Kembrey v Cuskelly [2008] NSWSC 262

New South Wales Supreme Court

CITATION : Kembrey v Cuskelly [2008] NSWSC 262

HEARING DATE(S) : 10/03/08

JUDGMENT DATE : 10 March 2008

JURISDICTION : Equity

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 10 March 2008

DECISION : Orders made in accordance with short minutes of order.

CATCHWORDS : SUCCESSION - Family provision and maintenance - whether testator made adequate provision for applicant - modest estate with competing legitimate claims - entire estate left to ex-wife - ex-wife had returned from Philippines and provided care for testator - promise by testator to leave estate to ex-wife.

LEGISLATION CITED : Family Provision Act 1982 (NSW)

CATEGORY : Principal judgment

Gorton v Parks (1989) 17 NSWLR 1 CASES CITED : Nicholls v Hall [2007] NSWCA 356 Singer v Berghouse (1994) 181 CLR 201

Michael John Kembrey PARTIES : v Eliza Cuskelly

FILE NUMBER(S) : SC 5319/06

COUNSEL : Plaintiff: R D Wilson Defendant: In Person

SOLICITORS : Plaintiff: Turnbull Hill Lawyers Defendant: N/A

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION FPA RUNNING LIST

WHITE J

Monday, 10 March 2008

5319/06 Michael John Kembrey v Eliza Cuskelly JUDGMENT 1 HIS HONOUR: This is an application under s 7 of the Family Provision Act 1982 (NSW) for an order that provision be made for the plaintiff's maintenance, education and advancement in life out of the estate or notional estate of Peter Samuel Cuskelly late of Ashtonfield, New South Wales. 2 Mr Cuskelly died on 28 May 2006. On 27 September 2006, probate was granted of his will dated 24 March 2000. By that will he appointed the defendant his executrix, and in the events which happened, he left her all of his estate. 3 As disclosed in the inventory of property filed in connection with the application for probate, the estate had an estimated value of $318,650. The principal asset was a property in Molucca Close, Ashtonfield, valued at $280,000. The plaintiff accepts that value as being a fair estimate of the value of the property for the purposes of these proceedings. 4 According to the inventory of property, the deceased owned a motorised golf buggy, golf clubs and a small boat, having a combined value of $10,650, and a motor vehicle having an estimated value of $28,000. The golf clubs were sold for $1,450. The boat was sold for $2,700. I infer that the buggy was sold for about $1,550, as the defendant said that the clubs and buggy were sold for $3,000. The motor vehicle was sold for about $20,000 and the proceeds were applied to reduce or discharge a mortgage over the property. 5 As I understand the defendant's evidence, the property is presently unencumbered. 6 Not long before his death the deceased would have received a superannuation payment in the order of at least $58,237. The defendant's evidence is that the superannuation payout was applied to reduce the mortgage to bring it down to the figure of about $21,000. Hence the principal asset in the estate and, subject to the matter to which I will come in a moment, the only asset now available from which provision could be made in favour of the plaintiff, is the house at 39 Molucca Close, Ashtonfield. 7 The qualification to that proposition is this. The deceased appears to have held life insurance cover in the sum of $30,900. On 28 May 2007, the administrator of the superannuation fund advised the plaintiff's solicitors that the trustees of the fund had proposed to pay the benefit, subject to the approval of the fund's insurers, to the estate. Those moneys have not yet been received by the estate. It is common ground that an application has been made by the plaintiff, I infer, to the Superannuation Complaints Tribunal, to review the decision of the trustees in respect of the proposed payment of that benefit. 8 The plaintiff is the natural son of the deceased. He was born on 20 June 1969. The defendant did not accept that the deceased was the plaintiff's father. That he is the son of the deceased is clearly established by the evidence. It is established not only by the evidence of his mother, Mrs Kembrey, but also by the orders made by consent in the Children's Court at Cessnock on 29 October 1969 for the deceased to pay the plaintiff's mother child maintenance. There is ample evidence of the deceased acknowledging the plaintiff as his son in conversation with friends and others. If further evidence of paternity were needed, it is found in the photograph of the plaintiff and the deceased taken in about 1994 when the plaintiff was about 24 or 25 and the deceased about 44 or 45. 9 When the plaintiff was born his mother was not yet 18. Her father refused consent to a marriage. The deceased's parents did not approve of his relationship with the plaintiff's mother. The deceased's mother insisted on blood tests being carried out and these established his paternity. I make that finding, although the tests themselves are no longer available. I accept Mrs Kembrey's evidence as to what they showed. 10 The deceased regularly paid child maintenance. Mrs Kembrey and the deceased remained in contact for a couple of years. Much of the contact appeared to have been at weekends in a local park, presumably owing to the difficulties she and the deceased then had with their respective families. When the plaintiff was about three, Mrs Kembrey married and moved from her parents' home. Contact between the deceased and his son was then less frequent. The deceased had contact with the plaintiff about once per fortnight in a local park until the plaintiff attended school. He gave the plaintiff birthday and Christmas presents until the plaintiff was about seven. Contact then seems largely to have ceased. 11 When the plaintiff was about 15 or maybe 16 he telephoned his father. The deceased said he was glad that his son had rung. They spoke over the phone on three or four occasions over the next few months. The deceased did not attend significant occasions in the plaintiff's life, such as his eighteenth and twenty-first birthdays, his wedding or his graduation from the academy as a prison warder. In essence, he said he felt that he would be out of place. 12 In about 1992, the plaintiff telephoned the deceased and told him that he had been married. For the next couple of years they spoke over the phone every two or three months. They did not see each other. The plaintiff was then working at Goulburn and the deceased was living and working at East Maitland. In 1994, the plaintiff was transferred to Cessnock. He then visited the deceased at his house in East Maitland. From then until the plaintiff was in his early thirties, that is, by the early 2000s, they met regularly. They went out for drinks or for dinner, the plaintiff says, about once per month. They also spoke on the telephone about weekly and they discussed the local football. 13 From some time after 1994, the deceased invited the plaintiff to call him Pop, which he did. There was some challenge to the plaintiff's evidence as to the regularity with which he saw his father over drinks. One of his father's friends and regular drinking companions gave evidence of having no recollection of having seen the plaintiff with the deceased. Whilst there may have been some exaggeration in the plaintiff's evidence about that, I think it is quite clear that there was frequent, although not necessarily regular, contact between them. That contact ceased in about 2000, about five or six years before the deceased's death. 14 The plaintiff is currently employed as a prison officer with the Department of Corrective Services. He earns net income of $50,370 per year. His wife is employed as a cleaner and earns a net income of $17,000 per year. They have a daughter who is now 15. Their income of net $1,288 per week does not meet their average living expenses per week, which the plaintiff estimates at $1,370. He was not cross-examined on that estimate and I accept it. A substantial part of the plaintiff's outgoings are loan repayments of $500 per week. He and his wife have personal loans, including credit card debts, of $60,000 and a debt incurred in connection with the acquisition of a car of $30,000. Leaving aside superannuation, the plaintiff estimates their assets to amount to no more than $40,000. Again he was not cross-examined on this evidence and I accept it. The plaintiff and his family live in rented premises. Their most pressing need is their outstanding debts, the repayments of which are a substantial burden on their weekly income. 15 The defendant was born in the Philippines in November 1960. She married the deceased on 16 January 1982. She represented herself in the proceedings. English is not her first language. Her evidence as to her relationship with the deceased and as to her financial position emerged disjointedly. It emerged partly from the evidence of other witnesses, partly from a document described as an affidavit which she filed in the proceedings and which was read as an affidavit, and partly in oral evidence. Even now her evidence as to her financial position has not been adduced in a proper way. 16 The deceased and the defendant separated on 20 March 1989. I infer that a principal reason for there being long periods where there was no contact between the deceased and the plaintiff was due to the defendant. At one point the deceased told one Mr Kevin Baker, whose evidence I accept, that the defendant did not get along with Michael, that is, the plaintiff, and that to keep the peace Michael did not visit. Hence it was that the plaintiff and the defendant never met until after the deceased's death. 17 After the deceased and the defendant separated in March 1989 they reached a property settlement. It is recorded in an application made to the Local Court at Kurri Kurri on 22 September 1989. Under the property settlement the defendant transferred her interest in the property in Molucca Close, Ashtonfield, to the deceased for $25,000. The parties agreed that the property was then valued at approximately $75,000 and that there was a mortgage in favour of the St George Building Society in their joint names of approximately $25,000. Accordingly, her receipt of $25,000 from the deceased reflected the agreed value of the property net of encumbrances. The defendant agreed to transfer a motor vehicle to her husband. The parties agreed that they would be the sole owner of personal chattels in their respective possession. 18 I mention these matters because one of the witnesses called by the plaintiff, a Mr Stashinsky, gave evidence that after their separation the deceased said to him words to the effect that he had to give the defendant a payout. If that was said, it was not an accurate description of the terms of the property settlement reached between the defendant and the deceased. Nothing in the property settlement reached in 1989 diminishes the claim of the defendant on the estate. That claim arises from events from 1997. 19 The defendant and the deceased were divorced on 8 February 1992. At a time which is not clear, the defendant left Australia for the Philippines where she had family. She gave evidence that even when she was in the Philippines and after she had divorced, the deceased made some financial contributions for her support. She returned to Australia in 1997 and took up residence with the deceased in the house at Molucca Close. She gave oral evidence that the deceased asked her to return from the Philippines to look after him. She gave oral evidence that the deceased told her that, if she were to do so, he would look after her and would look after her after he died by leaving her his estate. 20 No such evidence was given by the defendant in her affidavit which she read in the proceedings. However, I admitted a statement of evidence she had prepared in January 2007 to rebut what would otherwise be a powerful inference of recent invention. In the statement she prepared in January 2007, she made a statement to the like effect of that which she gave in oral evidence. 21 I conclude that the reason that evidence was not included in the affidavit the defendant prepared in July 2007 and which was filed on 28 August 2007 was simply the defendant's incompetence in presenting her own case. I accept that evidence. 22 The defendant also gave evidence that when invited by the deceased to return to Australia to look after him, the deceased said that it would be on the basis that "you mind your own business and I mind my own business". They did not re-establish a de facto relationship. There was no sexual relationship after the defendant returned to Australia. They kept their separate bedrooms. They did not go out as a couple and they were not regarded as a couple by the deceased's friends. 23 Nonetheless, I accept that the defendant did care for the deceased after her return. I infer that initially that care would have been the provision of food, and looking after the deceased's needs about the house. But as time went on and the deceased, particularly in his last years, became very ill, it appears that the defendant provided such nursing care for the defendant as was required. 24 I do not consider that this was a case of a contractual promise by the deceased that, if the defendant returned to Australia, he would give her all his estate after his death. Nonetheless, it was a statement of intention upon which she acted. That such a statement was made is corroborated by the deceased's will. It will be recalled that his will was made on 24 March 2000. In it he refers to the defendant as his friend. As I have said, he gave her all of his property under the will, subject to the usual provision of her surviving him for 30 days. 25 Moreover, it is clear from birthday and Christmas cards which the deceased gave to the defendant from 1996 that he maintained feelings of affection and love for her. In those cards, he called her variously "darling" or "sweetheart" and thanked her for putting up with him for another year. He expressed his love for her in those cards. 26 The defendant's evidence as to her financial position was not led with the clarity which the Court and the plaintiff were entitled to expect. The obligation of an executor in cases such as this is to put before the Court all relevant evidence. In the circumstances of this case, that clearly extended to evidence as to the defendant's income, expenses, assets and liabilities. 27 Various bank statements, although not up-to-date, were tendered. These do not include all of the relevant accounts. 28 The defendant also tendered an income statement from Centrelink dated 30 November 2007. The statement from Centrelink contained information as to the details of the defendant's income, presumably as reported to Centrelink, other than Centrelink payments, and details of her assets - again, presumably as reported to Centrelink. 29 For reasons best known to herself, the defendant attempted to obscure that information with "white out". Fortunately, she did not do so successfully. 30 The information tends to corroborate the evidence which she gave orally and in her affidavit as to the extent of her assets. It disclosed an asset, consisting of a motor vehicle caravan valued at $28,000, which is consistent with the inventory of property in the probate application, and a cash investment of $1,632 as at 4 May 2007, returning annual investment income of $57.12. 31 This evidence is broadly consistent with the defendant's evidence that, apart from small balances in building society accounts with the Newcastle Permanent Building Society and the Greater Building Society, she has about $1,000 in what was formerly a joint account with the Hunter United Employees Credit Union. 32 Although the way in which the evidence was adduced is not at all satisfactory, I accept that she has very modest cash resources. It appears that the proceeds of the realisation of assets from the estate - namely, the golf clubs, golf buggy and boat - have been applied in the payment of debts. 33 She is unemployed and in receipt of a pension of $450.60 per fortnight. 34 Apart from her interest in the house of which she is now the registered proprietor as a result of the registration of a transmission application, she has no substantial assets. This, therefore, is a case of a small estate with two claimants, both with legitimate claims on the estate, where the estate is insufficient to meet both claims. 35 The plaintiff, as the deceased's son, was a natural object of the deceased's testamentary bounty. The fact that he was an ex-nuptial child and there were long periods where there was no contact between him and his father, does not detract from the deceased's duty, when making his will, to have regard to, amongst other things, the plaintiff's welfare. 36 This is not a case of bare paternity. But even if it were, that would be no answer to the plaintiff's claim. (See generally Gorton v Parks (1989) 17 NSWLR 1 at 9-10; and Nicholls v Hall [2007] NSWCA 356 at [43]-[46].) 37 In fact, the deceased acknowledged the plaintiff as his child; but other than providing child maintenance for the plaintiff, so far as it appears, he did nothing for the plaintiff during his life. 38 The plaintiff was the deceased's only child. The plaintiff today has pressing financial needs, most particularly for the extinguishment, or if not the extinguishment, the reduction, of his personal debts. 39 If the estate were adequate to do so, but subject to the legitimate claims of the defendant, the plaintiff would clearly be entitled for an order for provision out of the estate at least to meet those debts. 40 The defendant is also in need. She also has legitimate claims on the testator's bounty. Although after her return to the deceased in 1997 the parties did not re-establish a relationship as man and wife, I infer from the cards to which I was referred earlier in these proceedings that the deceased felt the love for, and gratitude to, the defendant, which a man in his position might feel for a caring wife. 41 It was submitted for the plaintiff that because the defendant and the deceased were not husband and wife, or de facto husband and wife, the plaintiff's claim as an eligible claimant under paragraph (b) of the definition of "eligible person" in s 6 of the Act should have precedence over the defendant's claim to the testator's bounty which, if she were to make a payment under the Act, would arise under either paragraph (c) or paragraph (d) of the definition. 42 However, one thing which is clear in this area of the law is that there is a danger in applying a priori rules to evaluate competing claims. Each case depends upon a close analysis of the individual circumstances. 43 Sections 7 and 9 of the Family Provision Act set out a two-stage process for considering applications as described by Mason CJ, Deane and McHugh JJ in Singer v Berghouse (1994) 181 CLR 201 at 208-210, calling first for an assessment of whether the provision, if any, made for the claimant was inadequate for what, in all the circumstances, was the proper level of maintenance etc, 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. Considerations at the second stage involve essentially similar questions in determining what is the proper level of maintenance and what is the adequate provision if it is found that inadequate provision was made. 44 The concepts of what is adequate and what is proper are indeterminate. They depend upon the claims on the estate, the needs of the parties, the relationship between the deceased and those with claims on him, and the size of the estate. 45 Where the Court is satisfied that provision ought to be made, then it is no answer to a claim for provision under the Act that to make an order would be to defeat the intentions of the testator. The Act requires a testator's intention to be displaced if the Court is satisfied that the provision made for a claimant's proper maintenance, education and advancement in life is inadequate and if it considers that some provision other than that made under the will is the provision which ought to be made for the maintenance, education or advancement in life of the eligible person. 46 Having said that, the Act is not intended to empower the Court simply to rewrite a will of a testator. 47 Moreover, except perhaps in cases where the Court can clearly see that the testator has not given proper consideration to the respective claims on him or her, respect should be paid to the views of the testator as expressed in the will. The testator is often placed in a far better position than is the Court to evaluate the claims of persons on his or her bounty. 48 I infer from the terms of the will and from the fact that the will was not altered after March 2000 that the deceased considered that the defendant had the stronger claim on his estate. I do not conclude that he simply ignored the plaintiff's claim. 49 Having regard to the circumstances in which the defendant returned to Australia to the deceased's evident love for, and gratitude to, the defendant, and what I take to be the care provided to the defendant, I also consider that she has the stronger claim on the estate. 50 In coming to that view, I also take into account that she is unemployed. The evidence does not disclose her having had any employment, at least since her return in 1997. She is older than the plaintiff. She is unmarried and does not have anyone else to look to for her support. She is in a worse position in hoping to improve her economic position than is the plaintiff. 51 As I have said, she does not have any means of support except her pension and the house she has inherited. In my view, her claim on the estate has precedence until her reasonable financial needs are provided for. 52 I do not consider that her receipt of the house, presently unencumbered, and her receipt of the balance of the estate, to the extent to which it has so far been realised, goes beyond meeting her reasonable financial needs. Moreover, I consider those needs have a greater claim on the testator's bounty than the needs of the plaintiff, which I accept are also pressing. 53 Having said that, the defendant did not give clear evidence as to her regular expenses. She has a debt of about $15,000 for legal costs which she is paying off at $50 per fortnight. Even so, she appears to be meeting that debt from her income. 54 If there were a further $30,900 or thereabouts (in case interest has been earned on that sum), which was presently an asset of the estate which could be distributed, then the plaintiff would have a strong claim to that asset. I say that because payment of that sum to the plaintiff could be made without disturbing the defendant in her ownership and possession of the house. That is not presently an asset of the estate. 55 Counsel for the plaintiff submitted that, by not exercising a power in his life to direct that the benefit under the life insurance policy should be paid to the plaintiff, the deceased entered into a prescribed transaction within the meaning of s 22(4)(d) of the Act. If that is so, then the effect of s 22(5) is that the prescribed transaction is to be deemed to have been entered into immediately before, and to take effect on, the death of the deceased. 56 The benefit would then be liable to be designated as notional estate, as it would have directly disadvantaged an eligible person (s 26(a)). 57 The terms of the life insurance policy are not in evidence. It is part of the responsibility of the executor to put such material in evidence. The inference can be drawn from the correspondence from the administrator of the superannuation fund in respect of which the death benefit arose that the deceased had such a power. 58 I accept that there was a prescribed transaction as submitted by counsel for the plaintiff. The question then is whether I should make an order designating that property as notional estate of the deceased. There are limitations on making such orders relevantly in ss 27 and 28 of the Act. 59 I have considered each of the matters in s 27(1)(a) and (b) and (2), and I have also considered the matters in s 28(1). Prima facie, it is the estate of the deceased which should bear the burden of an order for provision. However, in the present case, there are special circumstances which go to the substantial justice or merits of designating the death benefit as notional estate. 60 The central reason why I do not consider that the plaintiff is entitled to an order out of the actual estate is that to do so will be to the detriment of the defendant in her possession and ownership of the house, which is her only substantial asset, and to which I consider she has a moral claim which exceeds the moral claim of the plaintiff to a legacy. 61 In those circumstances, I consider that an order ought to be made designating the death benefit as notional estate and making an order for provision in favour of the plaintiff out of the death benefit. Otherwise, the plaintiff's claim ought to be dismissed. I will ask counsel for the plaintiff at a convenient time to bring in short minutes of order to give effect to these reasons.