Demetriou v Jenner

[2005] NSWSC 103

CITATION:	Demetriou & Ors v Jenner & Anor [2005] NSWSC 103
HEARING DATE(S):	9 - 10 February
JUDGMENT DATE :	10 February 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Acting Master Berecry at 1
DECISION:	See paragraphs 68 - 69

CATCHWORDS:	Family Provision - Small Estate - Long happy marriage - Chronic illness of deceased - Care provided by widow - Competing needs - Special circumstances
LEGISLATION CITED:	Family Provision Act 182
CASES CITED:	Singer v Berghouse (1994) 181 CLR 201 Golosky v Golosky, 5 October 1998, unreported Luciano v Rosenblum (1985) NSWLR 65 O'Laughlin v Low (2002) NSWLR 222 Sayer v Sayer (1999) NSWCA 340 Blackmore v Allen (2000) NSWCA 162 Bladwell v Davies (2004) NSWCA 170 Re Fulop v Public Trustee (1987) 8 NSWLR 679
PARTIES:	Merlyn Demetriou Samantha Demetriou Andrew Demetriou Christina Jenner Simon Demetriou
FILE NUMBER(S):	SC 0258 of 2003
COUNSEL:	J Needham SC (First Plaintiff) S Roberts (Second and Third Plaintiffs) M Osterberg-Olsen (Defendant)
SOLICITORS:	Makinson & D'Apice (Plaintiffs) Adrian & Fellows (Defendants)

LOWER COURT JURISDICTION: Compensation Court

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ACTING MASTER BERECRY

10 February 2005

2589 of 2003 Merlyn May DEMETRIOU & 2 ORS v Christina JENNER & ANOR

JUDGMENT

1 CORAM: The proceedings before me are proceedings commenced under s 7 of the Family Provision Act by summons. The proceedings relate to the estate of the late Soterakis Demetriou, and the proceedings are brought by the widow of the deceased and his two children of the second marriage. It was indicated at the outset of the proceedings that the children of the second marriage would not be contesting these proceedings save as to the preservation of the legacy that they received under their late father’s will, and the question of costs.

2 The first plaintiff is forty-five years of age. She was born in the Philippines and came to Australia in 1986. She had previously met the deceased in the Philippines, and according to her evidence he asked her to marry him. She declined on the basis that she did not know him and then it was suggested by him that she come to Australia to see if she would like it there and they could eventually marry. She came to Australia with a friend and on 18 October 1986 she and the deceased married.

3 The deceased owned three businesses which he conducted with the assistance of his two children by his first marriage. They are the defendants and the executors in these proceedings. The evidence is that there as conflict between the first plaintiff and the defendants when she became a part of the household. It would appear that that conflict has continued from time to time.

4 Under the terms of the deceased’s will he made provision for the first plaintiff in respect of any lands that he held in the Philippines. He made provision in respect of two motor vehicles; one was to go to the first plaintiff and the other was to go to the defendant Simon Demetriou. The residue of the property was to be divided equally amongst the first plaintiff, the two children of the second marriage and the two children of the first marriage.

5 The estate is not a large estate. There were joint assets, namely moneys in a bank account, of approximately $109,000. The bulk of the estate was the property where the first plaintiff and her two children and the deceased lived. There was an agreed valuation of that property for the purpose of these proceedings, being approximately $550,000.

6 The first plaintiff has brought these proceedings to seek additional provision out of the estate of the deceased. She currently lives in the property with the second and third plaintiffs and she works for Coles. Her current income is approximately $33,000 a year. She has a superannuation entitlement of $27,000. She has the balance of the term deposit. Her weekly income is slightly in excess of her weekly expenses. She has no other assets.

7 The second and third plaintiffs are still minors. Samantha is seventeen, and her evidence is that she intends to commence a tertiary course this year at TAFE. The course will take a year or two. Her evidence was that she wishes to remain living with the first plaintiff and that they get on well. She earns currently about $200 per week and has savings of $310.

8 Andrew is sixteen. He is in Year 11, and his evidence is that when he completes the Higher School Certificate he wishes to do a real estate course or a builder’s course. He has no idea how long those courses would take or what he needs to do to be able to undertake the courses.

There is nothing unusual in that.

9 He also has indicated that he wishes to remain living with the first plaintiff. He is currently in receipt of a youth allowance of $141 per fortnight and has savings of approximately $123.

10 The two defendants are the children of the deceased’s first marriage. Christina is forty-one years of age. She is married and has a child who is five. That child has started school, and Christina’s evidence today was that the fees are approximately $1200 a year and she also has other incidental expenses such as uniforms. She and her husband are on a combined income of $69,000.

11 The house that they reside in is subject to a mortgage, and she places the value of the property at about $270,000. The liabilities she has are predominantly the mortgage. According to her affidavit the mortgage was $172,000. This morning she indicated that the mortgage had been reduced but not by a great deal. She was unable to put a figure on it. Nevertheless it seems there is still a substantial amount of money owing on the mortgage.

12 According to her affidavit she has a superannuation entitlement of approximately $23,500. That was in 2003. She was asked this morning what was the current value of her superannuation policy and she was not too sure of that. In any event one can assume that the policy has grown somewhat in the last two years. I do not suggest however for one moment that it has increased significantly. Her evidence was that their income now just exceeds expenditure.

13 Simon is thirty-seven years of age. He resides with his mother, and that is something he would like to change. He owns his own business. He is a qualified plumber. He did sustain a number of injuries a few years ago during the course of his employment, and still feels some discomfort and restriction as a result of those injuries. He received a compensation payment in respect of those injuries and with the funds he received he purchased equipment to set himself up as a plumber. He has conducted that business since that time.

14 His evidence is that he earns approximately $1000 a week. His all up expenses, including business expenses, come to approximately $980 a week. He does not have a great deal of money left over at the end of each week. He has minimum savings but also has minimum liabilities.

15 It has been agreed by the parties that the property will need to be sold. It appears that at some stage at least the expectation of Master Macready was that the appointment of Mr D’Apice in respect of Samantha and Andrew, and some independent person, might be able to bring the parties to a negotiating table and reach a settlement. That did not happen.

16 This is not a large estate, and the problem is exacerbated by the fact there is really only one asset in the estate, namely the family home. I was informed at the beginning of the hearing yesterday morning that when costs are taken into account together with sales costs and expenses in respect of the sale of the property there will be left approximately $377,000,that would leave each of the parties with about $70,000.

17 It has been suggested that the interests of the second and third plaintiffs should be subsumed by the interest of the first plaintiff, and that the three-fifths that they receive be put towards the purchase of another house. Miss Needham for the first plaintiff referred broadly to some problems that are inherent with that sort of arrangement. I agree with the concerns that she raised.

18 The task of the court is to apply the Family Provision Act, and the cases that flow from it, to the dispute between the parties. It is not the role of the court to try and achieve a balance between the parties which will perhaps remove any ill-feeling between the parties. The role of the court is to apply the law to the facts as they are presented, and to arrive at a decision.

19 The starting point is of course Singer v. Berghouse (1994) 181 CLR 201. It is trite for me to say that the High Court laid down a two stage test in determining whether or not provision or adequate provision ought be made for the first plaintiff.

20 The court, when considering an application under s 7, is also required to consider the matters that are set out in s 9.2 of the Act before determining whether or not provision should be made. In Singer v. Berghouse the court considered those sections, and the first matter that it said the court needed to address was whether or not there had been inadequate provision made for the plaintiff in the testator’s will. If the answer to that question is yes, the next question is what provision ought be made for the proper maintenance of the plaintiff?

I

21 In answering those questions there are matters which the court is required to consider, and those matters have been mentioned in a number of cases. In Golosky v. Golosky Court of Appeal unreported 5 October 1998 the then President of the court made the following comments in relation to the consideration of “proper”:

“When considering what is proper and by inference what is improper in a provision in a will it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship of the testator and the claimant, the character and conduct of the claimant, and the present and reasonably anticipated future need of the claimant, the size and nature of the estate, and any relevant dispositions which may have reduced the estate available for distribution according to the will, the nature and relative strengths of the competing claims for testamentary recognition, and the contribution of the claimant to the property or to the welfare of the deceased.”

22 During submissions this morning a reference was made to a number of cases dealing with the paramount position of a widow. In Luciano v. Rosenblum Powell J made the following comment:

“It seems to me that as a broad general rule and in the absence of special circumstances the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.”

23 In O’Laughlin v. Low (2002) NSWLR 222 the Chief Justice said as follows:

“When it comes to claims by adult children it can be said at once that if there is a competing claim by a widow and all claims cannot be fully accommodated, the widow’s claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in the aid of an adult child.”

24 That a widow’s claim to maintenance out of the estate of her deceased husband is a claim that is paramount of or high order is borne out by judgments of Sheller J in Sayer v. Sayer (1999) NSWCA 340, Davies JA concurring, and Blackmore v. Allen (2000) NSWCA 162, Priestley JA and

Foster AJA concurring.

25 The court in recent times has given further consideration to the matters expressed by Powell J in Luciano v. Rosenblum. It has not moved away from his Honour’s reasoning. It has crystallised certain parts of that judgment which perhaps in the following years were brushed over. In Bladwell v. Davies (2004) NSWCA 170 Ipp J concurred with Bryson J when he considered the position of a widow and the requirements of s 7 of the legislation. Bryson J said at par 19:

“In the application of the test in s 7 and in the exposition there of in Singer v. Berghouse by Mason CJ, Deane and McHugh JJ at ... it would be an error to accord to widows generally primacy of all other applicants regardless of circumstances and regardless of the forms of the stages of consideration described in Singer v. Berghouse in full without reference to the instant facts.”

26 The court therefore is required to consider more than the fact that the first plaintiff is the widow of the deceased. Matters that the court needs to consider are matters that McLelland J referred to in Re Fulop v Public Trustee (1987) 8 NSWLR 679 and Kirby J referred to in Golosky v.Golosky.

27 Before moving on to consider those matters there needs to be some comment made about the evidence given by the parties in the last two days. I have listened to the five parties in the witness box. By and large I found the witnesses to be candid and attempted to present their evidence honestly. However, in relation to the first plaintiff there were some aspects of her evidence that I found implausible. It may be that the difficulty of language, and perhaps the passage of time, have created that impression, but there was some evidence in relation to financial matters which I do not accept are the true position.

28 Having said that, that aspect of her evidence does not necessarily weigh against her in these proceedings. Much of the cross-examination in relation to financial records of the last twelve or thirteen years were by and large irrelevant to the matters to be considered in these proceedings. In other areas where she gave evidence that evidence appeared to me to be given forthrightly and honestly.

29 Turning to the matters that need to be considered above and beyond her standing as the widow of the deceased requires consideration of her relationship with the deceased, the relationship of the children with the deceased, and the contributions that each have made in respect of the family unit and the assets of the deceased.

30 The first plaintiff and the deceased were married fifteen and a half years. Together they spent just under sixteen years together. By any definition that marriage could not be regarded as a short marriage. In my view it falls within the description that the courts have given to marriages that are long marriages. A number of the authorities have referred to marriages that are long and harmonious, where the parties have worked together and had children.

31 Evidence was put on of conflict within the family unit in the early days of the marriage. That did not indicate that there was any breakdown of the marriage per se. The conflict arose out of a new wife and teenage children of an earlier marriage.

32 During the course of the marriage there were two children, both born within eighteen months of each other. The first plaintiff’s evidence is that she performed most of the household tasks. She cooked, washed and cared for the members of the family. Some of that evidence was contradicted.

33 The defendants’ evidence is that whilst they resided at the property the first plaintiff did not do all that she asserts. It was pointed out that there were periods when the first plaintiff had her mother or her sister living with them, and that they also shared some of the household burdens. However it was readily conceded by the defendants that when they moved out of home they really did not know what was done in the house. They conceded that their father was ill, the inference being that in all probability somebody else had to do most of that work.

34 In terms of preparation of meals there was a conflict in the evidence. It is said by the defendants that in the early days the first plaintiff did not know how to prepare Australian meals and she would prepare Filipino meals for herself and her friend; Christina prepared the meals for her father and her brother.

35 The plaintiff’s evidence is that she learned to prepare Australian meals from a friend, and that is what she did. I do not think there is much moment in whichever version is adopted. Christina conceded that her father was not a cook but occasionally he might do a barbeque. It would seem to me that it would follow that having regard to the age of Samantha and Andrew, once Christina and Simon had left the home most of the cooking would have been done by the first plaintiff.

36 The first plaintiff also returned to the workforce. In 1988, whilst she was pregnant, she worked at the deceased’s salad bar for four months. Subsequently in 1990 she returned to full time employment. She obtained a position with Coles and has remained there ever since.

37 An issue has arisen concerning the income that the first plaintiff earned in her employment with Coles. The defendants assert that none of the income that the first plaintiff earned was used in the family unit; the first plaintiff spent all of her money on herself. The first plaintiff’s evidence is different. In her first affidavit par 19 she states that she earned $200 a week when she commenced work with Coles and that that money was spent buying food and paying some small bills, and buying presents.

38 Except in relation to presents it does not seem to me that the rest of the evidence can be challenged too much. There has been no discovery of any hidden accounts that the first plaintiff has where she has been able to put money away for herself. There has been no evidence that she has been able to acquire assets without the knowledge of the deceased. There has been no evidence that she spent the money buying expensive clothes or other luxury items for herself. The probability is, and I accept the first plaintiff’s evidence on this point, that she did use a fair amount of her money for the family benefit.

39 The deceased developed a kidney problem in 1988/89. He was told that he would need a transplant. The evidence was that it would take some time in Australia. However, he was told that he could have one done almost straight away if he went to the Philippines. In 1989 the first plaintiff and the deceased went to the Philippines where he had an operation.

40 Whilst there, a property was purchased in the name of the first plaintiff. The evidence is that the deceased, not being a Filipino citizen, was not permitted to acquire realty. However the first plaintiff, being a Filipino, was entitled to acquire by purchase or lease a certain quantity of land. The property they purchased appeared to be a residential lot. That property was kept for a number of years.

41 Unfortunately for the deceased, the kidney transplant was not a success. Within two years the kidney was failing and thereafter, in 1991, he was on dialysis for the rest of his life. The first plaintiff’s evidence, and it is not contradicted to any great degree, was that she assisted him throughout the rest of his life.

42 In 1996/97 the first plaintiff and the deceased purchased three blocks of land. The land was purchased solely from capital from the deceased. After developing the kidney problem he found he could no longer cope with his businesses, and he sold them. He also sold the house that the first plaintiff and the defendants and the deceased had resided in when she first came to Australia. He in effect downsized. He purchased the land and the house where the first plaintiff currently resides, and had a sum of money left over.

43 The first plaintiff’s evidence is that she encouraged him to look at land development. Between 1996 and 1999 the deceased bought three blocks of land and developed and sold those blocks. Whilst the first plaintiff did not put any capital into the venture, her evidence was that she supported him.

44 To the extent that a wife in a loving relationship supports a husband, I accept that she gave him some support. That is a quality issue rather than a quantity issue, and it may well have been that the support of her standing behind him encouraged him with that project.

45 The Manila land was sold in 1998. There was much evidence about the sale of this land and what happened to the proceeds of sale. It would seem that the property was some for somewhere between $33,000 and $36,000 Australian. The money went into an account on the name of the first plaintiff and it stayed in accounts at various times in the name of the first plaintiff. There is no evidence of the deceased’s attitude in relation to those funds. There is an alleged conversation with Christina, but beyond that there is nothing else. It would pure speculation to advance that matter any further.

46 The fact of the matter is though that the parties were husband and wife. They were not in a partnership, they were not linked because of some contractual obligation to each other, they were husband and wife, where generally assets and funds are mingled.

47 The deceased died on 6 March 2002. His condition deteriorated throughout 2001. The plaintiff was there for him right throughout this time. There is evidence that Andrew got the deceased his breakfast most mornings. That was not because of any inattention by the plaintiff but simply due to the fact that she left for work between five and 5.30 a.m. each morning.

48 There was some criticism of the first plaintiff going on a holiday with the two children to the Philippines in late 2001, at a time when there was a significant decline in the health of the deceased. That may be fair criticism, however it needs to be looked at in the context of the whole of the relationship. The first plaintiff had cared for the deceased from the time he developed the kidney disease. It had been a lingering disease. He suffered from it for a period of eleven to twelve years.

49 The first plaintiff was going at Christmas, or immediately after Christmas. She was going to visit relatives. She was going for a fortnight. It was not necessarily unreasonable. There was no indication that the deceased’s life was in immediate danger, and in fact as it turned out he lived until the following March and in fact elected to go home to die.

50 The quality of the life between the first plaintiff and the deceased in my view was not such that it could invite any criticism. It had the characteristics of a happy marriage. There was some evidence put on by the defendants that the deceased felt badgered or perhaps threatened by the first plaintiff. The first plaintiff’s evidence was that when the defendants were not at the home the deceased was a loving and attentive husband, but he was cold and distant when the defendants were present. That is not unusual experience in these matters in cases where there is a second marriage.

51 There is nothing to suggest that the second and third plaintiffs had anything but a good relationship with their father. In fact they had a very good relationship, it would appear, with their siblings as well until he died. That is something that cannot be repaired by the court but is something for the parties to try and repair in the years to come.

52 Christina and Simon likewise on the evidence had nothing but a good relationship with their father. All four children it seems to me had a loving and caring relationship with their father. There would have been different priorities and different needs at different stages of their lives, but that does not take from the quality of that relationship.

53 The first plaintiff gave some evidence of contributions she made to the deceased not only in respect of his welfare but also in respect of his property. In terms of quantity it may have been quite minor. She was there, she maintained the house, she did all the things that no doubt she thought were expected of her. She was there when he decided to develop the land. She does not seem to have been an impediment to that project. She appears to have been a partner for him on all aspects of their life.

54 In the normal course of events the children of the deceased would expect to be left something by him. Likewise the widow would have expected provision to be made for her as well. Had this estate been far greater than it is it may well have been that the will that the deceased left would have been appropriate in every circumstance. His intention was to ensure that each of his children received something from the estate, and that his widow also received something. Unfortunately there are two impediments to what he sought to achieve.

55 The first is that it is a small estate with really only one asset of any value. The second is that in trying to be fair with everybody he has not given the proper consideration to provision for his wife.

56 When Powell J talked about “special circumstances”, that can be viewed in a number of ways. The special circumstances could relate to the widow an it could also relate to the children. In this case there are special circumstances in favour of the first plaintiff. It was a long harmonious marriage, there were two children of the marriage, and the first plaintiff supported her husband. The authorities that I referred to earlier have said that the first obligation - paraphrasing those decisions - of a husband is to ensure that there is proper provision for his wife. The authorities that I have referred to have considered the position between adult children and widows.

57 Turning to the will, in my view having regard to these reasons the provision made by the deceased for his wife was inadequate. Her position now is that she is a low-income earner and the prospects of that increasing are not great. Her prospects of retraining are probably not all that great. Other than an interest in the family home and the joint account she has no other assets. She has two teenage children, one of whom is at school and the other is about to undertake a TAFE course.

58 As things stand at the moment she will be entitled to whatever is left in the joint account and a one-fifth interest in the family home. That one-fifth interest is somewhere in the vicinity of $70,000. If the will is upheld the first plaintiff, after fifteen and a half years of marriage, will have little more than $70,000 to start life again, to bring up her two children, and to try to find some form of accommodation. Clearly anywhere in metropolitan Sydney she is going to struggle.

59 If it is assumed that she has a figure somewhere between $70,000 and $100,000, and that she can cash in $27,000 of her superannuation fund, she still only has approximately $127,000 with which to purchase a home. It is doubtful whether on her income she would be able to borrow sufficient funds to enable her to buy premises in the area where she currently resides. That is an important consideration as she works in the district, the daughter intends to go to a TAFE in the district, and the son goes to school in the district. In my view for those reasons inadequate provision has been made for the first plaintiff.

60 The next matter to consider, taking on board the matters I have already referred to in these reasons, is what would be proper provision for the first plaintiff in all the circumstances. The affidavits put on by the solicitors indicate that the legal costs of these proceedings are $158,000. If the property realises the average agreed figure of $550,000, that leave an estate of $392,000. From that figure there are to be deducted the costs of selling the property. That figure as given as $15,000 for the purpose of these proceedings. That would leave $377,000.

61 The plaintiff in her second affidavit has put on evidence of the costs of accommodation in the Quakers Hill area. That evidence shows that a range of accommodation varies from approximately $329,000 to $389,000.

62 In relation to Samantha and Andrew, they of course have competing needs to their mother. It has been submitted on behalf of them that there should be no adjustment to their entitlement; any adjustment should come from the provision made for the defendants. This estate is too small for that luxury. In my view Samantha and Andrew are going to be adequate provided for by their mother, and that will be greatly assisted by the first plaintiff having accommodation which is not subject to any encumbrance, or at least not a large mortgage. Although their interests are different to their mother’s I do not see that will be any adverse effect on their welfare if provision is made for their mother to receive the legacies that have been provided for them.

63 In relation to Christina and Simon, both have needs and it is clear that they, like many other people of their age, have obligations on their earnings. Christina and her husband are paying off a mortgage on their house and they have a five year old child. They have very little surplus cash and in all probability they will spend the next ten to fifteen years paying off the mortgage. Simon runs his own business and has some problems as a result of injuries he has sustained, and has very little in the way of savings. He currently lives with his mother.

64 Christina at least has some protection as she has an interest in a house. Simon has very little. The balancing act really comes down to what provision should be made for the first plaintiff and what provision should be preserved for Simon. The figure that is available after sale of the property is a figure which is less than the top of the range for the accommodation that has been put in evidence. That figure will be further reduced with the associate costs of purchasing the property.

65 The first plaintiff is forty-five years of age. Her chances of increasing her income are probably remote. Simon is thirty-seven, he has qualifications, and although he said his income is seasonal he is still able to earn approximately $52,000 per year. Simon does not have any other obligations other than to himself.

66 The sad fact about this estate is it is not large enough or flexible enough to meet the needs of everybody. The proper provision that should be made for the maintenance of the first plaintiff is that she should be given the property of the estate.

67 So far as costs are concerned the first plaintiff’s costs should be paid out of the estate on a party party basis. The second and third plaintiffs’ costs should be paid out of the estate on the indemnity basis from the date of the order appointing Mr D’Apice as their tutor, and the defendants’ costs should be paid out of the estate on the indemnity basis.

Submissions on costs.

68 The orders are as follows. The first plaintiff is to receive the whole of the estate of the deceased. The first plaintiff is to receive costs on party party basis. In relation to the costs of the tutor I make no variation of the order I have already made, in other words the costs of the second and third plaintiffs are to be paid on an indemnity basis out of the estate from the date of appointment of the tutor.

69 In relation to the defendants’ costs the last offer that was made by the first plaintiff was on 3 February 2005. The offer remained open for two days. The appropriate costs order then in relation to the defendants should be that the defendants are to receive their costs out of the estate on the indemnity basis up to and including 7 February. Thereafter they should receive their costs on a party party basis.

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