Reece v Warland [1999] NSWSC 1069 (29 October 1999)

Last Updated: 4 November 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Reece v Warland [1999] NSWSC 1069

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 1348/98

HEARING DATE{S): 28, 29 & 30 July 1999

19/08/99

JUDGMENT DATE: 29/10/1999

PARTIES:

Helen Margaret Reece as Tutor for Ashley Richard Reece v Patria Virola Warland (Estate of the late John Richard Warland)

JUDGMENT OF: Master Macready

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr M.B. Evans for the plaintiff

Mrs M. Lilienthal for the defendant

SOLICITORS:

Thomas Mitchell Partners

Mark Solomon & Associates

CATCHWORDS:

Family Provision. Application by a son who has autism and a severe intellectual handicap in respect of an estate of $859,000. Estate left to widow who had lived with the deceased for 7 years. A balancing of the relevant considerations leads to a legacy for the plaintiff of $525,000.

ACTS CITED:

DECISION:

Paragraph 58

JUDGMENT:

- 1 -

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

MASTER MACREADY

Friday, 29 October, 1999

1348/98 HELEN MARGARET REECE AS TUTOR FOR ASHLEY RICHARD REECE v PATRIA VIROLA WARLAND - ESTATE OF THE LATE JOHN RICHARD WARLAND

JUDGMENT

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late John Richard Warland who died on 30 May 1997 aged 58 years. The deceased was survived by his widow and various children, step children and former wives. The defendant, Patricia Virola Warland, is the deceased's widow. Under the will of the deceased made 9 April 1997 she was appointed sole executor and trustee of the deceased and received the whole of his estate.

Possible Eligible Persons

2 The deceased's marriage to the defendant was his fifth marriage. The information on the earlier marriages is extremely scanty in some cases. His first spouse was known as 'Peggy'. The details of when that marriage may have occurred and that person's whereabouts are simply not known. There was apparently a son, Michael, born of the relationship between the deceased and Peggy and likewise his whereabouts are unknown. Nothing is known or has been able to be led in evidence in this case of the circumstances of these people.

3 The deceased's second wife was Deanne Gallagher and apparently she was married to the deceased for about ten years she and the deceased having been divorced in 1980. She presently lives in Queensland and has been notified of the proceedings. She makes no claim.

4 The deceased's third wife was Sharon Prager . Apparently she and the deceased were married for two years and divorced in 1982. The evidence before me suggests that she is a member of a wealthy American family and her whereabouts are unknown. Accordingly, she has not been notified of the proceedings.

5 The fourth wife of the deceased was Carmel Herber and there is no information of her circumstances or her whereabouts.

6 Danielle Warland is a daughter of the marriage between the deceased and Deanne Gallagher. She has been notified and makes no claim. Her son, Michael John Warland, at one stage lived with the deceased and the defendant as part of their household. He is now presently residing with his grandmother, Deanne Gallagher, in Queensland. Notice has been given to him care of his grandmother.

7 The deceased had a stepdaughter, Katherine Virola, who is the daughter of the defendant. She is presently 21 years of age and she is living with the defendant having lived with both the deceased and the defendant for some time.

8 The other child who has survived the deceased is the plaintiff, Ashley Richard Recce. Ashley was born on 23 November 1980. His mother and tutor, Helen Margaret Recce, was employed by the deceased in the deceased's business. She had a sexual relationship with the deceased from 1972 until September or October 1980. Ashley, her son, was conceived about seven months before the end of the relationship. The deceased is shown as the father of Ashley on Ashley's birth certificate. Given this fact, the evidence of the plaintiff and s 11 of the Status of Children Act 1996 there would seem no doubt that Ashley is the son of the deceased.

9 Ashley was born with autism and a seizure disorder and as a result has a severe intellectual handicap. Evidence has been given by his treating paediatric neurologist, Dr Wilkinson, and it seems clear that Ashley will need full time care for the rest of his life. He is also having some treatment from a psychiatrist. Given his IQ of 47 he is in the category of moderate mental retardation. However, his autism is severe and it is clear that he will never be able to lead an independent life.

The Property in the Estate

10 I turn to deal with the assets and liabilities of the estate. The deceased carried on business under a company known as Banlaw Pty Ltd. The parties are agreed that the value of the business carried on by the company was $224,000. The sale of that business is in an advanced stage of negotiation. In addition the company owned an industrial warehouse at 17 Strathmore Road, Caves Beach. There is a dispute about the value of that property the defendant putting the value at $165,000 while the plaintiff puts it at $236,000. I will return to the resolution of that dispute in due course. The company also held a vacant block of land in the same industrial estate at 24 Strathmore Road, Caves Beach which the defendant's expert values at $140,000. In contrast, the plaintiffs expert values the land at $160,000.

11 The deceased's widow and her daughter live in the deceased's property at 29 The Esplanade, Caves Beach. The defendant's valuer valued this at $400,000 and the plaintiffs valuer at $440,000. 1 will return to this dispute in due course.

12 The only other asset in the estate at the date of death was a boat which has now been sold and the hire purchase contract paid out. In the result there are debts in the estate in the amount of $1,887. The estate has incurred costs in defence of the proceedings and those are estimated to be, including the costs of experts in the sum of $72,507.42. The plaintiffs costs in this matter, including all expert's costs, which of course did include accountancy experts until the value of the business was agreed, amount to between $54,924 and $64,924. For present purposes I will assume a figure of $60,000 for costs.

13 There were a number of other assets which need to be discussed. A property being a unit at 203/2-6 Burton Place, Elizabeth Bay, Sydney, was owned as to a one half share by the defendant as tenant in common the other half share being held by her and the deceased as joint tenants. That other half share owned by the deceased and the defendant was held as an asset in the John Warland Retirement Fund. The parties are agreed that that unit has a value of $325,000. No claim for notional estate is made in these proceedings and the plaintiff merely asks the court to take into account these other assets held by the defendant when considering what is the appropriate provision to be made for the plaintiff.

14 The superannuation fund has a number of assets. One I have already adverted to as the half interest in the unit at Elizabeth Bay. It also owns some Qantas shares, office equipment and has some cash. The total value of the fund is $265,905 of which $162,500 is its half share of the Elizabeth Bay unit.

Chronology

15 I turn to deal with some relevant history of the matter. The defendant was born at Paluan in the Philippines on 17 January 1951. She qualified as a nurse and prior to 1987 had worked in the Philippines and Libya as a registered nurse. In 1988 she was registered as a nurse in New South Wales and worked thereafter at Concord Hospital, Mater Misericordia Hospital at Waratah and John Hunter Hospital in Newcastle. In 1990 the defendant commenced to live with the deceased in a defacto relationship at the deceased's home at Cave Beach. They were married on 15 August 1992. They continued to live together until the death of the deceased. It appears that the defendant knew the deceased had suffered from some health problems and 1 will return to the detail of this and the attention that the defendant gave to the deceased later in these reasons.

16 As I have mentioned, Ashley was born on 23 November 1980. There were orders for maintenance for Ashley made against the deceased at various times. In March 1981 he was ordered to pay $20 a week and this was increased to $30 for a week at the end of 1982. Ashley was diagnosed with autism and intellectual disability together with a seizure disorder by 1983. In September 1991 the maintenance for Ashley was increased to $120 per week and by 1996 he was receiving a Disability Support Pension from the Department of Social Security. Throughout the period from the birth of Ashley until the deceased's death there was little contact between the deceased and Ashley. He probably saw him no more than half a dozen times and apart from one birthday he spent little time with Ashley on important occasions. He supported him by paying maintenance. Ashley attended special schools during his schooling and in June 1998 he contracted multi resistant staphylococci aureas which prevented him from working in a sheltered environment which he had been doing up until this stage. From January 1999 Ashley has attended some post school options courses which occupies him four days a week between 9.30am and 3.30pm. It is unlikely that these options will continue for more than another two years. On 26 July 1999 the plaintiffs tutor, his mother, was also appointed by the Guardianship Board as Ashley's financial manager and guardian.

The Task of the Court

17 In applications under the Family Provision Act the High Court has recently in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 set out the two stage approach that a Court must take. 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."

The Value of the Estate

18 In order consider the situation of the relevant parties it is necessary to have a proper appreciation, first, of the nature of the estate. To do this it is necessary to resolve the valuation dispute in respect of the three properties.

17 Strathmore Road

19 Mr Johns valued the property at $206,000 and Mr Fallon at $165,000. Mr Johns' valuation was done on two bases. One was summation taking the land separately from the building and using that method he arrived at a figure of $236,800. He also capitalised what he believed was a reasonable current market rental of $500 per week or $26,000 per annum and arrived at a value of $235,000.

20 In his report Mr Fallon was not able to give any comparable sales and he also agreed that 11%, which had been used by Mr Johns, would be an appropriate capitalisation rate. He was not able to give any details of rentals achievable. There was a recent sale of a site, 29 Strathmore Road, Caves Beach for $300,000 in March 1999. The land area was about 1,096 square metres which was about twice that of the subject land. However, the valuers agreed that it would be inappropriate simply to arrive at a value and divide it by two. Given the greater particularity of Mr Johns' evidence I propose to accept his value of $235,000.

24 Strathmore Road

21 This is a vacant piece of land which is in a industrial park. Mr Johns valued it at $160,000 and Mr Fallon at $140,000. A number of things stand out about it.

1. The property has been on the market for two years at $160,000 and has not sold.

2. There has been a general fall in the Valuer General's base for the area between 1 July 1995 and 1998. The Valuer General's valuation has fallen from $138,000 to $102,000.

22 In the evidence there was some debate about a fresh comparable which was referred to by Mr Johns. That was a sale of 19 Strathmore Road, Caves Beach for $130,000 in May 1999. The property 119 Strathmore Road has a smaller area, namely, 1171 square metres compared with the subject property 24 Strathmore Road, which has an area of 2,223 square metres. It seems that in arriving at his valuation Mr Johns thought it was vacant when it was sold. Having regard to the evidence it appears to me that Mr Fallon has a better recollection of the state of the land and his evidence was that at the time of sale there was a slab and some structures on the land. Accordingly, it would seem to me that this is not directly comparable and cannot be used to justify the higher price. Accordingly, I find that the value of 24 Strathmore Road is $140,000.

29 The Esplanade, Caves Beach

23 Mr Johns valued this property as at 14 September 1998 at $440,000. Mr Fallon whose valuation was made on 28 July 1999, the day the trial started, valued it at $400,000. The property has six bedrooms and accordingly there are not a lot of close comparables. However, in his report Mr Fallon noted that there was water damage to the dining and family rooms which needed repair. Painting was required and also the rear paling fence required fixing. Mr Johns did not refer to any difficulties with the roof in his report and presumably the damage had not occurred at the time he made his inspection. An interesting comparable was 35 The Esplanade, Caves Beach which was sold in May 1998 for $448,000. It would appear to be a large property but the number of bedrooms is not given. It had a triple garage, in ground pool and good coastal views. It appears to be superior to the subject property. Mr Johns has used comparables in a number of different areas which were remote from the street and suburb in question. I think Mr Fallon's approach using the comparables in the close locality is more appropriate. Accordingly, I find that the value is $400,000.

24 The balance of the estate after allowing for debts and costs will thus amount to $859,616.

The Plaintiff's Situation

25 I turn to the situation of the plaintiff, Ashley. Ashley, although presently aged 19 years is of a far lower intellectual age. He is a tall, solid boy who has the difficulties which 1 have earlier described.

Doctor's evidence on the extent of Ashley's future disability.

26 I have evidence from Dr Ian Wilkinson who is a paediatric neurologist who has known Ashley since 1984. I have also had the benefit of evidence from Gael Andrews who is a social educator and experienced dealing with children with disabilities from which Ashley suffers. She also has knowledge of the type of institutional care that is available in the Hunter Region. Dr Wilkinson made it plain that, although Ashley has autism and intellectual handicap, he has no underlying basic physical condition, which would make it likely that his lifespan would be significantly shortened. He thought that Ashley would have a normal life expectancy. However, because of the significant intellectual handicap and the effect on his behaviour Ashley will always require supervision and if his mother, Helen Reece, predeceases him then there will be a requirement for someone else to care for him. In his report he said:-

"In the event, not unlikely, that she cannot continue to care for him because of his difficult behaviour, he may well need to be institutionalised, or placed in a situation of care."

27 This aspect received some attention in cross examination. Ashley has in the last 12 months threatened his mother and he does have outbursts of temper. Any increase in such violence might mean that he would have to be institutionalised. According to Dr Wilkinson there was no neurological problem which was likely to cause this to happen and he thought it was more a psychological problem that may need some evidence from a psychiatrist. In his view he thought that the situation was reasonably stable at the moment and he did not think that there was any current evidence to indicate he was heading towards institutionalised care. In the absence of any psychiatric evidence it would seem unlikely that Ashley will need to be institutionalised until his mother reaches an age when she can no longer cope with him. Given the current ages of Ashley and his mother on the life expectancy tables it is likely that Ashley would survive his mother for a period of something in the order of 22 years.

Availability of institutional care.

28 It seems that permanent institutional care is not available for someone such as Ashley while he has the support of his mother. There are very few places available for people with Ashley's disability and it would only be in the event that he is left without any support at all that he would be likely to obtain a position in an institution and then he would take a place that would normally be available to others for respite care. After leaving the special group at Merewether High School, Ashley did have some sheltered work placement. However, he contracted multi-resistance staphylococci aureaus in June 1998 and ceased that work. This year Ashley has attended a post-school option's course called "Response". He attends Response four days a week from 9.30am to 3.30pm. He has funding for this year and must apply each year for continued funding. The maximum period that Ashley can attend is for a period of some three years. It goes without saying that it is always difficult to find an appropriate sheltered environment for Ashley to work and there will be difficulties for him in this area. Accordingly, although at present Ashley does have some activities which enable him to be occupied, the prospect in the future of this continuing is not certain. This, of course, has effects on his mother. His mother presently works each day of the week from 9.30am to 1.30pm in a part-time position as a doctor's receptionist. If Ashley was not able to be occupied during the day she would be unable to continue with that employment. What this indicates is the extreme uncertainty of Ashley's future and the necessary care that will have to be provided for him.

Mrs Reece's situation

29 As so much of Ashley's future revolves around his mother, Mrs Reece, it is necessary to note her situation. She owns a 1992 Dihatsu Charade valued at $10,000. She has furniture which is insured together with other personal items for about $36,000. She has savings of something less than $600. Her annual income as a secretary/receptionist is about $16,000 per annum. She is the only person who supports and cares for Ashley. Her father who had taken an important role in looking after Ashley died in 1997. She and Ashley live in a Housing Commission Villa unit.

Ashley's Future Needs

30 I turn to the assessment of Ashley's future needs and will first deal with the need for accommodation. One of the main areas advanced for Ashley is the need for him to have accommodation in the future. He and his mother reside in rented accommodation and recently it has become apparent that this accommodation which is a small two bedroom unit with a minimal four foot by six foot garden causes frustration for Ashley leading to some outbursts. It has been suggested that Ashley has a need for better accommodation. There is evidence before me of the type of accommodation sought on Ashley's behalf. Initially Mrs Reece suggested in her first affidavit that there was a need to purchase a two bedroom house or apartment in Merewether area that would cost approximately $250,000. More recently Mrs Reece has suggested that a three bedroom house in the Merewether area, which is quite a good location in Newcastle, would be appropriate. The reason advanced for having a three bedroom house was because a carer would have to have his or her own room. The precise role of such a carer is not clear at the moment. Given that at least in the immediate future, Mrs Reece will look after Ashley, a carer will not be required for a number of years. Even after Mrs Reece can no longer care for Ashley there is the possibility that institutional care may be found instead of him having a carer.

31 Based upon evidence given by Mr Johns of the cost of housing in the Merewether area of three bedroom homes, it suggested on the plaintiff's behalf that it is appropriate for a house to be purchased for $280,000 together with costs involved in the purchase of $10,642. The evidence from Mr Johns indicates that the price of such houses varies from $213,000 up to $340,000. Those houses at the higher end invariably have two garages something which was not a necessity. There were a number of houses with prices from $213,000 to $245,000 and even some of these had two garages. Cross examination of Mr Johns elicited that a two bedroom house in the Adamstown area which is about 4 kms from Merewether could be obtained for about $150,000. Mr Fallon in his evidence without particularising whether the houses were two or three bedrooms indicated that in Hamilton a house, presumably with at least two bedrooms, could be acquired for about $157,000 and in Mayfield similar houses up to $150,000.

32 Given the uncertain future and the fact that there may be a possibility of also having to have a carer live in the house once Ashley's mother can no longer care a generous assessment of an amount necessary for housing, I would have thought, would be the purchase of a three bedroom house in the area of $240,000 with additional costs in the order of $10,000, namely, a total of $250,000. It is probably appropriate that the assessment be generous because of the uncertainty of the future government requirements for the provision of homes for people with disabilities. There is a move to placement in group homes which requires individuals to contribute to the cost of such homes. A house which can be sold in the future will be an insurance against what might be a high cost of care in such an environment.

33 There are of course other costs involved in the accommodation and these will be the on-going cost of maintaining such accommodation. These costs are estimated at $5,200 per annum. This figure covers council and water rates, home insurance and home maintenance. Basing the period on the present value for an eighteen year old until death this, using the appropriate multiplier from the 3% tables (1487), would come to a total sum of $148,700.

On-going Maintenance Costs for Ashley

34 The difficult area here is the future maintenance for Ashley particularly if, as is more likely, he survives his mother. The medical evidence suggests that there would be no effect on his life expectancy as a result of his difficulties. His present life expectancy is 62. The difficulty with the evidence that was given is that, as appeared from cross examination, some of the estimates of expenses were exaggerated. A reasonable estimate of expenses of the household is as follows:-

Food and Household expenses $205.00

Health expenses 75.96

Utilities 55.00

Insurance premiums 15.00

Motor vehicle and transport expenses 107.00

Sundry expenses 49.00

Total $506.96

35 One half of this would be applicable to Ashley, namely, $253.48. Additional expenses that Ashley has himself are:-

Child care and education 100.00

Clothing and footwear 40.00

Total $140.00

36 This makes the total expenses for Ashley $393.48 per week which capitalised at the rate used before comes to $585,104.76.

37 It should be noted that Ashley does receive a pension at the moment which is at the rate of $157.05 per week. At the moment he would be entitled to earn $100 per fortnight income without reduction in his pension. As a single home owner, he would be entitled to have a home and assets of $125,750 before his pension was reduced. Once his assets increase to $246,000 he would not be entitled to a pension. Just simply taking off the income that Ashley has from his expenses, which I have set out above, would bring his need down to $236.43 per week which capitalised at the relevant rate, would amount to $351,571.41. As this is in excess of the cut off Ashley can, for these purposes, be assumed to have no entitlement to a pension.

38 Clearly these needs are real in the sense that the estimates assume that his mother will continue to work and receive the income that she presently receives and that a full time carer is not required.

39 Another area advanced for Ashley in respect of future needs is some contingency in case he should fall on hard times. This is a little hard to assess and in any event any such provision has to be looked at in the light of the other claims on the estate to which I will now turn.

The claims of Possible Eligible Persons

40 It is also necessary to take into account the situation of others who have a claim on the bounty of the deceased. In this case there are four people who have not been notified of those proceedings. These are the deceased's earlier wives and his son by his first marriage. The first wife of the deceased, known as Peggy, is someone who was married to him probably prior to 1970. Nobody appears to have had any contact with her in recent years and there is nothing to indicate whether she may have some possible claim. Clearly, after that marriage, the deceased was married to Mrs Gallagher for some ten years until he divorced her in 1980. The evidence from the defendant seems to be that in respect of Michael, the son of the first wife Peggy, there was no contact during the period of her marriage for the last eight years. Given the lapse of time the chances of a successful claim by Peggy or Michael are not great. This depends upon the person not having any substantial needs. One only has to look at the situation of the plaintiff who was totally unknown to the defendant to appreciate how surprises can occur in this area. The only evidence in respect of the third wife is that the marriage was for two years and that the lady apparently was from a wealthy American family. The chances of a claim would seem somewhat less. Nothing is known in respect of the deceased's fourth wife and accordingly that is a claim which is impossible to judge.

41 No doubt Mrs Warland will have some protection in that in due course after giving appropriate notices she will distribute part of the estate and will receive the balance of the estate. However, her only protection in respect of the estate which she retains will be that a court, dealing with an application under s 16 of the Family Provision Act, might conclude that there would be unacceptable prejudice to her if time were extended. I think that all I can do, given the lack of evidence, is to take into account the fact there is a possibility of some further claim against the defendant who will no doubt retain in her own right whatever assets in the estate come to her after the adjustments made as a result of these proceedings.

The Defendant's Situation

42 The next person to consider is the deceased's widow, the defendant. She is presently aged 48 years and has a daughter aged 21 who is partly dependent upon her. Her daughter is currently undergoing some university course but has part-time work in order to support herself.

43 The defendant's present asset situation is as follows:-

A half interest in the Elizabeth Bay property $162,500

Savings 2,000

Loan to the estate 4,962

Jewellery 20,000

Furniture and contents 50,000

2000 Telstra shares at $8.50 17,000

Interest in John Warland Retirement Fund 185,905

Total $ 442,367

44 Under the retirement fund the defendant, herself, has an interest as a result of contributions made for the period that she has been working for the deceased's companies since 1994. Her own interest in respect of those contributions amounts to $43,000 but they could not be paid to her without a substantial tax disadvantage because she has not yet reached 55 years of age. There is also a death benefit payable in respect of the deceased. The amount of that benefit which may be paid under the fund to the deceased is $277,609. The actual assets now available appear to be $265,905. Thus these funds can be transferred to her without a significant tax penalty. The trustee of the superannuation fund is now Banlaw Pty Ltd the sole director of which is the defendant. She has indicated in a recent affidavit that she proposes to distribute that fund in the following way:-

Michael John Warland, the deceased's grandson $10,000

Katherine Virola, the deceased's stepdaughter

and daughter of the defendant $70,000

The defendant $185,905

45 No doubt this latter distribution would be by way of distribution in specie of the half share of the unit at Elizabeth Bay which would leave the defendant owning it absolutely. The other funds for distribution would no doubt come from the remaining assets held by the superannuation fund which amount to $103,405.

46 There was an attack on the defendant for having made this disposition. However, she gave evidence of good reasons why it is appropriate that both Michael and her daughter have something and in the circumstances of this case I would not think there is any adverse view which I should take in respect of her decision. In my view it was motivated by a genuine regard for Michael and her daughter.

47 There is also a car which is a 1996 Audi Cabriole. That car is owned by the company and is presently used by the defendant. It is on either lease or hire purchase and the payout figure is $54,000. It would not be included in any sale of the business of the deceased's company and accordingly it is likely in those circumstances that either the defendant will continue to keep the car and pay the lease payments or, alternatively, it will be sold and the defendant will be without a car.

48 The defendant does have nursing qualifications and has worked until 1994 in that profession. She is qualified as an 8 year trained nurse subject to her perhaps having to undergo some retraining to obtain currency. The evidence indicates that a salary which she could obtain would be $836.70 per week. Since 1994 she been working as a assistant in the business of the deceased and presently receives a salary of $855 net per week. If the sale of the business of Banlaw Pty Ltd which is proposed, goes ahead, she may receive a salary and employment from that company for some three years at $3,800 per month. At the present time she can meet her expenses and save about $200 to $300 per month. The defendant does suffer from severe migraines, thyroid problems, shoulder pain and insomnia. Although they cause her difficulties she has been able to manage to look after the deceased and carry on her work notwithstanding these illnesses.

49 Discussion

This is a difficult case and all the more so for the parties because the defendant did not know of the existence of the child, Ashley, until after the death of the deceased. Given the size of the estate, Ashley's demonstrated needs and no provision for him in the will, the first question in Singer v Berghouse must be answered in the affirmative. The second question involves a difficult balancing exercise. The plaintiff does not suggest that given the assessment of the needs which 1 have referred to earlier that the whole estate should be left to him. In essence, the suggestion of the plaintiff is that the defendant, with the provision of the Elizabeth Bay unit, has sufficient assets and there is no reason why she should not return to the workface. It is suggested that the house at Caves Beach is bigger than what she and her daughter need. The plaintiff submits that a legacy of $800,000 would be appropriate. This involves a consideration of what is the proper balance between a child with a severe disability and a widow who had a relationship of some seven years with the deceased.

50 Although the defendant does not have to justify the provisions of the will it is sometimes instructive to look at what is thought to be appropriate in widows' claims under the Act.

51 Such claims are frequently the subject of applications in this Court. The Court of Appeal in Goloski v Goloski (unreported 5 October 1993) 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 and Elliott v Elliott, which was approved by the Court of Appeal on 24 April 1986. There his Honour said:-

"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".

52 In the present case the duration of the defendant's association with the deceased was for seven years. She has made some contributions to the purchase of the Elizabeth Bay unit but the extent of her contribution is not clear. She certainly devoted time to care for the deceased during his ill health. Given these facts the extent of what a widow in her situation should receive is not covered by the comments in Goloski's case. The matter is best considered bearing in mind the comments of Sheller JA in Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24 at 46F where he said:-

"Singer v Berghouse contains an authoritative restatement of the approach that should be taken by the court when considering an application under s7 of the Family Provision Act. However, although the Family Provision Act specifies matters which may be taken into consideration and allows the court to take into consideration unspecified circumstances existing before and after the death of the deceased person and any other matters which it considers relevant in the circumstances, it leaves undefined the norm by which courts must determine whether a provision is inadequate for the applicant eligible person's proper maintenance, education and advancement in life. To achieve what is seen to be the legislative intention and bring some certainty into the application of the Family Provision Act, the courts have developed principles and standards which have been applied in determining applications under the Family Provision Act and its predecessors. One such was the provision a just and wise testator would have thought it his or her moral duty to make in the interests of the prescribed claimants had he or she been fully aware of all the relevant circumstances.

In deciding whether the provision for an eligible person is inadequate for that person's proper maintenance education or advancement in life the court should be guided by consideration of the provision which, in accordance with prevailing community standards of what is right and appropriate and in the circumstances mentioned in the Family Provision Act and then obtaining, ought to be made in favour of the eligible person: compare White v Barron [1980] HCA 14; (1980) 144 CLR 431 at 440, 445 and Kearns v Ellis (Court of Appeal, 5 December 1984, unreported) per Mahoney JA at 7. I do not think this approach produces any different result from that reached by reference to the concept of moral obligation or duty as that expression had generally been understood or used by the courts. However it avoids doctrinal and inflexible judge made rules and fulfils the court's function, adverted to by Mahoney JA (at 8), of speaking for the feeling and judgment of fair and reasonable members of the community. This is a well recognised approach in other areas of the law: compare Lord Atkin's "general public sentiment of moral wrongdoing"(Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562 at 580) described by (1995) 36 NSWLR 24 at 47 Stephen J in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529 at 575 as the broad principle which underlies liability in negligence. As well as allowing for change in community standards this approach involves no departure from the language of the Family Provision Act and removes any possible diversion resulting from a consideration of irrelevant moral duties of the sort to which Stout CJ and Murphy J referred and irrelevant behavioural considerations. I think this is the approach which the courts should now adopt."

53 In an age where there is a move away from institutionalised care for people in Ashley's situation and a reluctance by Government to provide appropriate funding, the community would expect the father of such a person to provide, to the extent possible, for the future well being of his son for the rest of his life. The community would also expect him to make reasonable provision for his widow.

54 If a legacy of $800,000 were provided the defendant would only receive about $60,000 from the estate. She would have to sell the business, its properties and the matrimonial home.

55 It is important that Ashley has a home as that will provide an asset which will increase in value over time and will be a major source of funds if there is a need for capital because of a change in his circumstances.

56 No doubt the defendant is attached to the home at Caves Beach but it is not necessary for her to have that home. A more modest but still attractive dwelling would be readily available in the area.

57 A balancing of the various considerations leads me to the view than an order for a legacy for the plaintiff in the sum of $525,000 is appropriate.

58 The orders that I make are:-

1. That the plaintiff receive a legacy out of the estate of the deceased in the sum of $525,000.

2. That interest on such legacy under s 84A of the Wills Probate and Administration Act 1898 shall run from three months from today's date.

3. The plaintiff's costs on a party and party basis and the defendant's on an indemnity basis be paid or retained out of the estate.

LAST UPDATED: 02/11/1999