Panozzo v Worland
[2009] VSC 206
•25 June 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 9158 of 2007
| MOIY YIM PANOZZO | Plaintiff |
| V | |
| GINA ISABELLA WORLAND (who is sued as Executrix of the Will of ANDRE GELINDO PANOZZO) | Defendant |
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JUDGE: | FORREST J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 18, 19, 20 May 2009 | |
DATE OF JUDGMENT: | 25 June 2009 | |
CASE MAY BE CITED AS: | Panozzo v Worland | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 206 | |
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TESTATOR’S FAMILY MAINTENANCE – Administration and Probate Act 1958 (Vic), s 91 – Application by widow – Inadequate provision for widow by Will of deceased – Appropriate time for determining the applicant’s financial resources when deciding whether adequate provision for proper maintenance and support of widow – Widow left dilapidated rental property not marital home – At time of deceased’s death applicant in possession of substantial funds, later dissipated.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. Miller | Patrick J Cannon, Coburn & Associates |
| For the Defendant | Mr T. Messer | Milne Lawyers |
HIS HONOUR:
Introduction
Moiy Yim Panozzo (“Moiy”) is the widow of Andre Panozzo (“the deceased”) who died on 25 February 2007. Moiy brings her claim pursuant to Part IV of the Administration and Probate Act 1958 (Vic) (“the Act”) seeking that further provision be made for her out of the deceased’s estate. The claim is contested by the executrix, Gina Worland, the deceased’s daughter by a previous marriage.
The deceased had five children by his previous marriage. The deceased and Moiy lived together in Wangaratta for about eight years in total, marrying just over one year before his death. At the time of his death, the deceased owned the matrimonial home at 95 Templeton Street, Wangaratta and three other properties. He left one of those properties, a house in poor condition, (just around the corner from the Templeton Street house) at 56 Green Street, Wangaratta (“the Green Street house”), to Moiy as well as its contents; the balance of the estate was left to four of his five children.
It is most unfortunate that this matter requires judicial determination. The estate is not huge, and one would have thought that common sense and economic reality may have seen the resolution of this claim well before it reached this Court. That leads me to one other matter: the location of the hearing. Notwithstanding that all parties and witnesses live in northern Victoria (as well as the assets of the estate being located in Wangaratta and the Will being made in that town), the claim was issued out of Melbourne and no attempt appears to have been made to transfer the action to Wangaratta, its natural home.[1] By the time it came before me, it would have been productive of excessive wasted costs to transfer the matter to Wangaratta, but in any other circumstance that is what should have been done.
[1]Hansen v Border Morning Mail Pty Ltd (1987) 9 NSWLR 44, 46.
The issues
It was not in issue that the deceased had a responsibility to make provision for Moiy. The primary contest between the parties centred on the question of whether adequate provision was made by the deceased for Moiy at the time of the death of the deceased. It was said on behalf of Gina, the executrix, that when one took into account the fact that at the time of the death of the deceased Moiy probably had $200,000 in cash in her own name, then the gift of the Green Street house and the contents of the matrimonial home constituted just and adequate provision.
At the outset of the hearing Mr Miller of counsel who appeared for Moiy contended that she should be provided with title to the Templeton Street property as well as an adequate nest egg, however by the conclusion of the trial, it was accepted by him and by Mr Messer, who appeared for Gina, that if any provision was to be made by the Court, it should be in a monetary sum. There is no realistic expectation of Moiy returning to Templeton Street. Moiy sought that provision be made for her from the residuary estate of the deceased in the sum of $400,000 being half the estate’s probate value.
The deceased’s Will
The deceased made his Will on 25 September 2006. He left the Green Street house to Moiy, as well as the household contents of the Templeton Street residence. Putting aside a small legacy to his son James, the balance of the estate went to four of the five children. One daughter, Ivana, was excluded as a result of the benefit of a substantial legacy in the Will of the deceased’s first wife.
Background to the claim
Moiy was born on 24 February 1940 and is now 69 years of age. She cannot read or write in either Thai or English and has only a limited command of the English language. She gave her evidence through an interpreter, but at times spoke in English.
In the early 80s, she met her first husband, John Kuczma, in Thailand and married him on 5 January 1983.[2] In 1986, she emigrated to Australia and joined her husband, who was working on the construction of the Dartmouth Dam. She obtained employment at a caravan park as a cleaner, and for approximately ten years the couple lived at the Dam Township. They then moved to Mansfield, where they purchased a home at 5 Davies Street.[3] Mr Kuczma died on 19 February 1998. He left all his estate to Moiy. Shortly afterwards, Moiy met the deceased, who was working as a builder in Wangaratta.
[2]Affidavit of the plaintiff 20 December 2007 (“the first affidavit”) [6].
[3]The first affidavit [10].
The deceased was born on 20 July 1933 and was first married to Valerie. They had five children, the defendant and executrix Gina Worland, Bruna Robinson, James Panozzo, Ivana Giaconda and Clara Panozzo. In approximately 1972, the family moved to Wangaratta and purchased 95 Templeton Street, which at the time was a vacant block. During the late 70s, the deceased, who had taken up the business of a builder in partnership with Valerie, built a comfortable two-storey house on the block. The business was quite successful and, over the years, the deceased purchased two rental properties at 56 and 60 Green Street (both around the corner from the Templeton Street house).[4] In addition he purchased a block at 20 Newman Street, Wangaratta upon which he erected a shed and stored his plant and equipment on site.[5]
[4]T134-136.
[5]T137.
Valerie died aged 60 on 5 November 1995. She and the deceased were the joint proprietors of the Templeton Street house. Valerie also owned a small farm at Goorambat, which she devised to the deceased for his lifetime, then to be transferred to the five children.
Shortly after the death of Mr Kuczma and during 1998, Moiy went to live with the deceased at the Templeton Street house. She brought some furniture (from the Mansfield house) with her. She was his domestic partner and carried out all normal household duties, as well as having an intimate relationship with him. She was at that time receiving a Centrelink pension.[6]
[6]T54.
When they met, the deceased was still working as a builder. They both worked on the Goorambat farm, primarily growing hay and engaging in a small horticultural business. Moiy and the deceased also share-farmed another property in the area. They grew a variety of plants, flowers and herbs which they sold weekly at a Paddy’s market in Wangaratta. Moiy also paid for a number of items used in connection with the farm.
During the time that Moiy and the deceased lived at Templeton Street, both the houses at 56 and 60 Green Street were rented out. Gina and her children lived at number 56 for a period of time and Moiy’s niece, Jaichuen Lopez-Linares, lived in the house between April 2005 and the end of 2006.
Moiy and the deceased were married on 9 December 2005.[7]
[7]Exhibit MYP-4 to the first affidavit.
The Mansfield house was sold by Moiy in January 2006 for $180,000.[8] There was some debate concerning the amount actually received as a result of the sale, which I shall return to later.[9]
[8]Exhibit D3.
[9][33].
Shortly after the death of the deceased on 25 February 2007, Moiy went to Balranald to stay with her sister, Kasemsoi Srimaleejoi (known as Pam) and her partner Vi Van Le. She gave her key to the Templeton Street house to James Panozzo.
Gina has not spoken to Moiy since shortly after her father’s death. Notwithstanding that the household contents had been left to Moiy, the children, within six weeks of the death of their father and without notice to Moiy, placed a chain and lock on the gates to the Templeton Street house and removed the contents of the house.[10] Up until the time of the trial, Moiy was not told by either Gina or her solicitors as to the whereabouts of the contents.
[10]T167.
By a number of payments made in March and in April 2007, Moiy transferred all her savings (just over $200,000) to her sister, Pam, with whom she was living at Balranald.[11]
[11]T97-T101.
Moiy left Balranald shortly afterwards and went to live with her niece, Jaichuen Lopez-Linares, in Wodonga. She stayed with her until she moved into her own accommodation in Wodonga, a two bedroom flat, close to her niece, in Railway Street, Wodonga. She still resides there.
Although Moiy lives independently, her health has deteriorated significantly since the death of the deceased. She has short term memory impairment and difficulty with recall. She has difficulty walking as a result of a leg injury and needs assistance to get in and out of a chair.
The titles to each of the properties devised to the children have been transferred into Gina’s name as executrix. The title to the Green Street house has not been transferred to Moiy.[12]
Part IV of the Administration and Probate Act 1958 (Vic)
[12]T186.
The relevant parts of s 91 provide as follows:
“Power of the Court to make maintenance order
(1) Despite anything in this Act to the contrary, the Court may order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.
…
(3) The Court must not make an order under sub-section (1) in favour of a person unless the Court is of the opinion that the distribution of the estate of the deceased person effected by—
(a) his or her will (if any); ...
does not make adequate provision for the proper maintenance and support of the person.
(4) The Court in determining—
(a) whether or not the deceased had responsibility to make provision for a person; and
(b) whether or not the distribution of the estate of the deceased person as effected by—
(i) the deceased's will; …
makes adequate provision for the proper maintenance and support of the person; and
(c) the amount of provision (if any) which the Court may order for the person; …
must have regard to—
(e) any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;
(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;
(g) the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;
(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;
(i) any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;
(j) the age of the applicant;
(k) any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased;
(l) any benefits previously given by the deceased person to any applicant or to any beneficiary;
(m) whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility;
(n) the liability of any other person to maintain the applicant;
(o) the character and conduct of the applicant or any other person;
(p) any other matter the Court considers relevant.”
Part IV of the Act was significantly amended by the Wills Act 1997.[13] These amendments came into effect on 20 July 1998 (“the 1998 amendments”). Section 91 now provides for a three-step process in determining a claim for a maintenance order.[14] A Court may order that provision be made out of the estate of a deceased person provided the deceased had responsibility to make provision for the proper maintenance and support of the applicant. In determining whether the deceased had responsibility to make provision for a person, the Court is required by s 91(4) of the Act to have regard to the criteria set out in sub-paragraphs (e) to (p) (step one). However, the Court is not to make such an order in favour of such a person unless of the opinion that the distribution of the estate by the will does not make adequate provision for the proper maintenance and support of such a person (step two): s 91(3). If the Court is satisfied that there is not adequate provision as required by step two, then it determines the appropriate provision (step three): s 91(4)(c). The criteria set down in sub-paragraphs (e) to (p) are also applicable to the second and third steps.[15] The first two steps have, at times, been described as jurisdictional questions.
[13]Act No. 88 of 1997 s 55.
[14]Schmidt v Watkins [2002] VSC 273, [6], [8]-[9].
[15]Iwasivka v State Trustees Ltd [2005] VSC 323.
The determination of Moiy’s claim under Part IV of the Act therefore requires the following steps:
(a) Determining whether the deceased had a responsibility to make provision for Moiy. This is conceded by Gina.
(b) Determining whether the distribution to Moiy constituted adequate provision for her proper maintenance and support. This is hotly contested.
(c) If (b) is answered in the negative, then determining what amount is appropriate to provide for Moiy’s proper maintenance and support.
In Petrucci v Fields[16], Mandie J, when speaking of the first step (the responsibility question), said as follows:
“The Court is not entitled to rewrite the will in accordance with its own ideas of fairness or justice. The Court must place itself in the position of the testator and consider what the testator ought to have done in all the circumstances of the case, treating him for that purpose as a wise and just, rather than a fond and foolish testator.”[17]
I respectfully adopt this principle, which has application to each of the three steps mandated by statute. At each of the three stages, the “wise and just” testator test is the norm, or the point of reference, subject to the stipulations of s 91.[18]
[16][2004] VSC 425.
[17]Ibid [58]; See also Hughes v National Trustees Executors & Agency Co of Australasia Ltd (1979) 143 CLR 134, 146, citing Bosch v Perpetual Trustee Co [1938] AC 463, 478-9.
[18]Lee v Hearn (2005) 11 VR 270, 272-275. Vigolo v Bostin (2005) 221 CLR 191, 200-201.
The question of the extent of the obligation to provide adequate and proper provision for a widow was considered by Hedigan J in King v White:[19]
[19][1992] 2 VR 417.
“The Courts have sought to stand in the position of the testator and to consider what ought to have been done by a just and wise husband, having regard to the moral obligation to use testamentary powers to make proper provision after his death for the support of his wife, having regard to other moral claims to his bounty from other claimants.”[20]
His Honour then went on to say:
“It is, I believe, generally recognised that a widow has a higher moral claim on the estate than anybody else. In this case, that view is all the more potent because in my opinion there was and is no-one else with any moral claim on the deceased testator’s bounty.”[21]
[20]Ibid 422.
[21]Ibid 423.
The effect of the 1998 amendments was considered by the Court of Appeal in Blair v Blair[22] in which Chernov JA said:
“Thus, it is clear enough that the ‘responsibility’ of which sub-s.(1) speaks is the moral duty or obligation of the testator to make provision for the proper maintenance and support of the claimant. Similarly, sub-s.(3) is essentially concerned with whether the deceased – as a wise and just testator – has fulfilled his moral obligation to make adequate provision for the claimant’s proper maintenance and support. Given, however, that the court is now directed by the legislation to have regard to the matters specified in paragraphs (e) to (p) of sub-s.91(4) when determining the jurisdictional issues, characterisation of the deceased’s relevant obligation by reference to moral duty is likely to be of less utility than was the case prior to the recent amendments to Part IV of the Act. Be that as it may, it should be noted that while the criterion in each of paragraphs (e)-(o) of sub-s.91(4) is concerned with a specific matter, paragraph (p) is open ended, enabling the court to consider ‘any other matter [it] considers relevant’ and giving it a wide discretion to look beyond the specific statutory matters which are set out in the immediately preceding sub-paragraphs for the purpose of determining if the jurisdictional requirement has been satisfied and, where relevant, bringing into consideration the testator’s moral obligation to the claimant.” (Emphasis added.)
[22](2004) 10 VR 69 [13].
As I have said, no issue arose as to what has been called the first jurisdictional or threshold step, that is, whether the deceased had a responsibility to provide for the proper maintenance and support of Moiy.
There was, however, a real contest both as to a point of principle and as to matters of fact in respect of the second step, namely, whether the distribution to Moiy was adequate for her proper maintenance and support. I will return to this issue in some detail subsequently.
The trial
The evidence on behalf of Moiy was provided by five affidavits sworn by her, as well as an affidavit sworn by her niece, Jaichuen Lopez-Linares. Both were cross-examined. The evidence on behalf of the executrix, Gina Worland, was given both by affidavit and viva voce. I ruled at the commencement of the trial that her affidavit be removed from the Court file as it contained a significant number of hearsay allegations, many of which were irrelevant, and some of which were scandalous. She was cross-examined by counsel for Moiy. A number of exhibits were tendered, including a valuation report of Mr Male concerning the Templeton Street house and the Green Street house.
The assets and liabilities of the estate at the time of death
In total the estate was valued at approximately $820,000 for the purposes of probate. The inventory of assets and liabilities filed 1 May 2007 valued the four properties (Templeton Street, the two rental properties and Green Street and the Newman Street shed) at $730,000. The personal estate of the deceased was valued at $90,564. Approximately $74,000 of that was held in bank or credit union accounts.[23] The current value of the estate is approximately $700,000 - $710,000. [24]
[23]Exhibit P3.
[24]See [43].
The financial position of each of the relevant persons
Moiy’s current financial position was not the subject of dispute. She lives in a rented 2 bedroom unit in Wodonga. She has funds in a bank account of $243. She has no assets other than her entitlement to the Title of the Green Street house[25]. She receives $475 per fortnight by way of old age pension and pays a net rent of $55 per week. Out of her pension, she also pays gas, electricity, water and telephone expenses.[26]
[25]She may also have an entitlement to make a claim against her sister: see [72].
[26]Affidavit of the plaintiff 15 May 2009 (fourth affidavit) [4]-[5].
The level of Moiy’s assets prior to April 2007 is not altogether clear. It is indisputable that she received funds as a result of the sale of the Mansfield property to which she had sole Title after the death of her first husband, Mr Kuczma. It was accepted by her counsel that she probably received in the region of $173,000 as a result of the sale of this property (although she had originally sworn that she received $140,000 from the sale).[27] What is confusing is her evidence as to a further benefit she obtained upon the death of her first husband. In cross-examination, she said that she had also received a sum of $115,000 which was in Mr Kuczma’s bank account as well as the family furniture and car.[28] Exactly what has happened to the funds was not explained adequately, although I do not believe that this was due to any deception on her part.
[27]T205.
[28]T70–71.
It is, however, abundantly clear, and I find this to be the case, that in early April 2007 Moiy transferred all her money (the remaining funds from both the sale of the house and the cash left to her) being somewhere between $200,000 and $215,000 to her sister,[29] with whom she was living in Balranald. In her affidavit of 27 May 2008 she nominated three reasons for transferring the funds namely –
[29]The exact amount cannot be determined precisely, but it was accepted by Moiy’s counsel that it was somewhere in the region of $200,000 (T235) and by Gina’s counsel that it was about $215,000 (T208).
(a) Ease of payment of solicitor’s costs.
(b) Her sister’s better command of the English language.
(c) The “funds in my name may well incommode my proposed application for old age pension at Centrelink”.
In her cross-examination she agreed that there was a benefit to her to transfer the funds to Pam so as to make it easer to obtain the old age pension.[30] I do not find either (a) or (b) as persuasive reasons for the transfer. Rather, I conclude that the primary reason was to ensure continued receipt of the aged pension. Whatever the motive, she now asserts that the funds cannot be recovered and has reported the matter to the police. It was not suggested that Moiy currently has any remaining funds from Mr Kuczma’s estate in her possession.
[30]T96.
Bruna Robinson, the eldest daughter of the deceased, is a 49 year old widow and lives at Briagolong in Gippsland. She has two dependent children, one 14 and the other 9. She works a day a week cleaning. She owns a house that was built by herself and her late husband which still requires maintenance. She drives an old motor vehicle.
Gina Worland is 47 years of age and is divorced with three children, two of whom are part dependent upon her. She lives in Wangaratta in a three bedroom brick veneer house built in 1963. It has a capital improved value of $203,000, and $30,000 is owed on the mortgage. She does not own any other real estate. She works as a nurse and earns approximately $1,000 net per week.[31]
[31]T157.
James Panozzo is 46 years of age and works as a builder and engages in security work in Wangaratta. He owns a seven acre farm which has a shed upon it, and he lives in a partitioned part of the shed. He does not have any dependents.[32]
[32]T159-160.
Clara Robinson is 37 years of age, married and lives in Queensland. She does not work, but her husband works as a loan manager. They do not have children and are currently renting a house, having previously owned a house which was described as an average brick veneer home.[33]
[33]T159.
The gifts to Moiy under the Will
An area of controversy at the trial was the disposition of the gift of the household contents of Templeton Street. The gates of the house were locked, notwithstanding the specific legacy. Photographs of the interior of the Templeton Street house show a two-storey building with abundant furnishings. Six weeks after the death of the deceased, Gina, with the assistance of her siblings, removed the furniture and placed it in storage at James Panozzo’s premises and the Turner Street shed. Gina gave a disingenuous explanation for this conduct, namely, that she believed that the goods had been abandoned.[34] This was simply not credible. Over the ensuing years, notwithstanding requests by Moiy’s solicitor, Gina, in her role as executor, had done nothing to appraise Moiy of where the goods are and how they may be collected.[35] Gina’s solicitor’s letter telling Moiy to get in touch with Gina was less than helpful. Notwithstanding these criticisms of Gina’s conduct, the fact is that the household contents are still available to Moiy and presumably, when this case has concluded, can be accessed by her.
[34]T167-168.
[35]T165-166, T172.
The Green Street house was rented out within a short period of the death of the deceased. No rent was paid by the estate to Moiy.[36] The house is now decrepit. It is a 1920’s weatherboard house which has been poorly maintained. Notwithstanding that both Gina and Jaichuen Lopes-Linares have resided in the property with their children, the photographs of the property, the description given by Mr Male[37], the valuer and the details of the agent’s condition report[38] in 2005 all indicate that the property is in significant disrepair.[39] Nonetheless, the agents have been able to arrange for tenants to occupy the premises up until late last year.[40] The condition report contains what counsel for Moiy described, accurately, as a “damning set of observations”. I accept Mr Male’s valuation of $140,000, which was not contested. I also accept Ms Lopez-Linares description of the condition of the house.[41] Given Moiy’s background and age, I conclude that the house was not suitable for Moiy’s accommodation at the time of the testator’s death and is not suitable now if she wished to live there.
[36]T176.
[37]Exhibit P9
[38]Exhibit JLL4 to Mrs Lopez-Linarez’s affidavit.
[39]Described diplomatically by Mr Male as a “poorly presented weatherboard cottage”.
[40]T243.
[41]T118-120.
Analysis of the criteria under s 91 for the purpose of the second and (if necessary) third steps
(e)any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship
Moiy and the deceased lived together as husband and wife for at least eight years in total and were married for just over one year. Their relationship was such that they worked as a team in operating the farm and conducting the Paddy’s Market business. That business, whilst small, had been built up by them during the time of their relationship. In addition, Moiy provided domestic assistance to the deceased on a day-to-day basis.
(f)any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate
There is an acknowledged responsibility on the part of the deceased to Moiy. The deceased did not have any specific obligation or responsibility towards his four adult children, other than that which arose out of his parental relationship with them. It was not suggested that the relationship with his children was in any way broken or affected although it seems clear that he had a stronger relationship with the two children living in Wangaratta, Gina and Jim, than those living in other parts of Victoria and Australia.
(g)the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject
As I have noted, the net value of the estate at the time of death was around $820,000. Mr Male, in February 2009, valued the Green Street house at $140,000 (valued at $157,000 in the inventory) and Templeton Street at $270,000 (valued at $314,000 in the inventory). Considerable expenses, including the defence of this claim, have been covered by the estate and are disclosed in the recent administration account.[42] On the basis of Mr Male’s valuations and the administration account, the estate has a value of approximately $700,000 - $710,000 at the present time.
(h)the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future
[42]Exhibit D2.
Counsel for Gina argued that in relation to the second step (whether the disposition was adequate for the proper maintenance and support of Moiy) this specific inquiry was to be carried out as at the time of the death of the deceased as was the cause prior to the 1998 amendments. As has been seen, this is of considerable relevance, given that Moiy at the time of the death of the deceased had a substantial nest egg in the form of funds held by her from the estate of her first husband, Mr Kuczma. These funds, however, had been dissipated by the time of the hearing. Counsel for Moiy contended that the inquiry was not limited to the “wise and just” testator’s consideration of the financial circumstances of the applicant at the time of death, but rather, by reason of the terms of s 91(4)(h), to the consideration of the financial resources of the applicant at the time of the hearing and for the foreseeable future as mandated by that sub-section. He argued that notwithstanding what may have been the approach to this test prior to the 1998 amendments, the section is unambiguously clear; sub-s (4)(h) mandates that in determining whether there was adequate provision for the applicant consideration of the financial resources of the applicant at the time of hearing was necessary: s 91(4)(b) and (h).
Counsel for Gina relied upon the following statement made by Lush J in Prosser v Twiss,[43] a case decided under the provisions of the Administration and Probate Act prior to the 1998 amendments:
“There is of course conclusive authority for the proposition that the question whether adequate provision has been made must be determined by a consideration of the facts existing and eventualities which might reasonably have been foreseen at the date of the testator’s death, whereas the question what order should be made is to be cited by reference to the stated facts existing at the time of hearing by the court.”
[43][1970] VR 225, 232.
This was an encapsulation of what had been said by Dixon CJ in Coates v National Trustees Executors & Agency Co Ltd:[44]
“But the very question what is proper maintenance and support involves the future of the widow or children to be maintained or supported. It is, however, the future stretching forward from the date of the testator’s death and therefore considered as from that date. It involves what is necessary or appropriate prospectively from that time. To determine that question contingent events must be taken into account as well as what may be considered certain or exceedingly likely to happen. When a court is called upon to consider such a question many years after the date as at which the court must take its stand, all the advantage is available of knowing the events that have occurred. The intervening events may be taken into consideration because they suggest or tend to show what antecedently might have been expected. But they must not be outside the range of reasonable foresight.” (Emphasis added.)
[44](1956) 95 CLR 494, 508.
So under the Act prior to the 1998 amendments, the proposition stated by Lush J in Prosser held good. Determination of whether there had been adequate provision was to be undertaken at the time of death applying the wise and just testator test, taking into account reasonable foresight of eventualities which may then affect potential beneficiaries. It was only if an applicant was successful in persuading a Court that there was inadequate provision that the facts as disclosed at the time of trial became relevant to what is now the third step - the Court’s consideration of adequate provision.
The statutory intervention in the form of the 1998 amendments sets out the criteria, including s 91(4)(h), which now requires a Court to take into account “the financial resources of the applicant at the time of the hearing and for the foreseeable future”.
In Blair v Blair,[45] Nettle JA said of s 91 as amended:
“The court is bound in answering each of those questions to have regard to the matters mentioned in s 91(4)(e)–(o) and, pursuant to s 91(4)(p), to any other matter considered to be relevant. Self evidently, such matters are of themselves incapable of providing an answer to either question. To reason from the matters mentioned in s 91(4)(e)–(p) to a conclusion that a testator had a responsibility to make provision for a claimant, or that the testator failed to make adequate provision for the claimant, necessitates the application of a test or standard to the matters to be considered. That test remains one of whether and if so what provision a wise and just testator would have thought it his moral duty to make in the interests of the claimant.” (Emphasis added.)
[45](2004) 10 VR 69 [41].
As Callaway JA said in Lee v Hearn,[46] after citing with approval what had been said by Nettle JA in Blair: “It is important to focus on the words of the legislation”. The words of s 91(3) and s 91(4) are absolutely clear: In determining whether adequate provision has been made, a Court must have regard to the criteria set out in s 91(4)(e) to (p), including (h).
[46](2005) 11 VR 270, [5].
Counsel for Gina also relied upon decisions of judges of this Court dealing with the relevant time for the consideration of the second step[47] in applying the provisions of the Act after the 1998 amendments. In each case it was held that the question of the adequacy of the provision by the testator is to be determined at the time of the deceased’s death[48]. Insofar as that represents general principle I agree. However, there is a clear statutory exception in the consideration of “financial resources and financial needs” which the legislature has dictated is to be determined “at the time of the hearing and for the foreseeable future”. Indeed, I note that in Herszlikowicz v Czarny, one of the cases relied upon by Gina, Hargrave J said:
“By s. 91(4) the court is commanded, in determining each of these two jurisdictional requirements, and also in determining the amount of any provision or further provision to be ordered if the two jurisdictional requirements are met, to have regard to the matters set out in paragraphs 91(4)(e) to (o) of the Act and, under paragraph 91(4)(p) to have regard “to any other matter the Court considers relevant”.[49]
[47]Herszlikowicz v Czarny [2005] VSC 354 and White v Muldoon [2006] VSC 204.
[48]Herszlikowicz v Czarny [2005] VSC 354 [116] and White v Muldoon [2006] VSC 204 [59].
[49][2005] VSC 354 [105].
In neither Herszlikowicz nor White was there specific consideration by their Honours of the terms of s 91(4)(h) nor did either case raise the point that has emerged in this case, namely, a significant change in the financial position of the applicant between the time of death and the time of trial.
The Court of Appeal has said that the Act means what it says, and that the statutory criteria are to be applied at each stage. It can be readily accepted that the criteria in s 91(4)(h) are more suited to the determination of the third step as the law provided for prior to the 1998 amendments. Be that as it may, it is the task of this Court to give effect to the words of the legislation. In Re Bolton; ex parte Beane[50] Mason CJ, Wilson and Dawson JJ said:
[50](1987) 162 CLR 514, 518.
“It is always possible through oversight or inadvertence that the clear intention of Parliament fails to be translated into the text of the law. However unfortunate that may be the task of the Court remains clear. The function of the Court is to give effect to the will of Parliament as expressed in the law.”[51]
Recently in the same vein in Harrison v Melhem,[52] Spigelman CJ said:
“The task of the Court is to interpret the used words by Parliament. It is not to divine the intent of Parliament. The Courts must determine what Parliament meant by the words it used. The Courts do not determine what Parliament intended to say.” (Citations omitted).
[51]See also Dossett v TKJ Nominees Pty Ltd (2003) 218 CLR 1 [10].
[52][2008] NSWCA 67 [16].
The terms of the Act are unambiguously clear. If it was necessary, however, to have recourse to the second reading speech[53] it is apparent that the legislation reflects the parliamentary intention in relation to the second step:-
“The bill requires the court, in determining whether or not provision should be made for a particular applicant, to have regard to a list of factors, including: any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship; any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate; the size and nature of the estate of the deceased person; the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and in the foreseeable future; and any benefits previously given by the deceased to any applicant or any beneficiary.[54]” (Emphasis added.)
[53]S. 35 Interpretation of Legislation Act 1984 (Vic)
[54]Second Reading Speech by the Attorney-General (Hon Jan Wade) on the Wills Bill, Legislative Assembly, 9 October 1997, Hansard at 436; see also the Second Reading Speech on the same Bill by the Minister for Small Business (Hon Louise Asher), Legislative Council, 12 November 1997, Hansard at 449.
The decision of Owen J in Gibson v Perpetual Trustees[55] relied upon by counsel for Gina may be put to one side for two reasons. Firstly, cases such as these turn on their own facts and analogies are rarely helpful. Secondly, and more significantly, Owen J was applying the test laid down in Coates in determining whether the testator’s provision was adequate; the 1998 amendments require a different test to be used in relation to financial resources and needs.
[55]W.A. Supreme Court, unreported 19/4/1996.
Accordingly, and although it is odd given the logic underpinning the position prior to the 1998 amendments, consideration of the financial resources and the financial needs of a relevant party (applicant or beneficiary) is to be carried out in the course of the second step analysis as is apparent to the Court at the time of the hearing. The silence of Parliament as to the relevant time at which the other matters, s 91(4) (c) – (g) and (i) – (p) – are to be considered, leads me to conclude that such assessment in the course of the second step is made as at the time of death, reflecting the previous position as stated in Prosser.
If I am correct in this analysis then the effect, I think, is as follows. A court in considering each of the second step criteria has regard to the position of a wise and just testator as at the date of death. However, it must also take into account the particular considerations of sub-section (h) as at the time of trial. In a practical sense this will only be relevant where there is a change in the financial position of the applicant or other beneficiary as between the time of death and the trial, which is the very case that arises here.
As at the time of hearing, the financial resources of Moiy are meagre. She has no assets apart from Green Street, which has not yet been transferred into her name, lives in rented accommodation and pays her expenses out of the pension. This means that she just gets by. There is no reason to think this will not persist into the future, subject to one qualification - the question of whether Moiy has a valuable asset in the form of a chose in action, namely, her right to sue her sister for the swindled money, considered subsequently.[56] None of the four sibling beneficiaries are in similar dire financial need. However, Bruna is clearly in greater need than the other three children.[57]
(i)any physical, mental or intellectual disability of any applicant or any beneficiary of the estate
[56]See [71] and [72].
[57]See [35].
Medical reports of Dr Blair, consultant physician, and Dr Byrnes, consultant geriatrician, were tendered.[58] Moiy probably has a relatively limited intellectual capacity. She is now suffering from a failing memory. She suffers from Type 2 diabetes and takes insulin daily. Her movement is limited as a result of an injury to her leg. Her niece needs to check on her each day to make sure that she is in reasonable condition, although she can care for herself adequately at the present time. It is clear from observing her in Court that she is struggling. Looking ahead, it is reasonable to assume that at some point of time she will need to be cared for in special accommodation and, perhaps, a nursing home.
[58]Exhibit P5.
One other point needs to be made, and that is that at the time of the death of the deceased, a number of these problems were not apparent, particularly, it seems, Moiy’s impairment in terms of movement and her decreasing intellectual functioning. On the other hand, given her age it was reasonably foreseeable that as she aged she would need an increased level of care and would necessarily face the prospect of being cared for by others.
(j) the age of the applicant
Moiy is now 69 years of age.
(k)any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased
There is no evidence that Moiy built up the estate. However, over the eight years she and the deceased were together, she contributed to his welfare by providing domestic services for him; she assisted in both the farm and horticultural ventures and contributed some funds to the equipment and machinery for the farm.
(l)any benefits previously given by the deceased person to any applicant or to any beneficiary
None were suggested.
(m)whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility
The deceased had assumed a responsibility for the maintenance, at least in part, of Moiy. She was in receipt of an aged pension; her only other income appears to have been that derived from the Paddy’s Market sales and income from the Davies Street property (either rental or interest after the sale of the property). The deceased provided for her accommodation, transportation and at least part of her day-to-day living expenses and sustenance.
(n) the liability of any other person to maintain the applicant
None is suggested.
(o) the character and conduct of the applicant or any other person
Counsel for Moiy was highly critical of the conduct of Gina, in relation to a variety of matters: the incomplete inventory of the estate, the failure to pay any rental from the Green Street property to Moiy, the failure to transfer the title of the Green Street house to Moiy and the high-handed conduct in relation to the removal and storage of the furnishings of Templeton Street as well as the inadequate cataloguing of items which had been removed by the children.[59]
[59]T184.
All are just complaints, but I am not at all sure that they have any direct relevance to the determination of the second or third questions. In Part IV of the Administration and Probate Act prior to the 1998 amendments, the Act spoke of “disentitling conduct” on the part of an applicant. The Act now requires an examination of the character and conduct of not only the applicant but any other person. Although Collicoat v McMillan[60] involved the application of Part IV of the Act prior to the 1998 amendments, Ormiston J’s statement of principle is apposite, I think, to this case:
“What is right and proper ... is not determined by the ‘character and conduct’ of each applicant but by what the testator ought to have felt in duty bound to provide notwithstanding any defects in character or conduct but nevertheless having due regard to the nature of their relationship with and their treatment (whether morally reprehensible or the opposite) of the testator during his or her lifetime. It is only when that behaviour has affected, or (arguably) is perceived to have affected, the testator that he or she is in good conscience entitled to make lesser or greater provision for an applicant than that to which the applicant would have been entitled having regard only to the bare bones of his or her financial needs and circumstances.”[61]
[60][1999] 3 VR 803.
[61]Ibid 818.
It seems to me that the relevant character and conduct under sub-s (o) is that of the particular person in relation to the testator. It may or may not explain why the testator has made the disposition as he or she has. I think that it could only be in a rare case that the conduct of an applicant or beneficiary in the period after the death of the testator would be relevant to the determination under Part IV.
In any event, the household contents are still in existence, albeit that they have been hidden from her. Presumably, they can be delivered up at the conclusion of this hearing. The Green Street rental will necessarily have to be accounted for by Gina, given her obligations as the executrix of the estate. The failure to include certain items in the inventories of assets and liabilities has no real relevance, as I see it, to this determination.
(p) any other matter the Court considers relevant
I accept that Moiy has transferred her savings to her sister Pam. She deposed in her affidavit to a sum of $168,000.[62] In the light of her evidence in cross-examination and the documentary evidence, I have concluded that somewhere between $200,000 to $215,000 in total was transferred to Pam.[63]
[62]Affidavit of 27 May 2008.
[63]T97-101. See [34].
This loss by Moiy of the funds obtained by her from Mr Kuczma’s estate is relevant in two ways.
First, Moiy asserts that she has been “swindled”, to use her counsel’s expression, out of her savings[64] by her sister. Putting aside the legal principles which I referred to earlier, the parties adopted totally different positions in relation to how I should treat this issue. Moiy contends that there is no prospect of recovering the money; it has been referred to the police and nothing has been forthcoming. Moreover, as her counsel submitted, the capacity of Moiy to give satisfactory evidence in any criminal or civil proceeding is very much in doubt. Counsel for Gina, however, said that the right to claim the moneys back from her sister and partner was a valuable chose in action. He correctly pointed to the fact that nothing has been done in a civil court to recover the money[65], notwithstanding that these events occurred over two years ago and she has legal representation. Moiy said that her sister still lives at Balranald. One may readily suspect that in any civil litigation there would be arguments as to whether the moneys constituted a gift or a loan, particularly given the underlying purpose as I believe it to be. Whatever the position, I do not think that the Court can ignore that on her account she has a right to recover the moneys.
[64]T239
[65]T101.
Second is the fact that this was a voluntary decision made by Moiy to put her funds in the hands of her sister after the death of the deceased, well knowing the contents of the Will. I have concluded, as is conceded by her in part, that the primary reason for adopting this course was to have the money placed out of reach for the purpose of obtaining an old age pension. This was her choice and is a relevant matter for the purpose of the sub-section. I also accept that she is a woman of somewhat limited intellectual capacity and one who is often dependent upon others for advice and evidence. This was clear in relation to her evidence about the manner in which the deceased controlled her financial affairs, and I suspect that when at Balranald the same can be said for the behaviour of her sister and partner. Nevertheless, she made the decision to transfer the funds and she signed the relevant documents with a clear incentive for doing so.
The answer to the second question: Was there adequate and proper provision for Moiy?
With a modicum of reserve, mainly engendered by her disposal of a significant amount of money shortly after the death of the deceased, I have concluded that the provision for Moiy by the deceased was not adequate or proper.
Taking into account the statutory criteria I think that a wise and just testator would have made a more significant allowance for Moiy’s support. Given her financial position (at the time of the hearing), her age and the close relationship she enjoyed with the deceased over a not insignificant period, the provision of a property worth about $150,000 and the specific bequest of the contents of the matrimonial home was inadequate for a widow in her situation, with the future health and care problems she will face (which could reasonably have been contemplated by the deceased in light of her age). Simply put, to provide her with just less than 20% of the total value of the estate at the time of death was inadequate, and her lack of financial wherewithal at the time of hearing means that there was not adequate provision.
I should add that I would have reached this view if I had concluded that the appropriate time for determining each of the second step criteria was at the time of the death of the deceased. Moiy’s savings of $200,000 or so in addition to the value of the estate meant that out of a pool of approximately $1 million between the deceased and Moiy, Moiy received roughly 35% (accepting the probate inventory estimates). This was inadequate provision. She was entitled to a greater allowance, given the length of their relationship, her age and the fact that it was impracticable for her to live the Green Street house.
The answer to the third question: What constitutes adequate and proper provision for Moiy?
I said earlier that the parties agreed that any adjustment should be monetary. Counsel for Moiy suggested a sum of $400,000, being roughly half of the original value of the estate less the value of the Green Street house. Counsel for Gina, under cover of his blanket objection that there should be no alteration to the terms of the Will, suggested 25% to 33% (as the absolute maximum) of the current value of the estate.
In McKenzie v Topp[66], Nettle J said:
Section 91 of the Act confers wide power to make such order as is thought fit in all the circumstances of the case. It is plain, however, that the discretion is not untrammelled or to be exercised according to idiosyncratic notions of what is thought to be fair or in such a way as to transgress unnecessarily upon the testatrix’s freedom of testation, but rather carefully and conservatively according to current community perceptions of the provision which would be made by a wise and just testatrix.[67]
[66][2004] VSC 90 {63].
[67]Hughes v National Trustees, supra at p. 146
I am conscious of Moiy’s current parlous financial state and medical predicament. A wise and just testator determining adequate provision for her would necessarily take into account the fact that she will need further care and that there should be a sum of money, in addition to the proceeds of the sale of the Green Street house, to provide the financial wherewithal for her in the future. By the same token I am also conscious of the fact that such an allowance will necessarily affect the disposition to the four children, at least one of whom would appear to be in significant need. I also take into account that there must be some prospect of retrieving part of the “swindled” funds from her sister.
A wise and just testator in the deceased’s position would have ensured that there was a nest egg left for his widow in addition to the Green Street house. There was no realistic prospect of Moiy living at that house. As the matrimonial home had not been left to Moiy (understandable given the surrounding circumstances), all the more reason to provide for an adequate amount for Moiy to live out her days with a reasonable level of care, particularly given the prospect that she may need assistance and care as she ages.
It is appropriate to allow a further sum of $175,000 as a specific legacy. This amount, in addition to the proceeds from the inevitable sale of the Green Street house, will provide her with funds to maintain a modest lifestyle, whether in rented accommodation or a nursing home.
It will be necessary for the executors to sell one of the properties so as to provide this amount. However this will still leave a sum slightly over one half of the estate at its current value for distribution between the four children.
Conclusion
In addition to her existing bequest, further provision should be made for the plaintiff out of the estate of the deceased by a legacy of $175,000, such legacy not to bear interest.
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CERTIFICATE
I certify that the 24 preceding pages are a true copy of the reasons for Judgment of Forrest J of the Supreme Court of Victoria delivered on 25 June 2009.
DATED this twenty-fifth day of June 2009.
Associate to Justice Forrest
Key Legal Topics
Areas of Law
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Succession Law
Legal Concepts
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Testator’s Family Maintenance
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Adequate Provision
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Dissipation of Funds
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