New South Wales Supreme Court CITATION : Fordham v Burrell [2010] NSWSC 685 HEARING DATE(S) : 23/06/10, 24/06/10 JUDGMENT DATE : 11 August 2010 JUDGMENT OF : Macready AsJ at 1 DECISION : I dismiss the summons with costs. CATCHWORDS : Family Provision. Claim by a de facto partner of 7 years standing for all of a $700,000 estate. Held sufficient provision made in will which provided one third of estate should pass to plaintiff. PARTIES : Shirley Ann Fordham v Clinton James Burrell and Rebecca Burrell FILE NUMBER(S) : SC 2009/288304 COUNSEL : Mr D Smallbone for plaintiff Mr M Bradford for defendants SOLICITORS : Birch Partners for plaintiff Alex Ilkin & Co for defendants - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE MACREADY Wednesday 11 August 2010 2009/288304 - SHIRLEY ANN FORDHAM v CLINTON JAMES BURRELL & REBECCA BURRELL 1 HIS HONOUR: This is an application under the Family Provision Act 1982 in respect of the estate of the late James Craig Burrell who died on 3 June 2008 aged 69 years. The deceased was survived by his son, Clinton James Burrell, and his daughter, Rebecca Burrell, the defendants, who are the executors of his last will. The deceased was also survived by his de facto partner, Shirley Ann Fordham, the plaintiff in the proceedings. The deceased and his ex-wife had divorced in 1986. The deceased's last will 2 The deceased made his last will on 17 April 2008 ("2008 will") under which he appointed his children, Clinton Burrell and Rebecca Burrell, the defendants, co-executors of his last will. After some minor bequests the deceased divided the residue of his estate equally between the plaintiff, Shirley Fordham and his two children. 3 In November 2006 the deceased had made an earlier will in which he gave 75 per cent of his estate to his children in equal shares and 25 per cent to the plaintiff. The deceased's estate 4 The main asset was the deceased's former home at Lugarno which has been sold and the estate partly reduced to cash. The net proceeds remaining after allowing for costs and legal costs in respect of the estate and the sale of its properties amounts to $706,074.92. 5 There has been a partial distribution of $23,280 to the plaintiff and the defendants in the proceedings. At present the monies are held in an investment and amount to $637,650.19. There is some personalty worth $4,400 in respect of which the parties are in dispute. There are shares worth $12,532 held in the estate. 6 The defendants' costs of $72,681.45 have been paid before arriving at the figure mentioned above. There are further defendants' costs of $7,200. The plaintiff's costs were originally estimated at $58,950 but that estimate has been revised to $78,226.50. History 7 The deceased was born in 1938. The plaintiff was born in 1951. The deceased married Diana Rosalie Burrell in 1969 and they had two children, Rebecca born in 1971 and Clinton in 1973. The deceased and Diana divorced in 1986 and the deceased retained the family home at Lugarno. On 22 September 1998 the deceased made his first will which left his estate to Rebecca and Clinton. 8 The deceased first met the plaintiff in March 1995 and they commenced seeing each other. According to the plaintiff they stayed at each other's residence overnight. In October 2001 the plaintiff commenced to live at the deceased's residence. At that time she was employed as a shop assistant at David Jones at Macarther Square and the deceased was employed as the editor for the St George and Sutherland Leader. 9 In January 2003 the deceased was diagnosed with cancer and underwent chemotherapy. Shortly afterwards he underwent surgery to remove a tumour. At this time the deceased took nine months accrued sick leave. 10 In June 2003, Clinton and his wife, Shauna, returned from England where they had been living and working. They moved in to the Lugarno property to care for the deceased. 11 The deceased had further surgery in September 2003 which was successful to the extent that in October 2003 he returned to his previous full time employment. However in November 2003 the deceased's cancer spread to his liver and lungs and his doctor advised him that the cancer was terminal. 12 In December 2003 the plaintiff resigned from her employment and spent six months at home to care for the deceased. In July 2004 she studied at St George Tafe College to become a medical secretary. The deceased paid for her tuition. 13 In about April 2005 the deceased's employer requested he resign as the editor and he was employed on a part time basis for two days a week as a sub editor at Fairfax suburban newspaper head office. The deceased continued with the part time employment until December 2006 at which time he resigned from his employment due to his ill health. 14 The deceased made his second will on 27 November 2006 in which he left 75 per cent of his estate to his children in equal shares and 25 per cent to the plaintiff. 15 In February 2008 the plaintiff took six months without pay from her employer to enable her to look after the deceased. In March 2008 the deceased underwent further surgery. 16 As I have mentioned the deceased made his last will on 17 April 2008. In May 2008 the cancer had progressed to a stage where the deceased was transferred to the Calvary Hospital where he died on 3 June 2008. 17 These proceedings were commenced within time on 9 April 2009. Some time later the deceased's property at Lugarno was sold for $780,000. 18 Interim distribution of the estate of $23,280 to each of the plaintiff and both defendants were made on 24 August 2009. Eligibility 19 The plaintiff is an eligible person. The High Court in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 has set out the two stage approach that a court must take. At 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 Ltd [1938] AC at 476. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for 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 (1951) 82 CLR 645, where there were 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 20 The plaintiff is aged 58 years. She has no dependent children. She has two children and six grandchildren, some living interstate. She lives in rented three bedroom accommodation at Earlwood which she shares with her two dogs. She works as a secretary in the endocrinology department at St George Hospital, earning $382 net per week. She has expenses of about $490 per week plus rent of $300 per week. 21 So far as assets are concerned she has the deceased's car which was given to her shortly before he died and some furniture. She has savings slightly in excess of $7,000 and superannuation worth $33,000. She has a credit card debt of $1,429. She also owes the estate $2,000 which she took from the deceased's account to meet personal needs. 22 The plaintiff has suffered from two ruptured discs in her lower back, as well as two exposed nerves in her spine which resulted in an operation in 2006. Fortunately she seems able to cope with her back problems with physiotherapy treatment. She suffers from rheumatoid arthritis in both index fingers. She suffers from sciatic pain and from varicose veins in both her legs. In 2006 she was diagnosed with shingles and she continues to suffer from this and takes medication. 23 The deceased had a good relationship with the plaintiff but it plain from statements he made to others that he did not intend to marry the plaintiff. They lived together for six years and nine months and prior to that time the plaintiff and the deceased stayed at each other's residences most nights of the week. 24 The plaintiff has another asset which is her interest in the estate. It is plain that if these proceedings had not been brought the plaintiff would have received approximately $260,000, a third share in property worth $780,000. 25 It is necessary to consider the two defendants who have a claim on the bounty of the deceased. Rebecca Burrell 26 Rebecca is aged 39, she is single with no dependents. She is employed as an art director with the Sunday Telegraph. She earns approximately $1,200 net per week. Her expenses included rent of $465 per week. She has assets totalling $233,000 which includes savings of $195,000. She has debts including a car loan, tax debts and a credit card debt of $40,500. 27 Rebecca had a good relationship with her father. She would like to purchase a two-bedroom unit at Coogee but she is awaiting the outcome of these proceedings before making a decision on what sort of property she would like to purchase. Clinton Burrell 28 Clinton is aged 37, married with two children born in April 2007 and November 2008. He is employed as an equities trader with an income of $3,019 net per week. Clinton and his wife, Shauna, own their home at Caringbah which is valued at $760,000 and the house contents. They own a car worth $12,000. His wife does not work. Clinton has superannuation of $87,500 at June 2010. 29 Clinton's liabilities include a mortgage on the house of $512,000 and a car lease of $19,600. His expenses including the mortgage payments total $2,439 per week. He manages to deal with these expenses however not unnaturally the demands of a young family will increase over time. 30 Clinton also had a good relationship with his father and the extent of the relationship can be seen when one considers that he gave up well paid employment in England to come back to be with his father when he first had cancer. He plainly put his father's interests before his own. Discussion 31 It is necessary to see how the plaintiff says that she has been left without adequate and proper provision for her maintenance, education and advancement in life particularly as, under the deceased's will, she had an entitlement which before this litigation would have given her some $260,000. 32 The plaintiff's claim is that she should receive the whole of the deceased's estate. She says she would like to purchase a 2 to 3 bedroom townhouse in the St George area in the range of $450,000 to $535,000. She would also like a fund to provide for contingencies and update her car. 33 Although the plaintiff is not the deceased's widow, it is useful to look at what has been said in respect to such claims before considering the application of such statements to what has been said in respect of claims of defacto spouses. 34 Widow's claims are frequently the subject of applications in this Court. The Court of Appeal in Golosky v Golosky [1993] NSWCA 111 has referred to formulations of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65. An earlier formulation of this standard was approved by the Court of Appeal in Elliott v Elliott (Court of Appeal, 24 April 1986, unreported). Powell J in his first instance decision in Elliott v Elliott (Supreme Court of New South Wales, 18 May 1984 unreported) said the following: "Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring." 35 There have recently been reminders about the limited use of such formulations. In Marshall v Carruthers; Marshall v Marshall [2002] NSWCA 47 Young JA, with whom Palmer JA concurred, said: "73. It must be remembered that Powell J put his proposition as a "broad general rule". However, there is in fact no "standard former spouse" to which one can just apply that proposition as a rule of thumb. 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. 75. I also take this opportunity to reject Mr Ellison's submission that a person who has a claim as a class (a) eligible person ipso facto has a stronger claim than a person who comes under class (b). Indeed, in many cases, such as where there are infant children, this may not be so." 36 The matter was again dealt with in more detail in Bladwell v Davis & Anor [2004] NSWCA 170. In that case Bryson JA, with whom Ipp JA concurred, said: "12. There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. "Widow takes all" is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned. 13. Observations on the claims of widows were made by Powell J in Luciano v Rosenblum [1985] 2 NSWLR 65 at 69-70 in these terms: '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.' These observations were not made in the context of a competing claim or proved need by another eligible person, and were introduced by a guarded reference to a general rule and the absence of special circumstances. However they are frequently, almost universally cited in applications where provisions for widows are under consideration. 14. In Golosky v Golosky NSWCA 5 October 1993 (unreported) the widow, second wife of the testator, was the applicant and the sons of the first marriage, the will beneficiaries whose interests were affected, were well off and did not assert financial need. The majority (Kirby P, Cripps JA concurring) ordered further provision for the widow, and Kirby P referred to Luciano v Rosenblum b riefly for comparison, but also said: 'Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an "able bodied son" was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State. See [ Hunter v Hunter and Ors (1987) 8 NSWLR 573 (CA) 575[f], 580f; cf Anderson v Teboneras and Anor [1990] VR 527. So should inflexible rules about spousal provision. 15 In Hertzberg v Hertzberg [2003] NSWCA 311 provision ordered by Acting Master Berecry for a widow, second wife of the testator, out of a large estate was confirmed by the Court of Appeal. There was no competing claim or circumstance of need of any will beneficiary. McColl JA said at [35] in the context of the claim of a widow for the matrimonial home (which in this case the claimant owns): 'His Honour's judgment recognised the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors. In this case the situation was exacerbated where, regrettably, the previously affectionate relationship between the appellants and the respondent had, as Acting Master Berecry found, completely broken down following the execution of the deed. Thus the situation in which the deceased may well have contemplated he had left the respondent appeared to have altered. The statement in the first sentence of this passage should be understood in its context of a claim in a very large estate where there was no competing claim based on need. 16 In Sayer v Sayer [1999] NSWCA 340 at [34] Sheller JA (with whom Davies AJA concurred) accorded primacy to the claim of a widow (of a second marriage) over the claim of a granddaughter who was an eligible person "in the circumstances and in accordance with prevailing community standards." This does not in my opinion express any general principle of paramountcy. 17 In Cropley v Cropley [2002] NSWSC 349 at 56 Barrett J said: 'When it comes to claims by adult children, it can be said at once that, if there is a competing claim by the widow and all claims cannot be fully accommodated, the widow's claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in aid of an adult child. That a widow's claim to maintenance out of the estate of her deceased husband is a claim which is "paramount" and "of a high order" is borne out by the judgments of Sheller JA in Sayer v Sayer [1999] NSWCA 340 (Davies AJA concurring) and Blackmore v Allen [2000] NSWCA 162 (Priestley JA and Foster AJA concurring). In the former case, Sheller JA described the relativities between the claims of the widow and those of an adult grandchild applicant (Francesca) as follows: "In my opinion, the question is whether [the grandchild] has satisfied the Court that there is, in the circumstances and in accordance with prevailing community standards ( Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 46), sufficient in the estate to provide for the widow's proper maintenance and advancement in life and yet leave some amount out of which provision can be made for her." This was accepted as an accurate statement of the law by Palmer J in Latimore v Latimore (2003) NSWSC 364 at [59]. At [57] Barrett J proceeded to approach the applications according to the two stage approach described in Singer v Berghouse (1994) 181 CLR 201. 18 In my respectful view there is an inconsistency between an approach, in the context of competing claims, to the claims of widows as paramount, and the application to the facts and circumstance of each case of s 7 and the approach established by Singer v Berghouse . Preconceptions and predispositions are likely to be the source of inadequate consideration of the process required by the Family Provision Act 1982. 19 In the application of the test in s 7, and of the exposition thereof in Singer v Berghouse by Mason CJ, Deane and McHugh JJ at 409-411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse , in full and with reference to the instant facts. Defeat of the opponents' claims does not necessarily follow from a demonstration, which the claimant can make, that all her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have to be weighed, and they too have their needs and merits." 37 Interestingly Ipp J in Bladwell v Davis adopted this in his judgment at [1]-[2] and also said: "1. I agree with Bryson JA, for the reasons his Honour has stated, that 'it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse (1994) 181 CLR 201 …' 2. I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others." 38 Stein AJA agreed with both judges. 39 In Marshal v Carruthers the court was concerned with a claim by a defacto partner. Hodgson JA had the following to say: "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 respect, 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 unforseen 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. In my opinion, it is not clear that this statement would apply to applications by widowers. The difference in attitude that the Court may take to applications by widowers is due in part, I think, to economic disadvantages which women still face. One important aspect of this is the economic disadvantage occasioned by the greater responsibility which women often take in looking after children. That factor is of course absent here." 40 There is a real question whether the plaintiff should receive anything. The plaintiff's repeated assertion that she should receive the whole of the undistributed estate can only be described as extravagant and unrealistic. 41 While acknowledging comments made by Hodgson JA in respect of the strength of the marriage bond, which are not present in this case, there are a number of factors which are of importance in this case. It was a defacto relationship of some six years and nine months duration which came late in the deceased's life, which did not involve taking care of children and where the plaintiff's contribution to the estate was nominal. It could hardly be regarded as a similar claim to the widow referred to by Powell J in Elliott v Elliott. Importantly there was evidence given at the hearing by a number of witnesses that the deceased had referred to the plaintiff moving into the Lugarno property as temporary [T56], [T79], [T99] and, as mentioned earlier, it was never the deceased's intention to marry the plaintiff. 42 Another point to note is that the 2008 will was made when the deceased's health had deteriorated and at a time when the plaintiff was making demands to alter his earlier will so as to give her a greater share of his estate. By her own admission she made it plain to the deceased that she felt that she deserved more and the reason why the deceased increased her share from 25 per cent to an equal one-third share was the result of her request that he reconsider her claim on his estate. [T21-22]. He was a generous man and shortly before his death he had given the plaintiff his car so that she could sell her own car to pay her debts. 43 The situation of the deceased's children has to be taken into account. 44 Clinton is at a stage in his life where he is bringing up his young children who are aged two and three years. His children's demands will increase over the years and fortunately he has many years ahead of him in which he can build up his assets. However, the reality is that as with many young couples they have high debt levels and large mortgage repayments. Any assistance with reducing his mortgage will enable future funds to be applied to his family commitments. 45 Rebecca is in a better financial situation as she has savings of $155,000 after allowing for her debts. She still lives in rented accommodation. She is 39 years of age and a single career woman who will have to make her own way in life and provide for her future accommodation and retirement from her own resources. 46 While the plaintiff has a legitimate need for assistance in the provision of suitable accommodation, a more modest assessment of her situation is called for given the relatively small size of the estate and the competing claims of the deceased's children. The plaintiff can apply the funds from the estate towards rental accommodation in the St George area, if that is ultimately where she wants to reside. 47 There is no doubt that the plaintiff made a real contribution to the deceased's welfare at the end of his life. It must also be said that the deceased was aware of her contribution at the time he made his will in 2008 and it was almost certainly a factor which he took into account when deciding to increase her entitlement to an equal one third share in the estate. In my view, the deceased got it right when he decided to divide the estate equally between his children and the plaintiff. His decision was a wise and just one in the overall circumstances and his 2008 will should not be disturbed. 48 Unfortunately the result of this litigation will be the imposition of costs on the estate and the plaintiff. The costs will reduce the fund which the parties will receive from the estate. However, that is the effect of bringing these proceedings. 49 I dismiss the summons with costs. ********** 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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