SCHULTZ v GOLDSMITH & ANOR [2000] NSWSC 94

New South Wales Supreme Court

CITATION : SCHULTZ v GOLDSMITH & ANOR [2000] NSWSC 94 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4896/98 HEARING DATE(S) : 03/02/2000 JUDGMENT DATE : 3 February 2000

PARTIES : Donald John Schultz v Phillip Leslie Goldsmith - Estate of Frank Albert Ernest Schultz & Anor JUDGMENT OF : Master Macready at 1

COUNSEL : Mr R.J. Horsley for plaintiff Mr D.M. Loewenstein for defendant SOLICITORS : Walker Smith Solicitors, Taree for plaintiff Creaghe Lisle, Solicitors, Wagga Wagga for defendants CATCHWORDS : Family Provision. Application under Testator's Family Maintenance & Guardianship of Infants Act 1916 by a son. No matter of principle. Time for making application extended and order made for a legacy for the plaintiff. LEGISLATION CITED : Testator's Family Maintenance & Guardianship of Infants Act 1916 Re Guskett (1947) VLR 211; CASES CITED : Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19; Singer v Berghouse (1994) 181 CLR 201 at 209 DECISION : Para 24

- 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER MACREADY MONDAY 3 FEBRUARY 2000 4896/98 - DONALD JOHN SCHULTZ v PHILLIP LESLIE GOLDSMITH - ESTATE OF FRANK ALBERT ERNEST SCHULTZ & ANOR JUDGMENT

1 MASTER: This is an application under the Testators Family Maintenance and Guardianship of Infants Act (1916) in respect of the Estate of the Late Frank Albert Ernest Schultz who died on 4 October 1968 aged eighty-six years. The deceased was survived by his wife and adopted son, the son being the plaintiff in this action. Under his will which was made on 22 September 1967 the deceased gave to his wife an endowment policy which seems to have a value of some $5,000 and he gave the rest of his estate to be held by his executors to pay to his wife the income during her life and thereafter the estate to be divided into four equal parts. 2 After the death of the wife, those four equal parts were left as to one part for the plaintiff during his lifetime, and the remaining three parts as to one part for the Salvation Army, Eastern Territory, one part to the Lutheran Concordia College of Adelaide in South Australia and one part to the Smith Family organisation of Griffith. 3 It is apparent that at his death the deceased had a house at Griffith in which he resided. That house formed part of the estate. It was no doubt held by the trustees for the benefit of the wife during her lifetime and provided accommodation. The original executors have retired and there have been appointments of new trustees. Clearly the executorial duties were completed many years ago as a grant was obtained on 28 November 1969. The estate in recent years has been held by the trustees and the income applied for the benefit of the wife. The current amount in the estate is, leaving aside some furniture, just over $100,000 and that is what is the subject of the present application. 4 There are of course costs involved in this application. In the event that the plaintiff succeeds, he will be entitled to costs out of the estate. The plaintiff's costs are estimated at $15,000 and the defendant's at $12,000. Before proceeding with the matters, I will deal with some of the chronology of the family. 5 The deceased was born on 1 February 1882. The plaintiff was born on 13 April 1935 and was the son of Verlie Holland and Stephen Thomas Holland. They divorced in 1938. The plaintiff's mother, Mrs Verlie Holland, married the deceased in 1946. On 4 November 1949 the deceased adopted the plaintiff. The plaintiff was initially apprenticed to the deceased and in due course he obtained the leaving certificate. However, there was a change in his life and in 1962 he entered the Salvation Army Officers Training College. This was with the approval of his parents and in due course in January 1964 he was commissioned as a lieutenant in the Salvation Army. He lived the rest of his life following that calling with his wife who is also an officer in the Salvation Army. He and his wife married on 10 July 1965. In 1968 the deceased died and probate was granted on 28 November 1969. The time for filing a claim under the Testators Family Maintenance and Guardianship of Infants Act therefore expired on 28 November 1970. The claim is thus out of time. 6 The plaintiff and his wife have adopted both a son, Alistair born 11 June 1972, and a daughter, Fiona born 14 February 1978. On 28 July 1998 the plaintiff's mother died. It was at this time that the plaintiff found out the nature of the wills of both his mother and father. Under his mother's will she left three-quarters of the estate to the plaintiff and one-quarter to the children. This meant that recently the plaintiff received the sum of $90,148.83, which was used by him to purchase a modest property at Caboolture on the Sunshine Coast. The summons was filed in this matter on 4 December 1998. 7 The plaintiff is presently sixty-five and will retire on 1 May 2000 from the Salvation Army. He will have reached normal retirement age. As I have mentioned, the application is out of time and it is necessary for the court to consider whether there ought to be an extension of time. There are many cases where the relevant principles have been given consideration. For instance in Re Guskett (deceased) (1947) VLR 211 the following was said: "It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time." 8 In more recent years, dealing with the Family Provision Act, that principle has been adopted and it has been refined in many areas. The principles probably are equally applicable to the 1916 Act. For instance in Massie v Laundry his Honour, Young J giving a decision on 7 February 1986 indicated that the factors one looked at included the following: "(a) is the reason for making a late claim sufficient (b) will the beneficiaries under the rule be unacceptably prejudiced if time were extended (c) has there been any unconscionable conduct on either side which would enter into the equation." 9 There is also reference in the case as to the likelihood of obtaining an order. In the light of what I say later, it is apparent that there is a likelihood of an order. In the present case one has to firstly look at the reason for making a late claim. The circumstances surrounding this are not unusual. There were statements made by the deceased to the plaintiff during the deceased lifetime, that all his estate would be going to his widow and thereafter after the death of his widow the plaintiff would be provided for. They were said in general terms and no doubt the plaintiff accepted them at face value. He did not know the terms of his father's will and it was only when his mother died that he found out that in fact his father's estate had been passed to his mother. She merely had a life interest and he himself had the limited life interest to which I have referred. In these circumstances I am satisfied that this is a proper explanation for the late claim notwithstanding that it is some thirty years out of time. 10 So far as prejudice to the beneficiaries is concerned, there is none which has been demonstrated. In any event, under the terms of the will the property would be held until the widow died and it is agreed and there has been no substantial delay. There certainly also has been no unconscionable conduct on the part of any of the parties which needs to be considered. Given what I will later deal with, it appears to me it is appropriate to extend time. 11 It is important in the present case to realise that one is dealing with an application under the Testators Family Maintenance and Guardianship of Infants Act. Under that Act one has to determine whether there has been insufficient provision made for the plaintiff under the deceased's will. That determination has to be made having regard to the situation as at the date of death of the testator, namely 1968. If one finds that there has been a relevant lack of provision, one can then move to the question of an appropriate provision and have regard to changes in the parties' situation between the date of death and the present. To illustrate the range of circumstances that one might consider one has to go to what was said by Dixon J in Pontifical Society for the Propagation of the Faith v Scales (1962) 107CLR 9 at 19. There his Honour said the following: "Much has been written about the principles which should guide the court in administering the provisions of the Testator's Family Maintenance Legislation. But I do not think that any of the chief expositions give any foundation for applying the provisions to a case like this. It has often been pointed out that very important words in the statute are 'adequate provision for the proper maintenance and support' and each of these words must be given its value. 'adequate' and 'proper' in particular must be considered as words which must always be relative. The 'proper' maintenance and support of a son claiming a statutory provision must be relative to his age, sex, condition and mode of life and situation generally. What is 'adequate' must be relative not only to his needs but to his own capacity and resources for meeting them. There is then a relation to be considered between these matters on the one hand, and on the other, the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferable dispositions. The words 'proper maintenance and support', although they must be treated as elastic, cannot be pressed beyond their fair meaning. The court is given not only a discretion as to the nature and amount of the provision it directs but, what is even more important, a discretion as to making a provision at all. All authorities agree that it was never meant that the court should re-write the will of a testator. Nor was it ever intended that the freedom of testamentary disposition should be so encroached upon that a testator's decisions expressed in his will have only a prima facie effect, the real dispositive power being vested in the court. An observer of the course of development in the administration in Australia of such statutory provisions might be tempted to think that, unchecked, that is likely to become the practical result." 12 Scales' case has of course received criticism as to the result applied. However the principles referred to by his Honour are echoed in what the High Court said recently for example in Singer v Berghouse (1994) 181 CLR 201 at 209: "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 inter-relationship which exists between 'adequate provision' and 'proper maintenance' et cetera 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 of the circumstances, was the proper level of maintenance et cetera 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." 13 Clearly of course the situation is different under the Family Provision Act because one considers both the adequacy and the extent of provision at the date of hearing. In order to consider these questions it is necessary to look at the position of the plaintiff. The plaintiff at the date of death of the deceased was thirty-three years of age. He was engaged in his endeavours with the Salvation Army and he had committed his life to that work. As it turns out he did commit the whole of his life to that work as a Salvation Army officer. He was only paid a fairly small allowance. For example when he first married in 1965, just three years before the death of the testator, he was earning approximately $19 per week and that was the combined allowance for himself and his wife. Increases thereafter appeared to be $2 a week once a year and there were some slightly larger amounts - $20 in 1980. His assets situation at that stage was of course minimal. He had clothing and some text books and virtually little else. They did not even have household effects because they lived in accommodation provided by the Salvation Army, with the small amount of personal effects so provided by that organisation. 14 Given the other matters that have to be considered, if I find that the provision was inadequate, I also need to refer to the plaintiff's financial situation as at the present time. He presently has an account with the National Bank of Australia of some $46,000, with the Police Credit Union of some $400. He has the house at Caboolture worth $120,000. There is also superannuation which he will receive close to $45,000, with a recent contribution perhaps another $4,000. So far as his present income situation is concerned, it is appropriate really to look at it after his retirement in May because that is what will govern most of his life. He will have a Salvation Army pension of $91.65 a week and a grant to a Health Care fund of $33.77 together with an old age pension of some $307.60, a total of $429.62. His likely expenses, bearing in mind that he owns a home, are in the order of $385.77 and he would like, because he has now moved to Queensland to get cheaper accommodation which he could not afford in New South Wales, to have expenses in visiting his children in New South Wales, entertainment of some $5,000-odd per annum. There is therefore some small shortfall in income in that respect. 15 The plaintiff has some difficulties with his back but he seems to cope with those although he would like some assistance with appropriate chairs from time to time. He would no doubt have to assist his wife in managing her health problems which will require some operations in the future. So far as his relationship with the deceased is concerned, it is clear that there was a good relationship during the lifetime of the deceased although the deceased was substantially older as a parent because of the age when he married the plaintiff's mother. However, there was approval of his father to the course he had taken. It is worth noting that during the lifetime of the deceased the deceased and his wife would give the plaintiff and his wife gifts in order to supplement their somewhat meagre existence which their calling meant that they had to live. There are also indications of the favour with which the deceased regarded his son, when one looks at the nature of the promises that are referred to, to leave property to the son in due course after his widow had died. These are all clear. 16 It is also appropriate of course in considering the adequacy of the provision, to look at the others having a claim on the bounty of the deceased. First and foremost of these was the widow of the deceased. She was somewhat younger than the deceased and indeed survived for another thirty years. The details of her situation are not available now but she may have had some assets of her own as she has left an estate to which I have referred. She was entitled to receive paramount consideration by the deceased in the disposition of his estate. 17 In the event, he provided for her by providing a life interest. Given that there was no challenge to that, it is probably fair to assume that that provision was appropriate, and it also should be remembered that the provision was made in 1968. At that time life estates for widows were not uncommon and prevailing standards may well have approved a provision for a widow who had some of her own property by way of life estate in the house and in the rest of the estate. At the date of death the deceased's estate had a net value of some $152,951 of which the house was approximately $15,800. 18 The other persons having a claim on the bounty of the deceased at the time of his death the beneficiaries who have benefited by residuary bequest under the will. These are firstly the Salvation Army. The only evidence before me indicates that the deceased had a soft spot for the Salvation Army and that is recounted by his son. So far as the Lutheran Church is concerned, the deceased was a member of that religion and attended church when he could. There seems to have been some connection with the plaintiff playing music for the Lutheran Church at services occasionally in the area. The Smith Family, the other residuary beneficiary, only came into the deceased's life because the plaintiff's mother would organise Christmas lunches as part of her activities for that organisation. Importantly, although the deceased was a generous man there is no evidence of a pattern of giving to any of these organisations or a relationship which indicates that the deceased owed some moral duty - (one hesitates to use that word) - to repay such organisations. 19 It is necessary then to come to the first question as to whether at the date of death the deceased has left his son with adequate provision for his proper maintenance, education and advancement in life. What provision would have been appropriate at the time would be to provide some interest in remainder. It is noteworthy that the amount of the provision that has been provided by the deceased is not one of a capital nature. It is indeed a small income interest in a small share of the residuary estate in the future. It is hard now to sit back at that time and try to determine, having regard to the known likely future course of events, what was appropriate to provide by way of a residuary request after a life estate to a widow. Some things would have been abundantly clear. One is that the plaintiff and his wife were embarking upon a life of service which would not receive financial remuneration. One would have thought, given the levels of the then remuneration, that there would be little likelihood of any building up of assets to perhaps provide and pass on to the next generation. The other aspect that is to be taken into account of course is that there was the widow who would live for many years and had some assets of her own to pass on. The extent to which this was known at that stage is not clear though there must have been some assets. 20 When one looks at the situation of providing for a residuary bequest in those circumstances, one comes up against the others having a claim to the bounty of the deceased in terms of that residuary bequest. These are the charities, and one can see that they are charities obviously which everyone knows do appropriate work and are very beneficial in the community. That being said, there is not the extensive ties that one sometimes finds which would incline one to consider that they should receive the bounty. Here the plaintiff is the sole surviving member of one's family likely to approach older age after the widow dies and I would have thought that proper provision would encompass some capital sum for the plaintiff. 21 In these circumstances I am satisfied that the plaintiff was left without adequate and appropriate provision for his advancement in life. Accordingly, the question that has to be considered is what is appropriate provision. There is, as so often happens in these matters, a listing of a number of things which might be thought to be appropriate. The plaintiff has taken the course of not accepting a benefit of living in accommodation which could be provided on retirement for Salvation Army officers and which would require a contribution of some $17,000. He wishes to purchase a home so that at some stage he can leave something to his two children who are not dependent upon him for day-to-day needs except on occasions with his daughter who is ill and needs his assistance. That desire I think is appropriate on the part of the plaintiff and the use by him of funds both from his superannuation which is about $85,000 of which he has received $80,000, and the moneys received from his mother to buy this house in Queensland, seem to be sensible. They are at an age where they should be able to live in comfort in their own home. They do not need to consider retirement accommodation at this stage. The house itself will require furnishing and the sum of $14,500 is needed for that. There is also need for an orthopaedic bed of $1,300, dining chairs $1,200 and some Jason reclining chairs of $8,000. Given the difficulty with the plaintiff's back and that of his wife, I think these are reasonable. 22 Apparently the plaintiff has been provided, or at least has available to him, a car during his employment which he will not have and will need to spend some $30,000 for a car. This in today's age and society is not an outlandish request. It is suggested that the plaintiff would like to go for some trips overseas. He has never been overseas. Some $40,000 is suggested as appropriate. I myself would have thought that large amounts like this is starting to move beyond what is adequate and a proper consideration of the needs. There is also, because of his life-long interest in music, a desire to have a Roland digital piano. There has been suggested a need to do renovations to the house of some $16,500. Some are necessary and others seem to be perhaps dealing with everything that one might wish to be done but not absolutely necessary. So there are those needs which are advanced. When one looks at the plaintiff's current asset situation, he does have $97,000 income and assets and he also has needs which I have earlier referred to. 23 The other need that has been referred to is the fact that there is a small income deficiency on the figures. That is not much. Unfortunately I do not have life expectancy information to try to assess the likely amount of that deficiency. It is suggested that there ought to be some sum for contingencies. Perhaps with the resources he has, there is sufficient there, although some small amount might be necessary. Having regard to the areas of need that I have advanced, some of which I do not think are absolutely necessary, I think the appropriate order is that the plaintiff receive in lieu of his entitlement under the will, a legacy of $50,000. 24 The order that I make therefore is that, in lieu of the provisions of cl.4(a), that the plaintiff receive a legacy of $50,000 and that the residue of the estate which is held by the trustee after the death of the deceased, be held in equal shares for the parties referred to in cl.4(b)(c) and (d) of the will of the deceased. Interest on the legacy will run at the rates prescribed under the Wills Probate and Administration Act if they fail to pay it within two months from today's date and will run from that date. The plaintiff's costs on a party and party basis and the defendant's costs on an indemnity basis to be paid out or retained of the estate of the deceased. Exhibits can be returned. oOo