Margaret Prior v Tanya Lynne Kerrison

The late Brian John Moss (“Brian”) died on 19 November 2015. Probate of his will of 8 November 2011 was granted on 19 November 2015 to his executors, Ms Tanya Lynne Kerrison (“Tanya”), his daughter, and Mr Craig John Moss (“Craig”), his son.

The estate has a net value of approximately $1.2 million.

By the will Brian granted:

Paragraph 8 of the will contained the following:

Brian also signed a statutory declaration in which he explained his reasons for providing Marg with a life interest in Number 143, which I set out:

Marg seeks an order pursuant to s 59 of the Succession Act 2006 (NSW) “the Act”. Mr L. Ellison SC appears for Marg and Mr N. Bilinsky of counsel appears for Tanya and Craig. I set out the relevant portion of s 59 and also s 60(1) and s 60(2) of the Act:

A second claim on the estate was made by Mrs Lynette Helen Elstone (2017/81517), and heard together with Marg’s claim. Mrs Elstone was married to Brian for 16 years until 1985 and is the mother of Tanya and Craig. That claim was settled on the second day of the hearing and involved the executors paying $80,000 to Mrs Elstone in total.

I shall set out briefly the history of Brian and his relationships:

After the separation from Brian, Lynette moved, with Tanya and Craig, to a house in Broken Hill which she purchased. In 1991 she moved to Adelaide and subsequently married Darryl, to whom she is still married.

There were, in the affidavits relied on by the parties, a number of factual contests, many of which were treated as irrelevant in the conduct of the case before me. I set out below matters, additional to those already mentioned, which are not now in contest:

There is also contained in Number 143 personal and household contents said in the assets list in support of probate to have a value of $75,000, but are likely to be worth far less than that. Marg agrees that Number 143 is adequate accommodation for her needs: see T34.15 – T34.16.

Number 63 and Number 63A each have a rental earning of $130 per week. The ACT unit rents for $1,700 per month. Brookfield rents for approximately $1,400 per month.

In relation to the real estate, there is agreement on what the Brookfield premises and the ACT unit are worth, $175,000 and $440,000 respectively and Number 63 ($60,000), Number 63A ($60,000), but disagreement on the value of Number 143 and Number 145. One appraisal has Number 143 as $179,000, and another at $120,000. The probate application listed it as $125,000.

In relation to Number 145, it is listed in the probate application as worth $45,000, a figure of $120,000 comes from Tanya’s affidavit, and $15,000 come from a sales appraisal dated 17 February 2017: see Exhibit F. The latter document does not state as at what date the properties were viewed and the plaintiff’s evidence was that the estate agent had inspected them in late 2015: see T128.5 – T128.23. No evidence was given of how the document came into being in February 2017, what instructions were given in respect of it, and how an inspection in December 2015 was translated into an assessment as at February 2017. Tanya’s evidence of how she went on the internet to obtain figures for the two properties also raises concerns about the reliability of her $120,000 figure for Number 145. There is, however, in Tanya’s evidence, an appraisal by Core Logic RP Data valuing Number 143 at $179,168 as at 25 March 2017. There is an email from Mr Mitch Halpin, a real estate agent (at p 13 to the Executor’s affidavit of 31 July 2017) showing valuations for Number 143 at $170,000 and Number 145 as $70,000. The report explains how the valuations were arrived at. The $170,000 figure is very close to the Core Logic figure, giving me some confidence in Mr Halpin’s figures for both Number 143 and Number 145. Taking all matters into account, I shall proceed on the basis that Number 143 is worth $160,000 and Number 145 worth $50,000 (it has a carport and shed, but no house, which is the explanation for the significant difference in value).

Marg claims that she contributed work to the improvement of Number 143: see paragraph 6 of her affidavit of 21 April 2017. Her evidence is corroborated by Mr Kevin Frost’s evidence: see his affidavit of 6 May 2017, and I accept it.

Marg would like to continue to travel around Australia as she and Brian had done in the ten years before his death. She said if she did move to a retirement village later in her life she would like to move to one in Orange, where her children reside.

Marg’s assets, she says, are: a Holden Captiva ($26,000), household goods ($4,000), a bank account ($2,000) and jewellery ($2,000), being a total of $34,000. She now owns no real estate. She says that she spends approximately $1,300 per month on food and other items (see annexure B of her 9 November 2016 affidavit), which was not challenged.

I have referred to the retirement home issue. Marg’s evidence includes the costs of retirement homes in Orange (see: Exhibit A pp 29 – 70 and paragraph 10 of her affidavit of 31 March 2017) these range from $200,000 to $400,000 (maximum refundable deposit), but single rooms, unshared, are available for a 50% deposit, i.e. $200,000 with a daily payment of $31.50, and a larger room for $225,000 plus $35.51 per day or $498.50 per fortnight. In Broken Hill a single room with private ensuite is available for $270,000, or with a daily payment of $46.45 or a combination of both: see the last page of Exhibit 1.

Tanya says the relationship between Marg and Brian was strained and that Brian wanted to end it in 2009: see paragraph 16 of her affidavit. Marg agrees that there was a period in which she moved out of Number 143, but she says that separation was short-lived. Tanya gives evidence of negative comments made by Brian about Marg and their relationship, but the fact is they were together until his hospitalisation a few months before his death.

No submissions were made concerning the credit of the witnesses notwithstanding that there was a conflict of evidence between Marg, on the one hand, and Craig and Tanya, on the other. Cross examination of Craig was quite limited and I have no reason to doubt his honesty. Both Marg and Tanya were less impressive as witnesses – I found Marg’s evidence about her relationship with Mr Chandler and about the keys to the safe unreliable and Tanya’s evidence about her own financial position, impacted on her reliability.

In his affidavit Craig said that he had a conversation with Marg in June 2015 in which she asked him to tell Brian to give her the keys to the shed. Craig was aware that Brian kept the keys to his safe in that shed. Craig says that he had a conversation with Marg at the hospital in June 2015 in which she said she “got the shed keys from him while he was away with the fairies” and that he had another conversation with Brian and Marg in the hospital intensive care ward (see: paragraph 20 of Craig’s affidavit of 29 March 2017):

I find that these two conversations occurred and do not accept Marg’s evidence that she did not know what was in Brian’s will before he died. I also think the conversations explain that Marg obtained the key to the shed from Brian and was therefore able to find the keys to the safe, and that this occurred in or before June 2015 and not shortly before Brian dies, as she asserted in paragraph 20 of her affidavit of 21 April 2017. Tanya says that she observed Marg accessing the safe (see: paragraph 36 of Tanya’s affidavit of 29 March 2017), which Marg denied.

Neither of these factual matters, however, go to any remaining issue in the case because it was not contended in final submissions that Marg had removed money from the safe, and the fact that she knew what was in the will before Brian’s death and, on Craig’s version, tried to have Brian change his will, is irrelevant.

Tanya was married but is divorced from her husband, although they continue to live in the same house. The house is worth $400,000 but is encumbered by a $250,000 mortgage, and it is owned jointly by Tanya and her ex-husband. Tanya works part-time as a travel consultant earning $2,900 a month. It became apparent in cross-examination that her statement of monthly expenditure was somewhat inflated: see T112 – T113. Apart from the house, she has few other assets which are exceeded by her liabilities: see p 383 of Exhibit A. Tanya has a twelve year-old son and she would like to be able to buy a house worth $450,000. She says that she does not have the funds to embark upon Family Court proceedings to obtain a property settlement or, to force a sale of the jointly owned property.

Craig is divorced and lives alone, but has a daughter and step daughter from his former marriage. His daughter has children. He does not own his own house, but is in steady employment on a salary that was last financial year $121,000. He would like to buy a house which can accommodate his children on visits. His assets (including his super fund) exceed his liabilities by approximately $120,000 (see: pp 391 – 393 of Exhibit A).

Tanya and Craig have been acting as co-executors of the estate since December 2015. They have not sold any of the assets of the estate. Two of the properties of the estate, Number 143 and Number 63, suffered hail damage and Tanya, having received notification of the damage, has contacted the insurer of the properties and set out about ensuring that that damage is rectified. In relation to Number 143, Tanya embarked on this after notification from Marg.

There is, as is evidenced by the affidavit material, hostility and dislike between the defendants and Marg. Tanya has described Marg in very derogatory terms.

The defendants have, through their counsel, accepted that Marg is an eligible person for the purposes of s 59 of the Act and that the will does not make adequate provision for Marg because she could not use the property as security for a bond should she need do so, at some time in the future, to take up residence in a nursing home.

Mr Bilinsky proposed that there should be what has come to be known as a “Crisp order”. The name comes from Crisp v Burns Philp Trustee Company Ltd (Supreme Court (NSW), Holland J, 18 December 1979, unreported) and more recent examples of it can be seen in Johnson v Wright [2012] NSWSC 879 and O’Leary v O’Leary & Eccles [2010] NSWSC 1347. In Milillo v Konnecke [2009] NSWCA 109, Ipp JA, with whom MacFarlan JA and Sackville AJA concurred, said at [47] – [48]:

The Crisp order, it was offered, should be over Number 143 and over Number 63 and Number 63A, with the intent also that Marg would receive the rent from Number 63 and 63A during her lifetime (i.e. $260 per week on present rentals). In addition, the defendants offer a legacy of $50,000 (in lieu of the $15,000 for which the will provided).

The annual cost of outgoings on the property and insurance is $3,600.

Mr Ellison contends that a Crisp order is not appropriate. His primary contention is that Marg’s relationship of 30 years with Brian warrants a more extensive provision than a life estate in Number 143, even with the benefit of a Crisp order. He also contends that the poor relationship between the parties militates, in a practical sense, against such an order because not only is there acrimony, but in relation to the commercial properties over which the defendants are offering to include in the Crisp order, the defendants would have no real incentive to ensure that vacancies are filled promptly. Further, he contends that if Marg received $260 per week from Number 63 and 63A it will take her over the threshold for income, leading to loss of her pension. Mr Bilinsky accepted that the combined income of $260 per week could well do that, and hence indicated that the Crisp order could be limited to one of the two properties in Oxide Street.

Marg seeks the transfer of Number 143 and Number 145, the Nissan vehicle, the caravan, and an amount of $135,000. Number 145 is vacant, except for a large storage shed and carport, and is used as an additional outdoor living area, garaging cars, the caravan, a garden and to store wood and water tanks: see T133.5 – T133.9. The water tank provides additional water to Number 143. The Nissan is now worth $17,800, and the caravan $15,000 as at June 2016. The caravan, which was jointly owned by Brian and Tanya, passed to Tanya on his death. Marg’s evidence in relation to the Nissan is that she contributed half of the $33,000 purchase price for the Nissan (see paragraph 17 of Marg’s affidavit), being $16,500, and the defendants say she contributed only $3,500 (see paragraph 20 of Tanya’s affidavit and paragraph 15 of Craig’s affidavit). Neither competing assertion regarding the Nissan was challenged in cross-examination, nor established with documentary evidence. In light of the fact that Brian purchased a Holden Captiva for Marg, which remains in her name and which she values at $26,000 in her summary of assets and liabilities, this offsets any contribution by Marg to the purchase of the Nissan. Mr Ellison contends, however, that Marg needs the Nissan to tow the caravan. Since Marg will not receive the caravan she does not need the Nissan for that purpose, and even if she did I do not think that Brian was required to bequeath that to her.

The total value of the real estate, shares and cash, and less legal costs and the Elstone legacy, (using the same figures for Number 143 and Number 145 that I have used above) is $880,000. The total value of the claim that the plaintiff makes (using those same figures and excluding the Nissan and the caravan mentioned in the previous paragraph) is $345,000.

Mr Ellison submitted that Marg’s claim is not unreasonable or disproportionate for a de facto wife of 30 years. Mr Ellison quite properly placed emphasis on the fact that the Court is required to consider the needs of an eligible person at the time of the hearing.

There have been many iterations of the matters which the Court must take into account in deciding what provision ought be made for an applicant where the Court has determined (or, as here, where it has been conceded) that the will has not made adequate provision.

In Life v Hall [2016] NSWSC 316, Hallen J at [60] – [122] summarised the cases and principles applicable to ss 59 – 62 of the Succession Act. One matter, which his Honour touched upon in that summary, and on which Mr Bilinsky concentrated his attention, is the need for the Court to have due regard to the principle of testamentary freedom. Hallen J deals with this at [102] – [107] and reference should also be made to what was said in Alexander v Jansson [2010] NSWCA 176 at [20] per Brereton J (with whom Basten JA and Handley AJA agreed) citing Re Fulop (1987) 8 NSWLR 679 and Stewart v McDougall unreported (NSWSC Young J 19 November 1987) – i.e. that the Court should not seek to remake the will, but only alter it to the extent adequate provision is to be made for the eligible person and see Vigolo v Bostin (2005) 221 CLR 191 at [13] – [25] per Gleeson CJ, and Callinan and Heydon JJ at [113] – [121]. Reference should also be made to what was said by White J, as his Honour then was, in Slack v Rogan [2013] NSWSC 522 at [127].

I am very mindful of the fact that Brian did not want to extend the scope of his bounty to Marg beyond a life interest in Number 143 and a very small legacy. Although Marg does not accept all of the factual assertions made by Brian in his statutory declaration (see: paragraph 13 of Marg’s affidavit), most of the matters there recorded are not in dispute. Those that are in dispute have not been established by independent evidence to be incorrect and I am persuaded that the information he was proceeding upon was materially correct. The Court is required to bear in mind and respect the wishes of a testator, see Salmon v Osmond [2015] NSWCA 42 at [72] per Beazley P, with whom McColl JA and Gleeson JA agreed, but the Court is also required to consider the matters laid down in the Act and determine the matter in accordance with its requirements. Once it is accepted that the provision that he made in the will was inadequate, the options for an alternative provision are limited, although the Act does permit the Court to require provision to be made in “any manner the Court thinks fit”: see s 65(2)(f) of the Act. I need to take into account that Marg was a de facto spouse of thirty years with, at the time of the hearing, very little in the way of assets. I also take into account, however, that the relationship with Marg was one of a separation of financial interests and unlike the more common arrangements typical of married couples, no doubt a reflection of the fact that when they started their relationship they had both been married before, and Marg had their own children. I also must have regard to the small size of the estate and the competing claims of Tanya and Craig: Foley v Ellis [2008] NSWCA 288 at [88] and Chan v Chan [2016] NSWCA 222 at [22] per Basten JA.

I shall comment on each of the matters to which the Court may have regard in s 60(2):

Whilst I regard a Crisp order over Number 143 as an approach which would come closest to reflecting the wishes of Brian, it has three specific drawbacks. The first is that it will require the plaintiff to be a tenant of the property for a very long period, with the defendants having responsibility for the upkeep of the premises and payment of rates and insurance over that period whilst the plaintiff resides in it in circumstances where there is undoubted hostility between the plaintiff and the defendants. Secondly, it will not provide funds to pay the rates and insurance or maintenance, all of which are presently required by the will to be paid by Marg. Thirdly, it does not provide the plaintiff with enough money to obtain alternative accommodation in a nursing home or retirement village.

Taking all matters into account and recognising that there are problems with any of the limited alternatives, I have come to the view that the appropriate outcome is:

The provisions set out in [41], in lieu of the entitlement in the will, do not provide for the benefit to the plaintiff to only continue for so long as the plaintiff does not remarry or commence a new de facto relationship. Nothing was said about that condition contained in the will in submissions, and I understood that it was not sought to be imposed through the Crisp orders proposed by the defendants.

The benefits thus to be provided to the plaintiff are:

I understood that there was agreement that the costs of these proceedings of both the plaintiff and defendants, on an indemnity basis, are to be paid out of the estate.

I will hear the parties on precise form of orders that will reflect the provisions set out in [41]. If the parties are mutually agreed upon any different formulation of the provisions that will better suit their clients collectively, I am prepared to give consideration to that alternative formulation.