Josivovich v Stoikofski

[2008] NSWSC 474

CITATION:	Josivovich v Stoikofski [2008] NSWSC 474
HEARING DATE(S):	14 May 2008
JUDGMENT DATE :	14 May 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
EX TEMPORE JUDGMENT DATE:	14 May 2008
DECISION:	Further provision for Plaintiff out of estate.
CATCHWORDS:	FAMILY PROVISION – Whether plaintiff lived in domestic relationship with deceased – whether adequate provision made for plaintiff.
LEGISLATION CITED:	Family Provision Act 1982 (NSW) – s 6, s 7 Property (Relationships) Act 1984 (NSW) – s 5
CATEGORY:	Principal judgment
PARTIES:	Margarita Josivovich (Plaintiff) George Stoikofski (Defendant)
FILE NUMBER(S):	SC 5116/06
COUNSEL:	Ms D.M. Coulton (Plaintiff) S.Galitsky (Defendant)
SOLICITORS:	Vizzone Ruggero & Assoc (Plaintiff) D. Stanefska & Assoc (Defendant)

5116/06 Josivovich v Stoikofski

JUDGMENT – Ex tempore
14 May, 2008

Introduction

1    The Plaintiff, Margarita Josivovich, is the daughter-in-law of the late Stoiko Josivovich who died on 29 September 2005 leaving a will dated 20 May 2005. The Deceased's estate comprised a house at Mascot valued at $650,000 and cash in a bank account of just over $13,000. The Deceased's Will left his estate to his son George, his daughter Bisa, and the Plaintiff equally. On 4 May 2006 probate of the Will was granted to George as executor.

2    For the sake of convenient reference, and without intending any disrespect, I will hereafter refer to members of the family by their first names.

3 On 26 September 2006 Margarita commenced these proceedings. She sought a declaration that Stoiko had held the Mascot house in trust for her. Alternatively, she sought an order for further provision out of Stoiko's estate under s 7 of the Family Provision Act 1982 (NSW). The only claim which she has pressed at the trial is that under the Family Provision Act.

4    The issues are:

– whether Margarita was living in a “domestic relationship” with Stoiko at the time of his death and is, therefore, an “eligible person” under s 6(1)(a)(ii) of the Act;

– alternatively, whether Margarita was, at any time, wholly or partly dependent on Stoiko and was a member of his household during that time and is, therefore, an eligible person under s 6(1)(b) of the Act:

– if Margarita is an eligible person on either ground, was the provision made for her in Stoiko's Will, in all the circumstances, a proper level of maintenance for her, having regard to her financial position, the size and value of his estate, their relationship, and the relationship between Stoiko and his own children;

– if the provision for Marguerite was inadequate, what order should the Court now make.

The facts

5    Stoiko was born in 1912 and was ninety-three years of age when he died. He married and there were three children of the marriage: George, born in November 1933, Bisa, born in February 1936, and Marko, born in April 1938.

6    Margarita was born in Croatia in February 1941. In April 1963, she migrated to Australia to marry Marko. They were married in October that year. From the time of her arrival in Australia to the present time, Margarita has lived in Stoiko's house at Mascot.

7    When Margarita first arrived and began living in the Mascot house, it was shared by Stoiko and his wife, George and his wife and son, and Marko. Bisa and her husband were then living in Newtown.

8    In October 1964, Stoiko's wife died. In April 1965, Margarita's first daughter, Roza, was born. In December 1965, George and his wife and son moved out of the Mascot home into a house of their own not far away, leaving Stoiko, Margarita and Marko and their daughter in the Mascot house. In January 1970, Margarita's second daughter, Julie, was born.

9    Stoiko retired from work in 1974. In 1981, Bisa and her husband moved to Brisbane. Marko died in May 1993. It is not clear when Margarita's daughters moved out of the Mascot home, but Margarita says that from the date of Marko's death she and Stoiko lived alone at the Mascot house, and she looked after him and performed all household tasks until he died.

10    It is not in dispute that during the whole of the time that Margarita and her family have lived at the Mascot house, they did not pay rent to Stoiko. There is some minor dispute as to the extent to which Marko and Margarita, and later Margarita alone, contributed to household expenses such as food, electricity, rates and insurance.

11    Margarita started working in a factory soon after her arrival in Australia but gave up work in late 1964 to look after her mother-in-law, who was terminally ill and because she herself had become pregnant. I accept that at this time Margarita performed most of the domestic duties for the household.

12    In 1970, Margarita returned to full-time work as a cleaner. Marko continued to work and in 1980 they were able to purchase a house at Fairfield as an investment.

13    Between 1989 and 1991, Margarita gave up work and carried out domestic duties full time. I accept that during this time she undertook the major responsibility of performing domestic duties for Marko, her daughters and Stoiko. I accept that she and Marko undertook most of the responsibility for maintaining the Mascot house and garden. Undertaking these responsibilities was clearly as much for the benefit of Margarita and Marko as for Stoiko. For the same reason, I think it inherently probable that Margarita and Marko contributed to household expenses from their earnings, as Margarita says, so that costs of food, electricity and rates, at least, were shared between them and Stoiko.

14    In 1991, Margarita returned to work part-time until she retired in June 2003.

15    I accept that George visited his father regularly until his father's death. I accept that after Marko's death, George took Stoiko to the doctor, to his bank, took him on outings occasionally, visited him and spent time with him, as well as performing household tasks such as mowing the lawn. However, there is little evidence to contradict Margarita's assertion that she was the primary carer for Stoiko from the time that he became markedly frail about two or three years before his death and that she provided most of the household support for him from Marko's death in 1993 onwards. The inherent probabilities of the family's situation favours that conclusion and I accept it.

16    I accept that Stoiko grew more dependent on Margarita, particularly as he became older and more frail. He had a number of falls towards the end of his life and this debilitated him greatly. There is nothing to suggest, in short, that Margarita was anything but a dutiful and caring daughter-in-law to Stoiko. Indeed, it is clear that Stoiko himself, with the benefit of independent legal advice, acknowledged that he owed her a debt of gratitude and that she had a legitimate claim on his testamentary bounty because he placed her on an equal footing with his own children in disposing of his estate.

Whether Margarita is an “eligible person”

17 Section 6(1)(a)(ii) of the Act includes as a person eligible to make an application under s 7:

“(a) a person:
…
(ii) with whom the deceased person was living in a domestic relationship at the time of the deceased person’s death ….”

18    A “domestic relationship” is defined in the Property (Relationships) Act 1984 (NSW) as follows:

“ 5 DOMESTIC RELATIONSHIPS

(1) For the purposes of this Act, a domestic relationship is:

(a) a de facto relationship, or

(b) a close personal relationship (other than a marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.

(2) For the purposes of subsection (1)(b), a close personal relation-ship is taken not to exist between two persons where one of them provides the other with domestic support and personal care:

(a) for fee or reward, or

(b) on behalf of another person or an organisation (including a government or government agency, a body corporate or a charitable or benevolent organisation).”

19    Margarita says that she was in a close personal relationship with Stoiko because she lived in his house, paying no rent, for forty-two years and provided him with domestic support and care, particularly after her husband's death in 1993, and most especially when he had become very frail in the latter years of his life. She says that in return for her domestic support of Stoiko, Stoiko provided her with domestic support in the form of rent-free accommodation.

20    George does not deny that Margarita provided domestic support and care for Stoiko, but says that Stoiko was an independent person and largely took care of himself until the final years of his life. He says, and Margarita agrees, that Margarita did not do the washing of Stoiko's personal items but, apart from that, he does not dispute that Margarita did the cooking and the cleaning and, at least from 2005 onwards, he agrees that Margarita could be described as Stoiko's primary carer.

21    However, Mr Galitsky of Counsel, who appears for George, submits that Margarita's occupancy of the Mascot home was not the result of forming any sort of bond with Stoiko such as would demonstrate a close personal relationship between them within the meaning of that phrase within the Act. Rather, Mr Galitsky submits their relationship was merely the continuation of an arrangement which had been made between Stoiko and Marko much earlier. Mr Galitsky submits that Stoiko kept himself apart from Margarita and was an independent person. I am unable to accept this submission.

22    I accept Margarita's evidence as to the extent to which she cared for Stoiko both before and after Marko's death and both before and after Stoiko became very frail by reason of repeated falls. That evidence is inherently probable given the fact that no one suggests that Stoiko cooked for himself or undertook household chores as a matter of course after his wife's death. Particularly, it is not suggested that he looked after himself as he became older and more frail following his falls.

23    Margarita's evidence is also strongly supported by the fact that, as I have said, Stoiko freely acknowledged her moral claim on his testamentary bounty by placing her on an equal footing with his own children in his Will at the end of his life.

24    I find that there was, as at the date of Stoiko's death, a long-standing, close, personal relationship between Stoiko and Margarita in which Stoiko provided her with domestic support in the form of rent-free accommodation and she provided him with domestic support and care.

25 I find that Margarita was in a domestic relationship with Stoiko within the definition of that term for the purposes of s 6(1)(a)(ii) of the Act. Margarita is, therefore, an eligible person for the purposes of an application under s 7.

26 I note that Mr Galitsky does not dispute that Margarita was, as at the date of Stoiko's death, dependent on Stoiko for accommodation and was a member of his household. She is therefore qualified as an eligible person under s 6(1)(d) of the Act as well.

Whether proper provision made

27    Margarita is now sixty-seven years of age and in good health. She ceased working in June 2003 and receives a pension of $268.50 per week. Her living expenses are $256 per week. In 1996, Margarita sold the house at Fairfield for $129,000. The net proceeds of the sale were about $100,000 which she paid into her savings bank accounts. Out of these accounts, she has paid her solicitor's fees to date and various living expenses from time to time. She has also given some $10,000, she says, by way of financial assistance to her two daughters. About $78,000 now remains in Margarita's bank accounts, being the remainder of the proceeds of sale of the Fairfield house.

28    Mr Galitsky suggested that, in addition to the sum of some $120,000 odd which had come from the proceeds of sale of the Fairfield house, Margarita had also accumulated savings of about $100,000 or thereabouts. There is some ground for suggesting so from one of Margarita's affidavits, but I am satisfied that this was a misdescription or error in the affidavit and that she at no time received any substantial amount of cash other than from the proceeds of the sale of the Fairfield house.

29    Margarita has now no substantial debts or other liabilities. Apart from the cash presently in her savings bank accounts, her assets comprise only furniture and household effects.

30    Margarita continues to live in the Mascot house, as I have noted. She agrees it is larger than her present needs and she would like to acquire a two bedroom home unit in the area because her daughters live nearby. She would like a two bedroom unit to provide accommodation overnight for her grandchildren on occasion.

31    It is common ground that the present market value of the Mascot house is about $650,000. The cash which was in the estate when probate was first granted has since been expended in administration. Legal costs of Margarita and of George in these proceedings to date total $120,000. Taking the present valuation of the estate for purposes of this calculation at $650,000, after deduction of legal costs of both sides (if those costs were to come out of the estate) there would be a remainder for distribution under the terms of the Will of $530,000, that is, under the present provisions of the Will, $176,000 for each of the three beneficiaries. Margarita presently has some $78,000 in her savings account so that, after distribution in accordance with the Will, she would have some $253,000 available to provide herself with suitable accommodation.

32    There is undisputed evidence that a one bedroom unit with car space in the Mascot area would, on current prices, cost about $220,000 and a two bedroom unit with car space would cost about $320,000.

33    As I have said, I conclude that the relationship between Stoiko and Margarita was that of a father-in-law and dutiful and caring daughter-in-law, and that there was such a degree of mutual affection and care between them that Stoiko felt that he ought to make some provision for Margarita after his death.

34    As to the relationship between Stoiko and his children, that is, George and Bisa, the evidence is uncontroversial. I am satisfied that Stoiko and George were on close and affectionate terms and that George visited his father often until the end of his life. Stoiko had helped George financially, just as he had helped Marko, by providing rent-free accommodation in the Mascot home until George and his family were able to move into their own home.

35    George is now seventy-five years of age. He retired in 1997 and he receives a pension. He has superannuation benefits of about $10,400. His wife has superannuation benefits of about $60,000 and she receives the aged pension and a small weekly superannuation pension. George owns his own home, which is valued at about $650,000. It is unencumbered. He has no substantial liabilities. He says that he suffers from high blood pressure, diabetes and retinal problems. From his appearance in the witness box, George's health problems are not severe or markedly incapacitating.

36    I am satisfied that the relationship between Stoiko and Bisa was that of a father and affectionate daughter who were separated by distance. Bisa now seventy-three years of age. She and her husband are aged pensioners. They own their own house in Brisbane. It is valued at about $300,000. They have savings of about $20,000. They are not in the best of health, but there is no evidence that Bisa's health problems are now so severe that they necessitate substantial expenditure.

37    The financial positions of George and Bisa are stronger than that of Margarita. They have the security of owning their own homes without substantial liabilities. Margarita does not have that security.

38    If the Will were left undisturbed, after the provision out of the estate of legal costs of both sides, Margarita would have some $253,000 to apply to the costs of her accommodation. As I have noted, a one bedroom unit would cost about $220,000 so that she would have sufficient to provide herself with a one bedroom unit.

39    The question is whether a reasonable provision for her maintenance requires a two bedroom unit rather than a one bedroom unit. If a two bedroom unit is the standard to which she should be accommodated, then the Will does not adequately provide for her and an order should be made.

Orders for further provision

40    I am satisfied that a reasonable provision for Margarita in the Will should have enabled her to acquire a two bedroom unit. It seems to me that, having regard to the length of time that Margarita had lived in Stoiko's home, undertaking the main responsibility for household chores, having regard to the care which she took of him, particularly in his final years, having regard to her age and financial position and the comparative financial positions of George and Bisa, Stoiko ought to have made provision for accommodation which would enable Margarita to live with some degree of comfort, and particularly with the degree of comfort of having her grandchildren able to stay with her on occasion. She should not, in my view, be confined to a small one bedroom unit in which she could accommodate visits from her grandchildren only with considerable discomfort to all.

41    The financial position of Margarita is such that she now needs a sufficient sum from the estate which, when taken together with the present bequest and her present savings, will enable her to afford to acquire a two bedroom unit and pay the stamp duty and costs of the acquisition. A reasonable amount to provide for the costs of acquisition of a two bedroom unit would be $330,000. Margarita's present share of the estate would be $253,000, leaving a shortfall of some $77,000.

42    Bearing in mind that there will be incidental costs of moving and incidental costs of the acquisition, I think that further provision should be made from Stoiko's estate in a sum of $85,000. Because the position of George is much stronger than that of Bisa, this additional provision should come out of George's share and not out of Bisa's share.

43    The additional sum of $85,000 ought to be adequate to assist Margarita to acquire the two bedroom unit, pay stamp duty and legal costs. Subject to what the parties might otherwise say as to costs, it seems to me that the costs of both parties should come out of the estate. That means that costs already paid by Margarita to her solicitors will be reimbursed to her. That will leave her with an additional cushion of about $20,000 against the adversities of life, to which I think she is entitled, as all of her present savings will be utilised in acquiring her unit.

44    Those are the orders that I propose to make. I will stand the proceedings over for a short time to enable the Plaintiff to bring in Short Minutes of Order reflecting these reasons. I will decide any issue as to costs on short written submissions, without listing the matter for further argument.

– oOo –