Christina Elizabeth Hay v Sarah Renwick

1. [1]

   HIS HONOUR: The deceased Charles Athol Parker Adams died on 13 January 2015 aged 48 years. Probate of his informal will dated 17 January 2010 was granted to the defendants – his sister Sarah Renwick and his uncle Robert Maidment – on 17 August 2015. By that will, he left his estate of approximately $2.4 million to his sister Sarah, save for legacies to two nephews, Sarah's children, and made no provision for the plaintiff Christina Elizabeth Hay who, by the date of his death, had been his de facto spouse for a period that was approaching three years. By summons filed on 18 May 2015, the plaintiff claims an order for provision out of the Estate. I will, from time to time, refer to the protagonists by their first names, not intending any disrespect but for convenience and clarity.

Background

1. [2]

   The deceased was born on 23 September 1966. Between about 1989 and 2009, he was in a de facto relationship with Jennifer Bracken, of which there were no children. His father Harold John Parker Adams died in 2007, and the deceased inherited from his estate a share portfolio, shares in a company which owned a property in Paddington, and a half interest with his sister Sarah in a farming property at Tuggeranong in the Australian Capital Territory.

2. [3]

   On 22 July 2008, the deceased purchased a home at 58 Epping Road, Double Bay for $1,775,000, subject to a mortgage. He met the plaintiff on or about 6 December 2009 and a romantic relationship soon developed. She was then aged 41 and he 43. He was living in his Double Bay home, a small two bedroom property. She lived in an even smaller one bedroom house behind her shop at Mascot.

3. [4]

   On 17 January 2010, the deceased made his informal will, which was witnessed by the plaintiff as he was about to depart overseas for a skiing holiday. The relationship continued after his return. In April 2012, the plaintiff leased out her Mascot house, retaining the florist shop at the front for her business, and, at the deceased's invitation, commenced to cohabit with him in his Double Bay home. They continued to cohabit there until his death.

4. [5]

   Later that year, and continuing through 2013 and into 2014, the plaintiff and the deceased made extensive but ultimately unsuccessful attempts to conceive, including undergoing in-vitro fertilisation. In the course of this, Christina had an ectopic pregnancy and underwent numerous IVF procedures, including two trips to the Republic of South Africa with the deceased for that purpose.

5. [6]

   Also in 2013 and into 2014, Christina and the deceased investigated the purchase of a country pub, and visited a number of hotels in regional New South Wales. With the intention of acquiring and operating a country pub, the deceased and Christina proceeded to liquidate their assets. In June 2014, the deceased and Sarah sold the family farm at Tuggeranong; from this sale, the deceased received approximately $1 million which he applied in part to discharge the mortgage over his Double Bay home, which then secured about $587,000. Thereafter, he sold the Double Bay home for $2,110,000, but he and Christina remained in occupation under a licence-back from the purchaser. In October 2014, Christina sold her Mascot house for $897,000, netting about $530,000 after discharge of the mortgage; and in November 2014, an offer was made of $3,850,000 to purchase the Tumbulgum Hotel in the Northern Rivers region. In December 2014, Christina also sold her floristry business (to two employees of that business) for $20,000, and entered into a covenant in restraint of trade not to operate such a business within a 25 kilometre radius for a period of three years. She did so contemplating that it would not affect her, because she would be many miles away in Tumbulgum.

6. [7]

   Not long before Christmas 2014, the deceased contacted his solicitor Mr Mark Peoples, and informed his solicitor that he intended to make a new will; but before he could do so he died suddenly, unexpectedly and tragically of a heart attack on 13 January 2015.

7. [8]

   There is no real dispute as to the nature and value of the deceased's distributable estate as set out in the affidavit of the second defendant Robert Maidment of 4 April 2016, subject to one addition. The gross estate is now about $2,484,000, when one adds into that affidavit $50,000 for furniture which was inadvertently omitted. The liabilities are in the order of $80,000, and the net distributable estate is about $2.4 million. It is largely in liquid form, and represents the proceeds of sale of the Double Bay property. For the most part it was originally sourced in the deceased's inheritance from his father, although it includes an element of capital gain on the Double Bay property

Family provision

1. [9]

   Applications such as these for provision out of the estate of a deceased person have been described by the High Court of Australia, in the context of the former (NSW) Family Provision Act 1982, in Singer v Berghouse (No 2) (1994) 181 CLR 201 as involving a two stage approach. The first requires the determination of the jurisdictional fact, whether the applicant has been left without adequate provision for his or her proper maintenance, education, and advancement in life; and the second, which arises only if the first is resolved affirmatively, involves the discretionary assessment of what provision ought to be made out of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process:

2. [10]

   Although there have been suggestions that subtle changes in the language now used in (NSW) Succession Act 2006, s 59, may have affected this, [1] the prevalent view is that there is no change to the conventional two-stage approach [see Estate of the late Anthony Marras [2014] NSWSC 95 at [15], Bergin CJ in Eq]. That said, because the considerations relevant to both stages overlap, consideration of a family provision application does not always divide neatly into the two questions, as Callinan and Heydon JJ pointed out in Vigolo v Bostin [2005] CLR 191 (at 192). Nonetheless, in such an application, the Court must consider first, whether the plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education, and advancement in life; and thirdly, if so, what, if any, further provision ought to be made out of the estate for those purposes.

Eligibility

1. [11]

   In the present case, the plaintiff – being a de facto spouse of the deceased at the date of his death – is plainly an eligible person. As a de facto spouse, she does not have to demonstrate “factors warranting” the making of her application. Her application was made within time.

Adequate provision

1. [12]

   It was conceded that the plaintiff had been left without adequate provision for her proper maintenance, education, and advancement in life, so that the only remaining question is what, if any, provision or further provision ought to be made out of the estate for her.

2. [13]

   The relevant principles and considerations were summarised by McLelland, J (as he then was) in Re Fulop Deceased (1987) 8 NSWLR 679 as follows:

3. [14]

   The defendants’ submissions cited numerous cases for the proposition that a relatively restrictive approach should be taken to the family provision jurisdiction – an approach that focused on meeting the needs of an eligible person, and for that matter doing so adequately only. However, the jurisdiction is not limited in that way.

4. [15]

   First, the jurisdiction is not exclusively needs-based. Both the relevant considerations listed in the section which describes them in the Succession Act, and authorities such as the passages in Singer v Berghouse and Re Fulop Deceased to which I have referred, show that there are many other considerations – including, but not limited to, contribution-based considerations, as well as needs. The jurisdiction is not an exclusively needs-based one.

5. [16]

   Secondly, the provision that the Court may make is not limited to merely “adequate” provision, but to adequate provision for proper maintenance, education, and advancement in life. As McLelland J explained in the passage that I have cited, the expression "proper" in that context connotes a standard that is appropriate to all the circumstances in the case.

6. [17]

   Thirdly, the provision that can be made is not limited to maintenance, but extends to advancement which envisages not merely maintaining the standard or status of an eligible person, but in an appropriate case, improving and enhancing it.

7. [18]

   One of the cases to which reference was made in support of a restrictive approach was the judgment of Bryson J (as his Honour then was) in Gorton v Parks (1989) 17 NSWLR 1. It is true that in that case his Honour observed (at [5] to [6]) that orders made under the then Family Provision Act would detract from the testator's freedom to dispose of his property as he wished and from beneficiaries’ rights under the will, and so could only be made in accordance with the terms of the Act, applied according to well established principles "which limit the provision which can be made by reference to the moral duty of the testator, and the needs of the person applying". His Honour continued:

8. [19]

   However, what follows in that judgment demonstrates that insofar as his Honour referred to “provision which meets needs”, no narrow view of what is encompassed by that concept is to be adopted. Essentially, his Honour found the narrow approach – once explained by Dixon CJ, in Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 – of little assistance in the present day and age. Expressing scepticism at the view of Dixon CJ that a public servant aged 50 who had attained the position of Section Leader in a branch of the Department of Customs earning £2,200 per year in 1961, with two children aged 16 still at school and owning a home a home subject to a mortgage, could not be said to be in need, his Honour said: “It seems to me a very strange view of the facts, expressing a concept of need which I would not share, and which must have been indifferent to any consideration of relativity of need to available resources”.

9. [20]

   Bryson J preferred the approach of Taylor J, in dissent in Scales, as follows:

10. [21]

    Bryson J continued:

11. [22]

    Bryson J illustrated the point by reference to the judgment of Fullagar and Menzies JJ in Blore v Lang (1960) 104 CLR 124 who said (at 135):

12. [23]

    Reference was also made to the judgment of Young J (as he then was) in Stewart v McDougall (NSWSC, 19 November 1998, unreported), in explaining that the Court's role was limited to making adequate provision for an eligible person's proper maintenance and advancement. In a passage which I have often referred to in family provision cases, his Honour said:

13. [24]

    As it has often been, that may all be accepted. It does not say that in deciding what is adequate provision for the proper maintenance and advancement of an eligible person, the Court is constrained to limit itself to barely adequate maintenance. Rather, in McLelland J’s words, the cases make clear that attention must be directed to "a standard appropriate to all the circumstances in the case".

14. [25]

    The plaintiff Christina was born on 28 February 1968, and is now 48 years of age. She too has had at least one earlier de facto relationship, but no children or other dependants. So far as the evidence discloses, her health is satisfactory. She was the proprietor of a floristry business, but as I have mentioned has sold it and entered into a restraint of trade. From that business, in FY2012/13, she earned a net income of about $27,000 and she also received $7,500 net in rent from the Mascot premises, giving her a taxable income for the 2013 year of a mere $35,000. Since the sale of the floristry business, she has retained the benefit of one floristry contract, from which she earns about $3,000 gross per month. She has gained casual employment with a florist in Double Bay for about 15 hours per week, from which she earns about $450 per week before tax.

15. [26]

    Following the death of the deceased, she at first leased a ground floor apartment at Randwick, which she occupied until December 2015. Since then she has occupied a room in an apartment owned by a friend of the deceased, for which she pays $250 per week. Her assets are almost entirely in liquid form and amount to slightly over $480,000, and she has a credit card liability of about $5,000, leaving net assets of approximately $475,000.

16. [27]

    It is indisputable and undisputed that she had a close and loving relationship with the deceased. The quality of that relationship and her commitment to it is demonstrated by the course of in-vitro fertilisation that was undertaken; by their shared plans to liquidate their assets, move to regional New South Wales and operate a country pub as the deceased desired: and her ongoing aspiration to bear a child to the deceased from material harvested in the course of the in-vitro fertilisation procedures.

17. [28]

    Christina wants to live in a house with some scope for a small garden and a shed, from which in due course she might be able to re-establish, on a small scale, a floristry business or at least perform some floristry work. She does not want to live in an apartment. She wants to remain in the Eastern Suburbs, near where she lived with the deceased – preferably in the vicinity of Woollahra, Double Bay and Paddington, at the northern end of the Eastern Suburbs. So far as the evidence discloses, there is no one else to support her, and no one else on whom she has a moral claim.

18. [29]

    As I have said, she was the deceased's de facto spouse at the date of his death and, in that capacity, is plainly an eligible person. The defendants rightly conceded that the deceased did not make adequate provision for her in his will. The will miscarried as an exercise of his testamentary discretion – not at the time that it was made (when it was a perfectly logical and appropriate will), but retrospectively, by reason of the subsequent change in circumstances brought by the development of a permanent and close relationship with the plaintiff.

What order should be made?

1. [30]

   The only question for the Court is what order should be made. The estate amounts to about $2.4 million net. No-one suggests that the legacies to Sarah's children should be disturbed.

2. [31]

   Sarah is not herself an eligible person. That does not mean that any moral claim that she might have on the deceased is not to be taken into account. To the contrary, she starts from a position of strength in that she is a named beneficiary. However, she does not advance any circumstances of need as a basis for diminishing the order that would otherwise be appropriate in favour of the plaintiff. She points to the origins of the deceased's assets in their father's estate, but that is of very slight significance in the present circumstances. Ultimately, there is no competing claim which would diminish what would otherwise be proper provision in favour of the plaintiff.

3. [32]

   As I have said, the plaintiff had a close and loving relationship with the deceased, albeit a relatively short one, and one in which they were plainly committed to a shared future. Importantly, by the time of his death, she was dependent on him for accommodation, and to a substantial extent also for financial and material support, for most of which he paid. Also of great importance is that Christina had made significant changes in her position in reliance upon the relationship. Those include the sale of her Mascot home, the sale of her business, and the entry into a restraint of trade which would prevent her from plying her business within 25 kilometres of Mascot and thus compromised her earning capacity and her borrowing capacity. She moved from a position in which she was independent, to a position in which she was dependent.

4. [33]

   Thus, though the relationship was a relatively short one, and insofar as it was a de facto relationship had not reached three years at the date of death, it was continuing at that date, and it was contemplated by both of them that it was a permanent relationship. Christina had liquidated her assets and her position, and sacrificed her earning capacity, to throw in her lot with the deceased to follow his dream to the country.

Moral obligation of a testator

1. [34]

   The moral obligation of a testator to a spouse or a spouse-equivalent has been adverted to in many cases. In Luciano v Rosenblum [1985] 2 NSWLR 65, Powell J (as his Honour then was) said (at 69 to 70):

2. [35]

   Subsequently, in Elliott v Elliott (NSWSC, 18 May 1984, unreported) the same judge said, in a judgment that was affirmed by the Court of Appeal on 24 April 1986, and endorsed by Young J in Court v Hunt (NSWSC, 29 October 1987, unreported):

3. [36]

   Not all the conditions referred to in that passage are present in this case because his Honour spoke of a long marriage, and one in which the widow had assisted the deceased to build up and maintain his estate; but the general principles are not confined to such cases. There was no such limitation in the passage which I have cited from Luciano v Rosenblum; but of more guidance and higher authority is the judgment of the Court of Appeal in Golosky v Golosky [1993] NSWCA 111 (5 October 1993). That was a case in which the deceased had twice previously been married. Of the first marriage, the deceased had children and a number of grandchildren. The widow plaintiff was younger than the deceased's children. At his request, she moved from the United States to Australia, and sold her apartment in the United States. The relationship in all was of 30 weeks duration, and the marriage of 12 weeks before the deceased's sudden death. The deceased left her a right of occupation of the former matrimonial home on the Northern Beaches, and a legacy of $150,000, from a total estate of $750,000 which had been diminished by dispositions to his children prior to his death by a further $750,000. Master Gressier found that the provision made for the widow was inadequate for her proper maintenance, and instead ordered that she receive the North Curl Curl property absolutely.

4. [37]

   In the appeal, the executors challenged both the jurisdictional finding that there was inadequate provision, and the discretionary order as to the additional provision. The leading judgment was delivered by Kirby P (as he then was), who referred to principles which governed the approach to a widow’s application under the Act, while stressing that consideration of other cases must be undertaken with circumspection, and that the answer to proper application of the Act was to be discovered in the detail, so that no hard and fast rules could be adopted:

5. [38]

   Having observed that the potential for competing claims and other circumstances meant that there could be no inflexible rule that every spouse or widow was entitled as of right and to accommodation for life in every case, his Honour continued, in a passage which bears many analogies to the present case:

6. [39]

   Accordingly, the fundamental challenge on the jurisdictional ground was rejected. However, the appeal succeeded in overturning award of the family home absolutely, and substituted an enlarged legacy of $300,000, which was judged sufficient to enable the widow either to acquire an apartment on the Northern Beaches, or to return to the United States. It is important to observe that in that case, there were powerful competing moral obligations to the testator’s children and grandchildren.

7. [40]

   Turning to the present case, the relationship was not in relative terms a lengthy one, but it was continuing, and it had involved a significant change of position by the plaintiff, and significant reliance on the relationship. As was submitted for the plaintiff, were the rules of intestacy to apply, as a de facto spouse of more than two years, and in the absence of any children, she would have inherited the whole of the deceased's estate.

8. [41]

   The testamentary intentions of the deceased, as expressed in the 2010 will, have limited significance because of the supervening change of circumstances, reinforced by the deceased's own statement to his solicitor of his intention to change his will. When the 2010 will was made, the deceased’s sister Sarah was the obvious primary object of his testamentary bounty: he had no spouse and no children, and she was the closest person in the world to him at that time. But the developments of the next four years wrought a radical change to that. When he assumed the obligations of a marriage-like relationship – intended by him and relied upon by the plaintiff as permanent – the plaintiff became the closest person in the world to him, and would be regarded as the proper primary object of his testamentary obligations.

9. [42]

   There is also no competing claim of relevance. Unlike in Golosky v Golosky, where there were strong competing claims which made it necessary to balance the provision for the widow with obligations to children and grandchildren, there is no such competition in this case, and there is therefore no need to compromise the provision to be made in favour of the plaintiff on that account.

10. [43]

    In my view, the community would plainly view the plaintiff as the proper primary object of the deceased’s testamentary bounty. A not insignificant portion of the community would take the view that she had a strong claim to practically the whole of his estate. At the very least, community standards are that there is no reason why she should have to suffer any reduction in her lifestyle on account of the premature death of her spouse. If the mutual intention of an enduring permanent relationship of mutual commitment, support and affection (in which the deceased would necessarily have made, given their respective financial positions, the dominant financial contribution to the acquisition of future accommodation and to the provision of financial support), was set to be asunder by his premature death, so as to deprive her of the benefits of the relationship upon which she had relied, then in the absence of any significant competing claim, the moral obligation of the deceased was at the very least to ensure that she was able to continue to enjoy the lifestyle to which she had been accustomed during the relationship.

11. [44]

    The yardstick of that is accommodation in a home broadly equivalent to that in which they had cohabited, suited to accommodate the plaintiff and her dog and the deceased's dog, and allowing her the ability to change that accommodation if she pleases, together with a fund for contingencies and a sufficient income to cover her reasonable needs.

12. [45]

    The extent of the deceased's obligation is reduced to some extent by the circumstance that Christina already has a fund of close to $500,000, but she only has a very modest earning capacity. The highest the evidence demonstrates is that she earned $35,000 in 2013, from a business she no longer owns and rents from a property she no longer owns.

13. [46]

    I do not accept that, having entered into a covenant in restraint of trade, it can lightly be suggested that she should ignore it for the next two years. There is a possibility – I put it no higher – that she may get away with ignoring it, or that a court might decline to enforce it; but having undertaken for valuable consideration a solemn contractual obligation, the Court should not expect her to repudiate it. Insofar as it was suggested that she was free to re-establish business outside the area of the restraint, this tends to overlook that a 25 kilometre radius from Mascot extends in the east well out to sea, in the north to the upper North Shore, in the west well beyond Parramatta, and in the south beyond Sutherland. It might be suggested that she could set up business in Hornsby or Blacktown or Penrith or Campbelltown, but that is – given her residence and connections – not a reasonable proposition.

14. [47]

    A reasonable yardstick for a proper provision for accommodation is a broadly equivalent home to the Double Bay home, unencumbered. The Double Bay home was sold for $2,110,000, although it appears that, to some extent, development potential might have contributed to that price. It was a small home of two bedrooms and one bathroom, with an open plan kitchen, dining and living area. The internal buildings were about 95 square metres, and had a deck, a patch of grass and a garage.

15. [48]

    Both parties adduced extensive evidence of the cost of acquisition of comparable accommodation. The plaintiff's evidence included many three bedroom houses, albeit in somewhat less expensive locations than Double Bay. As it seems to me, three bedrooms involves a higher standard than that to which the plaintiff had become accustomed during the relationship with the deceased, and I have excluded them from my consideration. The plaintiff's evidence identified 13 two bedroom homes in Bondi, Waverley, Surry Hills, Alexandria and Mascot, ranging in price from $1.2 million to $1.6 million. The costs of acquisition, being stamp duty and legal costs of a property in that range, is in the order of $100,000.

16. [49]

    The defendant's evidence, on the other hand, comprised apartments, many of them located in high density housing on arterial roads at elevated levels, hardly suitable for the accommodation of two canines. Moreover, the plaintiff has never lived in an apartment and does not want to live in an apartment. She did not do so with the defendant and in my view, her desire not to do so is a perfectly reasonable one in the circumstances. Her express wishes in that respect are entirely reasonable, and a wise and just testator in the position of the deceased would have enabled her to be able to fulfil those wishes. A couple of properties proposed by the defendants were not inappropriate, but they still involved apartment living and the associated burdens of living under the governance of a body corporate and not being the sole owner of property to which one resorts. The defendant's evidence also included a 2010 sale at $530,000, which I find of little use in ascertaining an applicable price range in 2016.

17. [50]

    In my view, bearing in mind that all of this is only a guide to what is proper provision, it seems to me that proper provision for the plaintiff would be a legacy of $1.5 million. That will acquire her suitable accommodation, unencumbered. Her own resources provide a fund of $475,000 for contingencies and to generate income. Moreover, $1.5 million, as 60 per cent of the estate of $2.4 million, reflects appropriately the standing of the plaintiff as the proper primary object of the deceased’s testamentary obligations.

Orders

1. [51]

   The Court orders that:

   1. (1)

      By way of provision out of the estate of the deceased, the plaintiff receive a legacy of $1.5 million, such legacy not to bear interest if paid within 28 days but otherwise to bear interest at the rate prescribed under the Probate and Administration Act 1898, s 84A, for unpaid legacies from the date of this order to the extent it remains unpaid; and

   2. (2)

      The plaintiff’s costs on the party/party basis until 30 October 2015, and thereafter on the indemnity basis, and the defendant's costs on the indemnity basis, be paid out of the estate.