Ellis & Ors v Foley [2009] HCATrans 143 (19 June 2009)

Last Updated: 25 June 2009

[2009] HCATrans 143

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S522 of 2008

B e t w e e n -

PETER JAMES ELLIS

First Applicant

VIVIENNE JOAN ELLIS

Second Applicant

PHILIP WALLACE JONES

Third Applicant

and

JEANETTE ANN FOLEY

Respondent

Application for special leave to appeal

GUMMOW J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 19 JUNE 2009, AT 11.54 AM

Copyright in the High Court of Australia

MR L.J. ELLISON, SC: If the Court pleases, I appear for the applicants. (instructed by Bartier Perry Solicitors)

MR P.J. MENADUE: If the Court pleases, I appear for the respondent. (instructed by Kydon Segal Lawyers)

GUMMOW J: Yes, Mr Ellison.

MR ELLISON: Your Honours, this special leave application is different from others. This is by an executor. In Singer v Berghouse and Vigolo - - -

GUMMOW J: Just slow down for a minute. Is there some error in fact-finding by the primary judicial officer?

MR ELLISON: The Court of Appeal found there was an error of fact-finding with regard to - - -

GUMMOW J: Do you challenge that?

MR ELLISON: No, your Honour.

GUMMOW J: So therefore the matter was, as it were, in play before the Court of Appeal.

MR ELLISON: Yes.

GUMMOW J: They had found a factual error below. What then was the error that they committed?

MR ELLISON: To use that single finding of fact to overturn a very thorough discretionary judgment and in that context to bring into play the competing circumstances of the beneficiaries, the other beneficiaries of the first stage of Singer v Berghouse, instead of the second stage and to give no proper regard to the principle of testamentary freedom in the context of an estrangement or character and conduct over many years.

BELL J: When you say that to seize, as it were, on a factual finding to then overturn a careful decision by the primary judge, that might be thought to somewhat overlook the significance of the factual finding, may it not? As I understand it, the unchallenged evidence was that the plaintiff before the primary judge had suffered two accidents around the time in fact of the testator’s death, in consequence of which:

she has had limited capacity to work or to be on her feet, and that she suffers considerable pain and debilitating exhaustion.

That is his Honour at paragraph 34. Then when one goes over to application book 28 at 93, there is the observation that:

There appears to be not reason why the Plaintiff should no increase her earnings, by, for example, working in a full-time capacity –

Now - - -

MR ELLISON: It is the second half of that sentence, the “full-time capacity” that was not put to the claimant as plaintiff. There is reference to a medical report. She had increased her hours I think from two days a week to four days a week still part-time three or four hours a day and that had been post the medical reports and it was put to her that she could work more but it was never put to her that she could work full-time and to the extent that there was a finding that she could work full-time as an absolute fact, that was wrong.

BELL J: It is just that once that is accepted, it would seem to be an error of fact-finding that was material to the issue with which the primary judge was concerned.

MR ELLISON: That is a fair comment, but the comment is made in the written submissions that in the context of looking at a whole relationship, which a family provision matter must do, it can be asked rhetorically, even if the deceased knew that the lady could work full-time, given the manner in which she has structured her will and given the relationship, was it fair to the deceased and fair to the trial judge to completely overturn it on one error of fact.

GUMMOW J: Was there a decision of Justice Young that is - - -

MR ELLISON: Field v Inglis?

GUMMOW J: Yes.

MR ELLISON: That is at the back of the materials book, yes, and that is quoted in the appeal. The relevant part is quoted in the application book at the bottom of page 94. Your Honours have it there. At the top of page 95 His Honour said – in 1994:

The court when dealing with an application under this Act first has to concern itself with whether the applicant is an eligible person and whether she was not left the amount that she ought to have been left by the testatrix. On those two questions the wealth or otherwise of other possible objects of the testatrix’s benefaction is irrelevant. If one gets to the stage –

which I think is fairly called - - -

GUMMOW J: Stage 2.

MR ELLISON:

If one gets to the stage of working out the quantum of the order then the first thing one does is to think of what would have been the proper provision to make for the applicant, if nothing else came into consideration.

That, I respectfully put, is what the first stage of Singer v Berghouse is:

In many cases one will see that competing claims of other children or of, indeed, other people may reduce what the applicant might otherwise receive.

GUMMOW J: Two questions that arise, firstly, as I understand it, what was said in Field v Inglis has been applied across the equity division for some time.

MR ELLISON: Yes.

GUMMOW J: Was that departed from in the Court of Appeal?

MR ELLISON: Yes. At paragraph 90 of Justice Sackville’s statement, which conveniently is one page 94, his Honour uses the words - - -

GUMMOW J: What page are you reading from?

MR ELLISON: Page 94 of the application book at line 30.

BELL J: Is it not page 70 of the application book, paragraph 90?

MR ELLISON: I am sorry, I am quoting my submissions which just happen to be opposite that quote of Justice Young.

BELL J: I am sorry.

GUMMOW J: I know, but we are trying to go to the actual text.

MR ELLISON: It does not.

GUMMOW J: Paragraph 90 on page 70?

MR ELLISON: Yes, that is the same - - -

GUMMOW J: Where is the error or departure from Field v Inglis there that you point to?

MR ELLISON: When Acting Justice Sackville quotes Associate Justice McLaughlin in italics at lines 29 and 30 where he says:

his Honour made it clear that the appellant had to “establish her claim upon its own merits”.

That was a reflection of the traditional approach that you, as it were, prove your claim in isolation against the estate. The second stage is, if that claim is well founded, that is, you have not been left with proper and adequate, then you go on to bring the competing circumstances. At line 30 where Acting Justice Sackville says of the Associative Justice:

He specifically said that, while the competing claims of Peter and Vivienne might have reduced any entitlement the appellant otherwise could have established, “those competing claims cannot have the effect of enhancing [her] claim”.

Again, Justice Sackville took into account the circumstances of the beneficiaries which he considered to be favourable or relatively well off at the first stage to determine that the provision made was not proper and adequate and then you move on to the second stage. The point we seek to make in the submission is the - - -

GUMMOW J: That he had jumped from the second to the first?

MR ELLISON: Either the judge had put the cart before the horse or if you take into account competing beneficiaries at the first stage, there is no second stage because if you take them into account, you must really work out what is the exact provision that should have been made. In other words, what is the dollar sum that a claimant should get and if you have worked that out, taking everything into account, there is nothing to do in the second stage.

GUMMOW J: That brings us to the next point which is – this is not a particularly large estate – what will be the consequence of a remedy here? What would happen if you won here? If you have special leave and you won the appeal, what would happen then?

MR ELLISON: And the trial judgment was restored, the respondent, the claimant, would still get, subject to any adjustment for costs, whatever that may be, would still get the hundred and - - -

GUMMOW J: When you say trial judge restored, we would be restoring something that was factually flawed. What would we do?

MR ELLISON: I am not sure. It might not be for a very long time the High Court itself is recalculated. I am not sure it wants to.

GUMMOW J: This is what worries one.

MR ELLISON: But, your Honour, the claimant has still got a significant benefit.

GUMMOW J: How much did she get at first instance?

MR ELLISON: At first instance, the claim was dismissed. Under the will, if there had been no litigation, she would have got approximately $184,000. Once costs were factored in, there is discussion in the judgments about whether she would get something in the 120s or the 160s, depending on how costs were factored in, but she still got something and that is one of the points on the estrangement argument. She still got a significant benefit under the will which benefit still stands to be calculated as one-ninth of residue, residue being everything except the business part of the estate which went to the other two children.

GUMMOW J: What order would you seek from us? The restoration of the primary judge’s decision?

MR ELLISON: Yes.

BELL J: With an accepted error concerning her capacity to earn income?

MR ELLISON: An accepted error, but that should not embarrass the High Court because the judges say, and it is quoted in the application books, that judges, appeal judges should not be too enthusiastic to intervene. Sometimes the deceased does know better.

GUMMOW J: I think you are trying to fight off the prospect that it would have to go back to the Court of Appeal and be done again in the Court of Appeal and accord with Field v Inglis.

MR ELLISON: That is an option available to this Court. I want to make the point – I know your Honours are not telling me not to make it – that in the context of New South Wales which has for the last four years on average over approximately 630 filings per year, the certainty, the predictability, of Family Provision Act principles and their application is a significant matter. Recently we have got a new Succession Act. All these matters must go to mediation. If there is to be uncertainty between - - -

GUMMOW J: Has that Act commenced?

MR ELLISON: The Succession Act commenced for Family Provision Act matters on 1 March this year. There are various parts of it, depending on the process of law reform that are being last year, next year and for a while longer. The certainty, whether it be for New South Wales and the expectation that parties will mediate these matters and settle, or for the whole country, is expected of Singer v Berghouse and if there is to be doubt as to how it is interpreted, this Court should revisit it in whatever way it wishes.

There are eight jurisdictions with family provision or TFM legislation. All the legislation is different. It might be a novelty of this field that regardless of whether the Acts put no criteria or, as the new Succession Act (NSW) does, put 16 different factors to take into account. When the High Court spoke in Singer v Berghouse it provided the judicial template for all the States to apply and Vigolo v Bostin revisited that. But apart from those two cases, since the Family Provision Act came in in 1982, there has been no High Court consideration of the principles and since - - -

GUMMOW J: Would Field v Inglis continue to apply to the new Act when applying the new Act?

MR ELLISON: There has been some degree of agitation as to whether Foley v Ellis now is in conflict – whether there is now conflicting authority as to whether Field v Inglis used to justify a beneficiary saying, “I don’t want to put my financial circumstances before the court” and the court would then not have that and proceed accordingly, or whether Field v Inglis requires a beneficiary to put financial circumstances before the Court. If it does, that creates its own problem because an executor cannot compel a beneficiary to put circumstances before the court, but I certainly know of one case where the plaintiff, nevertheless, has sought production of the beneficiary’s circumstances over the head of a beneficiary who says, “I don’t want to put them before the court”. So, I think there is current conflict working its way through. How it will end up I cannot say.

GUMMOW J: Was the appeal record a very complex one in the Court of Appeal? How big was the appeal book?

MR ELLISON: I think only one. It was just the usual – the principal affidavits were from the three children of the deceased. There was a short affidavit from one of the grandchildren. There was another short affidavit from the father of the grandchild who was under 18, but I think there was only one. If there was more than one, I would be surprised, but one blue book, one black book, one red book.

BELL J: Mr Ellison, Justice Basten gave separate reasons and at application book 46, paragraph 9 his Honour expressed some doubt as to whether the asserted error in the primary judge’s treatment of the respective claims of the applicant and the siblings to the assessment of the adequacy of provision for the applicant was made good. His Honour then went on to refer to other potential errors.

MR ELLISON: Yes. He did not deal with them and Justice Sackville in the principal judgment did not deal with them.

BELL J: It would be difficult to see other than that this would have to go back to the Court of Appeal if you were successful, would it not?

MR ELLISON: In the context of my submission concerning estrangement, it is open to this Court – and I put them in the back of the supplementary book – to look at the particular letters that were written by the respondent as plaintiff, and were referred to by Associate Justice McLaughlin and the judges in the Court of Appeal. The relevant parts are very brief but the strength of them is not to be ignored. If I could take your Honours to those.

BELL J: Before you do that, both Justice Sackville and Justice Basten in his separate reasons considered that one error of the trial judge was placing somewhat too much emphasis on those letters, so - - -

MR ELLISON: We would submit that that is not a very strong point to make in an appeal judge to criticise a trial judge in a most subjective sort of case for putting too much emphasis is usually something that an appeal judge would not justify appellate intervention.

BELL J: Mr Ellison, I was taking up with you the utility of taking us to the very letters in circumstances where - - -

MR ELLISON: But it is an important part of my submission that estrangement or conduct disentitling, however it is used, has not been looked at by this Court since 1962 and whereas since 1962 adult children have been recognised as having a claim in their own right without a special need, adult children are the very people who have the estrangements or just the lack of communication with a parent and whereas it might be thought that adult children’s claims are recognised now in the context of any other claim without any need for a special need, the law and the commentary on estrangement has not moved in this Court in 40-odd years. There have been comments at the appeal level, but if adult children are allowed to bring claims, testators should be allowed perhaps to reflect on estrangement in the context of their testamentary dispositions.

BELL J: But on the question of estrangement, the testator herself in the family law proceedings evinced a desire not to, as it were, increase any rift, is that not so?

MR ELLISON: Yes. She was filing an affidavit in a custody case, quite sensibly, and she is to be congratulated. She did not buy into the argument between the husband and wife. She just said, “As grandmother, this is what I want to say about the grandchildren”.

BELL J: My point, I think, Mr Ellison, is the letters pre-dated the family law proceedings by some considerable time, did they not?

MR ELLISON: The reference to Hitler was in an 1984 document, the reference to “my family trying to vent on my destruction” was in 1997 and those two pre-dated. I think the 1997 was in the context of the early days of the family law matter, but it does show that it was not a rush of blood to the testator’s head which caused her to blame the respondent for everything at the last minute. Your Honour, I have made the point that if the High Court wishes to make a comment, it will apply across all the jurisdictions, not just for this case and not just for New South Wales.

Because it is an executor’s appeal, the beneficiaries are entitled to say that they and their mother have perhaps not had proper recognition of the deceased’s testamentary independence, a bit different to a claimant’s appeal, and to the extent there might be some conflict between the courts in family provision matters, the High Court is not asked to say things very often but this might be one of them. If the Court pleases, they are our submissions.

GUMMOW J: Yes, Mr Menadue.

MR MENADUE: Your Honours, the total size of the estate in this particular case is $2.8 million. Of that, the Court of Appeal, when it made its decision and in a sense allocated more money to the respondent in this particular matter, it was $335,000 which was about 10 per cent of the total size of the estate. So, one could not say that in this particular case the - - -

GUMMOW J: What is the legacy to your client under the - - -

MR MENADUE: Well, as Mr Ellison said, your Honour, it is somewhere between about $120,000 and $180,000 and when one adds to that $335,000, it is around about half a million dollars. So, effectively, the result of what the Court of Appeal did was to, as I said, allocate approximately another 10 per cent, or a little more. It certainly was not generous. The other two children, their allocations will drop from about a million dollars to about $835,000, or somewhere around there, so they each lose about half of that particular $335,000.

Indeed, in the Court of Appeal they made it very clear that one of the reasons why they were being less generous than they otherwise could have been, because there is no doubt at all from the record that the only party who had any need whatsoever was the respondent, the other two applicants had no need. Indeed, my understanding is it was accepted in the Court of Appeal and it was accepted below that the respondent had need. The essential question was whether or not there had been any particular conduct which might lessen the amount which she otherwise might obtain.

Justice Sackville made it very clear that to respect the wishes of the testator and because there had been an estrangement, although he was not inclined to assign blame for that, he did reduce the amount which she was to received. As a consequence, she still will receive substantially less than the other beneficiaries of the estate.

GUMMOW J: What do you say about paragraph 3.20 at page 94 where there is an extract from the Chief Judge’s judgment in Field v Inglis? It is said that there has been a departure from that structured approach and that the departure is manifest at paragraph 90 on page 70.

MR MENADUE: Your Honour, Field v Inglis is an interlocutory decision. It was not cited before the Court of Appeal in this particular matter.

GUMMOW J: I know. One is meant to know it if one practises in this field, I suspect.

MR MENADUE: As I said, your Honour, it is an interlocutory decision. In that particular case his Honour Chief Justice Young said that - - -

GUMMOW J: But do you agree that what is said there represents the understanding in the Equity Division?

MR MENADUE: I could not say that, your Honour. Mr Ellison would be in a better position to explain what happens in this particular area than me. But, in my submission, if it is, your Honour, it is contrary to what is said in Vigolo. In Vigolo Justices Callinan and Heydon made it very clear that when one looks at the first jurisdictional question, one must look at all of the circumstances and one must look at the position of the other potential beneficiaries. In a sense, one cannot just sort of ignore those and say, well, we are looking at the position of the plaintiff in isolation.

In a sense, what one does is one has to, in a sense, look at the smorgasbord of factors, all of the range of factors which are important, including the size of the estate and so forth and then the Court must make a judgment, but one cannot separate out and say, as his Honour did, the trial judge, that one can reduce the amount but one cannot possibly enhance the amount, depending upon the situation of the other beneficiaries.

BELL J: But it is necessary for an applicant to establish inadequate provision. True enough it is that involves a consideration of the circumstances because what is adequate for one applicant may not be for another, having regard to the circumstances in each case. But you do not suggest that there is not, as it were, a first limb, namely, the establishment of inadequacy?

MR MENADUE: But when one looks at inadequacy, your Honour, one looks at it in the context and context is everything here and the various factors is very important. For instance, the courts have often said that the larger the estate, the more generous one can be when one is assessing need. It is exactly the same here. The better off that the beneficiaries are, the more flexibility and perhaps even generosity one can show when assessing the need of a plaintiff. In a small estate with other beneficiaries who are in a difficult position, then the court will have to be far less generous and the court will have to be far more restrictive when one looks at need.

In a sense, what is submitted is that the trial judge said, in a sense, that when one looks at the position of the beneficiaries, it only travels one way and that is to potentially reduce the needs or the amount for which the plaintiff is entitled when really it is a more flexible approach and one can, in a sense – it is like a magnifying glass that what would otherwise – I am sorry – the actual need which is shown can be looked at in a more generous light if the other beneficiaries are in a good position. Those are my submissions on that, your Honour.

I could take your Honours to the relationship issues, particularly in relation to the letter. What the evidence clearly shows is that the letter about which there is major complaint occurred in 1994. Up until that time there was a good relationship between mother and daughter. After 1984 the relationship recovered and there was another good period in the relationship up until about 1995 when this exogenous event, the Family Court litigation came along and unfortunately upset their relationship.

GUMMOW J: I think it may come to this, Mr Menadue. If special leave were to be granted and the appeal was to be allowed because there had been a misapplication of principle, as Mr Ellison suggests, it seems at the moment that the litigation would then have to return to the Court of Appeal. The question then arises, to what extent is there a real prospect that properly applying the principle the Court of Appeal would reach a markedly different result than the one it reached?

MR MENADUE: I do not see how they could, your Honour. As I said, the position seemed to – no one seems to dispute that there is a real need here. The respondent is in a desperately parlous situation. The other beneficiaries are exceptionally well-off. There is no doubt about that. The only issue which really seems to have been put forward as to why the amount to be provided to the respondent should be cut down is because of this issue about the relationship between the mother and daughter, an estrangement.

BELL J: Just factually, can I understand this, the testator died in June 2004?

MR ELLISON: Five years this week.

MR MENADUE: That sounds right, then, your Honour.

BELL J: The motor vehicle accidents that impacted on her ability to work occurred in June 2004 and a year later in June or July 2005, is that the position?

MR MENADUE: That is correct, yes, your Honour.

BELL J: Was that of significance in the way the matter was put?

MR MENADUE: Justice Sackville did a very thorough analysis of all of that particular evidence. If the respondent is a position, your Honour, that she can only work part-time, she is over 50, she has serious medical conditions and she has very little in the way of assets, her position of going ahead and her needs must be very grim. As I said, the only real question which seems to have been raised against a legacy being made for her into the will is the relationship between the parties and, as I said, this is a relationship which went on for 50 years. Mother and daughter had a good relationship up until 1984. There was an incident in the house. I can take your Honours to that. It is not even clear, your Honours, that this particular Dachau letter was ever sent. The evidence of the transcript is that it was a diary note, which does not really seem to have been contested. Then after that, the relationship returned to normal up until the Family Court litigation. Those are my submissions.

GUMMOW J: Thank you. Mr Ellison.

MR ELLISON: Your Honours, Field v Inglis, in one sense, was both interlocutory and final. Ironically, it was during the context of a family provision claim Master McLaughlin, as his Honour then was, had held that the people do not have to produce and that decision went on review to Justice Young who upheld the Master’s position. Vigolo I have commented on in paragraph 3.19 of my submissions at page 94. I do not say this critically, although they will not hear it. That case was from Western Australia.

GUMMOW J: I remember.

MR ELLISON: It was obiter and Field v Inglis, not that I would expect them to, was not cited in the High Court. Singer v Berghouse was taken as gospel and it was a question in Vigolo as to whether moral duty still played a role. If it had ever gone out, it was back in.

GUMMOW J: That is right.

MR ELLISON: It had gone out in New South Wales and it was back in.

GUMMOW J: I did not put it back in.

MR ELLISON: My friend referred to large estates and small estates. The point is, has Singer v Berghouse become a one-stage test or a two-stage test. If the respondent had been left nothing under this will, her complaint perhaps would have been justified, but, putting aside whether there was a million or two and a half million, she was still left a significant amount into which the deceased factored the estrangement. The point is made, why should an appeal judge who has not even seen the witnesses start to buy into that question where estrangement is so significant? Having not given it too much thought, that is one of the shortfalls of sending it back to the Court of Appeal. There is still the question of whether greater regard should be given in the 21st century to adult children and the question of estrangement.

BELL J: Mr Ellison, factually, can I take up with you the matter I took up with Mr Menadue? As I apprehend the evidence, the two motor vehicle accidents that bore on the woman’s capacity to earn income occurred after the death of the testator. Is that the position?

MR ELLISON: I just saw the reference in the – June 2004 and July 2005, page 13 of the application book and then there was something in October 2005 about being shoved in the playground. The answer to your Honour’s question is yes.

BELL J: Does that have some significance to your submission that the Court of Appeal’s judgment undercuts, as it were, the testator’s intentions to make the provision that the testator considered adequate and that was adequate, having regard to the circumstances, including the estrangement?

MR ELLISON: There is no doubt that it does because every time a court makes an order under the TFC or Family Provision Act of a State or Territory it undercuts. The question is whether it is appropriate and there are hard cases and there are easy cases.

BELL J: But, Mr Ellison, the matter I am taking up with you is the testator was dead at the time the applicant’s ability to earn income was affected.

MR ELLISON: Yes.

BELL J: Well, you hear what I am saying.

MR ELLISON: I would be at cross-purposes with your Honour. Yes, she was, but the Court of Appeal factored that in. I have made the point in, I think, my written or hopefully made in the oral submission. The question is, in the context of everything, even if the deceased had known that her daughter was partially unfit, would that have been such a big factor as to overcome the fact that there was the estrangement, that she had given her a significant benefit but wished to benefit her preferred children and her grandchildren. If the Court pleases.

GUMMOW J: We will take a short adjournment.

AT 12.30 PM SHORT ADJOURNMENT

UPON RESUMING AT 12.33 PM:

GUMMOW J: If special leave to appeal were to be granted and the appeal allowed on the ground of misapplication of principle by the New South Wales Court of Appeal, as the applicant contends, then the litigation would have to return to the Court of Appeal for rehearing. We are not satisfied that the outcome which could then properly be reached by the Court of Appeal would significantly differ from that under the orders now under challenge. That circumstance makes this an unsuitable case to agitate the point of principle for which the applicant contends. Special leave is refused with costs.

AT 12.34 PM THE MATTER WAS CONCLUDED