PERT v NORRIS-SMITH & ANOR [2007] NSWSC 1427

New South Wales Supreme Court

CITATION : PERT v NORRIS-SMITH & ANOR [2007] NSWSC 1427

HEARING DATE(S) : 26, 27 & 28/11/2007

JUDGMENT DATE : 11 December 2007

JURISDICTION : EQUITY

JUDGMENT OF : Bryson AJ at 1

DECISION : Summons dismissed.

CATCHWORDS : FAMILY PROVISION - de facto relationship over 20 years - testator by will left plaintiff half proceeds of sale of house and also furniture and personal effects - also half share proceeds of insurance - assets about $1,009.000 - residue to 4 adult daughters of testator - plaintiff received assets worth about $40,000 and entitled to $310,000 from sale of house - aged 63 suffering dementia and other disabilities, Age Pension. Medical evidence showed need for hostel care, entry bond $180,000 - HELD provision adequate, application refused.

LEGISLATION CITED : Family Provision Act 1982, ss 7 and 9

Luciano v Rosenblum [1985] 2 NSWLR 65 CASES CITED : Marshall v Carruthers [2002] NSWCA 47 Permanent Trustee Co. Ltd v Fraser (1995) 36 NSWLR 2446

Helen Mary Pert - Plaintiff PARTIES : Penelope Anne Rhoades (previously Norris-Smith) - First Defendant Cassandra Jane Herbert - Second Defendant

FILE NUMBER(S) : SC 4551/2004

COUNSEL : Ms A. Cotter-Moroz - Plaintiff Mr C. Harris SC - Defendants

SOLICITORS : G.A. Guthrie (Woolgoolga) - Plaintiff Clinch Neville Long - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRYSON AJ

Tuesday 11 December 2007

4551/2004 HELEN MARY PERT v PENELOPE ANNE NORRIS-SMITH & ANOR JUDGMENT 1 HIS HONOUR: The plaintiff claims further provision out of the estate of the late Brian Ashton Rhoades, under ss 7 and 9 of the Family Provision Act 1982. He died on 29 November 2003 and this Court granted probate of his will to the defendants on 15 April 2004. 2 The plaintiff and the testator lived together, first at 11 Kinka Road Duffy's Forest and later at 3 Arrawarra Road, Mullaway, New South Wales, in a de facto relationship from a time not exactly established, probably in the years 1981 to 1984, and the relationship continued until his death. They were never married to each other. Their relationship was a domestic relationship and the plaintiff is an eligible person within the definitions in s 6(1). There were serious strains and deeply felt and strongly expressed grounds for dissatisfaction on the part of the testator with the relationship. In the last months of the testator's life there were indications and statements of a wish on his part to end the relationship, but no definitive event brought the relationship to an end. The relationship brought with it an obligation of the testator to make adequate provision for the plaintiff's maintenance and advancement in life; the testator recognized this by making substantial provision for the plaintiff in his will, although he expressed dissatisfaction with legal advice that he should do so. The plaintiff's claim must pass the tests in s7 and s9 of the Family Provision Act. In accordance with s 9(2) I am not to make an order under s 7 unless satisfied that the provision under the will is at the present time inadequate for the proper maintenance and advancement in life of the plaintiff. In making this determination I am to have regard to the matters in subs 9(2). I am only then to proceed to the issue stated by s 7. 3 Observations in Luciano v Rosenblum [1985] 2 NSWLR 65 at 69 by Powell J state the general approach of the court to an application by a widow. There are significant qualifications. In Marshall v Carruthers [2002] NSWCA 47 at 63 to 65 Hodgson JA said: [63] The Master found that Ms Carruthers had a strong claim, and I agree with that finding. However, the strength of a claim of a surviving partner does, in my opinion, vary with circumstances. Although the Family Provision Act does, in some respects, equate de facto spouses with de jure spouses, this does not, in my opinion, make the existence or otherwise of a marriage irrelevant. In my opinion, a formal and binding commitment to mutual support through good times and bad, other factors being equal, adds strength to a legitimate claim. In my opinion also, the strength of a claim can be affected by the length of a relationship and contributions to the relationship. One factor which may be particularly important in a claim by a woman is that a woman may have, to the detriment of her own financial prospects, taken a major role in raising the children of herself and the deceased. [64] The Master referred to the following statement of principle which appears in Luciano v Rosenblum [1985] 2 NSWLR 65 at 69 It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies. [65] I do not think it is to be assumed that this statement is to apply in all cases, particularly where factors such as those I have mentioned are absent. … 4 Hodgson JA. went on to make some observations about applications by widowers, which are not presently important. At 74 Young CJ in Eq. said: [74] Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue. 5 Brian Ashton Rhoades was born about 1932. He served for many years in the New South Wales Police Force but retired at the age of 45 in or about 1977, it would seem for disability; and received superannuation. After retiring from the Police Force he worked in the security industry, in several employments including responsible positions. For many years he and his wife Nancy owned the house at Kinka Road Duffy's Forest. They were divorced and that house was sold in or about 1987, to give effect to a division of property. The plaintiff and the testator then moved to live at Mullaway, a village near Woolgoolga, where he had bought land at 3 Arrawarra Road Mullaway. Over some years he improved this land by erecting first a shed, later a house, and by carrying out improvements so the property could be used to conduct a wholesale wildflower nursery. 6 While living at Mullaway the testator at one time worked as professional fishermen, and owned a boat for this purpose. He also carried out a development venture, relating to two villas at Safety Beach (or Park Beach) and four units at Coffs Harbour. In 1992, when he was 60 years of age, he redeemed his police superannuation rights for a capital sum. He spent some of this on the construction of the house at Mullaway, and some in conducting the wholesale wildflower nursery. From about 1992 or perhaps earlier until about 1997 a wildflower nursery business was conducted on the property at Mullaway. This involved the plaintiff and the testator in considerable hard work. The plaintiff was not willing to acknowledge in evidence the extent of the testator's work or the value of his use of machinery, but I am satisfied on evidence other than hers that he worked very energetically and very hard and to good effect in the business, for which he acquired and operated machinery, and he also worked on machinery maintenance. There was also much hard work by the plaintiff in this venture. However it was closed down in 1997. The testator and not the plaintiff took the responsibility for maintaining the books and accounts, dealing with accountants and meeting outside responsibilities such as preparing accounts and lodging tax returns; the land and the venture were wholly owned by him. He stated in various ways, borne out by accounting documents, that the venture was not profitable, and accounting records for the last two years show operations at a loss. 7 About 1997 the testator wound up his interest in units and villas and sold them. He rearranged his affairs so as to make a superannuation investment and also be eligible for a Part Age Pension. At about the same time the plaintiff began to receive Social Services payments as Partner or Carer for the testator. The plaintiff suffered the first of a series of strokes in December 1999. After December 1999 when she became disabled she began to receive Social Services benefits relating to her disability, and she now receives an Age Pension. Since 1997 Social Services benefits of one kind or another have been her source of income. 8 The testator is survived by four adult daughters, each of whom has children. In his will of 22 August 2000 he appointed two of his daughters to be his executrices; they are the defendants. His will gave significant benefits to the plaintiff. Clause 3 gave her the right to reside in the property at Mullaway for 12 months from his death "being responsible for maintenance of the property but not for any rental, rates or insurances", gave her "all household furniture and effects" but excluding some special items, and gave her one half of the net proceeds of the sale of the house property after deducting all agents' expenses and legal expenses consequent on the sale. He gave all the rest of his property to the executrices on trust to convert it into money; all debts, funeral and testamentary expenses and duties were to be paid out of this fund and the balance was to be divided equally among his four daughters (if they survived him, which they did.) 9 The inventory of property for probate purposes valued the testator's property at $1,008,661.00. As well as the house at Mullaway (valued for probate at $550,000) and household furniture and effects (valued at $10,000) the assets were land at The Boulevard Mullaway which the executrices valued at $220,000. This has not yet been sold. Plant and machinery were valued at $25,000, two accounts in BananaCoast Community Credit Union totalled $140,000 and a superannuation benefit in Connelly Temple Public Superannuation Fund was valued at $60,661. There was also a motor vehicle valued at $3000. The household furniture and effects and the motor car (probate values total $13,000) have passed to the plaintiff. The Superannuation Fund disputed payment of the superannuation benefits, this dispute was settled and the plaintiff was entitled to $27,559.03, half the settlement money. This was paid into her solicitor's trust account on 30 June 2005 and after the solicitors had paid various charges and disbursements $17,559.03 was paid into a Commonwealth Bank account in the name of the plaintiff. The explanations the plaintiff gave for what happened to this fund were extremely improbable; that it would have been for furniture storage. The Mullaway house was sold by the defendants, with the concurrence of the plaintiff who gave up possession before the 12 months expired. The sale of the house was completed on 13 July 2004 and the proceeds after expenses were $531,741.40. The proceeds have been held in a separate investment account and have earned interest. The balance of the proceeds with interest at the time of the trial was $630,595.34. Although an exact calculation is not available income tax is in the order of $10,000 and the amount available is about $620,000 of which the plaintiff is entitled to $310,000. The other half is part of distributable residue. Other significant assets in the estate now are a term deposit with BananaCoast Credit Union estimated now to be $60,500 and the unrealised land at The Boulevard Mullaway. 10 The plaintiff's solicitor has stated on affidavit an estimate of the costs of these proceedings; his estimate is not exact but appears to me to be about $80,000. The defendants' solicitor has made estimate on affidavit of the total costs of these proceedings paid and unpaid at $120,676.00. He has also given estimates of estate liabilities which have not been met, for capital gains tax $19,000 and estate administration $5,000. 11 The most important circumstances calling for my consideration relate to: