Cannings v Cannings [2010] NSWSC 87 (19 February 2010)

Last Updated: 22 February 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Cannings v Cannings [2010] NSWSC 87


JURISDICTION:


FILE NUMBER(S):
4598 of 2008

HEARING DATE(S):
28 and 29 October 2009

JUDGMENT DATE:
19 February 2010

PARTIES:
Florence May Grace Cannings (Plaintiff)
Jeffrey David Cannings (First Defendant)
Bryan John Cannings (Second Defendant)
John William Cannings (Third Defendant)

JUDGMENT OF:
McLaughlin AsJ

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Mr R. Quickenden and G. Dilworth (Plaintiff)
Mr C. Harris SC (Defendants)

SOLICITORS:
J. J. Lees and Associates (Plaintiff)
Pricewaterhouse Coopers (Defendants)


CATCHWORDS:
SUCCESSION - family provision - claim by elderly widow - financial and material circumstances of Plaintiff - Defendants concede that will does not make adequate provision for Plaintiff - competing claims of residuary beneficiaries - appropriate provision to be made for Plaintiff.

LEGISLATION CITED:
Family Provision Act 1982

CATEGORY:
Principal judgment

CASES CITED:
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 19

TEXTS CITED:


DECISION:
1. I order that, in lieu of the legacy of $25,000 given to her by the will of the late George William Cannings (“the Deceased”) but in addition to the various other benefits given to her by that will, the Plaintiff receive a legacy in the sum of $364,000, such legacy not to bear interest if paid on or before 19 March 2010, and if not so paid to bear interest at the rates prescribed for unpaid legacies by the Probate and Administration Act 1898.
2. I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased.
3. The exhibits may be returned.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION



ASSOCIATE JUSTICE McLAUGHLIN

Friday, 19 February 2010

4598 of 2008 FLORENCE MAY GRACE CANNINGS –v- JEFFREY DAVID CANNINGS and ORS

JUDGMENT

1 HIS HONOUR : These are proceedings under the Family Provision Act 1982.

2 By summons filed on 5 September 2008 Florence May Grace Cannings claims an order for provision for her maintenance and advancement in life out of the estate and/or notional estate of her late husband George William Cannings (to whom I shall refer as “the Deceased”).

3 The Deceased died on 13 March 2008, aged 82 years. He left a will dated 11 September 2007, probate whereof was on 22 September 2008, granted to Jeffrey David Cannings, Bryan John Cannings and John William Cannings, the executors named in such will (who are the Defendants to the present proceedings). The inventory of property discloses assets having a total estimated value of about $1,927,000. The chief assets are an interest in a rural property at Trunkey Creek in New South Wales ($1,300,000); a 50 per cent interest in a house property situate at and known as 32 Tudawali Crescent, Kariong, New South Wales ($185,000); and moneys held in various bank accounts and on term deposits (totalling about $348,000).

4 The Kariong property was the matrimonial home of the Deceased and the Plaintiff, and the Plaintiff holds the other 50 per cent interest therein, as tenant in common with the Deceased. (The Plaintiff, however, asserted that, in consequence of an agreement between herself and the Deceased, she held a far greater beneficial interest and he held a far lesser beneficial interest in that property than was represented by the equality of their legal interests therein.) The Trunkey Creek property, together with the stock and plant thereon, have been sold, and the present value of the assets of the estate is $1,377,348.

5 In calculating the value of the estate available for distribution, the costs of the present proceedings must be taken into consideration, since an applicant, if successful in her claim, will normally be entitled to an order that her costs be paid out of the estate of the testator, whilst defendant executors, irrespective of the outcome of the proceedings, will normally be entitled to an order that their costs be paid out of the estate. It was estimated on behalf of the Plaintiff that her costs will total $62,130, whilst it was estimated on behalf of the Defendants that their costs will total $63,715. Thus, if the entirety of those costs (totalling almost $126,000) becomes payable out of the estate, the value of the distributable estate will be about $1,250,000 (of which $185,000 represents the half interest of the Deceased in the Kariong property, in which the Plaintiff continues to reside).

6 By his will the Deceased gave to the Plaintiff his interest in the Kariong property, together with the contents thereof; his motor vehicle (to which an estimated value of $22,000 had been attributed in the inventory of property); and a legacy of $25,000. The Deceased gave the residue of his estate among his four sons, being the three executors and Stephen Paul Cannings. (I shall for convenience, and without intending any disrespect, refer to each of those sons by his first given name.)

7 The Plaintiff who was born in 1924 is presently aged 85 years. She and the Deceased commenced to live together in late 1975, and they were married in 1981 in the United Kingdom. Thus, they had been together for more than 32 years, to the time of the death of the Deceased. The relationship between the Plaintiff and the Deceased was described by her as being a very good one.

8 Each of the Plaintiff and the Deceased had been previously married. The Plaintiff has children by her previous marriage. The three executors are the children of Deceased’s first marriage, and his fourth son, Stephen, is the child of his second marriage. No children were born to the marriage of the Plaintiff and the Deceased.

9 The Plaintiff received $45,000 by way of property settlement when she and her first husband divorced.

10 The Deceased was a master builder by occupation at the time when he and the Plaintiff met. From a home unit development at Forster the Deceased transferred one unit to the Plaintiff for a price which represented the building cost to him, being about $30,000. The Plaintiff was enabled to earn rental income from that property until she sold it about two years later.

11 With the proceeds of sale of that home unit, together with (as I understood her evidence) part of the property settlement from her first husband, the Plaintiff purchased a former Housing Commission residence at Narraweena for $81,000 in December 1981. The Deceased then effected considerable renovation work upon that property, expending about $40,000 of his own funds upon materials. That property remained the matrimonial home of the parties from late 1981 until 1998, when it was sold for $395,000 (the Plaintiff receiving a net amount of $163,500).

12 The Kariong property was then purchased by the parties as tenants in common in equal shares for $212,000, plus stamp duty. The Plaintiff said that she provided the totality of the cost of that purchase, from the net proceeds of sale of the Narraweena property, together with her own funds.

13 When the Deceased gave up his building activities and devoted himself to the Trunkey Creek property (where he maintained cattle and sheep) the Plaintiff gave him physical assistance in conducting the rural activities thereon.

14 At the present time the Plaintiff’s income consists of a pension from the United Kingdom (about $25 a week); the aged pension (about $336 a week); interest from bank accounts (about $7.50 a week); interest from a term deposit (about $37 a week, but payable upon maturity). Thus the Plaintiff’s weekly income is in a total amount of about $406.

15 The Plaintiff has the following assets,

Kariong property, having an estimated value of $350,000

Contents of house, having an estimated value of $5,000

Renault sedan motor car, having and estimated value of $15,500

Funds held in bank accounts, totalling $16,648

Deposit account $51,521

16 The house property at Kariong is in need of repairs and renovations, for which the Plaintiff has obtained a quotation in an amount of $14,465. The Plaintiff expressed a need for new spectacles ($350) and new false teeth ($3,500), as well as for replacement of items of furniture and furnishings and of appliances (for which she has provided quotations in a total amount of $11,311).

17 The Plaintiff gave evidence of her expenses and outgoings, in a total estimated weekly amount of $711. That amount is considerably in excess of her total weekly income of $406. The shortfall has been met by resort to capital. The Plaintiff’s investments, which in March 1999 had a total value of about $130,000, had diminished to about $68,000 by the time of the hearing.

18 At the outset of the hearing the Defendants conceded that the will of the Deceased does not make adequate provision for the Plaintiff.

19 Accordingly, the only question to be determined by the Court is what additional provision should be made for the Plaintiff out of the estate of the Deceased.

20 It should here be observed that, whilst the Deceased’s motor vehicle has been transferred to the Plaintiff, she has not yet received payment of the legacy of $25,000. The Defendants could offer no explanation for their failure to make that payment, other than to say that the Plaintiff had not asked for it. I do not understand that it is the obligation of a beneficiary to request executors to carry out the terms of a will by, for example, making payment of a legacy. The inference is here available that it has been the institution of the present proceedings which has resulted in the omission on the part of the executors to carry out their executorial duty in this regard. That inference is supported when it is recognised that the Plaintiff herself consented to an early distribution in April 2009 of the sum of $100,000 to one of the four residuary beneficiaries, the Deceased’s youngest son Stephen, who, it would appear, was at that time in financial need.

21 On 10 June 2009 the Court ordered that the time for the institution of applications for provision out of the estate of the Deceased should, pursuant to the provisions of section 17 (1) of the Family Provision Act, be reduced from 18 months after the date of the death of the Deceased (that is, from 13 September 2009) to 10 June 2009. The Plaintiff consented to the making of that order.

22 The claim of the Plaintiff must be approached in the light of competing claims of the residuary beneficiaries and of any other persons who may have a claim upon the bounty of the Deceased. It is only the four sons of the Deceased (each of whom is also a residuary beneficiary) who fall into that latter category. The Deceased himself recognised the claim of his four sons upon his bounty by making them the chief objects of his testamentary beneficence.

23 Two of the Deceased’s sons, John and Bryan, did not place before the Court any evidence concerning their financial and material circumstances. It was expressly conceded on behalf of the Defendants that there was no competing claim on the part of either John or Bryan.

24 Evidence was placed before the Court concerning the financial and material circumstances of the other two sons of the Deceased, Jeffrey and Stephen.

25 It emerged under cross-examination that Jeffrey (who is an accountant by profession) is in better circumstances than his affidavit evidence would suggest. The house property in which he has resided with his family since October 1987 is in the name of this wife. Jeffrey under cross-examination gave the somewhat improbable response, that he had no idea of its value.

26 Stephen is presently aged 45. He is employed by the Australian Broadcasting Corporation, receiving a net salary of $1950 a fortnight. He owns a motor vehicle, shares, and $78,000 (representing the balance of the $100,000 initial distribution which he received from the estate on 28 April 2009), as well as personal items (having an estimated value of $5,000). At the time of that initial distribution, Stephen had debts totalling $21,500, and net assets of $23,500.

27 Stephen is hoping to use that balance of $78,000 for a deposit on the purchase of a residential property.

28 The Plaintiff is, for her age, in good health. She resides alone in the Kariong residence, which has been her home since 1998. She is familiar with the neighbourhood, and hopes to be able to remain in the Kariong residence for as long as possible. She continues to drive her motor vehicle.

29 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.

30 I have had the benefit of receiving a written outline of submissions from Counsel for the respective parties. Those documents will be retained in the Court file.

31 The Plaintiff as the widow of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such she has the standing to bring the present proceedings. Other eligible persons in relation to the Deceased include his four sons (each of whom is an eligible person within paragraph (b) of the foregoing definition); the two former wives of the Deceased (each of whom is an eligible person within paragraph (c) of the foregoing definition); and two of the children of the Plaintiff (each of whom may be an eligible person within paragraph (d) of the foregoing definition).

32 The time for the making of applications for provision out of the estate of the Deceased having been shortened to 10 June 2009, and none of the foregoing eligible persons, having made such an application, the interests of the former wives of the Deceased and of the daughters of the Plaintiff may be disregarded.

33 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 – 210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of a testator the applicant has been left without adequate provision for his or her proper maintenance.

34 The High Court in Singer v Berghouse (at 209 – 210) said that the determination of the first stage

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.

35 I have already observed that the Plaintiff is in good health for her age, is able to live independently and alone, drives her own motor vehicle, and is desirous of remaining in her present residence. However, it was recognised by both the Plaintiff herself and the Defendants that at some stage it was likely that she would need to move into retirement accommodation, and, ultimately, nursing home accommodation.

36 The Plaintiff placed before the Court evidence concerning the cost of accommodation in the Tarrigal Glen Retirement Village at Erina, which was her preferred choice for such accommodation. The Plaintiff expressed a desire to remain on the Central Coast. A two bedroom unit in the Tarrigal Glen at Erina would cost $465,000, plus stamp duty and legal fees. The Plaintiff said that she would need a two bedroom unit (the units in that establishment being much smaller than in her Kariong residence), so that she could have family visits on occasion. The weekly recurrent fee for such a unit would be about $124.

37 The Defendants placed before the Court evidence concerning other, and less expensive, retirement establishments on the Central Coast. The Plaintiff had inspected each of those retirement villages, and she expressed her opinion as to why each would be unsuitable for her.

38 The Plaintiff in her years of widowhood should not be required to live at a standard less than that which she enjoyed during her marriage or to reside in accommodation of a lower standard than the Kariong residence, which was the matrimonial home of herself and the Deceased. If ultimately it becomes necessary for her to move into a retirement village, then she is fully justified in not wanting her retirement accommodation to be, in her own words, “a downgrade from [her] current living standards”. She considered that the retirement complex at Tarrigal Glen Retirement Village at Erina most closely reflected the standards of her current home.

39 If the Plaintiff were to remove from her Kariong residence to the Tarrigal Glen Retirement Village at the present time, then between the present value of Kariong ($350,000) and the cost of Tarrigal Glen ($465,000) there would be a difference of $115,000 to be paid by her, as well as stamp duty, legal fees, and agent’s commission on the sale of Kariong. For such a change of residence the Plaintiff would require at least an additional $135,000.

40 The Defendants did not dispute that the Plaintiff should receive an immediate amount to cover the cost of renovations and repairs to the Kariong residence ($14,465), the acquisition of items of home furnishings, furniture and appliances ($11,311), and new spectacles and false teeth ($2,850).

41 The Plaintiff expressed a desire for regular overseas and domestic travel, especially to the United Kingdom where other members of her family reside. She gave evidence of a planned domestic cruise with the Deceased, which had to be cancelled because of his death. The Defendants disputed that the cost of such travel constituted a need of the Plaintiff which should be met from the estate of the Deceased.

42 I consider that the Plaintiff is entitled to a fund which during her declining years will be available for her not only to meet future unexpected contingencies but also to provide her with some degree of comfort and pleasure and to enable her to maintain the comfortable lifestyle which she enjoyed with the Deceased. If it is the desire of the Plaintiff that such lifestyle should include occasions of overseas and domestic travel, then I consider that she should be entitled to use such a fund for that purpose.

43 The capital fund to which I consider the Plaintiff to be entitled should also be of such a size that the shortfall between her weekly income and weekly outgoings can be adequately met from that fund. (It will be appreciated that her weekly outgoings will increase when she removes to Tarrigal Glen.) I consider that an appropriate amount for that fund is $200,000.

44 Accordingly, I am satisfied that the Plaintiff has established an entitlement to receive from the estate of the Deceased a legacy comprising:

(a) a capital fund of $200,000, to meet future unexpected contingencies, to provide for the Plaintiff’s appropriate lifestyle and comfort in her declining years, and to meet the shortfall between her weekly income and her weekly outgoings;

(b) an amount of $29,000, to cover the costs of house repairs, renovations, furniture, furnishings and appliances, spectacles and false teeth;

(c) an amount of $135,000, to provide for the ultimate removal of the Plaintiff from the Kariong residence into the Tarrigal Glen Retirement Village.

45 The foregoing amounts total $364,000. That is a sum far in excess of the entirely inadequate legacy of $25,000 given to the Plaintiff by the will of the Deceased.

46 The size of the estate is such that the competing claims of other beneficiaries will not have the effect of reducing, let alone extinguishing, an order for provision in favour of the Plaintiff in the foregoing sum.

47 In conclusion, I wish to comment upon the estimated costs of the respective parties.

48 This was a widow’s claim of no particular complexity. Indeed, the Defendants did not dispute the entitlement of the Plaintiff to an order for provision out of the estate greater than the legacy of $25,000 given to her by the will. The hearing occupied one and a half days. I consider the totality of the costs, in an amount of $126,000, to be excessive for such a case. I appreciate, however, that if I make an order capping those costs to a lesser figure, the practical consequence will be that the Plaintiff will have to bear part of her own costs, whilst the residuary estate will be increased by an equivalent amount, to the ultimate benefit of the Defendants and of Stephen, who are the residuary beneficiaries.

49 However, in the event that the costs of either the Plaintiff or the Defendants proceed to an assessment, I request that the comments which I have just made should be brought to the attention of the costs assessor.

50 I make the following orders:

1. I order that, in lieu of the legacy of $25,000 given to her by the will of the late George William Cannings (“the Deceased”) but in addition to the various other benefits given to her by that will, the Plaintiff receive a legacy in the sum of $364,000, such legacy not to bear interest if paid on or before 19 March 2010, and if not so paid to bear interest at the rates prescribed for unpaid legacies by the Probate and Administration Act 1898.

2. I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased.

3. The exhibits may be returned.

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LAST UPDATED:
19 February 2010