New South Wales Supreme Court CITATION : Curtain v Curtain and Anor - Estate D.D.B. Curtain [2005] NSWSC 35 HEARING DATE(S) : 31 January, 2005 JUDGMENT DATE : 31 January 2005 JURISDICTION : Equity Division JUDGMENT OF : Palmer J DECISION : Plaintiff to have life interest in the assets of the estate. CATCHWORDS : FAMILY PROVISION ACT - Claimant a widow of eighty-six years of age - insufficient provision for her security of accommodation - whether claimant should have whole estate absolutely or life interest. LEGISLATION CITED : Family Provision Act 1982 (NSW) - s.7 Barns v Barns (2003) 214 CLR 169 CASES CITED : Luciano v Rosenblum [1985] 2 NSWLR 65 Marshall v Carruthers [2002] NSWCA 47 May Curtain - Plaintiff PARTIES : John Arthur Curtain - First Defendant Barbara Gai Dougall - Second Defendant FILE NUMBER(S) : SC 2975/04 B. Sharpe - Plaintiff COUNSEL : R.E. Quickenden - Defendants Gary Cleary & Associates - Plaintiff SOLICITORS : Peter Cornock & Associates - Defendants LOWER COURT JURISDICTION : Ex tempore 1 The Plaintiff, Mrs Curtain, seeks an order under s.7 of the Family Provision Act 1982 (NSW) for further provision out of the estate of her late husband, David Donald Bruce Curtain, who died on 21 July 2003 leaving a will dated 16 February 1988. On 27 February 2004 the probate of that will was granted to the First Defendant. 2 The First Defendant and the Second Defendant, Mrs Dougall, are the deceased's adopted children. For the sake of convenience and intelligible reference, I will refer to the Plaintiff as May, to the First Defendant as John, and to the Second Defendant as Barbara. I mean no disrespect by those abbreviated references. 3 The deceased's last will provides that, after payment of the deceased's debts and testamentary expenses, his estate is to be divided equally between May, John and Barbara. 4 In the alternative to relief claimed under the Family Provision Act, May seeks by her Summons a declaration that the assets of the deceased's estate are held on trust for her alone. The trust is said to arise from an alleged agreement made between the deceased and May in about September 1981, to the effect that each of them would make a will leaving everything to the other if the other survived. The agreement also was to the effect that if one or other of them benefited from the agreement by taking the estate of the other, the survivor would then, in turn, make a will ensuring that half of the survivor's estate went to the survivor's side of the family, if I can put it that way, and the other half went to the deceased's side of the family. That agreement is evidenced by the making of mutual wills in those terms in September 1981. 5 The deceased, however, made a new will on 16 February 1988, which is the will of which probate has now been granted. May says that she never became aware of the making of that new will. I will return to the question of the alleged agreement for mutual wills and the issues arising therefrom after I have recited the facts relevant to the application by May for further provision for her pursuant to the provisions of the Family Provision Act. 6 Those facts are really not in dispute. They are helpfully summarised in Mr Sharpe's written submissions, from which I will quote freely. 7 May was born on 16 December 1918, so that she is now 86 years old. May is in good health for her age, although she suffers somewhat from osteoporosis and vertigo. However, those conditions are said to be manageable. She has a significant hearing disability, but she was still able to hear and understand questions which were asked of her during cross examination. To my perception, May is mentally alert and active. 8 Prior to their marriage in 1978, May was the sister-in-law of the deceased. May divorced the deceased's brother, and the deceased's first wife, Hazel, subsequently died. The deceased had adopted two children in about 1951. The deceased was their uncle. Those two children are the First and Second Defendants, John and Barbara. 9 Barbara was born on 1 June 1947 so that she is now 57 years of age. John was born on 3 May 1951. He is now 53. May has three grown-up children from her first marriage, Lynette Burns, Margaret McGlede and David Curtain. There were no children of the marriage between the deceased and May. 10 Prior to their marriage, the deceased sold a house which he owned at Castle Hill and bought a property at 40 Lakin Street, Bateau Bay. The purchase was completed apparently in February 1978 and he became and remained sole registered proprietor of the property. May owned a house at Thornleigh and in September 1978 she sold that property. She agrees that her share of the proceeds of sale of her home at Thornleigh were not directly applied to the purchase of the Bateau Bay home in which she resided with the deceased. However, she says, and there does not seem to be any dispute about this, that extensive renovations were carried out to the Bateau Bay premises and those renovations were paid for equally by herself, out of the proceeds of the sale of her Thornleigh home, and by the deceased. 11 The evidence establishes that May and the deceased generally shared the expenses of maintaining the home and their general living expenses. They went on trips and holidays, each contributing equally to the expenses. It is not in contest that throughout their marriage May did all of the housework, cooking and cleaning and the deceased looked after the maintenance of the property. Both the deceased and May received pensions and those pensions were placed in a joint account. 12 Again, there is no dispute that May and the deceased had a good marriage. It seems that they were a close and supportive couple and the evidence suggests that, particularly in the last years of the deceased's life when his health began to fail, he was particularly dependent upon May. This was especially so when the deceased developed Alzheimer's disease and dementia. I accept that May undertook the responsibility of looking after the deceased and that this created a considerable stress and strain on her. In the final stage of the deceased's life his condition had deteriorated to the point that he had to be admitted to a nursing home. There he was visited frequently by May. 13 I should say something briefly about the relationship between the deceased and John and Barbara. It seems that the relationship between the deceased and John was a particularly close and supportive one. John has not married and he has no dependants. The evidence is uncontradicted that he was of great help to his father, particularly in his father's declining years. I am confident that there was a warm and supportive relationship. 14 Barbara moved to Queensland some considerable time ago so that it has been difficult for her to maintain close physical contact with her father. I think that it was some 35 years ago that she went to live in Queensland. Nevertheless, I am satisfied that Barbara remained as close to her father as circumstances reasonably permitted. She was able to see him when she visited every couple of years and she says that she spoke to him regularly by telephone. I will return shortly to the other personal and financial circumstances of each of John and Barbara. 15 I turn now to the estate and the circumstances and needs of May. There is no difference between the parties as to the present position of the estate and what is distributable therefrom. The estate presently comprises the following assets: the house at Bateau Bay which is valued at $475,000, a term deposit which is in the sum of $15,800 approximately, a further sum on deposit at the bank of $2,400, another deposit in the Commonwealth Bank of $9,000 and an amount held in a solicitor's trust account in the sum of $4,500, approximately $506,000 in total. If the costs of both sides to the proceedings are to be paid out of the estate, there will then be deducted from that sum a total of about $65,000 so that the total value of the estate which would be available for distribution after payment of legal expenses would be some $440,000. 16 The evidence of May as to her living expenses is uncontested. Her assets are modest. She values her furniture and household effects at $10,000 and she has $38,500 on deposit in various bank accounts in her own name. May's only income is a pension of some $225 per week. Her weekly expenses, likewise, are modest and she agrees that her pension is sufficient to cover them. She has no significant liabilities. As I have said, her health seems to be very good for her age and there is no apparent need for the provision of any substantial sum to cover medical bills. 17 The assets, liability and financial position of John and Barbara are as follows. John is presently employed as a property officer with the Commonwealth Bank. His salary is approximately $77,000 a year. As I have said, John has no dependants. He owns a house which is valued at $380,000 and has a significant interest in superannuation. That, together with other assets, brings the value of his total assets to some $628,000. He has liabilities of $29,000. John admits that he does not have any pressing need for further provision out of the estate of the deceased to provide for his living expenses. Indeed, it may fairly be said that John's position financially is quite comfortable. 18 Barbara is a widow. She has a half-interest in a property at Tugun in Queensland which is said to have a value of $380,000. She has a term deposit in the sum of $50,000, a modest amount of superannuation, and a rather ancient motor vehicle. 19 Barbara is presently employed as a sales assistant and she agrees that her income barely, but adequately, covers her living expenses. However, she does have some prospective medical problem which leads her to believe that she will be able to continue working only for another five years or so. She says that her property needs some maintenance and upgrading and she anticipates further that her problem with arthritis will increase and that she will find difficulty in continuing to work for an extended period. 20 While Barbara's financial position is currently adequate for her needs, it can be seen that her health generally is such that she may well require some assistance financially as she gets older and is less able to provide for her living expenses out of remuneration from employment. 21 It can be seen that the estate really comprises the Bateau Bay residential property. It is conceded that that property will have to be sold in order to meet the expenses of these proceedings should those expenses come out of the estate as normally they would. 22 The real issue is whether and to what extent May requires further provision out of the estate to secure her accommodation. There is no contention between the parties that the applicable principle is expressed in Luciano v Rosenblum [1985] 2 NSWLR 65, at 69. There have been various qualifications to the principle expressed in that passage: see, for example, the discussion in Marshall v Carruthers [2002] NSWCA 47. But in the particular circumstances of this case, I think that the general principle discussed in Luciano v Rosemblum is applicable. 23 That principle may be summarised for present purposes, as follows. In a case such as the present where the deceased and May were married for approximately 25 years, the marriage was a good, close and supportive one, and one in which May contributed very significantly financially to the joint assets, it can be said that the deceased owed a duty to May to ensure that she was secure in her home after his death and that he had a duty to ensure that she had an income sufficient to permit her to live in the style to which she had become accustomed. 24 Also, he had a duty to provide May with a fund to enable her to meet any unforeseen contingencies. I do not think that duty was very much called into play so far as May's income was concerned, because her pension provided her with sufficient to live upon. However, the duty was unquestionably incumbent upon the deceased to provide May with security in her home. 25 Bearing in mind that the terms of the deceased's will left only a third of the deceased's assets to May, it was, of course, necessary that the Bateau Bay home would be sold if the provisions of the will were to be carried out. There is really no dispute – and I think that Mr Quickenden fairly conceded this in his submissions – that simply to leave a third of his estate to May did not adequately provide for May's secure accommodation for the rest of her life. As I have said, I think Mr Quickenden has conceded that, in this regard, the deceased failed in his duty. 26 There should be, therefore, some further provision from the estate of the deceased to provide a secure home for May for the rest of her life. This is where the parties part company. The Plaintiff says that, in order to have a secure home for the rest of her life, she should have the whole of the estate. The Defendants say that a sum of $200,000 out of the estate would be sufficient for that purpose. The Plaintiff says that she should have the whole of the estate because that reflects the agreement between the parties which produced the mutual wills in 1981 and, secondly, because that is what she needs in order to attain security in her accommodation. 27 The Defendants say that $200,000 out of the estate would be sufficient to provide for May's accommodation for the rest of her life. There has been no evidence led as to what it would cost to secure the type of accommodation which May would wish and which would be suitable for her purposes. Clearly, May would wish to live in the region of Bateau Bay where one of her daughters resides. She is close to that daughter and, for obvious reasons, she would not wish to move further away. Clearly, also, May does not wish to move into a retirement village at the present time or to go into a nursing home. Her medical condition certainly does not dictate that at the moment and from what I can gather, that would be a most unwelcome and unnecessary move if it were forced upon May by financial circumstances. I do not think that such a move should be forced upon her. 28 In my opinion, May should be provided with secure accommodation to a standard which is at least commensurate with that which she is presently enjoying while residing at Bateau Bay. May has said that she has looked at some properties or investigated the possibility of properties in her region and she would be content with a two-bedroom villa or unit. As I say, there is no evidence as to the current price of such accommodation, but she says that she thinks that between $300,000 and $400,000 would be necessary to purchase such a unit or villa. There has been no evidence, as I have said, led from the Defendants as to the cost of such a property. 29 The essential question is whether May should have the whole of the estate in order to permit her to live in the Bateau Bay property, if she so desires, for as long as she wishes, or else to sell that property and apply the total proceeds to the cost of alternative accommodation. It seems to me, on balance, that the time will come, sooner if not later, that May will wish to sell the Bateau Bay property and move to a property which does not require as much maintenance. In other words, she will need to move to a smaller property such as a villa or home unit, as she contemplates. I do not think that May should be left in a state of anxiety as to whether she would be able to afford such accommodation when the time arises for its acquisition. I think that the deceased owed her a duty to provide securely and comfortably for her accommodation. That essentially means that the value of the Bateau Bay property should be set aside to provide for May's accommodation for the rest of her life. 30 I do not think, however, that the deceased owed a duty to May to do more than provide for her secure accommodation, bearing in mind that her living expenses and other needs are seemingly adequately provided for by her income. When I say that he had a duty to do no more, I mean by leaving the whole of his estate to her absolutely. It seems to me that the deceased should have properly borne in mind, in making his testamentary disposition, his two children, particularly Barbara, whose earning capacity in the future is uncertain by reason of her medical condition. 31 It seems to me that the deceased's duty to May is properly reflected by providing for her a life estate in a sum which presently reflects the net value of the estate or approximately the net value of the estate, so that she may, during her lifetime, apply that sum towards securing her accommodation, with any surplus being left to provide an additional income for her for her life in order to cover contingencies which may arise in the future for medical expenses and the like. 32 I do not think that John and Barbara should be deprived entirely of any interest in the estate. It seems to me that, after providing for a sum to be held on trust for May for her life to provide for her accommodation and some surplus income, the remainder should be then divided between May and the Defendants. That would, in effect, secure the original agreement between the parties which was reflected in their mutual wills made in 1981. It will be recalled that that agreement provided that the survivor of the two was to have the benefit of the estate for his or her life but was to provide in his or her will for half of the estate to go to the deceased's children and the other half to go to the survivor's children. Subject to the question of whether there is a trust which has attached to the assets of the deceased during his lifetime, I would consider that there should be further provision from the deceased's estate by the establishment of a trust in the sum of $400,000 to be applied for the provision to May of such accommodation as she desires during her lifetime, any surplus after the acquisition of such accommodation to be invested to provide an income to May for her life. 33 The sum of $400,000 in effect represents, as I have said, the net value of the estate after provision for legal costs. Aafter May's death the estate should devolve as to one-half to the Defendants and one-half according to the disposition in May's will. 34 The actual terms in which that further provision should be made will require some refinement and elaboration and I will return to it. As I have said, that would be the provision out of the estate which I would think appropriate, subject to the question whether the assets in estate are presently subject to a trust arising by reason of the alleged agreement for mutual wills. 35 I am prepared to accept that the deceased and May entered into an agreement to make wills in the terms which are reflected in the two wills which they executed in September 1981. I am prepared to accept that the terms of the agreement included an implicit term that neither party would vary or revoke the terms of his or her will without the consent of the other. I am prepared to accept an agreement in those terms because, really, no evidence about the agreement has been led other than by May and there has been no evidence led in opposition to the evidence which May adduces. Neither has she been extensively cross examined upon the making of the agreement. The making of such an agreement is inherently probable by reason of the fact that both the deceased and May actually implemented it by executing wills in the terms in which they did in September 1981 36 However it seems to me that May faces an insuperable legal difficulty in having a trust over the deceased's assets declared as a result of the agreement which the parties reached. That difficulty arises by reason of the decision of the High Court in Barns v Barns (2003) 214 CLR 169. That case held that a deceased's promise to make a particular testamentary disposition is always subject to the potential operation of an order under s.7 of the Family Provision Act, so that a deceased's assets at the time of death always form part of the estate for the purposes of the Family Provision Act. 37 It was pointed out by the Chief Justice at p.183 that no agreement for the disposition of one's estate by will can really give rise to a trust during the lifetime of the promisor such as to remove all assets from the operation of the Family Provision Act. At paragraph 29 the Chief Justice said: "In argument in the present case, an attempt was made to demonstrate that the effect of the deed and the mutual wills was that, upon his death, the deceased was not the beneficial owner of any property; for that reason there was no estate of the deceased within the meaning of the Act; and therefore the Act was incapable of having any effect. That argument, which appeared in some respects to confuse the position of the deceased with that of the second respondent as survivor, fails. The relevant principles are set out in the judgment of Dixon J in Birmingham v Renfrew ((1937) 57 CLR 666 at 688-689). He spoke of the doctrines of equity affecting the conscience of the survivor in a case of mutual wills. They give rise to what he called a floating obligation, suspended during the lifetime of the survivor, which descends upon the assets of the survivor at the death of the survivor and then crystallizes into a trust (see also In re Dale, decd [1994] Ch 31 at 37 per Morritt J; and compare Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11). This may have been what the solicitors had in mind when referring to a course of action that would protect the estate of the survivor from a claim under the Act. But we are presently concerned with the estate of the deceased; the first to die." At paragraph 33, p.184, the Chief Justice said: "Because the [Family Provision] Act imposed a restriction on freedom of testamentary disposition, a promise to make a testamentary disposition was subject to the potential operation of that legislative restriction. The effect of the legislation could have been avoided by a disposition inter vivos so that the deceased died with no estate; that is inherent in the scheme of the legislation. But the effect of the legislative restriction on freedom of testamentary disposition cannot be avoided by a promise to make a certain disposition." 38 Even if the agreement alleged between the parties in the present case had been made in the terms alleged by May, that agreement would not have taken the assets of the deceased out of his beneficial ownership during his own lifetime, at least so far as the operation of the Family Provision Act is concerned, for the reasons given by the Chief Judge at p.183 of the judgment. Upon the death of the deceased the Act immediately applied to the assets which he then had. 39 For those reasons, the existence of an agreement between May and the Plaintiff in the terms alleged does not override and cannot defeat the operation of the provisions of the Family Provision Act. Accordingly, I must look at the question of further provision under s.7, taking into account all of the assets presently listed as the assets in the deceased's estate, that is, primarily the Bateau Bay property which is in his name. For those reasons it seems to me that the disposition of the property of the deceased, in the present case, is to be governed by the Family Provision Act and by those provisions alone. 40 I think that further provision for May out of the estate should be made in accordance with the terms which I have earlier suggested. I will stand the matter over for a short time to enable the parties to bring in Short Minutes of Order reflecting the orders outlined. – oOo – 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.