Jotkowitz v Keating
[2006] VSC 290
•9 August 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 5517 of 2006
IN THE MATTER of Part IV of the Administration and Probate Act 1958
IN THE MATTER of the Will and Estate of Magda Somogyi
| ETHEL JOTKOWITZ | Plaintiff |
| v | |
| JOHN KEATING (who is sued as the executor of the estate of Magda Somogyi deceased) | Defendant |
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JUDGE: | WILLIAMS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 June 2006 | |
DATE OF JUDGMENT: | 9 August 2006 | |
CASE MAY BE CITED AS: | Jotkowitz v Keating | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 290 | |
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PRACTICE AND PROCEDURE – Testator’s Family Maintenance – Application under s 99 of the Administration and Probate Act 1958 for extension of time for commencement of proceeding for provision – Applicant niece of deceased aunt – Substantial estate – Estate not distributed – Negotiations for settlement on foot – Short period of delay – Reasons for failure to commence proceeding include illness of solicitor and merger of solicitor’s practice – Close relationship between applicant niece and deceased aunt – Residuary beneficiaries four charities – No evidence of prejudice to existing beneficiaries – Extension of time granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A. Southall QC and Ms L. Bird | Harvey Bruce & Co |
| For the Defendant | Mr B. Gillies | John Keating & Associates |
HER HONOUR:
The claim
The plaintiff, Mrs Jotkowitz, has made an application under s 99 of the Administration and Probate Act 1958 (“the Act”) for an extension of the time for the commencement of proceedings seeking provision out of the estate of her late aunt, Mrs Magda Somogyi, (“the deceased”).
The deceased died on 25 July 2005 and probate of her will dated 13 March 1990 (“the will”) was granted to the defendant (“the executor”) on 19 September 2005. By the will, the deceased left her residuary estate to her late husband, Mr Stephen Somogyi, if he should survive her. Otherwise, the Royal Victorian Blind Institute, the Royal Guide Dogs for the Blind Association of Australia, the Royal Society for the Prevention of Cruelty of Animals (Victoria Foundation) and the Montefiore Home for the Aged were to take her residuary estate in equal shares.
The deceased’s husband predeceased her. Her net estate was valued for probate purposes at approximately $4,967,000.00. It has not been administered.
The Act
The Act relevantly provides:
“91. Power of the Court to make maintenance order
(1)Despite anything in this Act to the contrary, the Court may order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.
(2)The Court must not make an order under sub-section (1) in favour of a person unless-
(a)that person has applied for the order; or
(b)another person has applied for the order on behalf of that person.
(3)The Court must not make an order under sub-section (1) in favour of a person unless the Court is of the opinion that the distribution of the estate of the deceased person effected by-
(a)his or her will (if any); or
(b)the operation of the provisions of Part I, Division 6; or
(c)both the will and the operation of the provisions-
does not make adequate provision for the proper maintenance and support of the person.
(4)The Court in determining-
(a)whether or not the deceased had responsibility to make provision for a person; and
(b)whether or not the distribution of the estate of the deceased person as effected by-
(i) the deceased's will; or
(ii)the operation of the provisions of Part I, Division 6; or
(iii)both the will and the operation of the provisions- makes adequate provision for the proper maintenance and support of the person; and
(c)the amount of provision (if any) which the Court may order for the person; and
(d)any other matter related to an application for an order under sub-section (1)-
must have regard to-
(e)any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;
(f)any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;
(g)the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;
(h)the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;
(i)any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;
(j)the age of the applicant;
(k)any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased;
(l)any benefits previously given by the deceased person to any applicant or to any beneficiary;
(m)whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility;
(n)the liability of any other person to maintain the applicant;
(o)the character and conduct of the applicant or any other person;
(p)any other matter the Court considers relevant.
…
99. Time within which application may be made
No application shall be heard by the Court at the instance of a party claiming the benefit of this Part unless the application is made within six months after the date of the grant of probate of the will or of letters of administration (as the case may be):
Provided that the time for making an application may be extended for a further period by the Court after hearing such of the parties affected as the Court thinks necessary, and this power shall extend to cases where the time for applying has already expired but in all such cases the application for extension shall be made before the final distribution of the estate and no distribution of any part of the estate made prior to the application shall be disturbed by reason of the application or of any order made thereon.
Provided further that the time for making an application under this Part shall be extended by a period equal to the period between the commencement of proceedings in an application under Part V and the making of an order by the Court granting or dismissing the application.”
The relevant six month period under s 99 expired on 18 March 2006. Mrs Jotkowitz commenced this proceeding seeking leave to bring an application out of time some 16 days later, by an originating motion filed on 3 April 2006.
Material before the Court
Mrs Jotkowitz relies on affidavits, sworn in support of her application:
(a) by her solicitor, Mr Harvey Stephen Bruce, on 23 May 2006; and
(b) by her, on 23 May 2006.
The executor has not filed any affidavit material in response.
The grounds for the application
Section 91 of the Act was amended by the Wills Act 1997[1] which extended the group of people eligible to apply for provision from a deceased person’s estate to include those for whom the deceased “had responsibility to make provision”.
[1]Which relevantly came into operation on 20 July 1998.
However, there was no amendment of s 99. The applicable principles in relation to a claim under s 99 have been established by the authorities. In Re Barrot[2], Sholl J described the jurisdiction of the court as discretionary and made it clear that an extension of time would not automatically follow the making of an application.
[2][1953] VLR 308 at 312.
Mrs Jotkowitz bears the burden of establishing that the granting of the indulgence sought is justified[3]. She must provide sufficient explanation of the delay[4]. Time has been extended in cases where a solicitor has failed to commence proceedings in time[5] and where there have been negotiations between an applicant and the beneficiaries in relation to a claim[6]
[3]Re Guskett (dec’d) [1947] VLR 212.
[4]Henderson v Rowden [2001] VSC 267 at [2] per Beach J.
[5]Re Murie, deceased (Full Court unreported 21 June 1963); Shannon v Public Trustee [1970] VR 876.
[6]Amos v Amos [1966] VR 442.
If it is improbable that an application for provision would succeed, an extension should not be granted[7]. An applicant should demonstrate an arguable case that the deceased had a responsibility to make provision for his or her proper maintenance and support and failed to do so[8].
[7]Re Walker (1967) VR 890 at 892 per Lush J.
[8]Clayton v Aust (1993) 9 WAR 364 per Malcolm CJ; Sherlock v Guest [1999] VSC 431 at [14] per Bongiorno J; Valbe v Irlicht [2001] VSC 53 at [34] per Gillard J.
Section 91 contemplates a three stage process in the consideration of a claim for provision. First, the court must determine whether the deceased had responsibility to provide for the applicant. If so, the court must then consider whether the deceased made proper provision for the applicant. If proper provision has not been made, the court must decide what provision should be made[9]. At each stage, the factors listed in sub-s 91(4)(e)-(p) must be taken into account.
[9]See Schmidt v Watkins & Anor [2002] VSC 273 at [11] per Harper J.
The proper approach was explained as follows by Nettle JA in Blair v Blair[10]:
“The court is bound in answering each of those questions to have regard to the matters mentioned in ss. 91(4)(e) to (o) and, pursuant to s. 91(4)(p), to any other matter considered to be relevant. Self evidently, such matters are of themselves incapable of providing an answer to either question. To reason from the matters mentioned in ss. 91(e) to (p) to a conclusion that a testator had a responsibility to make provision for a claimant, or that the testator failed to make adequate provision for the claimant, necessitates the application of a test or standard to the matters to be considered. That test remains one of whether and if so what provision a wise and just testator would have thought it his moral duty to make in the interests of the claimant.”
[10][2005] VSCA 127 at [41].
The reasons for the delay
There have been ongoing negotiations between the parties in relation to Mrs Jotkowitz’s claim from mid August 2005. Mr Bruce, deposes that he made bona fide attempts on her behalf to have the matter resolved, without resort to litigation, during this period.
On 31 August 2005, however, Mr Bruce suffered a heart attack which threatened his life and has had ongoing effects upon his health. His practice also went through a merger in early 2006. Mr Bruce acknowledges his responsibility for inadvertently overlooking the time limit in relation to the commencement of proceedings in those circumstances.
Mrs Jotkowitz herself was unaware of the time limit for the commencement of proceedings.
Mrs Jotkowitz’s claim
Relationship with the deceased and contributions to her welfare (s 91(4)(e), (k) and (o))
Mrs Jotkowitz is the deceased’s niece. Her mother married Mr Les Somogyi, the deceased’s brother, in 1954, after the death of Mrs Jotkowitz’s father in 1950. Together, they reared Mrs Jotkowitz and she regards Mr Somogyi as her father. Mrs Jotkowitz is married to Mr Michael Jotkowitz.
Mrs Jotkowitz and her immediate family were the deceased’s only relatives in Australia. The deceased had no children of her own and Mrs Jotkowitz characterises the continuing relationship, formed between herself and the deceased shortly after her arrival in Australia in 1957, as akin to a close relationship between a mother and daughter. Mrs Joktowitz was aged nine when her aunt and uncle reached this country and lived with her family for some six months. They occupied her bedroom and she slept in the dining room during their stay.
The deceased and her husband lived a secluded and frugal lifestyle and were treated as members of Mrs Jotkowitz’s family, attending all major celebrations and many normal family gatherings. They had few social contacts outside the family circle.
According to Mrs Jotkowitz, it was Mr Stephen Somogyi’s employment, on generous terms, by her late father that enabled him to accumulate the property which now forms part of the deceased’s estate. The deceased worked on a part time basis managing a second hand furniture business owned by Mr Stephen Somogyi, but she did not draw any income in relation to that work.
When the deceased’s health deteriorated between about 1980 and 1990, Mrs Jotkowitz assisted her with her shopping and other personal requirements. She also helped her attend places of entertainment such as the poker machine venue at the Caulfield Racecourse. Because the deceased did not drive, Mrs Jotkowitz often drove her and Mr Stephen Somogyi when they required transportation.
The deceased became immobile in the early 1990s and Mrs Jotkowitz cared for her and her late husband by cooking traditional Jewish fare for them, generally and on religious occasions and holidays. From the death of Mrs Jotkowitz’s father in 1992, she and her husband regularly brought the deceased and her husband to their home for family meals. They would never travel by taxi. In 1993, Mrs Jotkowitz and her husband held a celebration for the deceased’s 70th birthday in their own home. Mrs Jotkowitz also cared for the deceased’s personal needs when she was hospitalised in about 1994.
Mrs Jotkowitz then visited the deceased regularly in the Montefiore Home after her admission in about 1994 and 1995. She also attended to the personal needs of Mr Stephen Somogyi after he was suddenly admitted to hospital in about 1998. He died, unexpectedly, on 2 July 1998, within a week of a second hospital admission. It was Mrs Jotkowitz and her husband who arranged the funeral and organised the necessary religious observances for her uncle.
Meanwhile, the deceased had developed symptoms of dementia. She was admitted to the Ashwood Dementia Hospital and resided there for some six years before her death. Mrs Jotkowitz visited her almost weekly and helped feed her aunt. She was the nominated member of the deceased’s family, to be contacted by Montefiore Homes.
Mrs Jotkowitz organised the deceased’s funeral which was attended only by her, her husband, her mother and her son. She and the other family members regularly visit the deceased’s grave in accordance with Jewish custom. Few others indicated their visits by placing stones on the grave in the customary fashion.
Obligations or responsibilities of the deceased to Mrs Jotkowitz (s 91(4)(f))
It does not appear that the deceased had assumed any obligations or responsibilities in relation to Mrs Jotkowitz during her lifetime.
Age, employment and earnings (s 91(4)(j) and (h))
Mrs Jotkowitz is a 58 year old kindergarten teacher in part time employment at the Addas Israel Pre School in Elsternwick. Her teaching qualifications were gained 40 years ago and are considered inadequate by today’s standards. She regards her employment as tenuous. Working full time she would earn $1391 net per fortnight. Apart from indicating that she has extended her working hours to meet day to day expenses, she has not stated what portion of a full time work load she undertakes. She has superannuation of $14,264.
Assets and liabilities (s 91(4)(h))
Mr and Mrs Jotkowitz have an interest valued at $600,000.00 in the Caulfield property at which they reside with Mrs Jotkowitz’e elderly mother who has been unable to live independently since 2005. Mrs Jotkowitz’s mother provided 50% of the purchase price for the jointly acquired property, after she and her daughter and her husband had sold their separate homes. Mr and Mrs Jotkowitz have a joint liability under a mortgage of $56,000.00 in relation to their home.
Mr and Mrs Jotkowitz jointly own shares valued at $118,437.00 and have joint savings of $11,300.00. Mrs Jotkowitz owns shares valued at $437.00 in her own right and has savings of $10,200.00. She has a credit card liability of approximately $5,000.00. She owns a motor vehicle, valued at $15,000.00.
Mrs Jotkowitz is also named as a beneficiary under a discretionary trust set up by her parents in 1973. She and her husband are its trustees. The trust has assets of some $361,964.00. Its principal asset is the property, valued at $242,652, at which Mrs Jotkowitz’s father’s business was carried on in Richmond. The remaining trust assets are loans to beneficiaries totalling $80,642. For the last 15 years, Mrs Jotkowitz has not received a distribution from the trust.
Mrs Jotkowitz and her husband have contributed some $9,000.00 in their ongoing support of her brother, Mr Fred Somogyi, who suffers from terminal cancer and is in a poor financial situation. They support their children to the extent of about $350.00 per week and have living expenses of some $250.00. Their daughter Debra who lives in Israel will soon need their financial assistance, for herself and her family, when she undergoes open heart surgery.
Health (s 91(4)(i))
Mrs Jotkowitz herself suffers from a thyroid condition, high blood pressure, high cholesterol levels and is classified as “pre-diabetic”.
Other sources of support (s 91(4)(n))
Mrs Jotkowitz’s 63 year old husband is unemployed and has a 20 year history of hypertension. He has recently had both his prostate and kidney removed as a result of cancer. He is at genuine risk of recurrence of cancer and Mrs Jotkowitz is gravely concerned about his future state of health. She believes that she cannot look to her husband for future financial support.
Submissions
Mrs Jotkowitz relies upon:
a) the relatively short delay of approximately two weeks;
b) the ongoing negotiations between the parties;
c) the circumstances explaining Mr Bruce’s failure to commence a proceeding;
d)the substantial value of the estate and the court’s greater willingness to extend time in such a case[11];
[11]Citing IMO Ivor Withall Trescowthick [1999] VSC 409 at [18] per Warren J.
e) the fact that the estate has not been administered;
f)the fact that the beneficiaries are large charitable institutions and not individuals who might suffer prejudice[12]
g) her arguable case for provision as a result of:
(i)her “mother/daughter” type relationship with the deceased over some 40 years;
(ii)the close relationship between the deceased and Mrs Jotkowitz’s family;
(iii)her own financial circumstances: with her finite resources, insecure employment, ill health and an ailing husband and the family members requiring her financial support.
[12]Relying upon the grant of an extension of time by Murphy J in similar circumstances in Knight v Fraser & Ors (Unreported, Supreme Court of Victoria, 26 April 1979).
The executor submits that Mrs Jotkowitz should not be granted an extension of time under s 99, being unable to show both an appropriate reason for excusing the delay in bringing the application and an arguable case for relief. He contends that, even though the delay is slight, the absence of a moral obligation on the part of the deceased to provide for Mrs Jotkowitz means that she has no arguable case and that, therefore, the application should be refused.
The executor distinguishes the circumstances of this case from those in Iwasivka v State Trustees Ltd[13] where a niece made a successful claim for provision from her aunt’s estate. He points out that Mrs Jotkowitz’s own mother is still alive and contends that the relationship between Mrs Jotkowitz and the deceased was not close enough to give rise to a moral obligation to make provision. He argues that this case is not one involving the nurturing of a niece by an aunt, as was the situation in Iwasivka. He characterises the relationship as one in which the deceased benefited from kindness and generosity which alone would not justify the making of an award[14]. He points out that others had also cared for the deceased.
[13]Iwasivka v State Trustees Ltd (2005) VSC 232.
[14]See Schmidt v Watkins [2002] VSC 273 at [23]-[24] per Harper J.
The executor also submits that Mrs Jotkowitz does not demonstrate the requisite need, pointing to her financial circumstances.
Conclusions
I am satisfied that time should be extended in this case.
The delay is short. Bona fide negotiations have been on foot in an attempt to settle the claim. The fault was that of Mrs Jotkowitz’s solicitor and explained by the unusual circumstances in which he found himself. Mrs Jotkowitz herself was unaware of the requirements as to time. The estate is substantial and has not been administered. There is no evidence of prejudice to the beneficiaries as a result of the delay in bringing a proceeding.
Mrs Jotkowitz has adduced evidence of a close relationship with the deceased and of contributions she has made to the deceased’s welfare. She has deposed as to her own financial and other circumstances and future requirements. She has health problems, as does her husband, who is not employed. She provides financial support for family members and has somewhat tenuous employment prospects, in light of her qualifications. She has assets, the most substantial being a share in the property at which she, her husband and her mother reside. Although her residence has not been tested, there is no material before the Court contesting the factual allegations upon which the claim is based.
I am not satisfied that it is improbable that Mrs Jotkowitz’s claim would succeed. On balance, in light of the authorities, having had regard to the matters listed in s 91(4)(e)-(p) and applying the relevant test[15], Mrs Jotkowitz has satisfied me that she has an arguable case for relief.
[15]See Blair v Blair [2005] VSCA 127 at [41] per Nettle JA.
I will grant the application for an extension of time for the commencement of proceedings.
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