Christodou v Chris
[2011] VSC 59
•4 March 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. S CI 2009 10855
IN THE MATTER of the estate of Ruby Rabi Chris, deceased
- and -
IN THE MATTER of an application for family provision under Part IV of the Administration and Probate Act 1958
B E T W E E N
| NATASA CHRISTIDOU | Plaintiff |
| - and - | |
| MARY CHRIS (in her capacity as executor of the deceased estate of Ruby Rabi Chris) | Defendant |
JUDGE: | MUKHTAR AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21 February 2011 | |
DATE OF JUDGMENT: | 4 March 2011 | |
CASE MAY BE CITED AS | Christodou v Chris | |
MEDIUM NEUTRAL CITATION | [2011] VSC 59 | Revised 8 March 2011 |
ADMINISTRATION AND PROBATE ― Claim by daughter who was dependant on testatrix ― Testatrix made grandchild a residuary beneficiary ― Terms of settlement between plaintiff and trustee ― Terms subject to Court approval ― Alleged misrepresentation and material non disclosure by plaintiff ― Approval refused.
REASONS FOR DECISION
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms K Moorehouse-Perks (solicitor) | Katherine Moorehouse‑Perks |
| For the Defendant | Ms L Englefield | E M McDonald and Co |
HIS HONOUR:
The plaintiff has filed this proceeding seeking further provision from her deceased’s mother’s estate under Part IV of the Administration and Probate Act. She is one of 3 daughters. This decision does not concern the merits of that claim, but an attempted settlement of it which required the Court’s approval in some unusual circumstances.
The essential facts of the claim are as follows. The testatrix Ruby Chris died on 23 October 2007, aged 67, leaving a will made on 5 July 2007. Probate of her will was granted by the Court on 24 December 2007. The testatrix appointed her youngest daughter Fotini Maria Chris (also known and named in this case as Mary Chris) as executrix and trustee of her will. Mary Chris has a son, Noah Konstantinos who was born on 6 June 2001. From an early age, he was diagnosed with neurodevelopmental problems. He has learning difficulties, motor skills impairment, and language disorder.
Under the will the testatrix gave a number of pecuniary legacies as follows:
(a)$20 000 to her daughter Fotini [the defendant] “to be utilised towards the purchase of real estate for her own use absolutely”;
(b)$40 000 to the plaintiff to be used for the same purpose;
(c)$5 000 to her daughter Lisa Chris (now known by the name of Lisa Mirigliani) for her own use absolutely;
(d)$10 000 to her grandchildren to be divided in equal shares for their own use upon turning 21.
The testatrix had property at Unit 6, 38-40 Broadway in Chelsea. Under the will she gave that property to her grandson Noah Konstantinos “who shall be living at my death and who shall attain or have attained the age of thirty five (35) years for his own use absolutely”. Under clause 5 she directed that the Chelsea property be not sold until Noah turned 35 and that he be allowed to reside in that property at any time from the date of her death for as long as he desired.
As for the residuary estate, that was given on trust to the trustee for Noah until he turned 21 years old and then for his own use absolutely.
As at December 2007 the estate was valued at $364 149.86. The inventory discloses debts of approximately $1500. The principal asset was the Chelsea property, then valued at $220 000.
Well before the plaintiff filed this proceeding, her sister Lisa Mirigliani filed a testator’s family claim in this Court on 8 February 2008. But she was made bankrupt on 3 February 2009. A mediation of her claim in November 2009 which of course involved her trustee in bankruptcy did not resolve the dispute. Then, the plaintiff issued this proceeding on 22 December 2009. But that claim was brought outside the six month time limit under s 99 of the Act and accordingly she also filed a summons seeking an extension of time.
The Court on 16 February 2010 made the usual procedural orders including an order for Before then, the plaintiff filed an affidavit the contents of which paint a tragic and appalling picture. For present purposes, I shall avoid the details and confine myself to essential matters.
The plaintiff was born on 9 January 1969. She says that from the age of two until she left Australia in 1989 she was abused mentally by her mother, and until the age of nine she was raped and sexually abused by her father who forced her into child prostitution until the age of 18. She says she was made to feel the abuse was her fault, and that the destruction of her parents’ relationship was also her fault. The affidavit refers to an unhappy story about alcohol and substance abuse in the family and mental illnesses. She says at the age of 10 her mother stuck a sewing needle in her right eye which eventually retinal detachment and blindness in the right eye. Her mother left the family when the plaintiff was 11 and she ran away from home. The mother was committed to Larundel mental hospital in 1983 by which time the plaintiff was a ward of the State in the Winlaton facility. She returned to her father’s custody, and prostitution, and ran away again. She was again made a ward of the State.
In February 1989, at the age of 19 the plaintiff she left Australia for Greece and earned a living there in music and television. She said she financially helped out the defendant and her son Noah. But she suffered many personal problems including major depression and suicidal thoughts.
By 2007 she says that her mother’s attitude towards her had changed and she returned to Melbourne. From then on she was totally dependent on her mother, who she says really cared for her. They reconciled. Mary paid visits but Lisa was not seen often. The plaintiff is now on a disability pension suffering from psychiatric problems, eyesight and skeletal problems. This causes significant interference with interpersonal and workplace relationships. The plaintiff was living with her mother at the time of her death at the unit in Chelsea and was still totally dependent on her. Her mother was divorced at the time of death and did not have a domestic partner. The plaintiff has no spouse or domestic partner or any children.
She says her assets consist of a car worth $12 000 on which she owes $13 000. Her affidavit seeks further provision by asking for a transfer of the unit at Chelsea to her.
A mediation of the plaintiff’s claim occurred on 10 August 2010. The parties were able to resolve the claim under terms of settlement dated 10 August 2010. Under clause 1, the plaintiff unconditionally agreed to vacate the Chelsea property by 15 October 2010 “leaving the property clean and in good order.” Clause 2 stated that if she “does not so vacate the property”, she unconditionally agreed to permit the defendant to enter summary judgment for possession of the property together with costs. In exchange, the defendant agreed to pay an interim distribution to the plaintiff of $20 000 from the $40 000 legacy.
There followed a number of terms which were expressly subject to the approval of the Court, for which the defendant was obliged to apply within 21 days after the property was vacated. Clause 4 said:
In the event that the Court does not approve the compromise, the parties acknowledge that the proceeding will not be at an end and that the status of all parties to the proceeding will be as if this compromise was not reached. This condition is to be read as a condition subsequent and this agreement remains binding unless, and until such time as, the approval by the Court has been refused by the Court.
Clause 6 provided that upon approval by the Court the estate would be administered by:
(a)paying to the plaintiff the remaining $20 000 of her legacy;
(b)selling the Chelsea property;
(c)paying the debts and liabilities of the estate including legal expenses;
(d)paying the plaintiff’s legal costs of $8000; and
(e)after paying legal costs of Lisa’s application and paying legacies under the will, dividing the net residue of 50% to the plaintiff and 50% for the residuary beneficiary.
The evidence shows that the parties did not comply with the time limits under the terms of settlement for various reasons that I will not go into. But the plaintiff did vacate the Chelsea unit, and the defendant eventually paid the $20 000 as an interim distribution under clause 3 the terms of settlement, which was not subject to Court approval. Come 10 November 2010 further disputations arose. The defendant revealed her intention not to apply to the Court to approve the compromise because in essence, she claimed the plaintiff had damaged the premises and left them in an uninhabitable condition that would require expenditure, and had misrepresented her financial position to the extent that the defendant was deceived or misled into making the terms of settlement in the first place. The defendant contended he plaintiff had concealed evidence about assets and income. It was said that she had obtained a loan and purchased a unit in Morwell, had been receiving Centrelink benefits and had also received remuneration for work done. The defendant contended that the deception or non disclosure meant that a court would be dissuaded from approving any compromise. That transformed to an unwillingness to seek the Court’s approval.
The plaintiff’s position was that the defendant was bound under the terms of settlement to seek approval of the Court. Accordingly, by a summons filed on 26 November 2010 , the plaintiff applied for an order that an application for approval of a compromise of the terms of settlement “be made forthwith”.
When the summons came on for hearing before me on 10 December 2010 I expressed the view that the summons was, so it seemed to me, seeking an order in the form of a mandatory injunction compelling the defendant to do something, really in the nature of specific performance. Both are discretionary remedies. But the defendant was saying had the truth been known about the plaintiff’s financial position, the terms would never have been made. There was as I analysed it, a contractual dispute with a stand-off.
Ordinarily, under the law of contract, if a contracting party alleges that it made an agreement as a result of an actionable misrepresentation, or a misrepresentation by silence on a material matter, then that can be a vitiating element. It is a matter then for the defendant executor to seek to set aside the terms of settlement which might then involve having to restore the parties to their position had the terms not been made.
After further discussion, this is how the matter was explained to me by the parties on the last occasion. The parties were minded to seek an order, by consent, to have the defendant proceed to seek approval of the compromise as sought under the summons. But in seeking approval, the defendant would put before the Court the facts concerning the plaintiff’s misrepresentation or non disclosure as matters going to the question whether approval should be given. In the meantime, the parties agreed to orders by which the plaintiff would give the defendant authority to obtain from various authorities financial information concerning the plaintiff’s affairs. Orders along those lines were made on 10 December 2010.
It was apparent back then, as it is now, that the defendant as trustee would seek the approval of the Court as contractually required, but in effect contend that the Court should not give its approval. For that reason I also ordered on 10 December 2010 that the defendant put before the Court any relevant facts which the defendant regarded as affecting the basis on which the terms were struck including the circumstances concerning the purchase of the unit in Morwell, the Centrelink benefits and money for work done.
The defendant trustee now returns to the Court seeking approval of the compromise, but the position now remains as it was on the last occasion. That is, the defendant is notionally doing what it agreed to do under the agreement by seeking the Court’s approval, but is not propounding that approval be given. For the defendant, much affidavit material has been filed from Fotini and the defendant’s solicitor. Avoiding the details of this material in essence it is said that –
(a) the plaintiff left the Chelsea premises in a filthy, damaged, smelly and uninhabitable state. Photographs have been produced.;
(b) the plaintiff has been using the name of Natasha Christidis (and not Christidou) has bought a unit at Morwell, was employed, had savings, owned a car and some other matters;
(c)the contract of sale was in September 2009 for $81 000. The plaintiff obtained a $64 000 mortgage loan from Westpac requiring monthly repayments of $353 transfer of land for Morwell was made in October 2009
As things stand now, counsel for the defendant says that the Court’s approval is required as the terms of settlement involve a dealing with trust property. Accordingly, the performance of the terms would require an order of the Court under s 63 of the Trustee Act. Needless to say, it is incumbent upon the trustee as a fiduciary to act in accordance with the trust and for the benefit of the beneficiaries exclusively. In this case, attention has turned to the interests of Noah and his disabilities. If the terms are carried out with the approval of the Court it will impact upon his interests under the trust and benefit the plaintiff in a way the defendant is now saying she does not deserve because she has misrepresented her financial position. Now, it may be there has been no such misrepresentation or at least no actionable misrepresentation. But that is the current dispute.
It is apparent though that the defendant as trustee is simply going through the motions of seeking the Court’s approval so that it can be seen to be performing the terms of settlement, and not be sued for breach. The defendant could of course disavow the terms and sue for rescission but that would involve more delay and expense for this small estate and an erosion of what would be available for distribution should they succeed. They would be contested proceedings.
As for the plaintiff, she maintains she has not misrepresented her position at all. She seems resigned to the dispute, and as I discern things, is resigned to the fact that the Court might not give approval. Indeed she seems more intent on seeking to have the executrix removed (for which there is no application) or if not, to simply proceed to prosecute her testator’s family claim.
What is the Court expected to do? The defendant states in open court that if there was some means for the plaintiff to give a proper accounting and explanation of her financial position then maybe it would, after due consideration, propound approval. The plaintiff says she has given all that she can, has given the defendant authority to pursue enquiries and she is fed up with the delay. She says there is no use point mediating. The problem for her is that the mortgagee of her Morwell home has served a notice to pay on 10 February 2011 failing which action will be taken for repossession of the property and added to her other problems, she will have to find somewhere to live.
What is also disturbing is that this is a small estate. The estate has $73 158 in funds and the only other asset is the Chelsea unit. The legacies under the will (apart from the partial payment of $20 000 to the plaintiff) are yet to be paid. There are outgoings on the property, legal fees and expenses for Noah.
In the circumstances as I have exposed them, this Court is bound to refuse its approval. The Court is in no position to adjudicate the dispute about whether there was a misrepresentation or non disclosure concerning the plaintiff’s financial position. A trustee is under fiduciary duties. For as long as there are the interests of a child who seems to have needs, and who is the beneficiary under the will, it is simply not open for the Court to give its approval. The court senses the acrimony, and the erosion of the estate by litigation, but it cannot force parties to see sense.
Lest anything should turn on this for future purposes, this Court passes no judgment or gives any view about the proper construction of the terms of settlement or how the defendant’s obligations would be construed under clause 3 when she agreed to seek approval of the Court, or what may be implied into that. On the face of it, the defendant has sought the approval. But as I wish to emphasize, it certainly has not propounded the approval because she contends her obligation to seek approval was procured as a result of a misrepresentation.
Accordingly, on the plaintiff’s summons I would refuse approval. I would order that: the application by the plaintiff’s summons filed 26 November 2010 for the Court’s approval to the defendant (as executrix and trustee of the deceased estate of Ruby Riba Chris) to perform the terms of settlement dated 10 August 2010 is refused.
That leaves the question of costs on the application (which I am inclined to think should be reserved), and further procedural directions for the conduct of the testator’s family maintenance claim. The defendant must now consider whether it is necessary for Noah to be added as a defendant by a litigation guardian. Unless there is dispute on those matters, I ask the parties to submit proposed consent orders within 7 days, which can be made on the papers to minimise legal expenses.
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