Armstrong v Armstrong [1999] NSWSC 764

New South Wales Supreme Court CITATION : Armstrong v Armstrong [1999] NSWSC 764 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 4192/98 HEARING DATE(S) : 23 July 1999 JUDGMENT DATE : 23 July 1999

PARTIES : Naomi Anne Armstrong (P) Gloria Dawn Armstrong (D) JUDGMENT OF : Master McLaughlin

COUNSEL : Mr. W. S. Willmott (P) Mr. R. J. Powell (D) SOLICITORS : Eric Butler Solicitors (P) Cleaves Mallik Gibbs Solicitors (D) CATCHWORDS : DECISION :

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 23 July 1999

4192/98 NAOMI ANNE ARMSTRONG -v- GLORIA DAWN ARMSTRONG JUDGMENT

1 MASTER: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 7 October 1998, the plaintiff seeks an order for provision for her maintenance, education and advancement in life out of the estate of her late father David Murray Armstrong (to whom I will refer as the "deceased") 3 The deceased died, aged about 58, on 14 January 1998. He left a will made in July 1996, and letters of administration with such will annexed were being granted on 20 July 1998 to Gloria Dawn Armstrong, a beneficiary named in the will, who is the defendant to the present proceedings. The executors designated in that will, which appears to have been prepared by the deceased personally without the benefit of legal advice, renounced probate. 4 By that will, the deceased left to the plaintiff a legacy of $5,000. He gave a collection of gramophone records to his niece, and gave the residue of his estate to the defendant. 5 The defendant is the de facto widow of the deceased. They lived together for a period of about four years, or perhaps a little less, up to the time of his death. The assets in the estate consisted essentially of the entitlements to the deceased resulting from his employment with the Newcastle City Council, those entitlements (including accrued holiday pay, long service leave, sick leave) being in the amount of $50,601, together with the interest of the deceased in the estate of his late father, Robert Murray Armstrong, that interest consisting of a one third share in certain real estate situated at Cessnock Street, Cessnock. I will later return to a consideration of the value of that one third interest. 6 It is also of relevance that, in consequence of the death of the deceased, the defendant received a superannuation benefit, which however came to her directly and did not form part of the estate of the deceased. That superannuation benefit was in the sum of $159,555. 7 After allowance had been made for the payment of the legacy to the plaintiff, and for the payment of various costs and administrative expenses relating to the estate of the deceased, the present assets of that estate consist of moneys totalling $36,082 and the interest of the deceased in the estate of his late father. 8 It will be appreciated that there must be paid out of the assets of the estate, the costs of the defendant of the present proceedings, estimated to total slightly under $20,000, and further that, in the event that she should be successful in these proceedings, the costs of the plaintiff also must be paid out of the estate. Those costs are estimated to be in the amount of $25,000. 9 The plaintiff was born on 5 December 1975. She is presently 21 years of age. Her parents separated in 1977, before the plaintiff was aged two, as a result an incident described in the affidavit evidence of the plaintiff's mother. The plaintiff's parents divorced in 1985. The plaintiff was brought up by her mother. Therefore, for all practical purposes, she had no contact with the deceased from the time when her parents separated, whilst the plaintiff was still an infant, until the death of the deceased. 10 The plaintiff until February of this year, had been in employment at McDonalds. She commenced maternity leave on 1 February 1999, and on 10 March, 1999 there was born to the plaintiff and to her de facto spouse, Karl Ailwood, a son. The plaintiff was paid maternity leave until 31 March 1999, but since that date her income has been the amount of $89 a fortnight paid by CentreLink and comprising what has been described as a staying at home allowance and a family payment. The plaintiff will be entitled to resume her employment with McDonalds within the period of twelve months from the time she commenced her maternity leave. She said she expects to return to work, but is not sure when that will be. 11 Evidence was placed before the Court concerning the financial material and circumstances of the plaintiff and of her de facto spouse. In March of this year they purchased a house property at 45 Neville Street, Mayfield, in which they and their newborn son currently reside. That house property was purchased for $90,000 and was largely funded by a housing loan, upon which there is presently outstanding an amount of about $87,000. 12 The plaintiff in her affidavit sworn last week, 15 July 1999, brings up to date the financial and material circumstances of herself and her de facto spouse. Apart from her joint liability with Mr Ailwood for the housing loan, the plaintiff has a credit card liability of $1,000. Mr Ailwood has, in addition to his joint liability on the housing loan, a loan from Australian Guarantee of $1,500, a personal loan from the St George Bank of $5,500 and a car loan from the St George Bank, the present pay out figure of which is $20,872. 13 Mr Ailwood is employed as a territory manager by a company, Office Organization Pty Ltd, for which he has worked for the past six years. In the last financial year, his gross income from that employment was $43,080. He in addition received a car allowance of $15,650, and he paid income tax of $11,539. His net income on those figures was $47,139. 14 Evidence was given concerning the financial and material circumstances of the defendant. I have already referred to the fact that she received, as a result of the death of the deceased, a superannuation payment totalling $159,555. The totality of that amount has been expended by the defendant. The largest items in that expenditure were the acquisition of what is described as an "on site van and site", in the total amount of $66,000, and a motor vehicle being a Mazda Astina, purchased new for $33,000. In addition, the defendant purchased replacement furniture and furnishings for a little over $10,000, and paid loans which were due by her in amounts totalling $2,680. The defendant gave assistance to her children --- she had been married and divorced before she met the deceased, and has three adult children. The defendant made gifts to her two sons totalling $26,500, and she has also paid for her daughter's wedding, which cost her about $6,000. The balance of the superannuation benefit which the defendant received has been used by her on ordinary living expenses, including clothing and other personal items. 15 The defendant receives an income by way of a social security pension in an amount presently $336.50 per fortnight, being described as unemployment payments. The defendant was born on 2 May 1954 and is presently aged 45 years. 16 I have already referred to the fact that the plaintiff had no contact with her father, the deceased, from early infancy until the death of the deceased. No submission was made on behalf of the defendant that that lack of contact between the plaintiff and her father in any way affected or reduced any entitlement the plaintiff might have to receive from the estate of her father a benefit in addition to that given to her by his will. 17 The plaintiff as a daughter of the deceased is an eligible person within paragraph (b) 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. 18 In approaching the claim of the plaintiff, the Court must look not only to her own financial and material circumstances, but also to the financial and material circumstances of her de facto spouse, and must approach the claim of the plaintiff in the light of any competing claims upon the bounty of the deceased. In the circumstances of this case the only such competing claim is that of the defendant, the de facto widow of the deceased, who it will be appreciated, is the designated object of the testamentary beneficence of the deceased. Indeed, the widow under the terms of his will receives the entirety of the estate, apart from the legacy to the plaintiff and the gift of specific chattels to the niece. 19 It has been submitted on behalf of the plaintiff that the deceased was under an obligation to provide for her, not only as a result of the mere fact of paternity but also as a result of any provision made by him whilst the plaintiff was growing up being of what might be described as a less than generous nature. Apparently he did pay maintenance as required for the plaintiff during her childhood but there is a suggestion that it was his own mother who was the ultimate source of those maintenance payments. Certainly the plaintiff did not receive from her father, whilst she was growing up, the emotional and material support that one would usually expect a child to receive from a parent. However, both parties appear to have been content that this case should be conducted essentially upon the basis of the financial needs of the plaintiff and the competing entitlements of the defendant. 20 It has been submitted that the total income of the plaintiff and of her de facto spouse is such that she has not established any relevant need, and that in consequence she is not entitled to receive any additional benefit from the estate of her father. I do not agree with that submission. The plaintiff and her de facto spouse have recently become parents. The plaintiff's income since she ceased to receive her wages from McDonalds at the end of March 1999 has been minimal. Whilst Mr Ailwood is receiving a reasonable income, especially when the car allowance is added to his salary, nevertheless that salary must maintain two adults and a new baby. From that salary they must meet the payments on the housing loan for the house property which they have recently acquired. 21 The defendant, as the de facto widow of the deceased and as the recognised chief object of the testamentary beneficence of her former spouse, is entitled to be regarded as a person whose claim is in substantial competition with that of the plaintiff. The circumstances of the defendant cannot enhance the plaintiff's claim, they can only have the effect of reducing, or even extinguishing, any provision and entitlement which the plaintiff might otherwise have established. 22 One of the problems in this case, and a problem which I have already signalled earlier in this judgment, relates to the assets in the estate. Apart from the amount of $37,675, being the balance of the leave entitlements and wages of the deceased, the only other asset is the entitlement of the deceased in the estate of his late father, the deceased's father, who died on 2 April 1990. The various pieces of real estate which comprise the estate of the deceased's father, have not yet been able to be sold. Evidence was placed before the Court by a valuer that the present total value of those pieces of real property is $220,000. However, the deceased's sister, who is one of the administrators of the estate of the deceased's late father, gave evidence and was cross-examined concerning the offers to purchase and the intention of the administrators of that estate to sell the real property. It would appear that an oral offer of $470,000 was received relatively recently for that real property but that the estate agent, upon whose advice the administrators rely and who has the responsibility of attempting to sell that property, advised that that oral offer should not be accepted, in the hope, apparently, that a higher amount could be obtained. 23 It has been submitted on behalf of the defendant that the Court should accept the evidence of the valuer and should adopt a figure of $220,000 as the value of the real property, and that the Court should disregard the suggestion that the property was worth $470,000 or even somewhat more than that figure. If the amount of $220,000 is adopted then the entitlement of the deceased would be $73,333, being one third of that figure. It should be appreciated however that if eventually the estate of his late father can sell the property for a higher figure, then the interest of the deceased will rise accordingly. 24 It seems to me, in all the circumstances of this case, that the plaintiff has established an entitlement to receive from the estate of her late father a further legacy additional to that of $5,000 given to her by the will and which she has already received. The amount of that further legacy however should not be such as to reduce in any significant fashion the benefit which the defendant has received or is entitled to receive either under the terms of the will of the deceased or as a consequence of the death of the deceased. The defendant under the terms of the will of the deceased will of course be entitled to receive the entirety of the interest of the deceased in the Cessnock property. Thus far she has received no practical benefit in consequence of that entitlement. 25 I consider that it is appropriate that the plaintiff should receive out of the estate of the deceased a further legacy, such further legacy being in the sum of $40,000 and I propose so to order. I propose further to order that that further legacy should be borne by the assets in the estate of the deceased which consist of his interest in the estate of his late father. 26 DISCUSSION ABOUT COSTS AND INTEREST ON THE LEGACY. 27 I make the following orders: 1. I order that in addition the benefit given to her by the will of the late David Murray Armstrong ("the deceased"), the plaintiff receive a further legacy, in the sum of $40,000, such further legacy to be borne by the asset in the estate of the deceased being the interest of the deceased in the estate of the late Robert Murray Armstrong, and that such further legacy not bear interest if paid on or before 23 January 2000, and, if not so paid, to bear interest at Supreme Court rates. 2. I order that the costs of the plaintiff on the party and party basis and the costs of the defendant on the indemnity basis be paid out of the estate of the deceased. **********