Fahy v Barrs [2006] NSWSC 1321

New South Wales Supreme Court

CITATION : Fahy v Barrs [2006] NSWSC 1321

HEARING DATE(S) : 27/11/06 JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

EX TEMPORE JUDGMENT DATE : 11/27/2006

DECISION : Plaintiff to receive out of the estate a legacy of $80,000 and an interest free loan of $190,000 for extensions to plaintiff's house to be repaid 6 months after the plaintiff vacates his home.

CATCHWORDS : SUCCESSION [317]- Family Provision- Claim by widower/de facto partner of 33 years- Insufficient provision- Elderly widower needing home care- Daughter willing to reside with widower as carer if house is extended- Concern with benefit that might pass to non-party- Held widower to receive small legacy and interest free loan to be repaid 6 months after plaintiff vacates his home.

LEGISLATION CITED : Family Provision Act 1982

CASES CITED : Barns v Barns (2003) 214 CLR 169 Singer v Berghouse (1994) 181 CLR 201

Beresford Fahy (P) PARTIES : Kenneth John Barrs (D1) Kay Robyn Williams (D2)

FILE NUMBER(S) : SC 1805/05

COUNSEL : M Gorrick (P) D Charles (D)

SOLICITORS : G J Gooden (P) Houston Dearn O'Connor (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Monday 27 November 2006

1805/05 – FAHY v BARRS JUDGMENT 1 HIS HONOUR: This is an application under the Family Provision Act 1982 in respect of the estate of the late Veronica Mary Fahy. The application is made by a gentleman who is both the ex-husband of the deceased, who was known in her life-time as "Ronnie", but who also lived with her after their divorce as man and wife until her death. The deceased died on 19 September 2004, aged 71. She had made and published her last will on 1 July 1982, probate of which was granted to the defendants on 9 December 2004. 2 The deceased married the late Walter Barrs in 1945. The defendants are children of that marriage. The first defendant is Kenneth John Barrs, who was born in 1950 and so is now 56, and the second defendant is Kay Robyn Williams, who was born in 1945 and so is now 60. Walter Barrs died in 1961. 3 The deceased met the plaintiff in 1971. She was working as a barmaid and the plaintiff a garbage man for Leichhardt Council. The plaintiff moved into the deceased's house at Abbotsford in 1971. He moved into that house with his step-daughters, these were Kerry and Debra, daughters of Joyce Wall (a former de facto wife of the plaintiff) and Donna and Sharon, daughters of the plaintiff and Joyce Wall. 4 The plaintiff and the deceased married in 1976. In 1982 the deceased divorced the plaintiff. I was not favoured with any of the divorce papers which I would have thought would be available in the former matrimonial registry of this Court, and some of the evidence about it is rather bizarre. The plaintiff says: "Ronnie and I were divorced in 1982. I cannot recall being served with the divorce application. The first moment I can recall knowing about the divorce was when a man came to my door and informed me that he had a document to give me that showed that a divorce had been obtained. He asked if I wanted the document to be explained to me. I replied with words to the following effect: 'Don't worry, my wife will be here soon and I will ask her'. When Ronnie arrived at my flat that afternoon I said … 'What are we divorced are we?' Ronnie replied: 'Yeah'. I said. 'Good luck to us. It didn't cost me nothing, did it?' She replied, 'No'. Ronnie and I went out that night for a drink at Leichhardt-Lillyfield RSL. Ronnie stayed with me at my unit at Leichhardt that night. Ronnie never explained to me why she got a divorce from me." 5 The plaintiff says that the deceased never removed her wedding ring. The first defendant says it was removed but reinstated a year or so later. However, there is no doubt that the deceased and the plaintiff continued to live as man and wife, perhaps after a small gap. 6 As the plaintiff says in paragraph 85 of his principal affidavit, he and the deceased lived together for the majority of the 33 years prior to her death. The will was made about the time of the divorce, but because I have not seen any of the divorce papers I am unable to say when in relation to the divorce the will was made. Essentially, the will gives the whole estate to the defendants, that is, the deceased's son and daughters. The estate consists of a house at Abbotsford, value agreed to $700,000. In addition, there is $76,000 which has already been distributed to the defendants and $1,250 in an account that was opened to receive the rent from the Abbotsford property. So there is $777,250 less costs of the sale of the Abbotsford house and the costs of these proceedings. 7 The estimate costs of sale of the Abbotsford house is $16,000. As to the costs of these proceedings, there is affidavit evidence from solicitors which assess these as totalling (both sides) $167,000. This was based on a two day hearing. I do not accept for a moment that the costs assessor would necessarily allow what appear to be exorbitant costs, but, for present purposes, I will take the figures less 10 per cent because the case finished in a day, so that makes the costs at $150,000. On this basis $777,000 less $166,000 makes an estate of $611,250 nett. 8 I now pass to the plaintiff's history, some of which I have already noted. The plaintiff married his first wife Gloria Stewart in 1953 and they had a son Wayne Fahy born in 1954. The plaintiff and Gloria were divorced in 1959. The plaintiff commenced living in a de facto relationship with Joyce Wall in the early sixties. Joyce Wall died in 1970, and as I have said the plaintiff took care of both Joyce Wall's daughters from a previous relationship as well as his own daughters by Joyce Wall. He moved with those four girls into the deceased's house at Abbotsford in 1971/1972. 9 In 1977 the plaintiff and his daughters left the Abbotsford house and commenced living in a rented unit at Leichhardt. However, there was an ongoing relationship between the deceased and the plaintiff and they constantly drank together at an RSL club in the district. Now, where they actually lived between 1977 and 1994 is a little unclear, but it matters very little. 10 The plaintiff took voluntary redundancy from Leichhardt Council in 1994 when he was 60. With this redundancy he purchased a house in Campsie. The plaintiff says that he said to the deceased: "Do you want to come and live with me at Campsie?" She said: "Yes". They packed up her possessions and moved them to Campsie. Thereafter, the plaintiff and the deceased lived together until May 2004 when the deceased was admitted to hospital with terminal cancer. 11 The deceased's house at Abbotsford was retained. The plaintiff's stepdaughter, Debra, lived there at one stage in consideration of her paying the deceased's health insurance premiums. Later, various children of the defendants lived there under a similar arrangement. When the defendants, who live in Canberra and Brisbane, made occasional visits to Sydney, they and their spouses also stayed in the Abbotsford house. The first defendant says that they always kept the front room of the Abbotsford house available for the deceased should she want to occupy it, however she never did, and the fact remains that because the deceased was living with the plaintiff in his Campsie house, the Abbotsford property was available to other members of the deceased's family and extended family at a very much discounted fee. 12 The relationship between the plaintiff and the deceased was at times stormy and both seemed to drink to excess, and there is a whole lot of material in the evidence as to family disputes and fights and disagreements. As in all these applications, the court is given a bulk of legally insignificant details about matters which are obviously keenly felt by the parties and which they feel they need to say, however, they have little effect on the ultimate result of the case, and I do not consider that it is appropriate to rule on any of these facts, as such a ruling will only inflame matters worse and, as I say, they do not go to the central point that I have to decide. 13 There is some suggestion that there was an oral agreement between the deceased and the plaintiff that they would share expenses and that neither would have any claim on the property of the other. The evidence on this point is ephemeral. Indeed, Mr Paxton, who gave some evidence of the agreement was unimpressive as a witness of good memory and there is little else on the point that was actually admitted into evidence. Moreover, had it been the case, it is extraordinary that no mention is made in the advice of Mr O'Connor, solicitor, which the deceased obtained from him in 1991. I am not able to find that any such agreement existed. Even if such agreement did exist, it would not be sufficient to preclude the Family Provision Act application; see Barns v Barns (2003) 214 CLR 169. 14 The plaintiff had a car accident in 1974 and both his legs were broken. The deceased was assisted by the plaintiff's mother and they nursed him and cared for him and his four daughters while he was recovering. The plaintiff says that he has had two heart attacks, the first one when he was on the job with Leichhardt Council during the 1970's and the second was at the Leichhardt RSL when his daughter, Sharon, drove him to Balmain Hospital where he was admitted for three or four days. In November 1996 the plaintiff had a triple bypass operation on his heart. The operation was successful. However, on his own evidence, the plaintiff was given strong medical advice to quit smoking, which, unfortunately, he has been unable to accept, though he has said he has reduced the number of cigarettes he smokes by about half. 15 The plaintiff says he has had three strokes since his heart bypass operation, one on Christmas Day 1998 when he suffered partial paralysis to his left side and was hospitalised in Orange. In 2000 he had a second minor stroke whilst at home in Campsie, and in February 2005 he had a third stroke and was admitted to Canterbury Hospital for three or four days. 16 He suffers constant pain in his legs as a result of the motor vehicle accident in the 1970's. He suffers from arthritis and his legs are a bit tottery, especially since his heart attacks. He has also been diagnosed with vascular disease on the brain and there is a history of Alzheimer's disease in his family. The plaintiff says that he is concerned about his state of health and his future. He is constantly short of breath and finds it difficult to move around. He has mobility problems and he says that he would like his daughter, Donna, to move in and take care of him. His daughter, Donna, has two daughters and it would be necessary to extend the home at Campsie to accommodate them adequately and this would cost about $190,000. Alternatively, he could move into a larger home and he estimates that at $680,000 to $800,000, however, there is no supporting evidence of that figure and I would not accept those figures without some support. In addition, his current home needs plumbing work and he needs some help by way of a mobile chair and needs a small capital sum to deal with that, otherwise his main expense is the cost of purchasing cigarettes. 17 The plaintiff's income is his pension. In his original affidavits he said that with interest from investments he was receiving $258 a week. The plaintiff sues by his tutor, his daughter Donna Waite, and her affidavit sworn 17 November 2006 updates the plaintiff's income to $288.75 per week with expenses of roughly the same amount. The original affidavit showed that the plaintiff was spending $120 a week on cigarettes. Donna Waite's affidavit reduces this to $80 a week but it is still a very significant amount. 18 The house at Campsie has been appraised by the local real estate agent and the value is agreed between the parties for the purpose of the present proceedings at $370,000 and the contents of the home are said to be about $20,000. The plaintiff has $34,000 on term deposit. Mrs Waite also gives confirmatory evidence as to the proposal that she live in an extended version of the Campsie property and care for the plaintiff so long as that is possible. 19 There was some evidence by a social worker, Ms. Coppin, but her evidence was of limited value for two principal reasons: (1) she was over-reliant on what she was told by the plaintiff's daughter; and (2) she gave costings as if there was some unlimited pool of money to meet the plaintiff's needs, as used to happen with motor vehicle accidents before the Civil Liability Act 2002. The clear inference from her evidence and from Associate Professor Chan, a geriatrician, however, was that the plaintiff's faculties were failing, he was suffering, inter alia, from dementia, and that he could be reduced to the state where he would be in institutional care but it was impossible to say what sort of time period one was looking at. It depends, as Associate Professor Chan said, on some incident, such as a fall or further stroke, or not. However, that material indicated that it was preferable for the plaintiff to stay in his home and be cared for if that were at all possible. 20 The defendants are both people who might be described as being neither rich nor poor. The first defendant has a good job in the Commonwealth Public Service. He has a home in Canberra, which he owns as joint tenant with his wife, worth $370,000 and no significant debts. The second defendant has her home in the Brisbane suburbs with an estimated value of $200,000 subject to a mortgage of $25,500. She has a small amount of savings. She and her husband earn $46,400 a year, however, her husband has moved onto a pension and she has some health problems. 21 Now, I believe that what I have said covers the vital facts and that is all I need say in order to decide this case. As I have said earlier, the vast amount of detail as to family relationships was something that the parties needed to get off their chests but which is not something upon which I need to rule. 22 The way the court must approach this sort of case is laid down in the decision of the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201, especially 209-210. The court is required to take a two-stage approach. The first stage is to consider the question whether the provision, if any, made for the plaintiff was inadequate. The second is to consider what, in all the circumstances, was the proper level of maintenance which the court should order be provided by the executors. However, one must always remember that the Family Provision Act or its predecessor was enacted in the factual matrix that since Magna Carta people have been able to enjoy freedom of testamentary disposition. The court is only justified in interfering with that freedom if the court can see that under the statute an adjustment needs to be made and then only so far as that adjustment should be made. 23 Applying the two-stage approach, Mr Charles, who appeared for the defendant, very properly conceded that, as the plaintiff was left nothing, the first barrier had been overcome by the plaintiff. The question really is, what provision should be made for the plaintiff in the circumstances? What provision would a wise testator have made as at today's date with all the circumstances that the court has had brought to its attention? 24 Now, I am very much indebted to both Mr Gorrick, who appeared for the plaintiff, and Mr Charles, who appeared for the defendant. It is very difficult for lawyers in a case such as the present where one is really dealing with a dispute between the first and second families of a parent to present the case professionally and dispassionately, but I am indebted to both counsel for doing that in the present case. 25 Mr Charles' submissions I found particularly helpful and indeed I will quote from page 13 of the submission because it sets out concisely and precisely the problems. He says: "The real issue between the parties is at the second stage of the Singer v Berghouse enquiry (ie assessing a proper provision for the plaintiff). The difficulty in the assessment would not be insurmountable if the plaintiff sought provision in an amount commensurate only with a sum to cover the expenses of maintenance and renovations of his Campsie house, and the cost of purchasing mobility aids to make his life more comfortable. However, the plaintiff's evidence is directed to more than those concerns, ie it seems that in addition to a sum covering those concerns, the plaintiff says he needs a further capital sum to extend his Campsie home in order to provide accommodation for his daughter (who will be principal carer) and her family, or alternatively, to provide a fund to cover the expenses of home nursing care at his Campsie house. This is unrealistic because the alleged cost of either of those scenarios is out of proportion to the size of the deceased's estate. It is also inappropriate to ask the court to exercise its discretion in that manner in the plaintiff's favour because the plaintiff's evidence is not adequate and cannot be considered a reliable guide to the reasonably likely future needs of the plaintiff. There is no actuarial advice on the cost of caring for the plaintiff in the future. Further, on the plaintiff's own evidence, there are uncertainties associated with the level of care required for the plaintiff, but particularly the views of his doctors that he will need accommodation in a nursing home facility at an(unspecified) later time. In this respect, there is no evidence on the plaintiff's life expectancy. The position of the plaintiff as a de facto widower does not mean he must be accorded primacy over all others regardless of circumstances and regardless of the performance of the stages of consideration as described in Singer v Berghouse : Bladwell v Davis [2004] NSWCA 170 at [19]. The plaintiff is clearly in a position where it cannot be said that he lacks assets of substance, and particularly so in the event negotiations are required between an institutionalised caregiver and the plaintiff on the level of accommodation bond such caregiver requires. The plaintiff's need within section 7 of the Act may be provided by a contingency sum which takes into account a lump sum that can be either invested for the plaintiff or used by the plaintiff when he needs to cover the cost of purchasing such items as a motorised scooter and medical costs and to enable him to acquire other items and utilise services which will make his life more comfortable. This includes maintenance and repairs to his Campsie house. A sum in the order of $60,000 is appropriate in the circumstances." 26 There is a tremendous amount of good sense in those submissions. 27 Mr Gorrick, on the other hand, says that here we have a situation of a man and woman who have lived together for 33 years. Their relationship may have been stormy at times but it was permanent. If the situation were that there had been a de jure marriage for 33 years, and one found that the children of the first marriage were relatively well-off, one would have little hesitation in giving the husband the whole of the estate, or at least a half. In the instant case Mr Gorrick submits a legacy of $250,000, which would be less than half the estate, would be a proper provision. There is some sense in that, too. 28 The problem for judges in these cases is to balance two sensible submissions in working out what a wise and just testatrix would have done in all the circumstances. There are cases going back almost a century which make it clear that when making an order under this Act the court must only be providing for the plaintiff and not for the plaintiff's family. 29 Now, the mere fact that, as a result of the order, some members of the family may achieve some benefit is no reason why the court would not make an order for the plaintiff but one must bear in mind that it is no part of the court's jurisdiction to provide benefits to non-parties. 30 Mr Gorrick said that the daughters could well have been the plaintiff's and so they were not really outsiders, but the fact is they are not plaintiff's. Thus, in the old days, where courts were accustomed to making orders by way of life estate, that sort of order was made principally because it would not be fair in the family type situations to allow the capital value of assets to pass to the second family when the life estate terminated. We have now moved away from life estate orders, but the general principle must be borne in mind. 31 The evidence is that the plaintiff has made a will and he probably (though I do not have to rule on this) does not have the capacity to alter it, and under that will Donna Waite will take the property. Thus, if there is an order that the plaintiff receive a legacy of the magnitude suggested by Mr Gorrick, then if the plaintiff were to die tomorrow, then $250,000 would pass to Donna Waite. On the other hand, of course, the plaintiff may survive for another 20 years. 32 Mr Charles is quite right that the evidence on this matter is not very satisfactory but I should balance that statement by saying that as accidents to the plaintiff, such as a fall or a further heart attack, are the principal matters which would affect his prognosis, to a great extent the evidence could not be improved upon. 33 However, it is seriously put forward that I should consider the alternative, selling Campsie and buying a new house, and there Mr Charles is quite right, there is just no proper evidence as to how much that would cost. 34 I also accept the submission that the costs of Home Care given by the social worker offers no real assistance to the court. We just do not have the funds to meet that sort of expense nor would the testatrix have been expected to make that sort of provision. 35 It is true that one normally expects that where there has been a marriage of 33 years that the predominant consideration will be given to a provision of at least a roof over his head and some nest-egg provision for contingencies for the surviving spouse. However, these days that is usually done by way of provision of what is normally called a Crisp order after the decision of Holland J in the 1970s, that is, to provide for a house, but if the house has to be sold the obtaining of a retirement village or nursing home accommodation. However, there is just no material here, as to how much that would cost, and there is also the X factor that we cannot predict when that sort of accommodation is going to be necessary. Furthermore, the recent decisions of this division and in the Court of Appeal suggest that one should never take as a general rule that it is an obligation of a testatrix to make such provision for a long-term spouse though it is a general guideline that that is so. 36 Now, putting all those thoughts together, it seems to me that there should be focus on providing for the extensions of the Campsie home so that Mrs Waite and her daughters can live there and care for the plaintiff. That appears to be the most satisfactory solution to the plaintiff and the least expensive. 37 Now, if one were to provide the plaintiff with an outright legacy of $80,000 for his expenses, and then require the estate to lend the plaintiff $190,000 for the repair of the house with the proviso that that $190,000 would not bear interest, but was to be repaid upon the plaintiff vacating the house (or perhaps six months after the plaintiff vacating the house so as to allow time for it to be sold), then the situation would be that there would be no possibility of any great benefit moving from the deceased's family to the plaintiff's family. Assuming the Sydney property market continues to improve, there would be, of course, some benefit passing to the plaintiff's family, but of little moment. 38 There is no evidence as to the increase in value of the plaintiff's property as a result of the $190,000 improvement but if, for the sake of argument, one takes approximately half that to be the improved value of the Campsie house it would be valued at $470,000. Taking $15,000 for the costs of sale would mean that upon the plaintiff's selling of the house and repaying the $190,000, there would be something like $265,000 remaining to make provision for a retirement village or a nursing home. Now, we just do not know whether that is enough or not, but all I can do is my best on the evidence and that seems to me to be the solution. 39 The matter will stand over for short minutes to be brought in and it may be that the parties can adjust those figures to their mutual benefit and it may be that when proper consideration is given to capital gains tax and other problems that there will be some variation. I do not mind that, but, essentially, then, the court will make an order that the plaintiff receive out of the estate of the late Veronica Mary Fahey: (a) a legacy of $80,000; and (b) a loan of $190,000. The said loan is to be interest free and is to be repaid 6 months after the plaintiff vacates his home at 92 Seventh Avenue, Campsie. No interest is to be paid so long as these funds are made available by a certain date and thereafter interest in accordance with the court rules. The costs of both parties are to be provided for and the exhibits to be returned. The loan is to be secured on the Campsie property and likewise the loan is to be repayable 6 months after the plaintiff dies. 40 I stand the matter over for short minutes to be brought in at 9.50 am on Friday 8 December 2006.