New South Wales Supreme Court CITATION : Perry v Olliffe [2004] NSWSC 1111 HEARING DATE(S) : 16/11/04 JUDGMENT DATE : 16 November 2004 JURISDICTION: Equity Division JUDGMENT OF : Young CJ in Eq DECISION : Orders made. CATCHWORDS : SUCCESSION [320]- Family Provision- Adult daughter left with gift of income for 20 years- Inadequate- Income gifts capitalized. LEGISLATION CITED : Family Provision Act 1982, s 10 Janet Dianne Perry (P) PARTIES : Timothy Olliffe (D1) Brendan McNally (D2) FILE NUMBER(S) : SC 1827/02 COUNSEL : M S Willmott SC (P) Dr C J Birch SC (D) SOLICITORS : Lees & Givney (P) Thurlow Fisher (D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Tuesday 16 November 2004 1827/02 – PERRY v OLLIFFE JUDGMENT 1 HIS HONOUR: This is an application under the Family Provision Act 1982 made by a daughter of the late Douglas McMillan Nicol. Mr Nicol died on 6 March 2000, aged 76. He left a will dated 20 April 1999, probate of which was granted to the defendants, the executors named therein, on 28 May 2001. The will essentially provided that after a legacy of $10,000 and a gift of household chattels, the residue be split into two halves, one half to be used to pay a net income to the plaintiff for life, or 20 years from the testator's death, whichever period was the shorter, and the other one half for the testator's daughter Debra on the same terms. On the death of both daughters ten percent of the balance was to be paid to his granddaughter, Peta, being a daughter of the plaintiff, ten percent to his grandson, Adrian, being a son of the plaintiff, and the remaining eighty percent to be divided equally between the New South Wales Cancer Council and Salvation Army NSW Property Trust. The will contained a charging clause because one of the executors was the deceased's solicitor and the other his accountant. 2 The testator had two children, the plaintiff, who is currently aged 48, and her sister Debra, aged 46. There are no other persons whom the community would expect would be an object of his benefaction. 3 Debra has been sought out by the executors and she has not been forthcoming with any details, save and except that she expected that the testator's philosophy of equality would be respected. The submissions of the plaintiff do not agree with that philosophy, but, as things have turned out, it is not necessary to pursue the matter further because I believe that justice can be done to all parties by the appropriate use of s 10 of the Family Provision Act 1982. 4 The plaintiff has not had a life that could be described as "roses, roses all the way". Indeed, quite the reverse. She married a gentleman who is in the trucking industry, an industry that is notorious for hard work, little money and not as many hours at home as a man would like. 5 The plaintiff has been married to her husband for some 26 years. Because of his business she is living in a small town in Queensland, Woodford, which is approximately 78 kilometres Northwest of Brisbane between Caboolture and Kilroy. She has two children, Peta now aged 23 and Adrian now aged 21. Peta was born with a health problem and she is now grown up and married, but is still in some precarious health. The plaintiff herself is not in the best of health. Because of the location of her home and because of the health of her daughter she has not been able to obtain more than casual work. She has had since 1995 a very severe health problem of her own. 6 The plaintiff's evidence shows that she is currently, with her husband, spending more than their combined weekly income. She and her husband own their own home, which is valued at about $80,000, but there is a mortgage on it for $14,000. The plaintiff and her husband have an overdraft facility, which is almost fully drawn, and they also have a debt of $118,000 in respect of the truck they use in their business. 7 The plaintiff's affidavit shows that, so far as her capital needs are concerned, she and her husband have debts of $186,500. They say their truck is close to the end of its economic life and if it is traded in and a newer and more efficient truck purchased they will have to outlay $170,000, and that they need about $51,000 to do necessary repairs to their home and for replacement of white goods and bedding. 8 The material shows that if the plaintiff and her husband had something like $407,500 they would be able to repay their debts, and so would not have to expend moneys for mortgage payments and other interests, which seem to take at least $225 per week from their weekly budget. 9 The estate was complicated in that it was unclear at the beginning what assets belonged to the testator personally and what were in his family trust, and that took some time and money to work out. However, if would now seem that the estate, which is substantially in cash, consists of $1,334,633. Deducting the costs of this application, brings one back to $1,250,000. However, in that $1,250,000 is approximately $150,000 of income which should go one half to the plaintiff and one half to her sister, so that the capital of the estate is approximately $1.1 million. I say "approximately" because there are some outstanding costs and the solicitor/executor may apply for commission. 10 Today Mr Willmott SC appeared for the plaintiff, and Dr Birch SC appeared for the defendant. I am indebted to both of them for the clear and concise way in which they put their client's case, Dr Birch SC making it quite clear that because of lack of authority from Debra Nicol and because the charities were involved he had to insist that the case be decided according to law. 11 The application was made out of time. However, this was primarily because the plaintiff received some erroneous legal advice that she had 18 months from the grant of probate (rather than from the date of the testator's death) to make her claim. In the circumstances, it is proper to extend the time for filing the claim. 12 The reason why the testator said that he controlled the flow of benefaction through to the plaintiff was because he was not particularly confident with the ability of the plaintiff's husband, and he was also concerned that the plaintiff's health problems would mean that she would not be able to manage a large sum of money. I do not need to go into the question as to whether that was reasonable or not because it seems to me that the way the figures pan out if the plaintiff does receive a capital sum of about $400,000 the whole of that will go to the items referred to in her affidavit, and there will be nothing left to control. 13 It is also completely unclear why the testator applied the same formula to his other daughter Debra, unless it was that he kept his philosophy of equality, because, from what little evidence we have, Debra appears to be a very experienced businesswoman. 14 The way in which the testator has arranged things will mean that the plaintiff has not sufficient capital for her immediate needs. With the $76,000 of income that is flowing to her she would need another $150,000, perhaps $200,000, to put her in a position where she could cope with the daily expenses of life. 15 If one took that sort of money from her share, it would mean that she would be receiving only about $15,000 per year. From that one would have to deduct probably about $3,000 tax and $1,250 administration expenses, which would leave her with only $11,000 a year, which would not seem to be of great benefit or solve her problems. 16 Mr Willmott SC suggests that instead of taking that $200,000 from her share one should take it from the whole estate, which would mean that the plaintiff would receive something like $21,000 gross, or somewhere around about $17,500 net. That is not really that much better. 17 The gift of income is explained by the testator's fear of dissipation of capital. However such a gift in the present circumstances fails to meet the plaintiff's real needs at the moment and if, as is most likely, she survives past March 2020, she will be only 64 with no income from the estate. There is clearly inadequate provision made for her. 18 The testator really only had two people in mind as objects of his bounty, apart from the residuary beneficiaries, and that was a sensible decision. His main problem was the dissipation of his capital. It seems to me, as things have worked out, that problem has now been wholly sidestepped. 19 On the figures that I have, it would seem to me that the plaintiff should receive somewhere between $400-410,000 capital to clear all her debts. The final figures of the estate are a little unclear and on my calculation a gift to the plaintiff of 37.5 percent of the capital of the estate, after there had been a distribution of income to 30 June 2004, would be an appropriate order. 20 I should say that I have, of course, gone through the usual two-stage approach. It is clear from the evidence that the plaintiff is a person who has not been properly provided for in the will, and that it would be proper to make an order of the magnitude that I have put. 21 I think also that it would be fair under s 10 of the Family Provision Act to adjust the other beneficiaries' entitlements so that Debra should get 37.5 percent of the capital of the estate, the two grandchildren 3 percent each, and the two charities 9.5 percent each. 22 I think, having said that, I will stand the matter over for short minutes to be brought in. ****************** Last Modified: 11/29/2004 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. 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