Reynolds v Reynolds [2011] NSWSC 83 (24 February 2011)

Last Updated: 4 November 2011

This decision has been amended. Please see the end of the decision for a list of the amendments.

Supreme Court New South Wales

Case Title:	Reynolds v Reynolds
Medium Neutral Citation:	[2011] NSWSC 83
Hearing Date(s):	Thursday 24 February 2011
Decision Date:	24 February 2011
Jurisdiction:
Before:	Associate Justice Macready
Decision:	The orders I make are: 1. That the property situated at 469 Sydney Road, Balgowlah, New South Wales, being the land comprised in Folio Identifier B/445642 be designated as notional estate pursuant to the Succession Act 2006. 2. That in lieu of the provisions contained in paragraphs 4, 5 and 7 of the will of the deceased in favour of the plaintiff, that the plaintiff received a legacy of $270,000. 3. The New South Wales Trustee and Guardian be appointed as trustee of the land. 4. That the said land be vested in the Trustee subject to any encumbrances effecting the entirety of the said land but free from encumbrances, if any, affecting any undivided share or shares to be held by the said Trustee upon statutory trust for sale under section 66 of the Succession Act 2006. 5. That the defendants deliver the Title Deed for the land comprised in Folio Identifier B/445642 to the Trustee forthwith. 6. That the defendants vacate the property at least seven days prior to settlement of the sale of the property. 7. That the Trustee distribute to the parties the net proceeds of sale after payment of selling expenses (including the Trustees commission and fees, disbursements, agents selling commission and other expenses including advertising expenses) in the following proportions: a. As to the sum of $250,000 to the plaintiff, Pearl Therese Reynolds; b. As to sum of $20,000 to the Plaintiff's solicitors on account of the plaintiff's costs and outlays in the proceedings inclusive of goods and services tax; c. As to the remainder, to the defendants in equal shares. 8. All outgoings in respect of the land are to be deducted or adjusted from the defendants' share of net proceeds of sale. 9. Liberty to apply by either party upon seven days notice.
Catchwords:	Family Provision. Application by a daughter under Succession Act. Defendants do not appear. Order for provision. No matter of principle.
Legislation Cited:
Cases Cited:
Texts Cited:
Category:	Principal judgment
Parties:	PEARL THERESE REYNOLDS v VINCENT JOSEPH REYNOLDS and RICHARD PAUL REYNOLDS
Representation
- Counsel:	Counsel: Ms S McLeod for plaintiff
- Solicitors:	Solicitors: Hayward & Co Lawyers
File number(s):	2010/139054
Publication Restriction:

JUDGMENT

1. HIS HONOUR: This is an application under the Succession Act in respect of the estate of the late Edith Pearl Reynolds who died on 6 June 2009 aged 91 years. She was survived by the plaintiff, her daughter, and the two defendants who are her sons.

2. The matter has been before the Court on two occasions and on each occasion the defendants have been called and have not appeared. I am satisfied that the relevant affidavits that are necessary to support the plaintiff's application have been appropriately served and I have proceeded with the hearing in the absence of the defendants.

The last will of the deceased

3. The deceased made her last will on 8 May 2001. In that will she appointed her two sons, Vincent and Richard, as the executors of the will. In clause 2 she gave her daughter, the plaintiff, her jewellery and personal effects. She made a bequest of furniture to Vincent and Richard and directed them, in paragraph 5 to make the following provision:

"5. I give by way of legacies an amount equal to one third of value of property 469 Sydney Road, Balgowlah as determined above as follows:

(a) as to Thirty Five Thousand and Eighty Dollars ($35,080.00) to my son Vincent (this being an amount approximately equal to the monies owed to him by my daughter Pearl) subject to Vincent acknowledging that this sum operates by way of reduction of Pearl's debt to him.

(b) as to Four Thousand Five Hundred Dollars to my son Richard (this being an amount approximately equal to the monies owed to Richard by my daughter Pearl) again subject to Richard acknowledging that this amount operates as a reduction of Pearl's debt to him.

(c) the balance of that amount (being one-third of the value of my home) to my daughter Pearl Therese Reynolds

And I direct that the payment of this legacy may be delayed by my Executors without attracting interest for a period of two (2) years after the date of my death."

4. In paragraph 6 she went on to give the property at Balgowlah to her two sons and in paragraph 7 she gave her residue to her three children in equal shares.

The assets in the estate

5. The Probate discloses that the only assets in the estate consist of the property at Sydney Road, Balgowlah valued at $720,000, together with bank accounts in the sum of $2,063. There were no liabilities shown.

6. It appears that the property was transferred into the defendants names as devisees as a result of an application made on 16 September 2009. No notice of their intention to make that distribution was given to the plaintiff.

Family History

7. As I have mentioned, there are three children of the deceased and the plaintiff moved out of the family home in 1962. She married at that stage and was subsequently separated from her husband in 1980. She had another marriage in 1999 for seven months. The deceased continued to live in the home and the defendants resided with the deceased in the family home. They are still there and have in fact resided there all their lives.

8. The arrangement seems to be that they do not pay any rent and they each pay a one-quarter share of the rates and outgoings.

9. In 1986, when the plaintiff separated, her brothers made some provision for her and gave her some funds. In the evidence before me it seems that the brothers, or at least one of them, did not consider this as a loan as it was only to be repayable if she ever won the lottery. The matter has obviously been addressed by the deceased in the provisions of her will.

10. The application which has been made, has been made within time and it now comes before me for hearing.

Eligibility

11. The plaintiff is an eligible person under the Succession Act and the principles which were set out by the High Court in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 apply. In applications under the Family Provision Act the High Court in that case has set out the two stage approach that a Court must take. At page 209 it said the following:-

12. "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.

13. 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 situation in life of the plaintiff

14. The plaintiff is now 71 years of age and she resides in rented accommodation. She does not have any dependents as her children have grown up.

15. The plaintiff has a number of health problems; these include rheumatoid arthritis, poor circulation in her legs, atrial fibrillation, high blood pressure, incontinence, several damaged vertebrae, and has recently been diagnosed with leaking heart valves. Because she cannot lift or do housework she has to have someone to assist her doing these basic tasks. She feels her ability to care for herself is somewhat diminished. She has extensive medications which she has to take to deal with her medical condition.

16. Her assets consist of a car worth $17,500, household contents of little value, a loan to a friend Susan Lister of $27,000, and a loan to her son of $25,000. She has liabilities which include solicitor's costs, which are estimated at $28,691. Her credit card has been used and she has reached the limit of that credit on her card.

17. The plaintiff has not contributed to the assets in the estate and, on the evidence before me, it seemed she had an appropriate relationship with her mother. Although they were separated by distance, they always got in touch with telephone calls and cards. She last saw her mother on her 88th birthday when she travelled to Sydney to surprise her.

18. It is also necessary to consider the situation in life of any other persons having a claim on the bounty of the deceased. In this case these people are the two defendants. They have, however, declined to attend court or place before the court evidence of their circumstances, or their relationship with the defendant. In those circumstances, the court can assume that the defendants do not wish these matters to be taken into account in considering the plaintiff's claim.

19. It is necessary to see how the plaintiff says she has been left without adequate and proper support. They provision in the will of the deceased effectively gave her, having regard to the value of the property, about $190,000. Further, there is a problem with the deductions which I have referred to and that is because, according to the plaintiff, they were not loans and therefore it is inappropriate that those amounts be deducted.

20. What the plaintiff needs is an ability to purchase a house for herself. Her income is only a pension being a total of $831.40 a fortnight which includes rental assistance. That is totally taken up in her expenses.

21. The plaintiff has over the last few years had to supplement her income from capital which has slowly diminished since she received a sum of $115,000 from the sale of her property some years ago, in 2009.

22. In my view the need which she has is to obtain a villa at the Pacific Palms Home Village, which is available for between $172,000 and $214,000. There would also obviously be some costs of acquisition. The plaintiff herself may well need some provision for contingencies as her only assets are loans which might not be able to be repaid.

23. In my view that is an appropriate need and I think in the circumstances she has been left without adequate provision under the will of the deceased.The plaintiff asked for a legacy of $270,000. She acknowledges that she has received $20,000 by way of distribution from the estate.

24. It is necessary, because there has been a distribution from the estate, for the Court to consider whether to designate property as notional estate. Under section 79 of the Act an order may be made where the property of the estate has been distributed. That has occurred in this case and I am satisfied that the Court can make an order. The transfer of the property to the defendants as devisees has meant that the estate has been disadvantaged as the plaintiff is unable to obtain an order from the estate.

25. Under section 87 the Court has to consider the following matters:

"87 General matters that must be considered by Court

(cf FPA 27 (1))

The Court must not make a notional estate order unless it has considered the following:

(a) the importance of not interfering with reasonable expectations in relation to property,

(b) the substantial justice and merits involved in making or refusing to make the order,

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

26. Because of the nature of the provision that was made in the will, and the somewhat limited increase of that provision, I cannot see that there are any reasonable expectations that have to be considered. The defendants have resided in the home all their lives and it would have been plain to them from the will of the deceased that they were not to continue to have that benefit without provision for their sister.

27. In my view the substantial justice and the merits favour the making of an order.

28. The other matter that has to be considered is the question of the sale of the property. The defendants have not taken part in the proceedings and it may be anticipated there may be some difficulty with them complying. The plaintiff has sought and obtained the consent of the New South Wales Trustee and Guardian to be appointed as a trustee of the property for the purposes of the sale.

29. The power to appoint such a trustee is contained in section 66 (1) (c) of the Act. Accordingly, in my view it is appropriate to make orders for further provision for the plaintiff and the designation of the property as notional estate.

30. The orders I make are:

1. That the property situated at 469 Sydney Road, Balgowlah, New South Wales, being the land comprised in Folio Identifier B/445642 be designated as notional estate pursuant to the Succession Act 2006.

2. That in lieu of the provisions contained in paragraphs 4, 5 and 7 of the will of the deceased in favour of the plaintiff, that the plaintiff receive a legacy of $270,000.

3. The New South Wales Trustee and Guardian be appointed as trustee of the land.

4. That the said land be vested in the Trustee subject to any encumbrances affecting the entirety of the said land but free from encumbrances, if any, affecting any undivided share or shares to be held by the said Trustee upon statutory trust for sale under section 66 of the Succession Act 2006.

5. That the defendants deliver the Title Deed for the land comprised in Folio Identifier B/445642 to the Trustee forthwith.

6. That the defendants vacate the property at least seven days prior to settlement of the sale of the property.

7. That the defendants pay the plaintiff's costs in the proceedings in the sum of $20,000.

8. I note that the plaintiff has already received the sum of $20,000 and accordingly, I order that the Trustee distribute to the parties the net proceeds of sale after payment of selling expenses (including the Trustees commission and fees, disbursements, agents selling commission and other expenses including advertising expenses) in the following proportions:

a. As to the sum of $250,000 to the plaintiff, Pearl Therese Reynolds;

b. As to sum of $20,000 to the Plaintiff's solicitors on account of the plaintiff's costs and outlays in the proceedings inclusive of goods and services tax;

c. As to the remainder, to the defendants in equal shares.

9. All outgoings in respect of the land are to be deducted or adjusted from the defendants' share of net proceeds of sale.

10. Liberty to apply by either party upon seven days notice.

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Amendments

23 Mar 2011 Name of deceased changed to 'Edith Pearl Reynolds' Paragraphs: 1