Chapman v Hudson [2006] NSWSC 373

New South Wales Supreme Court

CITATION : Chapman v Hudson [2006] NSWSC 373

HEARING DATE(S) : 01/05/06 JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

EX TEMPORE JUDGMENT DATE : 05/01/2006

DECISION : Dismiss the plaintiff's claim under Family Provision Act 1982 with costs.

CATCHWORDS : SUCCESSION [311]- Testator's family provision and maintenance- Testatrix's will entitled oldest two children to live in testatrix's house- Although plaintiff, as the third child, left with insufficient provision estate too small to accommodate her as house would have to be sold to satisfy claim- Sale of house would defeat testatrix's intention to provide a home for at least two of her children.

LEGISLATION CITED : Family Provision Act 1982, ss 7, 10

CASES CITED : Singer v Berghouse (1994) 181 CLR 201

PARTIES : Annette Marie Chapman (P) Shirley Anne Hudson (D)

FILE NUMBER(S) : SC 6511/04

COUNSEL : J Trebeck (P) G McNally (D)

SOLICITORS : Garden & Montgomerie (P) Matthews Dooley & Gibson (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Monday 1 May 2006

6511/04 - CHAPMAN v HUDSON JUDGMENT 1 HIS HONOUR: These proceedings are a daughter's application under the Family Provision Act 1982 with respect to the estate of the late Joan Mary Hudson, whom I will describe as the testatrix. 2 The testatrix died on 11 May 2003 having first made her last will on 19 August 1997. Probate of that will was granted to the defendant, another daughter of the testatrix, on 16 September 2003. The testatrix had four children; Christopher, now aged 50; Shirley, the defendant, aged 49; Annette, the plaintiff, aged 45, and Phillip aged 40. 3 The only assets the testatrix owned at the time of her death were her home at 19 Koorabel Road, Lalor Park, and a small amount of cash. The will provided that Shirley and Christopher: "May live in the house as long as they wish provided they pay all rates and taxes and other outgoings and all premiums for insurance policies effected by the Trustee in respect of the house and contents and keeps it in repair to the satisfaction of the Trustee, having regard to its condition at the date of my death." 4 When Shirley and Christopher had ceased to live permanently in the house, the house was to form part of the residue of the estate, which residue was to pass to the four children equally. 5 For some reason or other the executor distributed $1077.44 to each of the children on 12 December 2003. This included a distribution to the plaintiff. 6 Accordingly, at present the only asset in the estate is the house. The parties have agreed that this has a value of approximately $270,000. The plaintiff's solicitor has indicated that the costs of the plaintiff of these proceedings would be about $30,000 and the defendant's solicitors have said that the estate's costs are $28,500. 7 I have been greatly assisted by the digest of the estate provided by Mr Trebeck of counsel, who appears for the plaintiff, and by the written submissions of both parties. It would seem to me that Mr Trebeck's assessment of the costs of sale , if the property at Lalor Park were sold, at about $9,500 are substantially accurate. It thus means that if the plaintiff is to receive an order and to receive her costs, the house will have to be sold, unless the executrix can organise a loan and that there would be an estate of about $200,000, less any legacy that is awarded to the plaintiff. 8 A complicating factor would be that the sale of the house would mean that the gift to Shirley and Christopher of the right to reside might be vacated, unless the court made an order under s 10 of the Family Provision Act resettling the estate, and that if it did not make such an order then each of the children would be entitled to about $50,000. 9 No member of the family is in a very good position financially and some have health problems as well. The only member of the family who appears to have a full-time job is Phillip, who has a retail business at Cowra with his wife, and the defendant has a permanent casual job as a receptionist for five half-days a week in the Sydney area. 10 The plaintiff's affidavits show that she has no skills. She left school at the end of year ten. She was married for three years. She had two children. She was divorced in 1983, however, she recommenced living with her former husband in 1987 and they lived together in Sydney and Melbourne through to 1997. However, the plaintiff has had a severe alcohol problem and this was the cause of the final separation with her husband, and has been the cause of a lot of her other problems. She says that now she is completely sober and that she is off the drink forever, but Mr McNally, for the defendant, by his questions in cross-examination showed that that was not necessarily accepted by the rest of the family. I hope it is so, but past history shows that one can never be completely sure about these matters. 11 The defendant, as I have said, works part-time. She earns a modest amount per month, of which almost the whole goes on living expenses, rather than any extravagance. She has a son, David, and he stays with her, paying about $50 a week board, but that, of course, includes his food. 12 The eldest son of the testatrix, Christopher, also lives in the home at Lalor Park. Christopher for quite a period lived in the caravan park at Lansvale, but, as with many residents of that park, he has had to leave it and now lives with the defendant at the Lalor Park house. He is on social services and he has some income to devote to paying the expenses of the home, but not a very great deal. 13 The plaintiff is a person with virtually no assets. She is living in Cowra in rented accommodation of $130 a week. Her only income is from social services. She is in ill health and, in particular, has a problem with her liver which appears to have been brought about by her past alcoholism. There appears to be little doubt that of the children the defendant spent most time with her mother, the testatrix, and nursed her in the last year of her life. 14 The plaintiff did have regular communication with the testatrix up until the time she went to Melbourne, and thereafter the testatrix would stay with her for two weeks a year between 1991 and 1998. However, her last face-to-face contact with the testatrix was in 2000. There have been telephone calls since 2000. The reason for the lack of communication was said to be the plaintiff's illness through her alcoholism. 15 There appears to be little doubt that the testatrix thought that money given to the plaintiff would only be wasted through drink, and at the time she probably had good cause to think that. The plaintiff, however, says that at present she has beaten the alcoholism and she needs just a small amount of money to be able to pay for the necessities of life. She says that there is no furniture or glassware in her home and she would like to buy goods of this nature only to about $7,000. Mr McNally suggests that if she asked the Salvation Army they would supply them for her, but the plaintiff gave me the indication that she would prefer a superior quality if she could. 16 She would also like to buy a motor car to the value of $10,000 or $15,000, to get around. She does not presently have a driver's licence. She thinks she lost her licence because she did not pay a fine, but this is all in the period that is blurred to her and she cannot be completely certain of that. 17 There is one other matter that I should mention. As I have said, the testatrix died on 11 May 2003. The last day for making an application under the Act would appear to be 11 November 2004. The summons was filed on 1 December 2004, and so was a few weeks late. The plaintiff seeks that the time be extended. 18 The plaintiff says that she did not understand about the Act or the time limit until the time that she consulted a solicitor shortly before the summons was issued. However, she had received the legacy in December 2003. Although she cannot remember now receiving it, but thinks she must have spent the amount of the legacy on drink, the fact remains that for all intents and purposes the estate, other than the house, was fully distributed in December 2003 and had there been any protest at that time then it may well be that the distribution would never have been made. 19 I should digress here by saying that this will is not the sort of will that one would expect an experienced solicitor to make for anybody in this 21st century. The will does not specifically deal with who is to pay capital expenses of keeping the home in repair for what might be a period of up to 40 years. It is quite arguable that the words used in the will are only sufficient to deal with income-type repairs and not expensive capital repairs, so that there is a burden, particularly on Phillip, who seems to be the only one with a full-time job, to contribute to the expenses of capital repairs, or at least being somehow responsible for any mortgage that was taken out to pay for those repairs. 20 Just how this should work out in practice is none too clear as the difference between capital and income, when there is a life estate, or the equivalent, is one of the most awkward and expensive matters that presents itself to lawyers. No-one wants to contribute to a fund from which they may only derive a benefit in 40 years time. 21 Secondly, no provision was made for what should happen when Shirley and/or Christopher get too old to live in the home. Under the will the home would be sold and the proceeds distributed four ways. On present figures that would mean $50,000 each, completely inadequate for anyone to buy accommodation for the rest of their lives. If it had been possible to rewrite the will to prevent the capital and income problems from arising, and to deal with what might happen when Shirley and Christopher get too old to live in the property, I would have done so, but I have no warrant to do so, unless the parties consent, or unless an order can be made for the plaintiff under s 7 of the Act and a consequential order made under s 10. 22 As some of the parties are not talking to each other they have been unable to settle this matter amicably. They have been unable to rearrange things in a way that could have benefited them all. Instead they have amassed legal costs of $58,500 in an estate which is only $270,000. That probably means that all of them are going to hurt and none of them are going to really enjoy much of their mother's benefaction. However, that is the way they have behaved and as they have made their bed, so they must lie on it. 23 There is one other matter I must mention and that is that although I do not have the full details, and I am glad of that, there appears to have been a very deep argument between Phillip, on the one hand, and Shirley, on the other hand, over a party that was arranged for Shirley's son David a couple of years ago. Shirley got the impression that Phillip was going to cause trouble at that party so she changed its venue. Phillip, accordingly, never attended and he has not spoken to Shirley since. Shortly after that incident Phillip took the plaintiff to see a solicitor in Cowra, and that was what brought about the present application. 24 The plaintiff was asked in evidence: "Q. What caused you to make the claim against your mother's estate? What did you find out that caused you to make the claim?" 25 The answer simply was: "A. Why should I miss out?" 26 Of course, under Australian law each person has the right to leave their estate the way they wish. If they intend that one child should miss out, well then that is what happens, unless the child can show the court that under the accepted principles the testatrix had a duty to make provision for her and failed to do so. 27 Under the will all the plaintiff received was two paintings, (there is some evidence that she liked the paintings, but they have little intrinsic value) the $1,077.44 she has already received, plus a quarter of the estate when Shirley and Christopher finally vacate the Lalor Park property, which could be up to 40 years time. It may be that the plaintiff's health is such that she will not survive to receive this benefit, so that for all practical purposes she has received two pictures, plus around $1100. 28 Where there is a very small estate and there are a series of needy children it is very difficult for any testatrix, and it is very difficult for the court, to work out what should be the provision made for each applicant. In the instant case, the testatrix seems to have thought that there was no sense in making provision for the plaintiff because she would only spend the money on drink, but there was a need for the defendant and Christopher to have a roof over their heads. I have to judge the matter as at today's date, and it seems to me that while there is always a possibility of the plaintiff slipping back into alcoholism, on the balance of probabilities she has beaten her affliction and although her liver has been permanently damaged, and that could cause her expense, the money given to her is probably not going to be spent on drink. 29 Mr Trebeck says that I should regard the plaintiff as a person with special needs, and standing in the shoes of the testatrix as at today's date I should say to myself what would the community expect of a testatrix who has a daughter with special needs. The testatrix also has the other children, none of whom are particularly flush with money. 30 This is a very awkward question. Obviously if there was some free capital, and there were no competing needs, the community would say and I would say that the testatrix should have made further provision for the plaintiff. However, looking at the figures, any even small provision for the plaintiff will in fact mean that the Lalor Park house will either have to be sold or will have to be mortgaged. If the plaintiff were to pick up a figure that was one of figures suggested by Mr Trebeck in argument, give the plaintiff a small legacy of $40,000, with the legal costs of both sides, that would mean that close to $100,000 would have to be found. 31 The court in these small estates encourages people not to go to the expense of getting full valuations and so the evidence as to what could be borrowed and how much it would cost is a little flimsy, but the defendant says she has made inquiries and the highest loan that she would be able to raise would be $57,000. There was no evidence on her side as to how she might repay that $57,000. She has virtually no excess income. Christopher has only a small excess over his expenses. The son, David, is paying board, but not only does that include his food but the odds are that he will be moving away from the home and getting married before the next five or ten years is through. 32 There are some figures from the Commonwealth Bank which say that if someone borrowed $110,000 over 25 years that would mean $765 per month at an interest rate of 6.81 percent. Now, I suppose one can halve that and say something like $380 per month for a loan of $55,000, but there is no guarantee that the rate of 6.81 percent is going to remain. A 25 year loan for a woman who is now 49 takes her through to 74, and I just really cannot see how it is, on the balance of probabilities, possible for the defendant to maintain such payments for that period. The consequences of her not paying are that the house has to be sold, the moneys fall into residue and everybody is homeless. 33 If, on the other hand, the plaintiff's claim is simply dismissed, even if the plaintiff is ordered to pay costs she probably will not have the money to be able to carry out that order, so that the defendant may have to find some $28,500, and even that is going to be very hard on her income, but is certainly possible. 34 I have, of course, been referred to the two-prong test in Singer v Berghouse (1994) 181 CLR 201. Looking at the first limb of the test, it seems to me that the testatrix who looked at her family's position may well have said, "Well if I had a little more money I would make provision for the plaintiff who has special needs, but if I do so it will mean I can make no provision for the rest of the children. I can, however, do the best by having a roof over two of their heads by doing what I have done in my will, so that whilst I regret this will not help the plaintiff, that's the way I think I should go". 35 Now in the circumstances, in my view, that was a proper attitude and I think the attitude I have to take. I appreciate the plaintiff has a claim, but, unfortunately, this estate is just not big enough to support her claim. 36 Accordingly, the proceedings should be dismissed with costs; the defendant's costs on the indemnity basis. The exhibits may be returned.