New South Wales Supreme Court CITATION : Harris v Sheehan [2007] NSWSC 1334 HEARING DATE(S) : 19/11/2007 JUDGMENT DATE : 26 November 2007 JURISDICTION : Eqyuity Division JUDGMENT OF : Associate Justice Macready at 1 DECISION : Paragraph 34 CATCHWORDS : Family Provision. Claim by a son. No matter of principle. Order for a legacy. PARTIES : Carl Harris v Kevin Vincent Sheehan & Charles John Sheen (Estate of Enid Merle Sheehan) FILE NUMBER(S) : SC 1216/2006 COUNSEL : Miss L Cohen for plaintiff Mr J Wilson SC for defendants SOLICITORS : HA Miedzinski Lawyers for plaintiff Conroy & Stewart for defendants - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE MACREADY Monday 26 November 2007 1216/2006 CARL HARRIS v KEVIN SHEEHAN & CHARLES JOHN SHEEHAN ANOR (Estate of Enid Merle Sheehan) JUDGMENT 1 HIS HONOUR: This is an application under the Family Provision Act 1982 (NSW) in respect of the estate of the late Enid Merle Sheehan who died on 24 September 2005 aged 103 years. Her husband had died before her and she was a widow at the time of her death. She was survived by her son, Carl Harris ("Carl"), the plaintiff and her adopted sons Charles John Sheehan ("Charles") and Kevin Vincent Sheehan ("Kevin"). Kevin is the defendant in these proceedings. The last will of the deceased 2 The deceased made her last will and testament on 22 June 1999. Under the will she appointed the Kevin and Charles as her executors. She bequeathed legacies of $5,000 each to Carl and Charles and legacies totalling $6,000 to her grandchildren and a niece. She devised her house property at 25 Ocean Road, Broom's Head to the defendant. Assets in the estate 3 At the date of the death of the deceased had her property at 25 Ocean Road, Brooms Head which was then valued at $300,000, a National Australia Bank account of $4,553 and some furniture and chattels worth $500. The evidence before me shows that the property at Broom's Head has a value of $1,200,000. Costs have been incurred in the proceedings. The plaintiff's estimate of costs is $52,580 and the defendants' costs $79,600. There are legal costs for the estate administration and funeral debts of $9,522. 4 Charles John Sheehan also brought proceedings under the Family Provision Act 1982 (NSW) but those proceedings have been compromised by the defendants accepting a liability to pay $155,000 in settlement of those proceedings. The total of these costs and expenses is $296,702. Family History 5 Carl was born on 9 June 1923. He is an ex-nuptial child of the deceased and he was born when the deceased was 21 years of age. The deceased's parents Frederick and Christina Harris raised Carl as their child. It would appear that the deceased and Carl were raised as brother and sister by the deceased's parents although Carl says he found out that the deceased was his mother when he was 8 years of age and when his mother married Bernard Sheehan 20 May 1931. After the marriage the deceased left her grandparents home at Taloumbi Street, Maclean. Carl continued to live with his grandparents until he enlisted in World War II in 1942. 6 Charles was born in September 1939. Kevin was born in October 1940. They were the children of Isabella Mulville and her husband Charles who died in a motor vehicle accident on 28 February 1944. The deceased and her husband adopted John and the defendant on 2 August 1944. Thereafter the deceased and her husband raised John and the defendant as her children. 7 Carl married on 24 March 1945. At that time he and his wife Shirley were members of the defence forces. Carl went back to the Maclean area but was unable to find work. In 1946 Carl and his wife moved to Sydney and lived in Sydney until 1986 when he retired from work. He and his wife then sold their house at Bardwell Park and purchased a property at 44 Osborne Parade, Warilla. 8 Carl and his wife live in their home at Warilla but they have entered into a contract for a 99 year lease of a two bedroom unit at the Links Seaside Village at 1 Ross Street, Wollongong. This facility is presently under construction and is due to be completed in April or May 2008. 9 Kevin is a builder. He has lived all his life in the Maclean area. He married Marlene in September 1967. They have two children Phillip and Leisa each of whom is independent. When Kevin married he and his wife moved to live in the property at 8 Alexander Street, Maclean where he had previously lived with the deceased and her husband. The deceased and her husband Bernard Sheehan moved out of Alexander Street to Ocean Road, Broom's Head at the same time. 10 Bernard Sheehan died in 1970. On 14 March 1978 the property at 8 Alexander Street, Maclean was transferred to Kevin for a stated consideration of $20,000. Between 1967 and 1978 when there was a transfer Kevin gave evidence hat he spent some $23,835 on renovations to the property. So far as the consideration of $20,000 is concerned Kevin asserts that he paid this sum. In the absence of any documentary evidence to suggest otherwise I will accept his evidence on this matter. 11 By the mid 1980s the deceased's sight was affected and she could only recognise people by their voices and she also suffered hearing loss. In April 1999 she suffered a stroke. 12 In 2001 renovations were done to the Broom's Head property no doubt using some of the $30,000 which the deceased had in her bank account. In 2002 she moved into a nursing home at Maclean. On 24 September 2005 the deceased died. Carl and Charles' proceedings were commenced within time. Eligibility 13 Carl is an eligible person. In Singer v Berghouse (1994) 181 CLR 201 the High Court has set out the two-stage approach the Court must take. At page 209 the Court 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 exists between ' adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Ltd [1938] AC 476 . The determination of the first stage in the two-stage process calls for the assessment of whether the provision (if any) made was inadequate, for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and 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 a 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 have refused to make an order notwithstanding that the applicant is found to have been left without an adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder ((1951) 82 CLR 645 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." Carl's situation in life 14 Carl is 84 years of age. He is married and has no dependent children. He and his wife, Shirley, own their property at 44 Osborne Parade, Warilla estimated to have a value of $680,000 - $720,000. They have an old Mitsubishi Magna station wagon given to them by their daughter valued at $1,300-$3,000. Their savings account and their personal possessions amount to a small sum. 15 Carl receives a Veterans Affairs service disability pension of $723 per fortnight. Shirley Harris receives a part Veterans Affairs service disability pension of $628 per fortnight. Shirley also receives a superannuation pension from the State Super Fund of $440 per fortnight. This is a total of $896 a week. Their present weekly outgoings are $766. They have debts of $500 to K-Mart and $800 on a bankcard and there is a debt of $30,000 which Carl owes his daughter. She is not asking for repayment of this debt at this time. 16 As I have mentioned Carl and his wife have entered into a contract for a long-term lease of a two bedroom unit at Links Seaside Village, Wollongong. This has similar views to the home they live in and it looks out over a golf course towards the sea. The entry cost is $685,000 and lease registration fee, stamp duty and legal costs are approximately $1,400. 17 There is a weekly management fee of $106.76. The unit is appropriate for them as it accommodates elderly people. 18 Carl's relationship with the deceased was continuous throughout both their lives. Carl was raised by his grandparents rather than his mother and he did not have the benefit of living with his mother in a child/parent relationship. His mother lived at Maclean and from time to time over the years Carl would travel from Sydney to see her. For many years Carl was not able to afford a car so he would normally go by train to the north coast and catch a bus to Maclean. Carl and his family used to go to visit the deceased at Maclean for annual holidays and he probably saw his mother once a year. He did communicate with his mother by telephone and there are telephone records of frequent contact between them. 19 Although it was not a relationship which was generally known to others associated with the deceased I am satisfied that in the circumstances that Carl was a dutiful son and was in contact with his mother throughout their lives. Carl did not contribute to the estate of the deceased although on occasion he would work on the property. At times his mother would give him money for petrol so he could afford to visit her and return by car to Sydney. 20 It is necessary to consider the situation of Kevin who has a claim on the bounty of the deceased. Kevin's situation in life 21 Kevin is 66 years of age, married with no dependents. He and his wife have the following assets: Block of land 45B Wharf Street, Maclean $170,000 Home at 8 Alexander Street, Maclean 225,000 2005 Subaru 15,000 Cash at bank 51,640 Superannuation 30,753 Total $ 492,393 22 They have the following liabilities: Home loan $ 54,767 Car loan 6,942 Debt to daughter 2,000 Total $ 63,708 23 The debt which is the home loan of $54,767 arose because Kevin borrowed $56,000 to pay the legal costs of the estate which is included in the estimate referred to above. The figure that has to be paid if Carl is successful will be $240,702. 24 Kevin earns approximately $800 a week as an employed builder. The block of land at Wharf Street, Maclean has a shed on it where he keeps his building materials. 25 The evidence demonstrates that the deceased and Kevin enjoyed a close relationship throughout their lives. This continued when the deceased entered a nursing home in 2002. There is evidence that Kevin worked from time to time to improve the deceased's property at Broom's Head. He and his family maintained the lawns at the Broom's Head property. Further, it was submitted he made improvements to the property at Alexander Street before it was transferred to him. 26 It is plain that the deceased wished her son Kevin to have the property at Brooms Head. She expressed this wish to a number of people and she said that this was because he had spent a lot of his own money on the property and that he and his family had cared for her and looked after her since her husband had died. Discussion 27 It is necessary to see how Carl says he has been left without adequate and proper provision for his maintenance, education and advancement in life. 28 It is plain that Carl and his wife will be able to purchase the two bedroom unit at Links Seaside retirement village from the sale proceeds from their own home at Warilla. They will be left with few funds after the sale and they wish to have sufficient funds to cover problems they may have with their health. Carl suffers from macular degeneration and his eyesight has deteriorated to the stage where he cannot drive a vehicle at night. He is soon to give up his driving licence. He has had bladder cancer, he suffers from hearing loss and has had episodes of cerebral ischaemia. He suffers from multiple non-malignant lesions of the skin and diabetes which is treated with tablets. He also suffers from severe arthritis in his knees. His wife suffers from ischaemic heart disease, hypercholesterolemia, reflux oesophagitis, arthritis, asthma osteoporosis and urinary incontinence. She takes medication for these medical conditions. The doctor described her as an 82 year old woman who enjoys reasonably good health despite her multiple pathological states. The doctor expressed her future over the next five years as statistically one of downhill decline requiring more medical attention and intervention and more allied health support. 29 There is a 90 bed aged care facility being constructed at Links Seaside village, where they have arranged to buy the two bedroom unit which is separately owned but adjoins Links Seaside village. If Carl or his wife had a need to go into that facility they would need to pay an accommodation bond of about $250,000. At some time in the future they may both need to go into an aged care facility but no doubt the sale of Osborne Parade, Warilla, after the retention of fees on the sale would give them sufficient funds to do this. However, their concern is that if only one of them needs to go into the two bedroom unit they will have no funds with which to purchase the aged care facility. Where they propose to live is in the area where they have friends and it is about 2.7 kilometres from Woollongong Hospital and a shorter distance from the main shopping centre. There is also a bus service. It is a logical choice at this stage in their lives for them to acquire the two bedroom unit. 30 In his submissions Kevin criticised Carl's needs. First he submitted that Carl was not raised as a child by the deceased and was simply treated as a child of the deceased's parents. No doubt this is true but the fact of the matter is that he was a child of the deceased whether or not as a mother she had fulfilled her duties to him during her lifetime. The fact that she did not fulfil these duties, other than having a general concern for him, is a factor to be taken into account. Further, it might be noted that because of the fact that she was his mother she would be expected by members of the community to provide for him, notwithstanding that her personal circumstances when she was young made that obligation difficult to fulfil. 31 The second criticism is that there was more modest accommodation available in the Links Seaside Village development for $400,000 when the development was first marketed. However the cheaper units face west and do not have a view. This would have been a backwood step for Carl and his wife who have enjoyed extensive ocean views from their house at Warilla. It was submitted that this was simply a matter of choice and probably a deliberate choice in order to improve the chance of obtaining an award in the present case. 32 This has to be seen in the circumstances which now exist in respect of Kevin. In the last twelve months Kevin decided to move into 25 Ocean Road, Broom's Head and has put his properties on the market. After selling costs he should receive approximately $387,000 for these properties. The payment of the debts in the estate, the balance of his costs, the plaintiff's costs and the payment to settle Charles' family provision application will leave him with a liability of some $240,000. He will still have available approximately $140,000 after meeting these expenses, although he will have to discharge his home loan making it closer to $80,000 after the payment of legacies to other beneficiaries. 33 Kevin made the decision to sell his other properties and move into the Broom's Head property. I appreciate that it was the deceased's wish that he should live in that property for the kindness and help he gave the deceased over many years as well as the work he had done on the property. The fact of the matter is that Kevin has chosen to live in that property and no doubt as he is working he could take out some small loan to fund an amount to be provided for Carl. 34 In the circumstances I think it is appropriate that Carl should have a legacy of $250,000. The orders that I make are as follows: 1. The plaintiff, Carl Harris, receive a legacy out of the estate of the deceased in lieu of the provision already made for him of $250,000. 2. The plaintiff, Carl Harris', costs on a party and party basis and the defendants' costs on an indemnity basis be paid or retained out of the estate of the deceased. 3. Interest to be payable on the legacy at the rate provided for under the Wills Probate & Administration Act if not paid within four months of today's date and on and from that date. 4. In matter 4146/06 I make orders in accordance with the short minutes of order which I will sign and date and place with the papers. ********** 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.