New South Wales Supreme Court CITATION : Dalton v Paull [2007] NSWSC 721 HEARING DATE(S) : 28/06/07 JUDGMENT DATE : 29 June 2007 JURISDICTION : Equity Division JUDGMENT OF : Associate Justice Macready EX TEMPORE JUDGMENT DATE : 29 June 2007 DECISION : Paragraph 41 CATCHWORDS : Family Provision. Application under Family Provision Act by a stepson. Order for small legacy. No matter of principle. PARTIES : Stephen John Dalton v Vicki Paull (Estate of Allan Cyril Hodson) FILE NUMBER(S) : SC 2407 of 2006 COUNSEL : Mr R Wilson for plaintiff Mr L Ellison SC for defendant SOLICITORS : Turnbull Hill Lawyers for plaintiff Adrian Holmes Lawyer for defendant - 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE MACREADY FRIDAY 29 JUNE 2007 2407/06 - STEPHEN JOHN DALTON v VICKI PAULL - ESTATE OF ALLAN CYRIL HODSON JUDGMENT 1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late Allan Cyril Hodson, ho died on 8 June 2005. He was survived by the plaintiff, his step grandchild, and the defendant, also a grandchild. The deceased's wife predeceased him, as did the father of the plaintiff. The will of the deceased 2 The deceased made his last will on 1 October 2002 under which he left the whole of his estate to the defendant and appointed her to be executor and trustee thereof. Assets in the estate 3 The deceased's home has been sold and the estate has been reduced to cash. There has been a distribution to the defendant of $30,000. An amount of $5,257 has been paid by the defendant in respect of her costs and the balance of the distributable estate is now $172,187. The plaintiff's costs are estimated at $33,948 and the balance of the defendant's costs are $15,712. There is a total of $49,660, leaving a distributable estate of $122,527. Family history 4 The defendant was born in 1957 and the plaintiff on 24 June 1963. In 1967, when the plaintiff, Stephen, was aged three or four he lived with his parents for a time in the home of the deceased and his paternal grandmother, Hazel. At that stage another step grandchild, Glenn Ridge, and his parents were also living with the deceased. It was only for a short period of time, although the evidence does not say precisely how long. In 1972 and 1973 the defendant lived with the deceased and his wife for a period of some 18 months between 1975 and 1976 for about a year. The defendant used to live at the deceased's place while she was working doing her morning shift at the Gosford Hospital. She was, at that stage, a student nurse and studying for her qualifications. At that stage the plaintiff was not resident in the deceased's house. 5 In 1975 the plaintiff's parents separated. Initially the plaintiff stayed with his mother but he then moved to his father and he and his father started living with the deceased and Hazel in their home at Hill Street, Gosford. The time when that happened was slightly movable in the plaintiff's evidence but probably was either at the end of 1976 or early 1977. There was a move by the deceased and his then household, which included the plaintiff, his father and Hazel, in 1980 to a property at 9 Lemon Tree Street Wyoming. At that stage Stephen had a separate bedroom which was an enclosed area in the verandah out the back. The house was only a two-bedroom house. In 1980 the plaintiff left his school and started to work as a spare parts salesman. He initially paid board of $25 per week increasing to $70 per week by 1988 according to his evidence. 6 On 27 April 1984 the plaintiff and his girlfriend bought a property at Ourimbah and they commenced to live there. In 1984 to 1985 the deceased and Hazel won $100,000 in the lottery and gave the plaintiff $1500 in cash and also gave the same amount to their other two step-grandchildren. 7 It was in 1988 that the plaintiff in his affidavit evidence suggested that he ceased to live with the deceased at the age of 25 years. Actually what happened on 16 February 1988 was that the plaintiff and his by now ex-girlfriend sold the Cambridge Circle, Ourimbah property. The address shown by him on the transfer at this stage was the Ourimbah address, although the address for his girlfriend was her actual address, being her parents' address to where she had returned. 8 In 1991 the plaintiff married his first wife, Nadine. The deceased and Hazel contributed $3000 to the cost of the wedding. In 1992 the plaintiff and Nadine purchase some land at Gorokan and sold it in 1994 and purchased land at Morisset. It was on 23 August 1995 that the deceased's wife, Hazel, died. In that year the plaintiff and Nadine separated. A couple of years later in 1998 the plaintiff moved to Queensland and suggested to the deceased that he might like to move to Queensland to live with him. 9 In 1998 the plaintiff's father died and the plaintiff came down from Queensland for the funeral and stayed for a few days with the deceased. 10 In 1999 the plaintiff married his second wife, Christine. In 2001 there were communications between the plaintiff and the deceased in which the plaintiff asked for financial assistance. That produced a rift in the relationship with the deceased. On 1 October 2002 the deceased made his last will leaving it all to the defendant. 11 In 2003 the plaintiff separated from his second wife. On 22 November 2004 the deceased wrote a letter to the plaintiff saying that he did not want to have anything more to do with him. The deceased gave the letter to the defendant and asked her to post it but she did not do so. She gave it to her solicitor asking him to look after it. 12 The deceased died, as I have mentioned, on 8 June 2005 and probate was granted. These proceedings were commenced in time. Eligibility 13 The plaintiff will be an eligible person if he was part of the household in which the deceased was a member and was partly dependent upon the deceased. 14 In respect to the period when his parents stayed with the deceased for a short time in 1967 with the plaintiff, who was then aged three, I think he was not dependent upon the deceased. It was a short transient time and his parents were responsible for him. The financial information is such that I could not conclude there was any dependency. 15 The more important time was when he moved there with his father in 1976 or early 1977 after his parents separated. He was then 13. The plaintiff actually moved there after the defendant and Mr Ridge, his other second cousin, left the premises. The real question is how long did he stay there. In his affidavit evidence he said that he stayed there until 1988. He was cross-examined and initially conceded that there were some periods when he moved out for a short time after he left school. When confronted with his having bought a property at Ourimbah with Toni Jane Brown he was forced to admit that he had bought the property in April 1984 and that they had, in fact, moved from the deceased's home and lived there for some, according to him, nine months. None of that, of course, was disclosed in his affidavit evidence. 16 He then said that after the relationship with his girlfriend finished he went back home but the property, as I have indicated, in the chronology was not sold until February 1988. He claimed that it was tenanted, but there were no documents produced in relation to this and ultimately he said the property was sold to the tenants. Faced with the transfer of sale showing him residing at Ourimbah he said the tenants moved out before the sale and he moved back in. There is no evidence to support this strange story. I find it hard to believe that he just forgot about it and I do not accept his explanation. There was evidence from others that he was living at the deceased's home up until 1984 and, accordingly, I accept that he was a member of the household from 1977 to 1984. 17 In respect of the dependency I am prepared, having regard to the evidence of the plaintiff's mother, to accept that the plaintiff's father was a serious alcoholic. Plainly he could not look after the plaintiff and did not seem to take a great deal of interest in him. In addition to being dependent upon the deceased for accommodation during the seven-year period the plaintiff also received financial assistance whilst at school and after leaving school. Because of his drinking problem the plaintiff's father did not have the financial income to adequately look after the plaintiff. This left the deceased and his wife, Hazel, to provide the plaintiff, while he was at school, money for the tuckshop, text books, stationery and school excursions, together with uniforms and sporting equipment. This is not inconsiderable, being about $500 per year. 18 I have already mentioned two matters of a gift of $1500 and a payment for a wedding. Those matters are important in later considerations but I do not think they actually demonstrate dependency. Having regard to his age and the lack of assistance from his father I am satisfied that he was dependent upon the deceased and is an eligible person. 19 However, it is necessary under s 9(1) of the Family Provision Act that the Court should first determine whether there are factors warranting the making of the application. The courts have dealt with this on a number of occasions. In Re Fulop Deceased (1987) 8 NSWLR 679 at 681 McLelland J described that expression in the following terms: "Secondly, the subsection appears to be premised upon a distinction between 'factors which warrant the making of the application' on the one hand, and circumstances which would justify the making of an order granting the application, on the other; otherwise the subsection would be pointless. This means that in a particular case the Court might determine that there are 'factors which warrant the making of the application' within the meaning of the subsection, and yet go on to decide that the application should fail. Since the subsection applies only to certain classes of applicants, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicants, in broad terms, seems to be that the classes not affected by s 9(1) (lawful and de facto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (of the Wills Probate and Administration Act 1898, s 61B), whereas the classes affected by s 9(1)(former spouses, and sometime dependent grandchildren all household members) are as such not generally so regarded. This suggests that the 'factors' referred to in the subsection are factors which when added to facts which render the applicant an 'eligible person' give him or her status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased. That the subsection is directed at a plaintiff's status as applicant in some such sense as this perhaps finds some support in the statutory direction to the Court, in the event that it determines the preliminary question adversely to the plaintiff, not to go on to determine the application, but 'refuse to proceed with the determination of the application'". 20 In Churton v Christian (1988) 13 NSWLR 241 the Court approved this statement. Priestley JA at p 252, after setting out and approving the statement, added: -- "To this I would add that although the classes affected by s 9(1) are not necessarily generally regarded as natural objects of testamentary recognition, in some cases members of those classes may, when the circumstances of their relationship with the deceased are set out, immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition." 21 These principles have been applied at first instance for many years. There has been in recent times further attention to this matter in the Court of Appeal in the case of Brown v Faggoter, a decision given on 13 November 1998, which is a decision of Sheller JA, Sheppard AJA and Fitzgerald AJA. Fitzgerald AJA, who seemed to suggest that an application might be warranted if the application has reasonable prospects of success gave the main judgment. This seems to be a somewhat different and perhaps easier test than that which the Court of Appeal approved in Churton v Christian. I will consider the matter on both bases, given that there may be some flux in the state of the law in this regard. 22 In the present case there is the fact that the plaintiff lived with the deceased for seven years from 1977 until 1984 at an important stage in his teenage life, namely, between when he was 13 and 20. It seems to me that the deceased and his wife performed an important parenting role in his life. This is clear having regard to the state of his father who obviously could not take care of him. 23 The matter also has to be considered in the context of others having a claim on the deceased's bounty. In this case there are only the other step-grandchildren, namely, the defendant and her brother, Glenn Ridge. The deceased also supported them and their parents when they were young and apparently was happy to do so given the absence of children for him and Hazel. 24 There is the fact that he has been provided with financial support by the deceased and his wife, both as a child and as an adult. I have already talked about the provision for his education and there are the other amounts for the lottery win, which was amongst three, and also the payment of $3000 towards the cost of his first wedding. 25 I am satisfied that on the traditional basis there are factors warranting the making of the application. I will consider whether there are prospects of success. 26 In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 209 it said the following:- "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 Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or 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 the 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 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 refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there we no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors". The plaintiff's situation in life 27 The plaintiff is single, aged 44, and has no dependants. He lives in rented accommodation which he shares with a boarder. He is now working for K and M Automotive Services with a gross wage of $50,000 per annum. He has an investment unit which is subject to a mortgage and he says his employer pays that mortgage repayment of $361 per week from his pre-tax salary. After deduction of tax and the mortgage he gets $498 per week. His other income is the sum of $218 per week from his investment property for which he also has to pay agents fees. His assets consist of this investment house at Durack, Queensland of $260,000, a BMW secondhand motor vehicle $10,000, $500 in the bank and superannuation of $41,000. He has a debt to Suncorp of $234,500 secured on the unit and a Visa card $2200. He estimates his expenses at $826 per week. That leaves him with a net deficiency of $328 per week. His mortgage is being met, as I said, out of his salary and it is an interest only mortgage. 28 The plaintiff did not contribute to the estate and he has been provided with the benefits to which I have referred. So far as the relationship with the deceased there is nothing in the evidence to suggest that the relationship was other than a normal one until 2001. As I have mentioned, he moved to Queensland in 1998 and the deceased declined to go. After that he still visited the deceased once or twice a year, when he stayed with the deceased at the Wyoming home. 29 It was in 2001 that the plaintiff got into financial difficulties and asked for assistance. That was declined by the deceased and it seems clear that the deceased formed a view that all the plaintiff wanted was money. Notwithstanding that, the plaintiff says that he continued to contact the deceased but there was no meaningful dialogue between them. The letter written by the deceased in 2004 clearly shows the deceased's attitude at that time. 30 It was submitted that the history of the relationship between the plaintiff and the defendant from 2001 onwards resulted from a misunderstanding between the plaintiff and the deceased. It is said historically the deceased had been a source of financial assistance to the plaintiff both at school and after he left school. He was the only one who ever provided financial assistance to the plaintiff. His father was dead and it was submitted that in this time of need it was not unnatural for him to continue to approach the deceased for assistance. 31 He, in fact, asked him what he was going to do with his property and probably the deceased sensed that he was being too grasping. At least I do accept that he did try after this to continue the relationship but the deceased did not want it. I do not think that conduct itself is conduct disentitling in the sense it would bar any claim but it would have an effect on my view of the claim and there is, of course, the fact that he did not see him in the last years of his life. 32 It is necessary to consider the position in life of others having a claim on the bounty of the deceased. The defendant's situation in life 33 The defendant is married, is 50 years of age and has no dependent children. She and her husband own their own home at Caves Beach having a value of $500,000 which is subject to a mortgage of $156,820. The defendant's husband, Craig, also owns an investment property at Blackhalls Park having a value of $230,000 subject to a mortgage of $132,648. The plaintiff and her husband have combined superannuation benefits of approximately $138,000. 34 The plaintiff does not work but her husband, Craig, had a taxable income of $86,496 for the 2006 financial year. Their income exceeds their expenses by about $300 per week. The plaintiff's husband, although not close to retirement, will in due course retire and the superannuation which they have does not seem to be much and certainly at the moment it would not discharge even the mortgage on their home. It seems to me having heard the evidence of the defendant that it is unlikely she will be able to engage in any further full-time work. 35 The defendant did not contribute to the estate of the deceased. As far as the relationship with the deceased is concerned she set this out in some detail in her affidavits. In the early years they lived near the deceased and would frequently visit the deceased. Apparently they were within walking distance of his home. She and her parents moved to Muswellbrook in 1966 when her parents' marriage started to fail then and at that stage she was often collected and taken back to live with the deceased for a week until she was again collected. There were many moves for the defendant and her family and eventually she finished high school in 1972. She got a job in Gosford and lived with the deceased. This continued until the end of 1972, when she went back to look after her brother with her mother because the parents had separated. 36 In 1975 she got a job as a student nurse at Gosford Hospital. Although she had a room at the hospital she used to stay with the deceased when she was on day shift and I have already referred to that. That continued until March 1976. She said that she did not see the deceased as much after she married and that is probably not unnatural. Her grandmother died in 1999 and thereafter she saw the deceased more frequently. She helped arrange her grandmother's funeral and took Allan to the bank to deal with details in respect of his wife's death. 37 After the plaintiff's father left the deceased's home she used to see the deceased more often. She used to take him, for instance, to the RSL when she had a day off and used to keep in touch with him by phone. In 2002 she helped him when he had difficulties obtaining his driving licence renewal and then in 2004 she was the contact when the deceased became ill and had to go to Gosford Hospital. He was discharged into her care and she took him home. Thereafter she used to do his shopping, cooking meals and generally managed him and his household. The deceased still wanted to stay in his home so she continued to travel down from Caves Beach to help him. She was responsible ultimately for putting him into a nursing home and arranging that and was obviously the person who he relied upon in the latter part of his life. It seems to me it was a close relationship and the terms of the will record the regard in which the deceased held the defendant. Consideration of the application 38 I am dealing with an estate of $122,000. It is necessary to see how the plaintiff says he has been left without adequate and proper provision for his maintenance, education and advancement in life. 39 The plaintiff asked for a legacy of $50,000 to pay off some of his mortgage. The difficulty with this approach is that such a provision would not reduce his repayments to a point where he will be able to live with a positive balance from his income and expenditure. He will still, on the present figures, have a higher expenditure than his income. It seems to me that at some stage the plaintiff has to take charge of his financial circumstances and to sell his unit. That is the only way he is going to survive. However, I do accept that he has some need probably at the moment for some immediate provision to see him over a situation where he will probably, as I say, have to sell his unit. 40 Generally having regard to the higher competing claim both financially and in respect of the relationship with the deceased on the part of the defendant I see the plaintiff's claim as quite a small one in the circumstances. There is a suggestion made that the Court should not bother with small claims and one such as this where the claim is in respect of a relationship remote in time by 20 years and of little consequence in the later life of the deceased. In my view it is not appropriate to dismiss claims like that. There is some claim. The estate is a small one and there is only $122,000. In my view some small provision for the plaintiff to help him over the immediate future period while he rearranges his finances would be appropriate. 41 Accordingly, the orders that I make are as follows: 1. I order the plaintiff receive out of the estate of the deceased a legacy in the sum of $25,000; 2. The plaintiff's costs on the ordinary basis and the defendant's on the indemnity basis be paid or retained out of the estate of the deceased; 3. Interest to run on a legacy at the rate provided for under the Wills Probate and Administration Act on and from one month after the date of these orders; 4. Exhibit may be returned. (Mr Ellison SC made application that the plaintiff's costs be capped at $25,000) His Honour: I will consider the application but I want the plaintiff to have the opportunity to put on an affidavit setting out the nature of the costs incurred. (Mr Ellison made an application his Honour stay the costs order for 14 days) 5. I grant a stay of order 2 for 14 days. ******** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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