Terminal illness and property settlement

Terminal illness and property settlement

Morcomb & Lennox [2016] FCCA 485 (16 March 2016)

The following is annotated. For full case: http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2016/485.html?stem=0&synonyms=0&query=family%20law%20act

29. A significant issue in this case involves the applicant’s health. He suffers from lung cancer. Whilst at present this has not prevented him from pursuing his employment and as things presently stand his illness would have no impact on section 90SF(3) factors a significant aspect of this case is the impact that his prognosis should have on those factors. It is the respondent’s case that the court could conclude that the applicant has a limited life expectancy. As such it is submitted that his future needs are, perforce, limited. The respondent argues that her life expectancy is not compromised by any health issues and in consequence she has long term needs.
30. There is a degree of irony about the way this issue developed. It was arranged that I should hear the matter in Sydney as a matter of some urgency. I am based in Canberra. The reason for this was that the court had been told that the applicant was terminally ill and that it was important that the matter be heard whilst he was still able to give evidence. There was no Sydney judge available to hear the matter at short notice. At the hearing however the applicant presented a somewhat “upbeat” picture of his condition and would have me accept that his condition is not as serious as was originally presented. In the circumstances I propose to rely solely on the medical evidence that has been adduced rather than the applicant’s evidence.
31. The most up-to-date medical report in relation to the applicant is a report dated 17 June 2015 from Dr C. His report states as follows:
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    1. Diagnosis

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Mr Morcomb has recurrent adenocarcinoma of the right lung. This was first diagnosed in February 2014. At that time CT scan of his cheat demonstrated a mass at the right lung hilum with distal collapse of the right middle lobe. There was a prominence of the subcarinal lymph nodes. PET scan confirmed uptake in the region of the right hllum and subcarinal lymphadenopathy. Tissue biopsy was obtained at bronchoscopy on 25 February 2014, confirming the diagnosis of adenocarcinoma of primary lung origin.

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He was treated with concurrent radiation and chemotherapy, delivered with curative intent. This treatment was completed in May 2014.

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In April 2015 follow-up CT scan of his chest and subsequent PET scan confirmed disease progression with a mass in the right lung upper lobe and progressive subcarinal lymphadenopathy. The PET scan did not demonstrate any evidence of distant metastatic disease. Therefore, at this time, he has recurrent adenocarcinoms of lung, restricted at this time to locoregional progression.

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2. Recommended treatment plan

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Mr Morcomb has commenced palliative chemotherapy with the combination of carboplatin and pemetrexed. He has just received his fourth cycle. Repeat CT scan of the chest earlier this week has shown a reduction in the size of the right lung recurrence. The subcarinal lymphadenopathy is stable. Based on this scan result his cancer is currently responding to treatment. Provided he continues to respond to this treatment he will receive a total of six cycles of the current treatment and then will continue with maintenance chemotherapy with pemetrexed. This treatment will continue indefinitely until disease progression.

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3. The effect and likely success or otherwise of treatment

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Mr Morcomb has advanced lung cancer which has progressed after concurrent chemoradiation. In the setting of relapse, his cancer is now incurable. His predicted survival ranges from as poor as 6 months to up to 24 months. Most cancer specialists would quote a median survival of around 12 months.

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4. Any further diagnosis as to his condition

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Mr Morcomb is otherwise well with no other significant medical illnesses. He is tolerating the treatment very well and his current quality of life is good. He continues to work around his treatment days.

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5. Any changes as to or progression of his condition

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As already mentioned his cancer has progressed after concurrent chemoradiation. He is currently receiving first-line chemotherapy for recurrent disease. There was no evidence of any distant metastatic disease outside his chest.

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6. Future treatment plans

He will continue on the current treatment program. Once he has completed six cycles of the doublet combination he will switch to maintenance single agent pemetrexed. This will continue as long as he is tolerating treatment without toxicity and his scans show no evidence of progression. The likelihood is that his disease will progress at some stage in the next 12 months. At that time consideration will be given to further systemic treatment.

7. Mr Morcomb’s recovery

This patient has incurable cancer with limited prognosis. His wish is to continue treatment for as long as possible and also to continue to work as long as it is medically possible,

8. The effect of his condition on life expectancy

This cancer is incurable. Expected prognosis has already been clearly stated. This lung cancer will shorten Mr Morcomb’s life expectancy.

32. It goes without saying that it is quite distasteful to contemplate reducing a party’s entitlement to a share of property because he suffers from a terminal illness. However the matter has to be approached in a dispassionate way.
33. At the hearing I was referred to two Full Court cases both involving the same parties. These were the decisions in JCVB & SKK. The first is dated 6 September 2005. Its citation is [2005] FamCA 853. The second was delivered on 24 September 2008. Its citation is [2010] FamCAFC 157. The first of these involved an appeal from the decision of Purdy J. That appeal was allowed. The matter was remitted for re-hearing and came before Stevenson J. Her Honour’s judgment was also appealed but that appeal was dismissed. At the hearing before Purdy J the wife was still alive but had a terminal illness. By the time the matter came before the Full Court the wife had died. Her estate was substituted as a party before the Full Court and also before Stevenson J and the Full Court in the re-hearing and second appeal.
34. In JCVB & SKK reference was made to two other Full Court decisions, Tasmanian Trustees Ltd & Gleeson (1990) FLC 92-156 and Re Parrott v Public Trustee of NSW (1994) FLC 92-473. In both those cases one of the parties had died before the hearing at first instance. I shall discuss those cases later in this judgment.
35. The only decision of which I am aware in which the Full Court was confronted with a situation where a party was still living but had a terminal illness was Lawrie & Lawrie (1981) FLC 91-102. I shall commence this aspect to the case by discussing that authority.
36. In Lawrie the husband, at the date of the hearing before the trial Judge had a life expectancy of about six months. The only substantial property of the parties was a jointly owned home. The trial Judge made an order that provided for the husband to occupy the home until his death and that upon his death the property be sold and the proceeds divided 65% to the wife and 35% to the husband’s estate. There was in existence an order that the husband pay spousal maintenance of $35 a week to the wife and the trial Judge continued that order until the sale of the home.
37. The husband appealed. His issue with the result was not the fact that he could continue to occupy the home but with the fact that his estate was deprived of the share of the parties’ property to which his contributions should have entitled it to.
38. In the Full Court Fogarty J, at page 76,749 said as follows
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    Applications under sec. 79 involve in varying degrees the dual aspects of past contribution and future needs ……. Here it seems to me that the following facts or conclusions are established:

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1. The past contribution to the property and marriage generally should be treated as equal. The husband’s occupation of the home since separation and payment of the mortgage and outgoings was treated by his Honour as broadly equalised by the payment of the maintenance, and neither counsel challenged this aspect.

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2. The only asset available for distribution between the parties is of relatively small value, that is, just under $50,000. One half would not provide either with a substantial or indeed sufficient sum in ordinary circumstances.

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3. The future financial needs of the wife (as to which see sec. 75(2)(d)) are substantial even if assessed on a modest scale, having regard to her age, state of health and present financial circumstances.

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4. However difficult it may be to say, the fact is that the future financial needs of the husband are very limited. The uniqueness of this case is that that circumstance is not the subject of controversy as it would be in most cases. If that were not so then there would have been no justification for diverging from the ordinary 50/50 situation, a circumstance which his Honour himself clearly recognised.

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It is appropriate and, in my view, necessary to consider the relative future needs of the parties in determining what is a just and equitable order under sec. 79. Where there is a significant disparity that would ordinarily be reflected in the orders. This is frequently a result in cases of a more usual type. Further, where in any case it is clearly established that the future financial needs of a party will terminate (or perhaps significantly diminish) upon the happening of a definite future event, it is proper to take that into account. A number of examples of that readily spring to mind. The weight to be given to that will obviously vary from case to case.

39. His Honour then went on to say that in the circumstances of the case “the property orders made by his Honour grappled as well as may be with the unique circumstances of this case. I consider them to be proper and sensible orders and consequently would dismiss the appeal in relation to the property aspect”.
40. The only other detailed judgment in the Full Court was that of Gee J. He also referred to the “special facts” of the case.
41. The appeal was dismissed. It can be seen however that this case is of limited guidance. In the present case there is no application that the husband be given the right to occupy the property of the parties until his death.
42. The case of Tasmanian Trustees Ltd & Gleeson is also of limited relevance. In that case the parties were the joint proprietors of a home and the husband died between the date of the hearing before the trial Judge and the date of delivery of the judgment. The trial Judge thereupon declined to deliver judgment and re-heard the matter after Tasmanian Trustees Ltd, the executor of the husband’s estate, was substituted as a party to the proceedings. The effect of the death of the husband was that the whole of the parties’ home vested in the wife by reason of survivorship and that unless an order were made under section 79 altering her interest there would be effectively no property in the husband’s estate. The Judge refused to make an order under section 79.
43. Tasmanian Trustees Ltd appealed this decision. The Full Court dismissed the appeal. The leading judgment was delivered by Nygh J. His Honour cited with approval the single Judge decision of Smithers J in Menzies and Evans and Evans (1988) FLC 91-969 where his Honour pointed out that the most obvious difference in the case where one party is deceased is that party no longer has any section 75(2) needs for the future whilst the survivor continues to have such needs. Nygh J commented that it would be a rare case where the estate of the deceased party would be denied any share of the parties’ property given that the factors under section 75(2) are only one aspect of the case and an important issue is that of contributions. However his Honour considered that as the property pool was very small in the particular circumstances of the case there was no error in refusing to make an order under section 79.
44. His Honour pointed out that in Menzies, where Smithers J had made an order in favour of the estate of the deceased party, the property pool was much greater than in the case before him.
45. It is not necessary to dilate on Re Parrott. In that case also the husband had died by the time the case was heard at first instance. The Full Court agreed that the death of a party has a significant impact on section 75(2) factors. It approved Menzies and Tasmanian Trustees as authority for the proposition that where the property pool is small an order which deprives the estate of the deceased party of any share of the property pool may be justified.
46. Menzies itself is of little assistance. Not only was the wife already dead but the husband was aged 84, was suffering from dementia and was in poor physical health.
47. To summarise there is no clear authority indicating the appropriate approach where both parties are still living but one party has a terminal illness. The only comparable case of which I am aware is Lawrie and in that case the judge made orders of a type not available to me. However the judgment of Fogarty J in that case provides some guidance. I distil from this judgment the proposition that where it is established that a party has a limited life expectancy that fact indicates that an allowance should be made in favour of the other party under section 90SF(3)to reflect that party’s greater long term needs. In fairness the standard of proof as to the terminal nature of the illness would need to be at the upper level of what is sometimes called theBriginshaw standard (it will be recalled that Fogarty J used the term “clearly established”) but I am satisfied that this standard has been met. As I have said, taking such an approach is distasteful and I do so with reluctance but, as I have also said, the exercise must be approached in a dispassionate way.
48. However this issue to a degree cuts both ways. It may be that the applicant’s condition may at some stage prevent him from continuing his employment and there may be a period when he continues to have needs (perhaps substantial needs) but no salary.
49. I make a fifteen percent adjustment in favour of the respondent.