Habricko v Palijan

[2017] NSWSC 1695

Supreme Court

New South Wales

Medium Neutral Citation:	Habricko v Palijan [2017] NSWSC 1695
Hearing dates:	19, 20 June 2017
Decision date:	06 December 2017
Jurisdiction:	Equity - Family Provision List
Before:	Kunc J
Decision:	Summons dismissed
Catchwords:	SUCCESSION — family provision and maintenance — circumstances precluding relief — adult children — defendant sister preferred in surviving parent’s will to exclusion of plaintiff brother — brother fails to identify any particular need other than possibly for vicissitudes — failure to provide for brother not inadequate where he was treated generously during parents’ lives and sister had not been
Legislation Cited:	Succession Act 2006 (NSW)
Cases Cited:	Camernik v Reholc [2012] NSWSC 1537 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Sellak v Sellak (No 2) [2016] NSWSC 396 Verzar v Verzar [2014] NSWCA 45 West v Mann [2013] NSWSC 1852
Category:	Principal judgment
Parties:	Tom Habricko (Plaintiff) Mary Palijan (Defendant)
Representation:	Counsel: F Austin (Plaintiff) G A Elliott (Defendant)   Solicitors: Gerard Malouf & Partners (Plaintiff) Walter T Lyubicic & Associates (Defendant)
File Number(s):	2016/192687
Publication restriction:	No

Judgment

Summary

1. The plaintiff is Tom Habricko (“Tom”), the only son of Jela Habricko (“Mrs Habricko”) and her husband Ivan Habricko (“Ivan”). Mrs Habricko died on 16 July 2015 at the age of 82. Without disrespect, I shall refer to the plaintiff and several others who feature in this judgment by their given names.

2. On 16 February 2013, Mrs Habricko made her final will (the “Will”).

3. In addition to Tom (who is 61 years old), the defendant Mary Palijan (“Mary”) is Mrs Habricko’s only other eligible beneficiary. Mary (who is 57 years old) is Tom’s only sister and the only daughter of Mrs Habricko and Ivan. Mary is the appointed executrix and trustee of the Will.

4. Under the Will, Mrs Habricko’s estate (the “Estate”) was left entirely to Mary. At the time of trial, it comprised an immaterial amount of cash and 50% of a property at Cecil Hills (the “Cecil Hills Property”) which was jointly owned as tenants in common as to 50% by Mrs Habricko, and as to 50% by Mary and her husband, John Palijan (“John”). The value of Mrs Habricko’s 50% share at the time of hearing was approximately $775,000.

5. By summons filed on 24 June 2016, Tom applies for provision out of the Estate under s 59 of the Succession Act 2006 (NSW) (the “Act”). Mr R Austin of Counsel appeared for Tom and Mr G A Elliott of Counsel appeared for Mary.

6. Mr Austin ultimately accepted that any provision for Tom could not be more than between $50,000 and $100,000 as a buffer for contingencies or vicissitudes. Tom had received considerable financial assistance from Mrs Habricko and Ivan during their lifetimes. Mary had not. In the last three years of her life, Mrs Habricko had purchased the Cecil Hills Property with Mary pursuant to an arrangement that Mary would care for her (Mrs Habricko) and then receive the Estate. Mary had cared for Mrs Habricko until the latter’s death.

7. Having regard to the assistance received by Tom from his parents; the composition of the Estate; Tom and Mary’s respective claims on Mrs Habricko’s testamentary bounty; and Mrs Habricko’s clear view that Tom had been benefited during her and Ivan’s lives and that Mary should receive the Estate including in return for caring for her (Mrs Habricko), the Court is not satisfied that the Will makes inadequate provision for Tom. Alternatively, even if that were not so, for the same reasons the Court would not, in the exercise of its discretion, order additional provision for Tom.

The Act

8. Part 3.2 of the Act deals with family provision orders. Division 1 of that part identifies, in s 57, who are “eligible persons who may apply to the Court for a family provision order in respect of the estate of a deceased person”. Section 58(2) requires an application for a family provision order to “be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown”.

9. Division 2 of Part 3.2 of the Act deals with determination of applications for family provision orders. For the purposes of these proceedings, the relevant provisions are:

“59 (1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:

(a) the person in whose favour the order is to be made is an eligible person, and

(b) in the case of a person who is an eligible person by reason only of paragraph (d), (e) or (f) of the definition of “eligible person” in section 57 — having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application, and

(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both.

(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.

…

60 (1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining:

(a) whether the person in whose favour the order is sought to be made (the "applicant") is an eligible person, and

(b) whether to make a family provision order and the nature of any such order.

(2) The following matters may be considered by the Court:

(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,

(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person’s estate,

(c) the nature and extent of the deceased person’s estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,

(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person’s estate,

(e) if the applicant is cohabiting with another person ─ the financial circumstances of the other person,

(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person’s estate that is in existence when the application is being considered or that may reasonably be anticipated,

(g) the age of the applicant when the application is being considered,

(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person’s family, whether made before or after the deceased person’s death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,

(i) any provision made for the applicant by the deceased person, either during the deceased person’s lifetime or made from the deceased person’s estate,

(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person,

…

(m) the character and conduct of the applicant before and after the date of the death of the deceased person,

(n) the conduct of any other person before and after the date of the death of the deceased person,

…

(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person’s death or at the time the application is being considered.”

10. In West v Mann [2013] NSWSC 1852 at [9]–[11], I explained the reasons for the approach I adopt to applications under the Act. That is how I will proceed in this case.

11. By reference to the language of the Act, the questions and issues which the Court must take into account are:

1. Is the person who has applied to the Court for a “family provision order” (as defined in s 3 of the Act) an eligible person under s 57 of the Act? In accordance with s 60(1)(a), the Court may (not must) have regard to the matters set out in s 60(2) in determining whether that person is an eligible person. It is not readily apparent how many of those matters could be relevant to the issue of eligible person, but nothing turns on that observation.

2. If the answer to question (1) is “yes”, has the application been filed in the Court’s Registry not later than 12 months after Mrs Habricko’s death (ss 58(2) and (3))?

3. If the answer to question (2) is “no”, has the eligible person who has brought the application shown sufficient cause for the Court to order otherwise to extend the date for the filing of the application in the Court’s Registry (ss 58(2) and (3))?

4. If the answer to question (2) is “yes” or the Court has otherwise ordered under s 58(2), is the Court satisfied that the person in whose favour the order is to be made (the “applicant”) is an eligible person (s 59(1)(a))? In reaching the requisite state of satisfaction the Court may (not must) have regard to the matters set out in s 60(2). As a theoretical matter this question admits of the possibility that “the person in whose favour the order is to be made” is not the person who has brought the application (in which case, the latter must also be an eligible person).

5. If the answer to question (4) is “yes”, what provision has been made for the proper maintenance, education or advancement in life of the applicant by the Will or by the operation of the intestacy laws (the “Provision”)?

6. Is the Court satisfied, at the time when the Court is considering the application, that the Provision is not adequate for the proper maintenance, education or advancement in life of the applicant?

7. If the answer to question (6) is “yes” (i.e. the Court is satisfied the Provision is not adequate for the specified purpose) then the Court’s discretion conferred by the chapeau to s 59(1) to make a family provision order in favour of the applicant (the “Discretion”) is enlivened.

8. Once the Discretion is enlivened then, noting s 59(2), what provision, if any, does the Court think ought to be made for the proper maintenance, education or advancement in life of the applicant, having regard to the facts known to the Court at the time the order is made (the “Proposed Provision”)? This is an evaluative judgment which arises from the word “ought” and requires examination of the applicant’s needs. In making this judgment the Court may (not must) have regard to the matters set out in s 60(2) (“the nature of any such order”: s 60(1)(b)).

9. Having answered question (8), should the Court exercise the Discretion to make an order for the “Proposed Provision”? In deciding whether to exercise the Discretion to make such an order, the Court may (not must) have regard to the matters set out in s 60(2) (“whether to make a family provision order”: s 60(1)(b)).

10. Section 60(2) provides a helpful checklist but it is no more than that. The Court is not obliged to take those matters into account. The extent to which it does (if at all) will depend upon the facts of each particular case.

11. Section 60(2)(p) confirms the breadth of matters the Court can take into account. Once enlivened, the Discretion is expressly fettered only by the requirement in s 59(2) that if an order is made, it must be such order “as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made”. The Discretion is otherwise unconfined, which means that in answering question (8) the Court is otherwise constrained only by the need to act judicially, that is to say “not arbitrarily, capriciously or so as to frustrate the legislative intent”: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22] per Gaudron and Gummow JJ. The Court must act rationally and exercise the Discretion for the purpose for which it was conferred.

12. Having identified what I consider to be the correct approach under the Act to an application of this kind, I will set out the uncontested facts before resolving the three relevant factual issues that were in dispute.

The facts

13. The Court finds the facts to be as follows.

14. Mrs Habricko was born on 29 September 1932 in what was then Yugoslavia.

15. Mrs Habricko married Ivan in Yugoslavia and they had two children there: Tomislav (Tom) and Marijan (Mary).

16. Tom was born on 19 November 1956.

17. Mary was born on 25 February 1960.

18. Tom’s future wife, Lily, was born on 11 August 1961.

19. In October 1970, the family of four migrated to Australia.

20. The family first lived in a hostel in Victoria. They then moved to another hostel in East Hills, Sydney after which they lived with Ivan’s cousin in Leichhardt. The family later rented a property in Petersham.

21. Soon after the family’s arrival in Sydney, Ivan commenced work for Dunlop making car batteries and Mrs Habricko found work as a cleaner at Rozelle Hospital.

22. In April 1972, Ivan and Mrs Habricko purchased a unit in Day Street, Leichhardt for $16,750 subject to a $12,000 mortgage.

23. In late 1972, at the age of 16 years, Tom left school and commenced employment working in a factory making bicycles. Six months later he commenced a job as a process worker at Smalls Chocolate Factory. Tom contends that from the time he commenced work until after his marriage he gave his pay packets to his parents and his mother would give him pocket money every week and also pay for anything he needed.

24. On 10 September 1976, when Tom was 19 years of age, Mrs Habricko, Ivan and Tom purchased a house in Petersham as joint tenants for $57,000 (the “Petersham Property”) subject to a $28,000 mortgage. It is Tom’s submission that he contributed to the payment of the mortgage through the pay packets given to his mother. Mary denies this.

25. The mortgage over the Petersham Property was discharged on 7 November 1979.

26. Tom says that in 1981 an extension was added to the Petersham Property at an estimated cost of between $30,000 to $40,000. Tom claims the funds for the extension were paid by both Ivan and himself.

27. In 1981, Mrs Habricko suffered an injury at work and made a Workers Compensation claim. Mrs Habricko did not return to paid employment after this injury.

28. Tom married Lily on 20 February 1982. Tom says that he continued to give his pay packet to his parents for several months after the marriage but that he spoke to his parents and said that he and Lily needed to start saving for a house of their own so Tom discontinued giving his parents his pay.

29. Tom and Lily remained at the Petersham Property with Tom’s parents until August 1982 when they purchased a house at Minto (the “Minto Property”) for $59,500 with a mortgage of $40,000. Mary alleges that at the time of the purchase Tom and Lily received approximately $10,000 towards the deposit of the Minto Property from Mrs Habricko after she received her worker’s compensation payout.

30. Mary married John on 25 September 1982. They continued to live with Mrs Habricko and Ivan for a further two years while saving to purchase their own home.

31. On 10 November 1983, $30,573.86 was paid into Tom and Lily’s mortgage account to reduce it to $9,400. Between February 1984 and February 1985 the balance of the mortgage over the Minto Property was paid off, including by some payments (the records are incomplete) of $1,000.

32. Tom and Lily’s son Danny was born on 13 December 1984.

33. In March 1985, the mortgage over the Minto Property was discharged.

34. In 1986, Tom and Lily sold the Minto Property for $69,950 and moved back into the Petersham Property where they lived for three years while they bought land and built a new home. Tom claims that during these three years he and Lily contributed 50% of food and utility bills.

35. In 1987, Tom and Lily purchased land in Abbotsbury for $51,000 (the “Abbotsbury Property”) on which they built a home.

36. Tom and Lily sold the Abbotsbury Property for $325,000 in 1992.

37. Tom claims that, out of the proceeds of sale of the Abbotsbury Property, he provided $26,000 to $30,000 to his parents to purchase a new car and another $70,000 for improvements to the Petersham Property.

38. In 1992, Tom and Lily bought land at Bossley Pak to build their current home.

39. In 1994, Ivan provided Tom with $90,000 to assist Tom and Lily with the building of their home on the land at Bossley Park.

40. Tom and Lily’s daughter Melinda was born on 3 March 1994.

41. Tom and Lily’s son Paul was born on 20 June 1995.

42. In November 2011, Mrs Habricko and Ivan saw their solicitor, Mr Walter Lyubicic, in relation to preparing new wills. They specified that the wills be in favour of each other and otherwise in favour of Mary. Mrs Habricko’s and Ivan’s wills made on 14 November 2011 had an identical clause inserted:

“In this my will I make no provision for my son Tomislav Habricko because he has been provided for in the past.”

43. At the same conference with Mr Lyubicic at which they made their wills, Mrs Habricko and Ivan also executed a severance of their joint tenancy with Tom of the Petersham property. Tom ultimately accepted that he received notice of the proposed severance in a letter dated 16 November 2011 and that he was aware of what was being done. The severance was subsequently registered in early 2012 with the effect that Mrs Habricko and Ivan were joint tenants of a two-thirds interest in the Petersham Property, which interest they held as tenants in common with Tom owning the remaining third.

44. At the same time Ivan prepared a handwritten document outlining amounts taken out of the “House Budget” of the Petersham Property (“Ivan’s List”). A translation of this document is:

“House on Number G/394340

26A Croydon Street Petersham

Ownership –

Ivan – Jela – Tom Habricko

To remind our selfs

That our son Tomislav Habricko

Took out from House Budget

1   For car Hilman stationwagon

$850

2   And the second car was bought from the same Budget – Ford Falcon Stationwagon

$4,000 Year 1982

3   Bought were Amplifier and Gitar (sic)

$1,000

4   Mum gave him her Compensation for the First House

$40,000

5   And I gave him $90,000 for the Construction of the House

Year 1994

6   Mr Mlinaric $15,000 was returned”

45. The Petersham Property was listed for sale in January 2012.

46. On 24 January 2012, Ivan died after a brief illness.

47. After Ivan died, Mary’s evidence (on which she was not challenged) was that Mrs Habricko told Mary that she (Mrs Habricko) did not want to live alone and had said “We can buy a house together. I will contribute what I get from selling my house and I will leave everything to you at the end”.

48. On 7 March 2012, contracts were exchanged for the sale of the Petersham Property for $1,050,000. It will be recalled that the Petersham Property had been purchased in 1976 for $57,000.

49. On 13 March 2012, Mrs Habricko, Tom and Mary attended the offices of their solicitor, Mr Anthony Tran. Mr Tran asked Mary to stay outside his office as she was not a party to the sale.

50. During the meeting it is alleged by Mr Tran that he discussed with Mrs Habricko and Tom the distribution of proceeds of the sale. Mr Tran’s recollection of the conversation is:

“9.   We had a conversation in words to the following effect:

Me (Mr Tran):   I want to make sure how to distribute the proceeds of sale. According to the title it is two third for you, Mrs Habricko, and one third for you, Tom.

The deceased:   Tom did not contribute any money to the Petersham property at all. However, I want to keep my promise that even though Tom didn’t contribute anything he can get one third accordingly (sic) to the way it is on the title. I am also willing to give Tom more from the Petersham property to make his share increase from one third to one half and to reduce my share from two thirds to half. But that is subject to the condition and Tom must agree to this. When I pass away all of my assets will be given to Mirjana. Tom must agree to this and that he will not make any further claims on the estate after this. I want you to write something on paper so that Tom and I can sign it.

Tom:   OK, Mum, I will sign it.

10.   The deceased also said, in Tom’s and my presence, words to the following effect:

“After the house is sold I intend to buy a property with Mirjana and to live there with Mirjana so that Mirjana can look after me better. I feel it is not fair that so far Mirjana has not received anything and that is why I feel I need to give Mirjana all my assets when I pass away.”

11.   Tom did not say anything to disagree with what the deceased said as set out in the two paragraphs above.

12.   I took a copy of the deceased’s passport and Tom’s driving licence. I also drafted a document for them to sign and they signed it in my presence. I kept that document on the file. …”

51. The text of the document drafted by Mr Tran and signed by Mrs Habricko and Tom on 13 March 2012 (the “Tran Note”) is:

“We, Jela & Tomislav Habricko, agree that at settlement, the balance + net proceeds of the sale of XXX St, Petersham will be split into 2 cheques of equal amount. Tomislav will pick up the cheque for Jela, with no further claims on the estate after this.

13/03/12

Jela Habricko            Tomislav Habricko

Signature            Signature”

52. Tom accepted that he had agreed with Mrs Habricko that he would receive half the sale proceeds rather than the one-third to which he was strictly entitled. However, his evidence was that the words “with no further claims on the estate after this” were not on the Tran Note when he signed them and that he had not made any agreement to that effect. Because the appearance of the Tran Note may be important, a copy is attached as Schedule One to these reasons.

53. Settlement of the sale of the Petersham Property occurred on 30 April 2012 and Mrs Habricko and Tom each received cheques to a value of $515,592, representing their respective 50% shares in the proceeds of sale of the Petersham Property. The cheques were banked into their respective Commonwealth Bank accounts. Giving Tom an extra one-sixth of the proceeds meant he received approximately $175,000 more than he otherwise would have.

54. Once the Petersham Property had been sold, Mrs Habricko moved in with Mary and John at the home they had in Minto which they had put on the market. It was sold later in 2012 for $360,000, of which Mary and John received about $260,000.

55. At the end of May 2012, Mary and John decided to buy the Cecil Hills Property for $875,000 subject to a mortgage for $390,000. It was ultimately purchased on 12 July 2012 with Mary and John, of the one part, and Mrs Habricko, of the other part, as tenants in common of half interests in the Cecil Hills Property. Mrs Habricko contributed $520,785 towards the purchase. The mortgage (for which each of Mary, John and Mrs Habricko was liable) was drawn down with $328,000 going to the purchase and the balance to other expenses including a car for John. Mary and John paid the balance of the purchase price from the proceeds of the sale of their house at Minto and their savings.

56. The Cecil Hills Property was incomplete and Mary and John say that they spent approximately $120,000 on various improvements. If the value of those contributions is taken into account then the respective contributions of Mrs Habricko and Mary (and John) to the Cecil Hills Property were approximately equal. Mary’s evidence was that additional work which will cost approximately $85,000 will be required to improve the Cecil Hills Property.

57. Mrs Habricko made the Will on 16 February 2013.

58. Mrs Habricko died on 16 July 2015, having lived with Mary and John at the Cecil Hills Property from the time it was bought three years earlier.

59. Probate of the Will was granted to Mary on 10 November 2015.

60. Tom commenced these proceedings by summons filed on 24 June 2016.

61. I will now consider three disputed matters of fact.

Tom’s alleged contributions

62. The Court finds that Tom made some contributions to paying off the mortgage over the Day Street, Leichhardt property. The Court also accepts Tom’s evidence that in relation to the Petersham Property, he did give his pay packets to his mother so that the family’s resources were pooled to acquire the Petersham Property. This finding is made for two reasons:

1. It seems to me to be inherently likely in the circumstances described by Tom that his parents would have made this kind of arrangement with him.

2. Even without specific evidence as to how much each member of the family was earning in the late 1970s, given the nature of their respective employment it seems to me that to have paid off a $28,000 mortgage in three years supports the determined pooling of resources to bring about that result.

63. The Court notes that Mary denies Tom made such contributions. However, Mary has no direct knowledge whether Tom did or did not. Her denials are based on hearsay recollections of what Mary says Mrs Habricko said from time to time. Because it is hearsay I give that evidence little weight and prefer what, in my mind, accords with the inherent probabilities, especially given the speed with which the mortgage was paid off.

64. In reaching this conclusion I have also not overlooked Mr Tran’s evidence (see paragraph [50] above) that Mrs Habricko said that Tom did not contribute any money to the Petersham Property. While I do not doubt that Mr Tran was trying to give his evidence to the best of his recollection, the fact remains that he had no file note (other than the Tran Note) of his conference on 13 March 2012 with Mrs Habricko and Tom. Mr Tran, understandably, accepted that he had many clients and had had many conferences. In the circumstances, while acknowledging him to be an independent and disinterested witness, I have reached the conclusion (with no criticism intended) that his unassisted recollection is not a sufficiently reliable basis upon which to make any findings unless it is inherently probable or is consistent with other, contemporaneous documentary evidence.

65. While the Court accepts Tom’s evidence, at a general level, that he contributed his income to the family asset pool, that finding is only of limited assistance for Tom’s case. That is because no financial records have been produced that would enable the Court to form any view as to the relative financial contributions of Tom and his parents to the Petersham Property. Tom did accept in cross-examination that in getting half, rather than one-third, of the Petersham Property he received more in dollar terms than he had put in, including by reason of the increase in value of the Petersham Property.

66. Insofar as Tom says he contributed to an extension to the Petersham Property in 1981 (see paragraph [26] above), in the absence of documentary evidence supporting that statement, I am not satisfied that Tom has discharged the onus of proof to establish that fact on the balance of probabilities.

Tom’s alleged repayments

67. The Court accepts Ivan’s List as accurate. It is a note prepared by Ivan in circumstances where no reason has been shown as to why Ivan would fabricate it or its contents.

68. Tom accepted that he had received the money for the Hillman Station Wagon, the amplifier and guitar, and the $4,000 for another car.

69. The Court also finds that he did receive $40,000 from Mrs Habricko rather than only the $30,000 to which Tom admitted. There are two reasons for this finding. First, as I have said, I accept the truth of what is set out in Ivan’s List. Second, the payments to reduce Tom and Lily’s mortgage between November 1983 and February 1985 (see paragraph [31] above) are consistent with Tom receiving $40,000 rather than only $30,000.

70. Finally, Tom accepted that he had received $90,000 from Ivan towards the construction of Tom and Lily’s current home at Bossley Park. The remaining question is whether the Court is satisfied that Tom “repaid” it or otherwise gave to his parents approximately $100,000 from the proceeds of sale of the Abbotsbury Property. The Court is unable to make that finding for two reasons:

1. In the absence of documentary evidence such as financial records, the mere assertion of those facts by Tom does not discharge Tom’s onus to prove those facts on the balance of probabilities.

2. As I have already said, I accept Ivan’s List. That list refers to the $40,000 and $90,000 as having been given rather than loaned, which is inconsistent with Tom’s characterisation of those amounts as loans. Furthermore, the final entry refers to $15,000 being returned. If Ivan was prepared in Ivan’s List to record money that had been returned, then there is no reason to think that he would not have recorded substantial repayments of the kind asserted by Tom, or described loans as loans, if that is what they were.

71. In summary, the Court accepts that Tom received the benefits set out in Ivan’s List. However, Tom has not established to the requisite standard of proof that he made the repayments which he said he did.

The Tran Note

72. The Court accepts the Tran Note as accurately recording the arrangements between Mrs Habricko and Tom for the following reasons:

1. It was not suggested to Mr Tran that he had falsified the note.

2. Mr Tran was an independent witness who would have had no reason to fabricate or falsify the Tran Note.

3. Although from its appearance (see Schedule One) the words “with further claims on the estate after this” may well have been written in to fit around the date “13/03/12”, that is equally consistent with those words having been written in because that part of the agreement was reached after the balance of the document had been prepared but before it was signed.

4. The reservations which I have expressed in paragraph [64] above about Mr Tran as a witness are inapplicable to a contemporaneous document prepared by him.

5. Such an agreement seems inherently plausible because by that time (see paragraph [47] above) Mrs Habricko had conceived her plan to buy a house with Mary and leave her share in that house to Mary. Giving Tom an extra one-sixth of the proceeds from the Petersham Property in return for him agreeing to make no further claims on the estate has a clear and rational basis.

73. In reaching this conclusion, I have taken into account Tom’s denials that such an arrangement was ever discussed in the conference with Mr Tran. In the face of the Tran Note, I do not accept those denials. However, it could not be and was not suggested that Tom was legally bound in the sense that he had abandoned his rights under the Act in a formal way. Nevertheless, based on the Tran Note the Court finds that Tom knew and understood that Mrs Habricko was giving him an extra one-sixth over and above his entitlement in the Petersham Property on the basis and with the intention that would satisfy any claims he might have against the Estate, so that whatever was left on her death would pass to Mary.

The Estate

74. At the time of trial the Estate comprised an immaterial amount of cash and Mrs Habricko’s 50% share as tenant in common in the Cecil Hills Property. The value of Mrs Habricko’s 50% share at the time of hearing was approximately $775,000.

75. The Estate had no material liabilities, subject to one qualification. Mary submitted that the Estate had a liability to reimburse her and John for one-third of the mortgage repayments they have made both before and since Mrs Habricko’s death and also for one-third of the cost of the various improvements they had made to the Cecil Hills Property (see paragraph [56] above). Because of the view the Court has taken as to the outcome of the proceedings, it is unnecessary for this issue to be resolved.

76. Tom’s costs on the ordinary basis up to and including the hearing were $91,600. Mary’s costs on the indemnity basis were $49,300 (but this figure was premised on a one day hearing when in fact two days were required).

Tom

77. Tom is the only son of Mrs Habricko and Ivan and is 61 years old.

78. Tom and Lily’s home at Bossley Park has a value of approximately $1,200,000, subject to a mortgage of approximately $240,000.

79. Bank records show that on 3 May 2012 approximately $340,000 from Tom’s share of the sale of the Petersham Property was paid in to reduce his and Lily’s mortgage down to $6,000. He also paid off credit cards, repaid a debt he owed to Mary and bought cars for two of his children. Tom and Lily do not have savings. Nor do they have any material debts other than the mortgage over their home. Tom accepted that after paying down the mortgage account in 2012, he had used that account as an overdraft account to pay for overseas trips to Croatia and other discretionary expenditures. His evidence was that he expected to repay the mortgage from his and Lily’s income and when they “downsized” one day.

80. Tom and Lily have three adult children, all of whom (as well as the girlfriend of one of the children) live at home. None of the children or the girlfriend have been paying board or contributing to household expenses, although Tom said they were starting to do so. Tom accepted in cross-examination that he and his family (including his three children and one of their girlfriends) were able to live within their means, not spending more than what he and Lily were earning.

81. Tom has no trade or tertiary qualifications. He is currently employed by Woolworths on a casual basis and earns approximately $950 to $1,050 net per week. His taxable annual income for each of 2014 and 2015 was approximately $54,000. He had superannuation of approximately $17,000 as at 30 June 2015.

82. Lily works as a casual cashier at Coles earning approximately $329 net per week. For the 2013 to 2015 years her taxable annual income was approximately $29,000 in each year. She has superannuation of approximately $25,000.

83. By reason of the Court’s findings in paragraphs [53] and [71] above, the Court also finds that during Ivan and Mrs Habricko’s lifetimes, Tom received benefits of $135,850 (Ivan’s List), $175,000, and the capital appreciation in the value of his share of the Petersham Property.

Other interested persons

84. Mary is 57 and John is 59.

85. Mary works as a claims assessor. Her net pay as at June 2017 after tax and superannuation was $1,621.84 per fortnight (approximately $42,000 per annum).

86. John works for the Australian Federal Police. His net fortnightly pay varies but a payslip in evidence suggests it is about $1,500 (approximately $39,000 per annum).

87. Their annual expenses appear to exceed their incomes by $3,000 or $4,000, but given the various approximations in the evidence I do not regard that amount as material.

88. Mary and John have two adult children. Jason, aged 27, lives independently in the country. Nicole, aged 25, still lives at home and works as a hairdresser. She sometimes, but not always, contributes about $100 per week to household expenses.

89. John and Mary’s assets are valued at $1,748,804 comprising their interest in the Cecil Hills Property (valued at $775,000); superannuation ($826,486 comprising $462,457 (Mary) and $364,029 (John)); savings of $37,318; household effects of $10,000 and three motor vehicles with a total value of approximately $100,000. Their only debt apart from a car lease of $800 per fortnight is the mortgage over the Cecil Hills Property of $326,499. Therefore their net assets are $1,422,305.

Uncontroversial matters

90. Because Tom is Mrs Habricko’s son, he is an eligible person under s 57 of the Act. The summons was filed less than 12 months after Mrs Habricko’s death. It follows that the questions set out in sub-paragraphs (1), (2) and (4) of paragraph [11] above are all answered “yes”.

91. The Provision referred to in the question posed in sub-paragraph [11](5) above is nil.

Has adequate provision not been made for Tom?

92. It is next necessary to consider what is sometimes referred to as the jurisdictional question. This is set out in sub-paragraph [11](6) above, namely whether the Court is satisfied, at the time when the Court is considering the application, that the Provision for Tom is not adequate for his proper maintenance, education or advancement in life. If that question is answered “yes”, then the Court’s discretion to make a family provision order in favour of Tom is enlivened.

93. In Verzar v Verzar [2014] NSWCA 45, Meagher JA (with whom Macfarlan and Barrett JJA agreed) summarised the legal principles governing this stage of the inquiry:

“39. The primary judge concluded that Stephen's will did not make adequate provision for the respondent's proper maintenance, education and advancement in life. Whether such provision has been made requires an assessment of the applicant's financial position, the size and nature of the deceased's estate, the relationships between the applicant and the deceased and other persons who have legitimate claims upon his or her bounty and the circumstances and needs of those other persons: see Tobin v Ezekiel [2012] NSWCA 285; 83 NSWLR 75 at [70] and McCosker v McCosker [1957] HCA 82; 97 CLR 566 at 571–572; Singer v Berghouse [1994] HCA 40; 181 CLR 201 at 210; and Vigolo v Bostin [2005] HCA 11; 221 CLR 191 at [16], [75], [112]. Such an assessment is necessary because of the inter-relation between "adequate provision" and "proper maintenance". Whilst the inquiry as to what is "adequate" directs particular attention to the needs of the applicant, what is "proper" requires regard to all the circumstances of the case, and in particular the size and nature of the estate and the needs of the other beneficiaries or potential beneficiaries. As was observed by Sackville AJA in Foley v Ellis [2008] NSWCA 288 at [88], a court cannot consider the propriety and adequacy or inadequacy of any testamentary provision for an applicant in isolation from the resources and needs of the other claimants on the deceased's bounty.”

94. In addition to the preceding passage from Verzar, I also respectfully adopt what Hallen J said in Camernik v Reholc [2012] NSWSC 1537 both as to the general approach to applications for family provision and judicial observations concerning claims by adult children.

“154. Yet, in considering the question, the nature and content of what is adequate provision for the proper maintenance, education or advancement in life of an applicant, is not fixed or static. Rather, it is a flexible concept, the measure of which should be adapted to conform with what is considered to be right and proper according to contemporary accepted community standards: Pontifical Society for the Propagation of the Faith v Scales at 19; Walker v Walker (NSWSC, Young J, 17 May 1996, unreported); Vigolo v Bostin at 199 and 204; Stern v Sekers; Sekers v Sekers [2010] NSWSC 59.

155. An important consideration is whether, in all the circumstances, the community expectation would be for greater benefaction to have been made for the proper or adequate provision of the person seeking provision. Gleeson CJ observed in Vigolo v Bostin, at 199, that the justification for interference with freedom of testation is to be found in the failure of a deceased to meet the obligations, which the community would expect in terms of maintenance, for those persons within the class of eligible persons. The process requires the court to "connect the general but value-laden language of the statute to the community standards".

156. As Allsop P said in Andrew v Andrew, at [16]:

"If I may respectfully paraphrase Sheller JA [in Permanent Trustee Co Limited v Fraser (1995) 36 NSWLR 24 at 46F–47B], the Court in assessing the matter at s 59(1) and the order that should be made under s 59(1) and (2), should be guided and assisted by considering what provision, in accordance with prevailing community standards of what is right and appropriate, ought to be made. This, Sheller JA said ... involved speaking for the feeling and judgment of fair and reasonable members of the community. It is to be emphasised that s 59(1)(c) and s 59(2) refer to the time when the Court is considering [an application for a family provision order] and the facts then known to the Court. The evaluative assessment is to be undertaken assuming full knowledge and appreciation of all the circumstances of the case. This ... makes the notion of compliance by the testator with a moral duty (on what he or she knew) apt to distract from the statutory task of the Court."

157. In all cases under the Act, what is adequate and proper provision is necessarily fact specific. An inflexible approach cannot be taken in assessing the questions to be answered.

158 The Act is not a "Destitute Persons Act", and it is not necessary, therefore, that the applicant should be destitute to succeed in obtaining an order: In re Allardice, Allardice v Allardice (1909) 29 NZLR 959 at 966.

159. In relation to a claim by an adult child, the following principles are useful to remember:

(a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed.

(b) It is impossible to describe in terms of universal application, the obligation, responsibility, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life, such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set his, or her, children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation: McGrath v Eves [2005] NSWSC 1006; Taylor v Farrugia [2009] NSWSC 801.

(c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such as a spouse, who has a primary obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death if he or she is able to do so. But where a child, even an adult child, falls on hard times, and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia.

(d) If the applicant has an obligation to support others, such as a parent's obligation to support a dependent child, that will be a relevant factor in determining what is an appropriate provision for the maintenance of the applicant: Re Buckland Deceased [1966] VicRp 58; [1966] VR 404 at 411; Hughes v National Trustees Executors and Agency Co. of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134 at 148; Goodman v Windeyer at 498, 505. But the Act does not permit orders to be made to provide for the support of third persons to whom the applicant, however reasonably, wishes to support, where there is no obligation to support such persons: Re Buckland Deceased at 411; Kleinig v Neal (No 2) [1981] 2 NSWLR 532 at 537; Mayfield v Lloyd-Williams, at [86].

(e) There is no need for an applicant adult child to show some special need or some special claim: McCosker v McCosker; Kleinig v Neal (No 2), at 545; Bondelmonte v Blanckensee [1989] WAR 305; and Hawkins v Prestage (1989) 1 WAR 37 per Nicholson J at 45.

(f) The adult child's lack of reserves to meet demands, particularly of ill health, which become more likely with advancing years, is a relevant consideration: MacGregor v MacGregor [2003] WASC 169 (28 August 2003) at [181], [182]; Crossman v Riedel [2004] ACTSC 127 at [49]. Likewise, the need for financial security and a fund to protect against the ordinary vicissitudes of life, is relevant: Marks v Marks [2003] WASCA 297 at [43]. In addition, if the applicant is unable to earn, or has a limited means of earning, an income, this could give rise to an increased call on the estate of the deceased: Christie v Manera [2006] WASC 287; Butcher v Craig [2009] WASC 164 at [17].

(g) The applicant has the onus of satisfying the court, on the balance of probabilities, of the justification for the claim: Hughes v National Trustees, Executors and Agency Co of Australasia Ltd at 149.”

95. Applying the principles just set out, the Court is not satisfied that the Provision is not adequate for Tom’s proper maintenance, education or advancement in life. The question posed in sub-paragraph [11](6) above is answered “No”. The parties’ submissions and the Court’s reasons for this conclusion are set out in the following paragraphs.

Tom’s submissions

96. Mr Austin’s submissions on behalf of Tom as to both the inadequacy of the Provision and what would be an appropriate Proposed Provision can be summarised as:

1. This was not a case where Tom was able to point to specific needs such as future medical expenses, renovations or the like. Appropriate provision would be somewhere between $50,000 and $100,000, primarily for the vicissitudes of life. At the higher end of $100,000, it would also take into account provision to meet ordinary living expenses.

2. Tom’s case was based upon an acceptance that he had contributed to mortgage repayments on the Day Street, Leichhardt property and then the Petersham Property. While the evidence did not permit the Court to be precise, there was a proper basis for the Court to conclude that Tom had made a sufficiently significant contribution to the mortgage repayments in relation to the Petersham Property to enable repayment of the mortgage in a very short period of time and then, a couple of years later, for major renovations to be undertaken. On any view, he was entitled to the one-third interest in the Petersham Property which he had as a tenant in common.

3. When the Petersham Property was sold, Tom received an extra one-sixth — worth about $175,000 — over and above the one-third to which he was entitled.

4. The fact that Tom received approximately $175,000 extra from the Petersham Property was not fatal to Tom’s contention that the nil provision for him in the Will was not adequate. This was because Tom had been instrumental in helping his parents establish the asset pool and that he had given up his right to earn income from his share in the Petersham Property. Furthermore, he allowed his parents to live in the Petersham Property for another 30 years without a financial return to him other than the incremental increase in the price of the property over time. Therefore, he had foregone the opportunity to use his share in the Petersham Property to his advantage. As a result, he is now in a position where he and his wife have only very little superannuation and almost no savings. They have no other assets other than the family home and some old motor vehicles.

5. A figure between $50,000 and $100,000 would be proper provision. Tom was now 61 years old with approximately 24 years on average left to live. A sum of $100,000 would represent a payment of approximately $200 to $250 per week in financial assistance for that duration. Even if Tom and Lily were to downsize and pay off the mortgage, in the absence of superannuation or savings they would need, over and above the age pension, something in the vicinity of a payment of that amount to live adequately.

6. While Tom accepted that he was given cash amounts from his parents of $30,000 in the early 1980s and another $90,000 in 1994, the Court should accept Tom’s evidence that those amounts were loans and that they were paid back. While there was not a lot of evidence on the question, the circumstantial facts supported Tom’s version of events. Mary was unable to give any direct evidence on the question, but instead relied on statements said to have been made from time to time by Mrs Habricko. It was counterintuitive that Mrs Habricko should have just handed over a large part of her compensation payment to Tom and for Ivan to have provided $90,000 in circumstances where he had just retired unless those amounts were in fact loans.

7. In terms of assessing the competing needs of Mary and her husband, Tom and Lily are in a far more precarious financial position than Mary and her husband.

Mary’s submissions

97. Mr Elliott’s submissions on behalf of Mary may be summarised as:

1. The exercise of jurisdiction under s 59 of the Act does not involve attempting to achieve a fair disposition of the Estate and it is not for the Court to remodel the Will because it thinks that some additional provision would be fairer: Sellak v Sellak (No 2) [2016] NSWSC 396 at [93].

2. While an adult child does not have to show special need, the community does not generally expect a parent to look after his or her child for the rest of the child’s life and into retirement (see paragraph [94] above).

3. Even if it were accepted that Tom had made the contributions to the Day Street, Leichhardt property and then to the Petersham Property, giving him the extra one-sixth share on the realisation of the Petersham Property (valued at approximately $175,000) stood for adequate provision.

4. In any event, the evidence did not allow the Court to be satisfied of the extent to which Tom had in fact made any contributions. His evidence on this was incomplete and inconsistent. Furthermore, it was complete speculation to suggest that he was somehow disadvantaged by being unable to access his equity in the Petersham Property. On one view it was to his advantage to leave it in the property as a pre-capital gains tax asset.

5. The Court should accept the correctness of Ivan’s List. There is no reason to suggest that Tom’s father would have included the $40,000 if it had been repaid. In the absence of documentary proof, the Court should not accept Tom’s assertions that he had repaid the $40,000 and $90,000.

6. Ultimately no one had suggested to Mr Tran that Mr Tran had been part of an improper alteration of the Tran Note by inserting the words “with no further claims on the estate after this”. The Court should find that, while not legally binding, it records an acceptance by Tom that he was being given the extra one-sixth share in lieu of any provision being made for him in Mrs Habricko’s will.

7. Therefore, the zero provision for Tom in the Will was not inadequate because he had been given more than his legal interest in the Petersham Property and even that legal interest was the product of earlier generosity from his parents. He had also received financial assistance from his parents which was now part of the equity in his home.

8. Having reduced his mortgage to almost zero with his share of the Petersham Property, Tom was not to be criticised for having used his equity in his home to borrow funds for the various discretionary expenditures that had been referred to in the evidence, including trips back to Croatia. However, particularly as Tom must be taken to have known that there was no provision for him in the Will, the fact that he was now indebted as a result of those discretionary expenditures is not a reason either to suggest that the zero provision in the Will was inadequate or that further provision should be made for Tom.

9. Mary and John had mingled their financial fortunes with Mrs Habricko in taking her into their new home. It was entirely sensible for Mrs Habricko to have entered into such an arrangement and it was consistent with her intentions to leave her interest in the new home to Mary. Tom had received financial assistance from his parents during their life, and the Court should not interfere with Mrs Habricko’s freedom of testamentary disposition in confining her benefaction to Mary, with whom she had moved in and who looked after her for the last three years of her life.

10. In assessing the comparative claim of Mary and John, while they were apparently comfortable, it needed to be considered in the light of:

1. A large part of their assets is superannuation as a result of their long periods of employment.

2. Their interest in the Cecil Hills Property is as tenants in common with the Estate as a result of the arrangement they entered into with Mrs Habricko in 2015.

3. The net asset position still falls well short of the unencumbered value of even half of the Cecil Hills Property, let alone its entire unencumbered value.

Consideration

98. Having regard to the principles set out in paragraphs [93] and [94] above, I am not satisfied that by failing to give anything to Tom under the Will, Mrs Habricko failed to make adequate provision for his maintenance, education or advancement in life generally for the reasons advanced by Mr Elliott. My own expression of my reasons for this conclusion are:

1. I accept the submission that the exercise of jurisdiction under s 59 of the Act is not concerned with achieving fairness or equality, particularly between siblings. While I have not overlooked that in terms of superannuation, in particular, Tom and Lily are not as well off as Mary and John, that is not of itself sufficient to warrant the conclusion that adequate provision has not been made.

2. Tom is able to make ends meet and has a comfortable lifestyle including the capacity to continue to support his own adult children. Mr Austin accepted that Tom was unable to demonstrate any specific needs (as opposed to a non-specific claim for a buffer against vicissitudes).

3. The Estate essentially comprises Mrs Habricko’s interest in the Cecil Hills Property as part of a deliberate plan by Mrs Habricko for her, Mary and John’s assets to become intertwined. Given the benefits that had been conferred upon Tom, Mrs Habricko’s carefully conceived testamentary plans to buy a property with Mary and John in return for them caring for her was entirely rational, not at all unreasonable vis-à-vis Tom and is entitled to considerable weight.

4. The community does not expect parents to look after adult children into retirement, especially when, as here, Tom is married with children so that there are others who have some responsibility towards Tom and his wellbeing. Nor are Tom’s current financial and other circumstances the product of hard times or other adverse factors out of his control.

5. Mary has a very strong moral claim on the Estate. She did not receive the financial assistance from Mrs Habricko and Ivan that Tom did. However, she agreed to entangle her and John’s assets with Mrs Habricko’s as part of agreeing to care for Mrs Habricko in her old age. She fulfilled her agreement. In my view, community standards would, in those circumstances favour Mrs Habricko’s testamentary scheme being upheld.

6. While retirement may require Tom and Lily to downsize, it could not be suggested that even with their limited superannuation they will not be able to support themselves. With increasing frequency the Court is being confronted with the submission being made on behalf of adult plaintiffs that inadequate funds for retirement must always translate into a testamentary obligation on a parent to meet that need by way of a buffer or otherwise. That is not the law (see paragraphs [93] and [94] above). Every case depends upon its facts. When all the matters which I have referred to in the preceding sub-paragraphs are taken into account, I am not satisfied in this case that Tom’s (and Lily’s) small amount of superannuation and lack of savings is sufficient to warrant the conclusion that inadequate provision was made for him in the Will.

99. For the reasons given in the preceding paragraph, the question in sub–paragraph [11](6) should be answered “no”. It follows that the Court’s discretion to make a family provision order in favour of Tom is not enlivened. However, if I am wrong in that conclusion, I would still have declined to exercise the Court’s discretion to order provision for Tom out of the Estate for the reasons given in the preceding paragraph and for the following additional reasons:

1. Tom received the cash benefits referred to in paragraph [83] above. Furthermore, by including him as a joint owner in the Petersham Property, Mrs Habricko and Ivan gave Tom the benefit of the significant capital appreciation (as a pre-capital gains tax asset, as events turned out) in the value of the Petersham Property. That capital appreciation does not lose its character as a benefit because Tom contributed to the mortgage repayments. His parents nonetheless gave him the opportunity to participate in what turned out to be a good investment. Moreover, when the Petersham Property was sold, Tom received an extra share valued at approximately $175,000. With the sale of the Petersham Property he was able to reduce his mortgage to virtually nothing.

2. Tom had received the extra one-sixth from the proceeds of the Petersham Property in the knowledge that Mrs Habricko intended it to have the effect of precluding any further claim by Tom against the Estate given that she intended to bind her affairs to Mary and John in return for them caring for her in old age.

3. Given that the Estate now consists of the Cecil Hills Property, with which Mary and John’s affairs are inextricably bound as their home, any additional provision would require the Cecil Hills Property to be sold or for it to be further encumbered. That would be very much contrary to Mrs Habricko’s testamentary scheme.

100. If it were necessary to be answered, the Proposed Provision referred to in sub-paragraph [11](8) above would be “nil”.

Conclusion and orders

101. Tom’s summons will be dismissed.

102. The Court will hear the parties on the question of costs.
     ANNEXURE HABRICKO v PALIJAN (392 KB, pdf)

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Decision last updated: 06 December 2017