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Davy v Black [2011] NSWSC 1416 (16 November 2011)

Last Updated: 13 December 2011


Supreme Court

New South Wales


Case Title:
Davy v Black


Medium Neutral Citation:


Hearing Date(s):
14/11/2011


Decision Date:
16 November 2011


Jurisdiction:
Equity Division


Before:
Associate Justice Macready


Decision:
1. I order that the plaintiff receive a legacy out of the notional estate of the deceased referred to hereunder of $975,000, of which $500,000 has already been paid.
2. I order that the plaintiff's costs on the ordinary basis and the defendants' on an indemnity basis be paid or retained out of the notional estate designated hereunder.
3. I designate the following real estate, to the extent necessary to meet the legacy and the costs ordered to be paid, as notional estate of the deceased:
(i) the property in Howe Street, Finley in the names of the defendants;
(ii) the block of flats at Headford Street, Finley in the names of the defendants;
(iii) the defendants' property at Tarakan Street, Wodonga;
(iv) the defendants' property at Thomas Mitchell Drive, Wodonga;
(v) the defendants' property at Bralgon Street, North Albury;
(vi) the defendants' property at Hereford Street, Wodonga.
4.I reserve liberty to apply.
5. I order that the exhibits be returned.


Catchwords:
WILLS AND ESTATES - Succession Act 2006 - application for family provision order by daughter of deceased - plaintiff and first defendant both daughters of deceased -deceased left racehorse to defendant but died intestate as to residue of estate -transfers of assets to defendants during deceased's lifetime - further provision made for plaintiff


Legislation Cited:


Cases Cited:
Lloyd-Williams v Mayfield [2005] NSWCA 189
Mayfield v Lloyd-Williams [2004] NSWSC 419
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201


Texts Cited:



Category:
Principal judgment


Parties:
Helen Margaret Davy (plaintiff)
Jeanette Louise Black (first defendant)
Noel James Black (second defendant)


Representation


- Counsel:
Mr R Colquhoun (plaintiff)
Mr JB Whittle SC & Ms L Wilson (defendants)


- Solicitors:
Stacks Forster (plaintiff)
Lumleys (defendants)


File number(s):
2010/00230721

Publication Restriction:



JUDGMENT

  1. HIS HONOUR : This is an application under the Succession Act 2006 in respect of the estate of the late John Archibald Tulloch, who died on 24 November 2009, aged 78 years. The deceased was survived by his two daughters, Helen, the plaintiff and, Jeanette, the first defendant. The second defendant, Noel James Black, is Jeanette's husband and the second defendant in the proceedings.

Last will of the deceased

  1. The last will was made on 2 December 2008. In that will he left his racehorse "Excelltastic" to Jeanette and he appointed her executrix and trustee.

  1. He made no provision for residue and, accordingly, died intestate as to the rest of his estate. As his wife had predeceased him, his two children took on intestacy.

Assets in the estate

  1. At the date of his death, his estate had a value of $401,027, which included a half share of his racehorse, various debts and small amounts of personalty and cash.

  1. At the date of death, the deceased was engaged in litigation over an alleged transfer by him of a half share of his horse to a Mr Braybon. That litigation was continued by Jeanette until its resolution in a judgment given by Brereton J on 17 June 2010. She did this at the request of the deceased before he died. She was unable to settle the proceedings and they ran their full course. The judgment held that there had been no undue influence and the result was a loss for the deceased and his estate as his Honour decided that the estate and the defendant owned the horse equally. Costs were ordered against the estate. The horse has now been sold.

  1. After getting in all assets, all monies (other than $5,412.13 and a possible claim against Mr Braybon) were paid in costs and other expenses of the litigation and the estate.

  1. In addition, Jeanette has paid tax and funeral expenses of $21,845.51 from her funds. She and her husband have also paid $343,561.29 for costs, tax and other expenses in respect of the horse and its litigation.

  1. In addition, Jeanette has, at the request of the deceased, paid from her funds the sum of $500,000 to the plaintiff.

  1. The present assets in the estate amount to $5,412.13 and a possible claim against Mr Braybon for $36,785.76. Apart from the liability of the estate to Jeanette for the sums of $21,845 and $343,561, there is also owed by the estate costs due to the Jeanette in the horse case of an amount not yet assessed but estimated by Jeanette at $364,458.

  1. The defendants' legal costs and estate administration costs amount to $88,637.

  1. The plaintiff's costs in these proceedings are estimated on an indemnity basis at $185,000 and on the ordinary basis at $140,000.

  1. It may be wondered at this stage how the expenses were met. The answer lies in the fact that the deceased was a wealthy man until shortly before his death. Apart from helping both his daughters during their lives, he also transferred to the defendants the following:

  1. This is a total of between $3,274,296 to $3,304,296. As I have mentioned, the deceased died on 24 November 2009.

  1. The transfer of the Origin Energy shares was consideration for the Jeanette and her husband giving up their employment at Albury and coming to Finley to live with the deceased and look after him.

Family history

  1. The deceased was born in January 1931 and his two children were born, Helen in October 1966 and Jeanette in November 1967.

  1. Jeanette married her first husband in January 1987. They moved into a block of flats which the deceased owned in Macauley Street, Albury, which they managed for him in exchange for paying no rent on.

  1. In 1989 the plaintiff Helen and Jeremy Davy purchased a flat in Fallon Street, Albury. They used $20,000 from her husband's inheritance and borrowed the rest of the purchase price. They sold it in 1990 and purchased a hair studio business at Taree. Helen and Jeremy were married in 1991 at Taree.

  1. Jeanette had her first son Brett in February 1991.

  1. In 1993 things changed again for the Helen as the hair studio was sold and they then moved back to Albury.

  1. In August of that year Jeanette had a daughter Brianna.

  1. By April 1995 the Helen and her husband's first child Brad was born.

  1. Unfortunately, in 1996 Jeanette and her first husband separated. Around this time - and both the daughters seem to think it was perhaps in 1994 - the deceased gave them $30,000 each.

  1. In September 1996 Helen and her husband sold their apartment in Albury, moved up the coast for a short period and then moved back to Albury where they lived in one of the deceased's flats rent-free. They had their second child Nathan in August 1997.

  1. In December 1997 Helen and her husband, using the funds of $62,000 which were provided by the deceased, purchased a property in Atkin Street, Albury. Although that covered the whole of the purchase price, there was work that had to be done to the property and in April 1998 they mortgaged it to the Commonwealth Bank for $20,000 to carry out the necessary repairs.

  1. The deceased's health started to fail, and in 1998 he had a heart valve replacement operation. His wife, the parties' mother, died in January 1999.

  1. During 1999 an event occurred which affected the Jeanette: At the deceased's request, she sold a property in Teal Street, Albury and used the money to do up the deceased's flats in Macauley Street, Albury. This was in exchange for a promise made by the deceased that she could live there and would inherit it in due course. This did not happen as the deceased sold the flats in August 2001, prompting a break in their relationship for about 12 months.

  1. In mid 2000 the deceased married an old friend Pat Spicer, but the marriage only lasted for six months. Notice has been given of the proceedings to her and she makes no claim.

  1. By 2002 the deceased was having further operations for a faulty heart valve, and that was not completely successful.

  1. Helen's third child Alex was born in May 2002.

  1. Shortly thereafter, the deceased was in intensive care for six weeks, and a further four weeks later in the year at Albury Base Hospital.

  1. It was in April 2004, Helen says, that the deceased purchased the Land Rover for her for $29,650. Apparently, $9,000 was repaid and the balance was forgiven by the deceased.

  1. Between October 2002 and January 2006 Helen and her family stayed with the deceased in his home at Finley on most weekends and helped him. By this stage he was starting to go downhill. Jeanette also kept in touch regularly by phone.

  1. In the first six months of 2006 Helen and her husband and three sons moved in to live with the deceased at his Finley home.

  1. On 29 June 2006 there was an incident in which the deceased, suddenly and without warning, told, in very abrupt and rude terms, Helen to leave his house and not come back. He picked up a plate, threw it across the room and nearly hit a child. They left the home a couple of days later.

  1. Later that year in 2006, the Helen and her husband sold their property at Atkin Street for $220,000 and received a bit over $100,000 from the sale. They then moved to Forster.

  1. By March 2007 Jeanette had married her present husband, Noel Black. They continued to visit the deceased fortnightly, doing maintenance and chores but they also looked after the Finley flats.

  1. The defendants purchased a property in Hereford Street, Wodonga in March 2007. The purchase price was $172,000 and they borrowed $150,000 for that purchase. They and their children - that is, the first defendant's daughter Brianna and the second defendant's son - then moved into that house.

  1. In April 2007 there was the gift of half of the racehorse which I have already referred to, which led to the litigation and was a burden on the deceased's estate for some time until it was completed.

  1. In April 2007 the defendants purchased a home at Tarakan Street in Wodonga. This was purchased for $260,000. The funds were provided by the deceased, together with $10,000 for the expenses.

  1. In that year the deceased had some trips to Queensland.

  1. In August 2007 the deceased was back in hospital in Finley, and after that he stayed for a short time with the defendants.

  1. Later in August he was back in Wodonga Hospital, having had a mild heart attack, and then in October was admitted to Finley Hospital with pneumonia.

  1. In November 2007 the defendants purchased a property in Thomas Mitchell Drive, Wodonga for $205,000, using mortgage funds over that and their other property. They continued of course to keep in contact with the deceased.

  1. In April 2008 they took the deceased on a trip to Queensland, and there was a visit to Helen and Jeremy, according to Helen.

  1. On 18 August 2008 there was transfer of the deceased's home in Howe Street, Finley and the block of flats in Finley to the defendants for no consideration.

  1. In late August there was a discussion between the deceased and the defendants when he asked them to move to Finley to care for him in exchange for compensation, and they agreed. This compensation was a transfer of the Origin Energy shares, which were transferred towards the end of September, worth then $906,859.

  1. The deceased made his last will, as I mentioned, on 2 December 2008. Shortly thereafter, the defendants moved in with him in Finley.

  1. By March next year, he had episodes in hospital, and a final trip to Queensland happened between June and July. By August he had been admitted to Tocumwal and Finley Hospitals.

  1. On 28 August was the transfer of the cash in the amount of $334,264, to which I have referred. In September there was a transfer of the shares worth $1,711,016. The deceased died on 24 November.

  1. In December Jean gave Helen the $500,000 in accordance with the deceased's wishes.

  1. In July 2010 the defendants purchased a property at North Albury.

  1. In October probate was granted.

  1. In November, using part of the proceeds of the $500,000, Helen and her husband purchased a property at Calamas Place in Forster.

Eligibility

  1. The plaintiff, Helen, and the first defendant, Jeanette are eligible persons.

  1. In applications under the Family Provision Act 1982, 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. These comments are equally applicable to claims under the Succession Act . At page 209-210 the Court said the following:

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate 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 , 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."

  1. I turn to consider the situation of both the deceased's children.

The situation in life of Helen

  1. Helen is 44 years of age, married, with three dependant children, aged 16, 14 and 9.

  1. She works part-time as a hairdresser, earning $350 per week net. They receive a family assistance allowance of $174 per week. Her husband is in his first year working as a real estate agent and earns $600 per week plus an allowance of $150 for a car and a telephone. He has an entitlement to commission but evidence is silent as to what he has been earning in this respect. Their outgoings, which include mortgage repayments of $515 per week, are just covered by their income.

  1. It will be recalled that Helen received $500,000 in December 2009. She used part of it to purchase the present home at Forster and some to purchase two new vehicles. There is no explanation of where the whole $500,000 were spent but their present assets are as follows:

Current Assets
Home - Calamas Place, Forster
$520,000
2010 Toyota land Cruiser motor vehicle
$78,000
2010 Honda CRV motor vehicle
$37,000
Boat - 12 ft Tinny & outboard motor
$12,000
Household furniture & furnishings
$20,000
Commonwealth Bank account
$800
ANZ Bank account
$15,000
Trust account Stacks/Forster
$1,700
Superannuation - Jeremy Health Super
$29,000
Superannuation - Helen AXA
$2,500
TOTAL
$716,000

  1. There is no suggestion of undisclosed assets. They owe $338,000 on a mortgage and $1500 for dental fees for their son. They also are liable for the costs of the proceedings.

  1. The history I have recounted shows a continual involvement of the family with the deceased. It is apparent that the deceased was a difficult person. All agreed that with him, "In one minute you were in and in the next minute you were out".

  1. The incident which led to Helen's family leaving the deceased was a sudden and unexplained event. Notwithstanding this, contact was resumed.

  1. The deceased was critical of Helen for, without reference to him, mortgaging the property given to them in Albury. The mortgage was necessary to make the house liveable. He eventually got over this but there is some suggestion in the evidence that he still worried about what he perceived as Helen's improvidence, apparently stemming from this incident.

  1. There was also an incident when Helen was either molested as a child or had a relationship with a married man at a young age. Although it bothered the deceased, it obviously became something that did not stop his relationship with his daughter.

  1. There is nothing in the relationship which would cause me to reduce the claim by Helen.

  1. Although Helen cared for the deceased, she did not contribute to the estate. In contrast, she received support from the deceased, which included the $30,000 in 1994. She purchased the property in Atkin Street, Albury in 1997 with a gift of $62,000 from the deceased. There was a purchase of the Land Rover. There was also the provision of accommodation at various times.

The situation in life of Jeanette

  1. Jeanette is married, aged 43 years, with two children who are aged 20 and 17.

  1. Although she trained at one stage at a nurse, she had a brain aneurysm in October 2008. That ended her chance of being a nurse. She has been affected by this and suffers from a lack of memory. The only way she can keep track of history is her diary which she now maintains.

  1. Jeanette has not put forward her financial situation for consideration by the Court. In these circumstances, the Court can proceed on the assumption that she does not want the Court to take it into account.

  1. However, notwithstanding this, the evidence shows that she works part-time three days a week. Her husband does not work, mainly due to a problem he has with atrial fibrillation. That is a very serious condition for him and he has been hospitalised frequently for this problem.

  1. Apart from the transfer to Jeanette and her husband which I have referred to above, the other evidence in the case discloses the following properties as being owned by the first defendant or the first defendant and her husband, the second defendant:

  1. This is a total of between $785,000 to $825,000. There are mortgages on property apparently in the sum of some $200,000.

  1. The assets transferred in the last two years have been reduced by some $1,015,406 to partly pay off the mortgage, pay Helen the $500,000 and pay the estate expenses. Thus, the net worth of Jeanette and her husband is between $3,043,890 and $3,113,890 dollars.

  1. Apart from a gift of $30,000 in 1994 the home at Tarakan Street, Wodonga was purchased with all funds being provided by the deceased. However, it was not all one way.

  1. As I have mentioned, Helen in 1999, at the deceased's request, sold her house in Albury and spent the proceeds of $20,000 in renovating her father's block of flats in Macauley Street, Albury. As I have recounted, he promised them to her when he died, but he sold it in 2001. This caused a rift between them for 12 months, which seems to be the only major difference that they had that caused any break in the relationship.

  1. The relationship was at times difficult due to the deceased's nature, but in December 2008 she and her husband gave up employment and moved to Finley to care for the deceased till he died. They obviously cared well for him in this period despite his difficulties.

Consideration

  1. The plaintiff, Helen, has been paid, at the deceased's request, $500,000 out of the assets which he transferred to Jeanette. In effect it was his provision for Helen.

  1. It is necessary to see how Helen has been left without adequate and proper provision for her maintenance, education and advancement in life. She expressed that claim in her affidavit in these terms:

An amount to cover the additional cost of upgrading our home by purchasing a house in an area with greater longterm potential in, for instance, Becker Road, Forster for $885,000 (in the current market) which includes agent's fees on the sale of our home, stamp duty on the purchase of the new home and legal costs and incidentals in respect of both the sale and purchase of approximately $60,000

$425,000

Schooling in Years 11 and 12 for the three boys at an Armidale Boarding school (e.g. The Armidale School, which is co-ed):

Brad - years 11 and 12 tuition & boarding fees for 2 years

$68,310

Nathan - years 11 and 12 tuition & boarding fees for 2 years

$68,310

Alexander - years 11 and 12 tuition & boarding fees for 2 years

$68,310

Orthodontist - Dr A Abraham - Jeremy

$15,700

Orthodontist - Dr A Abraham - Jeremy

$5,600

Nathan - Orthodontic (braces)

$7,000

An education holiday in Europe (England, France) for my husband and I and the three children

$25,000

An amount to cover contingencies for the vicissitudes of life including health and employment

$100,000

TOTAL

$783,230

(4) The total amount needed to clear our current liabilities of $339,500 (not including legal costs), and an amount to provide for our future needs in the sum of $783,230, is therefore $1,122,730.

  1. The defendants submitted that in the circumstances there was no need demonstrated and that the proceedings should be dismissed.

  1. The claim has to be assessed having regard to the fact that Helen has already received $500,000 from the deceased's assets which puts her into her present financial situation, which is not unusual for most of the Australian population at that stage in their life.

  1. In assessing the claim, regard must be had to others having a claim on the bounty of the deceased. Jeanette is the only one and, disregarding her financial situation, her good relationship with the deceased and her position as one of his two daughters gives her a very strong moral claim.

  1. Also of course one needs to take into account the size of the estate. The actual estate is nonexistent but there is - even excluding the Origin Energy shares - a large notional estate.

  1. The plaintiff relied upon the case of Lloyd-Williams v Mayfield [2005] NSWCA 189 and at first instance Mayfield v Lloyd-Williams [2004] NSWSC 419.

  1. In that case there was a modest estate of a little in excess of $410,000 and notional estate of $5,345,661. The trial judge awarded a legacy of $850,000 to the plaintiff, the deceased's able-bodied adult daughter who had means.

  1. Bryson JA, who gave the Court's judgment, said at paras 31 to 32 the following:

"The facts in the present proceedings have features which are rarely encountered in contentious claims under the Family Provision Act 1982; particularly rarely are they encountered together. One is that the interests involved and the value of the shares designated as notional estate are very large, in comparison with estates ordinarily dealt with. Another is that the provision ordered for the respondent by White J cannot in reality have any significant adverse affect on the wellbeing of the appellant and cannot impose any hardship upon her, as she is otherwise provided for out of the estate of Mrs Shirley Stewart in an extremely ample way; there was no attempt to show that she could incur any kind of hardship. Another is that the respondent does not have any needs in terms of lack of present provision for necessities and amenities of life, on ordinary scales of needs as understood in the community generally. The concepts of needs and competition for their satisfaction out of the estate are usually prominent in litigation under the Family Provision Act 1982, but they have no place here.

It was open to White J and altogether appropriate to look well beyond needs when interpreting and applying community standards to decide what provision the Court ought to order. The concept of advancement in life can take consideration well beyond needs. The purposes White J considered are not concrete projects, but are means of appraising the provision which ought to be made, and of giving dimensions to an exercise which cannot be made highly concrete. Nothing commits the respondent to using the provision in the ways which White J considered."

  1. The Court of Appeal dismissed the appeal.

  1. Inherent in the decision at first instance and on appeal is the Court's consideration of the matters taking into account the amount of the notional estate. I think particularly that in this case, when considering both questions, I should take into account the amount of the notional estate (excluding the Origin Energy shares) as a result of the transfers by the deceased in the last two years of his life.

  1. Doing this, there plainly is a relatively large amount available which should be considered in the exercise of assessing Helens claim.

  1. The present home of Helen and her husband is a 10-minute walk from the central shopping area. It is a double-storey brick veneer home with:

  1. It seems to be presented well and of recent construction. It is suitable for the family.

  1. The claim to upgrade it at a cost of $425,000 seems to be to increase in investment or a desire to move to a more upmarket area of Forster.

  1. Bearing in mind the other claims made and the notional estate available, I do not think that this is an appropriate claim.

  1. The discharge of the present mortgage is an appropriate claim and will have the result of freeing up $515 per week of expenses for Helen.

  1. I do not think that Jeremy's orthodontic work for $15,700 is a proper claim by the plaintiff; that is a problem for him. Those for herself and her children are of course appropriate matters to be considered.

  1. Helen presently has a legal responsibility for educating her children to the end of their schooling at Year 12. As I have mentioned, they are 16, 14 and 9 years of age. I note that the evidence does not address how they are doing at school. For the youngest, it will be quite a few years before such additional education can be provided for him, when no doubt it will be more expensive.

  1. I would not regard an education holiday in Europe for $25,000 as a necessary part of the children's education.

  1. It was suggested in regard to contingencies that Helen and her husband are in good health. They will both have another 20 years of useful employment to improve their situation in this regard.

  1. However, their present superannuation is quite minimal and some provision for contingencies is appropriate.

  1. As was pointed out in Mayfield's case, a plaintiff is not bound to apply the provisions awarded for those purposes which a court finds demonstrate the plaintiff's needs (to use a shorthand expression).

  1. Indeed, in a case such as this, a legacy of an amount which is in addition to the $500,000 already provided will give Helen an opportunity to use it to most advantage.

  1. She may be able to free up income by reducing the mortgage payments, have some put away in reserve and still be able to provide additional education resources when needed from time to time, even if some more funds might then have to be borrowed. In other words, flexibility will be a key thing for Helen in managing her future finances and the education of her children.

  1. In the circumstances of this case, I am satisfied that Helen has been left without adequate and proper provision for her maintenance and advancement in life.

  1. An appropriate legacy in my view is the sum of $475,000.

  1. It will be necessary to designate the notional estate to meet the order for a legacy of $975,000 (of which $500,000 has already been paid) as the estate cannot meet such an order.

  1. Section 87 of the Succession Act provides as follows:

"87 General matters that must be considered by Court

The court must not make a notional estate order unless it has considered the following:

(a) the importance of not interfering with reasonable expectations in relation to property,

(b)the substantial justice and merits involved in making or refusing to make the order,

(c) any other matter it considers relevant in the circumstances."

  1. I do not think that the circumstances of the creation of the notional estate or otherwise creates unreasonable expectations and the substantial justice and merits favour the making of the orders.

  1. The parties may wish to address later which property of the defendant is to be designated.

  1. Accordingly, I direct the parties to bring in short minutes and argue any outstanding matters.

  1. I have had a discussion with counsel. Accordingly, the orders that I make are as follows:

1. I order that the plaintiff receive a legacy out of the notional estate of the deceased referred to hereunder of $975,000, of which $500,000 has already been paid.

2. I order that the plaintiff's costs on the ordinary basis and the defendants' on an indemnity basis be paid or retained out of the notional estate designated hereunder.

3. I designate the following real estate, to the extent necessary to meet the legacy and the costs ordered to be paid, as notional estate of the deceased:

(i) the property in Howe Street, Finley in the names of the defendants;

(ii) the block of flats at Headford Street, Finley in the names of the defendants;

(iii) the defendants' property at Tarakan Street, Wodonga;

(iv) the defendants' property at Thomas Mitchell Drive, Wodonga;

(v) the defendants' property at Bralgon Street, North Albury;

(vi) the defendants' property at Hereford Street, Wodonga.

4. I reserve liberty to apply.

5. I order that the exhibits be returned.

**********


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