Watson & 2 Ors v Watson [2002] NSWSC 919

New South Wales Supreme Court

CITATION : Watson & 2 Ors v Watson [2002] NSWSC 919 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 2657/2000 HEARING DATE(S) : 17 September 2002 JUDGMENT DATE : 4 October 2002

Michael Anthony Watson (First Plaintiff)

Suzanne Margaret Watson (Second Plaintiff) PARTIES : Peter John Watson (Third Plaintiff)

Christopher Robert Watson (Defendant) JUDGMENT OF : Acting Master Berecry

Mr L Ellison (Plaintiffs) COUNSEL : Mr M S Willmott (Defendant) Heckenberg Associates Solicitors (Plaintiffs) SOLICITORS : Eric Butler Solicitors (Defendant) CATCHWORDS : Family Provision Act - children of deceased enduring power of attorney - transfer of property - contrary to interest of donor - credit of executor - notional estate - whether defendant a disinterested executor - costs LEGISLATION CITED : Family Provisions Act 1982 - ss 7 & 22 Conveyancing Act 1991 - s 163B CASES CITED : The Margaret Mitchell 166 ER 1174 at 1199 Powell v Thompson [1991] NZLR 597 at 605 DECISION : See paras 60 and 61

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ACTING MASTER BERECRY

FRIDAY, 4 OCTOBER 2002

2657/2000 - MICHAEL ANTHONY WATSON & 2 ORS v CHRISTOPHER ROBERT WATSON JUDGMENT 1 MASTER: On 5 June 2000 the plaintiffs commenced proceedings, by way of summons, seeking an order under s 7 of the Family Provisions Act 1982 for provision to be made out of the estate of the deceased, the late John Brookman Watson, and a declaration that certain assets distributed to the defendants be declared notional estate. 2 The plaintiffs and defendant are the children of the deceased. The deceased made a will on 9 July 1993. The provisions in the will provide, inter alia, that the defendant and the plaintiff Suzanne Margaret Cordell nee Watson (Suzanne), be entitled to reside at the premises 105 Pennant Parade, Epping for so long as they desire. Upon the last of those persons vacating the premises, it was to be sold and divided equally amongst his four children, namely, the three plaintiffs and the defendant. The will also provided that the residue of the estate be divided equally between the four children. Probate of the estate was granted on 6 August 2001, the deceased having died 27 November 1999. The inventory of property discloses that the only assets in the estate were funds in a bank account in the sum of $44,500.00. And therefore under the terms of the will out of the residue each of the beneficiaries would receive approximately $11,000.00. 3 The deceased wife predeceased him in 1993. In that year the deceased moved into a nursing home and he remained there until he died in 1999. There is evidence given by the parties that the deceased developed dementia during the period of his stay in the nursing home. During the period 1993 to 1996 Suzanne and the defendant continued to reside in the family home at Epping. In 1996 Suzanne moved out of the family home and commenced to reside with her then boyfriend who subsequently became her husband. There is conflicting evidence concerning the reason why she vacated the premises. She asserts that there was a breakdown in the relationship between herself and the defendant. The defendant asserts that her boyfriend had been residing for sometime in the property and not making any contributions, he spoke with his sister suggesting that the boyfriend should make some contribution if he was to remain living there. Shortly thereafter both the boyfriend and the sister vacated the premises. 4 On 4 July 1993, the deceased granted an enduring power of attorney to the defendant, and subsequently on 20 July 1993 he moved to the nursing home. Subsequently in April 1996 the defendant using the power of attorney, transferred $55,000.00 from the testator's account into his own account. On 9 October 1997 the defendant, using the power of attorney, transferred the deceased's property to himself in consideration of $1.00. The plaintiffs have filed in these proceedings a statement of claim seeking declarations that the sum of $55,000.00 together with the Epping property are held on trust for the estate of the deceased. It is alleged in the statement of claim that the transfer of funds and the property where not to the benefit of the deceased. In his defence the defendant admits that he withdrew money from the deceased's account but denies in the amount and that they were monies belonging to the deceased. He also asserts in his defence that the conveyance was effected with the consent of the deceased and with his full knowledge and approval. The defendant also asserts that the deceased obtained a benefit by the transfer namely, an entitlement to retain his full pension rights. 5 As children of the deceased, each of the parties are natural objects testamentary recognition. It is clear from the terms of the will that the deceased intended that ultimately his estate would be divided equally between the four children. 6 It is necessary to consider the position of each of the children to determine if provision has been made for them during the deceased's lifetime and whether or not that provision was adequate, and if not, ought there be further provision made for them. Michael Anthony Watson 7 Michael Anthony Watson (Michael) was born on 28 April 1958. He lived in the family home until 1983, but seems that his years with the family were unremarkable in that the family appeared to be a normal loving and caring unit. There is no evidence of any major conflict between Michael, his parents or his siblings. In the early 1980's Michael lent his parents $4,000.00 to assist them in meeting their financial commitments. His evidence is that he would attend the family home on weekends and mow the lawn and assist with the general upkeep and maintenance of the yard and house. There is evidence that from time to time he assisted with painting the house and other household chores and tasks. The deceased has lost an arm in a motor vehicle accident and had difficulty in performing many tasks around the home. Michael's evidence is that he assisted his father whenever he could. 8 Michael left school in 1974 and commenced working with the Rural Bank of New South Wales as a junior bank officer. He remained with the bank until February 2001. 9 In 1989 he commenced a relationship with Françoise Kumbley. This relationship continued until 1998 when they started living together, I assume in a defacto relationship. However, this relationship ended in March 2001. Since that time he has been living alone. Michael owns a unit at Harris Park. The unit has a mortgage to the Colonial State Bank, his former employer. On 9 February 2001 he was made redundant due to the merger of the Colonial State Bank and the Commonwealth Bank. Between February and the end of August 2001 he was unemployed. Between 27 August and 9 October 2001 he was employed by MBF at Castle Hill. Subsequently until 25 November 2001 he was once again unemployed. He ceased employment with AMP on 22 February 2002 and was unemployed until 1 July 2002. From that date he has been employed as a loan support officer with the Commonwealth Bank, the position is a temporary position, he annual income is currently $34,580.00 per annum. 10 Michael's assets consist of the following: 2 Bedroom unit $180,000.00-$190,000.00 Car–Hyundai Lantra 1998 $ 16,000.00 Superannuation (as at 27 August 2002) $130,000.00 Shares – CBA (439 shares at $13) $13,000.00 Money in Bank account $ 5,400.00