Kossert v Margaret Gerda Ruggi As Executor of the Will of Peter Korps (No 2)
[2012] WASC 191
•15 JUNE 2012
KOSSERT -v- MARGARET GERDA RUGGI as Executor of the Will of PETER KORPS [No 2] [2012] WASC 191
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 191 | |
| 15/06/2012 | |||
| Case No: | CIV:1961/2001 | 28 FEBRUARY 2012 | |
| Coram: | KENNETH MARTIN J | 28/02/12 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff's application to amend terms of the deceased's will granted | ||
| B | |||
| PDF Version |
| Parties: | EDITH KOSSERT MARGARET GERDA RUGGI as Executor of the Will of PETER KORPS MARGARET GERDA RUGGI MAIJA LAPSA |
Catchwords: | Inheritance Partial intestacy Jurisdiction Inadequate provision for long term de facto spouse Competing claims Illegitimate child Modest estate Turns on own facts |
Legislation: | Inheritance (Family and Dependents Provision) Act 1972 (WA) |
Case References: | Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127 In the Estate of Bridges (1975) 12 SASR 1 Kossert v Ruggi [2010] WASC 262 Pereira v Patrick [2001] WASC 342 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARGARET GERDA RUGGI as Executor of the Will of PETER KORPS
First Defendant
MARGARET GERDA RUGGI
Second Defendant
MAIJA LAPSA
Third Defendant
(Page 2)
Catchwords:
Inheritance - Partial intestacy - Jurisdiction - Inadequate provision for long term de facto spouse - Competing claims - Illegitimate child - Modest estate - Turns on own facts
Legislation:
Inheritance (Family and Dependents Provision) Act 1972 (WA)
Result:
Plaintiff's application to amend terms of the deceased's will granted
Category: B
Representation:
Counsel:
Plaintiff : Ms J M McKenzie
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Solicitors:
Plaintiff : McCallum Donovan Sweeney
First Defendant : Kott Gunning
Second Defendant : Kott Gunning
Third Defendant : No appearance
Case(s) referred to in judgment(s):
Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127
In the Estate of Bridges (1975) 12 SASR 1
Kossert v Ruggi [2010] WASC 262
Pereira v Patrick [2001] WASC 342
(Page 3)
- KENNETH MARTIN J:
(This judgment was delivered extemporaneously on 28 February 2012 and has been edited from the transcript.)
1 This Inheritance Act matter was commenced on 9 July 2001. It has been pending for over 10 years and proceeds today, finally, on the basis of circumstances in which Mrs Ruggi, who is the first and second defendant, has indicated that she does not propose to attend or to make submissions, having been served with the materials. It is appropriate for me, today, to render a swift decision in regard to the merits.
2 Bearing in mind how long the matter has been going, the very small value of an estate diminishing each day that the matter goes on, a lack of any opposition by Mrs Ruggi as the executor, or in her capacity of second defendant in her own right, and the non-appearance today of the third defendant, I am in a position to render my decision at this time.
3 The third defendant, Ms Lapsa, I am satisfied has been served under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (1965). But she has not entered an appearance and has not actively participated. So, it is appropriate to render my decision substantively on the application now.
4 I deal today with the substantive application by Mrs Edith Kossert (Edith) for her needs to be addressed under the Inheritance (Family and Dependants Provision) Act 1972 (WA) as it stood at the date of the death of the deceased, Mr Peter Korps (Peter).
5 In my 2010 reasons (Kossert v Ruggi [2010] WASC 262, which is suppressed) I explained the nature of the longstanding relationship between Peter and Edith. Peter made his will on 3 December 1984. It was an imperfect will in the sense that it did not actually deal with the residual right, entitlement and ownership of the property at what was then 58 Charles Street, Northam. The property has since been re-numbered. I shall refer to it from here on as 62 Charles Street, Northam.
6 That residential property was owned by Peter solely in his name at the date of his death on 23 November 1998. Peter's 1984 will speaks at that time.
7 There is no argument from any quarter against the existence of a partial intestacy arising in respect of the residual interest in the property at
(Page 4)
- 62 Charles Street by Peter's will. It was a home-made will. It was written out by him in unsophisticated terms.
8 Sadly, as so many home-made wills seem to do because of a failure to receive proper legal advice, it throws up the question of Peter's failure to deal fully by his will with the one substantial asset he left, namely the house and land at 62 Charles Street, Northam.
9 Peter Korps died over 13 years ago, in 1998. The first issue on an application of this kind is the question of the standing of Edith to claim. Edith was never legally married under any ceremony to Peter. Her tragic early life and highly personal circumstances in Germany before arriving in Australia after World War II are recounted in more detail in my 2010 reasons, which will remain suppressed.
10 In 1950, Edith found herself in Western Australia after leaving war-ravaged Europe. After the failure of Edith's marriage to a Mr Goralenko she, together with her two daughters, took up residence with Peter in Northam. Initially they rented accommodation in Fitzgerald Street from about 1956.
11 From 1956, Edith, Peter and Edith's two daughters by her marriage to Mr Goralenko, Margaret Gerda Ruggi (the first and second defendant) and Vera Gadenne (who has sworn an affidavit in these proceedings), lived together as a family unit in Northam.
12 Peter seems to have been an industrious man before he retired due to ill health. He accumulated seven blocks of property in Charles Street, Northam. In about 1960, with Edith's help, he built a house on three of those blocks at 62 Charles Street for the family. The family lived together under that roof. Edith, approaching 89 years of age, still does.
13 Edith had spent 38 years living with Peter at 62 Charles Street until Peter died on 23 November 1998, ending their 42 year relationship. They were never married by a ceremony. But there was continuous cohabitation for 42 years, save for one year in the 1970s when the state of the relationship was such that Edith spent a year in Perth. She returned to Northam after a year and resumed cohabitation with Peter.
14 The nature of the relationship between Peter and Edith was a full marriage, save only for the fact that they did not actually undergo a formal ceremony. As their effective stepfather, Peter seems to have been devoted to Edith's daughters. He named Mrs Ruggi as his executor and made bequests to her. He also mentions Mrs Gadenne in his will.
(Page 5)
15 During their early relationship Peter and Edith both worked in paid employment. He worked initially for the railways, out of Northam. He later worked in the Clackline Brickyards for some years. But eyesight problems forced Peter to cease work completely around 1974. He then received an invalid or blind pension until his death 24 years later in 1998.
16 Edith was also industrious. In her early years at Northam, she provided housekeeping assistance to another family. Subsequently, she worked part-time, six days a week at a local greengrocer's store. She then worked full-time for 14 years as a domestic aide at the Northam Regional Hospital. That lasted until 1973 when, unfortunately, she developed bowel cancer. She was treated, but after her treatment was unable to resume work. She received the pension and continues as a pensioner.
17 As at the date of Peter's will, in December 1984, and as at the date of his death in November 1998, Edith was resident with him as his common law wife at the house at 62 Charles Street. This was the home where they raised her two daughters and lived as a family unit.
18 Whilst she worked (1956 - 1973), Edith contributed all of her income towards meeting household expenses, providing the food for the family, and essentially meeting all the domestic expenditures associated with the family relationship.
19 Peter, while working (1956 - 1974), only paid the rates and taxes on the property at Charles Street. At some point, four of the seven adjoining blocks appear to have been sold off by Peter to the Seventh Day Adventist Church. The Church then built on the four blocks adjacent to the 62 Charles Street residence.
20 Edith and Peter established and maintained their family at 62 Charles Street until Edith's two daughters became adults. The daughters eventually moved away. In the case of Mrs Ruggi, she moved interstate to rural Victoria. In the case of Mrs Gadenne, she married and moved south to Collie.
21 At the time of Peter's death in 1998, he was not a wealthy man. Essentially, all he left was the house at 62 Charles Street, $11,000 in sundry bank accounts and some items of personal property and furniture estimated at around $20,000 in value. This is dealt with in the first defendant's affidavit, the first of 14 assembled affidavits that have been provided to me in a book on this application and are together exhibit 1. I will mention those affidavits to identify the state of the evidence before me.
(Page 6)
22 From the first affidavit it will be seen that Mrs Ruggi, who was named as Peter's executor and who went on to obtain probate of Peter's will, estimated in 2000 that the property at Charles Street only had a value of $65,000.
23 Annexure A to her assessment of the value of Peter's estate indicates, apart from the small amount of cash and contents, that the main asset he left was the family home and property at Charles Street.
24 There is no challenge to any affidavit materials that have been assembled as part of this application. However, it has been pointed out by Ms McKenzie, who appeared as counsel on behalf of Edith, that certain communications from Ms Lapsa from Latvia found at pages 146 - 147 are not essentially verified or in admissible form. That material is put before me effectively as communications indicating contact was made with the third defendant. That material is not tendered or relied upon for the truth of its content as regards the third defendant.
25 There actually are 15 affidavits before me. The last affidavit was received this morning from Ms McKenzie, which I will also admit as part of exhibit 1, making it the 15th affidavit in the set. This is the evidentiary basis from which I determine this Inheritance Act application by Edith.
Standing
26 The first issue is: on the state of the law at relevant times, does Edith, as plaintiff, qualify under s 7(1)(f) of the Inheritance Act? Standing, on this basis, is derived by virtue of being a de facto widow, who at the time of the death of the deceased was being wholly or partly maintained by the deceased, who was ordinarily a member of the household of the deceased and for whom the deceased, in the opinion of the court, had some special moral responsibility to make provision.
27 The answer to the standing issue posed under s 7(1)(f) must be in the affirmative. It is demonstrable from the materials that I have now canvassed, that save for not undergoing a formal marriage ceremony there was a full common law marital relationship between Edith and Peter from 1956 until Peter's death in 1998. That amounts to a period of 42 years and included the raising of Edith's two infant daughters to adulthood, notwithstanding one year that they spent apart in the 1970s.
28 Therefore, I have no difficulty concluding in all the circumstances Peter did have a special moral responsibility to make proper provision for
(Page 7)
- Edith, who should be regarded as Peter's widow under a full common law marriage spanning their four decades together in Australia.
29 I observe that they together built the house at 62 Charles Street and moved in around 1960. That amounts to a period of 38 years, save for one year spent apart in the 1970s, in which they occupied 62 Charles Street together, as the family home. From 1974 they were both pensioners with health problems. They lived under the one roof and supported each other. Edith was dependent upon the shelter and security provided by the house they had built together, but was owned solely in Peter's name. That remained the position until Peter died in 1998.
30 I am satisfied that Edith has locus standi to claim under the Inheritance Act as Peter's de facto widow, who was dependent on him at the time of his death in 1998.
Jurisdiction
31 Moving then to the Inheritance Act claim by Edith concerning Peter's will to be determined, there is a two-stage test. A jurisdictional question is posed first, which is well known. It is conveniently explained in the decision of Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127 where Buss JA, with whom Pullin JA agreed, explained the two-stage process [66] - [69]:
The two-stage process under s 6(1) of the Act
66 By s 6(1) of the Act, the court is required to carry out a two-stage process.
67 The first stage involves the determination of whether the disposition of the deceased's estate effected by will or the law relating to intestacy is not such as to make adequate provision from his or her estate for the proper maintenance, support, education or advancement in life of the claimant. The first stage has been described as the 'jurisdictional question', which means no more than that the court's power to make an order in favour of the claimant is conditioned upon the court first being satisfied of the state of affairs referred to in the opening passage of s 6(1), ending with the words 'made under this Act'. See Singer v Berghouse (1994) 181 CLR 201 per Mason CJ, Deane and McHugh JJ at 208 - 209; Vigolo v Bostin (2005) 221 CLR 191 per Gleeson CJ at 196 - 197 [4] - [6], per Gummow and Hayne JJ at 212 - 213 [56].
68 The first stage involves a question which is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision arises from the fact that the
- court must determine whether the claimant has been left without 'adequate' provision for his or her 'proper' maintenance, etc. See White v Barron (1980) 144 CLR 431 per Mason J at 441 - 443, per Wilson J at 456 - 457; Goodman v Windeyer (1980) 144 CLR 490 per Aickin J at 509; Singer per Mason CJ, Deane and McHugh JJ at 210 - 211.
- 69 The second stage, which only arises if the 'jurisdictional question' is determined in favour of the claimant, involves the exercise of discretion: the court may order that such provision as the court thinks fit be made out of the deceased's estate for the proper maintenance, etc, of the claimant. See White per Mason J at 442 - 443, per Aickin J at 449; Goodman per Gibbs J at 501 - 502, per Aickin J at 509; Singer per Mason CJ, Deane and McHugh JJ at 211.
32 The jurisdictional question in respect of an applicant such as Edith with standing to claim, requires an evaluation as to whether or not dispositions under Peter's will were such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of Edith.
33 If the answer to that question is no, only then will the analysis move to a second stage. The point in time at which the first question is addressed was explained in Buss JA's reasons in Devereaux-Warnes. He said [70]:
The question which arises at the first stage must be formulated and determined as at the date of the death of the deceased, having regard to all material facts that existed at the date of death, whether the deceased knew of them or not, and all eventualities that might at that date reasonably have been foreseen by the deceased who knew the facts.
- I omit the citation of authority to which his Honour refers.
34 If the court moves to the second stage, his Honour said as to the temporal focus of that enquiry [71]:
At the second stage the court exercises its discretion to order adequate provision for the proper maintenance, et cetera, of the complainant by reference to the circumstances as they exist as at the date of the order.
(Page 9)
35 As to the jurisdictional question, the will of Peter generated a partial intestacy in his estate in respect of the residual interest in 62 Charles Street, at the end of Edith's period of occupancy of that property. At the date of Peter's death in 1998, and at the commencement of Edith's Inheritance Act application in 2001, Edith did not, under the intestacy provisions of the Administration Act then applicable, take any interest in the property on the partial intestacy, notwithstanding that Edith was Peter's common law widow. Rather, property not disposed of under the will would pass to any child of Peter's.
36 The state of the evidence is that the third defendant, Ms Lapsa, a resident of Latvia, is Peter's biological daughter. As a result of the partial intestacy, she would be entitled, as a matter of law, to 62 Charles Street once it is no longer occupied by Edith. This is, effectively, the result Edith seeks to change by her application. She seeks a full interest in 62 Charles Street.
37 Sir John Bray CJ in the case of In the Estate of Bridges (1975) 12 SASR 1, 5 - 6 said, as to results generated under the application of intestacy laws, this:
In the case of an intestacy, as much as in the case of a will, it seems to me that Parliament has indicated its intention that the scheme of things set up by a testator in his will, or by the law of the State in the event of intestacy, shall be interfered with so far as is necessary to make adequate provision for the proper maintenance, education and advancement of the claimants specified in the Act, but no further. It is true that when the persons entitled on intestacy are the surviving spouse and legitimate children of the deceased as opposed to collateral relations the speculation that the deceased may have intended to die intestate may have more cogency, but nevertheless I repeat that I think the correct approach is as I have said. I think that Parliament no more intended to grant an unlimited liberty to recast dispositions resulting from the law of intestacy on moral grounds than it did to give a similar liberty to recast dispositions made by will.
38 So, in going about the task of resolving this Inheritance Act application by Edith, I must respect the effect of the intestacy laws of the day in terms of the result they would deliver, even though Peter's will did not mention any legacy or bequest to Ms Lapsa.
39 Therefore, I proceed by evaluating the position on the first jurisdictional question as if Peter had made an express disposition to his daughter Ms Lapsa, of a residual interest in 62 Charles Street. That is the result that the law at that time would have delivered under this partial intestacy.
(Page 10)
40 In this case, a residual interest for Ms Lapsa in 62 Charles Street after the expiry of a right of (potential) lifetime occupancy given by Peter's will to Edith, is to be acknowledged and respected, as if Peter had made an express disposition to that end.
41 However, by the Inheritance Act, the fact that a will is made in a particular way, or works out a particular way by operation of intestacy laws, does not prevent a person with standing claiming for proper provision under the Inheritance Act. To succeed in such a challenge, they must surmount the jurisdictional threshold I have identified. If they do, they must then persuade the court that some alternate disposition in their favour is appropriate, in an exercise of discretion.
42 Here, the first (jurisdictional) question is assessed, temporally, bearing in mind all the circumstances, or the 'composite picture' - using the terminology of Hasluck J in Pereira v Patrick [2001] WASC 342 [55] - at the date of Peter's death in November 1998.
43 At that date Edith had been living at 62 Charles Street with him since 1960, a period of 38 years. They had, for all intents and purposes, been living as husband and wife since 1956, a period of 42 years (with one year apart in the 1970s). There was also, I accept, a real attachment to a family home they had built and established together and where they lived and worked for almost four decades.
44 Peter left only a modest estate in 1998. As regards Edith, he only gave her the (potential) lifetime right of occupancy over 62 Charles Street. Peter knew or should have known that Edith had been on a pension since 1974. She had not been able to work since she had suffered from bowel cancer in 1973. It was one thing to give Edith a place to live after his death. But living on a small pension, getting older was not going to be easy for Edith. Some more thought by Peter needed to be given to Edith's likely needs as she aged. To have only a modest State pension, but be effectively committed to living in the same Northam house, as she grew older, was unacceptably inflexible and inadequate for Edith's needs, in my view.
45 Essentially there was no capital from Peter's estate provided for Edith. Under the terms of his will, there was a roof over her head until she chose to move, but nothing more.
46 The legal effect of the dispositions under Peter's will, bearing in mind the special moral responsibility that I find he had towards Edith, was inadequate in terms of the proper maintenance of Edith as his
(Page 11)
- longstanding common law wife. I bear in mind the duration of that relationship. Peter was 79 and Edith was almost 75 years old when Peter died in November 1998. Neither of them were in robust health. They had always lived together since 1956, except for one year apart. She was dependent upon Peter for the shelter of the family home they had shared, which was owned solely by him. Peter's obligation to support Edith subsisted up until the time of his death. He acknowledged his obligation to an extent, under his home-made will, by giving her the right to occupy it for as long as she chose. But that was an insufficient provision for her as she faced growing older.
47 Greater and more secure provision for Edith was, in my assessment, required. That is so particularly bearing in mind the duration of their relationship, their respective advanced ages, how they together had established 62 Charles Street and mutually contributed to making it the family home. Edith had paid all the family bills from her wages (save for rates). That was a significant contribution to their joint endeavour as a family unit. Edith's ill-health would have been known to Peter before he died in 1998.
48 Every Inheritance Act case needs to be assessed on its own merits. In circumstances where a claimant was better off financially, or a testator had died leaving more money or assets, a disposition of this nature would be evaluated differently. But here, Peter's estate was modest. Apart from $11,000 (left to the first defendant) in his bank accounts, the house at 62 Charles Street that Peter and Edith had lived in for 38 years was essentially the only valuable asset Peter left.
49 Evaluating the matter as at the time of Peter's death in 1998, there has very clearly been inadequate maintenance by him for Edith. Inadequate provision having been identified, it becomes appropriate, as is envisaged by the Act, to move to consider the second stage.
The court's discretion
50 At the second stage the court will make such orders as it thinks fit, conducting a discretionary evaluation, having regard to all currently known circumstances in terms of what is appropriate for all those concerned with Peter's estate, but here essentially Edith and Ms Lapsa.
51 I refer to the most recent affidavit of Edith of 4 October 2011. She is now 88 years of age. She still lives at 62 Charles Street in what can only be described as harsh circumstances. She still receives the pension. Her health is now becoming increasingly more frail.
(Page 12)
52 In that affidavit, Edith speaks of her day to day life, as of now. In receipt of the pension, she lives frugally. The annual water rates and the local authority rates and taxes of 62 Charles Street continue to accrue. But, under Peter's will, Edith only has a right of occupancy. Accumulating utility charges have not been paid by the executor for some time. There is no remaining money in the estate until the 62 Charles Street property is sold.
53 Edith speaks in frank terms, particularly from par 20, about the state of disrepair of the house. She speaks of a termite infestation she cannot afford to have addressed in the shed. Only half the heating elements on the stove work. She cannot afford to have the stove's elements fixed. A slow combustion stove that she once used for warmth in winter is not working. She cannot afford to have it fixed or replaced. There is a mice infestation in the house that she cannot rid. She cannot afford to pay a pest exterminator to address the problem. Security shutters on the windows have broken four or five times. They cost $130 to repair each time. This is a drain on the meagre pension, which is identified at page 221 of the book of affidavits. Essentially, Edith receives $390 a week, plus about $20 a week from a German aged pension (which fluctuates).
54 All of her pension is consumed by her electricity, telephone and water bills, her outlay on medication, modest gardening expenditure, and the interest that she pays on two loans that she took out. She explains how she took out those loans to fund two trips she made back to Germany to see her sons. The background to those relationships is a product of earlier events in Germany during World War II that I related in my previous (suppressed) reasons. Those events are heart-rending and tragic.
55 The overall financial situation for Edith is essentially that she has no spare income. She lives a hand-to-mouth existence on her pension. She holds the right of occupancy at 62 Charles Street for as long as she remains. Her health is now tenuous. She suffers from low blood pressure, dizziness and nausea. She has suffered serious heart problems in the past. She has had the episode of bowel cancer in 1973 from which it appears she recovered.
56 In October 2001, Edith was diagnosed with encephalitis. Short-term memory loss has afflicted her since. She now has trouble with her fine motor skills. She cannot lift heavy things. Her legs are shaky. She cannot stand on chairs. It is difficult for her to walk even short distances, as she explains at par 30 of her affidavit.
(Page 13)
57 Fortunately, Edith has had the support of her daughter, Mrs Vera Gadenne. But Mrs Gadenne lives at Collie: see Mrs Gadenne's affidavit of 5 December 2011. Edith spends a few weeks in Collie with her daughter for a period in each year. Now, as Edith approaches 89 years of age, she speaks of the enjoyable time that she spends at Collie, and expresses a hope that she could eventually, by reason of her deteriorating health and age, move to Collie and reside in some sort of detached 'granny flat' on Mrs Gadenne's property. But the granny flat would need to be constructed and paid for.
58 Edith says, however, that she would like to stay on for as long as she can, living independently, at 62 Charles Street, Northam (par 36 of her latest affidavit) to which she obviously still holds a very strong attachment.
59 At the moment Edith cannot defer the rates from the Water Corporation or Council because 62 Charles Street is held by the estate of Peter, not by her. Bearing in mind her advanced age, there are moratorium arrangements for pensioners available were she the owner of 62 Charles Street. But she is not, unless the effect of Peter's will is altered by the court.
60 Edith has had inquiries made about the cost of a granny flat being constructed at Collie on her daughter's property. They are embodied in a last affidavit I received today, from Ms McKenzie. It contains a report from White Building Co. That report indicates that the cost of construction of a granny flat at Collie on Mrs Gadenne's property (assuming approvals could be obtained for that to occur) would be $116,000 for a concrete slab and iron roof. Site preparation works would be another $6,000, depending on the soil classification. The estimate excludes the cost of retaining and completion in full. That task requires painting, floor coverings, window treatments and air-conditioning, amounting to a further $15,000. Approximately $137,000 in total is needed to construct a functional granny flat on Mrs Gadenne's property in Collie, by Mr White's estimates of 16 February 2012.
61 Intruding into this as a concern, are some significant legal costs which have accumulated over 11 years since this action began in July 2001. These are not only Edith's legal costs, but the legal costs of the executor as first defendant and in her own right as second defendant. Legal costs are dealt with in Ms McKenzie's affidavits. I propose today to defer the issue of legal costs. They can be the subject of further dialogue between the respective solicitors. Edith's solicitors have indicated they
(Page 14)
- will substantially reduce the time costings that they would otherwise have levied, by reason of the low worth of Peter's estate and the compelling circumstances of their client, Edith.
62 In respect of the legal costs of Mrs Ruggi as first and second defendant, there have been some discussions. As things stand, I observe that there is a claim for approximately $53,000 on the horizon, by way of costs incurred either in Western Australia, by the local solicitor agents of the first and second defendant, or by Mrs Ruggi's eastern seaboard solicitors.
63 It would be a tragedy, in Edith's compelling circumstances, if the proceeds from a sale of 62 Charles Street, Northam were to be consumed by legal fees. I render that observation without criticism directed at anybody. This matter has had its practical difficulties, particularly given the modest estate and complications arising out of the ultimate joining of Peter's biological daughter, Ms Lapsa, a resident of Latvia.
64 But for Edith, it is the result at the end of the day that is important for her future security in her remaining years.
65 In terms then of addressing the second question, what would normally be a far easier task in terms of rewriting Peter's will so Edith received the entire interest in the house and land at 62 Charles Street, is not so straightforward. Edith's needs have to be measured against the rival interests of the third defendant, Ms Lapsa. Ms Lapsa was, on my orders, made a party to this application in 2010. She has subsequently been served in Latvia under the service processes of the Hague Service Convention (1965).
66 Ms Lapsa has not actively participated, other than to forward details of her bank account in Latvia. No appearance has been entered on her behalf. But I am satisfied she has been served and is aware of these proceedings.
67 As regards Ms Lapsa and the residue in the house and land she would normally receive under the will at this point, I do not discount, deprecate, or in any way diminish the prospect that Ms Lapsa may herself be in necessitous circumstances in Latvia. I was referred, properly by Ms McKenzie, to a piece of correspondence that appears to have been written or at least translated on the third defendant's behalf (found between pages 146 - 147, as a communication from Ms Lapsa) on 18 April 2007.
(Page 15)
68 That communication is not verified. It does not constitute evidence as to its truth. However, I am not insensitive to the possible needs of Peter's biological daughter born, it would seem, around 1942. That was after Latvia was occupied by the Red Army in 1939, subsequently invaded by Nazi Germany in 1941, only to fall back under Soviet rule at the end of World War II.
69 There is evidence that Peter made contact with Ms Lapsa in Latvia through the Red Cross, possibly sending some money to her. Ms Lapsa may have even visited Australia to see her father.
70 But in the end, in terms of the discretion I exercise, I must balance overall the compelling case of 88-year-old Edith, in the presenting circumstances of a very low-value estate which essentially is just the house and land at 62 Charles Street, Northam.
71 For much of the time that this action has been running, 62 Charles Street has been viewed as being of small value. The first of the documents put to the court associated with the first defendant's application for probate attributed to it - back in January 2000 - a value of only $65,000.
72 Since that time some market appraisals have been obtained in respect of the property. Market appraisals, of course, are not sworn valuations. I pointed to a need for more reliable information in my 2010 reasons. No-one suggests market appraisals carry the reliability of sworn valuations. Moreover, I am dealing with a house and land in a country town where demand and the scope to turn over properties is not always as high, or even as predictable as it is in a greater population centre such as Perth.
73 Having said that, the market appraisals most recently provided in December 2010 indicate very broadly that, on a sale of 62 Charles Street, there could be expected outcomes in the range of $230,000 - $250,000. That of course, was on market appraisals given about 14 months ago. Whether the Northam property market would still deliver outcomes at the level of those appraisals, only time could tell.
74 Essentially, I am dealing with what has always been a modest estate in terms of the likely capital value of its one asset. I also work in circumstances where potential legal costs, were they to be rendered on a time-billing basis, could reach $150,000, perhaps more.
(Page 16)
75 It can be seen then, in terms of the immediate need for Edith to realise a capital fund to cater for her future needs, there is a concerning capacity for any modest capital sum realised on the sale of 62 Charles Street to be very seriously eroded and reduced, even to possibly below $100,000.
76 This is not a case of deprecating the rival claim of Ms Lapsa in Latvia, in terms of how the partial intestacy under Peter's will works to advance her interest. Rather, it is more a case of Edith's overwhelmingly greater needs, as I assess them, in a case of a limited value estate. It is just a question of who has the greater needs at this time.
77 I conclude that Edith has the greater need for assistance, in terms of her age and her present ill health. More particularly, Edith has had an intimate association with the house and land at 62 Charles Street, the major asset of Peter's small estate. She had made it a family home for 38 years, until Peter died in 1998. It has remained her home for a further 14 years thereafter. She is understandably attached to the property. It is the modest house that she helped build with Peter, raised her two daughters in and called home for more than half a century. It should be hers fully.
78 Regrettable as it is for Ms Lapsa, that outcome presents as inevitable from a very modest estate. Ms Lapsa has no association with 62 Charles Street at all. The workings of the partial intestacy under Peter's will in her favour cannot be sustained in the face of a greater, more compelling need shown in someone with a closer life connection to this property.
79 Peter's will must be adjusted so that the unsatisfactory (potential) life occupancy presently delivered to Edith on a partial intestacy is altered, so that the property vests entirely in Edith.
80 I am persuaded that it is appropriate there be orders as proposed by the claimant in terms of pars 1, 2, 3 but not 4 of the minute of orders dated 24 February 2012:
1. Subject to paragraphs [2 and 3] below, the executor distribute the estate of the Deceased in accordance with the Will of the Deceased dated 3 December 1984 of which probate was granted on 23 February 2001 ('the Will').
2. The Will be amended such that the term of the Will that states:
- 'Should I predecease Edith Ursula Kossert she has my permission to remain in the house at 58 Charles Street Northam'.
- be removed and [replaced] with the following:
'Subject to the payment of the estate's debts, the land at 62 Charles Street, Northam (otherwise known as Lot 50 on diagram 73342 being the whole of the land in Certificate of Title Volume 1823 Folio 694) and all improvements on the land (together the 'Property') and all of the contents and chattels on the Property be transferred to Edith Ursula Kossert'.
- 3. The Will be amended such that the term of the Will that states:
'The proceeds of my insurance policy held with the Colonial Mutual Life Assurance Co Ltd, Policy No T250552, is bequest to Margaret Gerda Ruggi, also the financial balances of the following bank accounts are bequeathed to Margaret Gerda Ruggi.
Town & Country Pass Book No 0152706 (Max Wood, Pharmacist, Northam agent)
Town & Country Pass Book No 5582429 (Max Wood, Pharmacist, Northam agent)
R & I Bank savings account, Northam branch, account no 28 8264 8
Money on loan to Mrs Inge Wilson, housewife, of 20 Hampton Street Northam as per statutory declaration dated 9 September 1983, if not paid in full prior to my death, balance to be paid to Margaret Gerda Ruggi'.
- be removed and replaced with the following:
'The proceeds of my bank accounts to be applied to payment of my debts and testamentary expenses'.
82 Order 6 as currently framed proposed that the costs of the plaintiff, first defendant and second defendant be paid on an indemnity basis by the estate, to be taxed if not agreed. I will not make that order. Instead I reserve the question of costs. I do so making further observations.
(Page 18)
83 The compelling circumstances of Edith are obvious, including necessitous and presently unsuitable circumstances for an 88-year-old woman tied to 62 Charles Street by the terms of Peter's will.
84 The very modest estate stands to be overwhelmingly devoured by a legal costs exposure in the order of $150,000, as well as the value of the unpaid rates and taxes for 62 Charles Street. This amount eats up a major portion of the proceeds of sale. That would leave Edith with insufficient funds to pay for the construction of a granny flat at Collie, or, if she needs more intensive nursing home care, some financial capacity for her to fund her transition to care.
85 Ms McKenzie indicated to me today, very properly, that there have been discussions with the first and second defendants about all parties' solicitors voluntarily reducing their fees. Discussions are presently unresolved, but continuing. I will allow time for those discussions to continue in my hope and expectation that something positive can be concluded substantially advantaging Edith. Counsel indicated that the plaintiff's solicitors were prepared to make a significant reduction in their fees that they would otherwise render. That is to be commended.
86 If issues over legal costs cannot be resolved consensually, I am content, with a view again trying to keep legal costs to an absolute minimum, to resolve any further difficulties on the papers. I do so on the basis of limiting any further written submissions or materials submitted to the absolute minimum. I would indicate a prima facie inclination for submissions not to exceed five pages.
87 The order I will make today in terms of costs is that they be reserved, pending the further conferral process which I have accepted is appropriate.
18
6
1