Hoolahan v Scali [2010] NSWSC 1349 (25 November 2010)

Last Updated: 29 November 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Hoolahan v Scali [2010] NSWSC 1349
This decision has been amended. Please see the end of the judgment for a list of the amendments.

JURISDICTION:
Equity Division

FILE NUMBER(S):
2009/290797

HEARING DATE(S):
25/10/10 and 26/10/10

JUDGMENT DATE:
25 November 2010

PARTIES:
Juliana Hoolahan v Ferdinando Scali & Rocco Scali (Estate of Ronald Francis Hoolahan)

JUDGMENT OF:
Macready AsJ

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Mr L EllisonSC for plaintiff
Mr M Bradford for defendants

SOLICITORS:
TressCox Lawyers for plaintiff
Macpherson Kelley Lawyers Pty Ltd for defendants


CATCHWORDS:
Family Provision. Application by a widow in respect of a $15 million estate. Provision limited to an annuity decreasing with age. Orders for provision of a legacy sufficient to provide an income stream and a property to enable the former lifestyle to continue.

LEGISLATION CITED:



CASES CITED:


TEXTS CITED:


DECISION:
In lieu of the present provisions in the will of the deceased in favour of the plaintiff, she should receive:
(a) a bequest of Daley’s Point.
(b) a bequest of the deceased’s boat
(c) a legacy of $4 million.



JUDGMENT:

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


Associate Justice Macready

Thursday 25 November 2010


2009/290797 JULIANA HOOLAHAN v FERDINANDO SCALI & ROCCO SCALI (ESTATE OF THE LATE RONALD FRANCIS HOOLAHAN)


JUDGMENT

1 HIS HONOUR: This is an application under the Family Provision Act 1982 (‘the Act’) in respect of the estate of the late Ronald Francis Hoolahan who died on 24 February 2009, aged 63. He was survived by the plaintiff, his wife, Juliana, and four adult children of the marriage, Nicole, Danielle, Caitlin and Andrew.

2 The deceased left an estate that at the date of death was valued in excess of $16 million.

The deceased’s will

3 The deceased made his last will on 19 October 2007. He appointed the defendants, Mr Ferdinando Scali and Mr Rocco Vincenzo Scali, his executors. The relevant provisions of the deceased’s will in summary form are as follows:

Clause 2.1 Each of the deceased's children are to receive an indexed payment of $10,000 per annum until their 28^th birthday and from that birthday until their 32^nd birthday, the amount is $16,000 per annum, also indexed.

Clause 2.2 In respect of each grandchild born within ten years of the death of the deceased, an annual sum of $10,000 is to be paid to that grandchild (and in respect of any siblings of that grandchild subsequently born, to be shared with that sibling or siblings) with the particular entitlements being paid upon any particular grandchild reaching 21. At most, this clause will pay out $40,000 per year for a maximum of 31 years. At the date of hearing, there is only one grandchild, born to Nicole. Therefore, there is no doubt the ultimate payment will be less than the maximum. The amount to be paid out under this clause will not be able to be ascertained until ten years from the death of the deceased when the class closes.

Clause 4.1 Gives to the deceased's wife a one-off (but indexed) payment of $100,000.

Clause 4.2 Provides for the widow to receive $45,000 per annum (indexed but with that index capped at 5per cent) until she reaches 70 years. Between the ages of 70 and 75, this sum is reduced to $40,000 per annum (indexed). From age 75 until death, the sum is $25,000 net per annum (indexed).

Clause 4.3 Entitles the wife while to be reimbursed for residential outgoings including Council rates, Water rates, electricity, telephone, insurance premiums, repairs, maintenance and structural improvements.

Clause 5 Deals with the balance of the estate that constitutes residue.

Clause 5.2 Provides that the residue is to be divided into four parts, one part for each of the deceased's children. The trust is such that income may be distributed to any of the children.

Clause 5.4 Provides that at age 42, the principal beneficiary will become entitled to the capital and income remaining in that beneficiary's trust.

Clause 5.5 Provides that no capital is to be distributed until the beneficiary has reached 32 years, unless it is for the maintenance, education or advancement of a beneficiary (being a child),

Clause 5.7 Provides that the ultimate beneficiaries in the event of the failure of any trust are firstly the other trusts (in favour of the children), then the deceased's wife, and then the Cancer Council.

4 The deceased concluded his will by stating in clause 9.4 as follows:

"9.4 I wish it to be noted that in determining gifts made to my wife under this Will, I have had regard to:

(a) the significant superannuation contributions made for her benefit;

(b) the complying pension payments to be made annually to my wife from the R F and J E Hoolahan Superannuation Fund; and

(c) if I predecease my wife, she will by operation of law become the sole proprietor of our matrimonial home (which is held by us as joint tenants)."

5 In addition, the deceased wrote letters to his wife and his children in which he explained his reasons for leaving the estate as he did. I will return to the deceased’s letters later when I consider the plaintiff’s claim.

Estate assets

6 The matrimonial home at Mountainview Crescent, West Pennant Hills, passed by survivorship to the plaintiff, Juliana Hoolahan. The home has a value of approximately $900,000. At the time of the hearing on 25 October 2010, the assets in the estate were accurately described by the executor, Ferdinando Scali in an annexure A to his affidavit sworn 25 October 2010 as follows:

Boat 2005 SeaRay Sedan Bridge boat – Estimate	$450,000
Shares and Unit Trusts Approximate as at 18 October 2010 Dalton House Pty Limited	$130,500
Village Fresh Grocer Pty Limited	$10
Callmask Pty Limited	$1
Old Canterbury Road Unit trust (units sold $4,000 received)	NIL
Gro-Guard Australia Pty Limited	$150
AMP Limited	$10,860
Computershare Limited	$48,950
Thomas & Coffey Limited	$16,500
Henderson Group PLC	$677
SmartTrans Holdings Limited	$13,212
SmartTrans Holdings Limited	$13,212
Telstra Limited	$34,793
Geon Group Holdings Pty Limited, ordinary shares	NIL
Geon Group Holdings Pty Limited "A" Red Pref	NIL
Geon Group Holdings Pty Limited "C" Red Pref	NIL
Macquarie Office Trust	$2,075
Macquarie ALPS Series 5	$21,025
Stockland Direct Office Trust	$94,000
ANZ Private Portfolio Portfolio Assets	$461,488
Cash Account	$123,430
Total:	$1,420,883

Real Estate	Estimated value of
(i) 368 Wilson Street, Darlington, New South Wales 2088.	$735,000
(ii) Apartment 115, Pier 6/7, 19 Hickson Road, Walsh Bay, New South Wales 2000.	$2,425,000
(iii) Mooring 30, Pier 6/7, 19 Hickson Road, Walsh Bay, New South Wales 2000. This mooring forms part of the tenancy for Apartment 115.	$425,000
(iv) 17 Tulani Avenue, Delays Point, New South Wales 2257.	$3,000,000
(v) 30A North Street, Leichhardt, New South Wales 2040.	$610,000
(vi) 1/46 Carlisle Street, Ashfield, New South Wales 2131.	$1,150,00
(vii) Suite 1104, 109 Pitt Street, Sydney, New South Wales 2000.	$450,000
Total:	$8,795,000

Loans - [These loans are not recoverable at the present time]
(i) Dalton House Pty Limited	$972,078
(ii) Nicole Hoolahan	$174,740
(iii) Village Fresh Grocer Pty Limited (for Village Fresh Grocer Unit Trust)	$312,119
Total:	$1,458,937

Superannuation
R F and J E Hoolahan Superannuation Fund
(i) Deceased's member accumulation account	$869,212
(ii) Proportion of AXA life insurance component: In ANZ 012 003 967658128	$133,873
(iii) Allocated pension	$1
Total:	$1,003,086

Term Deposits - Proceeds of life insurance
(i) ANZ 9897-48589 (previously Tower Life Australia Limited Policy No. 1281336)	$1,243,631
(ii) NAB 17-070-2718 (previously Tower Life Australia Limited Policy No. 1301328)	$1,089,620
Total:	$2,333,251

Bank Accounts
(i) Estate bank account with ANZ Account No. 5258-51377 (as at 18 October 2010) - $243,696
Total:	$243,696

Stadium Australia Memberships

$7,600

7 The total value of assets as specified above is $15,262,453, based on full recovery of the specified loans, excluding costs of sale, disposal, cashing in of investments or assets and excluding CGT and any other taxes or associated expenses.

8 No calculation or assessment has yet been made of what type of assets or amount of assets is likely to be required to be set aside as an investment pool to satisfy the annual legacy payments specified in the Will.

9 The legal costs for the defendants in respect of obtaining the grant of probate, administration and acting in these proceedings until the conclusion of the hearing on 26 October 2010 are estimated at $257,362.49.

10 The legal costs for the plaintiff are estimated at $161,003.50.

History

11 The deceased, Ronald Francis Hoolahan, was born in February 1946.

12 The deceased’s wife, Juliana Elisabeth Hoolahan was born in May 1951.

13 Ronald and Juliana commenced living together in 1974 and they married in March 1979. They lived together happily until the death of the deceased.

14 Their first child Nichole was born July 1980, a second child, Danielle born September 1982, a third child Caitlin born November 1983 and Andrew was born October 1984.

15 In 1981 Ronald and Juliana purchased the West Pennant Hills property as joint tenants, which became their matrimonial home. They lived at West Pennant Hills property until the death of the deceased and the plaintiff continues to live in the property.

16 In 2003 the deceased was diagnosed with terminal prostate cancer. He then proceeded to deal with his estate with his death in mind. He did not inform his children of his diagnosis for some three years, as he did not wish to trouble them.

17 On 10 April 2003, the deceased established a superannuation fund to which reference has been made above.

18 In January 2004, after a long search for what the plaintiff says, was a holiday home they purchased a property at Daleys Point on the Central Coast for $2,730,000.

19 In 2005 the deceased sold his printing business that he had built up over many years. The sale resulted in substantial funds that the deceased invested in properties, shares and other assets.

20 Apart from the matrimonial home, which was purchased in April 1981 for $175,000, at the time of the sale of his printing business the deceased already owned two other properties in his own name. One property was at Wilson Street Darlington purchased in February 1994 for $180,000 and the other was a unit at Balmain Cove purchased in June 2001 for $828,500.

21 The apartment at Hickson Road, Walsh Bay and an associated mooring was purchased in January 2005 for $2,567,500.

22 In February 2004, a property at Tulani Avenue, Daleys Point was purchased for $2,730,000.

23 In 2005, a number of properties were purchased: a suite at Pitt Street, Sydney bought in August for $375,000; a property at North Street, Leichhardt purchased in October 2005 for $570,000; and a unit at Carlisle Street, Ashfield also purchased in October for $642,500.

24 The deceased made his will on 19 October 2007 and he died on 24 February 2009. Probate was granted on 20 August 2009 and the plaintiff filed her summons on 6 October 2009 which was within time.

25 In January 2010, the trustees of the deceased’s superannuation fund made a determination to pay all entitlements of approximately $1 million to the estate which was a majority decision by the defendants over the opposition of the plaintiff.

26 The plaintiff had been working on a casual basis for Village Fresh Grocer one of the businesses in which the deceased had an interest. The plaintiff finished working for the business in February 2010.

Eligibility

27 The plaintiff is an eligible person.

28 In Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-210, the High Court has set out the two stage approach:

“The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant. The first stage has been described as the "jurisdictional question". ....

....

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 Ltd [1938] AC, at p 476. 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 [1951] HCA 44; (1951) 82 CLR 645, 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 plaintiff

29 The plaintiff is aged 59 and she will be 60 in May in 2011. She has two children, Andrew and Caitlin who live at home and are dependent on her. She also extends support to Nicole who is married. Danielle, is married and works as a veterinary surgeon and she and her husband live in Perth.

30 The plaintiff received a legacy of $103,797 under the deceased’s will. She has received the first payment of $47,939 for the annuity. She has received her share of a life policy from the superannuation fund. Taking these payments into account she has cash assets of approximately $265,000. She has an Audi motor vehicle valued at $25,000 and a Lexus motor vehicle valued at $50,000. She has produced valuations of the home at West Pennant Hills which give a value of between $850,000 and $950,009.

31 The plaintiff has superannuation totalling $701,502.39 which she will be able to access in May 2011.

32 So far as income is concerned the plaintiff is entitled to annual indexed annuity of $47,939 and a reversionary pension from the superannuation fund of $17,851 both of which are tax free. She also has all outgoings on the house and telephone accounts paid by the estate. These are estimated at $20,000 a year.

33 The plaintiff receives $418 a week from Dalton House Pty Ltd in continuance of an arrangement made by the deceased during his lifetime. However, it is paid by way of advancement and this amount can be terminated at any time. In any event the amount paid since the date of death of the deceased was $16,720, which the defendants treat as owing to the estate.

34 The plaintiff’s health is reasonable although she has lost ten kilos in weight since her husband died and she has trouble sleeping. She was diagnosed with Lupus eight years ago and that illness is presently under control. She takes health supplements and vitamins.

35 It would appear that the plaintiff and the deceased had a happy life together although the deceased worked long hours. His brother described the deceased as being late for work if he got there at 5am and he frequently did not get home until 7.30pm or 8.00pm. Fourteen hour days were nothing for him. Notwithstanding this, he was devoted to his family.

36 The only matters which were raised in respect of the relationship are suggestions that between 2004 and 2009 when the plaintiff was caring for the deceased in respect of his cancer that she had acquired something of a gambling and drinking problem. I mentioned earlier that the deceased wrote separate notes to his wife, children and executors explaining the terms of his will. The note gives some insight into the deceased’s thoughts and the type of person he was, so it is useful to reproduce the note which he sent to the plaintiff. It is as follows:

“To Juliana Elisabeth Hoolahan, my wife

I am so sorry that I am not with you to share the best years of our life together, I love you dearly.

You have been living this disease with me for a number of years, that has been tough for both of us, particularly keeping this a secret from the kids for the first three years.

Importantly you still have our four children, and I hope and pray that you will remain united as a family,

I have created my will so that you come first, then continuing trusts for the children.

The will has been created to give you a lump sum, monthly amounts, super pension and a large lump sum in the Super Fund. There is a scale of regular payments to see you through to the end of your life.

Additionally you have the family house and your cars with outgoings for the house being paid by the trust.

The superannuation fund that I set up has a pension amount each year that I was receiving and that will now become a payment to you for life. You also have a substantial lump sum in the super fund that you can draw or withdraw once you reach retirement age, I strongly suggest you leave it in the super fund and take an annual amount out only as required.

You have said to me a number of times that you would not remarry when I died, Julie who knows what the future holds. What this will is planned to achieve is to protect you and the children from others, whether they be partners or friends or in fact pressure from the children

You need to create you own will, I suggest using Greg Peach who created this will and if you believe appropriate, piggy back onto this will.

Julie you are aware that I have always been concerned about you alcohol intake, after my death I am worried that you will drink more. That is no good for you or the children, you say things when you have been drinking that you normally would not say, once said, the words cannot be taken back, so please consider this request that you stop or only occasionally drink, best for you and the kids.

While I am making suggestions, I believe that you think you can win at gambling, particularly the pokies. You should be well aware by now that is not the case, you can only use this money once then it is gone, please be careful.

Your share of this will should allow you to maintain a good standard of living, remember while the money is in the superannuation fund it is being invested and all going well will increase in value.

Love

Dad

Ronald Francis Hoolahan

29 December 2006

P.S. Caitlin has been given the task of entering and balancing the accounts on an ongoing basis. She has been given this task due to her accounting skills. I have instructed her not to talk to anyone about the estate. The trustees are there for the purpose of informing you as to the details of the estate. Do not place any pressure on Caitlin for information, if you do I have instructed her to discontinue entering the accounts to stop any conflict. Remember you then lose the services of an interested party.

P.P.S Ferdinando Scali (Fred) and Rocco Vincenzo Scali (Rocco) are the two Executors of my estate. Their job is to follow my wishes as stated in my will, this means managing my estate and dealing with you and the other beneficiaries of my estate. The executors have been given some discretion, yet in the main are there to follow my instructions/wishes. Do not make it hard for them, there is no purpose or benefit to you. They are there to manage and improve the worth of my estate over time, therefore to work for your benefit and worth from the estate. Julie, they are my and your friends, not a job may are willing to take, make it pleasant for them to act in the role of executor. They are there to assist you and the kids.”

37 Immediately apparent from this letter are the concerns expressed by the deceased about his wife’s “alcohol intake” and her gambling, in particular the use of poker machines.

38 Mr Rocco Scali in his affidavit dated 2 February gave evidence that during discussions with the deceased about carrying out the wishes in his will he said:

“You need to look after Julie, she drinks and gambles out of proportion, she’s always at the club. Make sure you look after her.”

39 Mr Rocco Scali gave evidence that he had seen Julie have more than one alcoholic drink to the point she was quite merry.

40 One person who was close to Julie and the deceased was the deceased’s brother, Dr Brian Hoolahan. His view was that he had never known Julie to be a gambler nor a person who drinks too much alcohol. He suggested that the statements made by the deceased might well have been a result of the pain in the last years of his life.

41 Dr Hoolahan had discussions with the deceased about four years before his death as to whether he had any evidence of Julie’s gambling or drinking to which the deceased replied he did not.

42 Mr Ashley Collins and his wife Jill Collins were close friends of Julie and the deceased for many years. Mr Collins was basically a non alcoholic drinker and he disliked people who drank too much. He gave evidence that he never saw Julie drink to any excess or to be intoxicated. His wife Jill Collins recorded how careful Julie was in her drinking habits when they had lunch together. She said Julie would often not have a drink on these occasions.

43 It seems to me that the deceased may have been concerned about what might happen in the future so far as his wife was concerned. No doubt he worried that her drinking might increase after he had died. However, it does not seem to me that this has happened.

44 So far as gambling is concerned, it is plain that Julie enjoys visiting clubs with her friends for lunch and that she plays the poker machines. The defendants carried out an extensive investigation of the plaintiff’s bank records to suggest that she had a gambling problem. The purpose of the analysis was to show that the plaintiff was in the habit of withdrawing amounts of $1,000 at a time from ATM machines located in licensed club premises. The defendants’ submissions suggest that the bank records reveal that the plaintiff and the deceased used their Mastercards and AMX accounts to purchase household groceries and that the plaintiff’s explanation for withdrawing large sums of cash for household expenses was not appropriate and indeed disingenuous. The main withdrawals alleged by the defendants seem to be from the St George and the ANZ Bank accounts.

45 The plaintiff was cross-examined about eight transactions which took place in August 2009 which involved two withdrawals of $1,000 cash from those accounts at different clubs on the same or on consecutive days. She explained the transactions on the basis that she used the money to purchase vitamins and pots at Castle Hill.

46 An analysis of the transactions tends to suggest the following:

(a) In 2005, withdrawals were $34,100. On some occasions the difference between each withdrawal was one day. On average it seems that the plaintiff was making withdrawals a week or two weeks apart in amounts of hundreds up to $1,000.

(b) In 2006 and 2007, full bank account details were not available but the same withdrawal pattern seems to be apparent.

(c) In 2008, withdrawals were $22,600 once again repeating the withdrawal pattern of one to three weeks between large withdrawals.

(d) In 2009, withdrawals were $28,850 with a similar pattern of withdrawals.

(e) In 2010, withdrawals to 17 May were $16,700.

47 Given the pattern of spending and given the difficulty of assessing the actual household expenses I would not conclude that the plaintiff had a serious gambling problem. She conceded that she does enjoy playing the poker machines. However the receipts she produced for almost all her expenditure during the year before to the hearing do not suggest that she now has a problem.

48 Another matter relied upon by the defendants was the fact that, in the plaintiff’s initial affidavit, when she attached a copy of the letter from the deceased, she cut off from the bottom of the letter the paragraphs referring to her drinking and gambling problems. No doubt she found these comments embarrassing and there is some force in the defendants’ submissions that she was concerned about this matter. However, given the other evidence I do not think that the plaintiff has a gambling problem that requires any protection.

49 The defendants described the provisions in the will as “protective” but it should be appreciated that they were plainly an attempt by the deceased to control his estate after his death.

50 It is necessary to consider the situation in life of any other persons having a claim on the bounty of the deceased. The only person who has put any evidence forward is the deceased’s daughter, Danielle Hoolahan. Although she requested that her affidavit was not read, the defendants read the affidavit. It disclosed that she is married with no children. She lives in her husband’s parents’ home in Western Australia where she now works. She spent time in America where she met her husband who is a qualified veterinary surgeon. She and her husband have a Volkswagen car and a bank account of some US$10,000. They have credit card debts of about $42,000 and their income on a weekly basis is $1,500 which is mainly used for expenses. Danielle had a good relationship with her father.

51 None of the other children lead any evidence of their circumstances in life or their relationship with the deceased. In these circumstances the Court can assume that they do not want the Court to take them into account except to the extent that the plaintiff has given evidence about them. The plaintiff gave evidence that Nicole is married and lives with her husband. Andrew and Caitlin live with the plaintiff. Andrew is training to be a pilot and Caitlin does accountancy work.

The plaintiff’s claim

52 The plaintiff summarises her claim as follows:

(a) The plaintiff is aged 59. She has a life expectancy of approximately 29 years (Thomson Reuters Litigation Tables NSW October 2009). She is still relatively young. She continues in her role as a mother by virtue of adult children remaining at home and being (domestically) dependent upon her.

(b) The plaintiff and the deceased cohabited for 35 years which included a 30 year marriage.

(c) The plaintiff brought up to adulthood the four children of the marriage with whom she has continuing relationships.

(d) The plaintiff was in totally devoted to her husband and allowed him to pursue his career.

(e) The estate is large but the provision made for the plaintiff is minimal.

(f) There are no competing claimants who would potentially reduce the plaintiff’s claim.

(g) The plaintiff should not have to go to the executors, who are not family members, to request money for the house.

(h) The plaintiff is entitled to the Daleys Point holiday home, which was part of her lifestyle during the deceased's life.

(i) The plaintiff is entitled to maintain and possibly improve the lifestyle to which she and the deceased were accustomed. Paragraph 33 of her affidavit notes the use of the deceased's boat. Paragraph 34 details the plaintiff and the deceased’s extensive holiday cruising.

(j) Although the plaintiff is in relatively good health, her mental and physical health suffered during the provision of palliative care to the deceased especially in relation to the deceased insisting that his children not be told of his deteriorating health.

53 The plaintiff says she should receive the whole of the deceased’s estate. That is not appropriate and is no doubt based upon her desire to leave the estate to her children which is something they have apparently agreed should happen.

54 No case can be made out for the plaintiff to receive the whole of the estate. This led to submissions that the Court should exercise its power under section 10 of the Act to adjust the interests of the children’s share to provide for them to receive capital now, when they need it, not when they are 32.

55 I will return to this later but I note at this stage there is no application by the children in these proceedings.

56 I turn to the position of the plaintiff. Her cash assets are in the order of $265,000. She has two motor vehicles and her home valued between $850,000 and $950,000. She will be able to access the superannuation fund in May 2011, which has an amount of $701,502.39. When one takes into account the value of the outgoings, which are paid by the estate under the will, the plaintiff’s current income is approximately $85,000 per annum tax-free.

57 Apart from talking about her expenses in respect of Andrew’s continuing education as a pilot she has given an incomplete explanation for her current expenses. Leaving aside entertainment, holidays, phone usage, pharmacy and house maintenance, she has expenses in the order of $60,000 per annum. No carefully documented case has been presented suggesting that she has a need for additional income provision. Leaving aside her claim for the whole estate, in her most recent affidavit she asked for additional provision in these terms.

26. I wish to obtain additional provision from the estate by receiving at least the following assets:

“(a) 17 Tulani Avenue, Daleys Point - this was always intended by both Ron and me to use for our enjoyment and has a waterfront jetty for access with a boat which we both enjoyed. Annexed hereto and marked 'F' is a true copy of a market opinion I have obtained as to its current value of $2,700,000.

(b) Apartment 115, Pier 6-7,19 Hickson Road, Walsh Bay and its associated mooring. Annexed hereto and marked 'G ' is a true copy of a market opinion I have obtained as to its current value of $2,800,000.This is one of the properties Ron and I bought and maintained also with a mooring so it could be used with a boat.

(c) Ron's boat which I and my family have enjoyed using. I want to continue using it. Each of my son Andrew and my son in law Frank Hochbaum can manage the boat.

(d) A legacy of at least $5 million to supplement my savings and superannuation, to provide me with an income and a fund for contingencies. On current interest rates of 6% I will receive a return of $300,000 per annum before income tax on such sum. After tax of $113,050 at 2011 rates, the net income on this sum will be $186,950. In this regard I am content to receive from the estate a mix of real estate, cash, shares or other investments. I will manage these to maximize my income and provide (if possible) for capital growth.”

58 In her claim the plaintiff drew attention to the lifestyle that she and the deceased had enjoyed before his illness and she describes their annual holidays, which cost between $40,000 and $90,000.

59 Although the earlier years of the marriage were not as easy as the situation in the 1990s it is plain that from the 1990s onwards their lifestyle included world trips travelling business class and cruises on expensive ocean liners.

60 The Daleys Point property seems to have been purchased to allow the parties to live there when it was not rented. Unfortunately the deceased’s illness prevented them enjoying the property but the plaintiff wishes to be able to use it so that she can partly live in that area.

61 The plaintiff also expresses a need to use the deceased’s boat because her children are able to manage it and it would be a continuation of the lifestyle they had previously enjoyed. This seems a reasonable request.

62 The estate is a large estate and it is necessary to see first whether the plaintiff has been left without adequate and proper provision in a situation such as the present bearing in mind the size of the estate.

63 A classic statement on the approach to this type of case is found in Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1 where Bryson JA said:

"25 Since White J gave judgment there have been observations in judgments in Vigolo v. Bostin [2005] HCA 11; (2005) 79 ALJR 731 on the significance for decisions under legislation relating to Family Provision, especially on the concepts and expressions “moral duty,” “moral claims” and like expressions. Submissions and argument in the present appeal do not require me to reconsider the opinions expressed in Permanent Trustee Co. Ltd v. Fraser (1995) 36 NSWLR 24 by Kirby P and Sheller JA which now control the Court’s use of these and like expressions. Observations on moral duty in judgments in Vigolo are not uniform in effect and do not appear to have been parts of the ground for decision in that case. In Vigolo the claimant was a person of substantial means and his claim competed with entitlements of his brothers and sisters who, even with the provision made for them, were not persons of substantial means.

26 Passages in the joint judgment of Callinan and Heydon JJ in Vigolo at paras 114 and 115 to which counsel referred, in which their Honours make observations on the significance of the words “proper” and “maintenance,” to my mind serve to illustrate the amplitude of those concepts, but otherwise do not bear closely on the present appeal. Among other things their Honours said (para 114):

The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what used to be called the "station in life" of the parties and the expectations to which that has given rise, in other words reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future.

27 In para 115 their Honours said:

"Maintenance" may imply a continuity of a pre-existing state of affairs, or provision over and above a mere sufficiency of means upon which to live. "Support" similarly may imply provision beyond bare need. The use of the two terms serves to amplify the powers conferred upon the court. And, furthermore, provision to secure or promote "advancement" would ordinarily be provision beyond the necessities of life.

28 Counsel also referred to passages in the judgment of Salmond J in In Re Allen (Deceased), Allen v. Manchester [1922] NZLR 218 at 222. The classic passage, which has been influential in the development of the law, is cast in the terminology of moral claims upon the testator and the testator’s moral duty. The use of the passage has to be accommodated to a point of view which more directly addresses the reality that under s.7 of the Family Provision Act 1982 the decision to be made is a decision about the Court’s own opinions. However there are expressions in Salmond J’s passage which show, as has long been plain, that the jurisdiction is not limited to provision for needs. Among other things Salmond J said (at 222):

[The Court] has the more difficult function of determining the absolute scope and limit of the moral duty of a wealthy husband or father to make testamentary provision for the maintenance of his widow and children. ... [The Court] has to judge between the claim of a dependent to be maintained by the testator and the claim of the testator himself to do as he pleases with his own.

29 In almost all applications under the Family Provision Act 1982 questions of needs are prominent because of the scale of the resources available. The present case is one of the few which are free of that limitation. The focus of attention on needs is not an underlying legal limit on provision which can be ordered, but a subject which usually arises for consideration when the Court addresses the circumstances of each case, as it is required to do. Decisions in the past show that judges formerly took a very limited view of the provision appropriate to be made, for example, for able-bodied adult sons and a limited view of the appropriate provision for married daughters. These decisions belong to past times and do not express the values of the present age. See Hunter v. Hunter (1987) 8 NSWLR 573.

30 The range of matters which the Court may take under consideration is very wide. The wide terms stated in subs.9 (3) of the Act include:

(c) circumstances existing before and after the death of the deceased person, and

(d) any other matter which it considers relevant in the circumstances.

31 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.

32 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."

64 The question of what is an appropriate provision in respect of a large estate is dealt with by Young J in Anasson v Phillips, 4 March 1988, where he said the following:

"... with a very large estate ... there is a great temptation on a court to be over-generous with other people's money. This is especially so when the court can see that plaintiffs have been very hardly done by at the hands of a domineering testatrix. However, the case should not be approached in this way as the application has to be determined in accordance with the legal principles. These principles include the fact that in Australia there is freedom of a person to leave her property in whatever way she wishes, to love whom she wishes, to hate whom she wishes and there is only when there has been a failure to comply with a moral duty to those who in the community's eyes she should have made proper provision for, that anyone can legally complain about another person's will. Even then, the court has no power to re-write the will, but can only adjust things, in substitution for the testatrix, in such a way as to fulfil her moral duty.

If the estate is a large one, the court has a slightly different approach. The basic principles are the same, that is, the will can only be affected to the extent that it is necessary to discharge the moral duty by making adequate provision for the plaintiffs, but where there is a large estate, competition between claimant and claimant, and claimant and beneficiary under the will is much reduced or eliminated. Further, there may be a more liberal assessment of the moral duty owed, to be reflected in what is proper provision for the plaintiffs. In particular, the lifestyle that has been enjoyed by the plaintiffs, because they have been associated with a wealthy testatrix is a relevant factor. These principles all, I think, flow from cases such as Re Buckland [1966] VicRp 58; (1966) VR 404, especially at page 412."

65 It is apparent in this case that given the size of the estate there is no competition between those having a claim on the testators bounty. Using ballpark figures of $15,000,000 and a return of 5 per cent per annum, the estate should receive an income of $750,000 per annum before tax. From this it has to provide in accordance with the terms of the will about $77,000 to the plaintiff, leaving the balance of the income to be split between the four children. This is an amount of $168,250 per child. Reducing the estate to $10,000,000 still provides $105,750 per child.

66 The provisions of the will leave the plaintiff no control over her financial situation. She cannot control the type of assets that will be necessary to provide her with an income and a fund for contingencies. I am satisfied, as I have mentioned, that she does not need protection in this regard and normally a widow should be able to control her own destiny. Although income needs often diminish with age this is not always the case. The will quite extraordinarily reduces her income as she ages. Given her life expectancy of 29 years this provision is quite inappropriate.

67 The plaintiff’s claim for a fund of $5,000,000 to provide her with an after tax income of $186,950 would be more than necessary to provide for a $90,000 a year on holidays and $60,000 for the identified expenses. However, it is not overly generous. The plaintiff does already have her superannuation of $701,502, which produces an income of $17,851 a year.

68 In the present circumstances the plaintiff is entitled to have her matrimonial home. I also think that when one looks beyond basic needs which is appropriate in an estate of this size it is appropriate for the plaintiff to receive the Daley’s Point property and the deceased’s boat. There is no reason why the former lifestyle that included access to both these items of property should not continue after the deceased’s death. I do not see the Walsh Bay property as falling within this category.

69 The other matters that need to be considered are income and a fund for contingencies. The present superannuation can be accessed shortly and that level of capital would be an appropriate fund for contingencies.

70 To cover an adequate income provision a capital sum of $4,000,000 would provide an after tax income of approximately $150,000 per annum which is appropriate bearing in mind the potential use of Daley’s Point to produce an income stream (or at least to cover expenses) and the income from the superannuation amount.

71 Accordingly, in lieu of the present provisions in the will of the deceased in favour of the plaintiff, she should receive:

(a) a bequest of Daley’s Point.

(b) a bequest of the deceased’s boat

(c) a legacy of $4 million.

72 The parties may want to address the components of the $4 million legacy and I will hear further submissions on that aspect before making final orders. I will also allow the parties to address the suggestion of orders under s 10.

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AMENDMENTS:


26/11/2010 - Lower Court changed to not applicable - Paragraph(s) not applicable


LAST UPDATED:
26 November 2010