New South Wales Supreme Court CITATION : Towers v Towers [2004] NSWSC 1231 HEARING DATE(S) : 13, 14 December 2004 JUDGMENT DATE : 17 December 2004 JURISDICTION: Equity Division JUDGMENT OF : Master Macready at 1 DECISION : Paragraph 50 CATCHWORDS : Family Provision. Application by two sons where the deceased left estate to her daughter. Legacies ordered. No matter of principle. PARTIES : Robert Towers v Janese Ann Towers Gregory Connell Towers v Janese Ann Towers (Estate of Norma Anne Towers) FILE NUMBER(S) : SC 2436 of 2004; 5323 of 2003 Mr B.M. Antcliffe for Robert Towers COUNSEL : Mr J. Anderson for Gregory Towers Mr G. George for defendant Austin & Giugni for Robert Towers SOLICITORS : Jackson Smith for Gregory Towers Chris Peacock & Co for defendant - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Master Macready Friday 17 December 2004 5323/03 Gregory Connel Towers v Janese Ann Towers 2436/04 Robert Towers v Janese Ann Towers (Estate of late Norma Anne Towers) JUDGMENT 1 Master: This is an application under the Family Provision Act 1982 (NSW) in respect of the estate of the late Norma Anne Towers who died on 21 November 2002 aged 78 years. The parties to these proceedings are her three children. Her husband predeceased her. The will of the deceased 2 The deceased made her last will on 19 July 2002 in which she appointed her daughter, the defendant in both these proceedings as executrix of her will and left the whole of her estate to her daughter. Apparently the deceased thought that her sons each owned a house and had good jobs. As her daughter did not have a house she wished to leave her house to her. An earlier will provided that the estate was to be divided equally between her three children. Assets in the estate 3 Apart from some furniture worth $2,000.00 the only asset in the estate was the deceased's home at 602 Mowbray Road, Lane Cove. That has been transferred to the defendant and it is agreed that it now has a value of $680,000.00. 4 The defendant's costs amount to $47,000.00. The plaintiff Gregory's costs amount to $56,150.00 and those of Robert are $24,000.00. The defendant has already paid $30,000.00 of her costs. Family history 5 The parties' father, Kenneth Towers was born on 12 December 1924. The deceased was born on 3 January 1925. Their son Robert was born on 17 September 1948, Gregory on 10 January 1950 and their daughter, Janese, on 23 January 1952. 6 In 1954 Mr and Mrs Towers (senior) moved into a Housing Commission house at 602 Mowbray Road, Lane Cove that they later purchased. 7 The plaintiff Gregory married Kerrie Coleman on 26 September 1970 and his son Darren was born on 11 March 1971. His daughter Karen-Lee Towers was born on 11 May 1973. 8 The defendant left school in 1966 and married Trevor Sherwood in November 1972. After that marriage ended in 1974, she travelled to England where she stayed until 1976. She returned to Australia at her father's request after he was diagnosed with lung cancer. The parties' father died in 1978. 9 On 9 June 1980 the defendant's son Brett was born. Between 1980 and 1985 Gregory lived at home with the deceased and the defendant 10 In May 1980 Robert Towers married his wife and purchased a home at Telopea and moved to live there. 11 It was also in 1980 that Gregory's wife Kerry died. Shortly thereafter, the deceased had a heart attack and was cared for by the defendant. 12 In 1981 the defendant began using heroin and this led to her treatment at Odyssey house between 1983 and 1985. At the end of that time she commenced a relationship with Mark Trass who she met during that period. In 1989 Mark Trass developed Hodgkin's lymphoma and in 1992 he had his leg amputated. In that year the defendant, Mark Trass and the defendant's son Brett moved back to live in the deceased's house. They remained there until 1994 when they moved to Beecroft. 13 In 1998 Mark Trass died from Hodgkin's lymphoma. There is a dispute as to what happened with some of the funds from his estate with the defendant suggesting that the plaintiff Robert took some of the funds. After the death of Mark Trass, the defendant and her son Brett returned to live in the deceased's house. Brett left home shortly after the deceased's death and moved into a flat. The defendant still remains living in that house. 14 In 1981 the plaintiff Robert purchased a hardware store at Granville and was occupied with that businesses for some time. His son, Christopher, was born on the 14 August 1983 and his daughter Rebecca was born on 5 October 1986. Shortly thereafter, the plaintiff Robert and his wife purchased a further hardware store at Rydalmere. They had two further children, a son Luke who was born on 4 April 1988 and a son Joshua who was born on 12 January 1990. 15 In 1999 due to a downturn in the hardware business the plaintiff Robert closed the two stores and commenced work in an employed position as a store manager. In 2001 the plaintiff Robert and his wife sold their house for $370,000.00 and purchased a new house at Pennant Hills. 16 In 1985 the plaintiff Gregory and his partner moved into the deceased's house. They remained there until 1988 when they purchased a house and moved out from the deceased's home. Their relationship finished in 1995 and the plaintiff Gregory returned to live in the deceased's house. In that year the plaintiff Gregory suffered an injury to his lower back, which has caused him considerable problems. In 1998 he had a further work injury when he fell about five metres. He suffered broken vertebrae and was later found to be suffering from a broken neck. 17 On 19 September 1998 the plaintiff Gregory married his wife Diana Fiel. She and her son moved into the deceased's house. In 1999 the plaintiff Gregory had a motor vehicle accident, which led to him being treated for depression. Eventually in March 2003 he received $143,000.00 as compensation for injuries suffered as a result of the accident. 18 As already stated, the deceased made her will on 19 July 2002 and the deceased died on 21 November 2002. The summons in the plaintiff Gregory's matter was filed on 5 October 2003 and on 21 November 2003 the house was transmitted to the defendant. The summons was filed in Robert's matter on 16 April 2004 and accordingly both proceedings have been commenced within time. Eligibility 19 Both plaintiffs are clearly eligible persons. In the matter of Singer v Berghouse (1994) 181 CLR 201 the High Court has set out the two stage approach that a Court must take in dealing with applications under the Family Provision Act. At page 209 it said the following:- "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." The situation in life of Gregory Towers 20 Gregory is 54 years of age, married, and has a step child who is dependant upon him. He works as a bricklayer on a restricted basis due to his injuries and earns about $600.00 per week. His wife is a consultant who has an irregular income. In the year ended 30 June 2003 she earned a sum of $37,513.12 before tax. However that income does not seem to reflect what happened recently with respect to his wife's earnings. She has had no work since October 2003 and work that she was expecting in January has now been cancelled. 21 Their expenses total on a monthly basis $5,117.00. Taking an average of his wife's figures for the year ended 2003 and his current earnings produces a monthly income of $5,676.00 giving a surplus of $559.00 per month. As I have said this is not the complete story and it is apparent that they have been using capital to survive. Between February 2004 and the time of the hearing their mortgage debt has increased from $247,000.00 up to $286,000.00. The upper limited of that mortgage is $290,000.00. 22 The assets which they own are as follows: (a) Home at Castle Hill estimated at $700,000.00 (b) Ford car $25,000.00 (c) Jeep car $23,000.00 (d) Home contents $80,000.00 (e) Plaintiff's superannuation $14,084.00 (f) Plaintiff's wife superannuation $15,000.00 23 They have a loan of $280,000.00 and credit card debts of $19,000.00. There is also an outstanding liability for hire purchase of his motor vehicle in the sum of $35,000.00. 24 It is apparent from the chronology that for substantial periods of time the plaintiff has been living with the deceased either by himself or with his partners. He gave evidence of having carried out a number of repairs at his own expense. The figure he identified as having spent on the property was $14,620.00. Although there may be some truth in the suggestion that some of these repairs were done in order to enhance his standing with his proposed wife it still does not detract from the fact that these repairs and improvements to the property were carried out by the plaintiff. 25 The criticisms of Gregory's relationship with the deceased related to the following matters: (a) Moving his de-facto partner into the deceased's house without his mothers consent. (b) Banishing his mother to her bedroom when he had visitors. (c) Breaking his mother's toe in a fight with the deceased husband in 1969. (d) Moving his wife and her daughter into the deceased's house without his mother's consent. (e) The treatment by Gregory of his dying wife, and (f) The lack of contact in the last 2 years before his mother's death. 26 It is clear on the evidence that on two occasions the plaintiff Gregory moved his partner into the house without seeking his mother's approval. Although the deceased complained at the time there does not seem to be any friction caused and it should be noted that the plaintiff says that he paid rent of $100.00 per week. Gregory's wife whom I accept on this aspect corroborated the payments in recent times. He also paid for food at the time he was staying there. It seems that his mother accepted the situation after some initial complaints. 27 The occasion in 1969 only involved his mother peripherally had has been put in the past by the family. There is evidence which I accept from a friend of the deceased of a time Gregory was entertaining at the house when his mother stayed in her bedroom at Gregory's request. Although friends probably felt quite rightly that this was inappropriate it does not seem to have caused friction between the deceased and the plaintiff. There is not enough evidence to suggest that there was some treatment by Gregory of his mother which should warrant the Court's disapproval. 28 Gregory, like his brother, was not living at home in the last few years before his mother died. Although he may have missed some important occasions I am satisfied that he kept in contact with his mother. Consideration of the whole of the evidence certainly provides some support for the suggestion that Gregory was a difficult child and there were many arguments between him and his father. However the evidence is not such as to deprive him from making a claim on the deceased's estate. The situation in life of Robert Towers 29 Robert is 56 years of age and married. He has children three of whom are still dependent upon him. His daughter has just completed HSC and he has two other children aged 14 and 16 years who are still at school. His asset situation and that of his wife are as follows: Assets: House at 2 Greenhaven Drive, Pennant Hills (owned jointly with Mrs Towers) $825,000.00 Balance of refinance $14,000.00 Westpac cheque account $1,334.00 Value of share in Granville Hardware Pty Ltd $265.00 Superannuation $19,068.00 Superannuation – wife $36,000.00 Motor vehicles $31,800.00 Total: $927,467.00 less Liabilities: Citibank line of credit $6,768.00 CBA Bankcard $4,107.00 Mortgage $538,656.00 Unpaid bills $14,517.00 Total: $564,048.00 Net assets : $363,419.00 30 Their income and expenditure on a weekly basis is: Income: Robert Towers $1,346.00 Janeen Towers $1,230.00 Total: $2,576.00 less: Expenditure: Income tax - Robert Towers $302.00 Income tax - Janeen Towers Towers $331.00 Insurance $61.00 Car expenses $220.00 Loan repayments $1,000.00 School fees $192.00 Food $300.00 House repairs $30.00 Health insurance $65.00 Telephone $70.00 Children's expenses $90.00 Council rates $25.00 Water rates $10.00 Electricity $45.00 Clothing $90.00 Total: $2,831.00 Net: ($255.00) 31 These figures illustrate the obvious fact that the plaintiff Robert is too highly geared. No doubt that relates to the expenses of bringing up his family and his desire to have a suitable home for his family. 32 Much time and effort in this case was wasted upon a dispute which has arisen between Robert and his sister over funds which he received from his sister when he was in financial difficulties. It is clear now on the evidence that initially she willingly provided a sum of $6,058.90 to assist him, being out of the funds she received from her late de facto partner's estate. Thereafter she advanced further sums until there was an amount owing of some $17,558.90. Robert has agreed to pay his sister $25,000.00 to cover interest over the years and is quite prepared to set off this amount against any legacy which the Court might award him in this case. Whether or not his sister wrongly alleged that he had taken the money without consent is not relevant to the matters which I have to determine in this matter. 33 The only criticism of the relationship between the deceased and Robert was that he did not see much of his mother in the last two years of her life. He gave evidence that he did have contact by phone on a regular basis and visited her but not as regularly as before. He said this was because of the hostility between him and his sister. In my view this does not detract from his claim. 34 It is also necessary to consider the situation in life of any other person having a claim on the testator's bounty. In this case the only person is the defendant. The situation in life of Janese Towers 35 The defendant Janese is single with no dependants. Her son is overseas on a trip for 12 months. Before leaving he had moved out from home into a flat. It seems that he now making his own way in life having succeeded in his studies. Her assets and liabilities are as follows: Assets: House at 602 Mowbray Road, Lane Cove $680,000.00 Superannuation $73,880.00 Cash in the bank $115,000.00 Total: $868,880.00 Liabilities: Mortgage $249,873.00 Credit card debts $7,500.00 Total: $257,373.00 Net assets $611,507.00 36 She has regular employment with the Commonwealth Bank of Australia although like most bank employees she is concerned about any restructuring which might put her job at risk. Her income is $2,478.00 per month and she estimates her expenses are $2,925.00 per month. This is a net deficit of $447.00. This probably illustrates that the defendant has over extended herself by taking out a mortgage on the estate property. In part this was for the purposes of making some alterations to it and to make provision for her son in a sum of approximately $25,000.00. Part of this amount was a repayment of a loan that her son made her. 37 She has also used the mortgage to pay her solicitors $30,000.00 and the other money which she has put aside in the bank was borrowed for the purpose of attempting to settle these proceedings. Unfortunately that did not occur. 38 The defendant, like her brother Gregory was a problem for her family at some stage during her life. This was during her period of addiction and recovery but fortunately she seems to have made a complete recovery. There is no doubt that for many years the defendant was a carer for her mother. In her later years the deceased became overweight and suffered from difficulties, which meant that she had to be assisted with these difficulties. Both the defendant and her son assisted in this regard. At some stages the defendant's brother, Robert, looked after the deceased but the greater burden of looking after the deceased fell on the defendant. 39 Over the period between 1998 and 2003 there were improvements to the deceased's house totalling $50,953.00. These were financed by a mortgage on the house and the defendant was the person servicing the debt by way of mortgage repayments. In this way she has contributed to the estate of the deceased. 40 There is nothing in the evidence that indicates any criticism of the relationship between the defendant and the deceased in the later stages of the deceased's life. The defendant has of course had the benefit, like one of her brothers, of accommodation provided by the deceased for herself, her partner and her son. Discussion 41 It is necessary to see how the two plaintiffs say that they have been left without adequate and proper provision for their maintenance, education and advancement in life. The submissions of the defendant were that they established no need as they had adequate income and sufficient assets to manage their affairs. 42 Both plaintiffs submitted that they needed a capital fund in order to reduce their liabilities so that they could continue their present lifestyles. The plaintiff Gregory has already received a payout in respect of his motor vehicle accident and that has gone a long way to alleviate his difficulties. However the Court must consider the matter as of the date of hearing and it is plain that there are uncertainties both with respect to his ability to continue his trade and also in respect of his wife's earning capacity. In these circumstances I think that a capital sum to enable him to reduce his liabilities would be appropriate. 43 The plaintiff Robert at present has liabilities, which impose a substantial burden on him as he is endeavouring to raise his family. He has also, in my view, has been left without adequate provision. 44 It is of course necessary to balance the plaintiffs' claims with the moral duty that the deceased had to provide for her daughter the defendant. The deceased's house is a three-bedroom house and the defendant has suggested that because of her ties to the neighbourhood she would like to remain in the house. It is a house that is too large for her and subject to her being able to accommodate her pets it would be possible for her to move to a two-bedroom unit in the area at a capital cost of between $350,000.00 and $390,000.00. Any such move would of course involve the cost of selling the home and the cost of acquisition of the new property. 45 In my view, notwithstanding the defendant's position, the positions of the plaintiffs are such that some provision should be made for them. The amount of provision which I have in mind would not prevent the defendant purchasing a unit if that was her desire. The estate has been distributed and accordingly it will be necessary for the court to designate the property as notional estate, which it can do if it is of the opinion that adequate provision has not been made to the plaintiffs. This is the case in this matter. 46 Section 27 of the Family Provision Act is in the following terms: "(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered: (a) the importance of not interfering with reasonable expectations in relation to property; (b) the substantial justice and merits involved in making or refusing to make the order; and (c) any other matter which it considers relevant in the circumstances. (2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to: (a) the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person; (b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration; (c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be; (d) whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income; and (e) any other matter which it considers relevant in the circumstances." 47 In the present case the only expectations which the defendant could have would arise out of the fact of the making of the will a few months before the death of the deceased. Clearly there would be some reliance upon the expectation up to the date of death in respect of expenditure that was incurred on the house at that time. By the date of death the amount owing on the mortgage was approximately $23,496.92. I do not accept that the plaintiffs were told about the substantive change to the deceased's will which resulted in them taking no benefit. 48 The defendant must have realised that she was liable to some challenge by her brothers and she took steps to have the property transferred to her prior to the expiration of the time in which they could bring a claim. In these circumstances although there was some reliance, it is not sufficient in the circumstances to lead me to not make an order. There are no other matters referred to in the section or otherwise which in my view should prevent the making an order designating the house as notional estate. 49 Each of the plaintiffs has slightly different problems and requirements and I think that an appropriate legacy for each of them is $85,000.00. 50 The orders I make are as follows: 1. I designate as notional estate the defendant's property at 602 Mowbray Road Lane Cove. 2. That each of the plaintiffs receives a legacy of $85,000.00. 3. The plaintiffs' costs on a party and party basis and the defendant's on an indemnity basis are to be retained or paid out of the notional estate. 4. Interest to run on the legacies at the rate provided for under the Wills, Probate and Administration Act 1898 (NSW) on and from three months from the date of these orders, and 5. Liberty to apply. ********** Last Modified: 12/17/2004 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.