New South Wales Supreme Court CITATION : Smith v Barker [2005] NSWSC 14 HEARING DATE(S) : 18 October 2004 JUDGMENT DATE : 2 February 2005 JURISDICTION : Equity Division JUDGMENT OF : Master McLaughlin at 1 DECISION : (1). I order that, in lieu of the benefit given to her by the will of the late Roy Alwyn Smith ("the Deceased"), the Plaintiff receive absolutely the house property situate at and known as 9 Townson Street, Blakehurst. (2). I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased. (3). The exhibits may be returned. CATCHWORDS : Succession. Family provision. Claim by widow. Only significant asset is matrimonial home of Plaintiff and Deceased. Deceased by his will gave to Plaintiff one half share in net proceeds of sale of matrimonial home. Whether Plaintiff has been left without adequate provision for her proper maintenance. Need of Plaintiff for security and flexibility in her accommodation. Whether former matrimonial home is appropriate to Plaintiff's needs and circumstances. Competing claims of other beneficiaries, being the children of the Deceased. LEGISLATION CITED : Family Provision Act 1982 Luciano v Rosenblum (1985) 2 NSWLR 65 CASES CITED : Permanent Trustee Company Limited v Fraser (1995) 36 NSWLR 25 Hyacinth Angus Smith (Plaintiff) PARTIES : Venetta Barker and Anor (Defendants) FILE NUMBER(S) : SC 3517 of 2003 Mr. L. Ellison (Plaintiff) COUNSEL : Mr. D. Flaherty (Defendants) L. Rundle & Co (Plaintiff) SOLICITORS : David Grant & Associates (Defendants) LOWER COURT JURISDICTION : - 13 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER McLAUGHLIN 3517/03 HYACINTH ANGUS SMITH - v – VENETTA BARKER and Anor Wednesday, 2 February 2005 JUDGMENT 1 MASTER: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 27 June 2003 Hyacinth Angus Smith claims an order for provision for her maintenance, education and advancement in life out of the estate of her late husband Roy Alwyn Smith (to whom I shall refer as "the Deceased"). 3 The Deceased died on 2 January 2002, aged 79. He left a will dated 6 March 2001, probate whereof was on 13 August 2002 granted to Venetta Barker, Pamela Smith and the Plaintiff, the executors named in such will (Venetta Barker and Pamela Smith being the Defendants to the present proceedings). 4 The Deceased and the Plaintiff married on 10 February 1975. It was a second marriage for each of them. At the time of their marriage the Deceased was a widower with three children (being the two Defendants and Ralph Vaughan Smith), whilst the Plaintiff was a widow with three children. 5 The Plaintiff was born on 28 August 1923 and is presently aged 81. Her first husband died on 31 January 1959, as a result of an accident. At that time the Plaintiff's eldest child was only six years of age. After paying out the mortgage on her family home at 8 Clovers Road, Oyster Bay with superannuation and leave moneys to which her first husband had been entitled upon his death, the Plaintiff found it necessary to resume employment. She worked part-time from about 1963 until 1972, and was then in full-time employment until she married the Deceased in 1975. At the request of the Deceased the Plaintiff, then at the age of 51, gave up her employment, as a senior secretary with the MLC. 6 At the time of her marriage to the Deceased the Plaintiff held a one-third share in the Oyster Bay residence (which share had devolved upon her consequent upon her first husband's intestacy: her three children shared the remaining two-thirds interest in that property). The Deceased owned a house property at 33 Laurina Avenue, Engadine. After their return from a long overseas honeymoon the Plaintiff and the Deceased lived together in the Engadine property for several months. Thereafter the Deceased purchased a house property at 9 Townson Street, Blakehurst, which was their matrimonial home from about August 1975 until the death of the Deceased more than 26 years later. That house property was purchased in the name of the Deceased alone, for $93,000. The Deceased provided the totality of the purchase price. The Plaintiff has continued to reside in the Blakehurst property since the death of the Deceased. 7 At the time of their marriage the Deceased was a director of a company, All Class Metals Pty. Limited, which conducted a sheet metal business. The Plaintiff was not involved in the Deceased's business activities. According to the Plaintiff she and the Deceased maintained a comfortable lifestyle throughout their marriage. Throughout the first ten years of the marriage they travelled overseas at least twice a year and dined frequently in restaurants. The Deceased during that period purchased a new Mercedes Benz motor car. It would appear that the Deceased's financial situation deteriorated somewhat after those first ten years. According to the Plaintiff, that deterioration was the consequence, as the Plaintiff subsequently learned, of the Deceased's gambling activities. It would appear that from the late 1960s the Deceased was a professional gambler and that he derived little, if any, income from his nominal occupation as a company director. 8 The Deceased sold the Engadine property in 1987 for $89,000. Of that amount the Deceased gave $65,000 to his daughter Pamela Smith, who used that sum to purchase a property for herself. 9 In 1994 the Oyster Bay property (in which one or more of the Plaintiff's children had continued to reside after her marriage to the Deceased) was sold to one of the Plaintiff's daughters and the husband of that daughter. The Plaintiff said that from the proceeds of sale she received about $50,000, which amount was invested by her in a term deposit. 10 From about 1987 it was the practice of the Plaintiff to share with the Deceased the cost of all household outgoings and expenses. 11 Throughout the marriage (which appears to have been a happy and successful one) the Plaintiff did all the housework, cooking, cleaning and washing. According to the Plaintiff, the house was in a poor state of repair by the time of the death of the Deceased, since it had received little maintenance during the Deceased's latter years. It was the Plaintiff's evidence that at the present time the Blakehurst property requires re-carpeting, re-painting, and updating of the kitchen and bathroom. 12 The Deceased and the Plaintiff always maintained separate bank accounts, although the Plaintiff was a co-signatory on the Deceased's account with the St. George Bank, and after the Deceased entered the nursing home he gave a power of attorney to the Plaintiff. 13 In about 1990 the Deceased was diagnosed as suffering from Parkinson's Disease. Because of the decline in his health, it was necessary for the Plaintiff to spend a considerable and increasing time looking after him at home, especially from about early 2000. 14 In about August 2001 the Deceased was admitted to the intensive care unit of the Bankstown Hospital. Upon leaving hospital he entered the Bay Nursing Home, since the Plaintiff, then aged 78, was no longer able to care for him at home. She visited him every day at the nursing home until his death on 2 January 2002. 15 The inventory of property discloses that at the time of his death the assets of the Deceased consisted of the house property at 9 Townson Street, Blakehurst (to which an estimated value of $950,000 was attributed), bank accounts with the Commonwealth Bank of Australia ($25,000, plus interest of $736) and the St. George Bank ($3,641), together with a term deposit with the St. George Bank ($5,000), and moneys invested with Colonial First State Investments Limited ($18,870) and Colonial First State Managed Investment Funds and Bricks & Mortar ($20,055). 16 By his will the Deceased directed that the Blakehurst property be sold and that the net proceeds thereof be distributed as to one half to his three children in equal shares and as to the other half to the Plaintiff. The Deceased then gave moneys invested by him to the first Defendant, Venetta Barker, and the residue of his estate to his three children in equal shares as tenants in common. That gift to Mrs. Barker was preceded by the introductory passage in clause 2 of the will, "having made adequate monetary provision for my other two [2] children throughout their lives". 17 It will be appreciated that in calculating the value of the estate available for distribution the costs of the present proceedings must be taken into account, since the Plaintiff, if successful, will be entitled to an order that her costs be paid out of the estate of the Deceased, whilst the Defendants, irrespective of the outcome of the proceedings, will be entitled to an order for their costs. The costs of the Plaintiff are estimated to total $34,000, whilst those of the Defendants are estimated to total $42,000. 18 The present value of the Blakehurst property is $1.1 million. It has been calculated on behalf of the Defendants that the present value of the net distributable estate (after making provision for the costs of the defendants, but not for those of the Plaintiff) is $1,132,804. However, if ultimately the Plaintiff's costs become payable out of the estate, the totality of the assets apart from the Blakehurst property will be exhausted in meeting the costs of the proceedings. 19 It will be appreciated that the effect of the provisions of the will of the Deceased is that the Plaintiff will be dispossessed of the residence which has been her home for the past almost 30 years. 20 If the terms of the will are carried into effect, the net proceeds of sale of the Blakehurst property should be in an amount of about $1.1 million (probably somewhat less when conveyancing costs, statutory charges and commission are deducted), of which the Plaintiff will be entitled to one half, being about $500,000 (or a little more), whilst the two Defendants and their brother will share the other half, each of the three children of the Deceased thus receiving about $170,000. 21 The Plaintiff expressed a desire that she should remain in her present residence. She did not wish to move into a retirement village. Reasons for her desire to remain in the Blakehurst property included the fact that she has an excellent relationship with her neighbours (one of whom maintains the Plaintiff's swimming pool and two of whom are doctors), her familiarity with the neighbourhood and the proximity of the church which she attends and the shops which she patronises. The Plaintiff herself is able to attend to the light cleaning of the house, whilst she receives assistance with heavy cleaning by way of two hours a fortnight provided by the Department of Veterans Affairs. The Plaintiff still drives a motor vehicle. 22 The Blakehurst property is a commodious residence, comprising three bedchambers, a combined loungeroom-dining room, a room identified as a rumpus room, two bathrooms and an additional toilet. It is provided with a double garage and a swimming pool, as well as an external laundry. 23 At the present time the Plaintiff's assets, apart from her interest in the estate of the Deceased, consist of: St. George Bank - $50,000 ANZ Bank - $5,000 Term deposit, St. George Bank - $14,500 (approximately) Term deposit, Esanda - $10,500 (approximately) Mazda motor vehicle, having an estimated value of about $13,000 Household contents, having little commercial value. 24 The Plaintiff's income consists of a Veterans Affairs pension of $458 a fortnight (received in consequence of the death of the Deceased), as well as interest upon the foregoing term deposits. 25 According to the Plaintiff, her income is entirely expended on maintaining what is described by her as a frugal lifestyle. The Plaintiff suffers from arthritis and also from asthma. She has a metal brace on her ankle as a result of a fracture some years ago. She underwent cataract operations in September 2002 and June 2003, costing $1,500 and $1,700 respectively. The Plaintiff said that otherwise she is in fair health. She does not have private medical insurance. It was the Plaintiff's evidence that there is a history of longevity in her family, her mother having lived to the age of 102. The Defendant beneficiary Venetta Barker is presently aged 60. She together with her husband, Ross Barker, own a house property situate at and known as 315 Prenzlau Road, Prenzlau, Queensland, to which is attributed a value of $180,000. They have savings of $45,000 invested with the National Australia Bank. Their joint income is $427 a week (gross). Mrs Barker is not in employment. Her husband, who is presently aged 61, receives $267 (gross) a week from driving a school bus for 20 hours a week. He also receives $85 a week as a disability pension. Mrs Barker receives $65 a week from Centrelink as what she describes as "a partner allowance". Mr. and Mrs. Barker have an NAB card debt in an amount of about $4,000. 26 Mr. and Mrs. Barker's son, Trent Barker, who is presently aged 29, until April 2004 resided with his parents. He is in receipt of a disability pension. According to Mrs. Barker, a large part of the income of her husband and herself has been devoted to Trent's care and attention. 27 Mrs. Barker's health is fair, although she takes medication for arthritis. She has a metal plate and screws inserted in her left tibia as a result of a fracture of that bone. Mr. Barker suffers from osteoarthritis and chronic pulmonary disease and takes constant medication. 28 When Mr. and Mrs. Barker sold their Sydney residence in July 1996, Mrs. Barker borrowed from the Deceased various amounts totalling $7,000. Those borrowings were repaid by her to the Deceased very shortly thereafter. From time to time the Deceased gave to Mrs. Barker gifts of small amounts such as $100 or $50 for birthdays or on other occasions. 29 The Defendant beneficiary Pamela Smith is presently aged 52. She owns an estate of 16 acres situate at and known as 235 Petrea Road, Prenzlau, Queensland, to which a value of $80,000 is attributed. That property is subject to a mortgage of about $86,000. 30 Miss Smith is not married and has no dependents. She is employed as a youth worker at a youth detention centre, where she earns about $695 a week (gross). 31 In 1983 Miss Smith was injured in an omnibus accident and received compensation of $50,000 in respect to her injuries. That amount has long since been expended. However, Miss Smith has continuing lower back pain consequent upon that accident. She had a total hip replacement in 1986, and is expecting to have surgery on her other hip. However, she says that she cannot afford to be off work for three months, the period which such surgery would require. Miss Smith has been diagnosed as suffering clinical depression, and takes daily medication for that condition. 32 She states that she has no saving capacity. In addition to the mortgage indebtedness on her property (which indebtedness exceeds the value of that property), Miss Smith has a personal loan indebtedness of $16,000 and she owes $14,000 on credit card debts. I have already recorded that from the proceeds of sale of the Engadine property in 1987 the Deceased gave $65,000 to Miss Smith. In addition, the Deceased gave financial assistance to her by way of loans (most of which were repaid) and relatively small gifts and advances. 33 The beneficiary Ralph Smith is presently aged 57. He was previously married, but is now divorced, and has three adult children, none of whom are dependent upon him. He is presently employed as a shop assistant, earning $625 a week (net). Mr. Smith has not owned a house since 1984. However he is able to pay his rent ($150 a week) and car repayments ($237 a month in respect of an indebtedness of about $6,000). Apart from his motor vehicle Mr. Smith's only assets consist of furniture and personal effects, to which he attributes a total value of about $1,500. He has about $350 in his bank account. He has a superannuation entitlement, presently in an amount of $6,618. No evidence was offered as to the other details of his financial and material circumstances or as to any other expenditure from his income. Mr. Smith presented no evidence of present financial need. 34 The Deceased (apparently in the 1970s or early 1980s) acquired a residence at Innisfail for Mr. Smith and his then wife. Both Mr. Smith and the Deceased shared in the proceeds of the sale of that residence in 1984. 35 I have already observed that the Deceased himself, by the express statement in clause 2 of his will, acknowledged in his lifetime that he had made adequate monetary provision for his children Pamela Smith and Ralph Smith throughout their lives. 36 The Deceased had made an earlier will, dated 27 October 1993. By that will (which apparently was made without the benefit of legal assistance) the Deceased gave to his daughter Mrs Barker the contents of "my investment account number with Bank or any substitute account", and gave the residue of his estate to Plaintiff absolutely. (It is uncertain what, if any, benefit Mrs Barker would have received under this provision, which identified neither the investment nor the bank; the Plaintiff, however, would have received at least the Blakehurst property.) 37 According to Pamela Smith, the Deceased was motivated to make provision for his children because of his concern that the Plaintiff, upon her demise might not benefit them by her will. 38 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. 39 I have had the benefit of receiving chronologies from Counsel for the respective parties, together with a written outline of submission from Counsel for the Plaintiff. Those documents will be retained in the Court file. 40 The Plaintiff as the widow of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such she has the standing to bring the present proceedings. It will be appreciated that each of the three children of the Deceased is also an eligible person, within paragraph (b) of the foregoing definition. The only other persons who may be eligible persons in relation to the Deceased are the Plaintiff's own three children, none of whom has make any claim for provision from the estate of the Deceased. 41 The effect of the testamentary provisions of the will of the Deceased is that the Plaintiff will be deprived of her residence. It would then be necessary for the Plaintiff, at the age of 81, to seek to acquire some other form of accommodation, which she could do only after she receives her one-half share in the net proceeds of the sale of the Blakehurst residence. 42 The Deceased, even if motivated by the consideration that his own children should receive an ultimate benefit in the Blakehurst house, did not see fit to give to his wife (after a long and devoted marriage) a life estate in their matrimonial home, or even a right of residence therein for her life. The Deceased does not seem to have considered where the Plaintiff should live between the date of the sale of the Blakehurst residence and the receipt by her of one-half of the net proceeds of that sale, which proceeds she would need in order to acquire some substitutional accommodation. 43 That the intervention of the Court in favour of the Plaintiff is required was recognised by Counsel for the Defendants, who in his final address submitted that it was appropriate that the Plaintiff should receive (as I understand it) a one half share in the Blakehurst property (or the proceeds of sale thereof) absolutely, together with a life estate in the other half share in the property (or in the proceeds of sale thereof). Until then the case for the Defendants had essentially been that it was inappropriate for the Plaintiff, at her age and in her physical and material circumstances to dwell alone in the Blakehurst property, and that she should remove into smaller (and less valuable) accommodation in some other location. 44 It has been said that, as a broad general rule, in the case of a lengthy marriage (as was that of the Plaintiff and the Deceased) it is the duty of a testator to his widow, to the extent to which his assets permit, to ensure that she is secure in her accommodation, that she is enabled to live at a standard no less than that which she enjoyed during his lifetime and that she should have a fund to meet any unforeseen contingencies (see Luciano v Rosenblum (1985) 2 NSWLR 65). 45 In the instant case the will of the Deceased gives to the Plaintiff no security of accommodation. Indeed, it deprives her of the home in which she lived for almost the entirety of her marriage to the Deceased, and, as a practical consequence, it precludes her from acquiring any similar or equivalent accommodation. Neither does the will give to the plaintiff any other benefit, with the consequence that her already modest lifestyle will be reduced, and she certainly will have no fund to meet unforeseen contingencies. 46 I am satisfied that by the terms of the Deceased's will the Plaintiff has been left without adequate provision for her proper maintenance. 47 What the Plaintiff requires at this stage in her life, she now being aged 81, is security and flexibility. A life estate in part, or all, of the house property can give her neither. (A life estate in part of the proceeds of sale would be of little practical benefit in the acquisition of other accommodation.) The Plaintiff would then be tied to that particular house, even if unforeseen circumstances (resulting from advancing years or physical infirmity) required that she ultimately remove to some other residence or to some other form of accommodation. Such a need for security and flexibility can rarely be met by giving to an applicant merely a life estate or a right of residence: see Permanent Trustee Company Limited v Fraser (1995) 36 NSWLR 25 per Sheller JA at 47. 48 At the present time the Plaintiff is happy and contented in her accommodation, which has been her home for the best part of thirty years and which she is able to maintain. She desires to remain in her familiar surroundings, in an area in which her friends and caring neighbours and her church and familiar shops are located. She does not wish at her stage in life to be required to remove to smaller accommodation in some remote or unfamiliar location. 49 It is only by receiving the entirety of the house property absolutely that the Plaintiff will have the security and flexibility to which in my conclusion she is entitled. I recognise that none of the children of the Deceased is in affluent circumstances (but neither is the Plaintiff). Nevertheless, I do not consider that the competing claims of the children of the Deceased are such as to reduce, let alone extinguish, that entitlement of the Plaintiff to receive the Blakehurst property absolutely. However, if, after the payment of costs, there are any other assets still remaining in the estate, then, under the terms of the will, Mrs. Barker will be entitled to receive the balance of any investments, whilst she and her two siblings will share equally in the residue of the estate. 50 I make the following orders: (1). I order that, in lieu of the benefit given to her by the will of the late Roy Alwyn Smith ("the Deceased"), the Plaintiff receive absolutely the house property situate at and known as 9 Townson Street, Blakehurst. (2). I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased. (3). 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.