Markovska v Kocevska

[2005] VSC 319

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4507 of 2004

IN THE MATTER of Part IV of the Administration and Probate Act 1958
and
IN THE MATTER of the Will and estate of NIKOLA KOCEVSKA deceased

Between:

VICKI MARKOVSKA	Plaintiff
V
MARIJA KOCEVSKA (Who is sued as the Executrix of the Will of the abovenamed Deceased)	Defendant

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 August 2005
DATE OF JUDGMENT:	12 August 2005
CASE MAY BE CITED AS:	Markovska v Kocevska
MEDIUM NEUTRAL CITATION:	[2005] VSC 319

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Family Provision – small estate – adult daughter – whether responsibility to make provision – whether provision sufficient.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mrs E Connors	Lennon Settle Mazzeo
For the Defendant	Mr George Baker	Garland Hawthorn Brahe

DRAFT 2

HIS HONOUR:

1. Claims for further provision pursuant to Part 4 of the Administration and Probate Act 1958 present particular difficulties where the estate is small. In the present case, the estate of Nikola Kocevska was valued at the date of his death on 21 April 2003 at $290,012.96. It comprised a residential property at 39 Victoria Road, Northcote which was valued at $240,000, a debt in the sum of $50,000 and some very small bank accounts.

1. The deceased left surviving him three adult daughters:  Liliana Kocevska (then aged 55 years), the plaintiff Voskresija (Vicki) Marcovska (then aged 53 years) and the defendant executrix, Marija Kocevska (then aged 50 years).  By his will dated 29 June 2000 the deceased left the Northcote property to Marija.  He disposed of the debt of $50,000 which was owing to him by Liliana, by directing that it be divided between her and her sister Vicki.  By cl. 2(iii) the residue was divided between the three daughters equally.  There was, for practical purposes, no residue so that, in money terms, the distribution was as follows:

Liliana	$25,000
Vicki	$25,000
Marija	$240,000

The Northcote property is now worth $335,000.

1. The disposition with respect to the debt has been settled up between the relevant sisters without involving the estate.  Liliana said that, before her father’s death, she understood that the debt would be divided equally between the three of them and that she would therefore be obliged to pay $50,000 to the estate which would then pay nearly $17,000 to each of her and her two sisters.  She said that, prior to her father’s death, she made payments to Vicki totalling $17,000 in satisfaction of that sister’s expected entitlement.  When she later discovered that the debt was to be divided between the two sisters only, she made a further payment to Vicki of $8,000.  Liliana has then simply retained the balance of the debt which has therefore been treated as having been distributed.  This was accepted as correct on behalf of Vicki.

1. In this proceeding Vicki seeks, in addition, one half of the Northcote property.

1. This property was purchased by the deceased and his wife in 1970, a year or so after they and their young daughters emigrated to Australia from Macedonia.  Apart from two periods in the mid-1980s and mid-1990s, the house has served continuously as the home of the parents and one or more of the daughters and their families.  Between 1970 and 1985 and from 1987 to 1994 the parents lived there.  During this time Liliana lived there from 1978 to 1988 when she moved to Sydney;  Vicki lived there, even after her marriage until 1973 when her son Robert was born;  and Marija lived there with her husband and Elena from 1991 to 1993.  Between 1994 and 1997 the house was unoccupied.  In 1997 Vicki, who had left home upon her marriage in December 1972, came to live there with her two sons, Robert and Steven, who were then 23 and 18 years old respectively and she remained there until 1999.  Marija who had returned to Macedonia to complete her secondary education in 1971 returned to Melbourne 20 years later with her husband and infant daughter Elena.  She remained at Northcote with her parents until she and her husband were separated in 1993 and she then went with Elena to live with Liliana in Sydney.  They returned to the Northcote home in December 1999 with her father, then a widower, who had been diagnosed in 1994 as having prostate cancer.  She remained there until her father’s death in 2003.  She and Elena are still living there. 

1. Vicki, who was born on 8 April 1950, was married in 1972 but the marriage ended in 1990.  During the marriage she and her husband had purchased in 1980 a property at Austral Avenue, Preston as an investment.  It is not clear what became of this property.  In the mid-1980s, too, she and her husband built a house at White Court, Mill Park as their home.  At the time of their separation in 1990, she said that she and her husband also owned an investment property at Roycroft Avenue, Mill Park.  As part of the property settlement between them she received White Court.  Roycroft Avenue was sold in 1992 with her husband receiving the net proceeds of about $10,000.

1. When her parents moved to Sydney in 1994, Vicki, who was then living at White Court, visited the Northcote home and perhaps paid some of the cost of its maintenance.  The property was tenanted.  In 1997 she sold White Court and moved into the Northcote home where she remained with one or both of her sons until her father and Marija returned from Sydney in December 1999.  During this time she paid some of the council and water rates and all of the household bills.

1. In December 1999 Vicki moved to the house at Jacoby Court which she had recently purchased and where she now lives.  She estimates its current value as between $160,000 and $180,000 although the council valuation is $199,000.  It is subject to a mortgage to secure a debt of $32,000 and under which she makes fortnightly payments of $233 to the bank.  In her evidence she described this accommodation as a very small dual occupancy unit.  She says that she also owes $7,500 which she borrowed from her brother-in-law in 2001. 

1. Vicki is employed as a Customer Services Officer with the Family Assistance Office, Centrelink.  Her gross salary for the year ending June 2004 was $45,461.00 which she supplements with a little additional income from interpreting.  She has a superannuation entitlement available upon retirement which is currently worth $50,000.

1. Her two sons live with her.  They are, each of them, on an invalid pension and unable to work.  Steven has sustained permanent injuries as a result of a motor cycle accident and suffers from epilepsy.  Both her sons suffer from a narcotic substance addiction and make no contribution to the household expenses.  Vicki said that, as a consequence, she has great difficulty in making ends meet and she receives no assistance from their father.

1. And she, too, does not enjoy good health.  She has been on antidepressant medication since 1995 and medication for high blood pressure since April 2003.  She has recently had an operation for what she describes as “a nervous stomach”.  In March of this year she injured her knee in a fall for which she is waiting for surgery.  She is also waiting for surgery for a sinus condition.  Finally, in 2001, she was diagnosed as having a non-malignant tumour in her left breast for which she has regular check ups. 

1. There was evidence led to challenge Vicki’s evidence of her parlous financial position.  She agreed that she took a holiday at the Gold Coast in 2000 but she said this was not very expensive.  In November 2000 she purchased a new Subaru Impreza motor car for $32,516 which she paid for from the amount she held as “a nest egg”.  It may be that this was for the use of her sons for she then had her own car.  The Subaru was destroyed on New Year’s Eve 2002 in an accident when one of her sons was driving.  No insurance cover is available.

1. In the following year, 2001, she made a visit to Europe for which she borrowed $7,500 from a relative.  She told me that this was not an expensive trip for she largely stayed with family and friends.  It is not clear, then, how a substantial portion of this money was applied.

1. In 2002 her own car was in a run down condition and she purchased a new Corolla for about $30,000.  This was paid for by a bank loan of $20,000 and a further $10,000 as a gift from Liliana.  This was purchased as a second car, for she had the Subaru at this time.

1. It is convenient to say something at this stage about the situation of the competing beneficiary, Marija.  As I have mentioned, she and her daughter lived from 1993 with her parents and, after 1994, with her father.  They lived in this way at Liliana’s home in Sydney from 1993 and at Northcote since December 1999.

1. In 1985 her father had bought a unit in Skopje, Macedonia, for her own use.  Following her return to Australia in 1991  it was used by other family members.  This property was sold for $30,000 in 1997 and the proceeds placed in a bank account.  She said that the money has been spent partly on renovations and repairs to the Northcote home in 2000 and partly on her own living expenses.  The evidence as to this was not very satisfactory as she said that the cost of these building and renovation works was only $2,000.  There remains of this amount only $7,000.  Apart from this sum, she has no assets.  She has a credit card debt of $200.00.

1. Marija has completed a course in caring for the aged in Sydney but she did not obtain employment in that field because she was caring for her father and her daughter and running Liliana’s household.  She has recently obtained employment in a nursing home for which she is to receive $360 per week for 26 hours work.  Prior to that she has received a single mother’s pension and no other income.  She has, of course, had free accommodation in Melbourne and has received money from her father in his lifetime.

1. This brings me to a somewhat puzzling but largely unexplored matter.  In February 2001 there was in the National Australia Bank Term Deposit Account No. 26 967 5051, standing in the name of the deceased and Marija, the sum of $30,000.  This was the money of the deceased.  The deposit was rolled over in August 2001 for a further six months.  In February 2002 the sum reinvested for the next six months was only $20,000.  Marija said that the $10,000 was given to Elena for her school expenses.  She said that the balance of $20,000 was given to her by her father, in his words:  “for my funeral and if its not enough, you have to give your own”.  This was not challenged.  What is puzzling is the way this $20,000 was handled.  The term deposit was cashed in on 21 March 2002, some 12 months before the deceased’s condition deteriorated and credited to a National Australia Bank Flexi Direct Account No. 05 880 4238, again in their joint names.  This appears to have been the deceased’s living expenses account for his fortnightly veteran’s pension of $416.30 appears to be its substantial source of deposit.  There is sign that her own pension was deposited in it.  The $20,000 was withdrawn within a few weeks, by 15 April 2002.  This was achieved by a withdrawal on that date of $12,508 and by 16 ATM withdrawals each of $500 in pairs.  The sum of $1,000 was withdrawn from the account on eight days within a short period.  If the sum of $20,000 was given to Marija, as she says, she does not appear to have drawn upon it for this purpose.  There was, however, no evidence as to the fate of these sums other than her statement that, some 12 months later, she spent a lot more than $20,000 on her father’s funeral from her own resources, including, it would seem, these withdrawals from the joint account.  The final piece of evidence is contained in her affidavit sworn 1 August 2005 in which she lists the funeral expenses which she has paid as totalling $21,734.  Although these are described in the affidavit as liabilities of the estate, this must be an error for, on her own account, they were her own expenses for which the deceased had put her in funds as to $20,000.  On the evidence, I must accept Marija’s unchallenged account of these financial matters.

1. I have, to date, not mentioned a matter as to which there was a conflict of evidence.  In cl. 2(i) of his will, the deceased offered the following explanation for his gift to Marija.

“(i)My daughter Marija Kocevska has promised and undertaken to take care of me and to attend to my needs from the date I make this will until I die.  In consideration of her taking care of me and attending to my needs I have decided on my death to give to her my property situated at and known as 39 Victoria Road Northcote 3070 for her benefit absolutely.  If however she fail to honour her promise and undertaking then my said property shall become part of my residuary estate and be divided as set out in (iii) hereinafter.”

1. It seems that Liliana came to Melbourne in April 2000 to celebrate her sister, Vicki’s, 50^th birthday.  On the following day the three sisters and the 10 year old Elena were at the family home in Northcote.  All four women gave evidence of a conversation with the deceased in the kitchen on that occasion.  It is common ground that he addressed his daughters in terms to this effect:  “There’s something I would like to ask you.  I would like to know which one of you is prepared to look after me?  Who would like to look after me?”

1. There were, broadly speaking, two versions of what happened next.  That of Liliana and Vicki was to the effect that Liliana told her father that she would be unable to care for him since she was located in Sydney.  Vicki said that she was prepared to look after him if he wanted her to.  He replied that he would rather have Marija do so as she had no place to live, and this was accepted by all as a satisfactory arrangement.

1. The version of Marija and her daughter, Elena, was rather different.  After her father put the question, he left the house so they could discuss the matter among themselves.  In his absence, Liliana made a statement to the effect as she described.  Vicki said that she could not look after her father as she had a full-time job and her father did not get on well with her sons.  She told me that at this time they already had a drug problem.  Vicki then left the house to buy cigarettes and Liliana and Elena followed her outside.  The three women did not return to the house and, when the deceased re-entered, Marija told him she would look after him.  He said to her that if she did she would receive the house.  Two months later he changed his will, revoking a 1998 will in which he left the whole of his estate, essentially to the three daughters equally.

1. This incident occurred more than five years ago and recollections are therefore to be treated with some caution.  It is clear, too, that Liliana is sympathetic to the position of Vicki and, less so towards Marija.  Elena who was very young at the time said that her memory of the incident was good because she recorded the incident a few years later in a school assignment.  Of the two versions, I prefer that of Marija.  I do so because it is consistent with the conduct of the deceased in changing his will.  It is clear from this and from the evidence of his daughters that he was a man who was concerned that he be cared for in his declining years.  Although he had had prostate cancer for some five years, he was managing it and his colostomy well.  Nevertheless, at the age of 80 years, his future may well have been a matter of concern for him so that the account which I prefer is in accord with my perception of his character.  Finally, I am mindful of the evidence of Liliana that Vicki was upset by the incident, an observation which is more consistent with the version given by Marija.

1. I turn now to the application before the Court. Under s. 91 I must be satisfied of three things before an order may be made under Part 4:

(1)The claimant must demonstrate that the testator had a moral responsibility to make provision for her.  This must be determined as at the date of death.

(2)       There must be an insufficient provision.

(3)The Court must then determine in the circumstances now existing what further provision should be made.

1. Although the legislation has been recently changed and the Court is expressly required to have regard at each stage to some 12 matters, the philosophy underlying the earlier statutes cannot be ignored.  The Court will not lightly interfere with the right of testators to dispose of their property as they wish.  This may be done only where they have not fulfilled a testamentary responsibility which the Court has found to exist. 

1. I mentioned at the outset that the modest size of this estate causes difficulties.  The deceased, looking from his perspective at the date of death, had three daughters and, for practical purposes, only one asset to dispose of.  Putting to one side Liliana, who makes no claim, Vicki had made her own life with her husband and children and had bought and sold a number of properties and had purchased assets which, in the scheme of things, were not insignificant.  I refer particularly to the two motor cars.  She had a secure job with a good income and a home.  To the extent that she had a mortgage, this, it seems, reflected her own priorities.  But she had the burden of two dependant sons and she, herself, was not in good health.  Given the competing needs of Marija and the testator’s evident wish to provide her with a home as he had for some years, I am unable to conclude that he had a moral responsibility to make any provision for Vicki.

1. In reaching this conclusion, I do not rely upon the so called April 2000 agreement.  A father does not bargain away his moral responsibilities any more than a daughter can purchase them.  This is a case where a father has, in his previous dealings, sought to achieve an equality between his three daughters for each of whom he evidently had an affection.  Indeed, a characteristic of the family as it appeared to me was the existence of a strong bond between the sisters and their families and a readiness to provide support and assistance for their parents and for each other.  The deceased, for example, was ready to provide money without interest for the needs of Marija and Liliana.  This was evident, too, in the generous attitude of Liliana in providing accommodation and financial support for her parents and sisters and her fondness of Elena and her sympathy towards the unfortunate sons of Vicki.  Returning to the position as it appeared to the deceased in 2000 when the time came to decide what to do with the house in Northcote, it was once again a family home for himself and his daughter who had little assets or income.  And this remained the situation at the date of his death.  He was entitled, in my view, to see his responsibility as primarily that of providing a continuing home for her and for her teenage daughter.  He was entitled to view his responsibility in this way notwithstanding that it was at the expense of the expectancy of his other daughter, Vicki.  The application must fail at this point.

1. In fact, by his will, the deceased conferred on Vicki as on Liliana a benefit worth $25,000.  Given the size of the estate, this cannot be dismissed as trivial.  Even if I were satisfied that a responsibility existed towards Vicki, I would not be prepared to find that he has made insufficient provision.

1. The application therefore will be dismissed.

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