Bond v Milos

[2003] NSWSC 216

CITATION:	Bond v Milos [2003] NSWSC 216
HEARING DATE(S):	20/03/03
JUDGMENT DATE:	20 March 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Master Macready at 1
DECISION:	Paragraph 40
CATCHWORDS:	Family Provision. Application by a former de facto partner in respect of a small estate. Provision made. No matter of principle.
PARTIES :	Janette Kay Bond v Joyce Marion Milos & AMP Superannuation Limited
FILE NUMBER(S):	SC 1305/2001
COUNSEL:	Mr P. Blackburn-Hart & Mr Roberts for plaintiff Miss Crittenen for 2nd defendant
SOLICITORS:	Lane & O'Rourke for plaintiff Ebsworth & Ebsworth for 2nd defendant

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

THURSDAY 20 MARCH 2003

1305/01 - JANETTE KAY BOND - ESTATE OF MARINKO MILOS v JOYCE MARION MILOS & ANOR

JUDGMENT

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Marinko Milos, who died on 30 August 1999.

2 The deceased was survived by his wife, one son and one daughter. He is also survived by the plaintiff, who was a person with whom he had had a de facto relationship for a period of about 10 years up until some eight days before the deceased’s death.

3 The deceased’s wife is the first defendant in the proceedings and the son and daughter were notified of these proceedings to bring forward any claim and have not sought to be a party to the proceedings.

4 I will deal with just a little bit of the family history. The deceased and the first defendant were married on 16 September 1974. On 27 March 1975, the deceased’s daughter Rachael Milos was born. On 3 December 1976, the deceased’s son Ivan Milos was born.

5 The deceased and his wife, the first defendant, separated in 1979. It was in 1989 that the deceased and the plaintiff commenced living together in a de facto relationship.

6 In 1992 the deceased transferred his one half share in his former matrimonial home in Queensland to the first defendant. This appears to have been done by way of settlement of their property affairs and no consideration was paid by the first defendant.

7 On 19 May 1999, the deceased nominated the plaintiff as a beneficiary of his superannuation policy in the second defendant. The second defendant was joined so that it would be bound by any order that might be made in respect of notional estate.

8 On 22 August 1999, the plaintiff terminated her relationship with the deceased. On 30 August 1999, the deceased died, having taken his own life.

9 The summons was originally filed on 2 February 2001 within time. There has been a grant of letters of administration to the plaintiff pursuant to s 41A of the Wills, Probate and Administration Act. There has, in fact, been no general grant of administration in the estate of the deceased.

10 According to the evidence before me the deceased died intestate and given the size of the estate this would mean that the estate would pass to the first defendant. The estate, however, only consisted of the amount of $652.39, which were moneys which the deceased had in a credit union.

11 As has been apparent from the matters I have mentioned, the deceased had an interest in a superannuation fund, administered by the second defendant, in an amount of a death cover which was originally $47,745.53. In May 2000 the trustee determined to pay the death benefit to his legal personal representative. That decision was changed and on 26 February 2003 the trustee made a determination that the death benefit should be held equally for the widow, the first defendant and the two children. The second defendant still holds the funds pending a determination of this case and the amount of the funds payable as a death benefit, which are the relevant funds, amounts to $52,644.89.

12 It is necessary to see whether the plaintiff is an eligible person. As the de facto relationship did not exist at the date of death, the plaintiff will be an eligible person only if she has been part of the household of which the deceased was part and dependant in part on the deceased. Clearly, given the fact that they lived together for 10 years, she was part of the household.

13 It is also apparent that the plaintiff was dependant in part upon the deceased. In the early part of their relationship the deceased earned income as a bricklayer and the evidence is that that income was applied for the joint needs of the plaintiff and the deceased.

14 The plaintiff acquired a property at Eungai Rail and once that was purchased in her name she was dependant upon the deceased also for contributions to pay the outgoings in respect of that property. There were also joint borrowings when they purchased an additional property next door and the deceased joined in that mortgage.

15 I am satisfied that the plaintiff is an eligible person. However, it is necessary under s 9(1) of the Family Provision Act that the Court shall first determine whether there are factors warranting the making of the application. This expression has been dealt with by courts on a number of occasions. In Re Fulop Deceased (1987) 8 NSWLR 679 at 681 McLelland J described that expression in the following terms:-

“Secondly, the subsection appears to be premised upon a distinction between ‘factors which warrant the making of the application’ on the one hand, and circumstances which would justify the making of an order granting the application, on the other; otherwise the subsection would be pointless. This means that in a particular case the Court might determine that there are ‘factors which warrant the making of the application’ within the meaning of the subsection, and yet go on to decide that the application should fail. Since the subsection applies only to certain classes of applicants, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicants, in broad terms, seems to be that the classes not affected by s 9(1) (lawful and de facto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (of the Wills Probate and Administration Act 1898 , s 61B), whereas the classes affected by s 9(1) (former spouses, and some time dependant grandchildren or household members) are as such not generally so regarded. This suggests that the ‘factors’ referred to in the subsection are factors which when added to facts which render the applicant an ‘eligible person’ give him or her status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased. That the subsection is directed at a plaintiff’s status as applicant in some such sense as this perhaps finds some support in the statutory direction to the Court, in the event that it determines the preliminary question adversely to the plaintiff, not to go on to determine the application, but ‘refuse to proceed with the determination of the application.’”

16 In Churton v Christian (1988) 13 NSWLR 241, the Court approved this statement. Priestley JA at p 252, after setting out and approving the statement, added:-

“To this I would add that although the classes affected by s 9(1) are not necessarily generally regarded as natural objects of testamentary recognition, in some cases members of those classes may, when the circumstances of their relationship with the deceased are set out, immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition.”

17 These principles have been applied at first instance for many years. There has been in recent times further attention to this matter in the Court of Appeal in the case of Brown v Faggoter, a decision given on 13 November 1998, which is a decision of Sheller JA, Sheppard AJA and Fitzgerald AJA. Fitzgerald AJA, who seemed to suggest that an application might be warranted if the application has reasonable prospects of success, gave the main judgment. This seems to be a somewhat different and perhaps easier test than that which the Court of Appeal approved in Churton v Christian. I will consider the matter on both bases, given that there may be some flux in the state of the law in this regard.

18 Looking at the matter on a traditional basis, it is perfectly apparent that the deceased and the plaintiff had a long-standing de facto relationship of some 10 years. In those circumstance that factor alone, I would have thought, would be sufficient for the ‘factors warranting’ to exist. In any event, I will also continue on to see whether, in fact, the plaintiff would be likely to succeed.

19 In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a Court must take. At p 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 which 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 considerations. 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.”

20 I turn to consider the situation of the plaintiff. The plaintiff is single, aged 50 and has no dependants. There have recently been some changes to her financial situation. She previously owned the property at Eungai Rail which was subject to a mortgage in the sum of about $100,000. She has now sold two-thirds of that property to her brother and his fiancee and paid off the mortgage. She is left with one-third of the property worth some $60,000. Previously she had some stock but as a result of the drought she has had to sell off all her stock and now has no livestock on the property. Previously, she had her own showering and cooking facilities but now has to share those facilities with her brother and his fiancee.

21 One of the things she did when she sold that part of the property was to purchase an investment unit for which she paid $7,500 as a deposit. The purchase price of that unit was $71,000 and she borrowed $64,500 from the ANZ Bank to make the purchase. Accordingly, her asset situation at the moment is:-

One-third share of the farm $60,000
Net equity in the investment unit $ 6,500
Money in the bank $12,500
1985 Toyota car $ 1,500
Jewellery $ 1,000
Furniture $ 1,000

22 Fortunately now she has no liabilities. However, her income situation is difficult. At some stages in the past, from both her farming and her part-time book-keeping work, she has earned in the order of $36,000 gross, leaving her a net income of some $5,000. Precisely what her income is at the moment as a casual book-keeper is not clear but it certainly would not be substantial.

23 Normally in a matter where the defendant has, which has happened in this case, not appeared to put their case forward, the matter would be considered without any consideration of the defendant’s situation. Earlier I determined an adjournment application as a result of which I proceeded with the matter and the first defendant has not appeared on the substantive hearing.

24 In the circumstances, I have proposed to and I have, in fact, read the affidavit of the defendant of 5 December 2002 so that I can consider the first defendant’s situation in deciding this matter.

25 The first defendant does not appear to have any dependants. The information as to her assets is rather sketchy but it is apparent that she owns her home, which was transferred to her by the deceased, at 16 Murumba Drive, Ashmore, in Queensland. She has a 1991 Honda Accord motor car, which apparently she is paying off. Her income appears to be benefits from Centrelink in the sum of $369 per fortnight.

26 So far as her relationship with the deceased is concerned, it should be noted that although the first defendant was still married to the deceased at the date of death, the relationship, in fact, was for a short period, from 1974 to 1979. They did, of course, have their two children during that period but they separated in 1979. Thereafter there was merely occasional telephone contact between the first defendant and the deceased.

27 When one looks at the circumstances of the first defendant and the plaintiff, one has to note, in fact, that the plaintiff had a somewhat longer relationship with the deceased than did his wife. The relationship was one for some 10 years. The relationship was such that the plaintiff felt constrained to meet the wishes of the deceased that he be buried in his home land in Europe. She, therefore, undertook to do this at her own expense, a considerable expense in this regard, and, in fact, paid $23,771.72 towards those funeral expenses out of her own moneys.

28 Another matter apart from the different lengths of the relationships that has to be, I think, also considered is the fact that there was, in effect, the property settlement when the deceased transferred back to the first defendant the former matrimonial home.

29 The first defendant does not, fortunately, have to support her children so is apparently self-supporting.

30 Other matters that also are relevant, I think, is the fact that there was a nomination by the deceased of the plaintiff as the one who should receive the superannuation funds. I have also, of course, referred to the fact of the payment of the funeral expenses - that is an important matter. Unless an order were made that she should receive payment for those expenses, having regard to the size of the actual estate, she has, in fact, no means of recovering those expenses from the estate of the deceased.

31 In the circumstances of there being a very limited estate and also a limited notional estate, I think the proper consideration the matter requires that an order should be made in favour of the plaintiff for a legacy sufficient for her to receive all the estate and the notional estate. That brings me to a consideration of the notional estate provisions.

32 It seems to me fairly plain that there has been a prescribed transaction. The relevant prescribed transaction would be that which is referred to in ss 22(1)(a)(i) and 22(4)(e). That is a particular form of transaction which applies where a deceased was a member in an association scheme, fund or plan, that the deceased died with the result that the property became held upon trust or held by another person. That is an adequate description to establish that there is a prescribed transaction.

33 Section 23 allows the Court to make an order declaring notional estate if it is satisfied that an order for provision ought to be made and I am so satisfied.

34 Section 23 also provides that this can be made if there was a prescribed transaction which took effect after the death of the deceased person and this, indeed, has occurred.

35 Under s 26(a) an order under s 23 cannot be made in certain circumstances unless the prescribed transaction or contract disadvantages the estate of the deceased or an eligible person. Given the inability of the estate to meet the funeral expenses, the estate is disadvantaged and there is also disadvantage to the eligible person, namely, the plaintiff.

36 The Court in deciding whether to designate property has to consider various matters under s 27. That section is in the following terms:-

“(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered:

(a) the importance of not interfering with reasonable expectations in relation to property;

(b) the substantial justice and merits involved in making or refusing to make the order; and

(c) any other matter which it considers relevant in the circumstances.

(2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to:

(a) the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person;

(b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration;

(c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be;

(d) whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income; and

(e) any other matter which it considers relevant in the circumstances.”

37 Under s 27(1)(a) the Court has to consider the matter of not interfering with reasonable expectations in relation to property. There are no particular matters that have been put forward so far as the widow or her children are concerned and one of the reasonable expectations that has to be considered on the other side is, of course, the plaintiff having paid the funeral expenses.

38 The Court also has to consider the substantial justice and merits involved in making or refusing to make the order, and also any other matter which it considers relevant in the circumstances. I think the substantial justice and merits involve the consideration of the situation of both the plaintiff and the first defendant, and I have already adverted to this earlier, and in my view the substantial justice and merits require the making of the order.

39 Under s 27(2) the Court is required to have regard to a number of matters, and these relate to the value and nature of the property to which I have referred, and to consider the fact that there has been no changes other than the accruing of some interest and superannuation. Obviously, given the matters that I have recounted, I am satisfied under s 28 that the estate is insufficient to allow the making of a provision in favour of the plaintiff.

40 Accordingly, the orders that I make are and I will hear counsel on this if there are any suggestions:-

(1) I order that the plaintiff receive a legacy out of the estate and notional estate of the deceased in the sum of $53,000.

(2) I designate as notional estate the death benefit held by the second defendant payable in consequence of the death of the deceased.
(3) I order the plaintiff’s costs on the party and party basis to be paid out of the estate or notional estate of the deceased.

41 In this matter I note that the plaintiff does not seek any orders against the second defendant and also that the second defendant does not seek any order for costs against the plaintiff, or out of the estate or notional estate of the deceased.

42 I also note the agreement between the plaintiff and the second defendant that the second defendant will make no claim under cl 51 of the trust deed to seek reimbursement out of the fund of its costs or in any other way.

43 The exhibits may be returned.

**********

Last Modified: 03/28/2003