FRIEND v FRIEND SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KirBY P, HANDLEY and SHELLER JJA 31 October 1994, 31 October 1994 [1994] NSWCA 100 TESTATOR'S FAMILY MAINTENANCE Family Provision Act — widow of second marriage left no provision in will — relationship of 5 1/2 years — estate $1 million order of legacy of $120,000 — appeal — held: No error — appeal dismissed. White v Barron (1980) 144 CLR 431 referred to. TESTATOR'S FAMILY MAINTENANCE - Family Provision Act 1982 claim - adequacy of provision in will of deceased for widow aged 69 at death - second marriage - estate of about $1 million - will makes no provision for widow - widow's capital assets at death $249,000 - income $249 per week from pension and superannuation - expenses $368 per week - at trial widow living within means by reduction of expenditure - widow's capital interests reduced to half share in property worth $200,000, an old car and $17,000 in bank - obligations upon widow to repair her house - pre marriage agreement that deceased and widow would retain their separate assets - Master McLaughlin provides a legacy for the widow of $120,000 under Act - on appeal to the Court of Appeal by the executor - held (Handley JA; Kirby P and Sheller JA concurring) (1) The pre marriage agreement had not been approved by the Court, and was not binding on the widow. (2) The Master had power to make the order having regard to the size of the estate, the relationship of 5 1/2 years, the widow's need for secure accommodation and the total failure of the deceased to make any provision for her in the will; (3) The quantification of the provision made showed no error. (4) Appeal, accordingly, dismissed - observations by Handley JA concerning the need to prove by evidence the needs of claimants under the Act. Family Provision Act 1982, s7. ORDER Appeal dismissed with costs. Handley JA This is an appeal from so much of the orders made by Master McLaughlin on 25 September 1991 as award a legacy of $120,000 to the widow of the deceased. The Master ordered that the legacy should not bear interest if paid within twenty-eight days of the date of his order. The deceased died on 19 September 1989, then aged sixty-nine. He had married his widow, his second wife, on 6 March 1987 but their association went back to January 1984, some twelve months after the death of the deceased's first wife. The widow herself had previously been married and had children from her first marriage. The deceased was survived by two sons of his first marriage. The estate was a substantial one comprising approximately $1,000,000. The widow's financial circumstances at the date of death, set out in her affidavit, were that she had assets to the value of some $287,000 and an income of $353.50 per week with outgoings of $269 per week. At this stage she was renting part of the property at 1 Robson Road, Kenthurst that she owned jointly with her son-in-law and was receiving an amount of $160 gross a week by way of rent. Shortly after her husband's death she had to vacate the matrimonial home and rent alternative accommodation until such time as she was able to go back into possession of the main house at Kenthurst on the jointly owned property. 2 UNREPORTED JUDGMENTS At the date of her principal affidavit, sworn in August 1990, her capital assets were $245,000 and her income had fallen to $249 a week. At that stage her weekly expenses were $368. By the time of the hearing before the Master in September 1991 the widow was living within her means in terms of income but it is apparent that she was doing this as a result of reducing her expenditure. There had been no significant increase in her income. Her evidence at the hearing was that her income was $252.50 a week comprising superannuation as a result of the employment of her first husband, which was indexed, plus a modest part widow's pension. Her capital assets had further reduced. She still owned a half share in the Kenthurst property worth some $200,000. She had a manual car purchased for $16,500 which was second hand when she bought it two years before, and moneys in bank accounts totalling $17,000. She intended to spend $7,000 in order to repair what she described as her house on the jointly owned property which had been left in a poor state by her tenants, and she also wished to purchase an automatic car because a large bunion on her left foot caused her difficulties in her manual car. She expected that she would have to spend the other $10,000 in her bank account to purchase an automatic car. If the widow put the house in a proper state of repair and bought a car more suitable for her needs she would be left with no free capital and the joint interest in the property at which she lived would afford her no security of tenure. There was no suggestion that her relationship with her son-in-law was other than cordial but the fact remains that at any stage she could have been forced to vacate that property if a trustee for sale were appointed under the Conveyancing Act or if such a move were threatened. The deceased disposed of his substantial estate in favour of his grandchildren, principally the grandchildren of his son Joseph, and his other son Douglas, half of the residue being left to Douglas and half to the children of Joseph. He made no provision for his widow. This is remarkable bearing in mind the substantial size of his estate and the period of some five and a half years during which he had enjoyed either a de facto or a de jure marriage relationship with his widow. Counsel for the appellants has, firstly, submitted that the Master lacked power to make any order in favour of the widow, having regard to the extent of her capital assets at the date of death and at the date of the hearing, and also having regard to a document which the widow and the deceased signed about the time they entered into a formal marriage. However this document is ambiguous, the Master found that it was not legally binding on the widow, and neither of these matters have been strongly contested on this appeal. S31 of the Act enables an eligible person, in the lifetime of a deceased, to enter into a binding release of his or her rights under the Act but the release requires the approval of the court. Clearly such an agreement which has not been approved by the court is not legally binding. In the circumstances I am satisfied that the agreement in question provides no basis for disturbing the Master's order. The second ground of challenge to the Master's order is that the widow's assets and income position was such that she was in no need and that the Master had erred in making provision for her benefit. With due respect it is difficult to take this submission seriously. The deceased, as I said, left an estate of approximately $1,000,000. The Master's order in favour of the widow awarded her approximately 10 per cent of the estate. He also found, in various respects which I will deal with in a moment, that the widow was in URJ FRIEND v FRIEND (Handley JA) 3 need. In these circumstances I am satisfied that there was power in the Master to order proper provision for the widow out of the estate for purposes of adequately providing for her maintenance and advancement in life. There remains the challenge to the quantum of the order. The principal basis for this challenge was the fact that there was no evidence that the widow would need any amount of capital and that, in the circumstances, a sufficient order to make up for any inadequacy in the will, would be an annuity which it was suggested might be $6,000 a year. The Master found that the widow's needs were as follows. She said that she wished to leave her residence at Kenthurst and move to the north coast of New South Wales, probably around Port Macquarie. There was no evidence as to the cost of any property which she might wish to acquire in that area although, in answer to a question in cross-examination, she said that she had been informed by her daughter that it would be expensive for her to purchase the sort of residence in Port Macquarie that she wanted. She wanted a small house with a garden. It is quite correct that apart from this hearsay evidence which was not objected to or asked to be struck out there is no evidence of the likely cost of the type of house at Port Macquarie the widow wished to buy. The Master also found that the widow had other needs, in particular, she had a need for security of accommodation, a capital sum to meet the exigencies of life and a capital sum which would provide additional income to meet her normal expenditure. He held that the widow should have financial security and her income should exceed her expenditure. He also found that there was a need, because of her wish to purchase a new motor car and effect repairs to her house and, by implication, that she should not have to use her last free capital for these purposes. He dealt with the difficulties created for the widow by the absence of any evidence of the probable cost of buying a house at Port Macquarie by holding that he was justified in the circumstances in concluding that her share of the proceeds of sale of the Kenthurst house would be sufficient to meet the cost of purchase of any residence at Port Macquarie. This finding is challenged by the appellant as not supported by evidence, and it was submitted that the court was not justified in allowing any sum by way of capital provision to meet the widow's need for secure accommodation. It is unfortunate that the widow's case was not supported by evidence of the probable cost of acquiring the type of house she described in her evidence together with the associated legal and removal costs. Nevertheless the court may be taken as knowing the approximate costs of selling the Kenthurst property and buying a property in Port Macquarie and that the removal expenses for furniture of the type she described in her evidence would also be substantial. In my opinion the Master was doing no injustice either to the widow or the estate in assuming that her share of the net proceeds of sale of the Kenthurst property would adequately meet the cost of acquiring alternative accommodation of the kind she wished at Port Macquarie. There remains the general challenge by the appellant to the quantum of the capital order in favour of the widow. I am not persuaded that the Master fell into any error in making an order of this nature. I do not consider that, in 1991, let alone 1994, an annuity would be appropriate in a case of this kind for a widow with the likely life expectancy of this respondent. I do not consider that White v Baron (1980) 144 CLR 431 provides any support for the view that a legacy of 4 UNREPORTED JUDGMENTS approximately 10 per cent of an estate of this size in favour of a widow who was sixty-nine at the date of death is outside the range of a proper exercise of discretion by the Master. The widow's situation at the date of hearing was marginal, both in terms of income and free capital to enable her to meet the exigencies of life, to provide for reasonable comfort in her declining years, to change her motor vehicle and purchase another house. It was entirely appropriate that she should have a sufficient sum to enable her to face the exigencies of life without any financial worries. I would propose that the appeal should be dismissed with costs. Kirby P I agree. I would reinforce what Handley JA has said concerning the high desirability of the proof by claimants of the needs that they have and of the way in which such needs may be satisfied, by reference to what Sheller JA said in this court in Singer v Berghouse, unreported Court of Appeal (NSW) 24 July 1992. It was that observation of his Honour which appears to have persuaded the High Court of Australia in Singer v Berghouse [No 2] (1994) 123 ALR 481 that the failure of the deceased in that case to have made provision for his widow did not call for provision under the Act. That this is so can be seen by the approach of the majority at 490. Nonetheless, for the reasons which Handley JA has given, I consider it was open to the Master, using commonsense and the knowledge that may be attributed to judicial officers, to reach the conclusion which he did concerning the existence and satisfaction of the respondent's needs. I agree that no error has been demonstrated in the provision which the Master made. I, therefore, agree that the appeal should be dismissed with costs. Sheller JA For the reasons given by the other members of the court I also agree that the appeal should be dismissed with costs. Kirby P. The order of the Court is that the appeal is dismissed. The appellant must pay the respondent's costs. Appeal dismissed with costs. Counsel for the Appellant: RK EASSIE Instructed by: CAMERON GILLINGHAM BOYD Counsel for the Respondent: RA VINCENT Instructed by: ROWLANDSON AND CO