Kerr v Badran

[2004] NSWSC 1049

CITATION:	Kerr & anor v Badran & anor; Estate of Badran [2004] NSWSC 1049
HEARING DATE(S):	29 October 2004
JUDGMENT DATE:	11 November 2004
JURISDICTION:	Equity Division Probate List
JUDGMENT OF:	Windeyer J at 1
DECISION:	Costs of probate proceedings decided. Order made in one FPA claim; other claim dismissed.
CATCHWORDS:	SUCCESSION- Family Provision Act 1982 - where deceased left modest annuities to claimants out of substantial estate - claimants inherited real estate in Lebanon under law of Lebanon - significance of financial assistance given by deceased to claimants during deceased's lifetime - whether provision under will adequate for proper maintenance and advancement of claimants - sufficient provision for ordinary needs not necessarily adequate - regard had to assets of spouse - COSTS - probate costs - where examination of the question of capacity was justified - where award of costs will bear on family provision claim.
LEGISLATION CITED:	Family Provision Act 1982
CASES CITED:	Re Estate of Hodges (deceased); Shorter v Hodges (1988) 14 NSWLR 698 Shorten v Shorten (No 2) [2003] NSWCA 60
PARTIES :	John Kerr (First Plaintiff/First Cross-Defendant) Raymond Badran (Second Plaintiff/Second Cross-Defendant) Maurice Badran (First Defendant) Joyce Badran Freije (Second Defendant/Cross-Claimant) Joyce Freije (Second Defendant)
FILE NUMBER(S):	SC 119957 of 2002
COUNSEL:	Mr J Simpkins SC (Plaintiffs/Cross-Defendants) Mr M Rollinson (First Defendant) Mr M Cashion SC with him Mr P Bolster (Second Defendant/Cross-Claimant
SOLICITORS:	Home Wilkinson Lowry (Plaintiffs/Cross-Defendants) Newman & Associates (First Defendant) Vandervoords (Second Defendant/Cross-Claimant

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROBATE LIST

WINDEYER J

THURSDAY 11 NOVEMBER 2004.

119957/02 JOHN KERR & ANOR V BADRAN & ANOR

JUDGMENT

1 This judgment deals with the cross-claims brought by each of the defendants in the probate proceedings, who seek orders in their favour under the Family Provision Act 1982. The course of the proceedings to date is explained in paragraph 11 of the judgment delivered on 17 August 2004, in which I ordered that a will of the deceased dated 14 March 1995 be admitted to probate. It is also necessary to deal with the costs of the probate issues.

Costs of the probate issues

2 This was a case where an examination of the question of capacity was justified. The reason this is so is clear from my earlier judgment. The case is clearly one falling within the second exception referred to in Re Estate of Hodges (deceased); Shorter v Hodges (1988) 14 NSWLR 698 at 709. There is a question whether it could be said to be within the first category, namely was it a case where the testator was the cause of the litigation. A similar question was considered by the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60.

3 So far as the first defendant Maurice is concerned, he does not seek costs of the probate issue out of the estate. As he had no proper interest in contesting those proceedings that attitude is proper. An order for costs is not sought against him because it is accepted that had he not been a party his evidence would have been called by Mrs Freije in any event. He should bear his own costs.

4 The question of the costs of Mrs Freije of the probate action is more difficult. Those costs bear on the financial position of Mrs Freije as relevant to her Family Provision Act claim. There is now an affidavit from her solicitor that her costs amount to $219,059.35. In a case such as this, where the financial position of the unsuccessful defendant is not particularly strong and if diminished by this amount of costs, would, I consider, certainly result in an award under the Family Provision Act for something like the amount of those costs, I think in the exercise of discretion the proper order is for the costs to be paid out of the estate. That does not necessarily mean that on assessment the full amount of $219,059.35 will be allowed. Nor does it mean that it will not be, although naturally I am concerned about the figure. The order I will make so far as the issues on the statement of claim are concerned is that there be no order as to the costs of the first defendant, and the costs of the plaintiffs and second defendant be paid out of the estate, those of the plaintiffs on the indemnity basis.

Family Provision Act claims

5 Apart from up to date evidence of assets all the evidence relevant to the Family Provision Act proceedings was given at the earlier hearing. The only reason why it has been necessary to determine the probate part of the action first was that had the 1995 will not been admitted to probate the benefits which Mrs Freije would have received from the estate under the earlier will would have precluded her from obtaining any order under the Family Provision Act. The benefits which Mr Maurice Badran received under the 1995 will were substantially greater than those he received under the earlier will.

6 I will not repeat those parts of the earlier judgment relevant to the present claims. I will just set out any additional matters now relevant.

Estate assets

7 No assets have been located in Switzerland. The landholdings of the deceased in Lebanon have been agreed to have a value of US$667,359 which converts to approximately A$896,000. There is a property apparently held in the name of the deceased, together with Raymond and Mrs Freije having a value of US$45,691. It is not established if this went by survivorship or the deceased’s share became part of his estate. Of the properties included in the A$896,000 is one property which is described as the family home having a value of approximately $384,000. What turns on this was not made clear. I can only assume that this is an asset available for realization in due course. The Lebanese properties have either all been transferred or will be transferred to Raymond and the two defendants in equal shares, they being entitled to take that land under the law of Lebanon. Whether the deceased understood the devolution of the land I do not know, but the benefits must be regarded as provision made for the recipients.

8 The Wollongong properties have been revalued. This has resulted in an increased value in the shareholdings of the deceased. The net Australian estate of the deceased has been increased from approximately $3,992,000 to approximately $4,918,000. When there is added to this the value of the assets in Lebanon of $896,000 the total value of the estate now appears to be in the order of $5,814,000. In other words it is a substantial estate.

9 From that total would have to be deducted the plaintiffs’ costs of the proceedings to date, which are not quantified and now the costs of the second defendant. As the estate is so substantial these costs will not bear on the outcome.

10 Mr Raymond Badran gave no details of his financial position. The position therefore is that if it is appropriate to make an order for either or both of the cross-claimants this can be done without regard to the position of Raymond.

Claim of Mrs Freije

11 I have previously set out the financial assistance the deceased gave to Mrs Freije during her life, or part of that history. Too much should not be made of part of this. A grandfather may make gifts to grandchildren which enable them to be educated to a level not otherwise available, but that is a benefit to them not to their parents, if those parents would not have been able to provide that assistance themselves. There may have been some collateral gain, but that is not really of relevance.

12 The assets of Mrs Freije are as follows:

Apartment in Beirut owned by Mrs Freije
and her husband, (gift from the deceased)
estimated value $167,500

Apartment in Beirut inherited from mother
previously provided by the deceased for his wife $140,000

Two vacant lots near Monsif, not more than $ 10,000

Nissan motor vehicle purchased in 2000 $ unknown

Land in Lebanon inherited from her father’s
estate, approximately $298,000

The annuity given under the will $ 20,000
a year for 10
years

Disregarding the car and the annuity and her home, Mrs Freije has assets of $448,000, plus an unspecified co-ownership interest in land valued at about $61,000.

13 Mrs Freije receives income from the unit she inherited from her mother’s estate of about $800 per month. She spends this on maintenance of the properties and running her car. Mrs Freije’s husband, Richard Freije, is 73 years of age. He is a farmer and has a small agricultural business which he is trying to wind up. It seems that his land assets, some of which are held with relatives, have a net value of $470,200 for his share. His business is not profitable any more and he is trying to wind it up. The liabilities are expected to at least equal the assets of the business. After that he will rely on income from leasing the farming land which is expected to bring between $16,000 and $24,000 a year.

14 Mrs Freije is 68 years of age. She married in 1962. She suffers from hypercholesterolaemia, requiring constant medication. She needs an operation for varicose veins which will cost about $6,700. She suffers from arthritis in the fingers and joints and takes medication for osteoporosis. Her problems obviously lead to considerable discomfort but are not in the severe category. Her medication costs her about $260 per month. Mr Freije has heart problems. He had a triple bypass in 1983 and a heart valve replacement and double bypass in 2003. Medication costs him about $400 per month. Without taking into account the benefits Mrs Freije has received under the will, it is clear that she and her husband are able to meet their expenses, but have little, if anything, to spare. For instance, she cannot afford to make trips to visit her children in America

15 As I have said earlier, Mrs Freije was born in 1936. She did not meet her father until she was 18 when he visited Beirut. He had provided for the family in Lebanon quite well and they were quite comfortable. When she graduated in 1956, he took her on a holiday to Europe as a present. She came on a visit to Australia in 1957 and came back in 1958 and stayed for two years during which time she worked in the Wollongong store. She decided she would live in Lebanon with her mother and returned in 1960. She has three children now aged 41, 39 and 36. The deceased visited Beirut quite often in the 1960s to see his family. It was in 1969 that he purchased the unit for Mrs Freije and her husband and for his wife. Mrs Freije came to Australia again for two years in 1976 with her children and worked again in the Wollongong store and lived in one of the Phoenicia units. She returned to Beirut in 1977. I have already detailed her visits in 1990, 1997 and 1999. She was obviously a good daughter. She had no falling out with her father. The fact that they seldom saw each other was caused by distance. She gave considerable assistance to her father in maintaining his properties in Lebanon.

Claim of Maurice Badran

16 Maurice was born in 1932. He stayed in Lebanon with his mother after his father returned to Australia in 1936. He came to Australia in 1947 and spent his last three years of school at The Kings School. He studied economics at the University of Sydney, graduating in 1953. He managed the Normandie Hotel for the deceased from 1954 to 1957 and then went overseas. He worked for Middle East Airlines from 1957 to 1961 and then spent some time working as a consultant to the airline industry. He joined Boeing in 1966 and worked with that company until 1980 by then being the Chief Economist (Aircraft Sales). He returned to private consulting work.

17 Maurice brought proceedings in this Court against his father in 1985. Those were settled on the basis the deceased would make some payments on account of Maurice which it is claimed by him were not paid. Maurice returned to the United States. His marriage came to an end in 1990 and the home owned by him and his former wife was sold by the mortgagee and he got nothing from the sale. He returned to Australia and lived with his father for about two years from 1993 to 1995. He then went overseas again, returning to Australia in 1997. He lived in rental accommodation in Bondi for some time and then moved into his father’s Darling Point unit early in 1999. His father moved to a nursing home in July 1999. Maurice has remained in the Darling Point unit since then. He has not paid anything for rent. There is no evidence about the outgoings.

18 Maurice has little in the way of assets. He has about $2,000 in the bank, some possessions but nothing else. He has an Australian pension of $277 per week and a United States pension of about $232 per week. In submissions his counsel said that his Australian pension would be reduced as a result of the weekly value of his annuity by $129 per week. On that basis his weekly income, if the annuity is converted to a weekly payment, would be the United States pension of $232, the Australian pension $147.80, annuity $384, total $763.80.

19 In addition to the annuity received under the will, Maurice has received from his father’s estate a one third interest in the land in Lebanon worth $298,000. He also has land in Monsif, Lebanon. One block he has had since the 1960s, which is said now to be worth $36,000. He and Raymond own land in equal shares which they inherited from their mother. They estimate that land to be worth between $295,000 and $400,000, so that his share is worth between $147,500 and $200,000.

20 These are substantial real estate interests. It is said that land in Lebanon is difficult to sell, but the values were either put forward by Maurice or agreed by him. The total value of the real estate assets of Maurice is between $481,000 and $534,000. I have had concern that these assets seem to have been disregarded in submissions, but they cannot be disregarded by me. If Maurice wishes to retain his lands in Lebanon then that is a matter for him, but those lands must be taken to be an asset available to him and available to be realised. There is no evidence as to whether the Lebanon properties are producing any income. No cross-examination was directed to any of this. The fact is however that if the properties were sold and the proceeds brought to Australia, Maurice would be able to purchase a modest, but nevertheless comfortable unit in Sydney and would have that and the income of $763 per week, during the term of the annuity. That would be sufficient to provide for his ordinary needs, but that does not necessarily mean that the provision made for him was adequate.

21 The evidence established that the deceased and Maurice did not have a close relationship, though clearly it was closer towards the time of death than at the time of the litigation in 1985. They must have got along reasonably well or Maurice would not have been allowed to stay in the Darling Point flat. That may explain, of course, why the provision in the 1995 will was greater than under the earlier will. The other fact to be borne in mind for both claims is that while the deceased was a wealthy man, he does not appear to have lived an affluent style of life. While he made reasonable provision for his children by way of assistance and it is accepted that he provided over $200,000 for Maurice during a particular period, - (worth a lot more on present values) - his children did not themselves live the lives of wealthy people as a result of their father’s riches and certainly did not expect to.

22 It was not submitted that I should take into account any litigation costs incurred by Maurice in defending the probate proceedings. It was in his financial interest that the last will be admitted to probate. It is not quite clear why he sought to take part in that part of the proceedings, although of course it was for the plaintiffs to take interest proceedings if they wished to do so. No order for costs against him was sought. It was recognized that the evidence which Maurice gave would be evidence that would have been called by his sister in the probate proceedings in any event. It was accepted that his taking part in the probate proceedings was his choice and insofar as his financial position has been affected by that expenditure this was not something to be taken into account in determining whether any order in his favour should be made under the Family Provision Act.

Conclusion

23 I have gone as far as it is proper for a judge to go in trying to bring the family to settlement. This has failed. That is sad. However, I must proceed to decide the matter pursuant to the provisions of the Act, not on the basis of what I think the parties might have agreed.

24 Mrs Freije is getting by now. Her position is not to be considered in isolation from that of her husband of over 40 years. It is not the task of the court to redistribute assets of a deceased testator in a way that seems fair. A testator is entitled to dispose of his estate as he wishes subject of course to any order under the Family Provision Act. The provision of the present home of Mrs Freije by the deceased is to be taken into account. The question is whether the $20,000 a year for 10 years and the share in the land in Lebanon worth $298,000 is inadequate for the proper maintenance and advancement of Mrs Freije. I have come to the conclusion that while it is not generous and while the testator could have provided much more, it is not inadequate. This part of the cross-claim should be dismissed. Nevertheless in the circumstances which surround this case I consider that Mrs Freije should have her costs relating to the application out of the estate. Those circumstances include the fact that had I not ordered her costs of the probate proceedings be paid out of the estate I would have made an order for provision under the Family Provision Act.

25 I turn to the claim of Maurice. He has no dependants. His position differs from his sister in that he needs somewhere to live. As I have said he has the ability to purchase suitable accommodation; he needs time to arrange this. I consider adequate provision would require some additional rent free time to arrange accommodation together with a capital sum to enable him to set himself up in new accommodation, as some security for future needs such a medical expenses and to provide for additional needs when the annuity comes to an end. Without this I consider he has been left with inadequate provision. He should be entitled to remain in the Darling Point unit on whatever is the present arrangement as to outgoings up to 30 June 2005. The appropriate capital sum I consider to be $100,000. The sum should carry interest at court rates after one month. His costs should come out of the estate.

26 The plaintiffs’ solicitors should prepare short minutes of order to give effect to these reasons.

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Last Modified: 11/17/2004