Carstrom v Boesen [2004] NSWSC 1109

New South Wales Supreme Court

CITATION : Carstrom v Boesen [2004] NSWSC 1109 HEARING DATE(S) : 15/11/04 JUDGMENT DATE : 15 November 2004 JURISDICTION: Equity Division JUDGMENT OF : Young CJ in Eq DECISION : Orders made.

CATCHWORDS : SUCCESSION [320]- Family provision- Adult daughter- Claim made after distribution of estate- Distribution made early though after publication of prescribed notice- Position of executor- Whether notional estate could be used to satisfy order. LEGISLATION CITED : Family Provision Act 1982, ss 24, 27, 28 and 35 D'Albora v D'Albora [1999] NSWSC 498 CASES CITED : Guardian Trust and Executors Company of New Zealand Ltd v The Public Trustee of New Zealand [1942] AC 115 Re Simpson [1950] Ch 38 Carol Ann Carstrom (P) Shane Boesen (D1) PARTIES : The Salvation Army (D2) The Trustees of The Society of St Vincent de Paul (NSW) (D3) The Uniting Church in Australia Property Trust (NSW) (D4) The Smith Family (D5) FILE NUMBER(S) : SC 5811/03 COUNSEL : L Ellison and J Patey (P) J Wilson SC (D) Patrick Timbs & Company (P) SOLICITORS : Shane Boesen (D1) Hunt & Hunt (D2-D5)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Monday 15 November 2004

5811/03 – CARSTROM v BOESEN JUDGMENT 1 HIS HONOUR: This is an application under the Family Provision Act 1982 brought by the plaintiff who, at all material times, was treated by the deceased as his daughter. There is some doubt as to whether he was in fact her biological father, but that makes no difference to the present case. 2 The deceased died on 20 November 2002, having first made his last will and testament on 18 September 2001, probate of which was granted to the first defendant on 11 March 2003. 3 The will as admitted to probate gives the plaintiff $75,000, the deceased's biological daughter and a nephew a thousand dollars each, makes special legacies of a car and furniture to the plaintiff's son and the plaintiff and gives the rest in residue to be distributed between four well-known charities. 4 The plaintiff is now 58 years of age. She is divorced and she has two children, a son aged 27 and a daughter aged 26. The son suffers from depression; the daughter from schizophrenia. 5 The plaintiff has not worked for some time because she has to spend a considerable amount of time looking after her children. She has a valuable house at Greenwich worth about $950,000 unencumbered. She, of course, paid very much less for that house at the time of her divorce settlement, about 12 years ago. She has about $52,000 of her legacy still on hand pending the outcome of these proceedings. She reckons that she needs about $50,000 to do up her home and to buy a car. She also wants the money for a holiday and she reckons that these items will amount to about $60,000. She asks for the whole estate less what is being distributed to the legatees. 6 The material before me shows that there is $188,000 which has been distributed to the four charities by way of residue. That was distributed on 30 September 2003. If those moneys were available, then the combined costs appear to be $63,000 which would leave $125,000. 7 The executor knew that this was likely to be a contested will. He obtained probate in March 2003. He had the estate realty sold in that same month and he made a partial distribution, including the distribution to the plaintiff, on 9 April 2003. It looks like the plaintiff acknowledged receipt of her legacy on 29 April 2003. The plaintiff also asked for details of the estate which she was given on 30 March 2003. 8 There was no contact with the executor from the plaintiff or her legal representatives until the present summons was filed in November 2003. 9 The evidence shows that the plaintiff had consulted her solicitors in March or April 2003, but she only instructed them to commence proceedings shortly before the summons was filed in November 2003. 10 The four charities were given their $47,157.93 each on 30 September. The executor said that he hadn't heard anything more from the plaintiff. He had given notice in accordance with form 121 to the Supreme Court Rules by publishing a notice in the Central Coast Express Advocate of 19 March 2003. The deceased had resided in the Toukley area and that paper, within the meaning of section 78 rule 91 of the Supreme Court Rules, circulated in the area in which the deceased resided. However, it was not an area in which the plaintiff resided. 11 I would have liked to have spent some time considering the interplay of section 35 of the Family Provision Act which protects executors against claims of which they have had no notice at the time when they put an advertisement in the paper in form 121 with s 92 of the Wills Probate and Administration Act 1898, which is the basic section dealing with protection of executors against claims. 12 It is disturbing that this is the second case in two weeks I have had where complications have been caused by early distribution of estates. The Court has often said to executors that they must distribute estates early, but there does need to be considerable discretion when there is a likelihood of a claim being made under the Family Provision Act. It would seem to me to be wise practice, in circumstances such as the present, to indicate to possible claimers by letter - especially when they do not live in the area covered by the newspaper in which the ad is being placed - that they should either, within the next X days, notify that they will be making a claim or, alternatively, there will be a distribution. 13 The extra costs it causes and the possible personal liability on executors who distribute prematurely and the expectations that a distribution engenders in the recipients of a premature distribution, all should be avoided if possible. 14 I have been referred to the highly researched judgment of Master Macready D'Albora v D'Albora [1999] NSWSC 498 where some of these problems are exposed. The learned master refers inter alia to the decision of Vaisey J in Re Simpson [1950] Ch 38 at 42-43, where his Lordship makes it quite clear that executors must not allow beneficiaries to put pressure on them to distribute early when there is an impending claim under the Act. 15 The decision of the Privy Council, also referred to by the learned Master, Guardian Trust and Executors Company of New Zealand Limited v The Public Trustee of New Zealand [1942] AC 115, again throws up the danger to executors by premature distribution. 16 However, in the instant case, there was no indication given to the executor by the plaintiff that she might make a claim as one would normally expect to find. Where a plaintiff is even only toying with the possibility of a claim, it is wise to give notice to the executor as early as possible. 17 The facts are that the plaintiff had received her legacy in April, she'd been given full details of the estate in May, and had not communicated further with the executor until after the distribution at the end of September. In view of the fact that the statutory notice had indeed been published, the executor would have some justification for feeling that it was safe to make a final distribution. 18 I personally think the executor should have been a little more careful, but that is with the benefit of hindsight. 19 So then, at the moment, we are faced with a situation where there is nothing in the estate so one must look to see whether the notional estate, that is, the moneys distributed to the charities, can be resorted to to pay the order that might be made in favour of the plaintiff and orders for costs. 20 One gets to the notional estate through s 24 of the Family Provision Act 1982, but then one runs up against the barriers in ss 27 and 28. Section 27 says that "the Court shall not make an order designating property as notional estate of the deceased unless it has considered: (a) the importance of not interfering with reasonable expectations in relation to property" and various other matters. 21 Mr Ellison, who appeared for the plaintiff, says that that consideration means the Court needs to take into account the hopes of people who might, as at the date of death of the testator, have thought that they had reasonable expectations on the testator's bounty. 22 I do not know of any case that has decided the meaning of the provision in s 27, but I would agree with the submission of Mr Wilson SC, who appeared for the defendant, that one is looking, as at the date of hearing, and people with reasonable expectations include people who have benefited under the will and, a fortiori, those persons who have not only benefited under the will, but have received their benefaction. 23 These four charities have, for over a year, had this money and one might reasonably have expected that they have budgeted on the fact that they have received these moneys and are using them. 24 Mr Ellison, on the other hand, points to the fact that the charities are represented, two of them have filed short evidence, but neither of them had said that they will suffer any prejudice if they are deprived of their $47,000. So I have taken into account the considerations in s 27(1) and 27(2) including, of course, the fact that the distribution has been made and the time that has elapsed since the charities have received the money. 25 I am also satisfied, as there is no actual estate at all, that the estate of the deceased is insufficient to allow the making of the provision if any provision ought to be made. Accordingly, I can now consider what provision ought to be made. 26 The current thinking under this Act is that the Court must consider these applications in a two-stage process. First, whether the applicant has been left without appropriate provision and, secondly, if the answer to that first question is "yes", what provision should be made for her. 27 Mr Wilson submits that the plaintiff has an expensive house. She still has most of the legacy that she received a year ago. She receives some social security. She did not think that the provision that she got under the testator's will was inadequate for about six months after she cashed her cheque for her legacy. There was no evidence that she had any financial dependence upon the testator since 1975, when she got married. 28 She was living an independent life with two children and the community generally would have considered that, in making provision for her for $75,000 out of a total estate of about $300,000, the testator had done his duty. 29 I have wrestled with that submission which, I think, has a fair degree of merit, but it does seem to me that, when one looks at the plaintiff's actual position, there is no other close relative who has a claim on the testator's benefaction and that the community would have considered that she was left without proper provision. 30 So I then turn to the second question: how much further should that provision be? 31 Mr Ellison, with his usual forceful advocacy, says that the plaintiff should get the whole estate. I regret that I cannot see that the community would have thought that the testator would have gone so far, despite the fact that the plaintiff is in necessitous circumstances. She had no financial dependence on him for very many years. 32 In my view, the appropriate order is that the plaintiff receive a total legacy of $150,000, that is including the legacy she has already received. The usual order for costs should be made. I will ask counsel to draft the appropriate form of orders.