New South Wales Supreme Court CITATION : King v King [2004] NSWSC 586 HEARING DATE(S) : 1 July 2004 JUDGMENT DATE : 1 July 2004 JURISDICTION: Equity Division JUDGMENT OF : Master Macready at 1 DECISION : Paragraphs 54 and 55 CATCHWORDS : Family Provision. Application under the Family Provision Act by a widower who was married to the deceased for six years. Contributions to renovation of house. Order for a share of house to pass to plaintiff and balance to be held on a Crisp order. PARTIES : Alfred William George King v Gaile Susanne Fullerton (Estate of Phyllis Caroline King) FILE NUMBER(S) : SC 3856 of 2003 COUNSEL : Mr R Coloughoun for plaintiff Mr D.R. Meltz for defendant SOLICITORS : Michael Geoffrey Roper for plaintiff K.W. Fegebank for defendant - 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER MACREADY THURSDAY 1 JULY 2004 3856/03 - ALFRED WILLIAM GEORGE KING v GAILE SUSANNE FULLERTON - ESTATE OF PHYLLIS CAROLINE KING & ANOR JUDGMENT 1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Phyllis Caroline King who died on 4 July 2002 at seventy years of age. The deceased was survived by her second husband, the plaintiff in the proceedings. 2 The deceased and the plaintiff had both been married before and both had children from their earlier marriages. They had no children from their own particular marriage. 3 The last will of the deceased was made on 31 January 2000. Under that will she appointed the defendants as executors and executrices, they being the defendants and the deceased's children, of course. 4 The substantive provisions in the will are found in clauses 3 and 4, which are in the following terms: "3. I DIRECT that my principal place of residence together with its contents by way of furniture and items of household utility and adornment are not to be sold while-ever my husband ALFRED WILLIAM GEORGE KING uses such items as his principal place of residence and for his sole occupation and pays all rates and taxes and all other outgoings including insurance premiums to maintain a reasonable level of cover for both the house and its contents and also the cost of maintaining all improvements in a reasonable state of repair having regard to the state of repair of those things as at the date of my death. 4. SHOULD my husband fail to meet the outgoings referred to in the immediately preceding paragraph, fail to use the real estate and its contents as his principal place of residence or arrange for a female person to take up a marital or de facto relationship in the said dwelling house then that asset and its contents shall immediately fall into residue and be dealt with accordingly." 5 She then went on to provide that the residue be held for her two children equally. 6 I turn to consider the assets of the estate. The only asset presently left in the estate is the deceased's home at 141 Hawkesbury Road, Winmalee. The parties are agreed it has a present value of $330,000 and this is supported by valuation evidence apparently obtained last week. 7 There was also a sum of $20,000 which was held in the name of the deceased. According to the plaintiff this was in fact his money and has been put in the deceased's name. Although there is no provision about it in the will, the defendants have quite properly, in my view, handed the whole of that money over to the plaintiff and he has received it and invested it. 8 Unfortunately in this case there is the question of costs which intrudes into the matter. The plaintiff's costs are estimated at $33,883 and those of the defendants are estimated at $42,541. The defendants have suggested that they may be prepared to defer payment of those costs; but no doubt that is a matter for them and their solicitors. 9 I will just deal with some of the brief history in the matter in order to set the scene. The plaintiff, Mr King, was born on 11 September 1918. The deceased, the late Phyllis Caroline King, was born on 3 September 1927. Each of them had a number of children, two of whom are the defendants in the present proceedings. 10 The plaintiff retired in March 1979 and was paid some $50,000 on his retirement. He had been a Town Clerk for many years. It was in 1992 the deceased's husband died and in 1994 the plaintiff's first wife, Olga, died. At that time the plaintiff was living at 10 The Vesta Road, Springwood, New South Wales. 11 It was in 1995 the plaintiff and the deceased met. At that stage the deceased was living in her property, which she owned, which is the one which is presently in the estate. 12 On 6 July 1996 the plaintiff and the deceased married. Naturally, as I have recounted, both parties were respectively a widow and a widower, and they decided that if they married it would be inappropriate to try to maintain two houses and, accordingly, the plaintiff sold his house. The plaintiff moved into the deceased's house from the time that they married. 13 After their marriage they went on a trip for some twenty-one days to Western Australia and Northern Territory, and during 1996 and 1997 they had the benefit of other trips around New South Wales, the South Coast and elsewhere. These were substantially paid for by the plaintiff, who also commenced meeting the outgoings on the deceased's property in which they lived. 14 Between 1996 and the year 2000 the plaintiff carried out improvements to the family property, including construction of a sunroom, renovations to the bathroom, sun blinds, reverse cycle air conditioning and other matters. The evidence before me discloses the plaintiff spent $25,446 in making those additions to the deceased's property. 15 In 1999 the deceased became ill and the plaintiff also had problems, having had a number of eye operations about this time. The last will was made on 31 January 2000 and the deceased died on 4 July 2002. In October that year, the $20,000 to which I have referred, was transferred to the plaintiff; probate was granted on 12 May 2003, and on 11 July 2003 the summons in the present proceedings was filed. 16 The plaintiff, clearly being the husband of the deceased, is an eligible person. In applications under the Family Provision Act, the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a court must take. At page 209 it said: "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 existed between 'adequate provision' and 'proper maintenance' et cetera 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 et cetera, 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." 17 I turn to consider the plaintiff's situation in life. He is eighty-five years old, he has no dependents and he supports himself on an invalid pension of $443 per fortnight. He manages to meet his expenses on that sum and fortunately he does not operate a car. As far as assets are concerned, he now has fixed term deposits and various cash and bank accounts totalling $110,400. He has a car which is of somewhat uncertain value. 18 He has some medical problems, the most notable of which is he has cataracts on his eyes and his sight is badly affected. In effect, he only has about 15 per cent vision, but otherwise appears to be in reasonable health, given his age. He manages to get about by public transport, and gets into town to do his banking and things of that nature. 19 I have already referred to the fact that he has made the contributions to the improvements to the house. The evidence also discloses that he has paid a number of outgoings in respect of the property between November 1996 and November 2002. For instance, the total of council rates in that period he has paid is $3,607, the electricity, $4,591, telephone bills, $3,732, water rates of $1,1128 and home care bills, $1,183. The costs of operating their car, which has obviously been used extensively in that period, is $30,642 and their travel expenses were $15,976. Clearly, there have been contributions to the house. 20 Unfortunately, the evidence does not really address the value of the house at the time of the parties marrying in 1996. I have already talked about the existing value, and I note that in some of the affidavits, in September 2002 they had valued it at $249,950. There has therefore obviously been some capital growth. 21 It is necessary, of course, to consider the relationship between the plaintiff and the deceased. Clearly, and there is no dispute about this, there was a good relationship between the plaintiff and the deceased. It was one for the mutual benefit of both and the comfort of both. 22 It is also necessary to have regard to the situation of any other person having a claim on the bounty of the deceased. In the present case there are only three; one of them is Wayne John Buckland, the deceased's son. He is forty-six years old, but he gave no evidence of his financial situation. He also gave little evidence of the relationship with the deceased. In the absence of this evidence, the Court can assume that he does not wish to take into account his financial circumstances or those other matters in the Court's consideration of the matter. He also has a brother, to whom notice has been given in respect of the proceedings, but the brother does not wish to take any part in the proceedings. 23 This leaves the evidence given by Gaile Susanne Fullerton, who is the deceased's daughter. She is forty-nine years old and married and she has a son who is dependent upon her. Although he has a disability pension, he lives at home and needs help in that situation. Mrs Fullerton has very little income. Over the last fifteen months she has earned about $1,000 as a casual cook and her assessment for the year ended 30 June 2003 shows her taxable income at $9426. 24 She has some assets with her husband, the principal one being their house at Faireydell Road, Mount Victoria. There is no evidence of the value of the house now. It is a fibro house suffering from mildew, and about four years ago she was told it had no value, but the land value was about $115,000. No doubt that has increased with inflation, and they still have the value of the land. 25 They have a car. They have a mortgage of $55,000 and other debts, including Bankcard and Mastercard, which come to a sum of $12,000. So far as her living is concerned, she only just makes ends meet. She has to go to various charities to get vouchers for water and electricity payments, which she has not been able to meet. 26 So far as her health is concerned, she had breast cancer in 2003 and has had radiation therapy since then. She is continually being monitored. 27 Accordingly, the situation of herself and her husband does not seem to be one which could be described in any way as comfortable. I make this comment, notwithstanding the fact that her husband has had some proposals for trying to acquire a motel, which finally fortunately did not seem to have proceeded. 28 There is evidence of contributions to the estate of the deceased and there is no evidence to suggest that the relationship between the parties was not other than good. 29 It is necessary to see how it is said by the plaintiff that he has been left without adequate and proper provision for his maintenance, education and advancement in life. In this case it centres upon the provision for accommodation for him over the ensuing years. 30 As one can see from the parts of the will which I have quoted, he has the right of residence, which is a fairly restricted one, and which makes no provision, if it is necessary, to sell the property, to provide for some alternative accommodation, whether it be in a nursing home, hostel or other type retirement accommodation. 31 He has investigated the possibility of living elsewhere, and he has put his name down for Buckland Retirement Village, where a single place at the present stage might cost $160,000. That sum is the contribution and when the place is no longer needed as a result of the death of the owner, there will be a retention of 30 per cent of the initial contribution which is non-refundable. This is similar to other types of retirement accommodation. 32 The plaintiff's present situation is that he can manage at home. He wants to stay there, but he certainly realises that he may have to move out and the retirement village to which I have referred is the one he would prefer to live in if a suitable unit becomes available. He has had his name on the waiting list for some time, and it is a fairly lengthy waiting period. 33 The question of what is an appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a longstanding de facto partner has been dealt with in a number of cases. 34 In the 1970s and 1980s there were a number of decisions of single judges of this Court where they have held that a life interest with particular attributes was appropriate (see, for instance, Crisp v Burns Philp Trustee Co Limited, Holland J, 18 December 1979; Banks v Hourigan, Waddell CJ in EQ, 2 March 1989; Cameron v Hills, Needham J, 26 October 1989). 35 This perhaps is reflected in matters mentioned by the High Court in White v Barron (1979-1980) 144 CLR 431, where, at page 444, Mason J said: "A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing her proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceeds of the legacy. As has been pointed out in Elliott v Elliott, that statement was made in an evidentiary context, where the provision was made at the expense of the children of a previous marriage, who had some claim on the testamentary bounty of the deceased." 36 A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Warladge v Doddridge (1957) 97 CLR 1, that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron at pages 438 to 440 went to some length to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. 37 By the late 1980s other judges in this Division were taking a slightly different view. For instance, in Court v Hunt, 14 September 1987, unreported, Young J said: "Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves, and one judges the evidence in these sorts of proceedings against that background knowledge." 38 His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass fifty-five, have to change their accommodation and locate themselves either in retirement village or nursing homes, which have different requirements for capital contribution. 39 After talking about the evidence necessary, his Honour went on to say: "In many cases these days, a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible non-capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Limited , 18 December 1979, unreported, but noted in Mason & Handler Probate Service at page 13206. Other times the proper provision is for a fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will make provision for maintenance levies and the other payments that have to be made by the widow." 40 More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky & Anor v Golosky, 5 October 1998, unreported, the Court summarised the proper provision for widows (and thus the plaintiff in these proceedings) in the following terms: "In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevant, these included: (a) proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition to limit its disturbance of the testator's will to that which is necessary to achieve the purpose of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary Perth v Scales (1962) 107 CLR 9, 19; White v Barron & Anor, above, 458; Hunter , above, 576. (b) The purpose of the jurisdiction is not the correction of the hurt feelings of sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testator's household, and to consider whether, as claimed, the provision made by the will is inadequate for that person's proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1985; 1985) NSWJB 81. (c) Consideration of other cases must be conducted with circumspection because of the inescapable details of the factual circumstances of each case. It is the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69-70. (d) A mere right of residence will usually be an unsatisfactory method of providing for a spouse's accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence the spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore COA, unreported, 16 May 1984, per Hutley JA. (e) Considering what is 'proper' and by inference what is 'improper' as a provision in a will, it is appropriate to take into account all of the circumstances of the case, including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution, according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop (deceased) (1987) 8 NSWLR 679(SC); Churton v Christian & Ors (1988) 13 NSWLR 241 (CA) 252." 41 When talking of the need to provide a house and a sum for contingencies, the President is clearly referring to passages in Luciano v Rosenblum and other cases. As was pointed out by the Court of Appeal in Elliott v Elliott, unreported, 29 April 1986, such a top-up provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased thus. 42 In Permanent Trustee v Fraser, 36 NSWLR 24 at page 47, Sheller JA had the following to say: "Once it is accepted that adequate provision for her proper maintenance and advancement in life requires secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie . The need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security." 43 In Salmon v Blackford, 18 February 1997, the Court of Appeal was dealing with a case where the trial judge had given a fee simple to the deceased widow. Sheller JA said: "The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case. The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of the respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I must say in this regard that her life expectancy, according to the tables, was something over eleven years at the time of the hearing. If one comes to the conclusion that for her proper maintenance an order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage, and that he may be the ultimate beneficiary of her bounty." 44 This seems to indicate a different approach to that referred to by the High Court in White v Barron. 45 When one comes to the present case, one has a situation where there is a marriage of some six years duration. Although it was a very happy marriage for the parties, there was nothing of the type of situation that was referred to in Luciano v Rosenblum. The parties were married late in life, they had no children of their own union, and in this case, there have been some contributions to the house of the deceased. 46 It is hard to get a full picture of the overall contributions and expenses, because, obviously, of course, both were on invalid pensions and no doubt the deceased used her pension also for household purposes. But there is the contribution of some $24,000 plus to the improvements to the property, and there are also the questions of the payments for trips around Australia and for their travelling, which was of benefit to both parties. 47 In some senses, the plaintiff feels that he has missed out in that he sees that the property has increased in value. Precisely how much it has increased over the six years is hard to calculate, but obviously he should have some benefit of the capital appreciation over that period. 48 The other thing, of course, is that given it is only a short relationship, I think it is inappropriate that the whole of the capital or the interests of the deceased in the house should pass to the plaintiff. 49 The problems which occur in this case are very common and occur when the parties do in fact ultimately resort to litigation to solve the problems, because that involves, as they now see in this case, substantial costs. There was some suggestion in submissions the plaintiff would wish to purchase the property. That may be a desire, but there is no evidence of his ability to do that. Mention was made of his family perhaps assisting him, he has $110,000, but that support is not covered by evidence. 50 In the event that the property is to be sold, which is probably the most likely outcome at some stage, unless the parties can agree to a deferment together, it seems that what I should do is make some further provision for the plaintiff by way of a proportion of the estate to take into account the increase in value and his contributions to the property. 51 The balance of the property I think should be held upon terms that the estate can be applied for a fund to be invested in further accommodation for the plaintiff whether held solely in the trustee's name or whether held in part between the trustees and the plaintiff, if the plaintiff himself wants to contribute some of his own funds to it. 52 The provisions for that share should be in the form of a Crisp order and should allow for change of accommodation on request by the plaintiff, and for it to be applied towards the nursing home which may have a requirement for a non-refundable amount, and perhaps that amount should be not more than 50 per cent to cover the variety of different nursing homes. 53 Accordingly, the orders which I propose to make are: 54 In lieu of paragraphs 3, 4 and 5 of the will of the deceased, that the plaintiff receive one-eighth of the residual estate of the deceased absolutely, and the remaining seven-eighths be held upon trust of a nature which I have indicated in my judgment. 55 So far as costs are concerned, the plaintiff's costs on a party and party basis and the defendant's on an indemnity basis may be paid or retained out of the estate of the deceased. I direct the parties to bring in short minutes to reflect these orders. If there is any question about the terms of the Crisp order in respect of the seven-eighths, that will be dealt with on the basis that it may be considered at some appropriate time. 56 I stand the matter over to 9.45 am on 8 July 2004. ********** Last Modified: 07/08/2004 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.