McGrath v McGrath [1999] NSWSC 135

New South Wales Supreme Court CITATION : McGrath v McGrath [1999] NSWSC 135 CURRENT JURISDICTION : FILE NUMBER(S) : 2216/95 HEARING DATE(S) : 25/2/99 JUDGMENT DATE : 25 February 1999

McGrath v McGrath PARTIES : McGrath v McGrath JUDGMENT OF : Master Macready

LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : LOWER COURT JUDICIAL OFFICER :

J. Housego for plaintiff COUNSEL : M. Gorrick for 1st defendant G. Sirtes for 2 and 3 defendants SOLICITORS : CATCHWORDS : Testator's Family Maintenance - Claim under Family Provision Act by widower of deceased - no matter of principle. DECISION : Order that in lieu of the provisions of the will in favour of the parties, that the whole of the estate pass to the plaintiff.

16

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

THURSDAY 25 FEBRUARY 1995

2216/95- WILLIAM WALKER FRANCIS MCGRATH v GRAHAM JOHN WALKER AND 2 ORS

JUDGMENT

1 MASTER: This is an application under the Family Provisions Act in respect of the estate of the late Violet Elizabeth McGrath who died 22 November 1993 aged 69. The deceased was survived by her widower, the plaintiff in the action, her sons and several grandchildren. Under her will which was made on 4 August 1984 the deceased appointed her son the first defendant as executor and gave the whole of her estate to be held equally between her husband, the plaintiff, her son Graham, the defendant, and her grandsons, Adam and Scott who were the second and third defendants respectfully. 2 There has been adduced no evidence before me as to why the plaintiff may have made such a provision. The evidence is simply silent on the matter. The estate of the deceased is compromised of a modest property, 35 Hollingsworth Street, Port Macquarie, which has a value of approximately $100,000. There were some small amounts in bank accounts and after payment of administration expenses the amount left is sum of $6452.80. 3 The costs incurred today, so far on the plaintiffs part are $8432.90. The defendant part $9,001.20. Although the second and third defendant's cost amount to $9822.00 the second and third defendant made it plain at the commencement of the proceedings they are not seeking any costs orders and accordingly they clearly happy to bear those costs. 4 The plaintiff and the deceased were married on 10 January 1946. Prior to that the plaintiff had served in the AIF during the Second World War and was discharged medically unfit from the Army in 1945 the result of some psychological problems, osteo-arthritis and possible heart disease. They had one child, Graham, the defendant. The plaintiff apparently was well enough to be able to do some work as a truck driver and taxi driver and cleaner. Although he seemed to cease work in 1960 and lived on the invalid pension. In 1962 he had a heart attack and apparently there has been no recurrence of that. 5 He and his wife initially lived in rental accommodation. In the 1970's the deceased's mother died leaving some money to her. That money was used to purchase a house in July 1975 in Grafton in the joint names of the deceased and the plaintiff. The January 1979 property which was the property remaining in the estate was purchased in the name of the deceased. The purchase price of $28,500 was financed by $10,500.00 being savings of the deceased and the plaintiff and an $18,000 loan. Apparently it was purchased in the deceased name as both parties expected that the plaintiff would predecease her. 6 In 1980 they moved from Grafton to live in the Port Macquarie house and this was after some fairly extensive renovations which were carried out by the plaintiff on the property at Port Macquarie. I will not go through them in detail but they are set out in paragraph 18 of his principal affidavit. And in paragraph 19 he details some other matters which he attended to on the house. Grafton was sold in May 1980. Part of the sale proceeds were used pay off the debt for Port Macquarie. 7 The parties have lived there since that time and the plaintiff still lives there. Effectively. They have been married some 48 years at the date of death of the deceased on 22 November 1993. 8 In application under the Family Provisions Act to the High Court recently in Singer and Berghouse,1994 (181) CLR 201 1 set out the two stage approach that the court must take. At page 209 it 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 Bosh 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 of the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicants 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 or 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." 9 As is apparent from what is said, it is necessary to consider the position of the plaintiff. The plaintiff is aged either 73 or 74 years of age and he has an income from a totally permanent incapacity pension of $1029,80 per fortnight. He has expenses. However he is able to save from his pension and for instance he has increased his savings a little bit under a thousand dollars over the last year. As far as his medical condition is concerned clearly he had sufficient incapacity to justify the grant of a pension. He had a heart attack in 1962 and he has not referred to any other problems since then. He appears in the witness box to be a person who is still able to move about comfortably and nothing was suggested in cross-examination to dispel that impression. As far as his financial circumstance are concerned leaving aside his interest he takes under the will of his late wife he has a land Cruiser worth about $8,000, cash of about $6,000, boat and trailer worth $2,000, and some tools and furniture which he estimates has a value of $17,000. He has as I have mentioned been increasing his savings and the purpose of that has been to pay the cost of these proceedings 10 When one looks at the position of the first defendant one comes across the split that has occurred in this family. The first defendant quite properly in my view supports his fathers application. He asked his sons to also agree shortly after his mother's death that his father, the plaintiff in the action, could have the house absolutely. This was initially agreed to although shortly afterwards the second and third defendants changed their minds. Accordingly the first defendant's his financial situation is quite irrelevant. He wishes to see his father have the whole property. That of course, as has been pointed out in submissions will ultimately work to his benefit as he is the one who will benefit from his fathers will. But he is giving something up at this stage. 11 The second defendant is a grandson of the deceased. Adam is a senior constable with the New South Wales police force and is married with three children. They are young children aged approximately four and below. He deposed to his assets situation in his affidavit of 28 April 1988. That was not updated when he gave evidence in chief and a somewhat different picture emerged in cross-examination. He as a senior constable has a salary gross amount of $46,400 and he gets shift allowances of between two and three thousand dollars per annum. He and his wife reside in a home at 14 Russel Street, Vaucluse which is owned by his wife's father. And they own some furniture and he has a Commodore sedan valued at $44,500. To acquire that his wife lent him $30,000 dollars approximately which he used with a trade in of his own vehicle to purchase that vehicle. 12 It is apparent from cross-examination that his wife is a lady of some substance. She apparently owns 9 properties and indeed has five units in one block of six. Those no doubt are income producing and given the other matters which I am about to refer to I think it is reasonable to infer that she has substantial income. Adam gave evidence that his wife substantially met their household expenses from this income. She recently gave him $65,000 so he could buy an investment property at Maroubra. He purchased that for $275,000 with a loan of $220,000. 13 Looking at his situation over all, he is married, has been together with his wife for some years, they have three young children. There is no reason why that relationship is not likely to continue. Clearly his wife is person of some substance. 14 As far as Scott is concerned his situation is quite different. Scott was born on 17 June 1977 and is the younger son. He left school after obtaining the school certificate in 1992. After a series of casual jobs he recently obtained permanent employment and is now in permanent employment with David Jones. He is now married and earns 330 dollars per week and his wife also apparently earns some similar amount. They live in rented accommodation for which they pay $190 per week. The furniture belongs to his wife and there is little else of great substance which he or his wife have. However, they do not have the responsibility yet, of a family. They are young and have their life before them. 15 It is of course necessary for a plaintiff who comes to this court to establish that he has been left without adequate or proper provision for his maintenance, education and advancement in life. Unless that is established the court cannot make an order. This court does not make orders to readjust wills to make what someone might think would be a fair provision. Accordingly it is necessary to see what way the plaintiff might have been left without adequate and proper provision. Clearly as far as income is concerned the plaintiff has sufficient income to meet his needs as he is secure with the provision of his pension. 16 As far as other matters which would normally be expected there is the question of his accommodation and also the question of whether he ought to have some fund for the contingencies in life which might come upon him given his age. Widows claims are frequently the subject of application in this court. The Court of Appeal in Goloski and Goloski unreported (5 October 1993) referred to formulation of that standard to be expected for a widow in terms which refer to the decision of Powell J and Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliot and Elliot it was approved by the Court of Appeal on 24 April 1986. There the court said: "Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her and income sufficient to enable her to live in a reasonable degree of comfort and free from financial worry; and third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring." 17 This of course was the widow's application and the principles which I have just quoted in respect of widow's applications apply with equal force for a widower's application. In particular in this case there has been a long relationship, 42 years, and very clearly the plaintiff has contributed to and helped build up the assets which is now all that survives of that long relationship. There is nothing to suggest the relationship was unhappy and accordingly one would ordinarily expect that those three major matters should be addressed. One of them is addressed by the provision of the pension. The case is unusual in one sense, in that apart from some short evidence given in cross-examination in which Scott said he lived with his grandparents for two and a half months, there is absolutely no evidence that Adam did. There is also no evidence of any family contact between the grandparents and the grandchildren. 18 There can be no suggestion from what evidence I have seen that the grandchildren contributed to the estate which has been substantially contributed to by the plaintiff and the deceased. The only submission of substance that is made on behalf of the second and third defendants is that the appropriate order that the court could make would be that there should be some life estate given to the plaintiff. 19 The plaintiff has a life expectancy of some 11 or 12 years depending on his precise age. In this regard I am mindful of what was said by the High Court in White v Baron (1979-1980) 144 CLR 431. At page 444 the court said that: "A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing her proper maintenance. However, the provision of a large capital sum for a widow who is not young, may in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceeds of the legacy." 20 However even bearing that in mind there are a number of other cases where the courts have talked about the unsuitability of such provisions. For instance in a case which was referred to in argument, The Court v Hunt, the decision of Young J, (unreported), 14 December 1987, his Honour said: "Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one judges the evidence in these sort of proceedings against that background knowledge." 21 His Honour went on to talk about the assumptions and referred to the fact that in many case these days a life estate would not be sufficient because it does not cover the situation of the plaintiff moving from her own home to a retirement home to hospital. He said: "Sometimes it is possible for a court to order a more flexible non-capital provision such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd, Service at page 13206. Other times the proper provision is for a fee simple give, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and other payments that have to be made by the widow." 22 At times the Court of Appeal has also referred to undesirability of giving life estates. In Goloski v Goloski unreported, 5 October 1993, the Court summarised principles of widows applications and included was this statement: " A mere right of residence will usually be an unsatisfactory method of providing for a spouse's accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore, Court of Appeal, unreported, 16 May 1984, per Hutley JA." 23 The matter that concerns me is that in this case I do not think one really needs to get to a consideration of whether or not it is appropriate to consider a life interest. There are a number of factors which lead to this result. One is that the estate has small if any cash which may well be used by expenses and costs. And the second more important matter is that on the evidence there is no claim on the testator's bounty by second and third defendants. Admittedly the second and third defendants come here as beneficiaries who are named in the will. However the court has to consider the relationship between not only the deceased and the person making the application but also the relationship with the person who take a benefit under the will. 24 As I have earlier demonstrated, apart from living there for two and a half months, in the case of Scott there has, in fact, been nothing referred to in the evidence dealing with any matters which would tend to show some claim on the bounty of the deceased. In Gorton v Parks there is passage by His Honour Justice Bryson when he refers to the mere fact of paternity being of significance. His Honour's context was in a case dealing with children and sometimes in this jurisdiction people are better to rely on that fact as matter which is appropriate to support a claim by a child. However, the mere fact of paternity in my view in the case of grandchildren does not in any way establish any claim on the bounty of a testator and this is particularly so where there is a widower, a son and a small estate. 25 Even if I were wrong in this conclusion in my view it would still not be appropriate to grant some life estate to the plaintiff. The plaintiff although having past illnesses does not have any current matters which seem to be threatening his health. He has an 11 year life expectancy. Even though it is expressed briefly in his affidavit he is concerned about his security and it is a worry to him. 26 The fact that the second and third defendant in evidence expressed that they had all been prepared to let him live there until he dies really does not address the problem. The problem is for the person who has lived the whole of his 46 married years in one house to have control of that house to be able to do as he wishes, and not be at the beck and call or dependant upon the good graces and favours of someone else. In my view it would be quite inappropriate in this case to grant a life estate 27 Accordingly I order that in lieu of the provisions of the will in favour of the parties that the whole of the estate pass to the plaintiff. 28 I have heard argument about costs in this matter. The plaintiff seeks that the second and third defendant pay the costs of the plaintiff on an indemnity basis. The executor, the first defendant, also seeks a similar order from the second and third defendant. 29 The matter is one where the evidence in chief of the plaintiff was completed in July 1998. The only evidence put on by the second and third defendant was completed in April 1998. There apparently was an unsuccessful mediation on 24 June 1998, and after that on 17th of September 1998 one has consent orders which were the orders that Scott McGrath be joined as the third defendant. 30 Certain other motions were compromised and there was then a direction that the second and third defendants were to file further affidavit evidence on which they intended to rely on or before 24 September 1998. No such affidavits were filed or relied upon. There is some correspondence in September in which a claim for costs if the plaintiff is successful is foreshadowed with no mention made of cost being claimed on an indemnity basis. 31 Frequently one finds in matters of this nature that there are circumstance in which unsuccessful plaintiff's costs can be met where the deceased has misled people. However that is not this piece of litigation. Prima facie, this piece of litigation is contested inter-parties litigation between son and father on one side, and grandchildren on the other. In all civil litigation when one party loses, the prima facie result is that the party who loses pays the costs. 32 The other matter which has to be noted that is there a duty to compromise small estate claims. They are frequently the subject of litigation that erodes the estate and has unfortunate consequences on the parties. There is little left. The costs that have be met on the plaintiff and the defendant's side are $17,434.00 dollars and the cash that the plaintiff has and what is in the estate certainly will not cover that. I note that the matter was presented in an economical way for which I am thankful. However apart from putting that the provision of the will should be upheld there was little put to the court by way of evidence to justify the resistance to the claim. This should have been well known to those advising the second and third defendants at least by the middle of 1998. 33 Accordingly I order the second and third defendant to pay the plaintiff's and the defendant's costs on a party and party basis from 31 July 1998. To the extent that they may not be so paid, only in the event of their not being paid, I order that the first defendant's costs on an indemnity basis that the plaintiffs costs on a party and party basis may be paid or retained out of the estate of the deceased. The exhibits may be returned.