Brooke v Public Trustee [2001] NSWSC 715

Reported Decision : [2001] NSWSC 715 [2001] ACL Rep 430 Nsw 14

New South Wales Supreme Court

CITATION : Brooke v Public Trustee [2001] NSWSC 715 FILE NUMBER(S) : SC 3146/99 HEARING DATE(S) : 30, 31 July 2001 JUDGMENT DATE : 22 August 2001

PARTIES : Laurel Anne Brooke (Plaintiff) Public Trustee (Defendant) JUDGMENT OF : Master McLaughlin

COUNSEL : P. Hallen SC (Plaintiff) J.R. Wilson (Defendant) SOLICITORS : L. Rundle & Co (Plaintiff) P.J. Whitehead (Defendant) CATCHWORDS : Trusts - Resulting trust - Constructive trust - Acquisition of company title home unit by deceased father of Plainitff - Purchase was in name of deceased - Deposit was paid by deceased, but stated to be a gift to the Plaintiff - Mortgage payments, outgoings, improvements, repairs were paid by Plaintiff - Statements made by deceased at time of purchase and subsequently - Family provision - Claim by adult daughter - Financial and material circumstances - Need for accommodation - Competing claims of grandchildren named in will as conditional beneficiaries as to residue. LEGISLATION CITED : Family Provision Act 1982 Wills, Probate and Administration Act 1898 Baumgartner v Baumgartner (1987) 164 CLR 137 CASES CITED : Jones v Lock (1865) 1 Ch. App. 25 Muschinski v Dodds (1985) 160 CLR 583 DECISION : See paragraph 135

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER McLAUGHLIN

Wednesday, 22 August 2001

3146/99 LAUREL ANNE BROOKE -V- PUBLIC TRUSTEE JUDGMENT

1 MASTER: These proceedings were instituted by summons filed on 12 July 1999. By that summons the Plaintiff Laurel Anne Marie Brooke claimed an order for provision for her maintenance, education and advancement in life pursuant to section 7 of the Family Provision Act 1982 out of the estate of her late father Sydney Robert White (to whom I shall refer as "the Deceased"). (It should be observed that on 6 August 1999 the Public Trustee filed a notice of appearance which, somewhat curiously, stated that he "appears and submits to the orders of the Court, save as to costs". In fact, the Defendant consistently, actively, and steadfastly resisted the claims of the Plaintiff.) 2 Subsequently, on 12 June 2001 the Plaintiff filed an amended summons. In addition to replicating the relief sought in the summons, the Plaintiff by prayer 1 of the amended summons also claimed relief in the following terms, Declaration that the Defendant holds 2,400 shares in The Rand Flats Pty Ltd, entitling the shareholder to occupation of Flat 7/29 Marine Parade, St. Kilda on trust for the Plaintiff absolutely. 3 In light of the claim for the foregoing relief by way of a declaration of trust, an order was made on 30 July 2001 by Justice Palmer, as the Duty Judge in the Equity Division, committing the hearing of the entirety of the proceedings to a Master. 4 The Deceased died on 26 June 1998, aged 72. He left a will dated 7 April 1997, probate whereof was on 28 October 1998 granted to the Public Trustee, the executor named in such will (who is the Defendant to the present proceedings). 5 By that will the Deceased purported to give his interest in the property situate at and known as 8/2 Woodford Road, North Haven to his de facto wife Constance Joan Hall, to whom he also gave his household goods and personal effects (each of those phrases being defined in the will). He gave a legacy of $2,000 to each of seven persons (each of whom was described as "my friend", although two of those persons were, in fact, grandchildren of the Deceased). The residue of his estate, after payment of estate liabilities, was given to three named grandchildren of the Deceased, upon the condition that those persons (a) survive the Deceased and (b) reach the age of twenty-five years. Although all three of those persons survived the Deceased, none has yet reached the age of twenty-five years, and one, the Deceased's grandson Joseph Campbell, is still an infant, being aged only nine years. 6 The assets of the estate as disclosed in the inventory of property consist essentially of moneys in banks or financial institutions ($98,109), shares in companies ($29,786), other monetary entitlements ($3,991), together with shares in The Rand Flats Pty Limited (which are the subject of the relief sought in prayer 1 of the amended summons). Those shares, 2,400 in number, entitle the owner thereof to exclusive occupancy of Unit 7, 29 Marine Parade, St. Kilda in the State of Victoria. (I shall refer to that home unit as "the St. Kilda unit".) At the date of the death of the Deceased it was estimated that the value of that unit (and, in consequence, of those shares) was $260,000. 7 Since the death of the Deceased six of the seven pecuniary legacies have been distributed (the remaining legatee is still an infant). The Defendant presently holds funds totalling $99,006 and shares having a value of $29,786, as well as the shares in respect to the St. Kilda unit. The Defendant is entitled to commission in respect to those assets in an amount of $8,820. In consequence, the present distributable estate of the Deceased consists of the St. Kilda unit, together with other assets having a value of $119,996. 8 It will be appreciated that in approaching the value of the estate available for distribution the costs of the present proceedings must be taken into account. In the event that she be successful in her claim (either for a declaration of trust, or for an order under the Family Provision Act, or both), the Plaintiff will be entitled to her costs out of the estate. Irrespective of the outcome of the proceedings, the Defendant will be entitled to its costs out of the estate, since the Defendant has a duty to uphold the terms of the will and to resist the claims of the Plaintiff. It is estimated that the costs of the plaintiff of the present proceedings will total somewhat in excess of $48,500, and that the costs of the Defendant will total in excess of $22,000. 9 The present value of the St. Kilda unit is $350,000. 10 I have referred to the provision of the will by which the Deceased purported to give to his de facto spouse, Mrs Hall, his interest in what had been their matrimonial home at North Haven. Since that property was held by the Deceased and Mrs Hall as joint tenants, the Deceased's interest therein passes to Mrs Hall by survivorship, and not by virtue of the provisions of his will. It is for that reason that I spoke of the Deceased as having purported to give to Mrs Hall his interest in that house property. The provision of his will by which he purported to do so has no effect. 11 It will be observed that the chief asset in the estate of the Deceased consists of the home unit which is located at St. Kilda in the State of Victoria, and the shares representing the ownership of that unit. Neither party raised any problem about this Court dealing with that asset which is located in the State of Victoria, outside the geographical jurisdiction of the Supreme Court of New South Wales. 12 Not only was the Deceased resident (and also, apparently, domiciled) in New South Wales at the time of his death, but all his assets, other than the shares relating to the St. Kilda unit, were located in New South Wales. That being so, the Supreme Court of New South Wales had jurisdiction to grant probate of the will of the Deceased, pursuant to section 40 of the Wills, Probate and Administration Act 1898. 13 The power of the Court to make an order for provision pursuant to the Family Provision Act in respect to property located outside New South Wales is implicit in section 14 of the Act (subsection 1(a) whereof provides that such an order for provision "shall...take effect as if the provision had been made - (a) where the deceased person died leaving a will - in a codicil to the will"). Such power is explicit in section 11 of the Act (subsection (1)(b) whereof provides that an order for provision out of the estate or notional estate of a deceased person may "be in respect of property which is situated in or outside New South Wales at the time of, or at any time after, the making of the order, whether or not the deceased person was, at the time of death, domiciled in New South Wales"). Further, it has not been suggested by any party that the Defendant, not only in his capacity as executor, but also in his capacity as trustee of the will of the Deceased (clause 7.00), lacks the power to deal with the totality of the assets of the estate of the Deceased, or that this Court does not have jurisdiction to grant the relief by way of declaration of trust which is sought in prayer 1 of the amended summons. In this latter regard it will appreciated that the Court in granting such relief acts in personam, and that the Defendant is within the jurisdiction of the Court. 14 In approaching the claim of the Plaintiff, both in respect to the declaration of trust and in respect to the application for an order for provision for her maintenance, education and advancement in life under the Family Provision Act, it is appropriate that I should set forth relevant facts concerning the Deceased, his various spouses (both ceremonial and de facto) and his various children, and then set forth details of the circumstances in which the St. Kilda unit was acquired. 15 The Deceased (who had been born in 1926) married his first wife, Marjorie on 23 October 1946. Of that marriage were born (on 8 November 1947) twin daughters, being Laurel (the Plaintiff) and Lynsay. The daughter Lynsay was killed in a road accident in early 1952, when she was aged only four. Subsequently another daughter, Esther, was born on 16 April 1954. 16 The Deceased had served in the Royal Australian Navy during World War II. He subsequently matriculated and attended both the University of Sydney and the University of Melbourne (graduating, at least in Commerce; it is somewhat unclear from the evidence whether he also graduated in Economics). After completing his university course (or courses) the Deceased entered the Royal Australian Air Force, apparently in the early 1950s. He was very successful in his Air Force career, achieving the rank of Air Vice-Marshal, and holding as his final appointment the position of Chief of Supply for Defence from 1975 to 1980. 17 The Deceased and Marjorie separated in 1955, and they were divorced on 21 August 1961. Both at the time of their separation and at the time of their divorce Marjorie and her two surviving daughters were residing in a residential property at Black Rock, a suburb of Melbourne. That property had originally been purchased as a seaside retreat by Marjorie's father, but had subsequently been transferred by him into the name of the Deceased, who, with the assistance of finance from a building society, had caused a dwelling house to be erected upon that property. 18 At the time of the divorce in 1961 Marjorie received custody of both her children, and it was ordered that the Deceased should pay maintenance of 3 pounds a week for Marjorie and 4 pounds a week for each child. The house at Black Rock was ordered to be transferred to Marjorie, subject to the existing mortgage thereon. 19 After his separation from Marjorie, but before their divorce, the Deceased in 1957 fathered another child, Margaret (known as Maggie), the mother of whom was Constance Joan (née Terry) (who thirty years later, as Mrs Hall, became the de facto spouse of the Deceased). However, it would appear that the Deceased and Constance did not at that time enter into a de facto relationship. 20 Indeed, in December 1961, about four months after his divorce from Marjorie, the Deceased married his second wife, Loma (with whom it would appear that he had for some time been in a relationship). 21 For several years the Deceased was living and working in the United States of America (in the position, as I understand it, of Air Attaché at the Australian Embassy in Washington). 22 In the meantime the Plaintiff had attended the Black Rock primary school, and later attended a school conducted by the Sisters of the Good Shepherd. She completed her schooling when in Year 9 (when I gather she would have been aged fifteen). In 1964 at the age of sixteen the Plaintiff married her first husband. Of that marriage were born two children, Brian John Brooke (born in 1964) and Carolyn Jane Brooke (born in 1966). Laurel and her husband separated shortly after the birth of their younger child. (I would here interpolate that Brian and Carolyn are two of the legatees named in clause 3.00 of the will, each being described in that clause as "my friend".) The Plaintiff essentially brought up her two children as a single mother, although their father paid occasional maintenance. In order to support herself and her children the Plaintiff worked in such occupations as housekeeper, bar attendant and telephonist. 23 After the Deceased returned from America and while he was living and working in Canberra, the Plaintiff, who had continued to reside in Melbourne, maintained contact with him, and from time to time visited him in Canberra. The Plaintiff formed a close friendship with the Deceased's then wife Loma. 24 The Deceased retired from the Royal Australian Air Force in 1980. 25 In that same year (it is somewhat unclear from the evidence whether it was before or after the retirement of the Deceased) the Plaintiff found that she was unable to pay the increased rent of the house in Melbourne in which she had been residing as a tenant for the preceding eight years. She had a conversation with her father in which she sought financial assistance in respect to moving into some other rented property. According to the evidence of the Plaintiff the Deceased said that he would talk the matter over with Loma and that he would then come and visit the Plaintiff. This he did, staying with the Plaintiff at her Melbourne residence for about a week. 26 The Plaintiff gave evidence concerning a conversation to the effect that the Deceased during that visit suggested that the Plaintiff should buy a house or a unit, and that, when the Plaintiff responded that she would not be able to pay even the deposit for such a purchase, the Deceased said that he would give to her the deposit. The Plaintiff and the Deceased after that conversation then visited many real estate agents together, and inspected a considerable number of flats and houses. During the course of those inspections the Deceased, according to the Plaintiff, advised her concerning problems relating to the structure of the various premises they were inspecting, such as rising damp, wiring, roofing, guttering, cracks and the like. 27 Eventually they located the home unit situate at and known as 7/29 Marine Parade, St. Kilda. That is the home unit which was ultimately purchased, and which is essentially the subject of the present proceedings. The Plaintiff has lived in that home unit (firstly with her children, and subsequently on her own) since early 1981, and remains in residence therein to the present time. 28 I shall, later in this judgment, refer in greater detail to the circumstances surrounding the purchase of the St. Kilda unit, and to the evidence concerning the various conversations said to have taken place, involving both or either of the Deceased and the Plaintiff, concerning that purchase. 29 For the present, however, suffice it to say that the purchase was effected in the name of the Deceased for a purchase price of $37,000. The deposit, together with associated expenses for legal costs and stamp duty, totalled about $15,000. That deposit was paid by the Deceased from his bank account with the Bank of New South Wales (now Westpac Banking Corporation). and the balance of the purchase price was borrowed by the Deceased from that bank, secured by mortgage. 30 The Plaintiff since the acquisition of the unit in February 1981 has made all mortgage repayments ($300 a month), and has paid all outgoings in respect to the property, as well as the cost of capital improvements, repairs and maintenance. The mortgage was discharged in 1993. The Plaintiff has also actively participated in the corporate structure of The Rand Flats Pty Limited, having been a director of that company, and having attended all annual general meetings of that company. For the foregoing purposes the Plaintiff regularly received from and exercised the proxy of the Deceased as a shareholder in that company. 31 I have already referred to the birth of a daughter Margaret (known as Maggie) to the Deceased in 1957. It was soon after Maggie's birth (on 6 November 1957) that the Deceased was transferred to America. Shortly after that transfer the Deceased appears to have entered into a relationship with Loma, who subsequently became his second wife. 32 From shortly after her birth until she was aged twenty-two, apart from two isolated instances (one when she was about three years old), Maggie had no contact with the Deceased. Maggie did not meet the Plaintiff until 1980. According to Maggie, she and the Plaintiff thereafter had a "close sisterly relationship", which continued until shortly after the death of the Deceased. On 22 July 1981 there was born to Maggie a son, James Rongen-Hall, who is one of the three persons conditionally entitled to the remainder of the estate of the Deceased. He is now twenty years of age. 33 The Deceased's second wife, Mrs Loma White, died in September 1987. Shortly thereafter the Deceased entered into cohabitation with Mrs Constance Joan Hall (who, it will be recalled, was the mother of Maggie), and they lived in a de facto relationship from then until the death of the Deceased almost eleven years later. In 1992 the Deceased and Mrs Hall removed their residence from Sydney to North Haven. 34 At about the time when the Deceased entered into his de facto relationship with Mrs Hall, he made a will dated 2 November 1987. By that will he appointed the Public Trustee for the Australian Capital Territory as executor, and, inter alia, gave his "right, title and interest" in the St. Kilda property to the Plaintiff. (The Deceased by that will gave the remainder of his estate equally between the Plaintiff, his daughter Maggie and his granddaughter Kate, the daughter of his deceased daughter Esther.) 35 I have already observed that the Deceased, by his first wife, Mrs Marjorie White, was the father of three daughters (one of whom died at the age of four). His younger surviving daughter, Esther (Mrs Gronert), died suddenly on 16 October 1989, aged thirty-five. She left a daughter, Kate (then aged twelve), who is one of the conditional residuary beneficiaries named in the will of the Deceased. 36 Maggie married her present husband, Fergus Paterson Campbell, in 1991 (they had been living together for the preceding five years). Of that marriage were born two children, Joseph (born on 1 December 1991), who is aged nine, and Eleanor Joan (born 15 February 1998), who is aged three. Maggie's son James Rongen-Hall (now aged twenty) has resided with Maggie and her husband on a full-time basis since 1994. It will be appreciated that Joseph, an infant, is the third of the three beneficiaries conditionally entitled to the residue of the estate of the Deceased. 37 The Plaintiff, as a child of the Deceased is an eligible person within paragraph (b) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such, she has the standing to bring her present claim for an order for provision under that Act. 38 The other eligible persons in relation to the Deceased are Mrs Hall, as his de facto widow (who is an eligible person within paragraph (a) of that definition); Mrs Marjorie White, the former spouse of the Deceased (who is an eligible person within paragraph (c) of that definition); Maggie Campbell, daughter of the Deceased (who is an eligible person within paragraph (b) of that definition); and Linda Anne White and Curtis White, step-children of the Deceased (being the two children of the late Mrs Loma White), who were members of the same household as the Deceased and their mother and who were partly dependent upon the Deceased (who are eligible persons within paragraph (d) of that definition). 39 It will be appreciated that none of the three conditional beneficiaries entitled to the residue of the estate is an eligible person. Although each of those beneficiaries is a grandchild of the Deceased, it would appear that none of them was wholly or partly dependent upon the Deceased. 40 Notice of Claim has been given to each of the foregoing eligible persons and to each of the three conditional beneficiaries entitled to residue, as well as to each of the specific legatees named in the will of the Deceased. No eligible person apart from the Plaintiff has made any claim against the estate of the Deceased. 41 I have had the benefit of receiving from Counsel for the respective parties a written outline of the submissions of that Counsel. Those written submissions will be retained in the Court file. 42 It will be appreciated that if the Plaintiff is successful in establishing a trust of the nature asserted in prayer 1 of the summons that fact will have a considerable bearing upon the claim by the Plaintiff for an order for provision for her maintenance out of the estate of the Deceased. For, in those circumstances, the Plaintiff will have a secure residence with a value of $350,000. 43 If, however, the Plaintiff is not successful in her claim for such a declaration of trust, she will, in consequence, have no residence, and her assertion of need, upon which her claim under the Family Provision Act is grounded, will include a need for accomodation. 44 Accordingly, the practical consequences of a decision upon the Plaintiff's first claim for relief will have a significant bearing upon the outcome of the Plaintiff's claim for an order for provision under the Family Provision Act. It is appropriate, therefore, in my view that I should firstly proceed to a consideration of the Plaintiff's claim for a declaration of trust in respect to the St. Kilda unit. 45 I have already indicated that I would, in due course, set forth in greater detail the evidence concerning the circumstances surrounding the acquisition of the St. Kilda unit by the Deceased. It is appropriate that I should do so at this point in my reasons for judgment. 46 In the case for the Plaintiff, evidence relating to those circumstances was given by the Plaintiff herself; her mother Marjorie White; Imelda May Demetrios, the vendor of the St. Kilda unit; Anton van Doornik, a director of The Rand Flats Pty Limited; Steven George Bayliss; Kevin Joseph Mulhall; Stephen Gerard Jones; Linda Anne White, stepdaughter of the Deceased (being the daughter of the late Mrs Loma White). Each of those witnesses gave evidence on affidavit, and each (except Mr Mulhall) was cross-examined. On behalf of the Defendant, evidence relevant to the acquisition of the home unit was also given by Constance Joan Hall, the de facto widow of the Deceased; and Maggie Campbell, daughter of the Deceased and Mrs Hall. Each of those witnesses gave evidence on affidavit, and each was cross-examined. In addition, affidavit evidence was given by Jacqueline Giselle Turner, manager of the Port Macquarie Office of the Defendant, who, however, was not cross-examined. 47 I have already referred to some of the evidence of the Plaintiff concerning the original discussion between herself and the Deceased relating to the possibility that the Deceased would assist her in the acquisition of a residence. 48 The evidence of the Plaintiff in her affidavit of 30 November 1999 was that, following the original request by her for financial assistance for moving costs and rental bond for another rental property and the response which I have already recorded earlier in this judgment, there was a conversation between herself and the Deceased in Melbourne, when he stayed for about a week at her home, to the following effect (paragraph 14):