Perkins v Perkins [1999] NSWSC 749 (21 July 1999)

Last Updated: 28 July 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Perkins v Perkins [1999] NSWSC 749 revised - 27/07/99

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 2797/98

HEARING DATE{S): 21/07/99

JUDGMENT DATE: 21/07/1999

PARTIES:

Kevin William Perkins v Brian Zenas Perkins and Judith Anne Perkins

JUDGMENT OF: Master Macready

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

M.A. Bradford for the plaintiff

M.S. Willmott for the defendant

SOLICITORS:

Button Mulcahy for the plaintiff

Robert King & Associates for the defendant

CATCHWORDS:

Family Provision. Plaintiff's wife a spendthrift who has previously forged plaintiff's signature on documents to obtain moneys due to plaintiff. Whether the court should enforce conditions on any order in favour of the plaintiff. Held that if it is possible to frame an order that will reduce the possibility of the wife obtaining access to funds that should be done.

ACTS CITED:

DECISION:

Paragraphs 29 and 39

JUDGMENT:

- 15 -

THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

MASTER MACREADY

Wednesday 21 July 1999

2797/98 - KEVIN WILLIAM MAURICE PERKINS -V- BRIAN ZENAS PERKINS AND JUDITH ANNE PERKINS

JUDGMENT

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Margaret Ruby Perkins who died on 21 August 1997. She was survived by her two sons, their wives and children. The plaintiff is one of her sons and the defendants are her other son and his wife. Under her will which was made on 3 March 1992 she appointed the defendants as executors and trustees and gave, after the disposition of chattels, the residue of her estate to be held in two equal half shares.

2 One half share went to the defendants and the other half share was held on the trusts which are set out in cl 5(c) of the will. Those trusts are in the following terms:

"(c) As to the remaining one half share I direct that the same be held upon the following trusts:

(i) To invest the capital of the said share

in accordance with the trusts for investment

herein and to retain such investment upon

trust until the death of Maureen Ivy Perkins

and then to pay the capital of the said fund

and any undistributed net income to Kevin

William Maurice Perkins.

(ii) I direct my trustee during the life of

Kevin William Maurice Perkins and prior to

the vesting of the capital fund in accordance

with the preceding sub-cl (i), to pay to the

said Kevin William Maurice Perkins the net

income derived from the said fund in each

financial year after satisfying from the

income of the said fund the taxation liability of the income earned in such

financial year.

(iii) Should Kevin William Maurice Perkins

die before me or before the vesting in him

of the capital fund in accordance with

sub-cl (i) I direct that the capital and

any undistributed net income of the fund

be paid to those of Judith Ann Ducrou,

Colin James Perkins, Deborah Gaye Howard

and Diane Margaret Mitchell as shall then

be living and if more than one in equal

shares as tenants in common."

3 As can be seen from that provision the share for the plaintiff is held so that he has the income from it until his wife dies and thereafter he receives the capital. In the event of him pre-deceasing his wife the amount of the capital goes to the persons named in sub-s (iii) who are the children of the plaintiff. As is evident the plaintiff's wife takes no part in that disposition.

4 The reason for that was set out by the deceased in a letter which she wrote the same day addressed to her son Kevin in which in effect she apologised for what she had done in her will and explained her reasons. These reasons were connected with the plaintiff's wife's dealings with the plaintiff's money in the past. She refers to the plaintiff's wife spending the money for purposes which were not agreed and forging payments using the plaintiff's credit card.

5 The estate has been reduced to cash and expenses paid. The distributable estate is in the order of $278,191.16. One half of that has been distributed to the defendants pursuant to the provisions of the will, the other half has been invested by them and that amounts to $139,095.58. There have been two payments of income to the plaintiff since the date of death, one in respect of the year 1998 in the sum of $2605 and for the year 1999 in the sum of $6241.08.

6 There has as a necessary consequence of these proceedings been costs incurred. The plaintiff's costs to date are estimated at $14,000 and the defendants' costs $9500.

7 I will just deal with a few matters of history first. The plaintiff was born on 8 October 1934 and his brother the defendant, Brian, was born in 1942. The plaintiff married in 1955 and has had four children from the marriage, none of whom are now dependent upon him. He was a panel beater and retired from work in 1987 due to health problems. In 1989 some of the problems that he was having with his wife came to a head and he at that stage was forced to, inter alia, borrow some money from his brother and sell the family car to repay amounts that she had run up. The plaintiff's father died in 1992 and the deceased made her will on 3 March 1992. In 1994 there was a dispute between the plaintiff and his wife over the problems to which I have referred and she left home for two months.

8 In May 1995 the plaintiff had surgery at Westmead Hospital to replace his right knee and in August 1997 the deceased died. The plaintiff had further surgery in September 1997 on his left knee and in due course the house property was sold towards the end of 1997.

9 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 the Court must take. At p 209 they 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."

10 The plaintiff's condition in a financial sense is that he is presently sixty-four years of age, he is married and has no children dependent upon him. He and his wife have a house worth $152,000, furniture $8000, he has cash of a little over $10,000 which is substantially comprised of the recent income distribution, he has a 1984 Commodore car which could possibly be traded-in for $2500. He is on a disability pension of $360 per fortnight and his wife is on the same pension but an aged one. Obviously their income is used totally in meeting expenses.

11 His medical condition has been set out in a lengthy report by his treating orthopaedic surgeon and he summarises the plaintiff's situation as having undergone bilateral total hip replacements and bilateral total knee replacements. He says his right hip replacement is failing and he is likely to require replacement within the next couple of years.

12 He also goes on to say that he would be able to perform that surgery on the plaintiff as a public patient at Westmead but there would be a two year waiting list. He mentions that if it was to be done through the private sector the cost would be in the order of $18,000 and there is no significant waiting time.

13 It is necessary in the context of the provisions in the will to look at how it is said that the plaintiff has been left without adequate and proper provision for his maintenance, education and advancement in life. These matters are put on two levels. On the first level are a number of specific matters. His house needs some repairs and renovations: there are firstly expenses in connection with the kitchen $5500, cost of floor coverings $2000, cost for enclosing verandah $4500. Although there was criticism of the generality of the evidence it seems to me, particularly given the description of some of the work the plaintiff was hoping to attend to himself, that the estimates are probably modest. He also referred to a wish to paint the outside himself, but no doubt he may have some difficulty with that.

14 Another specific area is the question of purchasing a new car. That seems to be a reasonable matter given the state of repair of his existing car and what he has had to spend on it. He estimates he would need $34,000 less a trade-in of $2500 which he might get for his car if it survives to that time.

15 The other specific area I have already touched on is the hospitalisation costs of $18,000. True it is that it is possible for this to be obtained on a free basis. However, there are a number of imponderables in this area which are really not addressed in the evidence. They are, firstly, whether the public hospital difficulties will continue in their present form or perhaps even be exacerbated; secondly, whether there may or may not be some urgency in the need for provision of this work. I think, having seen the plaintiff, what his doctor says is supported by the way in which he walks and is able to move. Even though the evidence does not address this area it is an area of concern which should be able to be accommodated and the plaintiff should not have the worry in this regard.

16 The plaintiff also puts forward a generalised need for contingencies and in this respect he refers to his age, the little resources which he has and the general uncertainties which life presents.

17 It is necessary also to have regard to others who have a claim upon the bounty of the deceased. As can be seen from the will there are four persons who have a contingent interest in the share in question. Three of those have sworn affidavits saying that they have no objection to the whole of their contingent interest being made available to their father. The other has not given evidence but through correspondence expresses the view that the will should be upheld. There is no evidence from the person who takes that view and accordingly the court has no information on that person's financial situation. The court thus can assume that the person does not want the court to take into account her personal financial situation in consideration of the competing claims upon the bounty of the testator.

18 The reasons for the deceased leaving her will in the way she did stem from the relationship in part between the plaintiff and the plaintiff's wife and the deceased. Apparently, according to the plaintiff - and there is no reason not to accept him - in 1958 they had an argument about a trivial matter and, apart from exchanging a few words at a funeral in 1992, never spoke to each other again.

19 The plaintiff has frankly put his situation before the court in his affidavit. In par 9 he talks about how for many years his wife accessed moneys which had been in their joint savings account without his knowledge or consent. At other times she would be given money to pay household bills and the money would be spent on other things. She apparently ran up debts on his St George Bank credit cards and they, as I have mentioned before, became so unmanageable that he had to sell the family car and also borrow money from his brother.

20 He does not dispute that his wife is a spendthrift and that she did not always tell him the truth about what she had done with money. These problems led to the dispute between them in 1994 as a result of which the plaintiff's wife left home for some two months. They are however back together and have remained together since 1994.

21 The plaintiff says that he took steps in 1994 to separate out their finances. He has a separate bank account which is a savings account into which his pension is paid and his wife has an account into which her pension is paid. He says he supervises all the payment of the household bills. No doubt from that time, having regard to the history of what had happened and the little assets under the plaintiff's control, there has been very little opportunity for the plaintiff's wife to run up large accounts and debts.

22 Apart from the affidavit evidence there is also evidence given in cross-examination of the plaintiff. That brought to light a number of matters. One of them was that he received an examination summons to be examined in respect of a judgment debt. Apparently that was the first he ever heard of that matter as his wife had managed to successfully conceal from him the processes that no doubt were served prior to that event. She also, when she used his credit card, managed to conceal from him what was happening by intercepting the bank account statements when they were coming home.

23 Another more particular and more worrying matter was that when the plaintiff and his wife moved from Penrith to North Narooma there was some small surplus left over which they invested through their solicitor. The plaintiff thinks the amount was about $10,000. What became clear is that his wife managed to get hold of the moneys from that investment when a mortgage was repaid and a discharge given. It turns out that she has forged his signature on the discharge and received the funds. Some of them may have been spent on the new place at Narooma but certainly not all.

24 I think in this case, given the position of the plaintiff, it has clearly been established that he has been left without adequate and proper provision for his support and his advancement in life having regard to the terms of the will. The question is of course what is an appropriate order and any conditions that may be applied to it. In Howarth v. Reed Powell J refers to the possibility of a provision not being applied by the person for the purposes intended by the court. At pp 43 and 44 his Honour said:

"While, as will be apparent from what I have earlier written, I am deeply concerned at what I regard as the totally unrealistic approach to the management of their affairs adopted by Mr and Mrs Howarth, which approach, if persisted in, will almost inevitably lead to the benefit of any Order which might be made in Mrs Howarth's favour being dissipated in short order, it seems to me that, while that is a matter which may bear on the form of Order to be made, it is not a matter which ought, without more, to be regarded as disqualifying Mrs Howarth from receiving the benefit of any Order to which she might otherwise be entitled. Nor is this a novel view, for a similar approach is reflected in the following passage in the judgment of Young J in Bondy v. Vavros (28 August 1998 (unreported)):

'I should interpose at this point that

in one sense it does not matter if I

form the view that a plaintiff is a

spendthrift. If a person is entitled

to an order, what they do with the

money that they receive is their

business and it is none of my affair

if I very much fear that the money

may be wasted on wine, women and song

in a short period of time. I have

deliberately used that expression to

make it clear that I am not referring

at the moment to the facts of this

particular case. On the other hand,

when one is considering what a wise and

just testator would have done, if one

can see that a plaintiff is a spendthrift

and the testator has arranged his will

in such a way as to limit the funds

flowing to the plaintiff, then one may

very well come to the conclusion that the

plaintiff has failed to establish that

there has been any breach of moral duty.'

The question, then, is what is the form of Order which ought now to be made?"

25 In this case of course we are not concerned with the plaintiff not applying the funds in a satisfactory manner. He certainly is a trustworthy person and appears to be sensible and concerned for his future. He feels that he has secured the situation by having a separate bank account with the signature for any withdrawal having to be verified at the bank. It does seem to me however that, given the past history, it is not beyond the bounds of possibility that his wife may, if she obtained the passbook, forge his signature and withdraw funds. The history given indicates that the plaintiff's wife has a real disability. The plaintiff of course is perfectly happy to continue his relationship and that is a matter of great credit to him. It seems to me that if it is possible to minimise the chance of something untoward happening it may be wise to do so.

26 I also accept that the plaintiff should naturally feel that he would not wish to be beholden to his brother and have to ask him for money to be spent on him. That is natural, given the ages and positions in life of both brothers.

27 The other thing that should be observed is that the future contingencies for the plaintiff are not certain. Apart from the application of the statutory provision in s 44 of the Trustee Act there is no express provision for the advancement under the trust of the plaintiff's share. There certainly, given the plaintiff's and his wife's comparative ages, is a real possibility that he may pre-decease her.

28 In these circumstances I propose to make a composite order which will provide something for the plaintiff now, some fund which the plaintiff can direct and not necessarily need to feel that he is beholden to his brother, and also to give some additional powers of advancement in respect of the balance.

29 The order I make is as follows:

(1) I order the defendants to hold the funds referred to in par 5(c) of the will of the deceased for the purposes and upon the trusts therein mentioned and upon the further trust -

(a) to pay thereout forthwith to the plaintiff the sum of $30,000;

(b) to pay thereout from time to time at the direction of the plaintiff such sums up to a total amount of $60,000 for -

(i) medical, hospital and like services provided to the plaintiff,

(ii) renovations or repairs to any home in which the plaintiff has an interest,

(iii) the purchase of a motor vehicle for the plaintiff.

(c) to exercise the powers in s 44 of the Trustee Act without limit to the amount of capital that may be advanced.

30 I have heard submissions on costs which raise a number of discrete areas. One of the particular areas is the service of an offer of compromise on 30 October 1998. Effectively that offer of compromise given by the plaintiff to the defendants offered to settle the proceedings for payment from the fund of a legacy of $60,000. It appears to be an offer in accordance with the terms of the rules and it is submitted the plaintiff has in effect done better under the judgment than that, given that he is given the right to direct the payment in respect of the $60,000 to which I have referred in my judgment.

31 Probably the plaintiff, I would have thought, has done better but I do not think that in this particular case it follows that there should automatically be from the expiration of the offer, which was 28 November, an order for indemnity costs in favour of the plaintiff. One frequently sees in this jurisdiction disputes between parties to litigation where the litigation truly could be described as inter-parties litigation where it can be the case that one sometimes even finds a trustee not obtaining costs. However, the litigation in this case I think is somewhat different.

32 It seems to me that the executors were placed in a difficult situation in that they were bound to uphold the will as they had one contingent beneficiary who wished them to do that. The other aspect that leads me to think it would be inappropriate to apply what would normally follow from the rules is that the difficulty itself comes from the actions of the testatrix given the difficulties that she perceived and the solution that she adopted.

33 In the circumstances I do not think it is appropriate that the plaintiff's costs should be paid on an indemnity basis after the offer of compromise, but clearly the plaintiff's costs on a party and party basis should be paid. Similarly the defendants' costs on an indemnity basis should also be paid. The question is from what part of either the estate or notional estate should the amounts be paid? There was a submission from the plaintiff that there was in fact no actual estate left. This was on the basis that the estate is now held by the defendants as trustees. In my view I do not think that an appropriate conclusion. The estate is still held by the present defendants and to my mind it certainly is what is referred to in the Act as the actual estate.

34 There are a number of provisions of the Act to which I should refer and these include the provisions of s 24 which allows the court to designate notional estate where part of it has been distributed. Section 28(1) provides that the court should not designate property as notional estate unless it is satisfied that the estate of the deceased person is insufficient to allow the making of the provision that in its opinion should be made.

35 There also has to be noticed the particular powers in respect of costs. Section 33(1) provides:

"Except as provided in sub-ss (2) and (3) the Court may order that the costs, charges and expenses of or incidental to proceedings under this Act in relation to the estate or notional estate of a deceased person be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit."

36 That is a wide power and is in the present circumstances not affected by the remaining sub-sections. The entitlement of the beneficiaries under the will to receive a share derives from the fact that they are each entitled to a proportion of the residue. Residue is determined, as provided in cl 5(a) of the will, after payment for just debts, funeral and testamentary expenses. Accordingly, in the ordinary case in determining residue the proper costs of a Family Provision Act application would be described as testamentary expenses and would come out of the estate before dividing it in half, in this case, to determine what each share comprises. In these circumstances it seems to me that it would be quite inappropriate for the share of one beneficiary to be determined prior to the actual determination of the true residue. I think the reality is that the distribution was within a few months of the date of death of the deceased and well within the eighteen months period. Accordingly, even if a notice of intended distribution had been published there would be no protection to an executor who had notice of the claim. However, I do not rely upon that matter.

37 It seems to me that the matter can also be considered having regard to the provisions of s 13 which gives the court power to specify beneficial entitlements and specify what parts of the estate should bear the burden of that provision. The general thrust of s 13 and s 33 in my view leads to a result that it is appropriate, subject to the matters in s 27, to make an order that the plaintiff's costs on a party and party basis and the defendants' costs on an indemnity basis be paid as to one half out of the actual estate and as to one half out of property to be designated as notional estate. The court thus has to look at the provisions of s 27(1) to see whether there will be any interfering with reasonable expectations and there is no such evidence of such matter.

38 I have already dealt I think with the substantial justice and merits in making the order I propose. They specifically encompass the fact that a plaintiff who is successful in his proceedings should not have to bear out of his share of the estate the costs. There are no other particular matters in the section that require consideration.

39 Accordingly, I order:

(2) To the extent necessary I designate as notional estate the debt due to the defendants by Canley Vale Real Estate Pty Ltd referred to in par 2 of the affidavit of Brian Zenas Perkins sworn 21 July 1999.

(3) I order that the plaintiff's costs on a party and party basis and the defendants' costs on an indemnity basis be paid as to one half out of the actual estate and as to one half out of the notional estate.

(4) The exhibits can be returned.

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LAST UPDATED: 27/07/1999