Graham v Vukic

[2020] NSWSC 1801

Supreme Court

New South Wales

Medium Neutral Citation:

Graham v Vukic [2020] NSWSC 1801

Hearing dates:

18 November 2020

Date of orders:

14 December 2020

Decision date:

14 December 2020

Jurisdiction:

Equity - Family Provision List

Before:

Parker J

Decision:

See [132]

Catchwords:

SUCCESSION – family provision – claim by adult daughter for provision from the deceased’s estate under Succession Act 2006 (NSW), Ch 3 – previous family arrangement for claimant to receive former family properties on the deceased’s death – estate instead passed by survivorship and will to step-daughter – moral obligation

SUCCESSION – family provision – notional estate – whether order designating property as notional estate should be made

Legislation Cited:

Family Provision Act 1982 (NSW), s 27

Succession Act 2006 (NSW), ss 57, 58, 59, 80, 87

Cases Cited:

Birmingham v Renfrew (1937) 57 CLR 666

John v John [2010] NSWSC 937

Kelly v Deluchi [2012] NSWSC 841

MacAlpine v MacAlpine [2020] NSWSC 824

Megerditchian v Khatchadourian [2020] NSWCA 229

Megerditchian v Khatchadourian [2019] NSWSC 1870

Petschelt v Petschelt [2002] NSWSC 706

Phillips v James (2014) 85 NSWLR 619

Sgro v Thompson [2017] NSWCA 326

Slack v Rogan (2013) 85 NSWLR 253

Category:

Principal judgment

Parties:

Blzena Graham (Plaintiff)
Jasna Vukic (First Defendant)
Tereza Osrecak (Second Defendant)

Representation:

Counsel:
H Chiu (Plaintiff)
L Ellison SC (Defendants)

Solicitors:
John R De Mattia & Co (Plaintiff)
Lamrocks Solicitors (Defendants)

File Number(s):

2019/255427

Publication restriction:

Nil

Judgment

1. These proceedings concern the estate of the late Frank Radinksi, who died in September 2018 at the age of 85. The plaintiff seeks an order for provision out of his estate under Part 3.2 of the Succession Act 2006 (NSW). Unless otherwise specified, legislative references in the rest of this judgment are to that Act. For convenience and without disrespect I will refer to the members of the deceased’s family by their first names.

2. The deceased married twice. His first wife was Jela Radinski. She predeceased him, dying in 1983. He later married Terezija Radinski. She also predeceased him, dying in 2015.

3. The deceased and his first wife Jela had two daughters. The elder was Anna Radinski (now Anna Perdikooris). The younger was Blzena Radinski (now Blzena Graham). Blzena is the plaintiff who is seeking provision in these proceedings.

4. The deceased and his second wife Terezija married in middle age and had no children together. Terezija had a son and a daughter from a previous marriage. Her daughter (the deceased’s step-daughter) is Tereza Osrecak.

5. On the deceased’s death the whole of his assets passed to Tereza. She is the second defendant. Her daughter (the deceased’s step-granddaughter), Jasna Vukic, was appointed executor of the deceased’s estate under his will. She is the first defendant.

6. The same solicitors and counsel acted for both Tereza and Jasna in the proceedings. For convenience, I will refer to them as Tereza’s solicitors and counsel in the balance of this judgment.

Issues for determination

7. The deceased’s last will was made in 2011. Under that will, he left his estate to Terezija, providing that if (as happened) she predeceased him, the estate was to go to Tereza.

8. The deceased’s main asset was his home, a house in Canberra Street, Oxley Park, in western Sydney. At the time of his death the property was owned by the deceased and Tereza as joint tenants. The deceased’s half share thus passed on his death to Tereza by survivorship. The current value of a half share in the property is approximately $410,000. The deceased’s actual estate realised about $5,000, which was distributed to Tereza. There has been no formal grant of probate.

9. Blzena received nothing from her father’s estate. She seeks provision in the form of a lump sum payment of between $200,000 and $250,000. In order to fund this payment, she seeks an order designating a half share of the Oxley Park property as notional estate.

Summary and analysis of evidence

Chronology of relevant events

10. The deceased was born in Croatia (then part of Yugoslavia) in July 1933. His first wife, Jela, was about five years older, having been born in August 1928. Anna was born in September 1959 and Blzena in April 1963.

11. The family migrated to Australia in 1967. In their 1978 wills (see below) the deceased is described as a labourer and Jela as a married woman. There is no other evidence about their work histories.

12. In 1969 the deceased and Jela purchased a double block of land in Canberra Street, Oxley Park. One block (known as Lot 187) had an existing house on it; the other block (Lot 186) was vacant. The family moved into the house at Lot 187.

13. In 1977 the deceased and Jela built a house on the vacant lot (Lot 186). The family then moved into that house and the older house on Lot 187 was rented out.

14. Anna married her first husband, Marko Garsic, in June 1979. At some point, not identified in the evidence, the deceased and Jela allowed them to move in to the house next door on Lot 187.

15. In September 1983, Jela died, aged only forty-five. By survivorship, the Oxley Park properties passed to the deceased, who also inherited her estate. In May 1984, the transmission of the properties into the deceased’s sole name was registered, together with a transfer, by way of gift, of Lot 187 to Anna and Marko. Blzena (who was only 20 when her mother died) continued to live with the deceased in the family home on Lot 186.

16. The witnesses agreed that the deceased had a drinking problem, although whether this was continuous or episodic does not appear from the evidence. In about 1987 he was admitted to hospital with alcohol poisoning. According to Blzena he was never the same again after that. Among other things, his drinking affected his memory.

17. In July 1989 Anna’s husband Marko died. Anna and her three children continued to live in the house at Lot 187. In December of that year Blzena married her husband Robert James (known as “Jamie”) Graham. Their wedding took place at Anna’s house and they lived there with Anna and her children for about two years. The deceased did not attend the wedding. According to Blzena this was because he was “affected by alcohol”.

18. Following her mother’s death in 1983, Blzena kept house and cared for her father. This continued when she moved next door to Lot 187 following her marriage.

19. In October 1991 Blzena and Jamie moved to the nearby suburb of Lethbridge Park. At around this time the deceased began a relationship with Terezija. Quite soon afterwards, they married. This was in July 1992. Terezija was also from Croatia; she was eleven years older than the deceased, having been born in January 1922.

20. It seems that once Blzena and Jamie moved to Lethbridge Park and the deceased married Terezija, Blzena ceased to undertake housekeeping work for the deceased. Blzena and Jamie later moved around for work purposes. For a while they lived in Geelong. There was also a period of time in country New South Wales before they returned to live in western Sydney.

21. In December 1996, the deceased transferred ownership of his house, Lot 186, to himself and Terezija as joint owners. In May 2000 there was a further change to the title. The deceased and Terezija transferred the property to themselves as tenants in common.

22. Meanwhile, in about 1999, Anna had sold Lot 187 and moved with her children to Emu Plains. In 2003, Blzena and Jamie, who by this stage were back living in western Sydney, returned to Victoria. They were to live there for the next twelve or thirteen years, first at Mill Park, and then at Craigieburn where they both obtained work in a local factory. Mill Park is a northern suburb of Melbourne and Craigieburn is on the northern edge of Melbourne.

23. According to Tereza she started caring for her mother and the deceased in about 2010 or 2011. At the time, Tereza was living with Jasna and Jasna’s family at Cecil Hills, also in western Sydney. Tereza would visit the Oxley Park house to perform household chores and otherwise act as her mother and step-father’s carer. At this time the deceased was over 75 and Terezija was in her late eighties.

24. The deceased’s last will was made in December 2011. Shortly before the will was executed, there was a further change to the title of the Oxley Park property. The deceased and Terezija (as tenants in common) transferred the property to themselves and Tereza in equal (one-third) shares, as joint tenants. It seems that at the same time as the deceased executed his new will, Terezija executed her will and there was also a power of attorney, or powers of attorney, executed. These other instruments were not in evidence.

25. The transfer, the wills and the power, or powers, of attorney were all prepared by a Penrith firm of solicitors called Lamrocks. The partner responsible was Graeme John Hockley. Lamrocks’ records were produced on subpoena for the purpose of these proceedings. I will refer to them in more detail below.

26. Later Tereza moved in to the Oxley Park property with her mother and step-father. She said that this happened in June 2014. Terezija died in October 2015. This left the deceased and Tereza as half owners of the Oxley Park property, as joint tenants. Tereza inherited the rest of her mother’s estate.

27. Meanwhile, the factory at which Blzena and Jamie worked in Victoria had closed down. Eventually they moved back to New South Wales, moving in with members of Jamie’s family at a rural property in the Hunter Valley. This occurred at some point in 2016.

28. Following Terezija’s death, Tereza continued to live with the deceased at Oxley Park, caring for him and performing household tasks. By this stage his health appears to have been in decline and he had become frail. He had also been suffering from dementia at least since 2015. After being in hospital for about six weeks, he died on 18 September 2018. These proceedings were commenced in August 2019.

Witnesses

29. Blzena gave evidence in support of her claim, and was cross-examined. Her sister Anna also gave evidence and was briefly cross-examined. Jamie gave evidence by affidavit of his and Blzena’s financial circumstances. He was not required for cross-examination.

30. Affidavits were read from Jasna in the defence case. These affidavits contained only the formal information required from Jasna as executor. Jasna was not required for cross-examination.

31. Mr Hockley of Lamrocks acted for the defendants in the proceedings. In accordance with the requirements of the Practice Note, he provided an affidavit concerning the costs of the proceedings. His affidavit evidence did not deal with the preparation of the transfer, or the deceased’s will, in 2011. He was not required for cross-examination.

32. Tereza gave evidence in the defence case and was cross-examined. Her reliability as a witness was challenged. I deal with this, to the extent necessary, below.

Deceased’s testamentary plans

33. In evidence are wills of the deceased and his first wife Jela dated 9 August 1978. The deceased’s will left his estate to Jela but provided that if he did not survive her, Anna was to receive Lot 187 and Blzena was to receive Lot 186. The residue was to be divided equally. Jela’s will was in mirror form.

34. These wills are consistent with the later transfer of Lot 187 to Anna. They are also consistent with evidence given by Anna and Blzena about their parents’ testamentary plans. Anna and Blzena said they were told by both of their parents that the Oxley Park property and their parents’ other assets were to be divided in the manner set out in the wills. That evidence was not contested.

35. According to Anna and Blzena, however, the promises did not cease with their mother’s death. Both gave evidence that their father repeatedly said that Lot 186 would go to Blzena after he died. In cross-examination, counsel for Tereza questioned whether such promises continued after the deceased married Terezija, but Anna and Blzena insisted that they did. According to both of them, the promises extended right up until shortly before Terezija’s death in 2015.

36. There is no evidence, either documentary or oral, to explain the transfers in 1996 and 2000 whereby the Oxley Park property was transferred first into the joint names of the deceased and Terezija, and then into their names as tenants in common. Counsel for Blzena suggested that it might have been for the benefit of Tereza. As Terezija was eleven years older than the deceased, it might have been expected that she would die first. The transfer might have been done to ensure that Tereza would receive a half share of the house even if Terezija predeceased her husband. This is plausible and no other suggestion emerged, but it remains speculative.

37. As I have mentioned, Lamrocks’ file was produced on subpoena. There are two main file notes. One was dated 19 October 2011. It appears to have recorded the first instructions, and related to the property transfer. The clients were recorded as the deceased and Terezija, but the contact was Jasna (an email to the valuer recorded that Jasna was acting as the translator for the deceased and Terzija because neither of them spoke English). The transfer appears to have been completed on 22 November or thereabouts.

38. There is a second file note dated 6 December 2011. It relevantly recorded:

Been done so if Frank gets sick no one can take home from her.

Caring for Frank.

Difficult for Frank to live anywhere else.

Mr Frank said after I die to wife or Tereza Osrecak.

Mrs [i.e Terezija] said all to her daughter not to Frank.

Frank appeared to understand.

39. The context suggests that the reference to taking the “home from her” was a reference to Tereza. She does not appear to have been present at the conference, but her daughter Jasna was. There is no reason to doubt that Tereza was aware at the time of what was going on.

40. The note continued, in a section apparently dealing with a power of attorney:

Jasna explained document to him in Croatian.

I asked understand he said ok yes thank you.

Satisfied that he understood and wanted to appoint [illegible] as guardian.

Deceased’s family relationships

41. As already mentioned, Blzena’s evidence was that she looked after the Oxley Park household and her father after her mother’s death in 1983 until she and Jamie moved to Lethbridge Park in October 1991. This evidence was not contested.

42. Anna gave evidence that after the deceased formed his relationship with, and later married, Terezija, the family relationship changed. According to Anna, Terezija discouraged any assistance and declined invitations to visit Anna and her family once they moved to Emu Plains. When Anna remarried, she invited her father and step-mother to the wedding but they did not attend. Anna reported that she continued to visit their father at Oxley Park, but the atmosphere was uncomfortable.

43. Blzena’s account was similar. Although for most of the period after 1991 she lived away from Sydney, she said that she visited her father and Terezija at least annually, usually during visits to Sydney at Christmas time. Blzena and her father were both smokers and would go out on the veranda to enjoy a cigarette together. Blzena said she continued to give her father gifts at Christmas. He always appeared to be happy for her to visit. But she said that although she invited her father and Terezija to visit her, offering to pay for the airfares, this was always declined.

44. According to Blzena and Anna, the level of discomfort increased once Tereza moved in to the Oxley Park house in 2014. According to Blzena, her father told her that this happened because Tereza had nowhere else to go.

45. Things came to a head after Terezija’s death in October 2015. Blzena (who by then had lost her job at the factory in Victoria) came to Sydney. This resulted in an incident, or incidents, at the Oxley Park house.

46. As described by the witnesses, there were two issues which arose, perhaps on two separate occasions. One issue was that Blzena wanted to move in to the Oxley Park house. She came to the house saying that she would look after, or help look after, her father. She brought a suitcase with her. Tereza refused.

47. The other issue was that Anna and Blzena wanted to take their father out of the house. Their intention was to take him to a doctor to have his condition checked. This also was refused by Tereza.

48. According to Blzena and Anna, on this occasion Tereza manhandled Blzena out of the house. The incident disturbed the deceased, whose health was by now frail. According to Blzena, he was left cowering in fear. She and Anna went to the police, but no action was taken.

49. According to Anna, after this incident she continued to visit her father. But there was no further challenge by Anna or Blzena to Tereza’s control of the Oxley Park house.

50. According to Anna and Blzena, Tereza did not tell them about their father being admitted to hospital. They found out through another member of the family. When they visited the deceased in hospital, Tereza was not there. Anna and Blzena arranged the funeral. Tereza did not attend.

51. Tereza’s account was quite different. She said that she looked after the deceased at his request. He was terrified of going in to a nursing home and wanted to live in his house for as long as he could.

52. Tereza said that Anna and Blzena had little to do with the deceased during his lifetime and he was upset by this. They did not write to him or telephone him and only visited very infrequently. Tereza said she was told by the deceased that he had not attended Blzena and Jamie’s wedding because of her neglectful attitude.

53. Tereza did not dispute that Blzena tried to move into the Oxley Park house and she (Tereza) prevented this. Nor did she dispute that Anna and Blzena tried to take their father out of the house and she refused. But she said that they did not say why they wanted to do so. According to Tereza, they behaved offensively towards her, suggesting that she was poisoning their father. Tereza said that it was the deceased’s decision not to go out with his daughters. She said she did lay hands briefly on Blzena, but this was only to push her back by her shoulders to get her out of the house. She said that she and Jasna were the ones who called the police. The police later visited; they were shown the will and indicated that Tereza was within her rights.

54. Tereza accepted that she had not told Anna and Blzena about the deceased’s hospitalisation. She said that neither the deceased nor she had any contact details for them. She said she did tell their aunt (Jela’s sister) who lived nearby. Tereza said that her step-sisters wanted to take over the funeral arrangements and she allowed them to do so. She said she did not attend the funeral because her step-sisters’ behaviour made her uncomfortable, but that she visited the grave later to pay her respects.

55. In cross-examination, Tereza recounted a conversation with Blzena which touched on the will. According to Tereza the conversation took place before her mother died. The timing was unclear but in the end Tereza appears to have placed the conversation as having happened during Blzena’s Christmas visit the year before her mother’s death, which would have been Christmas 2014.

56. Tereza’s account of the conversation was not easy to follow. As best I could make out, it began with Blzena saying that her mother (and, it seems, her father) had promised her the Oxley Park house. Tereza replied that the deceased had done his will and “it’s too late”. Blzena replied “It’s never too late”.

57. Tereza had not referred to this alleged conversation in her affidavits. Blzena was not asked about it in cross-examination. I asked counsel whether he proposed to call Blzena in reply. Ultimately he did not do so.

58. In evidence is a police report which was prepared following the incident which resulted when Anna and Blzena tried to take their father out of the house. I will deal with that in a moment, but it is of limited use in resolving the conflict of evidence between the witnesses about the deceased’s relationships with his daughters on one hand, and his step-daughter on the other. Neither side produced any other independent evidence, either from documents or third party witnesses, to support their respective accounts.

41. The police report is dated 23 November 2015. It was prepared as a result of a complaint by Tereza and Jasna who were described as the victims, or alleged victims.

42. The report records that the police visited the Oxley Park house after the incident happened. It states that the police obtained an account from each of Tereza, Jasna and the deceased. But none of the information in the report about the incident is recorded as having come from the deceased, and Jasna is recorded as saying that the deceased was suffering from dementia.

43. The report records that the police were given a version of events which was broadly similar to that provided by Tereza in her evidence. In particular they were shown the deceased’s will and advised:

Police informed [Tereza] to stop all contact and refrain from inviting [Anna and Blzena] inside of the location in the future.

It seems that the police left matters there. They appear to have taken no direct action against Anna and Blzena.

62. Clearly Tereza is correct in saying that it was she who reported the incident to the police and that the result was to leave her in undisturbed possession of the Oxley Park house. But there is no independent support for any suggestion that the deceased did not wish to see his daughters. At most he may not have wished to go with them on that occasion.

63. This does not mean that I accept Blzena and Anna’s account in its full detail either. Unfortunately, I find it all too easy to imagine that Blzena did want to take her father to the doctor because she harboured some suspicions that he was being poisoned or otherwise mistreated by Tereza. It hardly needs to be said that there was no justification whatsoever for this.

64. At the same time, the evidence from both Blzena and Anna that in general their father was happy for them to visit was not contested. Nor was the evidence that they did make visits to him, even if those visits were infrequent.

65. I also think it is unlikely that the deceased failed to attend Blzena and Jamie’s wedding as a response to neglect on her part, as Tereza claims he told her. The wedding of course happened in 1989 which was long before Tereza (or her mother) came on the scene. The explanation given by Blzena, that the deceased’s non-attendance was attributable to alcohol problems, was not challenged. Nor was Blzena’s evidence that she was doing housework and otherwise looking after the deceased until October 1991.

66. I do not doubt that when Tereza started to care for her mother and step-father in 2010 or 2011, the deceased benefited from this. I can also believe that he did not want to be put into a nursing home. But I think that while Terezija was alive, looking after her is likely to have been Tereza’s priority, with looking after the deceased being incidental.

67. Tereza denied the suggestion that she only moved into the Oxley Park house in 2014 because she had nowhere else to go. She accepted that her daughter Jasna had moved from the house at Cecil Hills which Tereza had previously shared with her. Tereza said she left before Jasna moved and there was room for her at Jasna’s new house. But there is no independent evidence to confirm this, whether from Jasna or anyone else.

68. Counsel for Blzena also submitted that there was no evidence that there was any personal warmth or depth to Tereza’s relationship with the deceased. Counsel characterised Tereza’s role as being a carer and nothing more.

69. I was left with the impression that Tereza looked after the deceased efficiently and devotedly, and was understandably proud of her efforts and resentful of the baseless poisoning allegation by her step-sisters. Her perception may well have been that they were happy to criticise her while not making any substantial contributions themselves. Such a perception may well have been justified; but the fact remains that there is no evidence of any shared interests, or emotional bond, between Tereza and her step-father over the last seven years or so of his life.

70. Blzena accepted that she never wrote to, or telephoned, the deceased. Clearly there was no love lost between Anna and Blzena on the one hand and Tereza (and it seems Terezija) on the other. This may be part of the explanation but it does not seem to me to be persuasive as a complete explanation. On the other hand, for reasons I have given, the evidence does not establish hostility or estrangement between the deceased and Blzena after 1991.

71. Counsel for Blzena emphasised, in his submissions on credit, that the alleged conversation referring to the will at Christmas 2014 did not appear in Tereza’s affidavit. But given that no evidence was called in reply, that conversation was not actually denied. However, whether the conversation happened, and happened exactly as Tereza described, seems to me to be less important than the knowledge and beliefs which Tereza attributed to herself and Blzena.

72. On her own account, as late as 2014 Tereza was conscious of earlier promises that Blzena was to receive the Oxley Park property, and that Blzena still expected that those promises should be fulfilled. Equally, it is clear that Tereza took the view that any such moral claim by Blzena had been defeated by the will.

73. Tereza seems to have seen the will and the transfer as reflecting in effect a contract between herself, Terezija and the deceased which, having been carried into effect over a period of years, could not be reversed. There is no sign that she saw her step-father as having an ongoing entitlement to choose how to dispose of his property.

74. There is no dispute that Tereza excluded her step-sisters from the house. Tereza was cross-examined about why she would not permit Blzena to move in. Tereza said she could manage on her own. I do not think this is an answer. The house contained three bedrooms; there seems no reason why it would not have been feasible for Blzena to stay there. I think the real reason for Tereza’s refusal was her poor relationship with her step-sisters.

75. It is difficult to accept Tereza’s suggestion that the deceased did not want to see his daughters when there is unchallenged evidence of visits by them, and of such visits being welcomed by the deceased. Of course the deceased’s attitude to his daughters may have been inconsistent, perhaps as a result of encroaching dementia. But that only underlines the fact that there is no independent evidence of the deceased having cut his daughters off at a time when he was in full command of his faculties.

76. However offended Tereza may have been by the false poisoning allegation, there was no justification from the deceased’s point of view for preventing Anna and Blzena from taking him out, whether to visit a doctor or anyone else. Nor was there any justification for excluding them if he wished them to visit or stay. The house was just as much the deceased’s as Tereza’s.

77. What both of the incidents underline is that by 2015 Tereza was in effective control of the deceased. She was making decisions for him based on her own wishes. Even if the deceased retained capacity at that stage, he appears to have lost the ability to influence events.

78. In cross-examination, counsel for Blzena put to Tereza that she was deliberately trying to keep the deceased from his daughters because she did not want him to change his mind about the testamentary arrangements he had made in her favour. Tereza denied this. I am not prepared to go so far as to make an affirmative finding in accordance with counsel’s suggestion. But I do think that in Tereza’s view the house in effect belonged to her by that stage. She would clearly not have been interested in fostering any relationship between the deceased and his daughters, even if the deceased’s state of health had allowed for that.

Blzena’s circumstances

79. Blzena left school when she was 15 years old, in 1978 or 1979 and began working in a textile factory at St Marys. She worked there until the factory closed in 1989. She later undertook other factory work. As already mentioned, she and her husband Jamie both lost their jobs in 2015 when the factory in which they were working closed down.

80. Blzena is now 56 years old. She is living with Jamie in a one bedroom cottage on a property in Brookfield in the Hunter Valley region of NSW. They moved there after returning from Victoria permanently in 2016. The property is owned by two of Blzena's sisters-in-law (Jamie's sisters) and another person. As well as performing chores around the property, Blzena and Jamie pay rent of $250 per week.

81. Blzena has no source of income and has not worked since August 2015. She does not receive any Centrelink payments. She states that she suffers from back pain and hypothyroidism, but these were not offered as explanations to explain her unemployment. Blzena is also prescribed anti-depressants and is a smoker.

82. Jamie became unemployed at the same time as Blzena in 2015. Since about April 2017, he has worked on a casual basis for Telstra. He has now accepted a full-time position with Telstra. During the Covid-19 emergency, he has been working from home. In the 2020 financial year his income was over $70,000. Jamie deposes that he has ongoing health problems, including: ankylosing spondlitis, hypertension, gallstone issues, dental and eyesight problems which he asserts he is unable to adequately treat because of their financial situation.

83. Blzena and Jamie have no children and own no real property. She owns one car, although it is registered under a different name, that she estimates to be worth about $150. Jamie also owns a car worth about $5,000 but it is currently unregistered. Together Blzena and Jamie own two boats estimated to be worth about $5,000, a box trailer worth $200 and some personal jewellery worth about $1,000.

84. Blzena and Jamie have $60 in a joint account. His superannuation is over $198,000. Pursuant to Covid-19 amendments to the superannuation rules, Blzena withdrew $20,000 from her superannuation, leaving her with a balance of $28,000. Blzena used the funds to pay down her rental arrears and to register her car.

85. The period of unemployment between Blzena and Jamie has caused them to incur a $21,600 rental debt and about $65,000 in credit card debts. The rental debt has been reduced to $13,500, but they have only been able to meet the interest, not the principal, payments of the credit card debts. They estimate their monthly expenses to be about $3,500 to $4,230 and expect their expenses to increase next year, well exceeding their forecasted monthly income.

Tereza’s circumstances

86. Tereza is 76 years old. She had previously undertaken factory work which ceased in 1995. She was then living with her husband in Smithfield, in a property which appears to have been owned jointly. Tereza sold the Smithfield property in 1999 for $190,000. Some of the proceeds were used to fund her husband’s cancer treatment and discharge the mortgage. It appears that the remaining amount was used for Tereza’s living expenses.

87. Tereza has two children and six grandchildren. I have already mentioned Jasna. Tereza’s other child is a son who lives in Basin View on the South Coast.

88. Whilst living with her mother and the deceased, Tereza received a carer’s pension of $120 a fortnight. She also deposes to having access to the deceased’s bank account and using his funds to pay for living expenses.

89. Tereza now lives alone at the Oxley Park property. She receives $1,852 a month from Centrelink and estimates her monthly expenses to be about $1,000. She owns a car worth about $1,400 and has funds on deposit of about $23,000.

90. Tereza does not make any complaints of any particular non-age related ailments that require additional care. She does not claim to have any outstanding debts.

91. Tereza states that she enjoys using the Oxley Park property for gardening and stress relief. The property is located near the cemetery where her mother and the deceased are buried and she states that she visits them on occasion. The property is also nearby her local church and she says she has formed community ties to the neighbourhood. She enjoys her independent lifestyle and intends to remain living independently as long as maintainable; but in cross-examination she conceded that she currently receives help to maintain the property from her grandchildren and neighbours.

Application for provision

92. Blzena’s application was made within the time fixed by s 58 of the Act. There is no dispute that she is an eligible person under s 57(1)(c). The issues are:

1. whether the deceased’s will made “proper” provision for Blzena (s 59(1)(c)); and

2. if not, what provision “ought” to be made (s 59(2)).

93. I have summarised Blzena’s circumstances above. Though Jamie is currently employed her circumstances are somewhat precarious. If Jamie were to lose his employment, they would have no savings to fall back on. In my view Blzena is relevantly in need: cf MacAlpine v MacAlpine [2020] NSWSC 824 at [308].

94. Counsel for Tereza relied on the principle which was expressed by Payne JA in Megerditchian v Khatchadourian [2020] NSWCA 229 as follows (at [35]):

If the deceased is capable of giving due consideration to the question of what provision was required for the applicant’s proper maintenance and advancement in life and has done so, considerable weight should be given to the testator’s testamentary wishes in recognition of the advantages that the testator has over the Court in knowing the details of the family’s relationships.

95. In support of this proposition, Payne JA relied on Slack v Rogan (2013) 85 NSWLR 253 at [125]-[127]; and Sgro v Thompson [2017] NSWCA 326 at [80]-[88]. I refer to some further authorities in my discussion of the principle in MacAlpine at [341]-[346].

96. In the present case, the critical step taken by the deceased was not the execution of the 2011 will. Rather it was the execution of the transfer which converted the deceased’s interest share of the Oxley Park property from a tenancy in common to a joint tenancy and gave Tereza a share of the property and a right of survivorship. But there is no reason why that should make any difference. The transfer was clearly executed in a testamentary context. For convenience I will treat it as part of the provisions in favour of Tereza in the will itself.

97. The principle has been stated in different cases in slightly different terms but it clearly can only apply if there is reason to think that the testator’s judgment, as expressed in the will, was a considered and responsible one. In the present case, that is open to question. I think four important points emerge from the evidence.

98. First, the testamentary arrangements lacked mutuality. There is no evidence that Tereza (or Terezija) contributed financially to the purchase of the house. It is understandable that the deceased would have felt an obligation to provide for Terezija on his death. But Terezija evidently felt no equivalent obligation towards him.

99. Second, there is uncontested evidence of alcohol abuse affecting the deceased and going back to 1987. By 2015 the deceased was suffering from dementia. There is no evidence about when he started to exhibit the symptoms of that condition. Nor is there any evidence which expressly addresses his cognitive function as it was in 2011 when he executed the transfer and made the will.

100. It appears from the notes that the solicitors at Lamrocks did not communicate directly with the deceased in Croatian, relying instead upon Terezija’s granddaughter, Jasna. All the notes say is that the deceased “seemed” to understand the will arrangements but there is no evidence in the notes that the deceased was given a clear and full explanation of the implications of the transactions.

101. Third, there is the evidence given by Blzena and Anna of repeated assurances by the deceased (and his first wife Jela) that Blzena would ultimately be given the property. As I have already noted, for at least the period up until the deceased married Terezija, the making of these statements was not contested and it is consistent with the objective evidence.

102. The assurances cannot be reconciled with the deceased’s conduct after 2000 when he and Terezija altered the title to the property so that Terezija would have a half share as tenant in common. Arguably the inconsistency goes back to the joint tenancy arrangement with Terezija in 1996. The assurances are clearly inconsistent with the 2011 arrangements.

103. If Tereza’s account of the conversation with Blzena referring to the will were correct, then it would have provided a foundation for challenging Blzena’s evidence that the deceased’s promises that she would receive the Oxley Park property continued up until shortly before Terezija’s death. But no such point was taken in cross-examination; in fact, there was no cross-examination of Blzena on the conversation at all. Counsel did question Anna’s and Blzena’s evidence that the promises continued up until 2014 or 2015, but they made no concessions. In the end, I am not prepared to reject their evidence on this point.

104. Fourth, and perhaps most important, there is simply no evidence that in 2011 the deceased considered his obligations to Blzena at all. Lamrocks’ notes do not refer to the deceased even having any daughters, let alone to the deceased making some sort of adverse judgment on them based on their supposed neglect of him. For that I have only Tereza’s evidence.

105. It is fair to say that neither party seems to have overextended themselves in collecting evidence which would allow me to resolve the factual issue about the deceased’s 2011 testamentary arrangements. Presumably the deceased’s cognitive function, and when the diagnosis of dementia was made, could have been illuminated from medical records. Evidence might also have been produced from the recollections of the deceased’s friends and acquaintances. Either party might have obtained such evidence.

106. But I think the critical omission is the omission by Tereza to lead any evidence of the circumstances in which the will and the transfer were prepared. Both Mr Hockley and Jasna gave evidence as part of the defendants’ case. Their evidence did not address the issue. Counsel for the defendants pointed out that neither of them had been required for cross-examination, but I do not think that counsel for Blzena was required to cross-examine them in the dark.

107. Counsel for Blzena invited me to draw a Jones v Dunkel inference against the defendants on this question. I do not think I should go as far as that. But the fact is that the surrounding circumstances give rise to doubts and no evidence was led to dispel those doubts. In my view, in these circumstances, the testamentary judgment reflected in the 2011 transfer and will are of little or no weight.

108. Counsel for the defendants pointed out that on Tereza’s evidence she looked after the deceased, and moved into the house, as part of an understanding that she would receive the house when her mother and step-father died. Tereza, of course, is a beneficiary under the will and has no obligation to justify the gift in her favour. But counsel submitted that if she did have to, she would have an entitlement by way of proprietary estoppel.

109. I am not satisfied, however, that Tereza began caring for her mother and step-father, and later moved in with them, in reliance on a specific promise from the deceased. Her conduct from 2010 or 2011 is equally explicable by reference to a desire to care for her mother. That also would explain a decision to move into the house in 2014, as would a lack of anywhere else to live (a possibility which, on the evidence, has not been excluded: see [67] above).

110. Furthermore, Tereza did not pay rent and she received a social security benefit by way of carer’s allowance for looking after her mother and step-father. I am not satisfied that she suffered any relevant detriment in what she did.

111. This is not to say that the assistance provided by Tereza to the deceased should be ignored. But it should not be forgotten that on Blzena’s unchallenged evidence she kept house for the deceased and provided care for him over a period of eight years, from 1983 to 1991. This compares with the four or five years during which Tereza cared for the deceased along with her mother and three years caring for the deceased alone. Obviously the deceased would have required more care at the end of his life, but looking at the deceased’s life overall, even if one excludes the emotional connection with Blzena, she made a significant contribution to the deceased’s welfare which is comparable to, if not perhaps of exactly the same weight as, that made by Tereza.

95. As I have noted there is no doubt that the deceased did make promises to Blzena that she would get the Oxley Park property. But there is more to it than simply the deceased encouraging that expectation on Blzena’s part. The promises reflected a family understanding reflected in both the deceased’s 1978 will and Jela’s. When Jela died that plan remained in place, and it was partially put into effect by the transfer of Lot 187 to Anna.

96. It was not suggested that this was one of those rare cases where such a family understanding had contractual force: cf Birmingham v Renfrew (1937) 57 CLR 666. But in my view it is capable of giving rise to a moral obligation for the purposes of the Act. That obligation goes beyond merely keeping the deceased’s promises to Blzena. It derives further force from the deceased’s receipt of Jela’s share of the Oxley Park property on the understanding that the deceased would then deal with it in a particular way.

97. By the time the deceased died, it was beyond his power to give full effect to that arrangement. But the half share of the Oxley Park property which the deceased retained was still available to give some effect to it. Counsel for the defendants did not suggest that this was a case of actual estrangement or misconduct on the part of Blzena, and the evidence would not have supported that. In my view, in 2011 there remained a moral obligation on the deceased to make some provision for Blzena out of his interest in the house.

98. Counsel for Tereza raised questions as to the utility of such a provision. I will address these submissions in more detail shortly. For the moment it is enough to say that they do not persuade me that the deceased’s failure to make provision for Blzena was proper.

99. This brings me to what provision ought to be made. In Megerditchian v Khatchadourian [2019] NSWSC 1870 at [179], [201] I said that in the case of an adult beneficiary who has reached retirement age any entitlement to provision is best seen as a provision for “advancement” rather than “maintenance” (I use these terms loosely: provision for “education” was not of course relevant here). Counsel for Blzena relied on this approach, and it was not contested by counsel for Tereza.

100. Counsel for Tereza did however suggest that there was no point in making such a provision in the circumstances of this case. Counsel submitted that, unfortunate as it might be, it was clear that Blzena and Jamie were never going to be able to afford their own house to live in, and whatever provision was made from the estate for them was not going to alter that. Counsel submitted that to award them some sort of lump sum would only mean that the Oxley Park property would have to be sold, turning Tereza into a renter alongside Blzena and Jamie.

101. At the outset of the hearing, counsel for Tereza announced that the defendants would not claim costs if the application was dismissed. Counsel also drew my attention in submissions to evidence about the costs to be charged. If Blzena’s application is dismissed her solicitor will not charge her for acting. Mr Hockley’s affidavit states that if the application is dismissed he will not seek payment of Lamrocks’ fees from the Oxley Park property. Counsel invited me to dismiss the application, secure in the knowledge that in doing so I would impose no additional financial burden on Blzena, and that Tereza would be able to continue to live unaffected at Oxley Park.

102. As already mentioned, Tereza gave evidence that she is comfortable living in the house at Oxley Park and intends to continue to do so indefinitely. She resisted any suggestion that it was too big for her, insisting that she was able to maintain it herself or with the assistance of family members. But I am not satisfied that if I were to dismiss Blzena’s claim that Tereza would necessarily stay at the house for any extended length of time. I did not find the evidence she gave on this subject particularly persuasive. I think it is more likely that once the proceedings were over she will, if successful, sell the house anyway, to free up the capital in it, and move to a smaller and more suitable home.

103. Certainly the impact of costs in family provision cases is a matter of concern, especially in cases such as this one where the deceased’s assets are relatively small. The jurisdiction is not one which should be exercised to make a marginal adjustment here or there to the deceased’s testamentary arrangements. And to the extent that costs are within the Court’s control, the Court strives to ensure that they are kept proportionate to the amount in issue. But in the end Parliament has created the jurisdiction and has left the Court to exercise it in accordance with the usual rules as to costs.

104. There is no reason why the solicitors who act in such matters should not be properly remunerated for the professional services which they provide. I do not see the present case as being one of marginal adjustment. In any event I question whether it could ever be right for the Court to decline to make a provision in favour of a plaintiff simply out of a desire to keep the overall costs burden down. Furthermore, at this point, I do not know what the ultimate incidence of costs inter partes will be. That may be affected by offers made by the parties or other facts which will only be revealed once judgment has been delivered. The lawyers’ generosity towards their clients in this case is admirable but it should not prejudice Blzena’s entitlements.

105. I do not propose to fix the amount of the provision by reference to a list of existing debts and prospective future expenditures, such as paying off Blzena and Jamie’s credit card debt and buying a new car. In this case I see the proper provision as a lump sum assessed by reference to the deceased’s share of the Oxley Park property which is the source of the deceased’s moral obligation to provide for Blzena.

106. It is not suggested that the promises made to Blzena should be fully recognised. Half of the property has passed to Tereza. Only half is available. Counsel for Blzena did not claim all of that. The circumstances point to a lump sum representing a substantial proportion of the value of the deceased’s share. The parties agreed that the Court should accept the valuation evidence which put the value of a half share of the Oxley Park property at $412,500. In the exercise of my judgment I fix the amount as $220,000.

Notional estate

124. There was no dispute that the deceased’s half share of the property as joint owner was available as notional estate for the purpose of satisfying any entitlement the Court might find Blzena to have: see s 80(2)(c) of the Act. Counsel for Tereza, however, emphasised the requirements of s 87. That section provides:

General matters that must be considered by Court

The Court must not make a notional estate order unless it has considered the following:

(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,

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

125. The parties agreed that the “reasonable expectations” would include those of Tereza. But counsel for Tereza went further and submitted that they also included the “reasonable expectations” of the deceased. Counsel submitted that his expectation was that Tereza would receive the whole of the property on his death.

126. In Petschelt v Petschelt [2002] NSWSC 706 at [68], Master McLaughlin expressly referred to reasonable expectations, under the predecessor provision to s 87 (Family Provision Act 1982 (NSW), s 27) as including those of the deceased. This passage was quoted by Ward J (as the Chief Judge then was) in John v John [2010] NSWSC 937 at [118], and in turn by Hallen J in Kelly v Deluchi [2012] NSWSC 841. But in Phillips v James (2014) 85 NSWLR 619 at [125] Basten JA said:

While it remains true that the section (which has not changed from the 1982 Act) is silent as to whose “reasonable expectations” must be considered, the requirement is a constraint on the making of a notional estate order. It is not sensibly construed as referring to the reasonable expectations of the applicant who wants a share of, but does not own, the property. Nor does it sensibly refer to the expectations of the deceased person, because the court must already have determined that an adjustment in the distribution effected by the will was appropriate: s 89(2). Since a notional estate order will only be made in relation to property which never was, or no longer is, part of the estate, it is unlikely to refer to the expectations of any person other than the person who is the present holder of an interest in the property. To the extent that it held otherwise, the reasoning in Petschelt should not be followed.

127. If it were necessary to do so, I would follow the view expressed by Basten JA. But in any event I am not satisfied that the benefit to Tereza represents a “reasonable expectation” on the part of the deceased. For reasons which I have given, I am simply not satisfied that the testamentary arrangements in 2011 represented a conscious, clear and settled rejection of the deceased’s previous intention to benefit Blzena.

128. This leaves Tereza’s “reasonable expectations”. But I have rejected the submission that Tereza would have an entitlement to the whole of the property based on proprietary estoppel. As a result of my conclusions she will retain the half share of the property effectively derived from her mother as well as slightly less than a further quarter of the property in value (subject to the impact of costs). Her eventual benefit is likely to be something more than half a million dollars.

129. In these circumstances I do not accept that Tereza’s expectation of receiving the whole of the property is properly described as “reasonable”, so as to prevail over Blzena’s prima facie entitlement to provision. Section 87 is no bar to the making of such a provision.

Conclusions and orders

130. I have concluded that:

1. the deceased failed to make adequate provision for Blzena’s advancement (in the sense in which I have used that term in these reasons);

2. the provision which “ought” to be made, subject to the availability of assets, is a legacy in the sum of $220,000; and

3. it is proper to make an order designating the deceased’s half share of the Oxley Park property as notional estate for the purpose of satisfying that legacy.

131. I will direct that the parties confer with a view to agreeing orders to give effect to these conclusions, and dealing with costs. If agreement cannot be reached then arrangements may be made with my Associate for the making of further submissions.

132. The orders of the Court are:

1. Adjourn the proceedings to 9.30am on 17 December 2020, or such other date and time as may be arranged with my Associate.

2. Direct that the parties confer and, not less than one day before the hearing date specified in order (1), submit to the Court an agreed minute of order (or, if they do not agree, separate minutes of order) giving effect to the conclusions reached in this judgment and dealing with the costs of these proceedings.

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Decision last updated: 14 December 2020