Perkins v Perkins [1999] NSWSC 749

New South Wales Supreme Court CITATION : Perkins v Perkins [1999] NSWSC 749 revised - 31/08/99 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 2797/98 HEARING DATE(S) : 21/07/99 JUDGMENT DATE : 21 July 1999

PARTIES : Kevin William Perkins v Brian Zenas Perkins and Judith Anne Perkins JUDGMENT OF : Master Macready at 1

COUNSEL : M.A. Bradford for the plaintiff M.S. Willmott for the defendant SOLICITORS : Button Mulcahy for the plaintiff Robert King & Associates for the defendant CATCHWORDS : Family Provision. Plaintiff's wife a spendthrift who has previously forged plaintiff's signature on documents to obtain moneys due to plaintiff. Whether the court should enforce conditions on any order in favour of the plaintiff. Held that if it is possible to frame an order that will reduce the possibility of the wife obtaining access to funds that should be done. CASES CITED : Bondy v Vavros 28/08/98 Howarth v Reed, Powell J. 15/04/91 applied. DECISION : Paragraphs 29 and 39

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THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

Wednesday 21 July 1999

2797/98 - KEVIN WILLIAM MAURICE PERKINS -V- BRIAN ZENAS PERKINS AND JUDITH ANNE PERKINS

JUDGMENT

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Margaret Ruby Perkins who died on 21 August 1997. She was survived by her two sons, their wives and children. The plaintiff is one of her sons and the defendants are her other son and his wife. Under her will which was made on 3 March 1992 she appointed the defendants as executors and trustees and gave, after the disposition of chattels, the residue of her estate to be held in two equal half shares. 2 One half share went to the defendants and the other half share was held on the trusts which are set out in cl 5(c) of the will. Those trusts are in the following terms: "(c) As to the remaining one half share I direct that the same be held upon the following trusts: (i) To invest the capital of the said share in accordance with the trusts for investment herein and to retain such investment upon trust until the death of Maureen Ivy Perkins and then to pay the capital of the said fund and any undistributed net income to Kevin William Maurice Perkins. (ii) I direct my trustee during the life of Kevin William Maurice Perkins and prior to the vesting of the capital fund in accordance with the preceding sub-cl (i), to pay to the said Kevin William Maurice Perkins the net income derived from the said fund in each financial year after satisfying from the income of the said fund the taxation liability of the income earned in such financial year. (iii) Should Kevin William Maurice Perkins die before me or before the vesting in him of the capital fund in accordance with sub-cl (i) I direct that the capital and any undistributed net income of the fund be paid to those of Judith Ann Ducrou, Colin James Perkins, Deborah Gaye Howard and Diane Margaret Mitchell as shall then be living and if more than one in equal shares as tenants in common." 3 As can be seen from that provision the share for the plaintiff is held so that he has the income from it until his wife dies and thereafter he receives the capital. In the event of him pre-deceasing his wife the amount of the capital goes to the persons named in sub-s (iii) who are the children of the plaintiff. As is evident the plaintiff's wife takes no part in that disposition. 4 The reason for that was set out by the deceased in a letter which she wrote the same day addressed to her son Kevin in which in effect she apologised for what she had done in her will and explained her reasons. These reasons were connected with the plaintiff's wife's dealings with the plaintiff's money in the past. She refers to the plaintiff's wife spending the money for purposes which were not agreed and forging payments using the plaintiff's credit card. 5 The estate has been reduced to cash and expenses paid. The distributable estate is in the order of $278,191.16. One half of that has been distributed to the defendants pursuant to the provisions of the will, the other half has been invested by them and that amounts to $139,095.58. There have been two payments of income to the plaintiff since the date of death, one in respect of the year 1998 in the sum of $2605 and for the year 1999 in the sum of $6241.08. 6 There has as a necessary consequence of these proceedings been costs incurred. The plaintiff's costs to date are estimated at $14,000 and the defendants' costs $9500. 7 I will just deal with a few matters of history first. The plaintiff was born on 8 October 1934 and his brother the defendant, Brian, was born in 1942. The plaintiff married in 1955 and has had four children from the marriage, none of whom are now dependent upon him. He was a panel beater and retired from work in 1987 due to health problems. In 1989 some of the problems that he was having with his wife came to a head and he at that stage was forced to, inter alia, borrow some money from his brother and sell the family car to repay amounts that she had run up. The plaintiff's father died in 1992 and the deceased made her will on 3 March 1992. In 1994 there was a dispute between the plaintiff and his wife over the problems to which I have referred and she left home for two months. 8 In May 1995 the plaintiff had surgery at Westmead Hospital to replace his right knee and in August 1997 the deceased died. The plaintiff had further surgery in September 1997 on his left knee and in due course the house property was sold towards the end of 1997. 9 In applications under the Family Provision Act the High Court has recently, in Singer v. Berghouse (1994) 181 CLR 201, set out the two stage approach that the Court must take. At p 209 they said the following: "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc. were explained in Bosch v. Perpetual Trustee Co Limited. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v. Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 10 The plaintiff's condition in a financial sense is that he is presently sixty-four years of age, he is married and has no children dependent upon him. He and his wife have a house worth $152,000, furniture $8000, he has cash of a little over $10,000 which is substantially comprised of the recent income distribution, he has a 1984 Commodore car which could possibly be traded-in for $2500. He is on a disability pension of $360 per fortnight and his wife is on the same pension but an aged one. Obviously their income is used totally in meeting expenses. 11 His medical condition has been set out in a lengthy report by his treating orthopaedic surgeon and he summarises the plaintiff's situation as having undergone bilateral total hip replacements and bilateral total knee replacements. He says his right hip replacement is failing and he is likely to require replacement within the next couple of years. 12 He also goes on to say that he would be able to perform that surgery on the plaintiff as a public patient at Westmead but there would be a two year waiting list. He mentions that if it was to be done through the private sector the cost would be in the order of $18,000 and there is no significant waiting time. 13 It is necessary in the context of the provisions in the will to look at how it is said that the plaintiff has been left without adequate and proper provision for his maintenance, education and advancement in life. These matters are put on two levels. On the first level are a number of specific matters. His house needs some repairs and renovations: there are firstly expenses in connection with the kitchen $5500, cost of floor coverings $2000, cost for enclosing verandah $4500. Although there was criticism of the generality of the evidence it seems to me, particularly given the description of some of the work the plaintiff was hoping to attend to himself, that the estimates are probably modest. He also referred to a wish to paint the outside himself, but no doubt he may have some difficulty with that. 14 Another specific area is the question of purchasing a new car. That seems to be a reasonable matter given the state of repair of his existing car and what he has had to spend on it. He estimates he would need $34,000 less a trade-in of $2500 which he might get for his car if it survives to that time. 15 The other specific area I have already touched on is the hospitalisation costs of $18,000. True it is that it is possible for this to be obtained on a free basis. However, there are a number of imponderables in this area which are really not addressed in the evidence. They are, firstly, whether the public hospital difficulties will continue in their present form or perhaps even be exacerbated; secondly, whether there may or may not be some urgency in the need for provision of this work. I think, having seen the plaintiff, what his doctor says is supported by the way in which he walks and is able to move. Even though the evidence does not address this area it is an area of concern which should be able to be accommodated and the plaintiff should not have the worry in this regard. 16 The plaintiff also puts forward a generalised need for contingencies and in this respect he refers to his age, the little resources which he has and the general uncertainties which life presents. 17 It is necessary also to have regard to others who have a claim upon the bounty of the deceased. As can be seen from the will there are four persons who have a contingent interest in the share in question. Three of those have sworn affidavits saying that they have no objection to the whole of their contingent interest being made available to their father. The other has not given evidence but through correspondence expresses the view that the will should be upheld. There is no evidence from the person who takes that view and accordingly the court has no information on that person's financial situation. The court thus can assume that the person does not want the court to take into account her personal financial situation in consideration of the competing claims upon the bounty of the testator. 18 The reasons for the deceased leaving her will in the way she did stem from the relationship in part between the plaintiff and the plaintiff's wife and the deceased. Apparently, according to the plaintiff - and there is no reason not to accept him - in 1958 they had an argument about a trivial matter and, apart from exchanging a few words at a funeral in 1992, never spoke to each other again. 19 The plaintiff has frankly put his situation before the court in his affidavit. In par 9 he talks about how for many years his wife accessed moneys which had been in their joint savings account without his knowledge or consent. At other times she would be given money to pay household bills and the money would be spent on other things. She apparently ran up debts on his St George Bank credit cards and they, as I have mentioned before, became so unmanageable that he had to sell the family car and also borrow money from his brother. 20 He does not dispute that his wife is a spendthrift and that she did not always tell him the truth about what she had done with money. These problems led to the dispute between them in 1994 as a result of which the plaintiff's wife left home for some two months. They are however back together and have remained together since 1994. 21 The plaintiff says that he took steps in 1994 to separate out their finances. He has a separate bank account which is a savings account into which his pension is paid and his wife has an account into which her pension is paid. He says he supervises all the payment of the household bills. No doubt from that time, having regard to the history of what had happened and the little assets under the plaintiff's control, there has been very little opportunity for the plaintiff's wife to run up large accounts and debts. 22 Apart from the affidavit evidence there is also evidence given in cross-examination of the plaintiff. That brought to light a number of matters. One of them was that he received an examination summons to be examined in respect of a judgment debt. Apparently that was the first he ever heard of that matter as his wife had managed to successfully conceal from him the processes that no doubt were served prior to that event. She also, when she used his credit card, managed to conceal from him what was happening by intercepting the bank account statements when they were coming home. 23 Another more particular and more worrying matter was that when the plaintiff and his wife moved from Penrith to North Narooma there was some small surplus left over which they invested through their solicitor. The plaintiff thinks the amount was about $10,000. What became clear is that his wife managed to get hold of the moneys from that investment when a mortgage was repaid and a discharge given. It turns out that she has forged his signature on the discharge and received the funds. Some of them may have been spent on the new place at Narooma but certainly not all. 24 I think in this case, given the position of the plaintiff, it has clearly been established that he has been left without adequate and proper provision for his support and his advancement in life having regard to the terms of the will. The question is of course what is an appropriate order and any conditions that may be applied to it. In Howarth v. Reed Powell J refers to the possibility of a provision not being applied by the person for the purposes intended by the court. At pp 43 and 44 his Honour said: "While, as will be apparent from what I have earlier written, I am deeply concerned at what I regard as the totally unrealistic approach to the management of their affairs adopted by Mr and Mrs Howarth, which approach, if persisted in, will almost inevitably lead to the benefit of any Order which might be made in Mrs Howarth's favour being dissipated in short order, it seems to me that, while that is a matter which may bear on the form of Order to be made, it is not a matter which ought, without more, to be regarded as disqualifying Mrs Howarth from receiving the benefit of any Order to which she might otherwise be entitled. Nor is this a novel view, for a similar approach is reflected in the following passage in the judgment of Young J in Bondy v. Vavros (28 August 1998 (unreported)): 'I should interpose at this point that in one sense it does not matter if I form the view that a plaintiff is a spendthrift. If a person is entitled to an order, what they do with the money that they receive is their business and it is none of my affair if I very much fear that the money may be wasted on wine, women and song in a short period of time. I have deliberately used that expression to make it clear that I am not referring at the moment to the facts of this particular case. On the other hand, when one is considering what a wise and just testator would have done, if one can see that a plaintiff is a spendthrift and the testator has arranged his will in such a way as to limit the funds flowing to the plaintiff, then one may very well come to the conclusion that the plaintiff has failed to establish that there has been any breach of moral duty.'