Korbi v Poljak

[2003] NSWSC 671

CITATION:	Korbi v Poljak [2003] NSWSC 671
HEARING DATE(S):	27/05/03
JUDGMENT DATE:	29 July 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Master Macready at 1
DECISION:
CATCHWORDS:	Family Provision. Application by blind daughter in respect of an estate where the only asset, a house, was held for her elderly brother for life and thereafter for the plaintiff and her siblings. Brother contributed more to the estate than the plaintiff. Claim dismissed.
PARTIES :	Maria Korbi v Anna Poljak
FILE NUMBER(S):	SC 4405 of 2000
COUNSEL:	Mr G. Rundle for plaintiff Mr D.B. McGovern SC with M.K. Meek for defendant
SOLICITORS:	Warren McKeon Dickson for plaintiff Giles Payne & Co for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Master Macready

Tuesday 29 July 2003

4405/00 Maria Korbi v Anna Poljak

JUDGMENT

1 Master: This is the hearing of a claim under the Family Provision Act 1982 in respect of the estate of the Late Duro Gajdos who died on 9 March 1994. His two daughters and his two sons survived the deceased. His wife had predeceased him. The plaintiff is one of the deceased’s daughters and the defendant is another daughter who was appointed executrix of the deceased’s last will.

The will of the deceased

2 The deceased made his last will on the second of June 1992. Under that will the deceased left his home at 21 General Holmes Drive, Brighton-le-Sands to the executrix to hold it to permit his son George Gajdos to reside therein for life with a power of substitution of the residence. On the death of George the property is to pass to such of the deceased’s children other than George who should survive the deceased. The plaintiff thus has already a one third interest in remainder in the property. There was a provision for substitution of grandchildren of the deceased in this bequest. The residue of the estate was to be applied in payment of testamentary expenses and then to be shared between all the deceased’s children equally.

The estate of the deceased

3 At the date of his death the deceased owned the property at 21 General Holmes Drive, Brighton-le-Sands, then valued for probate at $275,000, which was unencumbered. His only other assets appear to be moneys in bank accounts amounting to $6582.51 and some furniture of negligible value. These funds were used to pay administration expenses. As time progressed there was insufficient moneys in the estate to meet the ongoing expenses of maintaining the property which under the terms of the will fell upon the defendant. In 1994 the defendant came to an agreement with her brother George that he would pay all the expenses in relation to the property and this has enabled its retention.

4 The property at 21 General Holmes Drive, Brighton-le-Sands is currently valued at $590,000. The value of the life estate held by George at 1 September 2002 was $137,215.

5 The plaintiff's costs in respect of these proceedings on the basis of a 2-day hearing are estimated at $55,000 to $60,000. Her daughter Maryanne who has advanced some $10,000 to $15,000 on account of her mother’s costs has in part funded the plaintiff. The defendant's costs are estimated at $70,000 for a 2-day hearing. The defendant has herself paid a substantial part of these costs and does not propose to take any action in respect of their recovery from the estate until after the death of her brother George who is aged 70 and who has inhabited the property by himself since the death of the deceased. In final submissions the defendant indicated that in the event that the plaintiff's claim was dismissed no order for costs would be sought against the plaintiff. This compassionate offer is no doubt motivated by the desire of the defendant not to see her sister ejected from her house in order to meet such a costs order.

Family history

6 The first son of the deceased namely George Gajdos was born on 12 June 1934. He is now 70 years of age. The defendant was born in 1940 and the deceased’s son John was born in 1946. The youngest daughter Maria, the plaintiff was born on 15 November 1949 and she is now 53 years old.

7 The family of the deceased, his wife and children was originally located in Serbia and in 1958 the family moved to Croatia. In 1964 the family moved to Germany where they resided until 1965. Between 1965 and 1968 the family moved to Australia in various stages. The first to come were John, Anna and her husband. When the deceased's wife came together with the plaintiff they stayed in Anna’s house for a period of some nine months.

8 The plaintiff married on 7 July 1969 to Liman Korbi. At that stage the family purchased a property at 21 General Holmes Drive, Brighton-le-Sands. The house was purchased, as to a one-third share by the deceased and his wife, as to a one-third share by the brother John and as to the remaining one-third share by the brother George. The purchase price was $12,000 and funds to enable the purchase of $7,500 were borrowed. Both brothers and their parents contributed to the repayment of the mortgage. As well they all contributed to the $4,500 paid on completion.

9 On the acquisition of the house both the plaintiff, her husband and her parents moved into occupation. The plaintiff and her husband with their children lived there for many years. The plaintiff's first son Sammy was born on 12 April 1970 and her daughter Maryanne was born on 7 September 1971.

10 In 1972 the mortgages on the property at 21 General Holmes Drive were discharged. At that stage George transferred his one-third interest to his parents. The consideration was shown as $2500. There is some conflicting evidence as to whether or not any amount was paid. John also transferred his one-third interest to his parents at this time. He was paid some $4,000-$5,000 and used the funds to buy a house at Chapel Street, Rockdale. The plaintiff suggested that George was also paid $4,000 to $5,000 from his parents at that time. George denies this and the defendant did not hear of this from her parents. As George remained at home for most of the relevant time and did not need to purchase a home I will accept his evidence that nothing was paid to him for this transfer.

11 The plaintiff had for some time suffered with problems with her sight as a result of a failed cataract operation and secondary glaucoma. She first started to receive a pension to compensate for this in 1974. Her second son Dean was born on 9 May 1975. In this year the plaintiff's parents borrowed $11,000 from the plaintiff and her husband to fund the construction of a granny flat at the back of the property at 21 General Holmes Drive. The plaintiff’s second daughter Vera was born on 27 April 1979.

12 In May 1979 both parents made wills in favour of each other with default provisions giving George the right to live in the premises for life. In this year the plaintiff and her husband purchased a property at 107 General Holmes Drive. The purchase price with legal expenses was $75,000. The parents of the plaintiff provided $25,000. The Plaintiff suggested that only $15,000 of this was a loan and the balance was a gift. However there is a receipt signed by the plaintiff on 31 July 1979 in which she acknowledges that she had borrowed $25,000. It is clear that the plaintiff and her husband paid back $5,000 two years later. Whether the balance was a loan or gift is not important. The plaintiff provided her parents with $11,000 and they provided her with $20,000. The plaintiff also borrowed $10,000 from her sister, Anna, to complete the purchase but this was paid back a year or two later after she sold land at Nowra.

13 In 1980 the plaintiff became totally blind. Her third son Tony was born on 15 June 1980.

14 The Plaintiff’s mother died on 1 March 1991. Shortly thereafter the plaintiff made some allegations of improper conduct against her brother George. This had the obvious result of estranging the plaintiff and her brother.

15 As I have indicated the deceased made his last will on 2 June 1992 and he died on 9 March 1994. On 5 August 1993 the plaintiff's husband had died leaving the plaintiff with five children then aged from 13 to 23 years. Probate of the deceased’s will was granted on 19 October 1994 and on 7 December 1994 the house was transmitted into the defendant's name as executrix.

16 The plaintiff alleges that she first learnt of the terms of her fathers will in early 2000 and she consulted a solicitor in February of that year. The summons was filed on 31 October 2000, which was approximately five years outside the time within which the application had to be filed under the act.

Extension of time

17 Because the application is out of time it is necessary for the court to consider section 16 of the Family Provision Act, which allows an application to be made notwithstanding it, is out of time. There are a number of cases that refer to the principles to be applied in an application for an extension of time. In Re Guskett (deceased) (1947) VLR 211 the following was said:

"It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time."

18 His Honour Young J in several cases has dealt with the principles governing application to extend time under this Act. In Massie v Laundy (unreported NSWSC, 7 February 1986) he indicated that when looking at ‘sufficient cause” under 16(3) of the Act the factors which one looks at include the following:-

(a) Is the reason for making a late claim sufficient?
(b) Will the beneficiaries under the will be unacceptably prejudiced if the time were extended?
(c) Has there been any unconscionable conduct on either side which would enter into the equation?

19 Apparently he also accepts a view, which was expressed by his Honour Needham J in Fancett v Ware (unreported NSWSC 3 June 1986) that there is no purpose in extending the time with respect to a claim that must fail. In Phillips v Quinton (unreported NSWSC 31 March 1988) Powell J when considering the matter at the substantive hearing leant to the view that a plaintiff seeking an extension of time under the Testators Family Maintenance Act must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by his Honour Hodgson J in Basto v Basto (unreported NSWSC 8 September 1989).

20 In De Winter v Johnstone, a decision of the Court of Appeal on 23 August 1995 his Honour Powell J referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at page 23:

"In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief."

21 His Honour Mr Justice Sheller considered that it was only necessary to show that the application was not bound to fail. His Honour Mr Justice Cole seems to have adopted the parties’ approach of looking at the strength of the plaintiff’s case.

22 The case of De Winter v Johnstone is also useful in that Sheller J commented on the meaning of “unconscionable”. He was dealing with an appeal from Master McLaughlin and he referred to the Master's comments to the following effect:-

"Unconscionable conduct in this context of course relates to such matters as whether the plaintiff has made an informed decision not to make a claim against the estate and has then decided after the limitation period has expired to make such a claim on account of some change in her financial and material circumstances which has occurred after the expiry of the limitation period."

23 With regard to the Master’s comments, His Honour observed:

“…with all respect I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However the concept of unconscionable conduct is to be directed towards a deliberate holding off designed to lull beneficiaries into false sense of security. There is nothing to suggest anything of that sort in the present case."

24 I turn to the question of whether there is any adequate explanation for the delay. In her evidence the plaintiff suggested that she did not have any knowledge of the will after the death of her father and it was only when a discussion occurred in the year 2000 and her daughter made some investigations to find out what was in the will that she became aware of its contents. She says that it was only when she saw her solicitors on 9 February 2000 that she first became aware of a time limit for making an application.

25 It is clear that the plaintiff’s daughter, Maryanne, talked to the defendant after the death of the deceased and was informed of the terms of the will. She says that she did not tell her mother of it at the time. When dealing with the issue in paragraph 12 of her affidavit Maryanne refers to the fact that she read the copy of the will to her mother after she had obtained it. Her mother was upset. She says that after hearing it read her mother said, “I thought that George could only live there until he died and then the rest would be split three ways.” Prima facie that would seem to indicate that the plaintiff did know the contents of the will prior to this occasion. However, in cross examination it is apparent that this is a reference to what had been said to her mother which was contained in paragraph 10 no doubt a short time before the will was obtained. What was told to her mother would be the discussions that the daughter, Maryanne, had with the defendant shortly after the deceased’s funeral.

26 The other area of evidence was put on by the defendant after these issues had been ventilated in the affidavits of the plaintiff, her daughters and the defendant at some earlier time. The defendant referred to an occasion when she went to a friend’s place shortly after the funeral when she alleges that she said in response to a question from her friend, Kata Liptak, about the effect of the will the following words:-

“George will have the right to live there until he dies. George has been given that right in my father’s will.”

27 In her affidavit she says that her sister, the plaintiff, was sitting next to her but made no comment. This occasion was denied by the plaintiff although I was impressed with the defendant’s evidence but given the fact that there was no response from the plaintiff I am not satisfied that the plaintiff in fact knew and understood or appreciated what was being said.

28 The deterioration in the relationship between the plaintiff and her brother, George, occurred before her father’s death. It is clear that there was little contact with the plaintiff and him at that stage. The plaintiff says that she was simply waiting for something to be done about the will and thought she would be informed if anything was to be done. It seems likely to me that due to her preoccupation with her children and the breach in her relationship with her siblings the plaintiff did not have any particular interest in the matter and her interest is likely to have only arisen at a later stage when the matter was raised by her daughter, Maryanne, in the year 2000. In these circumstances I think there is an explanation, although it is not very satisfactory, as to the delay.

29 There was a delay from the time she first saw a solicitor in February 2000 until the summons was filed on 31 October 2000. There is an affidavit from the solicitor explaining that delay in which he gives details of the advice obtained from counsel and arrangements for the preparation of affidavits and commencing proceedings. He says that this was compounded by the plaintiff’s blindness which required documents to be read to her and the emotional distress suffered by the plaintiff which caused difficulty in obtaining instructions.

30 I am satisfied with the explanation given. Although there was some further delay until filing of affidavits I do not think that matter is relevant on this aspect of the matter.

31 Although George has been paying the rates on the house for some time I do not think that is a matter which would be described as unacceptable prejudice to him as he has had the benefit of the accommodation. There does not seem to be any unconscionable conduct on either side which would enter into the equation. In these circumstances I would propose to extend time.

Eligibility of the plaintiff

32 The plaintiff is a daughter of the deceased and, accordingly, is an eligible person.

33 In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a Court must take. At page 209 it said the following:-

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.

The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

34 I turn to consider the situation of the plaintiff. The plaintiff is 53 years old and has three children living with her in her house. She owns a property at 107 General Holmes Drive which is worth $550,000 and she has a small amount in the Commonwealth Bank Keycard account and some furniture. She has debts of $15,000 due to her daughter, Maryanne, who has been funding this case, a debt of $3,000 to her son, Deane, and a debt of $2,000 due to a person Vlado Kubeckis. There is no indication of when the debts are repayable.

35 So far as income is concerned the plaintiff receives an income of $440 per fortnight from her pension. She is supported by each of her children, Deane, Tony and Vera contributing $250 per month to the general expenses of the house. This income adequately covers her monthly expenditure which is estimated to be between $1,366 and $1,454 per month.

36 The plaintiff is blind and needs the assistance of her children to look after her in the home. This assistance they appear to readily give and are likely to continue to do so given the advantages to them of living in the home.

37 The plaintiff lived at home for a long part of her life and, indeed, she and her husband and their children lived there for some time without the need to pay board or accommodation. There is nothing in the evidence which would suggest that the relationship between her and the deceased was not satisfactory although towards the end there were difficulties with access to the deceased due to the distancing of the plaintiff from her brothers and sisters.

38 The provisions made for the plaintiff during her lifetime by the deceased included, of course, the accommodation for her and her family between 1969 and 1979. There was also the period when they were still remaining there when they received rent for a year from their house after it was completed. This was before the plaintiff and her family moved out of her parent’s home to their new home. The other contributions to be remembered are the advance of $20,000 net to contribute to the home and, of course, and the offsetting assistance in the amount of $11,000 which the plaintiff and her husband provided to the deceased.

39 It is necessary to see how the plaintiff says that she has been left without adequate and proper provision for her maintenance, education and advancement in life. In respect of her blindness she says she would like to acquire a Braille machine so she can learn to spell and write in English. The cost of the Braille equipment is $1,799 and the computer system to support it is $4,508. There is little evidence which would indicate how useful the plaintiff would find this other than as a matter of interest. She also wishes to have a guide dog and she needs to be assessed to see whether she is suitable to have one. If she is suitable the only expenses would be the food for the dog which apparently is in the order of $1,100 per annum which no doubt she could meet out of her surplus income.

40 She has also given evidence of renovations she would like to make to the home totalling $62,761. They include a new kitchen for $20,230 and replacement of tiles on the roof for $15,785. A new bathroom is also is included for $10,346. There are other minor matters to do with fixing the driveway and fixing a sewer line. Having looked at photographs of the areas it seems to me that probably the most urgent thing is the roofing although precisely when that will be due for repair is not clear.

The position of the life tenant George Gajdos

41 It is necessary when considering this application to carefully consider the position of a person who will be mainly affected by any order made in favour of the plaintiff. This is, of course, her brother, George because if any order is made the house, which is the only asset in the estate, will have to be sold. As I have indicated earlier the defendant is not going to claim her costs until after the death of the brother, George.

42 George is single, aged 68 years and has no responsibilities. He has a life expectancy of 12.23 years in contrast to the plaintiff’s life expectancy of 33.31 years. He has no assets and lives on a pension of $407.80 per fortnight. Out of this he has to pay the rates and other outgoings on the estate property.

43 George trained as a doctor in Europe and when he came to Australia he had a number of attempts at pursuing that occupation. On each occasion that he did so after a short time he suffered a nervous breakdown and ultimately was not usefully employed in that profession. For some years he did other work such as screen painting and upholstery work. His condition deteriorated over his life and by 1990 he had long since ceased work and was unable to leave the house. Apart from some periods when he was trying to obtain accreditation as a doctor he lived at home and assisted his parents with cooking and household chores. In the earlier days when he was more able he also assisted with the extensions to the house in the early 1980s. There are other main areas of contribution to the estate by George. He contributed one third of the purchase price that was paid in cash on completion of the property, he contributed his wages towards the repayment of the mortgage on the property. He also, of course, transferred his one third interest after it was paid off back to his parents for no consideration.

44 On the other hand George has had the benefit of accommodation in the property during his lifetime but given his illnesses and inability to cope with the world this is not unnatural.

Consideration of the application

45 Any order in favour of the plaintiff will mean the sale of the estate property presently valued at $590,000. From this would have to be deducted the costs of $130,000 and the expenses on sale. It would be likely that the amount available after the sale would be in the order of $435,000. From this would need to be deducted the award made in favour of the plaintiff and the balance left over perhaps could be applied for the benefit of George. The evidence before me establishes that even the cost of a two bedroom unit in the local area for George would be in the order of $450,000 to $480,000. I am assuming in this discussion that if the property is sold that the defendant would claim her costs from the estate.

46 What one has is a competition between two siblings both of whom have special difficulties. The defendant has difficulties with her sight but she seems to have been coping with that remarkably well with the assistance of her children. George has difficulties which mean that he is unemployable and needs familiar surroundings.

47 Overall I am satisfied that there has been substantially more contribution to the estate of the deceased on the part of George than by the plaintiff. The plaintiff’s needs are really for some repairs to her house. It should not be forgotten that she is entitled to a one third interest in remainder on the death of George in respect of that house and, accordingly, she will receive something in due course. She is likely to live substantially longer than her brother, George.

48 It seems to me that the circumstances of the brother, George, and his needs outweigh those of the plaintiff and, accordingly, it is inappropriate to make any order in favour of the plaintiff.

49 I note the undertaking of the defendant that in the event the proceedings are dismissed that she will not claim costs against the plaintiff.

50 Accordingly, I order that the proceedings be dismissed and the defendant’s costs on an indemnity basis may be paid or retained out of the estate of the deceased on the death of the life tenant.

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Last Modified: 07/31/2003