New South Wales Supreme Court CITATION : Geraldine Ann Gurss v William Byron Findley and William Buys [2004] NSWSC 229 revised - 1/04/2004 HEARING DATE(S) : 15/03/04, 16/03/04, 17/03/04, 18/03/04 JUDGMENT DATE : 31 March 2004 JUDGMENT OF : Pearlman AJ DECISION : Parties to bring in, within 21 days, short minutes of order to give effect to the judgment. CATCHWORDS : Claim by de-facto wife - substantial estate - long and harmonious de-facto relationship - failure by deceased to make adequate provision for plaintiff - adequate and proper provision - principles to be applied - contribution by plaintiff to welfare of deceased and accumulation of his assets - right to reside - proper income for plaintiff - capital sum to meet extingencies of life. LEGISLATION CITED : Family Provision Act 1982 Singer v Berghouse (1994) 181 CLR 201 at 208 Bosch v Perpetual Trustee Co (1938) AC 463 at 478-479 Golosky v Golosky (Unreported Court of Appeal 5/10/93) CASES CITED : Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24 at 46 Anasson v Phillips (Unreported Young J Supreme Court 4/3/88) Hertzberg v Hertzberg [2003] NSWCA 311 at para 28 Langtry v Campbell (Unreported Powell J Supreme Court 7/3/91) Luciano v Rosenblum (Unreported Powell J 24/7/85) PARTIES : Geraldine Ann Gurss v William Byron Findley and William Buys FILE NUMBER(S) : SC 4733 / 2002 Plaintiff: Mr P Hallen SC & Mr D Charles COUNSEL : Defendant: Mr M Cashion SC & Mr J White Plaintiff: Aitken McLachlan & Thorpe SOLICITORS : Defendant: Kemp Strang IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PEARLMAN AJ Date 4733/02 Geraldine Ann GURSS v William Byron FINDLEY & Anor JUDGMENT Introduction 1 The plaintiff, Geraldine Ann Gurss, seeks an order that provision be made for her under the Family Provision Act 1982 ("the Act") out of the estate of John Lusarreta in addition to or substitution for the provision made for her in his will. Background 2 The factual background is not in dispute and is as follows. 3 John Lusarreta ("the deceased") died on 31 March 2001. He left a will dated 4 July 1989, probate of which was granted on 5 November 2001 to the defendants, William Byron Findley and William Buys. William Buys died in December 2003, and Mr Findley ("the executor" or "the defendant") is now the sole executor of the will of the deceased. 4 The will provided for the following distribution of the deceased's estate: (1) A bequest to the plaintiff during her lifetime of the income from money or other assets having the value of $1,000,000, and on her death such money or other assets to fall into the residue of the estate; (2) A pecuniary legacy in the sum of $200,000 to Mr Buys; and (3) A bequest of the residue of the estate in equal shares between John Iturriria and Julie Iturirria, who are respectively the nephew and niece of the deceased. 5 The deceased had been a successful cotton farmer. He had significant assets both in Australia and in the United States of America, and on his death he left a large and valuable estate. I shall return to consider his assets in more detail, but it is sufficient merely to note at this point that the executor estimated the total net value of the estate as at 15 March 2004 as approximately $39 million. (Throughout this judgment, references to dollar figures are references to Australian dollars, unless the dollar figure is specifically denoted as United States dollars by use of the formula "$US"). 6 The plaintiff and the deceased, who were both born in the USA, first met in that country in about 1966. They lived together (with the plaintiff's two sons from a previous marriage) at Wee Waa (in north western New South Wales) from June 1970 until February 1971, when the plaintiff returned to the USA. 7 In 1978, the deceased married Susan Margaret Hinton. There are no children of that marriage. The marriage did not last - they separated in about 1985, and were ultimately divorced. 8 In September 1985, the plaintiff returned to Australia, and commenced to live in a de facto relationship with the deceased. Apart from a short period when the plaintiff returned to the USA to obtain a permanent residency visa, that de facto relationship continued until the death of the deceased, that is, for a period of about 16 years. There are no children from that relationship. 9 Similarly to the factual background, so, too, there is no dispute about the law and principles to be applied by the Court in approaching its task. 10 First, it is common ground that the statutory requirements for the making of the plaintiff's claim have been met, that is: · The plaintiff is an "eligible person" as defined in s 6(1)(a)(ii) of the Act, she being a person with whom the deceased was living in a domestic relationship (that is, a de facto relationship) at the time of his death; · The proceedings were commenced within the time prescribed by the Act; and · The only other persons who are, or may be, eligible persons under the Act (that is, Susan Margaret Dance, the former wife of the deceased, and Jack Raymond Gurss and Edward Franklin Gurss, the adult children of the plaintiff) have each been given notice of the proceedings as required by the Supreme Court Rules, but none of them has made any application and their interests may be disregarded (s 20(1) and s 20(2) (a)). 11 Secondly, ss 7 and 9 of the Act require the Court to carry out a two stage process involving, in the first place, a determination of whether the plaintiff has been left without adequate provision for her proper maintenance, education and advancement in life, and, if she has, involving, in the second place, a determination of what provision ought to be made out of the estate of the deceased for her (Singer v Berghouse (1994) 181 CLR 201 at 208). 12 In this connection, the defendant conceded that the plaintiff has been left without adequate provision for her proper maintenance, education and advancement in life and offered no evidence to the contrary. The executor has established the fund of $1,000,000 contemplated by the will and the plaintiff has been receiving the interest derived from that fund, which, for the period from June 2002 to February 2004, amounted to approximately $89,000. Taking into account the size of the estate of the deceased, the nature of the provision for the plaintiff that the deceased made in his will (a life interest in the income from $1,000,000) and the amount of income likely to be derived from it (of which $89,000 may be taken as an indication), as well as the stance taken by the defendant on this point, there is an ample basis for the Court to find, and I do so find, that the provision made by the deceased for the plaintiff is inadequate for her proper maintenance, education and advancement in life. 13 That being so, the only issue for the Court's determination is what provision ought to be made out of the estate of the deceased for the plaintiff, and the case was focussed almost exclusively on that issue. 14 There was no real dispute about the principles guiding the Court's approach to this task. The relevant principles may be outlined as follows: (1) Section 7 of the Act empowers the Court to order such provision for the plaintiff as, in the opinion of the Court, ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the plaintiff. (2) Section 9(3) of the Act provides that the Court may take into consideration any contribution made by the plaintiff, whether of a financial nature or not, to the acquisition, conservation or improvement of the property of the deceased, to the welfare of the deceased (including contribution as a homemaker), the character and conduct of the plaintiff before and after the deceased death, the circumstances existing before and after the deceased's death and any matter which the Court considers relevant in the circumstances. (3) The Court must place itself in the position of the deceased and consider what he had ought to have done in all of the circumstances of the case, treating the deceased as a wise and just husband ( Bosch v Perpetual Trustee Co (1938) AC 463 at 478-479). (4) The Court's consideration should include the nature and quality of the relationship between the deceased and the plaintiff; the character and conduct of the plaintiff; the present and reasonably anticipated future needs of the plaintiff; the size and nature of the estate and any contribution of the plainitiff to the property or to the welfare of the deceased ( Golosky v Golosky, Court of Appeal, 5 October 1993 (unreported). (5) The Court should not unduly interfere with the deceased's will. It must limit disturbance of the will to that which is necessary to achieve the purposes of the Act, and not more ( Golosky v Golosky ). It is not the task of the Court to rewrite the will upon some notion of what is fair and not fair between the competing claims on the deceased's estate. Rather the focus is on adequate and proper provision for the plaintiff in the circumstances of the case. (6) The Court must consider not only what is "adequate" but also what is "proper" and they are different concepts. What may be adequate may not, in all the circumstances of the case, be proper ( Bosch v Perpetual Trustee Co at 476). The Court should be guided by " consideration of the provision which, in accordance with prevailing community standards of what is right and appropriate and, in the circumstances mentioned in the Family Provision Act and then obtaining, ought to be made" (per Sheller JA in Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24 at 46). (7) Where the estate is large, the contest between claimants and claimants is much reduced or eliminated ( Anasson v Phillips, Young J Supreme Court, 4 March 1988 (unreported)) and it is open to the Court to take a liberal view of what is adequate and what is proper within section 9 of the Act ( Hertzberg v Hertzberg [2003] NSWCA 311 at para 28). The assets of the deceased 15 The most significant assets of the deceased were six farms in north western New South Wales held by the deceased in his own name or through companies that he controlled. These farms were used substantially to produce cotton. In his own name, the deceased held the farms known as "Lochinvar", "Willewa South" and "Geera". John Lusarreta Farms Pty Ltd owned the farms known as "White Acres" and "Coolabah". Sunup Pty Ltd owned the farm known as "Sunup East". 16 The executor estimated the value of these farms as at 15 March 2004 as follows: Lochinvar and Willewa South $12,680,000 Sunup East $1,720,000 Geera $5,800,000 White Acres $5,300,000 Coolabah $1,300,000 17 The deceased also held some real estate in the USA, most of which has been sold and some of the proceeds applied in meeting tax and other liabilities in that country. However, significantly for the purpose of these proceedings, the deceased and the plaintiff jointly owned a dwelling in Bakersfield, California ("the Bakersfield property"). The executor estimated its value as at 15 March 2004 as $US350,000. 18 As I have pointed out, John Lusarreta Farms Pty Ltd held White Acres and Coolabah. The deceased beneficially held the two issued shares in that company and the executor now holds the shares as part of the estate of the deceased. The executor has estimated the net value of the assets of that company as at 15 March 2004 as totalling approximately $16,280,847 by taking into account the following estimates of the value of the company's assets and liabilities: White Acres and Coolabah (less 2% for selling costs) $4,753,392 Cash and deposits $9,309,001 Loans to the estate of the deceased $2,041,810 Other assets (comprising loans, shares, plant and machinery) $2,744,679 Liabilities $2,568,035 19 Another significant asset in which the deceased held the beneficial interest at the date of his death was water authority no 90SA011590 over White Acres. The executor estimated the value of that water authority at 15 March 2004 as $3,499,200. In cross-examination, Michael Grose, the estate's accountant, acknowledged that the value of White Acres takes into account the value of that water authority. 20 The remaining assets of the deceased were not significant in value. They comprised some shares in and loans to various companies, a number of Australian gold coins, cash, and household, equipment and personal effects. The deceased had some liabilities in Australia and in the USA, but these also were not significant in value. Dealings with the estate 21 The evidence of the executor disclosed that the following distributions from the estate have been made: (1) As I have noted above, in fulfilment of the provisions of the will, in March 2002 an amount of $1,000,000 was set aside in an interest bearing deposit at the Wee Waa branch of the ANZ Bank with the plaintiff as beneficiary. Payments totalling $89,022.22 have been paid out of this deposit to the plaintiff; (2) The legacy of $200,000 was paid to William Buys; (3) A payment of $570,000 was made to each of John Iturriria and Julie Iturriria, totalling $1,140,000. (4) The Australian $200 gold coins were distributed amongst various persons, including one to the plaintiff; (5) Payments of $US10,000 and $23,819.48 were made to the plaintiff to cover her expenses prior to the establishment of the interest bearing deposit referred to above. In addition, various assets have been collected and converted into cash, and various liabilities have been paid or reduced. The plaintiff's assets 22 The plaintiff, in her affidavits of 28 August 2003 and 4 March 2004, disclosed her assets (in round figures) as follows: Esanda debenture $1,000,000 Superannuation $ 419,046 ANZ Bank savings account $ 386,345 ANZ Bank cheque account $ 8,051 Mission Bank (USA) account $US114,577 Mission Bank checking account $US31,408 Half interest in Bakersfield property $US 125,000 Furniture in Australia $ 30,000 Furniture and antiques in USA $US 50,000 Two motor vehicles in USA $US 6750 This results in total assets in Australia of $1,843,442 and in the USA of $US 327,735. 23 Three matters about these assets must be noted. First, the only real estate owned by the plaintiff is her half interest in the Bakersfield property. The executor has estimated its value as $US350,000, and, on that basis, the plaintiff's interest is US$175,000 and not $US125,000 as she disclosed. 24 Secondly, included in the plaintiff's assets are sums received or due to be received from the John Lusarreta Farms Pty Ltd Superannuation Scheme. A death benefit of $1,440,708 is substantially represented by the amount of the Esanda debenture and the credit in the ANZ savings account. Initially, there was an issue between the parties as to whether and to what extent this payment may attract the imposition of tax in the USA, but ultimately the parties agreed that the defendant would, out of the estate, indemnify the plaintiff for any such tax, at least for a limited period. The Plaintiff is also entitled to a further sum of $419,046 representing her member's benefit in that scheme. 25 Thirdly, the plaintiff noted a current liability of $4584. To this must be added her liability, if any, for the costs of these proceedings. Her solicitor, Andrew Aitken, estimated those costs, on a solicitor/client basis, as being approximately $338,000. The relationship of the plaintiff and the deceased 26 The plaintiff and the deceased lived continuously in a de facto relationship for some 16 years. During that time, they resided together in Australia principally at White Acres but also at Coolabah, and they spent some months of each year together in the USA. 27 The plaintiff gave evidence of the relationship between herself and the deceased, and of her contribution, in a non-financial way, to the deceased's business, property and other assets. The evidence of 33 witnesses – friends and business acquaintances of both the plaintiff and the deceased – corroborated the plaintiff's evidence. Except in two respects, which I deal with later, that evidence was not challenged, and none of these witnesses was required for cross-examination. 28 That evidence reveals the following. The deceased and the plaintiff lived together in a relationship of husband and wife. She kept house, and took care of meals, laundry, gardening, entertaining and the like. She oversaw the deceased's diet – he was diabetic – and she helped him with his dyslexia. She was responsible for renovations, refurbishing and decorating of the home at White Acres and also at Coolabah. She worked with him in the design, construction and furnishing of the Bakersfield property. They travelled together between Australia and the USA, and they went on holidays together in the USA, Australia, Canada, Alaska and Mexico. Furthermore, the plaintiff had an involvement in the deceased's businesses. She accompanied him from time to time on business trips and with him attended business meetings with accountants, share farmers, consultants and others. She was a director and secretary of John Lusarreta Farms Pty Ltd from 1993 until 2002 and received a salary of about $30,000 per annum. She managed the financial and other records of the deceased businesses, wrote cheques and attended to mail and other enquiries. 29 Some of the deponents (Sharon Bayne, Thomas Brayshaw, Scott Buys, Yvonne Cole, John Crump, Kenneth Hersh, Olive Maxwell, Gladys Parish, Robert Parish, George Parish, Betty Parish, Tommie Joe Rogers, James Stockton, and Gerda Vogel) testified as to comments made to them by the deceased about his relationship with the plaintiff. They deposed to statements made by the deceased regarding his love for the plaintiff and his reliance on her as a support and backbone in his work and his life. Some of the deponents noted that the relationship of the couple was volatile and argumentative occasionally and for short periods, but that they appeared happy together and, in the words of one of the deponents, John Crump, they "…were partners in everything, as far as I knew". 30 The defendant's evidence challenged this evidence of the plaintiff in two respects. First, the defendant adduced evidence from three business associates of the deceased, Trevor Hawkins, Berne Evans and Dana Hair and from John Baker and his wife Diane Baker, the last two having been employed by John Lusarreta Farms Pty Ltd. These deponents each testified that they had dealt with the deceased on many occasions and the plaintiff had not been present. Whilst the plaintiff may not have been present at each business meeting of the deceased, the preponderance of the evidence is that she was involved in the deceased's business enterprises. I consider therefore that the evidence of these witnesses does not seriously challenge the evidence of those friends and associates which I have outlined above. 31 Secondly, both of the residuary beneficiaries gave evidence. I am not, however, prepared to accept the evidence of the residuary beneficiaries where it conflicts with the plaintiff's evidence. In the case of Julie Iturirria, that is because her evidence was not impartial. In cross-examination, she characterised the plaintiff as being the deceased's "…long time girlfriend". I cannot help but think that remark was meant to be pejorative, bearing in mind the length of the relationship of the plaintiff and the deceased and bearing in mind the evidence adduced on the plaintiff's behalf. Furthermore, Ms Iturriria's attitude to one particular piece of evidence adduced by four of the plaintiff's witnesses also diminished her credit. Those four witnesses, Sharon Bayne, Yvonne Cole, Jeanette Echenique, and Frances Berrigan, gave evidence of a conversation that each had had with Ms Iturirria. In each of those conversations, Ms Iturriria is said to have voiced her opinion to the effect that the plaintiff should receive the deceased's estate because of the long joint relationship between them. In her affidavit sworn on the eve of the hearing, Ms Iturirria denied each of these conversations, and in cross-examination, she characterised the evidence of each these witnesses as being "laughable" or "ridiculous" and said that each of those witnesses were lying. Finally, however, Ms Iturriria only visited Australia once between 1990 and the death of the deceased and between 1993 and 1999, she lived out of California or in northern California. Accordingly, she did not have such prolonged or continuous opportunities to observe the plaintiff and the deceased such that her evidence would outweigh the evidence given by the plaintiff's witnesses. 32 The last comment may be made about the evidence of John Iturriria. He was more dispassionate in giving his evidence, but he did not come to Australia when the deceased was alive, and he had no lengthy contact with the deceased or the plaintiff when they were in the USA. Accordingly, his evidence cannot significantly disturb findings based on the evidence of the plaintiff's witnesses. 33 Accordingly, I find, in summary, that the plaintiff and the deceased had a long-standing generally harmonious and committed de facto relationship, in which the plaintiff contributed to the welfare of the deceased and to the enhancement and maintenance of his business, property and other assets. The competing claims 34 In the circumstances I have outlined, the plaintiff claims that the Court should order that, in substitution for the provision made for her in the deceased's will, the following should be made as adequate provision for her proper maintenance, education or advancement in life; (1) She should receive the deceased's half-interest in the Bakersfield property; (2) She should receive White Acres (and the water authority attached to it) absolutely; (3) She should receive a capital sum that would form a fund from which she would be able to derive a proper and adequate income for her life; (4) She should receive a capital sum which is proper and adequate to provide for the exigencies of life. 35 The executor concedes that the plaintiff should receive the deceased's half interest in the Bakersfield property. However, he does not agree that an adequate provision for the proper maintenance, education and advancement in life of the plaintiff requires the transfer of White Acres to her absolutely. He does not dispute that she should receive a capital sum to provide for the exigencies of life, as a "buffer" as it were, or that she should receive a capital sum to provide for an income for life, or that she should receive a capital sum to provide for her future accommodation in Australia. He strenuously contends, however, that her estimates of present and future income and the amount claimed for a contingency sum are excessive and beyond what is required, in the circumstances of the case, for an adequate provision for her proper maintenance, education and advancement in life. Furthermore, he contends that, if the Court was minded to provide for the accommodation of the plaintiff at White Acres, it should do no more than order the provision of a life estate in that portion of White Acres that includes the principal homestead and the gardens. Alternatively, if the Court was minded to order the transfer of White Acres to the plaintiff absolutely, there should be no provision made out of the estate for her future income, since the income derived from White Acres would be sufficient for her future needs. 36 I turn then to consider, first, the question of White Acres, then the question of the proper income to be provided for the plaintiff, and finally any other capital sum required as a buffer or for the provision of alternative accommodation. White Acres 37 White Acres is a cotton farming property situated near Wee Waa and it comprises (in the executor's estimation) about 643 hectares, of which about 407 hectares is available for farming. There are three houses erected upon it (including the principal homestead where the deceased and the plaintiff lived) and a large machinery shed. At the present time, the plaintiff is living in the principal homestead. 38 White Acres has been farmed for some time under share farming arrangements. An undated copy of the current share farming agreement was in evidence. It is made between John Lusarreta Farms Pty Ltd, the executors and Whiteacres Pty Ltd, a company controlled by Quentin Vogel. It is sufficient to note that it expires on 31 May 2004, and provides for all produce to be split as to 20% to John Lusarreta Farms Pty Ltd as the landowner, and as to 80% to Whiteacres Pty Ltd as the share farmer. It is also relevant to note that it contains conventional provisions requiring the sharefarmer at its own cost to prepare, sow, cultivate, irrigate and harvest the cotton crop and deliver it to the gin. The sharefarmer is to bear the cost of all seed, fertilizer, spray, fuel and like items, and to furnish all the necessary plant and equipment. The landowner is to pay for all expenses incurred in the ownership of the land, such as rates, taxes, insurance, water charges and the like. 39 Mr Vogel gave evidence that White Acres is the smallest of the six properties owned or controlled through companies by the deceased. He said that he had discussed the share farming arrangement with the plaintiff, and, if she should receive White Acres absolutely, he would like to continue to share farm that property. He said that, if he decided to leave White Acres, it would not be difficult to obtain the services of another share farmer for the property. 40 In my judgment, the plaintiff has a strong claim to White Acres. It was the "matrimonial" home and the home in which she has spent the major part of more than 19 years (taking into account that she returned to live there with the deceased in 1985). It is, on the face of it, the appropriate accommodation for her in Australia. Furthermore, she was, as I have found, a contributor in non-financial ways to the cotton enterprise conducted there, and I am in no doubt that the community would view it as right and appropriate that the plaintiff, in the position of the "widow" of a deceased wealthy cotton farmer, should continue to reside on the cotton farm and derive the benefits of its production. 41 However, as I have said, the defendant resists this conclusion. Mr Cashion SC, appearing on his behalf, put the defendant's reasons for this contention in a number of ways. First, it was said that White Acres would not simply provide residential accommodation for the plaintiff. It would instead provide her with a large and productive cotton farming enterprise. Secondly, it is inappropriate to burden her with a large operating cotton farm, taking into account her age, health and limited agricultural experience. Thirdly, it was said that the water authority attached to White Acres had value for the remainder of the properties because it provided a capacity to grow crops in times of drought to support those other properties when their productivity was adversely affected, and consequently, the transfer of White Acres would have an impact upon the financial strength of John Lusarreta Farms Pty Ltd and the estate. Fourthly, the Bakersfield property would provide the plaintiff with adequate and proper residential accommodation that she intends, in any event, to utilise for several months of each year. Finally, a life estate in the principal residence and surrounding gardens could accommodate the plaintiff's emotional attachment to White Acres. 42 I am not persuaded by these arguments. As I have said, the community's expectation, in the circumstances of this case, would to my mind regard the plaintiff as rightly and appropriately provided with the whole of White Acres absolutely. Nor do I think that there is any evidence that her personal circumstances would make it too much of a burden for her to manage. She would, no doubt, carry on the operation of the cotton farm by means of a share farming agreement, and the evidence of Mr Vogel leaves me in no doubt that either he, or some other share farmer, would readily provide share farming for White Acres. Furthermore, there is no evidence that her age, 61, would preclude her from managing the cotton farm operation. Nor was there any evidence that her health would impede her. On her own evidence, she has some health problems, but no evidence was adduced to indicate that these problems would prevent her from managing White Acres as a home and business. I think it could be said that the plaintiff does not have vast experience as a cotton farmer, but I have found that she contributed in a non-financial way to the cotton farming and other enterprises of the deceased, and there is evidence from Mr Vogel that she has a "good general knowledge of the farm". As to the possible benefit of the water licence to the other properties, I can draw no conclusion in the absence of any evidence about that benefit. Lastly, the submission that the Bakersfield property alone would constitute sufficient accommodation for the plaintiff ignores her lengthy and committed connection to Australia. 43 Moreover, I am not persuaded that the plaintiff should receive simply a life estate in the principal homestead and gardens on White Acres. Such an interest would involve the plaintiff in an ongoing relationship with the executor and his advisors, such as the estate's accountant, Mr Grose, and, to some extent with the residuary beneficiaries. But the relationship between these persons has been less than ideal. The executor said that he had not spoken to the plaintiff for "several" years, and that he had not contacted her to inquire if, after the death of the deceased, she had wanted any assistance. Neither of the residuary beneficiaries had had any contact with the plaintiff for a considerable period, and Mr Grose said that he had not spoken to the plaintiff since October/November 2003 (despite the fact that, when the deceased was alive, Mr Grose stayed overnight at White Acres once or twice in each year). But even if the apparent coldness between the relevant parties could be overcome (and the disposal of the current proceedings might help in that regard), I think it is not appropriate, in the circumstances of this case, for the residuary beneficiaries to have a potential wait of many years before a life estate comes to an end and they receive in total their interests in the estate, nor for the plaintiff to be anything other than the "mistress of her own life" : per Powell J (as he then was) in Langtry v Campbell (Powell J Supreme Court 7 March 1991, unreported). The size of the estate also supports such a conclusion – the transfer of the whole of White Acres out of the estate will not prevent each of the residuary beneficiaries receiving an interest valued at many millions of dollars. 44 I have not lost sight of the fact that White Acres is an asset of John Lusarreta Farms Pty Ltd and not of the estate. But the evidence discloses that the shares in that company were beneficially held by the deceased and they now vest in the executor. Mr Grose said that there were alternative methods of transferring White Acres from the company to the plaintiff, some methods having more tax implications than others. Mr Grose outlined one method whereby White Acres could be transferred from the company to the plaintiff which, put in simplistic terms, would involve the company lending to the estate a sum sufficient to cover the purchase price of White Acres, in turn the estate providing such a sum to the plaintiff by way of provision under the orders of this Court, and thereafter the plaintiff purchasing White Acres for that sum. The net result would be the removal of White Acres from the company's assets, the vesting of White Acres in the plaintiff, and the burden of the purchase price would lie in the estate as part of the required provision for the plaintiff under the Act. Mr Grose said there would be some tax implications but this method of vesting White Acres in the plaintiff would have the advantage of permitting the company and the estate to utilise various options so as to structure the arrangements between them in the most beneficial way. 45 In summary, then, I determine that the plaintiff should receive White Acres absolutely (including the water authority and the contents of the principal homestead) as part of the adequate and proper provision for her maintenance, education or advancement in life. 46 Furthermore, the transfer of White Acres to the plaintiff should be free of stamp duty, capital gains tax or other similar imposts. Proper income for the plaintiff 47 The plaintiff provided a table of her present outgoings and expected expenses (converting expenditure in the USA from US dollars to Australian dollars). That table was as follows: Expenses Annual Expenses Weekly Expenses Food $20,400.00 $392.00 Alcohol and Tobacco $7,200.00 $138.00 Housing expenses such as repairs and maintenance, cleaning, gardening, furnishing, appliances and insurance, pumps and road maintenance $40,300.00 $775.00 Council rates, water, electricity, telephone, mobile and internet $35,700.00 $686.00 Transport, petrol, registration, Third Party insurance, comprehensive insurance, maintenance and service and motor vehicles replacement cost $35,200.00 $676.00 Health insurance, chemist, medical, dental and optical $18,550.00 $356.00 Travel including two airfares to US and Australia, and other travel eg. Country flights (but excluding holiday travel) $17,750.00 $341.00 Clothing, footwear, haircuts, dry cleaning $16,500.00 $317.00 Entertainment, hobbies, gifts, books, magazine, papers and holidays (including travel for holidays) $32,700.00 $629.00 Total $224,300.00 $4,121.00 48 The plaintiff was extensively cross-examined in relation to this table. She said that she had done the best that she could in compiling it, but conceded that it was put together without reference to any documents, and that it overestimated the expenses rather than underestimated them. 49 The defendant claimed that the plaintiff's estimate was excessive, and that the amount required to maintain the lifestyle she had whilst living with the deceased is significantly less than that estimate. 50 In support of the defendant's claim, Mr Cashion submitted: (1) The best evidence of what is required to provide adequate income for the plaintiff is the evidence of what she actually spent. From the bank and credit card statements of the plaintiff, the defendant produced a schedule of the plaintiff's actual expenses over the period of almost three years between March 2001 and February 2004. That schedule showed a total, in round figures, of $291,562 and $US 69857; (2) Of those two amounts, significant deductions must be made for expenditure that will not be ongoing, such as the purchase of a spa and of a utility for one of the farm employees; (3) The accounting records disclose that the majority of expenses of the deceased and the plaintiff in the USA were spent on farm and other business expenditure, and such continuing expenses in the USA will no longer be incurred. The plaintiff conceded in cross examination that this was the case, and that the amount of personal expenses in the USA were insignificant; (4) The evidence of many of the plaintiff's witnesses (such as Joan Brayshaw, James Stockton, Dennis Smith, Olive Maxwell, Madalene Pauly, Robert Browning and Thomas Brayshaw) establishes that the deceased and the plaintiff did not lead an extravagant lifestyle. 51 Mr Cashion submitted that, in summary, the proper average amount of the plaintiff's living expenses should be approximately $80,000, although he acknowledged that some buffer might be appropriately provided. 52 There are two things to note. First, the total of the plaintiff's estimate, namely, $224,300, was based on an exchange rate of 50c whereas the agreed expert actuarial evidence is that an appropriate exchange rate is 66c. This brings the total to a figure of $195,000. Secondly, the plaintiff's estimate is based on receiving White Acres absolutely, and includes present and future expenditure in relation to that property. The plaintiff estimated that expenditure as $40,000 per annum. Mr Grose did not "violently disagree" with that estimate – he thought it to be in the vicinity of $35,000 to $40,000. 53 I have formed the opinion, doing the best I can, that a proper provision of an after tax income for the plaintiff in respect of both her Australian and USA future expenses of $120,000 per annum would be proper and adequate provision for the plaintiff in all of the circumstances. In forming that opinion, I have considered all of the evidence and in particular: (1) The plaintiff's estimate (at the agreed exchange rate) of $195,000; (2) The inclusion in that estimate of farm expenses of $40,000; (3) The defendant's estimate of $80,000; (4) The fact that the plaintiff and the deceased did not maintain an extravagant lifestyle whilst the deceased was alive. 54 That brings me to the next issue. The plaintiff claims that a fund should be established so as to provide her with such an income for her lifetime. She concedes, however, that such a fund must take into account any income that she will derive from White Acres, and ought therefore to cover any shortfall between the proper income the Court has determined and the White Acres income. The defendant claims, however, that the after tax income likely to be derived from White Acres will provide to the plaintiff a proper and adequate income. 55 Income from White Acres is derived from the production of both cotton and wheat on the property. Mr Vogel said that John Lusarreta Farms Pty Ltd, pursuant to its 20% share farming interest, receives approximately 400 bales of cotton per season, and that the current price for cotton was $460 per bale. That would yield a gross income of $184,000 per annum. As to wheat, Mr Vogel estimated that the yield varies from 400 tonnes to 1,100 tonnes in each season, with an average production of 500 to 600 tonnes. Mr Vogel said that the current prices for wheat range between $150 to $160 per tonne. Based on a 20% share, and adopting $160 per tonne, 400 tonnes would yield $12,800 and 1100 tonnes would yield $35,200. 56 The executor's evidence disclosed that these figures are conservative. He estimated that the gross income of White Acres from the sale of cotton alone is likely to be between $160,000 and $240,000 per annum. He stated that the company had sold all of its current crop of cotton for about $550 per bale. 57 There was no evidence contradicting any of this evidence, and accordingly, I find that, estimated conservatively, the gross income derived from White Acres from both cotton farming and wheat production is likely to be in excess of $200,000 per annum, and that the expenses incurred in such farming is likely to be in the vicinity of $40,000 per annum. 58 In his written submissions, Mr Cashion produced a table estimating the current income position from White Acres as follows: Total Total Total Gross Cotton Gross Gross Farm Farm Tax Net Income Wheat Crop Expenses Income, (Company Rate) Crop Income Income Net of Income Expenses $12,000- $196,000- $156,000 $109,200 $184,000 $35,000 $219,000 $40,000 - 30% - $179,000 $125,300 59 In the light of my findings as to the likely gross income and expenditure to be derived from White Acres (para 57), I accept this table as setting out, in graphic form, the likely after tax income to be derived from White Acres. The table, of course, assumes a company structure and a company tax rate but there is no evidence as to how and in what form the plaintiff will, if White Acres is vested in her absolutely, carry on the operations on it. Mr Hallen SC appearing for the plaintiff, submitted, for example, that the table takes no account of the tax that may be payable by the plaintiff on any dividends she might receive from any company structure. Nevertheless, the figures suggest (as Mr Cashion submitted) that the income from White Acres is likely to be sufficient to ensure that the plaintiff derives an after tax income of $120,000. 60 In Mr Hallen's written submissions, he set out a method of calculating the lump sum necessary to provide the plaintiff with the amount that the Court should determine to be the proper amount of income for the deceased to receive. Mr Cashion did not dispute this method. It would involve the expert actuaries, first, calculating the before tax income necessary to provide the plaintiff with the proper income as determined by the Court, secondly, calculating the difference between that income and the gross income from White Acres in order to determine the shortfall of income, if any, and, thirdly, if there is a shortfall, calculating the lump sum necessary to provide a fund for that income to be received by the plaintiff during her lifetime. 61 There are difficulties, which, I think, stand in the way of ordering a lump sum to provide the plaintiff with what is in effect a guarantee of any shortfall between the after tax income from White Acres and the sum of $120,000. First, the income from White Acres will no doubt fluctuate, depending upon farming conditions and cotton and wheat prices. Mr Vogel's evidence was to this effect. Thus, whilst it is possible that there may be a shortfall, there may also be a windfall, that is, the plaintiff may, in any year, derive more than $120,000 or less than that sum. However, it is not intended, nor would it be practical, for a fund to be established to cover a fluctuating lump sum. The method suggested by counsel involved the Court determining the present likely gross income from Whites Acres and for the experts to calculate the lump sum necessary to provide for that income to be received by the plaintiff. In effect, the calculations would set the base gross income figure as that determined by the Court and fluctuations would be ignored. That would guarantee that the plaintiff receives $120,000, but, on the conservatively estimated figures that I accept, she would more often than not receive more than that. Secondly, none of these considerations take into account any income that the plaintiff will derive from her own Australia and USA cash assets, which include approximately $2 million that she presently has (see para 22) and will include any lump sum payable to her by the Court to meet unforeseen contingencies. 62 I have given considerable thought to this question, that is, whether the Court should provide the plaintiff with a lump sum to ensure that she receives no less than an after tax income of $120,000 per annum. For the reasons that I have outlined I have concluded that no such provision is required. A capital sum 63 I think it is appropriate that the plaintiff be provided with a capital sum to meet any unforeseen contingencies of life (Luciano v Rosenblum, , Powell J, 24 July 1985 (unreported)). 64 There are a number of matters to be taken into account in this regard. First, the plaintiff has some funds of her own. In round figures, she has available funds in Australia and in the USA of approximately $2,000,000 (see para 22). Secondly, she has no significant liabilities except for the potential liability for the cost of these proceedings. Thirdly, the size of the deceased's estate will permit her to have a proper fund as a hedge against unforeseen contingencies without depriving each of the residuary beneficiaries of substantial benefit from the deceased's estate. Fourthly, it is appropriate, in my view, that the proper and adequate provision for the plaintiff should be ordered in substitution for the provision for her in the deceased's will. This will release the fund of $1,000,000 which the executor has already established. Fifthly, the plaintiff claims that she should not be required to repay any of the interest paid to her out of that fund if it is so released. That amount is insignificant in the whole of the circumstances, and her claim in this regard should be upheld. Similarly, her claim to be released from repayment of the two amounts paid to her by the estate (par 21) should also be upheld. 65 Taking all those matters into account, as well has having regard to the whole of the circumstances, including the length of the de facto relationship of the plaintiff and the deceased and the findings I have thus far made, I consider that an amount of $2,000,000 would be adequate and proper provision for the plaintiff as a fund to meet the contingencies of life. Conclusion 66 In summary, I have determined, for the reasons set out, that the following provision out of the deceased's estate be made for the maintenance, education and advancement in life of the plaintiff: (1) The deceased's joint interest in the Bakersfield property; (2) The whole of White Acres absolutely, including the water authority and the furnishings and other contents of the principal homestead; (3) A lump sum of $2,000,000 to cover unforseen contingencies. (4) An indemnity in respect of any stamp duty, capital gains tax or other like impost incurred in the transfer or receipt of property the subject of the Court's orders; (5) A release of any obligation of the plaintiff to repay any amounts she has received from the estate. (being interest on the fund of $1,000,000 and the amounts of US $10,000 and $23,819.48) (6) An indemnity (limited in time for a reasonable period) in respect of any tax incurred in relation to receipts by the plaintiff from the John Lusarreta Farms Pty Ltd Superannuation Scheme. 67 I have not yet received submissions as to costs, and accordingly I formally reserve the question of costs. 68 I direct the parties to bring in, within 21 days, short minutes of order to give effect to the determination I have made. Arrangements may be made with the Registry for a hearing date at which submissions as to costs may be made, and orders delivered. I grant leave to apply on 3 days' notice. ********** Last Modified: 04/01/2004 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.