New South Wales Supreme Court CITATION : Phipps v Knott [2003] NSWSC 470 HEARING DATE(S) : 24 February 2003 JUDGMENT DATE : 30 May 2003 JURISDICTION: Equity Division JUDGMENT OF : Master McLaughlin DECISION : (1). I order that the Plaintiff receive from the estate of the late Edith Barbara Knott ("the Deceased") a legacy in the sum of $150,000, such legacy not to bear interest if paid on or before 30 August 2003, and if not so paid to bear interest at Supreme Court rates; (2). I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased; (3). I reserve to the Defendants and each of them liberty to apply within fourteen days of the date hereof for any variation of the foregoing order that the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased; (4). The exhibits may be returned. CATCHWORDS : Succession - Family Provision - Claim by adult grandson - Plaintiff resided with Deceased and became her full-time carer - Financial and material circumstances of Plaintiff - Factors warranting the making of the application - Competing claims of Defendants. LEGISLATION CITED : Family Provision Act 1982 CASES CITED : Blore v Lang (1960) 104 CLR 124 Mark Edwin Phipps (Plaintiff) PARTIES : Barbara Doreen Knott (First Defendant) Thelma Muriel Witherow (Second Defendant) FILE NUMBER(S) : SC 3928/00 COUNSEL : J.A. Trebeck (Plaintiff) P. Blackburn-Hart (Second Defendant) SOLICITORS : Herbert Weller, Solicitors (Plaintiff) McPhe Kelshaw (Second Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER McLAUGHLIN Friday, 30 May 2003 3928 of 2000 MARK PHIPPS -v- BARBARA DOREEN KNOTT JUDGMENT 1 MASTER: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 11 September 2000 the Plaintiff, Mark Edwin Phipps, claims an order for provision for his maintenance, education and advancement in life out of the estate of the late Edith Barbara Knott (to whom I shall refer as "the Deceased"). The Plaintiff is the grandson of the Deceased, his mother, Barbara Doreen Knott, being the elder daughter of the Deceased. 3 The Deceased died on 28 February 2000, aged one hundred years. The Deceased left a will dated 18 June 1959, probate whereof was on 27 June 2000, granted to Barbara Doreen Knott and Thelma Muriel Witherow, the executors named in such will (who are the Defendants to the present proceedings). 4 It is appropriate here to record that, although the Defendants filed an appearance on 27 October 2000, the First Defendant, Barbara Doreen Knott, subsequently in July 2001 obtained separate legal representation. At the commencement of the hearing on 24 February 2003 there was placed before the Court a letter from the solicitor for the First Defendant seeking to be excused from further appearance. On that occasion the First Defendant was in attendance in person, without legal representation. The First Defendant sought to be excused from formally participating in the proceedings. Counsel for the Plaintiff and Counsel for the Second Defendant did not object to that application and were content that the Second Defendant should bear the responsibility of upholding the will of the Deceased and opposing the claim of the Plaintiff, without the participation of the First Defendant. In those circumstances I excused the First Defendant from actively participating in the proceedings. 5 The estate of the Deceased consisted of one substantial asset, being a house property situate at and known as 312 Windsor Street, Richmond, which had been the residence of the Deceased for well over fifty years. That property had been acquired by the Deceased's husband in 1944, and devolved upon the Deceased upon his death in 1959. The property was valued at $800,000 in December 2002. In addition, the Deceased held about $58,300 on deposit with the National Australia Bank. However, by the time of hearing that amount had diminished to $21,543 (that diminution being apparently due, at least in part, to costs and expenses incurred in the administration of the estate). 6 In calculating the value of the distributable estate the costs of the present proceedings must be taken into account. It is estimated that the costs of the Plaintiff will total between $40,500 and $43,500, whilst those of the Defendant will total $38,500. It will be appreciated therefore that it is inevitable that the Windsor Street property must be sold, if only to meet the costs of the proceedings. If the costs associated with such sale also be deducted, it is appropriate to proceed upon the basis that the net distributable estate of the Deceased will be in the vicinity of $740,000 (or perhaps somewhat less). 7 By her will the Deceased gave the entirety of her estate to the two Defendants equally. The Deceased had been married only once, to Alfred Knott, who died in 1959. Of that marriage were born two children, being Barbara Doreen, the First Defendant (who was born on 23 June 1934 and is presently aged sixty-eight) and Wilma Muriel (Mrs Witherow), the Second Defendant (who was born on 13 January 1936 and is presently aged sixty-seven). 8 The Windsor Street property is a commodious residence, the accommodation whereof includes six bedrooms. The Deceased, who appears to have been a generous and devoted mother, mother-in-law and grandmother, frequently had her grandchildren, both as young persons and as adults, living with her, sometimes for a period of years and sometimes more than one at a time. 9 The Plaintiff (who was born on 14 January 1964 and is presently aged thirty-nine) grew up with his parents in Wollongong. He attended Dapto High School, attaining his Higher School Certificate in 1981. Whilst pursuing a Bachelor of Arts course at the University of Wollongong the Plaintiff commenced to stay intermittently with the Deceased at the Windsor Street property. There was a good relationship between the Plaintiff and his grandmother. After the Plaintiff completed his BA at the end of 1987 he commenced to reside full-time with the Deceased in May 1988. At that stage the Deceased was aged eighty-nine and had for a period been living on her own. She did not want to go into a nursing home and wished to remain living in her own residence for as long as possible. The Plaintiff did not pay any rent for residing in the Windsor Street property. 10 Thereafter the Plaintiff gave considerable personal assistance to the Deceased until the time of her death. That assistance may be divided into three periods. 11 From 1988 to 1991 the Deceased appears to have been physically active. However, after a fall in a Coles supermarket in 1991 the household assistance which the Deceased required increased. From 1991 to 1995 the Deceased's needs gradually increased, but she was well able to look after herself with assistance from the Plaintiff. From 1995 until 1999 the Deceased's physical condition declined to the extent that she required twenty-four hour care with every aspect of her daily routine. In mid-1995 the Plaintiff acquired a carer's pension, so that he could devote himself full-time to looking after his grandmother. 12 At the outset the assistance provided by the Deceased included what was described by Counsel for the Plaintiff as the ordinary categories of assistance which an able bodied adult grandson residing with his grandmother would provide. That assistance included property maintenance, driving to family outings, shopping, cooking, serving, dishwashing. It also included dealing with the Department of Veteran's Affairs (since the Deceased was in receipt of a pension as a result of her being the widow of a veteran), in order to have a Vitalcall machine provided, and to provide hand and safety rails in the house. It also encompassed taking the Deceased on visits to see her medical practitioners, dentists, podiatrist and optometrist. 13 By 1995, however, the Plaintiff was cooking three meals a day for the household, without any significant assistance from the Deceased. His responsibilities also included a level of intimate personal care (including hair washing, toenail clipping and assistance in getting in and out of bed). From 1996 the assistance was in the nature of full-time nursing, including assisting the Deceased with the commode, dealing with her incontinence, assisting with washing and dressing the Deceased and generally overseeing the Deceased's personal activities. The daily washing was eventually taken over by external nursing in 1997. A podiatrist attended the Deceased from about 1996. 14 The Plaintiff also gave considerable assistance to the Deceased concerning the maintenance and conservation of the Windsor Street property, both in a material sense and also in dealing with various governmental and local governmental authorities. For example, in 1985 the Plaintiff assisted in repelling the local Council's attempt to resume part of the backyard of the property. The Plaintiff also assisted the Deceased in having the Council rates reduced, upon the basis that the actual use of the property was lower than the highest and best use. It has been calculated on behalf of the Plaintiff that the saving in that regard totalled an amount in excess of $34,000 throughout the period from 1985 to 2000. The Plaintiff assisted the Deceased with an application to the Water Board for rate reduction and war widow rebates. In addition, the Plaintiff carried out general maintenance of the house property. 15 Throughout the period from 1995 until her death the Deceased's savings increased from $2,500 to $25,000, that increase being, so it was submitted on behalf of the Plaintiff, substantially the result of the Plaintiff's assistance in the maintenance and conservation of the Windsor Street property and of his aforementioned dealings with various governmental and local government authorities. 16 From the end of 1987, when he graduated, until 1993 the Plaintiff worked in a number of casual or part-time positions, but since 1993 he has not been in employment. He has, however, since the death of the Deceased made a number of applications for employment (including two applications for the teaching of English). The last occasion when the Plaintiff applied for any employment was in May 2002, when he applied for a tutorship in English at the Charles Sturt University. The Plaintiff stated that he does not intend to make any job applications within the period of three months from the time of the hearing in late February 2003. 17 However, the Plaintiff is in receipt of a Newstart allowance, which requires him to attend counselling. He has attended such counselling once a month since April 2002. That counselling is, according to the Plaintiff, for persons who are socially isolated and is intended to assist such persons in ultimately obtaining paid employment. It was the case for the Plaintiff that throughout the period whilst he was caring for the Deceased he became socially isolated. He stated that when his present program, including counselling, finishes he will actively seek employment, although he has not decided upon the area in which he wishes to work. 18 Since graduating from Wollongong University at the end of 1987 the Plaintiff has commenced, or completed, several other courses of tertiary or vocational education. 19 At the present time the Plaintiff has an amount of about $26,000 invested in a credit union, which provides him with an income of $15 a week. In addition he receives a Newstart allowance of $187 a week. The Plaintiff's average weekly expenditure totals about $168. He said that while he was in receipt of the carers pension from 1995 he was able to save money. That pension continued for fourteen weeks after the death of the Deceased, by way of a bereavement payment. In addition, it entitled the Plaintiff to receive a further bereavement payment in a lump sum of about $1,700. 20 The Plaintiff owns a 1968 Volkswagen motor car (to which he ascribes a value of $4,000). In March 2001 the Plaintiff sold his Honda motor car for $14,100 and purchased from his mother another Honda motor car for $15,000. His only other assts are an Aga stove, a computer and printer and personal items (to which he ascribes a total value of $5,500). In August 2001 the Plaintiff received almost $1,900 by way of interest upon a Local Court judgment for about $3,000 which he had obtained some three years earlier. 21 In November 2000 the Plaintiff received $13,216, by way of repayment of a loan which he had made to his father. 22 The Plaintiff has no liabilities. The Plaintiff is still residing in the Windsor Street property, in respect of which he has been since the date of death of the Deceased been paying some of the outgoings. 23 There has been a partial distribution of an amount of $5,000 and of a further amount of $7,500 to each of the two beneficiaries. 24 Evidence was placed before the Court concerning the financial and material circumstances of each Defendant. 25 The First Defendant, who is a retired childcare worker, is in receipt of an aged pension of $345 a fortnight. Her husband, a retired electrical fitter aged sixty-nine, is also in receipt of an aged pension of $345 a fortnight. 26 Their combined assets (which include their residence at Nelson Bay ($350,000)) have a total value of $413,500. Their expenditure on their residence and motor vehicles totals $6,180 a year. They have no liabilities, but additional expenditure (costing at least $10,000) is required on their residence. 27 The assets of the Second Defendant and her husband (which include their residence at Faulconbridge ($300,000)) have a total value of about $574,000. Their annual income, from Centrelink and from investments, dividends and interest, totals about $18,000. Their total expenditure is about $708 a week. 28 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. Those documents will be retained in the Court file. 29 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. 30 The Plaintiff asserts that he is an eligible person within paragraph (d) of the definition of that phrase contained in section 6(1) of the Family Provision Act (in that he was both a grandchild of the Deceased and also a member of the same household as the Deceased and was partly dependent upon the Deceased). The status of the Plaintiff as an eligible person within that paragraph of the definition is admitted by the First Defendant. I am satisfied that the Plaintiff is such an eligible person. Accordingly, he has the standing to bring the present proceedings. The only other eligible persons in relation to the Deceased are the two Defendants, each of whom, as a child of the Deceased, is an eligible person within paragraph (b) of the definition. 31 However, since the Plaintiff is an eligible person only within paragraph (d) of the definition, it is necessary for him, pursuant to section 9(1) of the Act, to establish that there are factors which warrant the making of his application. It was submitted that those factors are, essentially, that for a period of twelve years he resided in the same house as the Deceased, that for at least the last four years of her life he was the principal carer of the Deceased, looking after every aspect of her daily routine, and that that fact was recognised by him receiving a carer's pension in mid-1995. It was submitted that that care was undertaken at a considerable sacrifice to the Plaintiff, who has been subsequently disadvantaged. Further, that in consequence of the efforts and activities of the Plaintiff there was a substantial contribution by him to the conservation of the assets which comprise the estate of the Deceased. The Plaintiff submitted that those contributions to the personal and financial welfare of the Deceased were such as would cause him to be generally regarded as a natural object of the testamentary recognition of the Deceased. 32 I am satisfied that the Plaintiff has established that the foregoing matters constitute factors which warrant the making of the present application. 33 A very considerable quantity of evidence was placed before the Court in respect to the relationship between the Plaintiff and the Second Defendant and the relationship between the Second Defendant and the Deceased. That evidence can be of no assistance to the Court in the present application (and in this regard I would refer to the salutary admonition of Windeyer J in Blore v Lang (1960) 104 CLR 124 at 137). 34 Further, it should be emphasised that an order for provision is not made as a reward for good conduct. Neither is such an order withheld as punishment for perceived bad conduct on the part of an applicant. 35 The Second Defendant was one of the two chosen objects of the testamentary beneficence of the Deceased. As such, she does not have to prove anything. It is for the Plaintiff to establish his own claim upon its own merits. 36 I am satisfied that the Plaintiff has established an entitlement to an order for provision. Indeed, the Second Defendant did not dispute that such an order should be made. The essential question to be determined is the nature of such an order. It was submitted on behalf of the Plaintiff that, especially in the circumstances where he has modest assets and is currently unemployed, he should be awarded a substantial legacy. It was submitted on behalf of the Second Defendant that the Plaintiff had established an entitlement only to a modest legacy. The Second Defendant in that regard pointed to the fact that there was before the Court no evidence of the Plaintiff's further intentions, and thus that the Court could not assess the nature of the Plaintiff's future needs. 37 I consider that the Plaintiff, with his present tertiary qualification, and his apparent academic ability, should have little difficulty in obtaining employment. However, the Plaintiff in my conclusion is entitled to receive from the estate of the Deceased a legacy which will enable him to have a start in life, since, although now aged thirty-eight, he in fact devoted most of his life from 1988, when he was aged twenty-four, to looking after the Deceased. I do not consider that the Plaintiff has established an entitlement to receive a benefit which would enable him to purchase a residence of his own (and certainly not to acquire the Windsor Street property, which, in any event, is far too large for his present needs). 38 In all the circumstances of this case, and in the light of the competing claims of the Defendants, it seems to me appropriate that the Plaintiff should receive from the estate of the Deceased a legacy in an amount which will give him a start in life, and which, if he so desires, will go some distance to enabling him to place a deposit upon a residential property. I consider it is appropriate the Plaintiff should receive a legacy in the sum of $150,000. 39 At the outset of the hearing it was foreshadowed on behalf of the Second Defendant that there might be an argument between the Defendants as to whether or not the First Defendant is entitled to costs. I was informed that as between the First Defendant and the Second Defendant there was at that time an agreement that that issue should be reserved. 40 Accordingly, I make the following orders: (1). I order that the Plaintiff receive from the estate of the late Edith Barbara Knott ("the Deceased") a legacy in the sum of $150,000, such legacy not to bear interest if paid on or before 30 August 2003, and if not so paid to bear interest at Supreme Court rates. (2). I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased. (3). I reserve to the Defendants and each of them liberty to apply within fourteen days of the date hereof for any variation of the foregoing order that the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased. (4). The exhibits may be returned. ********** Last Modified: 07/10/2003 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.