Maguire v Maguire [2001] NSWSC 1160

New South Wales Supreme Court

CITATION : Maguire v Maguire [2001] NSWSC 1160 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4347 of 2000 HEARING DATE(S) : 12/12/01 JUDGMENT DATE : 14 December 2001

PARTIES : Olga Mary Maguire v Robert James Maguire JUDGMENT OF : Master Macready at 1

COUNSEL : Not applicable SOLICITORS : Mr Greg J. Smith for plaintiff Mr Phillip Bushby for defendant CATCHWORDS : Family Provision claim by a widow. Contributions by children of the first marriage to deceased's home. Widow left a life estate. Life estate replaced by a legacy to enable widow to purchase a home. DECISION : Paragraph 37

- 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

FRIDAY 14 DECEMBER 2001

004347/00 - OLGA MARY MAGUIRE v ROBERT JOHN MAGUIRE

JUDGMENT

1 MASTER: This is an application under the Family Provision Act with respect to the estate of the late James Gordon Maguire who died on 25 July 2000 aged 89 years. He was survived by his widow the plaintiff and his three children from his first marriage. 2 The deceased's last will was made on 20 March 1981. He left the plaintiff a life estate in his unit at Maroubra and a legacy of $1,000. The residue he gave to his three children. 3 The life estate was one which was sufficient to provide for requests to change residence or acquire other types of accommodation. The assets in the estate at this stage consisted of the property at 10/114 Maroubra Road, Maroubra, valued at $255,000. If one took the costs of the expenses after sale, it is likely to realise $245,000. The cash in the estate after administration expenses is $22,959, making a total of $267,959. Costs have been incurred in this matter. Fortunately there has been some limit to them as counsel has not been employed and the parties engaged solicitors to appear before me. Those of the plaintiff were $14,900 and the defendant $33,969, a total of $48,869. This leaves a net estate after the sale of the property of $219,090. 4 I will refer to some of the family history. The deceased was born on 29 July 1911 and the plaintiff on 5 December 1918. The deceased's first child Fay Helen Edwards was born on 7 January 1936. Twin sons, Robert and Donald were born on 30 August 1939. The plaintiff who had been married suffered a loss of her husband in 1967 and the deceased's wife died in 1968. In 1970, the deceased and the plaintiff started to get together and in 1974 the deceased asked the plaintiff to marry him. 5 In 1996, the deceased, after showing the property to the plaintiff, agreed to purchase the unit at Maroubra. They married in 1976 and commenced living together in that unit. The deceased did not have quite enough to finish the purchase, he had to borrow $1,000 from his son. The plaintiff herself repaid that on 2 January 1997. They continued working for some years and in 1979 they both retired. The wills were made in March 1981. Over the subsequent years the deceased and the plaintiff continued on with their marriage. 6 The deceased had difficulties of a medical nature as he got older. He had a prostate operation in 1983. He had cerebrovascular disease and osteoarthritis in 1992. He started having heart attacks and other problems in 1995. 7 In 1996 the plaintiff had a lottery win. She won $100,000 and that was applied by her in part over the subsequent years of paying two lots of $10,000, the sum of $20,000 to her son. She also used it to purchase some items for the home, but more importantly, she and the deceased took a number of holidays together for which the plaintiff paid for. She now has $50,000 left in respect of those winnings. 8 The deceased became more ill in the year or two before his death and there was a substantial amount of work done by the plaintiff in looking after him. Ultimately, he died on 25 July 2000. The plaintiff renounced probate of the will and commenced proceedings within time. 9 In applications under the Family Provision Act, the High Court has in Singer and Berghouse (1994) 181 CLR 201 set out the two stage approach that a 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 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 I turn to the situation of the plaintiff. She is aged 83 years. She is single and has no dependents. She had one son and a number of grandchildren. Although there was no evidence of her life expectancy, on the tables, it would be in the order of some seven years. The only assets she has is furniture of about $1,000 and her bank and credit union investments are some $50,000. She has no debts. Her income consists of a pension and some interest, namely $238.55 per week. At present her out-goings are $427 per week because she has moved to Canberra and taken a flat to be near her son. The rent is $190 per week and hence the reason for her high expenditure at the moment. It would appear that she is probably able to manage on the pension. 11 The plaintiff is well, particularly for her age. She is obviously in good health and active. She had a good relationship with the deceased for many, many years. They were married in 1976. As I have mentioned, she certainly looked after the deceased well in his last years when he was suffering from various illnesses. 12 So far as contributions to the estate are concerned, the only one that seems to be identified apart from some minor household items is $1,000, which was used to repay the deceased's son. It is necessary also to consider the situation of others having a claim on the bounty of the deceased. In this case these are the three children of the deceased. 13 Robert John Maguire is aged 62, he is married. He has a house worth $280,000, newsagency worth $300,000, a car worth $6,000 and some shares of value of about $12,000. Taking into account his various business accounts, he has debts of about $20,000 with the business at the moment. Each he and his wife earn $600 per week. He has some $220,000 in a superannuation fund and wishes to retire when he reaches 65. His income will then drop substantially down to about $30,000 per annum. He, like his other siblings, had a good relationship with the deceased and also, of course, with the plaintiff. 14 One of the matters that has been a subject of argument in this case are the contributions made by the children to the estate of the deceased. It was in 1968 that the deceased's wife died. On the rules as to intestacy, as they then were, one-third of the estate passed to the deceased and two-thirds of the estate to the three children. I am satisfied on the evidence that the three children gave their share of the estate to their father. The estate had a value of about $11,311 less $250 owing for the loss on the sale of the land. There was about $11,000 in the estate which the deceased received. Effectively, this meant the children each contributed some $2,400 to the deceased. There would be no doubt, I think, that those funds were used by the deceased when he purchased the unit in 1976 for $24,500. Effectively, one has to think of the children who, by giving up their interest in their mother's estate, each contributed about 10 per cent of the purchase price of the property. 15 Ronald James Maguire is 62 years of age. He is married and has no dependents. He has a house worth some $300,000, a car worth $16,000, a caravan $10,000 and moneys in the bank of some $7,000. His income is of $220 per week and that of his wife $120 week. He retired when he was 57 and lives a very modest lifestyle. He also had a good relationship with the deceased and made the contributions to which I have already referred in respect of his brother. 16 Fay Helen Edwards is married. She is 65 years of age and has no dependents. She has been married since 1958 and it is obviously a long and stable relationship with her husband. Her husband owns a home which they live in which is worth some $400,000. He still owns a taxi plate which is worth somewhere between $180,000 and $225,000. He has a car worth $5,000. Their income is their combined pension of $218 per week, rent from the lease of the taxi plates at $320 per week and an annuity, which they purchased at $100 a week. Mrs Edwards also had a good relationship with the deceased and she contributed in a way which I have referred. Mrs Edwards advanced some $3,000 to enable the doing of repairs resulting from the hail storm damage in Sydney in 1999. 17 It is necessary to consider the way the plaintiff says she has been left without adequate or proper provision for her maintenance, education and advancement in life. Her claim was to receive the whole of the estate of the deceased in order to: (a) ensure that the plaintiff is secure in a home unfettered and without being beholden to the defendant and the other beneficiaries; and (b) a sum to ensure that she has an income sufficient to permit her to live in a style to which she is accustomed; and (c) a sum to provide her with a fund sufficient to enable her to meet any unforeseen contingencies. 18 This was based on the traditional view of the widow's claim. Widow's claims are frequently the subject of applications in this Court. The Court of Appeal in Goloski v Goloski (unreported 5 October 1993) has referred to formulations of this standard to be expected in respect of a widow in terms which refers to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliot v Elliot, which was approved by the Court of Appeal on 24 April 1986. 19 There, his Honour 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 an income sufficient to enable her to live in a reasonable degree of comfort and free from any 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 her life might bring." 20 So far as the house is concerned, it is clear that because of the costs involved in this case, whether or not the plaintiff is successful, the house will have to be sold. 21 The plaintiff has moved, in effect, to Canberra and is living there because she wishes to be close to her son. What she really needs is a home in an area in Canberra close to her son. She needs a two-bedroom unit which is also handy to shops. She identified in-chief a number of newspaper advertisements in which she referred to homes. There was one in Garran which was a top floor two-bedroom apartment for $235,000 and a two-bedroom unit in Narrabundah for $220,000. There was cross-examination on a number of other ranges of units that might be available to her in the suburbs that are near where her son lives. For example, in Wannaissa, there was a ground floor unit which would probably suit. It apparently has two bedrooms with a living room opening to a carport, carport and store room, the asking price was $140,950. Another one in Lyons was a two-bedroom unit in a convenient location with a balcony and carport for $117,000. A one-bedroom unit, for instance, in Curtin seemed to be in the order of $105,000. In Narrabundah, some obviously fairly new and deluxe units with pools and court yards, tennis courts, were for sale for $199,500. 22 These do indicate a range of unit prices and she could probably find something appropriate between the ranges of $120,000 to $190,000. There would also be the cost of acquisition and stamp duty. There are not really sufficient funds in the estate to provide for all the plaintiff's needs. The real debate is whether she should have a sum outright or whether she should have only a life estate of the house to purchase. This is a matter which has been debated for many years. 23 In the 1970s and 1980s there are a number of decisions of single Judges of this Court where they have held that a life interest with particular attributes were appropriate. (See, for instance, Crisp v Burns Philp Trustee Co Ltd, Holland J 18 December 1979; Banks v Hourigan, Waddell CJ in Eq, 2 March 1989; Cameron v Hills, Needham J, 26 October 1989.) This perhaps is reflected in matters mentioned by the High Court in White v Barron (1979-1980) 144 CLR 431 where at p 444 Mason J said:- "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.' 24 As has been pointed out in Elliott v Elliott that statement was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased. 25 A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Warladge v Doddridge (1957) 97 CLR 1, that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J who was one of the majority in White v Barron at pp 438-440 went to some length to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. 26 By the late 1980s other Judges in this Division were taking a slightly different view. For instance, in Court v Hunt, 14 September 1987, unreported, Young J 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." 27 His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass 55, have to change their accommodation and locate themselves either in retirement villages or nursing homes which have different requirements for capital contribution. 28 After talking about the evidence necessary, his Honour went on to say:- "In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a court to alter a life estate to a more flexible non- capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd, 18 December 1979, unreported, but noted in Mason & Handler Probate Service at page 13206. Other times the proper provision is for a fee simple gift, 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 the other payments that have to be made by the widow." 29 More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky & Anor v Golosky, 5 October 1998, unreported, the Court summarised the proper provision for widows (and thus the plaintiff in these proceedings) in the following terms:- 'In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included: (a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron & Anor , above, 458; Hunter , above, 576. (b) The purpose of the jurisdiction is not the correction of the hurt feelings of sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testator's household and to consider whether, as claimed, the provision made by the will is inadequate for that person's proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81. (c) Consideration of other cases must be conducted with circumspection because of the inescapable details of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69-70. (d) 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. (e) Considering what is 'proper' and by inference what is 'improper' as a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop (deceased) (1987) 8 NSWLR 679 (SC); Churton v Christian & Ors (1988) 13 NSWLR 241 (CA) 252.' 30 In talking of the need to provide a house and a sum for contingencies the President is clearly referring to passages in Luciano v Rosenblum and other cases. As was pointed out by the Court of Appeal in Elliott v Elliott, unreported, 29 April 1986, such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased. 31 In Permanent Trustee v Fraser 36 NSWLR 24 at p 47, Sheller JA had the following to say:- "Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie. The need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security.' 32 In Salmon v Blackford, 18 February 1997, the Court of Appeal was dealing with a case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said:- 'The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case. The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over eleven years at the time of the hearing. If one comes to the conclusion that for her proper maintenance an order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty.' 33 This seems to indicate a different approach to that referred to by the High Court in White v Barron. 34 Here in this case there are other claims apart from the widow's. These are the claims of the children who have contributed in part to the property, in other words put the deceased in the situation where he was able to own that property. I have already mentioned the extent of the contribution at the time it was purchased of about 10 per cent each. 35 The plaintiff herself is fit and well and will be moving to Canberra. I think she needs the comfort and security of her own house. Although cross-examination suggests otherwise, she repeated her desire to have a house outright in her evidence and that is certainly the basis upon which her case has been put by the solicitor appearing for her to the Court. 36 In an ordinary case as such as this she would normally receive the whole estate. However, in this case there are the genuine claims of the children who have contributed to the house and those claims have to be recognised. This can be done by the provision of a legacy in favour of the plaintiff sufficient for her to be able to purchase a unit in Canberra and to leave a small amount to be split between the three children. This will mean that they will receive some amount now, which is an advance of which they would normally receive under the provisions of the law and accordingly it can be discounted. 37 Accordingly, the orders I make are as follows: (1) In lieu of the bequests in the will of the deceased in favour of the plaintiff, she receive a legacy of $175,000;