Barter v Barter [2011] NSWSC 393 (9 May 2011)

Last Updated: 26 May 2011

Supreme Court New South Wales

Case Title:	Barter v Barter
Medium Neutral Citation:	[2011] NSWSC 393
Hearing Date(s):	Monday 18 April 2011
Decision Date:	09 May 2011
Jurisdiction:	Equity Division
Before:	Associate Justice Macready
Decision:	I direct the parties to bring in short minutes.
Catchwords:	WILLS AND ESTATES - family provision claim - nature and extent of estate - deceased left property to two adult sons free of all encumbrances - on death of deceased property was sold and the whole sale price was used to pay out the liabilities of the estate - plaintiff left residue of estate
Legislation Cited:	Succession Act 2006
Cases Cited:	Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Texts Cited:
Category:	Principal judgment
Parties:	Gai Barter v Shannon Barter
Representation
- Counsel:	Counsel: Mr M Gorrick for plaintiff Mr J Priestley for defendant
- Solicitors:
File number(s):	2010/97031
Publication Restriction:

Judgme nt

1. This is an application under the Succession Act 2006 in respect of the estate of the late Donald Arthur Barter who died on 4 May 2009 aged 61. The deceased was survived by his widow, the plaintiff, Gai Barter and two sons, from his first marriage, Shannon and Slade Barter.
   

The Will

2. The deceased's will is dated 12 September 2007. He appointed Gai executor and trustee and she has taken out probate. Under his will, the deceased gave his two sons, Shannon and Slade his property at Gunyama Crescent, Nowra, free of all incumbrances as tenants in common in equal shares or a legacy to each of them equal to one half of the gross sale price if the property was sold by his executor. The deceased gave legacies of $10,000 to each of Gai's children, Daniella Aquilina and Benjamin Aquilina who had been living with him and Gai. The deceased left the residue of his estate to Gai.
   

The estate

3. At the date of death, the deceased had cash of just under $10,000 which has been applied administration costs. He had a share portfolio of $200,968. Gai as executor has transferred the share portfolio to herself and the shares are now estimated to be worth $166,849.04 due to the fall in share prices.
   
4. The deceased owned the property at Gunyama Crescent, Nowra. At the date of death the property was valued at $250,000 and it will be noted that this is the property that is the subject of the bequest to the deceased's sons.
   
5. The property was sold on 2 December 2009 for $267,500 with the net proceeds paid to the Commonwealth Bank on settlement.
   
6. At the date of the deceased's death Gai held as joint tenant, in equal shares with the deceased, three properties. One was the property at Seaspray Street, Narrawallee, which was the last home of the deceased and Gai. The property was valued at $480,000 at the date of death and its current value is $460,000 which is subject to a mortgage to the ANZ Bank of $155,257.52.
   
7. The second is property at Leo Drive, Narrawallee which at the date of death was valued at $270,000 and was sold for $275,000 on 5 February 2010. The proceeds of sale were paid to the Commonwealth Bank on settlement.
   
8. The third property at 56 Yurunga Drive, North Nowra, which at the date of death was valued at $500,000, was sold on 4 March 2010 for $400,000. Part of the proceeds of sale we paid to the Commonwealth Bank and part to reduce the ANZ mortgage over the Seaspray Street property. A sum of $100,000 was paid to the estate's solicitors' trust account and is still held on behalf of the estate.
   
9. There was a superannuation death benefit which was paid to Gai which appears to be $37,802.10 of which $20,000 has already paid to Gai.
   
10. It can be seen that three jointly owned properties and the solely owned property were highly geared by the deceased and Gai and the total applied to discharge the Commonwealth Bank advances in full was $589,750.50. The mortgage to the ANZ Bank over the jointly owned matrimonial home at Seaspray Street was $320,000.
    
11. Gai as executor and residuary beneficiary paid the probate and legal fees of $10,867.08 partly using the deceased's cash and she paid funeral expenses of $14,483.23. There is an outstanding liability in the estate for capital gains tax of $18,675. This is in respect of the sale Gunyama Crescent, Nowra.
    
12. It is apparent that at the hearing the assets which remain either in the estate or as notional estate are:
    

$100,000 in the solicitor's trust account,
the share portfolio held by Gai of $166,849.04 and
Seaspray Street property valued at $460,000 subject to a mortgage to the ANZ Bank of $155,00257.52.

13. The hearing of this matter was finalised in one day. The plaintiff's costs are estimated at $53,000 for a one day hearing and those of the defendant are estimated at $65,025 for a two day hearing. The total costs of $118,025 is more than the sum of $100,000 presently held in the solicitor's trust account. The resulting hearing only lasted one day.
    
14. I will return later to the question of whether Gai's handling of the estate has been appropriate and in accordance with the provisions of the will.
    

History

15. The deceased was born in 1947 and the plaintiff in 1961.
    
16. The deceased had two sons, Shannon born in 1974 and Slade born in 1980. Gai had two children by her former relationship, Danielle born in 1988 and Benjamin born in 1991.
    
17. The plaintiff and deceased first become acquainted in 1994 and in 1998 they commenced living together with Gai's children. By that time the deceased's sons had left home. Gai had the sum of $20,000 in a bank account and the deceased had superannuation worth approximately $48,000 and the property at Gunyama Crescent, Nowra, which he had purchased in 1996 with the proceeds of a divorce settlement with his first wife.
    
18. In 2000, Gai and the deceased and Gai's children moved from rented premises into Gunyama Crescent.
    
19. In 2002 ,Gai and deceased purchased as joint tenants the property at Yurunga Drive, Nowra, for $280,000 with a loan from Commonwealth Bank and they moved to this property from Gunyama Crescent.
    
20. Some time after 2000, Gai inherited $61,000 from her grandmother and she used it for joint purposes of the relationship.
    
21. At this time Gai and the deceased were in full time employment.
    
22. In late 2001, there was a short separation for a month when Gai moved into rented premises in Devlin Avenue while the deceased continued to reside at Gunyama Crescent.
    
23. In that year, Gai and the deceased travelled to Queenslan d and on their return deceased moved into Devlin Avenue with Gai and he rented out Gunyama Crescent. Shortly after their return from Queensland the deceased was diagnosed with prostate cancer and disclosed his diagnosis to Gai but to no one else.
    
24. In November 2003, Gai and the deceased purchased as joint tenants the property at Leo Drive, Narrawallee for $225,000 with a loan from the Commonwealth Bank. They established a line of credit in the amount of $100,000 to trade shares.
    
25. On 17 April 2004, Gai and the deceased were married.
    
26. In 2007, the deceased experienced pain from his cancer and in November he underwent radiation treatment. At this time Gai told Shannon and Slade of their father's illness.
    
27. In late 2007, the deceased retired from his full time employment with Telstra while Gai continued in full time employment at Shoalhaven Shire Council.
    
28. On 12 December 2007, the deceased made his last will.
    
29. In 2008, at the age of 60 years the deceased took redundancy from Telstra. In that year, Gai and the deceased jointly purchased the property at Seaspray Street, Narrawalle for $480,000 with a loan from the ANZ Bank. From this time until the deceased died on 4 May 2009 his condition deteriorated to the extent that he required constant nursing and a number of hospital admissions.
    
30. On 14 October 2009, contracts were exchanged for the sale of Gunyama Crescent owned solely by the deceased. On 19 October 2009 the Commonwealth Bank issued a letter of demand on the estate in relation to the mortgage default on that property.
    
31. On 22 October 2009 the solicitors for the estate wrote to Commonwealth Bank advising of the sale of Gunyama Crescent, that Yuranga Drive was to be auctioned in November and Leo Drive was on the market for sale. The solicitors asked the bank to hold any further actions. On 28 October 2009 the Commonwealth Bank responded demanding that the bank required the proceeds of sale of all properties until the bank's debts were discharged. In due course after the sale of the properties the bank's debts were discharged, the ANZ home loan was reduced and balance of the funds of $100,000 paid to the estate's solicitors.
    

Eligibility

32. Gai 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 in applications such as the present. At page 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 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 or 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."

Gai Barter

33. Gai is 50 years of age, single. She cares for her son, Benjamin, who moved back to live with her at Seaspray Street. Her assets are:
    

2008 Toyota and a BMW bike $ 29,000.00

Seaspray Street $ 460,000.00

Commonwealth Bank savings $ 370.00

Balance of death benefit $ 17,802.00

Gai's superannuation $ 41,200.90

Shares $ 166,849.00

Total $ 715,221.90

34. Gai's liabilities are:

ANZ Bank $155,257.52

Liabilities for costs $

35. Gai works for the Shoalhaven City Council and her gross income is $4,000 per month. Her expenses on a monthly basis including repayment of the loan to the bank is $3,720 per month.
    
36. It is clear that the deceased and Gai had a good relationship except for a period of one month which was probably as a result of the deceased's prostate cancer.
    
37. It is also clear that Gai devoted much time and care to the deceased when he was suffering from his illness.
    
38. Gai contributed her savings of $20,000 that she had at the commencement of the relationship and her inheritance of $61,000 towards the couple's finances. The deceased managed these finances.
    
39. It is necessary to consider the situation in life of others who have a claim on the bounty of the deceased. In this case they are Gai's children and the children of the deceased. So far as Gai's children are concerned they are young adults and Benjamin lives with Gai. Other than this information there is no evidence before the court of Danielle's and Benjamin's circumstances. In these circumstances the Court can assume they do not want their circumstances to be taken into account when the Court decides what orders should be made.
    
40. Consideration should be given to the circumstances of the deceased's sons who both put forward their financial situation.
    

Shannon Barter

41. Shannon is 37 years of age and married. He and his wife, Simone, own their property at Murwillumbah worth $450,000 which is a subject to a $360,000 mortgage. They own furniture and contents worth about $10,000. Shannon has a visa card debt of $2,500 and his wife has a car worth $45,000, subject to finance which exceeds that amount by $5,000.
    
42. Shannon's wife operates a fashion retail store known as Swanky and Swish. They have had the business for listed for sale since early November 2010, but there have been no enquiries to purchase the business. On 1 April 2011 they decided to close the doors on the business. They had some stock left estimated to be worth $20,000 and Simone is now running the business online from home. They have substantial debts associated with the business which total $86,635.
    
43. The family income at the present time is $2,380 per fortnight and their expenses are estimated at $2,570 per fortnight. Shannon and Simone have four-year-old twin daughters who require care. They commenced school in February 2011 and this has allowed Shannon to apply for positions in the mining industry. He worked for many years for the Fire Brigade and he has enrolled in two certificate IV courses that should assist him in gaining employment. He has finished two short-term contracts in the mining industry.
    
44. It seems clear that the deceased and Shannon had a good relationship and it was only distance that prevented them from seeing more of each other in the last years of the deceased's life.
    
45. During their marriage, the deceased and Gai assisted Shannon and Simone by contributing $100,000 to the purchase of an investment property at Ocean Shores. However, the value of Ocean Shores decreased and no gain was realised. Some years later the $100,000 loan was repaid to the deceased in two instalments.
    

Slade Barter

46. Slade is 30 years of age, single with no dependents. He is employed as a landscape gardener in Gerringong earning $1,100 a week. He owns an investment unit at Broadbeach worth $350,000, subject to a mortgage of $280,000. He has liabilities for personal loans and credit cards and the Australian Taxation Office of $40,000. He receives rent from his rental unit and after expenses and his other outgoing he has about $300 a week to live on.
    
47. Slade had a good relationship with the deceased. The deceased and Gai assisted him when he purchased his investment unit by being a guarantors for the loan from the Commonwealth Bank. This situation continued for three years until the bank released them from the guarantee.
    

Discussion

48. It is clear that as a result of the bank's demand that the proceeds of sale of the property at Gunyama Crescent, Nowra were paid to the bank and not to Shannon and Slade as stated in the deceased's will. Given the sale price of $267,500 for Gunyama Crescent, the legacy that Shannon and Slade would be entitled to under the will was $133,714.30 each. In the ordinary administration of the estate the debts of the deceased would have come out of the residue which mainly comprised the shares rather than the properties. However, the relevant part of residue, namely, the share portfolio is still available to go to Shannon and Slade if that is appropriate.
    
49. Gai's claim is that she should receive the whole of the estate of the deceased. She submits that she should have an unencumbered home with a fund to provide an income and fund for emergencies and unforeseen contingencies. In this regard, it is clear that the Gai and the deceased were either in a de facto or a de jure relationship for eleven years from 1988 to 2009.
    
50. The plaintiff made reference to Paton v Public Trustee (Supreme Court of NSW, 8 December 1988, unreported). In this case Young J said:
    

"Whilst if there was a very large estate it may be that there would be a different result in an application under the Act between a happy marriage and an unhappy marriage, there is a basic minimum which the community regards as necessary for testators to provide for their spouses where their marriage has been of medium to long duration. Those basic necessities include a secure roof over the remaining spouse's head and at least a small capital sum."

51. The question here is whether or not the relationship can be characterised as "medium to long duration". In my view an eleven year marriage is not one of "medium to long duration". In addition, of course, Gai and the deceased had no children but they did care for Gai's children until they grew up.
    
52. The submission of the defendant is that the plaintiff's summons be dismissed with costs on the following basis:
    

"... it is the submission of the defendant that the appropriate orders to make in this case are for the Plaintiff's summons to be dismissed with the intent that the estate be realised and the terms of the will be complied with. One unexplained feature of this case is why the Plaintiff has chosen to act other than in accordance with the will and to distribute to herself the estate apart from a $100,000 amount in her former solicitors trust account. If the court finds favour with the submission of the Defendant, then whilst the orders would seem straight forward, it is requested that there be a period of 28 days before orders are made so that the parties can liaise as to how the premature distribution can be remedied."

53. Precisely how the latter part of the submission is to be achieved is not plain particularly as there is no cross claim by Shannon and Slade seeking an account of the administration of the estate. It would be sensible for the matter to be resolved either by making orders in favour of Gai or other orders out of notional estate in favour of the deceased's sons.
    
54. Shannon and Slade seem to approach the case on the basis that if one analysed the situation of the estate at the date of death and only looked at the assets of the deceased on the theoretical values attributed to assets in the affidavit of the executor sworn for the probate application and making an allowance for the increase in the value of Gunyuma Crescent, the assets would amount to $521,379. From this amount is deducted the sole debts of the deceased of $71,987 leaving a net value of the estate at $449,392. It was suggested that that sum would be sufficient to pay the legacies to the four children and there would remain $161,892 for Gai. This analysis ignores the situation in respect of the joint debts which was exacerbated by actions taken by the Commonwealth Bank. Plainly the bank was entitled to call in the mortgages requiring their repayment and from a practical point of view this was a sensible course for the executor to take. Gai herself could not on her salary alone continue to support such large borrowings.
    
55. It is clear that the indebtedness has increased on the ANZ loan and there were suggestions that $30,000, $18,000 and $56,000 were the amounts of the increase. There does not appear to be any cross-examination to suggest that these were inappropriate payments.
    
56. Clearly, the situations in life of Shannon and Slade are not good. Shannon's wife has substantial debts that might cause difficulties and Slade has a difficult time at the moment trying to meet the expenses of his investment unit.
    
57. Fortunately for Gai she can continue working for some years as she is 50 years of age. Her superannuation is small being some $40,000 and this will no doubt increase over the years.
    
58. Once again, in net terms, this is a small estate and the size of the joint debts may have made what the deceased provided in his will unrealistic. His bequest to his sons was in respect of the whole of the value of Gunyuma Crescent, not just the equity in the property at the date of death. Considering all of the circumstances, I think the deceased's sons, Shannon and Slade, should each receive legacies at, inter alia, the expense of the legacies to Gai's children. The appropriate amount is that Shannon and Slade should each receive a legacy of $40,000.
    
59. It will be necessary to designate property as notional estate as the estate has been distributed and $100,000 in the solicitor's trust account will be needed to cover the legacies and costs. Section 87 of the Succession Act is 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."

60. I am satisfied that there will be no interference with reasonable expectations and that the substantial justice and merits of the case require the designation of sufficient of Gai's share portfolio as notional estate.
    
61. I direct the parties to bring in short minutes to reflect my judgment.
    

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