New South Wales Supreme Court CITATION : Walker v Walker [2005] NSWSC 1024 HEARING DATE(S) : 15 and 16 August 2005 JUDGMENT DATE : 12 October 2005 JURISDICTION : Equity Division JUDGMENT OF : Associate Justice McLaughlin at 1 DECISION : (1). I order that the proceedings be dismissed. (2). I order that the Plaintiff pay the costs of the Defendant, such costs to be on the party and party basis. (3). I order that the Defendant be entitled to recoup from the estate of the late Vera Caroline Walker ("the Deceased") the difference between the foregoing costs which the Defendant may recover from the Plaintiff and the costs of the Defendant on the indemnity basis. (4). The exhibits may be returned. CATCHWORDS : Succession. Family Provision. Claim by adult son. Financial and material circumstances of Plaintiff. Obligation upon applicant for provision to place before the Court as fully and as frankly as possible all information concerning his financial and material circumstances. Whether Plaintiff has been left without adequate provision for his proper maintenance. Competing claim of Defendant. Notional estate. Importance of not interfering with reasonable expectations in relation to property. LEGISLATION CITED : Family Provision Act 1982 Singer v Berghouse (1994) 181 CLR 201 CASES CITED : Vigolo v Bostin (2005) 79 ALJR 731 Carl Walker (Plaintiff) PARTIES : Christopher James Walker (Defendant) FILE NUMBER(S) : SC 3533 of 2004 D. Jordan (Plaintiff) COUNSEL : R. Powell SC / J. Kearney (Defendant) Michael Dennis (Plaintiff) SOLICITORS : Liston & Loveband (Defendant) LOWER COURT JURISDICTION : - 9 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE McLAUGHLIN Wednesday, 12 October 2005 3533/04 CARL WALKER –v- CHRISTOPHER JAMES WALKER JUDGMENT 1 HIS HONOUR: These are proceedings under the Family Provision Act 1982. 2 The proceedings were instituted by summons filed by the Plaintiff, Carl Walker, on 22 June 2004. Subsequently on 20 October 2004 an amended summons was filed, by which, the Plaintiff substantively claims first an order for provision for his education, maintenance and advancement in life out of the estate and/or notional estate of his late mother, Vera Caroline Walker (to whom I shall refer as "the Deceased"); second, an order that certain specified property (including a rural property known as Highfield) be designated notional estate of the Deceased. 3 The Deceased died on 3 January 2003, aged 88 years. She left a will dated 1 June 2001, together with a codicil thereto dated 10 December 2001, probate whereof was on 20 March 2003 granted to Christopher James Walker and Carl Walker, the executors named in such will (Christopher James Walker being the Defendant to the present proceedings). 4 The inventory of property disclosed the following assets of the Deceased at time of her death: Life insurance policy - $5,040 Moneys held in bank accounts - $15,442 Term deposits - $40,502 Furniture, chattels and personal effects, to which an estimated value of $2,000 was ascribed. 5 No liabilities of the Deceased at the time of her death were disclosed. Subsequent to the death of the Deceased the only liabilities of the estate, apart from the costs of the present proceedings, are funeral expenses of $4,161, probate and administration costs of $2,781 and miscellaneous debts of $450 (totalling about $7,400). 6 In calculating the value of the estate available for distribution the costs of the present proceedings must be taken into consideration, since the Plaintiff, if successful, will be entitled to an order that his costs be paid out of the estate of the Deceased, and the Defendant, irrespective of the outcome of the proceedings, will be entitled to an order that his costs be paid out of the estate. The costs of the Plaintiff are estimated to total $30,665, whilst those of the Defendant are estimated to total $49,048. 7 By her will the Deceased gave a legacy of $1,000 to each of her seven named grandchildren, and gave the residue of her estate equally between the Plaintiff and the Defendant. By her codicil the Deceased gave certain specific chattels (pieces of furniture) to the Plaintiff and to the Defendant. 8 The Deceased was a widow at the time of her death, her husband, James William Henry Walker, having died on 17 May 1970. 9 The Plaintiff (who was born on 25 June 1949 and is presently aged 56) is one of the two children born to the Deceased and her husband. The other child of that marriage is the Defendant (who was born on 27 November 1943, and who is presently aged 61). 10 In late 1949, when the Plaintiff was only a few months old, his parents moved from Sydney to the New England area of New South Wales. In December 1957 the Deceased and her husband purchased a rural estate known as Highfield near Ben Lomond, on the Northern Tablelands of New South Wales. (It would appear that that property is held on two separate titles.) The Deceased and her husband then erected a new residence on Highfield, that residence becoming the family home of themselves and their two children. 11 Each of the Plaintiff and the Defendant left school at the age of 15 and each thereafter assisted his father on Highfield. The Plaintiff did not receive any wages for working on Highfield. However, he was still residing at home with his parents, and on occasion he received lump sums from the family partnership. For example, in 1967 (when he was aged 17 or 18) he received $400; in 1968 he received $100, in 1969 he received $400, in 1970 he received two payments, one of $200 and the other of $400. He deposited those moneys into his savings account. In 1966 (when he was aged 17) the Plaintiff commenced a cartage business in partnership with the Defendant. Later, each of the Plaintiff and the Defendant conducted a separate cartage business. 12 The farming business upon Highfield (which property consists of about 460 acres) was being conducted by a partnership known as Highfield Pastoral Company, consisting of the Deceased, her husband and their two children. It would appear that after the death of James Walker that partnership was continued by the Deceased and her two children. The partnership business was thereafter essentially under the control of the Defendant, who was five and half years older than the Plaintiff. It seems that there was never any written partnership agreement in respect to the Highfield partnership, either before the death of James Walker or from the time of his death until the partnership was ultimately dissolved in June 2002. 13 It was the evidence of Gary William Sisson, the chartered accountant who (and whose firms) had acted for the Highfield partnership and for its members, that over a number of years the Defendant had drawn moneys from the partnership substantially in excess of the moneys drawn by the Plaintiff. From 1981 to 1996 the Defendant had made drawings totalling $255,465, whilst the Plaintiff had made drawings totalling $145,532. In addition, the Defendant had been paid salaries totalling $15,000, whilst the Plaintiff had not been paid any salary during that period. 14 Upon the death of James Walker in 1970 his interest in Highfield passed by survivorship to the Deceased. By his will (probate whereof was granted to the present Defendant, the executor named therein) James Walker gave a legacy of £1,000 ($2,000) to the Deceased and gave the residue of his estate to the present Plaintiff and present Defendant in equal shares as tenants in common. After his father's death the Plaintiff continued to work on Highfield. It was the evidence of the Plaintiff that he did so in the expectation that Highfield would be owned jointly by himself and the Defendant after the death of the Deceased. That expectation was based upon statements attributed to the Deceased by the Plaintiff, to the effect, "Highfield will be yours and Christopher's". 15 In 1972 the Plaintiff purchased a rural estate known as Bonfield, consisting of about 80 acres, which is located only one kilometre from Highfield. The Plaintiff however continued to work on Highfield. The purchase price of Bonfield was about $12,000. That purchase was funded by the Plaintiff's own savings of $4,000, a loan of $4,000 from the Deceased, and the balance being borrowed from a bank. 16 At about the same time the Plaintiff, on 10 June 1972, married his first wife, Margaret June. Of that marriage were born two children, both of whom are now adults and are no longer dependent upon the Plaintiff. 17 In 1974 the Plaintiff and the Defendant conjointly purchased a rural estate known as Sidebrook at Ben Lomond, located in proximity to Highfield and to Bonfield (being only one kilometre from Highfield). Until the break up of the Defendant's first marriage in 1996, he and his family resided on Sidebrook, the Plaintiff and his family resided on Bonfield and the Deceased resided on Highfield. For a period of about two years after the end of his first marriage the Defendant removed from the Northern Tablelands and was residing in the Newcastle area. 18 In June 1996 the Defendant transferred to the Plaintiff his half share in Sidebrook for $180,000 (the value of Sidebrook at that time being $360,000). The purpose of that transaction was to enable the Defendant to effect a property settlement with his first wife, Mrs. Robyn Walker. 19 The marriage of the Plaintiff to his first wife came to an end in 1999. Upon the termination of his marriage the Plaintiff entered into a property settlement with his wife, under which she received Bonfield, two motor vehicles, a tractor, cattle, household possessions, $100,000 from what was described as "our accounts in Bonfield" and $40,000 from the Plaintiff personally. That sum of $40,000 was paid by the Plaintiff by way of instalments of $10,000 a year, the last payment being made in June 2004. After his separation from his wife the Plaintiff resided in a caravan located on the property of a friend. He subsequently removed to Sidebrook, where he resided in a shed on that estate. The Plaintiff still resides upon Sidebrook. He lives with his present partner, Marilyn Omeara, with whom he said he had been residing "for a couple of years". She is not in employment and the Plaintiff is supporting her. 20 According to the Plaintiff's affidavit evidence his present assets consist of: Sidebrook, to which an estimated value of $900,000 was attributed Sheep (400 head at $50 a head), $20,000 Cattle (220 head plus calves), $112,500 Three trucks, $30,000 Excavator, $40,000 Four trailers, $20,000 Holden Rodeo utility, $20,000 Toyota Landcruiser, $2,500 Two tractors, $15,000 Total: $1,160,000 21 The Plaintiff said that he did not have any significant liabilities, apart from approximately $36,000 owing on the excavator. 22 For the year ended 30 June 2004 the Plaintiff's income tax return disclosed a taxable income loss of $57,950. However, evidence was given by Mr. Sisson, the chartered accountant who has been involved with the accountancy work for the Highfield Pastoral Company and its members from the later part of 1996. (The firms of accountants of which Mr. Sisson is presently or has been a principal have acted for the Highfield Pastoral Company, the Deceased, the Plaintiff and the Defendant since before 1981.) According to Mr. Sisson the Plaintiff's income is a combination of his income from Sidebrook and his income from his carting activities. For the year ended 30 June 2004 his income from primary production was $9,663 and his income from the carting business was $47,708. 23 It will be appreciated that it is incumbent upon an applicant for provision to place before the Court as fully and as frankly as possible all information concerning his financial and material circumstances. This the Plaintiff failed to do. 24 It emerged under cross-examination that the Plaintiff had additional assets which had not been disclosed in his affidavit evidence. Those additional assets consisted of a farm management account with the National Australia Bank, having a credit of $41,813, and a Westpac Classic Plus Account, having a credit of $39,064. That total amount of almost $81,000 was not disclosed by the Plaintiff in his evidence in chief. If it had been left to the Plaintiff the Court would have been totally unaware of the existence of these not insignificant assets. 25 The Plaintiff suffers from sleep apnoea, which condition requires him to wear a mask at night and to be attached to a machine. Although previously renting such a machine, the Plaintiff has recently purchased one, at a cost of $2,215. In addition, the Plaintiff suffers from left bundle block branch (of long standing) and hyperlipidaemia. 26 The Plaintiff gave evidence concerning repairs and improvements required to Sidebrook and to the residence thereon. He also expressed a desire to give up his cartage business, on account of his advancing years, but said that he was only now establishing himself after his property settlement with his first wife. 27 The claim of the Plaintiff must be viewed in the light of any other claims upon the testamentary bounty of the Deceased. The only other person with such a claim is the Defendant. 28 The Defendant resided with his parents upon Highfield until his marriage to his first wife, Robyn (née Norley) (which marriage had already taken place by the time the Plaintiff left school in June 1964), and thereafter until 1974, when he and his wife and children moved into the residence on Sidebrook. Subsequently the Defendant separated from his first wife in 1996, and they later divorced. The Defendant married his present wife, Betty, in May 1998, and they thereafter resided on Sidebrook until May 2002. They then removed to Highfield, where they have resided to the present time. 29 Highfield had originally been held by the Deceased and her husband as joint tenants. After the death of her husband the Deceased by survivorship became the sole registered proprietor of Highfield. By two transfers, dated respectively 1 June 2001 and 17 July 2001, the Deceased transferred Highfield to the Defendant, for a consideration of $1 in respect of each transfer. It was the evidence of the Plaintiff that he was always of the belief that eventually Highfield would be owned by himself and the Defendant conjointly. That belief appears to have been based upon statements which the Plaintiff said were made to him on many occasions by his father. 30 The assets of the Defendant and his wife are as follows: Highfield (to which an agreed value of $800,000 is now attributed) Highfield stock and plant, having an estimated value of $50,000 Highfield Partnership, credit balance of trading account, $16,000 31 The liabilities of the Defendant and his wife include a loan of $80,000 from the National Australia Bank. They hold a motor car under a hire purchase agreement from the Bank, under which agreement about $30,000 is owing. 32 According to the Defendant, his income is negligible. He and his wife are likely to make a loss for the year ended 30 June 2005. Their outgoings include repayment of interest and principal in respect to the loan from the National Australia Bank, in an amount of $8,200 every six months; and payments of $519 a month on the hire purchase of the motor car. 33 The Defendant gave evidence of various health problems, for which he has undergone a number of surgical procedures in recent years. Injury to his neck and shoulder resulted from a fall from his truck. He has suffered from diabetes for about the past five years. He has also undergone surgical procedures in respect to his gall bladder and his bowel (the latter procedure having resulted in him suffering and continuing to suffer from diarrhoea). The Defendant has undergone an operation in respect to his prostate. In March 2003 and again in April 2003 the Defendant underwent surgical procedures in respect to a cervical nerve route compression. He apparently suffered a cerebral haemorrhage either during or after the second of those procedures. 34 As a result of the various health problems from which he has suffered, and in particular the problems with his neck, he has had to give up work in his cartage business. That business has now been put up for sale. The business made a loss of $8,000 for the year ended 30 June 2004, and Highfield Pastoral Company (being the partnership of the Defendant and his wife) made a profit of only $6,000 for that year. Since June 2004 the Defendant and his wife have been living on exceptional circumstances drought relief payments, which payments, however, terminated on 8 December 2004. In about December 2001 the Defendant took out a mortgage over Highfield, that mortgage, apparently, securing the loan of $80,000 from the National Australia Bank. 35 At the outset of the hearing it was noted that it was agreed between the parties that the present value of Sidebrook is $900,000 and the present value of Highfield is $800,000. 36 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. 37 I have had the benefit of receiving a chronology from Counsel for the Plaintiff and a written outline of submissions for Counsel for the Defendant. Those documents will be retained in the Court file. 38 The Plaintiff as a son of the Deceased is an eligible person within paragraph (b) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such he has the standing to bring the present proceedings. The only other eligible person in relation to the Deceased is the Defendant, who, as the only other child of the Deceased, is also an eligible person within paragraph (b). (It should be observed, however, that the Notice as to Eligible Persons filed by the Plaintiff on 20 October 2004, that being the date upon which the amended summons was filed, gave notice that in the opinion of the Plaintiff two grandchildren of the Deceased, namely Suzanne Haurigan [sic] and Oudette Pillar, were or may be eligible persons. No evidence was offered on behalf of the Plaintiff to support the suggestion that those persons were eligible persons. The affidavit of the Defendant of 10 December 2004 (marked B for identification), being the affidavit of the administrator required by Part 77 rule 59 of the Supreme Court Rules, identified only the Plaintiff and the Defendant as eligible persons.) 39 In performing the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 at 208 the Court must first consider whether the Plaintiff in consequence of the terms of the will of the Deceased has been left without adequate provision for his proper maintenance. (See, also, Vigolo v Bostin (2005) 79 ALJR 731, which affirmed the correctness of the foregoing test in Singer v Berghouse.) 40 It will be appreciated that the entirety of the actual estate of the Deceased (totalling about $61,000, apart from furniture, chattels and personal effects) will be exhausted in meeting the costs of the present proceedings. If the Plaintiff had not instituted these proceedings he would have received from the estate of the Deceased about $27,000 (being one-half of the net value of the estate after payment of the legacies totalling $7,000). That amount would have improved the financial circumstances of the Plaintiff. 41 It is the desire of the Plaintiff that on account of his health problems he should give up his cartage business. He said that he needed $250,000 to maintain the farming business on Highfield. The Plaintiff's net income from the farming business in recent years has been within the range of $45,202 to a loss of $4,930. 42 It is apparent that the farming business is uneconomic. If the Plaintiff were to liquidate his assets he would realise $1,160,000 (apart from the amounts in bank accounts, totalling almost $81,000, which he failed to disclose in his affidavit evidence). That amount would be more than adequate to enable the Plaintiff to acquire a residence and to have sufficient funds for investment in order to give him an income in excess of the totality of his income from the cartage business and the farm – let alone in excess of his income from only the farm. 43 It is not for the Court to tell people how they should conduct their lives or how they should manage their financial affairs. But if the Plaintiff seeks to obtain an order which will disturb the testamentary provisions of the Deceased and dispositions made by her during her lifetime, then the Court must consider whether the present financial arrangements of the Plaintiff are such that the Plaintiff can be said to have been left without adequate provision for his proper maintenance. 44 Where, as here, the Plaintiff chooses to maintain a lifestyle, as a farmer, which results to him in little financial return, in circumstances where, by giving up the farm he could achieve a greater income from investments without the necessity for conducting either the cartage business or the farming business, I am not satisfied that the Plaintiff has demonstrated that he has been left without adequate provision for his proper maintenance. 45 The conclusion which I have just expressed is sufficient to dispose of the Plaintiff's claim. 46 However, if (contrary to my foregoing conclusion) I were satisfied that the Plaintiff had been left without adequate provision for his proper maintenance, it would then be necessary for me to consider, first, the nature of any order for provision which should be made in his favour. Further, since the totality of the available assets in the estate of the Deceased will be exhausted in meeting the costs of the present proceedings, it will be appreciated that any order for provision in favour of the Plaintiff would need to be met out of the notional estate of the Deceased. In this latter regard, the Plaintiff seeks to have Highfield designated as notional property of the Deceased. 47 I was not favourably impressed by the failure (probably deliberate) of the Defendant to set forth with accuracy or completeness details of his financial and material circumstances. Nevertheless, the Court must consider the importance of not interfering with reasonable expectations in relation to property (Family Provision Act, section 27(1)(a)). 48 In any event, the Court must not make an order designating property as notional estate unless the actual estate of the testator is insufficient to meet an order for provision an entitlement to which the applicant has established (section 28(1)(a)). I am not satisfied that the Plaintiff has established an entitlement to an order for provision in any amount, let alone in the amount of $250,000 claimed by him. It is not necessary, therefore, for me to proceed to a consideration of whether any property should be designated notional estate of the Deceased. But if it were so necessary, the importance of not interfering with reasonable expectations on the part of the Defendant in relation to Highfield and the fact that the Defendant conducts Highfield as an operational and working farm would satisfy me that it is not appropriate that Highfield, or any part thereof, should be designated notional estate of the Deceased. Essentially, what the Plaintiff wants is an outcome which will require the Defendant to lose his farm (which is a viable commercial enterprise), in order to enable the Plaintiff to maintain his farm (which is not commercially viable). 49 It is difficult to resist the conclusion that the claim of the Plaintiff, and the amount sought by him in that claim, have been made and sought essentially because of his dissatisfaction with the conduct of the Deceased in transferring Highfield to the Defendant, rather than because of any perceived entitlement to an order for provision out of the estate of the Deceased. 50 It follows from my foregoing conclusions that the Plaintiff has not established an entitlement to an order for provision out of the estate and/or the notional estate of the Deceased. 51 I make the following orders: (1). I order that the proceedings be dismissed. (2). I order that the Plaintiff pay the costs of the Defendant, such costs to be on the party and party basis. (3). I order that the Defendant be entitled to recoup from the estate of the late Vera Caroline Walker ("the Deceased") the difference between the foregoing costs which the Defendant may recover from the Plaintiff and the costs of the Defendant on the indemnity basis. (4). The exhibits may be returned. ********** 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.