Watkins v Public Trustee (Estate of Harry Owen Watkins) [2007] NSWSC 365

New South Wales Supreme Court

CITATION : Watkins v Public Trustee (Estate of Harry Owen Watkins) [2007] NSWSC 365

HEARING DATE(S) : 29 March 2007 JURISDICTION : Equity Division

JUDGMENT OF : McDougall J at [1]

EX TEMPORE JUDGMENT DATE : 29 March 2007

DECISION : See paras [19] and [20] of judgment

CATCHWORDS : SUCCESSION - family provision - claim by adult daughter - no question of principle

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

PARTIES : Joanne Tracey Watkins (Plaintiff) Public Trustee of New South Wales (Defendant)

FILE NUMBER(S) : SC 2261/06

COUNSEL : D Liebhold (Plaintiff) M K Meek (Defendant)

SOLICITORS : Elizabeth Fleming & Associates Moruya (Plaintiff) Margaret Pringle, Solicitor for the Public Trustee (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

29 March 2007 (Ex tempore revised 30 March 2007)

2261/06 JOANNE TRACEY WATKINS v PUBLIC TRUSTEE OF NEW SOUTH WALES – ESTATE OF HARRY OWEN WATKINS JUDGMENT 1 HIS HONOUR: The deceased, Harry Owen Watkins, died on 10 September, 2005. By his will made on 30 November 1978, and in the events that have happened, he left the whole of his estate to his widow, Margaret Watkins. The net distributable estate allowing for costs, charges and expenses, is estimated at $755,000. The plaintiff, who is the only child of the deceased's first marriage, seeks an order for provision out of the estate of the deceased. The parameters of the debate have been closely defined by the thorough, careful and expeditious way in which both the parties and their counsel have addressed the matter. 2 The plaintiff is aged 36. She is single. She works in a field associated with interior design although she has no tertiary qualifications. Her present situation is that she is able to meet her day to day living expenses out of her after tax salary of approximately $4,900 per month, but that she has a relatively small amount left over to take care of any of life's contingencies. She has assets valued at a little over $100,000 of which an interest in remainder in a property subject to a life estate of her mother accounts for some $70,000, and a motor vehicle accounts for another $33,000. She has debts of some $48,000, of which a loan in respect of the motor vehicle accounts for some $32,000. The balance of the debts are owed on credit cards or to family members. 3 The deceased's widow, Mrs Margaret Watkins, is now 62 years old. The marriage was one of some 28 years duration. It is plain from Mrs Watkins' unchallenged evidence that she made significant contributions during that lengthy marriage to the acquisition and upkeep of property now forming part of the estate and to the welfare of the deceased. 4 Mrs Watkins has a superannuation balance of a little under $239,000, from which she has an allocated pension of about $2,146 per month. That pension is barely sufficient to cover her monthly expenses, and allows nothing whatsoever for any contingencies. However, Mrs Watkins has or will have the benefit of rental from an unencumbered property owned by the deceased (not the matrimonial home) which is presently let at $200 per week gross. That property is valued at some $290,000, and it is plain that if it were sold and the proceeds invested, Mrs Watkins could derive a more substantial income from the proceeds than she does from the property itself. No doubt, on appropriate advice, any such transformation and investment could be done in an advantageous way so as to take the benefit of her superannuation arrangements. 5 The assets of the estate include the rental property to which I have referred (23 Jellicoe Road, Tuross Heads) and the former matrimonial home (27 Jellicoe Road). They include also the deceased's interest in the estate of his mother, the late Alice Lillian Dove. That is valued at approximately $170,000. The remaining assets include cash, the proceeds of life policy, some shares and a motor vehicle. As I have said, it is effectively accepted that the net distributable estate is of the order of $755,000. That calculation includes the plaintiff's estimated costs in these proceedings in the sum of $37,325 (according to the written submissions; affidavit evidence puts them at $38,825). On either basis, it may be assumed that if costs are ordered to be paid on the party and party basis, something less will be recovered on taxation. 6 Mr Meek of counsel for the defendant very properly accepted that, applying the two stage analysis mandated by the decision of the majority of the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 at 208, the first stage of the determination - ascertaining whether the plaintiff has been left without adequate provision - should be answered in favour of the plaintiff. Since that concession has been made, and since, quite plainly it is correct, it is unnecessary for me to deal in detail with it. In any event, as the decision of the majority in Singer made plain, many of the factors that would have been recited in reaching an independent decision on that first stage question are relevant also to the second stage - the discretionary ascertainment of the proper amount of provision. 7 For the plaintiff, Mr Liebhold pointed to some evidence that showed, so he said, that the deceased had intended to remake his will so as to ensure that the plaintiff received the benefit of her grandmother's estate. Thus, he submitted, appropriate provision in the circumstances of this case should be measured by reference to the amount of that estate - in round figures - as I have said, $170,000. 8 For the defendant, Mr Meek accepted that proper provision would involve the discharge of the plaintiff's debts. However, he submitted, there was no basis shown for any more substantial or generous provision. 9 This is in some ways a fortunate case, in that the estate of the deceased, although not substantial by contemporary standards, is sufficient to meet the claims that have been made upon it. The only other potential claimant, the deceased's stepson (and child of Mrs Watkins' first marriage), has not intimated any desire to make a claim against the estate of the deceased. Thus, in substance, the presentation can be regarded as one resolving a competition (if that is the appropriate term, which I doubt) between the legitimate interests of the plaintiff and of Mrs Watkins. 10 Mrs Watkins has given evidence of her desire for security, including the likely need to move into retirement village accommodation at some stage in the future. Her estimate of the cost of that accommodation, supported by appropriate documentation, suggests that there would be a range of costs from about $410,000 down to $345,000. Those estimates of cost involve a contribution for the accommodation of which some 2 percent per annum, for a maximum of five years, is retained at the end of the occupation. It is, I think, fair to proceed on the basis that the appropriate figure of cost lies somewhere within the range that I have indicated and probably toward the upper end. However, there is other evidence that if Mrs Watkins were to seek her own accommodation but in what might be called more manageable premises, the cost might be slightly less. 11 Otherwise, Mrs Watkins has pointed to some debts that she would like to discharge (which are not large in extent) and some items of household use that she would like to replace. It is clear that the figure of provision I have in mind will permit her to do all these things, and will permit her also to move to appropriate accommodation of her own choosing when she feels the time is right for her to do so. 12 The plaintiff points to her desire to undertake tertiary education in the field of interior design and to set up her own business once she has achieved those qualifications. There is no clear evidence of the total cost of the course to which she has pointed; the evidence is that the first year of that course (it is apparently a four year full-time course) would involve undergraduate fees totalling $18,360. The course structure, involving "electives" and other choices, is such that it is very difficult to extrapolate from that figure any realistic projection of the overall cost of the course. 13 The plaintiff had sought to give evidence of the cost of setting up her own business. However, that evidence was objected to. It was so broadly expressed, and so completely incapable of analysis or verification, that I rejected it. 14 The consequence is that it is impossible to quantify in monetary terms the total cost of the education or the total amount needed to set up a business which the plaintiff might require. Thus, I think, the question of provision has to be approached by looking firstly at the discharge of her debts and, secondly, at the provision of a lump sum that she can apply towards her education, on the basis that once she has attained the qualifications that she seeks (and assuming that, as I think is likely to be the case, there will be some residue) she can give consideration to pursuing her business interests on her own account. 15 Mr Meek submitted for the defendant that it would be inappropriate for any amount of provision to require the sale of the investment property at 23 Jellicoe Street. In principle, I agree with that proposition, although I should make it plain that if, balancing all the factors that are relevant to a determination of the second stage question, it were necessary to sell the property to raise the appropriate amount of provision, I would not have been deterred from making the order simply by the desire to retain the property. That hypothetical approach is reinforced by the matters to which I have referred, including that a greater return could be achieved from investing the proceeds and the likelihood that a return, through the superannuation structure Mrs Watkins has in place, could be advantageously managed. But since the view to which I have come does not, on the figures presented to me, raise the spectre of sale, it is unnecessary to pursue this to conclusion. 16 When one balances all the factors to which I have referred, and other relevant factors (which include what on the evidence is the apparent good health of both the plaintiff and Mrs Watkins, and the somewhat sparse nature of the contact between the plaintiff and the deceased since his remarriage), I have come to the view that an appropriate figure for provision is an order for a legacy in the sum of $150,000. A legacy in that sum would be sufficient to discharge the plaintiff's indebtedness, to pay (so far as can be ascertained from the somewhat brief evidence) for her tuition and to leave some residue which could be applied (for example) towards setting up her own business. It would not provide for all those costs. But in my view there is no reason why a healthy young woman with (on my hypothesis) appropriate tertiary qualifications is entitled to demand more. 17 At the same time, in my view, provision in the sum to which I have referred would not so deplete the estate that it would deprive Mrs Watkins of the provision that most assuredly she is entitled to expect, having regard both to the long and apparently harmonious marriage (including her contributions made during the course of it) and her present needs. 18 I have referred earlier to the question of the plaintiff's grandmother's estate. I have stated that I do not regard that as of itself an appropriate measure of proper provision. My views on that topic are confirmed by the circumstance that the evidence of the deceased's intentions in relation to his mother's estate is (to put it kindly) less than convincing; particularly when assessed against the evidence adduced to counter it. Although neither witness was tested in cross-examination (in one case because of ill health and in the other by a wise decision as to what were the real issues in this case), it is plain that, if the deceased did say what was attributed to him by Mr St Leon (who is the relevant witness) then the deceased must have been somewhat confused; and if the deceased did not say it then the evidence goes nowhere. On either view, I do not regard that evidence as cogent, and that is another reason for rejecting the approach for which Mr Liebhold contended in his submissions. 19 As I have said, I think, taking into account all of the circumstances to which I have referred, that the appropriate provision is a legacy in the sum indicated. The plaintiff should in addition have her costs on the party and party basis and the defendant should have his costs on the indemnity basis. 20 The matter is stood over to 9.30 am on Tuesday 17 April 2007 before me to enable the parties to bring in short minutes of order to give effect to the reasons I have just delivered. If the parties cannot agree on the orders to be made, I will hear argument at that time and make what seem to me to be the appropriate orders. ******