Kroegel v Frazer [2001] NSWSC 873

New South Wales Supreme Court

CITATION : Kroegel v Frazer [2001] NSWSC 873 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3401 of 2001 HEARING DATE(S) : 12 and 13 July 2001 JUDGMENT DATE : 13 July 2001

PARTIES : Elizabeth Kroegel & Ors v Gregory William Frazer JUDGMENT OF : Master Macready at 1

COUNSEL : J. Conners for plaintiff Mr L. Ellison for defendant SOLICITORS : Fitzgerald White Talbot for plaintiff Eric Butler for the defendant CATCHWORDS : Fa,mily Provision. - Small estate left to neighbour. - No evidence of widow's needs. - Order for provision made. - No matter of principle. DECISION : Paragraph 34

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1 MASTER: This is an application under the Family Provision Act in respect of the estate of late Karl George Kroegel who died between 17 and 18 July 1999 aged 71 years. The deceased was survived by his wife and four children. By his will dated 24 July 1998 he left all his estate to the defendant and appointed him executor. The defendant was a neighbour of the deceased and had extended help to him in the last few years of the deceased's life. 2 There are very few assets in the estate. In substance the main asset is a half share in the property Lot 14 Mill Lane, Quorrobolong, near Cessnock. The property has an agreed value of $262,000 and after allowing for the cost of sale, one half share would be worth $127,500. The other half share is owned by the deceased's widow. There is some cash available from rent of $1,320. There is farm equipment worth about $3,000 and some stock worth $2,500. 3 There are funeral and other small debts outstanding, slightly in excess of $3,000. 4 The costs of this application, if the plaintiff is successful, will have to come out of the estate. The plaintiff's costs to date are in the order of some $20,000 and those of the defendant are $25,000. This effectively means that the property will have to be sold. There is no suggestion by the widow that she wishes to go back and live there, and from a practical point of view that is the only alternative. There is thus a fund of somewhere around about $80,000 available for distribution. 5 It is useful to deal with some of the history of the matter. The first plaintiff, the deceased's wife, was born on 18 May 1929. She and the deceased married in 1953; they were living in Germany at the time. The son Siegbert was born on 11 October 1960. In 1965 the deceased and the first plaintiff came to Australia. The child Sylvia Robinson was born on 17 July 1965, and Michael was born on 2 March 1967. 6 The family lived in Sydney for many years and the property, which is now in the estate and held by the widow, was purchased in 1971. At that stage the deceased and his wife worked and bought it as joint tenants. A house was built in 1978 and the first plaintiff worked on the farm full time while the deceased himself still worked in Sydney. He would come up to the farm on the weekends. 7 In 1982 the deceased was badly injured in a car crash. He spent a year in hospital and he eventually got over that accident, although he still always had trouble with his back and in doing heavy work. He came back to the farm and by 1984 he had once again started drinking to excess. It is apparent from the evidence that the deceased was a heavy drinker, and this affected him and ultimately affected the relationships with his children and his wife. He was living full time on the farm from 1985. 8 In December 1985 his wife left him because of his drinking and violence, but returned a few days later. It was in late 1986 that it once again became too much for her. She had to leave, and went to live with her daughter in Singleton. She obtained some advice at that stage, and apparently as a result of that advice, because she was concerned about the ownership of the property being held as joint tenants, she arranged for solicitors to severe the joint tenancy. As a result, of course it is now held as tenants in common. 9 The will with which we are concerned was made on 24 July 1998 and that left it all to the defendant. The testator died. He was found in a paddock and died somewhere between 17 and 18 July. 10 In applications under the Family Provision Act the High Court has recently, in Singer v Berghouse (1994) 181CLR 201 set out the two-stage approach the court must take. At page 209 it said the following: "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 with 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.

The determination of the second stage, should it arise, involves similar consideration. 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".

11 As directed by the High Court, I turn to consider the various positions of the plaintiffs. The deceased's widow is 71 years of age. Her only asset is her half interest in the property, which will probably bring her about $127,500. She presently has cash of $1,408 and she lives in hostel accommodation. She has a pension of some $377.40, and that is substantially taken up, about $316 of it going towards the hostel. There do not seem to be any other expenses that she incurs; certainly the evidence is silent as to that. 12 It is clear of course that the widow helped the deceased build up the assets in the estate as at the date of death. She was with the deceased working alongside him, raising the family and helping on the farm while she was there. 13 The breaching of the relationship in 1996 clearly on the preponderance of the evidence was due to the problems that the deceased had with alcohol, which made him somewhat violent, and I frankly do not think that it was any fault of the widow that she had to leave. Notwithstanding the fact that she left in 1996, they still had forty two years together as a married couple - quite a long time. 14 The plaintiff Sylvia Robinson has a child; she is thirty four years of age. She has recently been widowed and she has a fifteen year old daughter who is still dependent upon her. She basically has no assets at all. She lives in rented accommodation and she works as a nurses' assistant at the hostel which accommodates her mother. She was fortunate in that she was given some provision by the deceased during her lifetime. That apparently was a house at Richmond Road, Kitchener, which was bought in her name in 1985 for $30,000. She says that she lived in it and paid rent for the house to the end of 1989, when she moved to Singleton. Apparently the house was then sold. $15,000 was paid off a car loan and the balance was used to purchase a home unit. That home unit was financed, and as a result of her husband losing his job she fell behind, the home unit was repossessed and she ultimately herself went bankrupt. Accordingly, all the provision that she received from the deceased has been lost. 15 She gave evidence of threats that the deceased himself made to her, which made her extremely reluctant to go to the property, except when he was in hospital, and once again I think that what break down there was at the end of the deceased's life was not due to her fault. 16 Siegbert Kroegel is a son who is thirty nine and married with four children; they range in ages up from 7 to 14. Compared to his brothers and sisters, he is well off. He has a house worth $150,000, he has a car which is worth several thousand dollars, and he has debts of about $10,000. There was some suggestion that he had a house provided to him by the deceased, but his affidavit evidence is to the effect that he bought the home from the deceased. He had a reasonable relationship with the deceased. He lived with the deceased for quite a while at Canley Vale but it seems as though he had little to do with him at the end of the deceased's life. 17 Michael is the youngest child. He is thirty three, single, and he has now dependents. He owns a Toyota Hilux and rents his accommodation. He owes about $3,000 in debts. He says that he is a supervisor at Pioneer Roof Tiles. Although he has lived in Queensland, he certainly spent time visiting his father and he, like the other children, also lived on the farm from time to time, or at least visited. 18 It is also of course necessary for the court to consider the situation of others who have a claim on the bounty of the deceased. In this case the only person is the defendant, who received the whole of the estate under the will of the deceased. He is currently forty years of age and living in a de facto relationship. His partner has two young children and she is expecting another child in a few weeks. 19 The property that the defendant owns consists of a farm which is next door to the deceased's property, which is valued at $120,000. He has an investment property in a nearby town, worth $52,000; a car, a horse float worth between $1500 and $1800; a trailer, a boat and some other personal possessions. He has a few horses. 20 However, he has fairly substantial liabilities because he has borrowed to make his real estate purchases. His total debts are in the order of about $114,000. The defendant is a policeman, whose net income is about $41,803 per annum. His wife now is not earning, because of the impending birth of the child, although she receives some maintenance from the father of her other two children. 21 The relationship between the defendant and the deceased initially was that of country neighbours. As frequently happens in the country, they would assist each other with various tasks about their respective farms, whether it would be managing cattle, dealing with fences, slashing and other matters of that nature. However, it is apparent that for the last few years, particularly after the widow left the deceased in 1996, the defendant did a lot more for the deceased. In effect, he was probably one of his closest neighbours. There is no doubt that some other neighbours did things for the deceased, such as washing his clothes and things like that, but it seems that the deceased organised Meals on Wheels, showed him how to cook his food, and would take him in to town when he needed to go in to get his pension. 22 The defendant even got to the stage of starting to manage his finances because the deceased simply lost track of things. However, there was more and more difficulty as the years went on. He organised some aged care and would also take Karl out to various things like cattle sales, and other matters. He used to help around the house and fix things for the deceased, and also on occasions he took him to the doctors in town. 23 In 1998 the deceased's house caught fire. Apparently the deceased let the insurance lapse, and he was faced with no prospect of rebuilding it. The defendant, however, took the initiative and spoke to the NRMA and convinced the NRMA that, provided the arrears of premiums were met, they should rebuild the property. The defendant paid the arrears, which was ultimately paid back by the giving of some cattle, but as a result of his endeavours there was a rebuilding of the house, which has obviously been to the advantage of the estate and has probably led to the property holding its value. 24 It is important that the parties realise that all that can be done in this case is to make orders where the plaintiffs establish that they have been left without adequate and proper provision for their maintenance, education or advancement in life. It is therefore necessary to consider what has been said by the plaintiffs about how they have been left without adequate provision. 25 When I look at the evidence in this case I am reminded of what was said by Sheller JA in the Court of Appeal in Singer v Berghouse of 23 July 1992. There his Honour had the following to say:

"I must say that I find it extraordinary that the appellant presented scant or no evidence as to her present income and outgoings or as to her intentions or needs for the future or as to what lump sum provision applying appropriate discount tables would be required to meet these claims or needs, if they existed. In my opinion, in the circumstances of this case, for the court, in the absence of any such evidence, to make an order for the payment to the appellant of a lump sum is to do no more than act on speculation and, contrary to the prohibition contained in s9(2) of the Act, to alter the deceased's disposition of his property in the absence of proof that he has inadequately provided for the appellant."

26 In the present case this is particularly of concern in respect of the widow of the deceased. Widows' claims are frequently the subject of applications in this court. The Court of Appeal in Goloski v Goloski has referred to formulation of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSW 65 and Elliott v Elliott, which was approved by the Court of Appeal on 24 April 1986. There his Honour said: "Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring".

27 The widow was in the witness box and she was asked what she would do with the $120,000 when she received it from the sale of the property. She said she had nothing she wanted to do with it, and ultimately agreed that she would probably just give it away to her children. She is an elderly lady, and it is apparent that she is being cared for in the hostel and does not have any needs. There was absolutely no evidence before me about the future care that she might have to have, how that would be provided and whether it would be available to her through the public system. In the absence of evidence I can only conclude that she is appropriately provided for. The only thing that she wishes is some personal items which may or may not exist in the house, particularly as there has been a fire. 28 Indeed, in the presentation of the plaintiff's case it is not suggested that the plaintiff should receive any more than that provision from the estate. 29 The daughter Sylvia is in a fairly desperate situation. She lives in rented accommodation and only earns $350 per week. The fifteen year old daughter only has occasional days work at Woolworths and brings little home. She has had her provision but lost it. That probably was not through any fault of hers. I have to look at people's situation as at the date of the hearing, although still taking account of the fact that others have some provision made for them. 30 Siegbert is in a situation where frankly he is fairly well off, compared to his brothers and sisters and also the defendant. He will, however, have some expenses with a child who has problems. Some small amount might assist him. 31 Michael is in the situation where he has no assets. I heard little about him, but one of the things that is clear is that he received no help in his lifetime from the deceased. 32 So far as the defendant is concerned I have already noted the help that he provided over the years to the deceased. He has helped preserve the estate, particularly with his actions in having the NRMA come to the rescue and have the house rebuilt. 33 In the circumstances it seems to me that it is probably best to divide the estate into certain proportions between the defendant and the three children of the deceased, and provide for some specific legacies. This will enable the estate to be sold at the most appropriate time after it has been readied for sale. 34 Accordingly the orders that I make are: (1) The first plaintiff is to receive a legacy of all the furniture and personal possessions of the deceased in the house on the deceased's property; (2) That the defendant receive a legacy of any stock and farming equipment of the deceased; (3) The residue of the estate be held, as to Sylvia Robinson thirty percent, Michael Kroegel twenty five percent, Siegbert Kroegel five percent and Gregory Frazer forty percent; (4) The plaintiffs' costs on a party and party basis, and the defendant's costs on an indemnity basis to be paid or retained out of the estate of the deceased; (5) I order the exhibits be returned.

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