Capelinski and Patton
[2010] FamCA 1243
•7 December 2010
FAMILY COURT OF AUSTRALIA
| CAPELINSKI & PATTON | [2010] FamCA 1243 |
| FAMILY LAW – DE FACTO PROPERTY CLAIM – Respondent deceased – Legal personal representative by prior order substituted as respondent – Current and prospective proceedings in the State Courts concerning the Deceased’s Will and other matters – Application by Deceased’s legal personal representative for stay or adjournment of proceedings here – Relevant principles considered – Application for stay or adjournment refused – Directions made |
| Family Law Act 1975 (Cth) ss 79 (5), 90SM (1), (2), (3), (4), (5) and (8), s90SF (3) Succession Act 1981 (Qld) s 41 Family Law Rules 2004 rules 1.04, 6.15(3), 11.01 |
| Blue & Blue and Ors [2008] FamCA 787 Grace & Grace (1988) FLC 92-792 Prince & Prince (1984) FLC 91-501 Whitehouse & Whitehouse (2009) FLC 93-415 |
| APPLICANT: | Ms Capelinksi |
| RESPONDENT: | J Patton as the legal personal representative of Mr Patton (Deceased) |
| FILE NUMBER: | DGC | 764 | Of | 2010 |
| DATE DELIVERED: | 7 December 2010 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | O’Reilly J |
| HEARING DATE: | 6 December 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Sara |
| SOLICITORS FOR THE APPLICANT: | Thynne & McCartney Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Carew |
| SOLICITORS FOR THE RESPONDENT: | Small Myers Hughes |
Orders
IT IS ORDERED BY CONSENT
The Executor of the Will of Mr Patton (Deceased) as soon as possible sign all documents necessary to release to Ms Capelinski all moneys presently in account no …494 in her name with Suncorp Banking Corporation, but in default this order be sufficient authorisation for Suncorp Banking Corporation to release those moneys to Ms Capelinski with such moneys to be paid into Thynne & McCartney Lawyers Trust Account.
AND IT IS FURTHER ORDERED
The Deceased’s legal personal representative file and serve a response to Ms Capelinski’s initiating application and a financial statement by 4.00pm on Friday 7 January 2011.
The case assessment conference at 10.15am on Thursday 9 December 2010 is vacated.
The parties and their legal advisers attend on a Registrar for a conciliation conference at 9.00am on Wednesday 9 February 2011.
The parties must comply with all requirements under the Family Law Rules 2004 in relation to the steps to be taken preceding a conciliation conference.
The costs of and incidental to Deceased’s legal personal representatives’ application in a case filed 14 October 2010 and Ms Capelinski’s response filed 3 December 2000 are reserved to the trial judge.
IT IS NOTED that publication of this judgment under the pseudonym Capelinski & Patton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: DGC 764 of 2010
| MS CAPELINKSI |
Applicant
And
| J PATTON as the legal personal representative of MR PATTON (Deceased) |
Respondent
REASONS FOR JUDGMENT
Background
Twenty six years ago, in 1984, Mr Patton, now deceased, and Ms Capelinski commenced a de facto relationship. Mr Patton was then 67 years and Ms Capelinski 59 years.
They separated on 6 January 2010.
On 10 March 2010, Ms Capelinski commenced proceedings under Part VIIIAB of the Family Law Act 1975 (Cth) seeking an order under s 90SM for a property settlement order in relation to their house property and assets. She seeks that a property at M be sold and that the net proceeds be divided equally. She also seeks that moneys held in bank accounts be divided equally as well as other incidental relief with effect overall of an equal property division.
In March 2010, a short 2 months after the separation, and days after the commencement of these proceedings, Mr Patton passed away. He was then 92 years and Ms Capelinski 85 years. She will turn 86 years in April 2011.
On 25 June 2010, an order was made that J Patton, the son of the Deceased and the Executor appointed under his Will, be appointed as the legal personal representative of the Deceased and was, pursuant to rule 6.15(3) of the Family Law Rules 2004 (the Rules), substituted as the respondent in the proceedings.
The relief sought by Ms Capelinksi is resisted by the Deceased’s legal personal representative.
The Deceased has three children, R 73 years, J 51 years and L 45 years.
Ms Capelinski has a daughter, Ms K. Her age is not disclosed in the material.
The Deceased made an inter vivos gift to Ms Capelinksi of $50,000.
By a consent order which I propose to make, that sum or whatever is its present balance is to be released to her.
By his Will dated 9 October 2007, clause 5, the Deceased bequeathed furniture and personal effects to Ms Capelinski. By clause 6(a), he provided a life interest to her to reside in the M property and by clause 10 provided that she have $130,000. By clause 12, he “declared” that he had made “sufficient provision” for her by the combination of the provisions in his Will and the inter vivos gift.
There is not any issue raised, presently, as to the effect or value of clause 5.
It is common ground that Ms Capelinski is not entitled to her life interest to reside in the M property as she was not residing there as at the date of the Deceased’s death, she and the Deceased then having separated.
Ms K, it appears, withdrew $104,000 from a bank account after the Deceased’s death.
By current District Court proceedings, J Patton, as Executor of the Will of the Deceased, has sought repayment of that amount to the Deceased’s Estate.
L Patton, the son of the Deceased, aged 45 years, has instituted Supreme Court proceedings pursuant to Part 4 of the Succession Act 1981 (Qld) (the State Act), s 41, for a family provision order out of the Estate of the Deceased on the basis that adequate provision was not made for him in the Deceased’s Will. Section 41 of the State Act vests a discretion to order “such provision as the Court think fit”, out of the Deceased’s Estate, which may be by way of lump sum or periodical or other payment, to fall rateably upon the whole of the Estate unless the Court otherwise orders. L Patton, by way of clause 4 of the Deceased’s Will, was provided for as to such of the income from an amount of $100,000 to be held on trust by the Executor as trustee and invested for that purpose as L may need, the surplus income, if any, to accumulate and the balance on L’s death to apply to the residue. Presently, there is to be a mediation in relation to L’s claim in the Supreme Court of Queensland in September 2011.
J Patton, as Executor, has received notice from the Deceased’s daughter R that she proposes also to commence Supreme Court proceedings pursuant to Part 4 of the State Act for a family provision order for her.
J Patton, as Executor, is considering Supreme Court proceedings for a declaration that the Deceased’s Will should be read and construed, as to clause 10, as intending that Ms Capelinski have the amount of $130,000 only if she were to be and remain his de facto wife at the date of his death. It will be recalled, as I have mentioned, that after the 26 year de facto relationship, the Deceased died a short 2 months after he and Ms Capelinksi separated.
Presently, thus, in addition to Ms Capelinksi’s proceedings in this Court, there are two current proceedings in the State courts and prospectively two further proceedings in the State courts.
Applications to be determined
It is against that background that, by application in a case filed 14 October 2010 the Deceased’s legal personal representative seeks an order that Ms Capelinski’s proceedings in this Court be “temporarily stayed” or “otherwise adjourned” until such time as her entitlement under the Deceased’s Will and the litigation between Ms K and the Deceased’s Estate are determined or settled, but that if such relief be refused the Deceased’s legal personal representative file and serve a response to Ms Capelinksi’s initiating application and a financial statement within 21 days.
Ms Capelinski seeks by response to the application in a case, filed 3 December 2010, that the application in a case filed by the Deceased’s legal personal representative be dismissed, that within 28 days he file a response to Ms Capelinski’s initiating application, a supporting affidavit and a financial questionnaire pursuant to rule 12.06(1) of the Rules and that a date for a conciliation conference be fixed.
Submissions and argument as to the power to grant relief sought by the Deceased’s legal personal representative
Ms Carew of Counsel, for the Deceased’s legal personal representative, despite his application that the proceedings here be “temporarily stayed” or “otherwise adjourned,” disavowed reliance on s 90SM(5), which is the power to adjourn proceedings if there is likely to be a “significant change in the financial circumstances” of the parties to a de facto relationship, or either of them, having regard to the time when that change is likely to take place, and put his case solely upon the inherent power to order a stay of proceedings, citing Prince & Prince (1984) FLC 91-501, in particular at 79,086 per Fogarty J and rule 11.01 of the Rules, to the effect that the Court has power to manage a case to achieve the main purpose of the Rules (see rule 1.04) including (item 3, Table 11.1, pars (c) and (d)), to adjourn a Court event, or stay a case or part of a case.
Mr Sara of Counsel, for Ms Capelinski, whilst not disputing the Court’s inherent power to order a stay, put that despite Ms Carew’s disavowed reliance on s 90SM(5), “in reality” the application of the Deceased’s legal personal representative is made pursuant to that provision, and that in essence it does not apply, because there can be no suggestion that there is likely to be a “significant change in the financial circumstances” of the parties once the current and prospective proceedings in the State courts are determined.
Mr Sara referred to the circumstance that rule 11.01, by note 1 to it, makes clear that it operates “in addition” to any powers given to the Court by the Act, such that note 1 implicitly “refers back” to s 90SM(5). Mr Sara referred further to rule 1.04, which provides that the main purpose of the Rules is to ensure that each case is resolved “in a just and timely manner”, such that Ms Carew’s invoking of rule 11.01 would, in the particular circumstances of the case, defeat the “main purpose of the Rules” as set out in rule 1.04.
Observations
Section 90SM(5) is sourced in the correlative provision in Part VIII of the Act, s 79(5). In Grace & Grace (1988) FLC 92-792, the Full Court observed that the exercise of discretion under s 79(5) is “guided by the legislature”. In Blue & Blue and Ors [2008] FamCA 787, I said in relation to Grace & Grace:
4.The principles relevant to the wife's application are as stated by the Full Court in Grace v Grace (1998) FLC 92-792. Generally, it was said that the exercise of the discretion in s 79(5) is guided by the legislature so that taking the words of s 79(5) on their face the following are preconditions which cumulatively must be found in order to invoke the power to order a deferral, namely that the Court is of the opinion that:
· there is likely to be a change in financial circumstances
· the likely change is a significant one
· having regard to the likely and significant change it is reasonable to defer the proceedings and
· an order made if that significant change occurs is more likely to do justice and equity as between the parties than an immediate order.
5.In so concluding, the Full Court considered the broader context of the scheme established within the Act for property proceedings under s 79, and referred to the important features of the scheme, including that an application for property settlement must be brought no later than 12 months after the marriage has been dissolved unless leave be obtained under s 44(3) of the Act and that the usual process to be undertaken operates upon the property of the parties at the time of the hearing.
6.The Full Court distinguished between procedural adjournment which connotes that the hearing has commenced or is due to commence in a relatively short time and the power under s 79(5) stating that in context it is better described as deferral because an order under s 79(5) has the effect of deferring the step of ascertaining the property pool for distribution to a defined future point in time so that as such an order goes to the core subject matter of the determination to be made under s 79 thus conferring a substantive not just procedural quality to its consequences.
7.Although s 79(5) uses the expression "adjournment" it is convenient to use the term "deferral".
8.More recently, a differently constituted Full Court in Van Essen v Van Essen (2000) FLC 93-028 agreed with the formulation and statement of the principles in Grace v Grace.
9.Since both of those cases were decided s 79(5) has been amended, however, not in a way presently relevant.
10.Section 79(7) specifies two categories in which s 79(5) may apply, namely superannuation interests and discretionary trust powers, but provides expressly that nothing in that provision shall be taken to limit the circumstances in which the Court may form the opinion that there is likely to be a significant change in the financial circumstances of a party.
Applying those principles to the present case, it seems to me that Ms Carew is correct in disavowing reliance on s 90SM(5), in that the Deceased’s legal personal representative is not seeking “deferral”, within the meaning of s 90SM(5) (its counterpart being s 79(5)), because the Deceased’s legal personal representative is not seeking to establish that there is likely to be a significant change in financial circumstances, but simply that as a matter of practical reality the actual financial circumstances of Ms Capelinksi and the Deceased’s Estate cannot be ascertained until the current and prospective State court proceedings are determined or finalised. Hence, Ms Carew’s reliance on Prince & Prince (above) in which Fogarty J, at 79,086, observed that as a matter of practical reality the wife’s claim in that case for a s 79 order could not be heard and determined until there be determination of third party proceedings in another court, because the s 79 proceedings could not “usefully be heard and determined” until that controversy was finalised. Essentially, Fogarty J, in determining (on appeal, supported by Pawley J to form the majority) that there should be a stay in that case was speaking of the need in s 79 proceedings (and I would interpolate the need in s 90SM proceedings), as the first step, to identify the nature and value of the property and assets of the parties or either of them such that, in the case being considered by Fogarty J (on appeal) such exercise, it was determined, could not for practical reasons be undertaken until the proceedings in another court were finalised.
Having made those observations, I will turn now to apply the relevant principles to the facts of this case.
Determination in relation to the facts of this case
I will deal separately with the two family provision proceedings (that is, one current and one prospective), the proceedings concerning Ms K and the prospective (or potential) proceedings by the Executor as to interpretation of the Deceased’s intentions under clause 10 of the Will.
As I have foreshadowed, Ms Carew submitted that until the two family provision proceedings (bearing in mind that only one is current and one prospective, but for convenience referring to them as two), have been heard and determined, the Court here cannot know the size of the pool, as was the case in Prince. I reject that argument. Rather, the contrary is true, in that until Ms Capelinski’s proceedings have been determined here, that is, it be determined what, if any, property she should have, and what, if any, the Deceased’s Estate should have, the Supreme Court of Queensland cannot know the size of the Deceased’s Estate in order to adjudge whether, having regard to it and other bequests, there was inadequate provision for the claimants.
As to the proceedings by the Executor against Ms K for return to the Estate of $104,000, if those proceedings are not finalised by the time of Ms Capelinski’s trial here, she is content for that sum to be regarded as an early distribution to her, either out of the $130,000 bequest, or in any event, so there is no problem. As I understand her position, she does nor claim to have both the bequest and a s 90SM order, but only a s 90SM order, so that for the purpose of the proceedings here she would agree to surrender the bequest (rendering the Executor’s prospective Supreme Court proceedings concerning the effect of clause 10 of the Will unnecessary), provided that the Executor ceases the District Court proceedings against Ms K for return of the $104,000, with such sum regarded here as an early distribution to Ms Capelinski. Procedurally, and to avoid multiplicity of proceedings, and the unnecessary incurrence of costs, such would seem a sensible approach and one likely to lead to quicker resolution all round.
Once Ms Capelinski’s proceedings are determined here, the Supreme Court of Queensland will know the true value of the Deceased’s Estate, in order then to adjudicate upon L’s family provision claim and (if brought) R’s family provision claim.
As to the prospective Supreme Court proceedings by the Executor concerning clause 10 of the Will, I note that he has had 9 months so far to do this and has not. This Court will take the pool “as it finds it”, unless by the time of any trial here the Executor has actually commenced proceedings for such relief: Prince (above). In those circumstances, this Court would regard Ms Capelinski as having the right to payment under the Will of the $130,000: see s 90SF (3)(b) and/or (r); s 90SM (4)(e); and s 90SM (3); (with, perhaps, procedural estoppel then against the Executor to denounce that bequest); but with the circumstance that already she will be regarded as having had $104,000 out of the $130,000 (if the Executor ceases the action against Ms K) with effect that only $26,000 of it would be payable. This would not be detrimental, procedurally or substantively, to the position of the Executor.
In the meantime, presently, the existing action against Ms K, and the prospective action concerning clause 10 of the Will, are not a reason to stay Ms Capelinksi’s proceedings, particularly as the Executor has now had 9 months to commence proceedings in respect of the latter matter and taken no action. The Executor cannot, by inaction, jeopardise the legitimate progress of the proceedings commenced here by Ms Capelinksi.
I therefore determine that the Executor has failed to demonstrate any grounds warranting a stay or adjournment.
Even if I had determined, however, that there are grounds, in any event, in the exercise of my discretion I would refuse the application for the following discretionary reasons. Ms Capelinski is 85 years, nearly 86 years. Although she is not afflicted with any diagnosed terminal disease, she has considerable health problems and difficulties as outlined in pars 5, 9 and 10 of her affidavit filed 8 April 2010. Her lifespan is unknown. However, already she is beyond average lifespan. She is in urgent need of determination of her claim for property settlement.
Ms Carew argued that when the Deceased and Ms Capelinski met, she, in effect, had nothing, and he was man of means; she contributed nothing; they lived off his capital; and thus his property was diminished throughout the period of their relationship, not increased, so that she has no claim now to a property settlement, its only prospect being on the basis of contribution. Ms Capelinski disputes that she made no contribution.
That is why there needs to be a trial to determine that disputed issue and to determine what, if any, property settlement Ms Capelinski should have.
To the extent that the matter should be considered at all as an application under s 90SM(5), although Ms Carew has disavowed reliance on it, and Mr Sara has said that even if she did rely on it, it does not apply, it is necessary for me to make observation about it so that if the application in truth be regarded as one for deferral, an assessment of detriment and benefit to each of the parties is required. An assessment of detriment to Ms Capelinski, if there be deferral, compared with benefit to the Estate, if there not be deferral, tilts heavily in Ms Capelinski’s favour against deferral, for the reasons already outlined, having regard to her circumstances, compared with actual benefit, not detriment, to the Estate, if Ms Capelinski is regarded as having received, even notionally, the $130,000 (or $104,000 of it) but ultimately the Executor should obtain relief that she is not entitled to it so as to enrich the Estate by that amount: Blue at par [44].
Mr Sara put, further, that the effect of the decision in Whitehouse & Whitehouse (2009) FLC 93-415 is that if Ms Capelinski should die, Mr Patton already being deceased, her substantive proceedings would end, with no resolution, such that necessarily immediately they would be dismissed: Whitehouse [54], concerning s 79(8), and more relevantly its counterpart, s 90SM(8). I am not satisfied that this submission is correct. Potentially, there is no reason why proceedings under s 79, or s 90SM, should not continue as Estate v Estate. However, conscious as I am that the decision in Whitehouse was a majority Full Court decision, I simply will observe that in this particular case, it is not necessary for me to determine Mr Sara’s submission on this point in order to dispose of the Executor’s application, and expressly, I do not do so.
I will now pronounce the orders.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly.
Associate:
Date: 24 January 2011
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