McIntyre v O’Regan

This is a claim for family provision made by Sarah McIntyre and Seth McIntyre in respect of the estate of their late mother, Judith McIntyre (“the Deceased”).

The Deceased died on 17 June 2014, aged 66 years.

The Deceased was survived by the plaintiffs:

The Deceased made a will on 3 May 2014, a little over a month before she died.

Under the will, the Deceased left to:

In April 2014, two months before she died, the Deceased gave Seth $60,000 to assist him with expenses in relation to proceedings in the Federal Circuit Court of Australia concerning custody of and access to one of his children. That money was paid into a solicitor’s trust account. Of the $60,000, $41,000 has now been returned to Seth.

Between 2 October 2013 and 30 May 2014, the Deceased paid a total amount of $322,259 towards the purchase and improvement of a property registered in Ms Langenbruch’s name in October 2013 in Goonellabah, near Lismore. The Deceased lived with, and was cared for by Ms Langenbruch in that property until she died. I will discuss the circumstances surrounding the purchase of that property below.

On 7 May 2014, the Deceased paid Mr Benhayon an amount of $800,000 which Mr Benhayon used to make improvements to a teaching auditorium on a property he owns at Wollongbar, between Lismore and Ballina. I discuss the Deceased’s relationship with Mr Benhayon below.

I will refer to the plaintiffs by their given names. I do so for convenience, and without intending any disrespect.

In 2014, Sarah received a PhD in the area of perceptual processing of tactile motion from the University of Sydney. She is currently a post-doctoral research officer at Neuroscience Research Australia at the University of New South Wales, and also works at the University of Western Sydney.

Sarah (and Seth) grew up in the family home in Ryde, in what Sarah described as a “fairly traditional arrangement” whereby the Deceased was “for the most part responsible for the household and raising us children” and her father was the “main income earner”.

The Deceased and Sarah’s (and Seth’s) father were divorced in 2009.

Sarah commenced university (studying for a bachelor of science in psychology) in 2000. She lived at home for a while, but “eventually got a job and moved out into my own apartment with friends”. Thereafter, for the most part, she supported herself.

In the meantime, in late 2009 the Deceased moved from Sydney to Myocum, near Byron Bay, where she purchased a property (which I will refer to further below).

The Deceased was diagnosed with breast cancer in June 2011. At this time, Sarah was studying for her PhD.

Between June 2011 and the Deceased’s death in June 2014, Sarah regularly flew to Ballina or Lismore to visit the Deceased (very often the Deceased paid for those airfares). Sarah made some 14 visits during that period, with greater regularity from March 2014 when the Deceased’s medical condition deteriorated.

Sarah said in her affidavit:

So far as concerns the Deceased’s intentions in relation to her will, Sarah said in one of her affidavits:

I will return to the Deceased’s relationship with Universal Medicine and Mr Benhayon below.

Sarah also said:

Sarah’s net income is in the order of $61,000 per annum.

She has some $33,000 superannuation and is the joint owner of a bank account with her partner, Gareth Williams, in which there is some $40,000.

As to her employment prospects, Sarah said:

Sarah is currently renting an apartment in Darlinghurst where she lives with Mr Williams.

Although Mr Williams has a bachelor of science in psychology, he suffers from what he described in his affidavit as a “debilitating chronic psychiatric disorder” which prevents him from working. He has not been employed for many years and is dependent on Sarah.

As to her future needs, Sarah said in her affidavit:

She described her “total needs” as follows:

Sarah said she would prefer to purchase a home or an apartment in the inner west of Sydney.

Sarah’s father is in good health, and has remarried. There appears to be no immediate prospect of her receiving any financial support from that source.

In his affidavit evidence, Seth spoke of having a loving relationship with the Deceased. He said that:

Seth left the Ryde home in about 1994 and started working in the construction industry.

Seth commenced a course at the Jansen Newman Institute in 2002 for what he described as a “degree in counselling”. He was unable to finish his studies at that institute because of the birth of his first child, Louis. Louis is now aged 10.

Between 2006 and 2009, Seth engaged in a furniture finishing apprenticeship.

He said his employment history was as follows:

Seth’s current role at Millers Strata Maintenance involves garden maintenance and other light maintenance work.

Seth now also has a daughter, Mei Mara, who is aged four.

Seth rents an apartment in Petersham, which is near to Erskineville and Croydon, where his former wife and former partner (the mothers of Louis and Mei Mara) live.

Seth has regular access to both children and contributes to their maintenance.

Seth’s income is in the order of $35,000 per annum. He has superannuation in the order of $14,000 and the $41,000 of the $60,000 that the Deceased paid on his behalf in April 2014 (see [6] above).

He seems not to have seen the Deceased often in the final years of her life. In his affidavit he said:

Seth suffers from what he described as a “long standing and chronic back condition” known as spondylolisthesis. He said that:

As yet, Seth has taken no steps towards finishing his counselling degree.

So far as concerns the Deceased’s will, Seth gave this evidence:

Seth has received some financial support from an aunt. Such support will not be available indefinitely. Seth is currently estranged from his father who, in any event, has remarried and may well leave his estate to his now wife.

Seth would like to purchase a three bedroom property in the Petersham area and said that his financial needs are as follows:

Each of Sarah and Seth seek provision from the Deceased’s estate in the sum of $550,000; a total of $1.1 million, which amounts to nearly the whole of the value of the actual estate.

When he opened the case, Mr Morrissey, who appeared for Sarah and Seth, stated that Sarah and Seth sought an order that their costs be paid on the ordinary basis from the Deceased’s notional estate. However, later, he accepted that as neither Mr Benhayon nor Ms Langenbruch had been joined as defendants, that claim was not maintainable.

In 2006, the Deceased and her then husband loaned the Deceased’s brother, Mr John Ellis, $200,000. That loan was secured by a charge over a property owned by Mr Ellis in Kingsville, Canada.

In March 2013, for reasons unexplained in the evidence, the Deceased assigned that charge equally to Sarah and Seth.

In May 2015 (shortly after these proceedings were commenced), Sarah and Seth executed a discharge of that charge and thus, in effect, forgave the loan.

Sarah said:

During cross-examination, Sarah also said that she thought there was no significant prospect of Mr Ellis repaying the loan and that, accordingly, she did not believe she had given up anything of value by forgiving it.

Seth gave evidence to the same effect.

As the loan was secured, it does appear that Sarah and Seth could have forced the issue with their uncle and compelled him to pay them the money he had borrowed from their mother.

However, in my opinion, Ms Catanzariti, who appeared for the estate, went too far when she made this submission:

Sarah’s and Seth’s decision was understandable in the circumstances. I do not see this aspect of the matter as having great significance to the decision that I must make in the proceedings. I certainly do not see it as a factor that, of itself, disqualifies Sarah and Seth from contending that adequate provision has not been made for them by the Deceased. Nor do I accept that Sarah or Seth released their uncle from the debt in order to improve their position in this litigation.

Both Sarah and Seth gave evidence of the Deceased’s longstanding interest in spiritualism. Sarah said that the Deceased “began a spiritual search to find meaning in life beyond the intellectual” following a serious accident that her father (the Deceased’s then husband) had. Sarah said that, when she was young, “my Mother’s spirituality began to take a forefront in our family life”. As she grew older “and entered my teen years, I sometimes felt embarrassed by some of my Mother’s practices when my friends were around, as they were so different from mainstream culture”.

Seth said that he “started questioning my Mother’s spirituality when I became a teenager” but that “my Mother took my differing opinion well” and “allowed me to have a different opinion than her and we were able to discuss our opinions freely”. He said:

In his affidavit, Seth gave this evidence:

Mr Benhayon is the proprietor of a business known as “Universal Medicine”. Mr Benhayon described the business as being a complementary healing and training organisation based in Wollongbar. He said:

Mr Benhayon was formerly a board member of a charitable institution known as “The College of Universal Medicine”. He maintains an association with that charity, although he is no longer on the board.

Mr Benhayon owns a number of properties, including the Wollongbar property to which I have referred.

Mr Benhayon first met the Deceased in August 2011 at the Byron Bay Writers Festival, where he had been invited to speak.

Mr Benhayon gave evidence that:

So far as concerns the payment of $800,000 that the Deceased made to Mr Benhayon on 7 May 2014, Mr Benhayon gave this evidence:

In cross-examination, Mr Benhayon said that the $800,000 was used to refit and effect renovations to the building located on the Wollongbar property. The renovations commenced shortly after the death of the Deceased and concluded around November 2014.

Mr Benhayon gave this evidence:

There is nothing in the evidence before me that would cause me to doubt the truthfulness of this evidence.

The tone of Mr Morrissey’s cross-examination, and many of the questions that Mr Morrissey put to Mr Benhayon, were seemingly designed to suggest some lack of bona fides on Mr Benhayon’s part. Mr Morrissey also emphasised, in his final submissions, that the Deceased had made her May 2014 gift and bequeathed the residue of her estate to Mr Benhayon personally, and not to the Universal Medicine business. Mr Morrissey also emphasised that the hall which was improved using the money that the Deceased gave to Mr Benhayon in May 2014, which Mr Benhayon proposed further to improve with the legacy, is registered in Mr Benhayon’s name. Mr Benhayon accepted in cross-examination (see [67] above) that there is no legal impediment to him making such use of the property as he sees fit.

In final submissions, Mr Morrissey went so far as to submit that I should conclude that Mr Benhayon might actually use his property at Wollongbar, as improved using funds provided by the Deceased, for his own interests rather than those of Universal Medicine. But Mr Morrissey did not put that proposition to Mr Benhayon. On the evidence before me, I see no basis upon which I could reach such a conclusion.

Similarly, in final submissions, Mr Morrissey handed up what he described as a “wheel of persons related to Universal Medicine”. This document sought to depict the large number of people, associated with Universal Medicine who played a role in the Deceased’s life in the period before her death (including her nurse, financial planner, executor, the witness to her will, the solicitor who drafted the will, the creator of a video made of the Deceased very shortly before she died, and counsel originally briefed to appear for the estate in these proceedings).

I am not sure what implication Mr Morrissey thought I should draw from that document. As I said during the course of argument, the only matter before me was Sarah’s and Seth’s claim for family provision.

It was no part of Sarah’s or Seth’s case that the Deceased lacked testamentary capacity when she made her will, that she did not know the nature and contents of her will, nor that her will had been overborne.

Part of the evidence adduced on behalf of the Deceased’s estate was a video of an interview of the Deceased in April 2014, very shortly before she died. I was invited by Ms Catanzariti view the video. I have done so. No one watching that video could fail to see the state of peace and serenity with which the Deceased faced her passing. The evidence points strongly to the conclusion that the Deceased attributed that state of being to the teachings of Mr Benhayon.

The strong impression I have from the evidence is that the Deceased knew exactly what she was doing when she made her will. She appears to have weighed up the competing considerations of the need to a leave legacy to Sarah and Seth and her desire to promote the teachings of Mr Benhayon. I see no basis upon which to conclude that the decision was not her own. She foreshadowed to Sarah and Seth her plan to leave a significant part of her estate to Universal Medicine, explained her decision to them and sought their assurance that they would respect her wishes.

Ms Langenbruch met the Deceased towards the end of 2011.

At that time, Ms Langenbruch owned a property at Ocean Shores (near Bruswick Heads) and the Deceased owned the property at Myocum to which I have referred.

The Deceased and Ms Langenbruch became close friends. Ms Langenbruch said that she “started helping her out and driving her”. In 2012, she moved into the Deceased’s home at Myocum to care for her on a full time basis.

In 2013, Ms Langenbruch and the Deceased travelled to the United Kingdom. Ms Langenbruch said:

During 2013, the Deceased and Ms Langenbruch decided to purchase a house together.

Ms Langenbruch sold her Ocean Shores property and the Deceased sold her Myocum property.

Ms Langenbruch gave this evidence in cross-examination:

I have no hesitation in accepting Ms Langenbruch’s evidence.

It is clear that she showed great kindness to the Deceased in the last few years of her life, and was especially attentive to her needs during the months leading up to her death.

So far as concerns the Deceased’s decision to give Mr Benhayon money, Ms Langenbruch said:

Ms Catanzariti raised two further matters that she submitted went to the “character and conduct of the parties”.

The first was that, as I have said, the Deceased explained the scheme of her will to both Sarah and Seth and sought their assurance that they would not challenge it. Sarah gave her mother that assurance. Seth “just nodded” (see [43] above). Ms Langenbruch said that the Deceased’s “main concern” was that “her children would not accept her wishes”.

However, in re-examination, Sarah said that when she told the Deceased that she would not challenge her will, she did not know the size of the Deceased’s estate. Nor did she know of the gift the Deceased had made to Mr Benhayon of $800,000 or the money that the Deceased had used to purchase the Goonellabah property.

Ms Catanzariti also drew attention to the fact that, after the Deceased died, Sarah accessed the Deceased’s personal email account using the Deceased’s password. Sarah annexed to one of her affidavits emails and an extract from the Deceased’s diary that she obtained in this way. Sarah agreed that she had changed the password of the Deceased’s email account so that no one else could access the Deceased’s emails. Sarah also agreed that she was looking for material that she could use in these proceedings. I rejected that material on the basis that it was obtained (at the very least) improperly, for the purposes of s 138 of the Evidence Act 1995 (NSW).

Having drawn these matters to my attention in her final written submissions, Ms Catanzariti did not make submissions as to how they might be relevant to the decision I must make in these proceedings.

In my opinion, they could not be relevant to the question of whether adequate provision has been made for Sarah and Seth in the will. Were I to conclude that adequate provision has not been made, they may have some role to play in the question of what further provision should now be made (albeit not a significant role).

Section 59 of the Act provides that the Court may make, on the application of an “eligible person” (there is no dispute that Sarah and Seth are “eligible persons”), a family provision order in relation to the estate of a deceased person if the Court is satisfied that:

The section provides that, if the Court is so satisfied, then:

I consider that the test to be applied remains the two-stage test referred to in Singer v Berghouse (No 2) [1994] HCA 40; 181 CLR 201 at 208-209; namely, determining whether adequate provision has been made in the will for Sarah and Seth, and, if not, what provision should be made.

A different view as to the applicability of the two-stage test has been expressed by one member of the Court of Appeal (Basten JA in Andrew v Andrew [2012] NSWCA 308 at [29] and [41]). Differing views were expressed by other members of the Court in that case (see Allsop P at [6] and Barrett JA at [65], [79]-[81] and [94]).

In Nowak v Beska [2013] NSWSC 166 Hallen J said at [113]:

His Honour expressed the same view more recently in Ciric v Ciric [2015] NSWSC 313 at [86], and observed that that view was unaffected by the more recent decisions of the Court of Appeal in Phillips v James [2014] NSWCA 4; 85 NSWLR 619, Verzar v Verzar [2014] NSWCA 45 and Salmon v Osmond [2015] NSWCA 42. I agree.

The first stage of the two-stage test involves a question of fact, namely whether the Deceased has made adequate provision for Sarah’s and Seth’s proper maintenance, education and advancement in life.

The aim of the first stage is to assess whether the Court can make an order for provision. As Hallen AsJ (as his Honour then was) said in Lajcarova v Todorov [2011] NSWSC 522 at [79]:

The second stage, should it arise, involves an exercise of discretion. The Court must assess whether provision ought to be made in Sarah’s and Seth’s favour.

The object of the second stage is to assess whether the Court should make an order for provision. As Hallen AsJ said in Lajcarova v Todorov at [84]:

Although Hallen AsJ was then considering a claim under the former Family Provision Act 1982 (NSW), I see no reason to adopt a different approach under the Act.

It is clear that the determination of the second stage involves similar considerations to that of the first stage: Singer v Berghouse (No 2) at 209-210.

What is involved is “an evaluative determination of a discretionary nature, not susceptible of complete exposition” and one which is “inexact, non-scientific, not narrow or purely mathematical, and fact and circumstance specific” (Manuel v Lane [2013] NSWCA 61 at [9] per Emmett JA, with whom Meagher and Ward JJA agreed, speaking of the discretion to be exercised under s 20 the Property (Relationships) Act 1984 (NSW); which I see as involving, in this respect, the same notions as arise under the Act).

The guiding “principles” were summarised by Hallen AsJ in Gersbach v Blake [2011] NSWSC 368 at [94]-[96] as follows:

I may also have regard to the matters set forth in s 60(2) of the Act. Those most relevant to this case are those in s 60(2)(a) and (j), namely:

As Mr Morrissey pointed out, in October 2013, at a time when the Deceased had been diagnosed with a terminal illness, and when she had only nine months to live, she had assets in the order of $2.2 to $2.3 million.

Between October 2013 and May 2014, the Deceased made the payments to which I have referred in respect of the Goonellabah property, and in May 2014 she gave $800,000 to Mr Benhayon.

At around that time, she also provided $60,000 towards Seth’s legal fees, of which Seth has since received some $40,000.

Thus, at the time she died, the Deceased’s estate was in the order of $1.1 million.

In substance (taking into account the $60,000 provided for Seth shortly before she died), the Deceased has made provision for each of her children in the sum of $250,000 and has left the remainder to Mr Benhayon.

The question is whether the provision thus made for Sarah and Seth is, in all of the circumstances, adequate.

Both are in modest financial circumstances; Seth especially so.

Both are in rental accommodation and aspire to purchase property.

Both have someone dependent on them; Mr Williams in the case of Sarah, and Louis and Mei Mara in the case of Seth.

Both would doubtless benefit from greater provision than that which has been made for them by the Deceased in the will.

Neither was estranged from the Deceased, although it seems fair to say that both were a little mystified by the Deceased’s commitment to matters spiritual. On the dissolution of her marriage, the Deceased moved from Sydney to the far north coast, and thus saw less of her children.

As I have said, the Deceased appears to have carefully considered how she should dispose of her estate. She weighed up the competing considerations for her bounty. And as Ms Catanzariti emphasised in submissions, the Deceased has not left her children with nothing.

It is true that the Deceased has been very generous to Mr Benhayon and Ms Langenbruch.

But that fact must not divert attention from the fundamental question, which is whether adequate provision has been made for Sarah and Seth.

The Deceased told Sarah that she proposed to provide for Sarah and Seth to have a “sizeable” deposit for a property. She has done that. On any view, $250,000 is a “sizeable” deposit. On the other hand, both Sarah and Seth say that they need a deposit of $400,000. No doubt a larger deposit would help; neither Sarah nor Seth has a large income, and their capacity to borrow must be limited.

Minds might differ as to whether $250,000 each is, in all of the circumstances, adequate. But it appears to me to be within the range, albeit perhaps at the lower end of the range, of adequate provision.

Perhaps $300,000 each, or $350,000 each, or $400,000 each would be “fairer”. But, to adopt the words of White J in Friend v Brien [2014] NSWSC 613 (at [62] and [63]):

Were I to make an order of the kind sought by Sarah and Seth, then, taking into account costs, they would in effect receive the whole of the estate. That would set to nought the Deceased’s desire to benefit the entity with which Mr Benhayon is associated; a desire she expressed both by the gift she made to him very shortly before she died and the separate and additional provision she obviously intended to make in her will.

My conclusion is that Sarah and Seth have not shown that adequate provision was not made for them by the Deceased in her will.

Their claims should be dismissed.

I will hear the parties as to the precise orders that should now be made, and as to costs.