Petschelt v Petschelt
[2002] NSWSC 706
•12 August 2002
CITATION: Petschelt v Petschelt [2002] NSWSC 706 CURRENT JURISDICTION: Equity Division FILE NUMBER(S): SC 4563/01 HEARING DATE(S): 1, 2, 3 May 2002 JUDGMENT DATE: 12 August 2002 PARTIES :
Melina Petschelt (Plaintiff)
Anton Theodor Petschelt (First Defendant)
Rosita Hedwig Bachmann (Second Defendant)JUDGMENT OF: Master McLaughlin
COUNSEL : D.M. Coulton, A. McLean (Plaintiff)
M.A. Bradford (Defendants)SOLICITORS: Joanne Muller, Solicitor (Plaintiff)
Lawrence N Dunn, Solicitor (Defendants)CATCHWORDS: Succession - Family provision - Claim by adult daughter - Proceedings out of time - Financial and material circumstances of Plaintiff - Plaintiff suffers a serious medical condition and is incapable of employment - Whether PLaintiff has been left without adequate provision for her proper maintenance - Notinal estate - First Defendant was sole beneficiary of testator - First Defendant has largely distributed assets of estate - Those assets have mostly been placed by First Defendant in superannuation funds, where practically they are inaccessible to him until he achieves the age of sixty-five - Property held by testator as joint tenant passed to First Defendant by survivorship - First Defendant sold that property and with proceeds of sale purchased property in joint ownership with Second Defendant - Whether an order should be made designating that property notional estate - Importance of not interfering with reasonable expectations in relation to property - Substantial justice and merits involved in making or refusing to make such an order. LEGISLATION CITED: Family Provision Act 1982 CASES CITED: Singer v Berghouse (1994) 181 CLR 208
Wade v Harding (1987) 11 NSWLR 551DECISION: See paragraph 77.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
MASTER McLAUGHLIN
Monday, 12 August 2002
4563/01 MELINA PETSCHELT -V- ANTON THEODOR PETSCHELT and ANOR
JUDGMENT
1 MASTER: These are proceedings under the Family Provision Act 1982.
2 The proceedings were instituted by summons filed by the Plaintiff Melina Petschelt on 13 September 2001. That summons named only one Defendant, Anton Theodor Petschelt. Subsequently (pursuant to leave granted in that regard by Master Macready on 12 December 2001) the Plaintiff filed an amended summons on 14 December 2001. That amended summons named two Defendants, being Anton Theodor Petschelt as First Defendant and Rosita Hedwig Bachmann as Second Defendant. During the course of the hearing the Plaintiff (without opposition by the Defendants) filed a further amended summons on 3 May 2002.
3 The substantive relief claimed by the Plaintiff is an order for provision for her maintenance and advancement in life out of the estate or notional estate of her late mother, Daphne Petschelt (to whom I shall refer as “the Deceased”). In addition, the Plaintiff seeks orders designating as notional estate of the Deceased various items of property. (It is because of the claim in respect to notional estate that the Second Defendant has been joined as a party to the proceedings.)
4 The Deceased died, by her own hand, on 29 September 1996. She left a will dated 10 December 1981, probate whereof was on 22 January 1997 granted to Anton Theodor Petschelt, the executor named in such will (who is the First Defendant to the present proceedings). By that will the Deceased gave to the First Defendant her entire estate.
5 The inventory of property discloses that the assets of the Deceased consisted of moneys in banks and financial institutions (totalling about $164,000), shares in companies ($2,160), a motor vehicle ($3,000) and a personal injuries claim entitlement ($85,585).
6 In addition, the Deceased at the time of her death was joint tenant with the First Defendant of their house property at 26 Coolangatta Avenue, Elanora Heights. The interest of the Deceased in that property passed to the First Defendant by survivorship.
7 It will be appreciated that the present proceedings were instituted after the expiry of the eighteen months limitation period provided in section 16 of the Family Provision Act. The Plaintiff is some three and a half years out of time in bringing the proceedings. Accordingly, prayer 2 in the further amended summons seeks an order that leave be granted to the Plaintiff to institute the proceedings out of time. At the commencement of the hearing it was stated by Counsel for the Defendants, and noted, that the Defendants do not oppose the granting of such an extension of time.
8 The house property at Elanora Heights has been sold by the First Defendant, for $565,000. With the proceeds thereof he has acquired a residential property situate at and known as Unit 12, 2 Forest Road, Warriewood. That home unit was purchased on 27 September 2001 for $450,000. It is held conjointly by the First Defendant and the Second Defendant (although the Second Defendant made no contribution to the purchase price). It is unencumbered. (By prayer 3 of the further amended summons the Plaintiff seeks an order designating that property as notional estate of the Deceased.) It would appear that, apart from about $87,000 held on deposit with the St. George Bank, all the other assets of the Deceased are now held by various superannuation funds for the benefit of the Defendant, and that practically they will remain inaccessible to the Defendant until he achieves the age of sixty-five on 29 July 2007. (By prayer 4 of the further amended summons the Plaintiff seeks an order designating those funds as notional estate of the Deceased.)
9 It will be appreciated, in regard to the designating of property as notional estate of the Deceased, that apart from the deposit with the St. George Bank, such notional estate represents the only fund available to bear the costs of the Defendant executor of the present proceedings (which are estimated to total a little under $38,000) and, in the event that she ultimately be successful in her claim, the costs of the Plaintiff (which are estimated to total $56,500).
10 At the time when the proceedings were instituted on 13 September 2001 the Plaintiff, by way of ex parte application to Justice Bryson, obtained an interlocutory injunction restraining the First Defendant from dealing with the proceeds of sale of the Elanora Heights property, other than to use those proceeds to purchase another property of the nature described in that injunction. It would appear that that interlocutory injunction was not continued, but was replaced by an undertaking given by the First Defendant concerning other assets.
11 The Plaintiff (who was born on 24 January 1973 and is presently aged twenty-nine) is the only child of the Deceased and the First Defendant, who married on 8 September 1966. The Plaintiff is unmarried and has no children.
12 The Plaintiff suffers from cystic fibrosis, a serious condition of the lungs, which was diagnosed when she was aged about four months. Extensive medical evidence was placed before the Court concerning that condition of the Plaintiff and treatment therefor which she has undergone and expects to undergo in the future. According to that evidence the Plaintiff’s life expectancy is on account of her medical condition reduced to a maximum age of about forty years – that is, she presently expects to live only about another ten years.
13 The Plaintiff experiences the following symptoms as a result of her suffering from cystic fibrosis: shortness of breath, coughing, digestive problems, difficulty walking upstairs or walking distances, tiredness. She requires to have physiotherapy at least twice a day for the rest of her life. The Plaintiff also requires regular hospitalisation and requires constant medication. In 1998 she underwent a life-threatening major haemoptysis, which required urgent bronchial artery emobilisation. She underwent further hospital treatment for almost two weeks in January 2001 and again, for two and a half weeks, in June 2001.
14 On account of her medical condition the Plaintiff cannot work. She has never (apart from a very short period in 1991) been able to work, and will never be able to do so in the future.
15 The house at Elanora Heights was the family home of the Plaintiff and her parents from the time of her birth. That house was erected on a block of land which had been purchased by the Deceased and the First Defendant in 1969. They participated in the physical construction of that residence, and moved into occupation in about July 1972.
16 The Plaintiff remained at school until 1989, when she completed Year 10. In 1990 she undertook a course as an office administrator at Williams Business College at Brookvale. In 1991 she had employment in office work for about three weeks. That employment was part-time and the Plaintiff earned about $100-$150 a week. That employment was terminated as, according to the Plaintiff, the employer did not have any more work. Because of the deteriorating condition of her cystic fibrosis, the Plaintiff has not subsequently been in employment.
17 The Plaintiff had a warm, caring and loving relationship with her mother.
18 The Deceased, who had been in employment up to the time of the Plaintiff’s birth, did not return to the workforce thereafter. She was the principal carer of the Plaintiff until her death in September 1996, and largely devoted her life to looking after the Plaintiff. The Deceased’s suicide was, according to the Plaintiff, the result of a severe depression brought on by a motor vehicle accident in June 1993, in which the Deceased suffered a knee injury. After the death of the Deceased the Plaintiff continued to reside in the family home at Elanora Heights with her father, the First Defendant, until 23 December 2000. The First Defendant, who is a cabinet maker and joiner by occupation, attended to the major part of the household duties during that period.
19 According to the Plaintiff, after her mother’s death the First Defendant had a number of relationships with various women. The First Defendant had been born in Germany and has kinsfolk in that country. In May 1999 the Plaintiff accompanied her father on a holiday to Germany, where she met Rosita Bachmann, the Second Defendant, with whom the First Defendant had been corresponding. The First Defendant paid a further visit to the Second Defendant in Germany in November 1999. During that absence the Plaintiff was looked after by her uncle and aunt.
20 The Second Defendant visited Australia in February 2000, staying with the First Defendant and the Plaintiff for about one month. On 20 October 2000 the Second Defendant came to live with the First Defendant and the Plaintiff in the family home at Elanora Heights, and was still residing there when the Plaintiff departed that residence on 23 December 2000.
21 According to the Plaintiff the reason for her departure from the family home was that the relationship between herself and her father and the Second Defendant had deteriorated, and that it was, in her own words “unbearable” for her to live there any longer. Various instances of domestic disharmony during the period from the arrival of the Second Defendant on 20 October 2000 to the departure of the Plaintiff two months later are set forth in the Plaintiff’s affidavit of 12 September 2001.
22 When the Plaintiff departed the Elanora Heights residence she lived with her aunt, Mrs Maisie le Gay Brereton, and uncle for about two months, and then entered into occupation at her present address, on about 28 February 2001. Assistance was given by Mr and Mrs le Gay Brereton in finding her present accommodation, which is a residential unit at Dee Why, and in lending her moneys to pay for that accommodation.
23 The Plaintiff’s aunt and uncle advanced her $1,500 for that purpose. The Plaintiff regards that advance as a loan and intends to repay it.
24 The Plaintiff receives a disability support pension presently in an amount of $394.70 a fortnight, as well as a pharmaceutical allowance and rent assistance. She has savings of about $5,000 in the St George Bank at Dee Why.
25 The Plaintiff in June 2001 received an amount of $33,772. That sum represented moneys which were placed in the Plaintiff’s name by the Deceased before the Deceased’s death and after her death were invested by the First Defendant on the Plaintiff’s behalf. Although the First Defendant never had any beneficial interest in those moneys, it was only after correspondence in that regard between solicitors and an unsuccessful attempt by the First Defendant to withhold the moneys unless the Plaintiff released her rights to make a claim under the Family Provision Act, that the First Defendant paid over to her those moneys which belonged to the Plaintiff.
26 In about 1995 the Deceased received about $90,000 from her deceased mother’s estate. At the time of her death there was also pending a negligence claim for personal injuries relating to the motor vehicle accident in which the Deceased had been involved in June 1993. That claim was settled a short time before the Deceased’s death for the sum of $70,000. Those settlement moneys were received by the First Defendant after the death of the Deceased.
27 In her affidavit of 12 September 2001 the Plaintiff sets forth her specific needs regarding furniture and furnishings and household items in her present accommodation. The Plaintiff has certain household items which have been given to her by family and friends. However, she states that they are of very poor quality and very old. She does not have a washing machine or a dryer, whilst her refrigerator is very old. A friend presently washes heavy items, whilst the Plaintiff washes all other items by hand. The Plaintiff’s living standard and lifestyle are modest in the extreme.
28 Since the Plaintiff left the family home she has had no contact from her father. She did not receive any present or communication at Christmas from either her father or the Second Defendant, despite the fact that she sent gifts for them.
29 Although the Defendants do not oppose an order for extension of time for the bringing of the proceedings, it is appropriate that I should here record that according to the Plaintiff she did not become aware until shortly after February 2001 that she could make a claim under the Family Provision Act against her mother’s estate. Neither was she aware until that time of any limitation period in respect to the making of such a claim. That is, she did not become aware of the statute or her rights thereunder until almost three years after the expiry of the limitation period.
30 The Plaintiff has throughout her adult life been in receipt of a disability support pension. At the present time she receives by way of social security benefits a total amount of $505.90 a fortnight, comprising
(a) Disability Support Pension $394.70
(b) GST component $15.80
(d) Rent Assistance $89.60(c) Pharmaceutical Allowance $5.80
31 In addition, the Plaintiff receives a relatively small (and diminishing) income from the investment of her savings, being currently in an amount of about $26,000 (representing the balance remaining of the amount of $33,772 which had been invested in the name of the First Defendant, and which has now been returned by him to the Plaintiff).
32 The Plaintiff presently pays rent of $230 a week, and has set forth in her evidence details of other living expenses, totalling $190 a week. That is, the Plaintiff has basic outgoings of $840 a fortnight. The shortfall of almost $253 a fortnight is met by the Plaintiff resorting to the foregoing amount of her savings.
33 The Plaintiff has set forth in her affidavit evidence details of her immediate needs for furniture and furnishings in her apartment. They include washing machine and dryer ($1,500), wardrobe, drawers and bedside table ($1,800), bed ($1,200), bedding and towels (including dustmite covers ($1,800), dining table and chairs ($1,400), kitchenware ($500), totalling $8,200. In addition, the Plaintiff has in her evidence referred to a desire to participate in social activities, such as a meal or entertainment with friends or kinsfolk, to a cost of $40 a week.
34 Evidence was given concerning a lung transplant procedure about five years hence, which had been recommended by Associate Professor Peter Bye of Royal Prince Alfred Hospital (where the Plaintiff has undergone the various medical and surgical procedures to which I have already referred), and the costs which, according to the affidavit of Denise Carol Gandy, 15 April 2002, would accrue in consequence of that procedure. As I understand it, the actual costs of the surgical procedure itself and the associated hospitalisation of the Plaintiff would be met by Medicare. However, Miss Gandy has given evidence of the need for a full time carer, transport, mobile telephone facilities for a period of two to three months after such a procedure, and has given an estimation of $10,000 to $20,000 as the cost of providing such support for the Plaintiff.
35 The Plaintiff also claims the cost of physiotherapy, in respect of which it is appropriate that she should receive two sessions each day, and (consequent upon the affidavit of Muriel Betty Ginges, 21 March 2002), the Plaintiff asserts that for a period of ten years an amount of $19,600 for physiotherapy would be appropriate.
36 Evidence was given concerning the purchase price of various one bedroom home units in the Northern Beaches area. An average for such purchase price is $250,000.
37 Evidence was placed before the Court concerning the respective financial and material circumstances of the First Defendant and the Second Defendant.
38 The First Defendant is presently aged sixty (having been born on 29 July 1942).
39 For a period of several weeks shortly after the death of the Deceased the First Defendant was not in employment. However, since November 1999 the First Defendant has been consistently in employment. He holds trade qualifications as a cabinet maker and joiner, and is presently employed as a production supervisor, earning about $40,000 a year. According to the Defendant, he received about $255,000 from the estate of the Deceased. Most of that amount was invested by him firstly in a term deposit with the St. George Bank, and then, in 1998, in the various superannuation funds to which I have already made reference.
40 In addition to his interests in the Warriewood home unit and the foregoing superannuation entitlements, the First Defendant’s assets presently consist of an investment of $92,000 with the St. George Bank (which appears to represent, either in its entirety, or to the extent of about $87,000, assets formerly held by the Deceased), together with a 1993 VT Holden Commodore motor vehicle, and household furniture. (By prayer 5 in the further amended summons the Plaintiff seeks an order designating the funds in the St. George Bank as notional estate of the Deceased.)
41 The Second Defendant is aged fifty-three, having been born on 10 November 1948. She is a German citizen, but has applied for permanent residence in Australia. She owns certain assets in Germany, being the lease of an apartment and a motor vehicle. The Second Defendant is a widow (her husband having died in 1998). The Second Defendant is in receipt of two German pensions, totalling $1968 a month, in consequence of the death of her late husband. Those pensions, which are her only source of income, will terminate if she remarries.
42 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.
43 The Plaintiff as a daughter of the Deceased is an eligible person within paragraph (b) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such she has the standing to bring the present proceedings. The only other eligible person in relation to the Deceased is the First Defendant, who is such an eligible person within paragraph (a) of that definition.
44 I have had the benefit of receiving a written outline of submissions and a chronology from each Counsel. Those submissions and chronologies will be retained in the Court file.
45 Each of those submissions addresses itself in some detail to the fact that the proceedings were not instituted within the limitation period of eighteen months after the death of the Deceased, as required by section 16(1) of the Family Provision Act, and to the application by the Plaintiff for an extension of the prescribed period in which to institute the proceedings. However, as has already been recorded herein, it was at the outset of the hearing stated on behalf of the Defendants, and noted, that the Defendants do not oppose the application for extension of time. It was the evidence of the Plaintiff that it was not until early 2001 that she became aware of her rights under the Family Provision Act and of the limitation period prescribed by that Act, that limitation period having already expired before the Plaintiff became thus aware. I am satisfied that, in the event that the Plaintiff has otherwise established an entitlement to an order for provision, it is appropriate that the limitation period be extended up to and including the date of the institution of the proceedings.
46 In performing the first stage of the two stage exercise identified by the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 at 208, it is necessary for the Court to determine whether the Plaintiff has been left without adequate provision for her proper maintenance, education or advancement in life. In doing so, the Court must assess whether the provision (or, as in the instant case, the absence of provision) was inadequate for what, in all the circumstances, was the proper level of maintenance appropriate for the Plaintiff, having regard, amongst other things, to the Plaintiff’s financial position, the size and nature of the estate of the Deceased, the totality of the relationship between the Plaintiff and the Deceased, and the relationship between the Deceased and other persons who have a legitimate claim upon her bounty.
47 In the instant case, in the context of the serious physical disability from which the Plaintiff suffers, and the close and loving relationship which the Plaintiff had with her mother, who was the Plaintiff’s principal carer from the time when the Plaintiff’s physical condition was diagnosed until the death of the Deceased, the Court is entitled to draw the inference that the Deceased, at the time when she made her will, expected that she would outlive the Plaintiff, and to draw the further inference that at the time when she took her own life she expected that the Plaintiff would be provided with secure accommodation and paternal care by the First Defendant for the rest of the Plaintiff’s life. (Such an inference is consistent with the fact that by her will the Deceased, in the event that the First Defendant predeceased her, gave the entirety of her estate to the Plaintiff.)
48 None of those expectations of the Deceased were fulfilled. It is all very well for the First Defendant to say that the Plaintiff can come back and live with him and the Second Defendant in their new residence. Whilst it is no part of the Court’s function to attribute or apportion blame for the domestic disharmony which resulted in the departure of the Plaintiff from the family home in December 2000, the realities of the situation are that, whether or not the First Defendant is prepared to provide a home for the Plaintiff, she will not return and she proposes to live independently. The Plaintiff, an adult, should not be required to reside in accommodation and in domestic circumstances which are not congenial to her. In any event, it is not unreasonable, in my view, that a young woman aged twenty-nine should live independently of her father, in her own separate domestic establishment.
49 It is appropriate here to observe that I prefer the evidence of the Plaintiff to that of the First Defendant. Whilst he denied that he had ever dominated the Plaintiff, he presented in the witness box as a very domineering person. He also gave many responses under cross-examination by saying that he did not know or that he did not remember. He gave the extraordinary answers that he was not qualified to know if the Plaintiff was disabled or not, that he did not agree that she was seriously disabled, and that he did not know that she was seriously ill.
50 In my determination the Plaintiff, as a result of the absence of any provision made for her by the Deceased, has been left without adequate provision for her proper maintenance and advancement in life.
51 Further, I am satisfied that the Plaintiff has established an entitlement to an order for provision for her maintenance and advancement in life. However, I am in agreement with the submissions made on behalf of the Defendant that the quantification of such an entitlement is far from easy.
52 Whilst the Plaintiff is certainly justified in living independently of her father, I am not persuaded that, in the circumstances of this case, the Plaintiff has established an entitlement to receive from the estate or the notional estate of the Deceased an amount sufficient to enable her to purchase a residence of her own. The fact that the Plaintiff has a life expectancy of only a further ten years is a relevant consideration in this regard.
53 The evidence from the Department of Housing was not entirely clear as to whether the Plaintiff might be able, at some stage, to establish an entitlement to emergency accommodation from that entity. It was, however, clear that if the Plaintiff does not establish such an entitlement it will be about ten years before she is able to receive public accommodation provided by the Department of Housing. Thus, for at least ten years, the Plaintiff certainly requires a fund which will assist in enabling her to pay rent. Her present accommodation, which is basic, appears to be not particularly satisfactory for her lifestyle. It seems to me that the Plaintiff should certainly receive an amount of $12,000 to assist in her rental payments for at least the next ten years.
54 The Plaintiff has an immediate and pressing need for an amount of a little over $8,000 for the immediate purchase of those household items and furnishings to which I have already made reference.
55 Professor Bye has recommended that the Plaintiff receive a lung transplant. It is appropriate therefore, that the Court’s award should include a component in respect to the consequential expenses associated with such procedure. Nevertheless, it is difficult to quantify that component. I would propose an amount midway within the range of $10,000 to $20,000 identified by Miss Gandy – that is, $15,000. For future physiotherapy the Plaintiff will require $19,600.
56 If the Plaintiff moves into other, and more congenial, accommodation, she will incur removal expenses (for which it is submitted an amount of $5,000 to $10,000 would be appropriate; I prefer the lower amount). Moreover, it seems to me essential that the Plaintiff should receive a not insignificant fund, firstly, to provide an increased income which will enable her to live at a somewhat higher standard than that provided by the mere breadline existence of her present lifestyle; further, to be available to meet any unexpected contingencies. I would propose that that fund be in an amount of $100,000.
57 It follows, in my conclusion, that the Plaintiff has established an entitlement to receive a benefit in the nature of a legacy of $160,000. That entitlement, however, must be approached in the light of competing claims upon the testamentary bounty of the Deceased. The only such competing claim is that of the First Defendant, who was the chosen object of the totality of the testamentary beneficence of the Deceased.
58 Further, as has already been observed, the estate of the Deceased has been largely distributed, and the assets remaining (which appear to consist of an amount of about $87,000, being part of the amount held by the Second Defendant with the St. George Bank) are not sufficient to meet the payment of the totality of the costs of the proceedings, let alone a legacy in the foregoing amount. Accordingly, it becomes necessary, in regard to ordering payment of such a legacy, for the Court to proceed to a consideration of any notional estate of the Deceased, and to a consideration of whether any, and I so what, assets held by the Defendants should be designated as notional estate of the Deceased.
59 Not only was the First Defendant the chosen object of the testamentary beneficence of the Deceased, but, in consequence of the death of the Deceased the Elanora property, of which the Deceased and the First Defendant were joint tenants, passed by survivorship to the First Defendant. That property has subsequently been sold, and with the proceeds of sale the Warriewood property has been purchased in the joint names of the First Defendant and the Second Defendant.
60 It will be appreciated that, in consequence, any order for provision an entitlement to which the Plaintiff might otherwise establish can be made only by the designating of either the Warriewood property or the superannuation funds held for the benefit of the First Defendant or the funds in the St. George Bank as notional estate of the Deceased (section 24 of the Family Provision Act). However, the Court (by section 27(1) of the Act) is prohibited from making such an order unless it has considered certain matters, including
61 (a) the importance of not interfering with reasonable expectations in relation to property, and
62 (b) the substantial justice and merits involved in making or refusing to make the order.
63 The First Defendant has stated his intention to continue in employment until the age of sixty-five, about five years hence. He will then receive about $583,000 from the superannuation funds in which he has deposited most of the assets which he received from the estate of the Deceased (see paragraph 8 of affidavit of Karen Robinson, 26 March 2002). His current superannuation entitlements amount to $508,000.
64 The evidence is far from clear as to whether the amounts presently held in the superannuation funds from which the Plaintiff will ultimately receive a benefit are available to be distributed to him at the present time, either in whole or in part. For that reason, I would be reluctant to designate those funds as notional estate of the Deceased, if that designation were to be deprived of practical effect, either by the terms upon which the funds are presently held, or by the fact that the legal owners of those funds have not been joined as parties to these proceedings.
65 The Plaintiff submits that it is appropriate that the Warriewood property be designated as notional estate of the Deceased, to the extent necessary to meet any order for provision an entitlement to which the Plaintiff has otherwise established.
66 I have already referred to section 27(1) of the Family Provision Act, by which the Court is prohibited from making an order designating property as notional estate of the Deceased unless it has considered certain matters.
67 Paragraph (b) of that subsection speaks of “reasonable expectations in relation to property”.
68 That phrase does not, however, indicate the person by whom those reasonable expectations are held. Clearly the Court must consider the reasonable expectations of the First Defendant in relation to property. By the same token, however, the Court should also consider the reasonable expectations of the Deceased herself in relation to property, and also, possibly, the reasonable expectations of the Plaintiff. I have already observed that the inference can legitimately be drawn that the Deceased expected that the Plaintiff would be provided with appropriate accommodation by the First Defendant. Further, it would also appear that the Elanora Heights property would not have been sold and the Warriewood property would not have been purchased had the Second Defendant not come into the lives of the First Defendant and the Plaintiff.
69 Moreover, it is the conduct of the First Defendant himself which appears to have placed outside his present practical control the major part of the assets of the estate of the Deceased.
70 In any event, the Court must also consider (section 27(1)(b)) the substantial justice and merits involved in making or refusing to make the order. I have no hesitation in expressing my conclusion that the substantial justice and merits of this case require that an order for provision be made in favour of the Plaintiff, and that, since the First Defendant has for all practical purposes distributed most of the assets of the estate in such a manner that they are held conjointly by himself and the Second Defendant or that they are at the present time beyond the practical control of the First Defendant, it is essential that an order be made designating property as notional estate of the Deceased.
71 It will, however, be appreciated that the Court can make an order designating as notional estate of the Deceased the proceeds of sale of the Elanora Heights property only if that property passed to the First Defendant in the consequence of a prescribed transaction on the part of the Deceased. In the instant case, it was submitted that such prescribed transaction was the failure of the Deceased before her death to sever the joint tenancy upon which the Deceased and the Defendant held the Elanora Heights property. (See Wade v Harding (1987) 11 NSWLR 551.)
72 I am satisfied that the foregoing failure on the part of the Deceased to sever the joint tenancy constituted such a prescribed transaction, and that, in consequence, the interest of the Deceased in the Elanora Heights property (being one half of that property) became notional property of the Deceased. The Elanora Heights residence was sold for $565,000. In consequence, therefore, one half of those proceeds of sale, which passed to the First Defendant, and now the Warriewood property, which was purchased with such proceeds of sale, are liable to be designated as notional estate of the Deceased.
73 In all the circumstances, therefore, it seems to me appropriate that I should designate as notional estate of the Deceased the Warriewood home unit to the extent which reflects the foregoing half of the proceeds of sale of the Elanora Heights property. The proposed legacy of $160,000 is less than that one half of the sale proceeds of the Elanora Heights property. A legacy is such an amount will not have the inevitable consequence that the Defendants will be deprived of their residence.
74 In this regard it should be recognised that, in the event that it become necessary for the First Defendant to raise a mortgage over the Warriewood property (or his one half interest therein), the superannuation entitlements which he will receive in less than five years will be more than sufficient to discharge such mortgage.
75 Moreover, the inference is open to the Court that one of the reasons why the First Defendant placed the title to the Warriewood property in the joint ownership of himself and the Second Defendant (who had contributed in no way to the purchase price) was, at least in part, to thwart the present claim of the Plaintiff, which had already been the subject of correspondence between the solicitors for some months before the sale of the Elanora Heights property and the purchase of the Warriewood property.
76 I have not heard any submissions concerning costs. It was, however, foreshadowed on behalf of the Defendants that, in the light of the ultimate decision, they might wish to be heard concerning costs. An opportunity will, of course, be given to any party who so desires to make submissions as to costs. My preliminary view is that the usual order for costs should be made.
77 Accordingly, unless within seven days of the date hereof any party arranges with my Associate for the matter to be listed for the purpose of argument as to costs, I make the following orders.
(1). I order that the time for the institution of these proceedings be extended up to and including 13 September 2001.
(2). I order that the Plaintiff receive out of the estate or the notional estate of the late Daphne Petschelt (“the Deceased”) a legacy of $160,000, such legacy not to bear interest if paid on or before 12 October 2002, and if not so paid to bear interest at Supreme Court rates.
(3). I order that the residential property situate at and known as Unit 12, 2 Forest Road, Warriewood, be designated notional estate of the Deceased.
(5). The exhibits may be returned.(4). I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate or the notional estate of the Deceased.
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