New South Wales Supreme Court CITATION : Piercy v Connellan [2001] NSWSC 1115 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 5065/00 HEARING DATE(S) : 29/11/01 JUDGMENT DATE : 30 November 2001 PARTIES : JESSICA MICHELLE PIERCY v GEOFFREY THOMAS CONNELLAN - ESTATE OF GRAHAM ROBERT PIERCY JUDGMENT OF : Master Macready at 1 COUNSEL : Mr. A.M. Colefax for plaintiff Mr. D. O'Dowd SOLICITORS : Harris & Company for plaintiff Moray & Agnew for defendant CATCHWORDS : Family Provision. Application by an infant child born after the death of deceased. Competition with claim by the deceased's mother who the deceased had promised could live in his house in England. Priority accorded to child's claim and orders made. DECISION : Paragraph 27 - 1- 1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Mr Graham Robert Piercy who died on 23 December 1999, aged thirty-nine years. He was survived by is widow. His daughter, the plaintiff in this action, was born on 18 June 2000, some six months after the death of the deceased. 2 In his will, which was made on 14 November 1999, the deceased, in clause 3, gave a property at 6 Chiltern Road, Barton-Le-Clay, Bedforshire on trust for his mother for her life and thereafter to various nieces and nephews. The residue of his estate went to Fiona Margaret Piercy, his widow, who is the tutor of the plaintiff in the action. 3 The estate consisted substantially of the property in the United Kingdom to which I have referred. There were some life policies and cash and there was also a jointly owned property in Turramurra which was owned by the deceased and the tutor. There has so far been a distribution of about $76,400 to the tutor pursuant to the residual bequest. The estate apparently now consists of the United Kingdom property. That has been valued at £91,000 which, on the present exchange rates, would be approximately $(A)273,000. There is also cash left in the estate of some $7500. 4 Costs have been incurred in a modest amount. The defendant's costs are $14,000 and the plaintiff's $18,880. Strangely, the defendant, who is a solicitor, seems to have distributed the residue without keeping sufficient back to cover the costs of the proceedings. Primarily, of course, under the terms of the will as it presently stands, the residue is the proper part of the estate to bear the burden of any costs, but no doubt the executor will have a right of indemnity against the tutor, who is the residuary beneficiary, in respect of any over-distribution. 5 I will deal with some of the chronology shortly and come back to other matters. The deceased was born on 19 September 1960. His mother moved into the property, which was a Council property, at 4 Dunstall Road, Barton-Le-Clay, in the United Kingdom in 1963. She occupied it along with her family, which included the deceased and his brother. The tutor herself was born on 5 April 1964. 6 In November 1985 the deceased's mother and the deceased purchased a property in Dunstall Road from the local Council. The actual price for the purchase was £31,750, and the purchase price was reduced by a discount of £16,510. This was available to the deceased's mother because she had been a tenant there for twenty-two years. It would not have been available to the deceased. 7 The balance of £15,290 was secured by a mortgage back to the Council. Two years later, in August 1987, the mother's interest was transferred to the deceased and the mortgage to the local Council, which by that stage had reduced to £15,000, was discharged by the deceased. He took out a loan with a building society and used those funds to discharge the mortgage to the Council. From then on, of course, his mother did not have an interest in the property, nor a liability under the mortgage. 8 In 1991, the deceased came to Australia for a holiday. In 1992 he applied for residency in Australia. Later on that year he sold the property in Dunstall Road for £72,500. He then purchased the property at 6 Chiltern Road, Barton-Le-Clay which is the one which is referred to in the will. That was purchased for £40,500. As a result of the sale, the mortgage which had existed over the old property was discharged. His mother moved into the new property, along with some other members of the family, and they have continued to reside there ever since. 9 In September 1995 the deceased migrated to Australia. Early in 1996 the deceased and the tutor commenced a relationship and, in September, they commenced living together. He became an Australian citizen in September 1997 and, in July 1999, the deceased and the tutor married. 10 The will in question was made on 14 November 1999. As I mentioned earlier, the deceased died on 23 December 1999 as a result of a sudden cardiac arrest. Jessica, the plaintiff, was born on 18 June 2000. There has been a grant of probate, the proceedings being within time. The tutor, in July this year, recommenced her work as a barrister's clerk on a full time basis. She is of course, looking after the plaintiff, Jessica. 11 In applications under the Family Provision Act the High Court has in Singer v. 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 become 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 o assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 12 It is necessary, as directed by the High Court, to firstly look at the plaintiff's situation. The plaintiff is fourteen months old and is totally dependent upon her mother for support. She was born with heart murmur which, in ordinary cases, may not be a great problem. However, because of the fact that her father died from an acute cardiac disrhythmia, the specialist has been concerned to see whether or not Jessica may have a long QT syndrome. This apparently can be inherited and can be the cause of death in people who are afflicted with it at a somewhat earlier age than the rest of the population. There have been substantial tests carried out, but at this stage it has not been able to be established that she is suffering from that syndrome. Hopefully, of course, it will not be established. Tests tend to suggest that her reactions to ECGs are normal. Apart from that, there is nothing particular to be concerned about with the plaintiff. 13 Obviously, her way in life depends upon the position of the tutor, her mother. She is thirty-seven and single. She is a barrister's clerk and she has at this stage some assets. There is a property at 21 Reed Place, Turramurra, which is estimated to have a value of $510,000. The contents of that property are $9500. The tutor has in a bank account an amount of just under $50,000. She has a car worth about $14,000. The mortgage on her home has been reduced substantially from when it was purchased and is now $71,680.92. She has an ANZ Visa card debt of some $3340. Her income on a fortnightly basis comprises her salary and a Centrelink allowance, totalling $1109. 14 She currently has expenses, particularly looking after Jessica and paying for child care, which come to $2271 per week. It is apparent that she has had to live off capital in order to meet her expenses. It is worth noting, so far as the jointly owned property is concerned, this was purchased by the tutor and the deceased together. They both contributed savings they had been making for some time and both contributed by entering into the mortgage and making repayments of that mortgage. 15 It is necessary to see how the plaintiff has been left without adequate and proper provision for her maintenance, education and advancement in life. A number of matters are advanced. First, there is the cost of schooling. There is evidence that the deceased wanted to be able to send his daughter to PLC at Croydon, where the tutor had schooled. If possible, that should be accommodated. However, it is expensive. The estimate for that schooling is $121,235. There are also, of course, other school expenses which will be incurred, whether it is a private school or elsewhere, which are estimated at $35,250. 16 The other obvious difficulty for the tutor is, of course, that she has to work full time. That means Jessica has to be in care. The estimate of the costs of care over that period is $67,200, which gives at total of $223,685. 17 This, of course, is not all that is involved in bringing up a child. There is the cost of food, there are medical matters, medical insurance and whole range of other matters which go towards the very substantial cost of raising children. I do not think that the claims which have been put forward are in any way ambitious. They are simply the costs that are incurred in looking after a child. No doubt there will be a substantial contribution by the tutor from her own income towards those costs. 18 It is also necessary to consider the position of others who have a claim on the bounty of the deceased. The prime one of these is, of course, the deceased's mother, Pamela Piercy. She is sixty-six years of age. She is currently working and receives income both from that and from a pension which totals £285 per month, not a substantial income. She has capital of some £2000 and no other assets. 19 An important matter in this case is, of course, the contributions which she has made to the estate of the deceased. She had always been promised by the deceased that she would always have a home for her to live in for the rest of her life. It was these promises that no doubt were a cause of the re-arrangement of the house ownership. It is also clear that, when the house was first purchased from the local Council, she contributed at least one half of the equity by the benefit that she attained by having the right of purchase. Not only did she do this, but she joined in the mortgage for the balance, effectively contributing three quarters of the house. 20 That arrangement continued, but only for two years until 1987. At that stage there was a gift by the deceased's mother to the deceased and the deceased thereafter took over the mortgage and continued to pay it off. Effectively what happened was that the mother gave the son half of the house at that stage in 1987, which was no doubt in return for the promise to be able to live there for the rest of her life. Importantly, of course, there was no further financial involvement by the deceased's mother in the property. She did not have responsibility for the mortgage and she had accommodation provided for her. 21 One would have thought that normally, in considering the extent of the contributions, one would thereafter allow the deceased a credit for the increase no doubt due to inflation. There are also no doubt increases due to the value of the property as a result of work which the deceased himself did on the property. He was a carpenter and builder and did a lot of renovations. 22 In 1992 there was a sale of that property. Effectively one finds, if one looks at the sale price of £72,500, and assumes that the contribution his mother made is some £15,000, she had contributed by this stage an amount which was about twenty per cent towards that sale price. Her interest no doubt was not one which would be capable of enforcement, but obviously is one which has to be taken into account in testing the various claims on the bounty of the deceased. It is perfectly apparent that one of the bases upon which the transfer was made would have been the promise for future accommodation. 23 There is a gift in remainder to nieces and nephews of the deceased. They are apparently very young and there is no information as to their financial circumstances or, indeed, as to their material circumstances or position in life. In the circumstances, the court can assume that, as evidence has not been put on, they do not wish those interests advanced to be for the court to consider when deciding what should happen. Effectively, the interests of those nieces and nephews can be put to one side. It is a small estate with other claims with far greater priority. 24 The mother's real interest is to be able to obtain housing in the event that the house has to be sold. There is a dispute about whether she can live in a house that her other son presently owns. It was this son who was injured in a car accident in Macau which caused the deceased to travel to England where, unfortunately, he died. The son apparently has visited Australia recently and said to the tutor that he proposes to marry, that his fiancee is someone of some substance, and they propose to acquire some other house. This is disputed by the mother, who does not think that the son, because of his injuries, will be able to move out. She does not think the accommodation is suitable. Unfortunately, there is no evidence from that brother as to what might occur. Accordingly, it is not certain that she will be able to be re-housed within the family. However, there is certain evidence that she will be able to be re-housed publicly in some other way, although it may not be anywhere near as a convenient. 25 It is, indeed, a hard choice between putting the mother out of her house and providing for one of the two people for whom the deceased assumed responsibility when he married and decided to have a family. However, I think the mother's contribution to the property can at least be recognised in some way without compromising what I consider to be the over-riding claim of the daughter. Unfortunately, there is no way of staging the payments to the plaintiff to keep the mother in the house for a little bit longer. The tutor is slowly going backwards, and will continue to do so, without funds to take over some of the burden of raising the plaintiff. Unfortunately, it is for this reason that the house will have to be sold. This will allow a sum to be invested for the benefit of the plaintiff. 26 I have not been provided with appropriate sums and discount of tables to work out a cash flow over the years as to what is necessary. I have only been given the figures to which I referred earlier. But the fact that a sum will be able to be invested and applied partly by the use of income and part by the use of capital, will at least allow the quantum of the order to be reduced. 27 Accordingly, having regard to all these factors and the matters that appeared in the evidence in the case, the orders I make are as follows: 1. In lieu of the provision of clause 3 of the will, I order that there be a bequest of the property 6 Chiltern Road, Barton-Le-Clay, Bedfordshire to the trustee upon trust to sell the same and apply the proceeds as follows: (a) As to 80 per cent thereof for the plaintiff when she attains eighteen years of age and, in the meantime, to apply it for the maintenance, education and advancement in life of the plaintiff with power to apply both the capital and income for such purpose. (b) As to 20 per cent for Pamela Daphne Piercy. 2. Order the plaintiff's costs on a party and party basis be paid out of the estate of the deceased and to be borne by the share which she receives from the estate. 3. Order the defendant's costs on an indemnity basis to be paid out of the estate of the deceased and to be borne by the residue in the estate. 4. I order that the exhibits be returned. *********** Last Modified: 12/10/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.