Pizimolas v Pizimolas - [2010] SASCFC 34

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
PIZIMOLAS v PIZIMOLAS & ANOR
[2010] SASCFC 34
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Gray and The Honourable Justice Sulan)
23 September 2010
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL - OTHER MATTERS
SUCCESSION - FAMILY PROVISION AND MAINTENANCE - FAILURE BY TESTATOR TO MAKE SUFFICIENT PROVISION FOR APPLICANT - WHETHER APPLICANT LEFT WITH INSUFFICIENT PROVISION - CLAIMS BY CHILDREN
REAL PROPERTY - GENERAL PRINCIPLES - EJECTMENT - MESNE PROFITS
Appeal against decision of Judge of this Court dismissing the appellant’s claim under section 7 of the Inheritance (Family Provision) Act 1972 (SA) that greater provision for him be made out of the estate of his mother – whether Judge proceeded on a misapprehension of facts – whether deceased made inadequate provision for appellant, a disabled son.
Held: Appeal allowed – conclusion that there were respective needs of the other beneficiaries of the deceased’s estate was not supported by the evidence – appellant has made out his claim for maintenance and advancement – appellant to receive legacy of $100,000.00 from the estate, the residue of the estate to be divided equally between appellant and respondents.
Inheritance (Family Provision) Act 1972 (SA) s 7, referred to.
Pizimolas v Pizimolas & Zannis [2010] SASC 158; Singer v Berghouse (1994) 181 CLR 201; Vigolo v Bostin (2005) 221 CLR 191; Bosch v Perpetual Trustee Co Ltd [1938] AC 463; McCosker v McCosker (1957) 97 CLR 566, considered.

PIZIMOLAS v PIZIMOLAS & ANOR
[2010] SASCFC 34
Full Court Doyle CJ, Gray and Sulan JJ

DOYLE CJ: I agree with the orders proposed by Gray J. I agree with his reasons for making those orders.
GRAY J.
Introduction
This is an appeal from a decision of a Judge of this Court dismissing a claim under the Inheritance (Family Provision) Act 1972 (SA).
Maria Pizimolas migrated to Australia from Greece with her husband Yannis in about 1950 accompanied by their two children Irene, born 26 September 1945 and Phillip, born 15 December 1949. Stavros, the youngest child, was born in Australia on 28 March 1957. Yannis died on 12 June 2003 and Maria on 27 September 2007. The only asset of any substance in Maria’s estate is the family home at Norwood.
The Judge dismissed several claims made by Stavros, the plaintiff and appellant. Those claims included a claim for further provision from the estate of Maria pursuant to the provisions of the Inheritance (Family Provision) Act. It is the dismissal of this claim and consequential costs orders that are pursued on appeal. Stavros also complained about an order made on a counterclaim brought by Maria’s executors, Irene and Phillip, that he pay $12,000.00 by way of mesne profits.
On the hearing of the appeal, counsel for Irene and Phillip, the defendants and respondents and the other beneficiaries named in her will, accepted that the Judge proceeded under two material misapprehensions. First, it was accepted that in dismissing Stavros’ claim with reference to the “relative needs of the other beneficiaries”, the Judge fell into error, as there were in fact no relative needs of the other beneficiaries. Second, it was accepted that the Judge misunderstood the earning capacity of Stavros. It was acknowledged that as a consequence, the Inheritance (Family Provision) Act claim should be reconsidered by this Court. Subject to the misapprehensions mentioned above, the findings of fact made by the Judge were unchallenged. All parties agreed that it was appropriate for this Court to reconsider the claim and counterclaim. The Court agreed to do so.
The estate of Maria comprised unencumbered real property at Norwood, a small amount of cash and personal effects of little monetary value. By her will dated 17 October 2002, Maria left a legacy of $8,500.00 to Phillip in repayment of loans made to her. The rest and residue of the estate after the payment of debts, funeral and testamentary expenses was to be distributed between Irene, Phillip and Stavros in equal shares. The terms of the will appeared to contemplate that Stavros would continue to reside in the Norwood property until the executors determined that the property should be sold.
For reasons set out below, it is my view that Stavros’ claim under the Inheritance (Family Provision) Act for further provision from Maria’s estate should succeed. As a consequence of emotional, mental and physical disabilities, Stavros is in need of maintenance. The remaining beneficiaries of Maria’s estate, Irene and Phillip, have not asserted nor made out any case of need or relative need. The estate is of sufficient size to allow for further provision to be made in favour of Stavros. I have reached the conclusion that Stavros should receive a legacy of $100,000.00 in addition to one-third of the proceeds of the sale of the rest and residue of the estate. Irene and Phillip should each receive one-third of the rest and residue. My reasons follow.
The Judge’s Reasons
In the course of his reasons the Judge made the following findings with respect to Stavros:[1]
Stavros’ psychological health has not improved since his retirement from the Public Service. He continues to suffer from anxiety and depression. Dr Varvounis testified that he had noted that alcohol abuse was a significant feature of Stavros’ presentation as early as 1995 and made a formal diagnosis of alcoholism in 2006. According to Dr Varvounis, Stavros’ alcoholism was exacerbated by the emotional distress of residing with his mother. Stavros’ physical capacity is limited by an injury to his knee; a cartilage tear was repaired in 2001.
…
By August 2004 Stavros was a 47 year old man who had never lived away from his parents home with a substantial incapacity for work and a serious alcohol dependency. The request that he return to the Norwood home was an offer that he could not afford to refuse.
[1] Pizimolas v Pizimolas & Zannis [2010] SASC 158 at [29], [39].
Stavros lived for many years with his parents at the Norwood home. He is unmarried. Following the death of Yannis, Stavros continued to live with Maria providing her with companionship and emotional support. It is to be noted that Maria suffered from dementia for some years before her death, as the Judge observed:[2]
Even though Stavros performed little work around the house apart from gardening and did not actively care for his mother, I find that his continued presence in the house was a benefit to his mother. He was able to guard against the serious dangers to the house and Maria’s personal safety arising from her forgetfulness. I am sure that the continuing presence of her youngest son much comforted Maria.
[2] Pizimolas v Pizimolas & Zannis [2010] SASC 158 at [33].
Following Yannis’ death there came a time when Stavros left the Norwood home. However a family conference led by a priest from the Norwood Greek Orthodox Church resulted in his return. The Judge found that Maria was anxious to have Stavros return and was further satisfied that Stavros’ concern for his mother’s welfare influenced his decision to return. The Judge concluded that it was difficult for Stavros to have lived in share accommodation with friends and the Judge in particular observed:[3]
…Stavros would have found it extremely difficult to live in shared accommodation after many decades of a largely solitary life. Following his admission to the Flinders Medical Centre in 1984, Stavros’ capacity to obtain, maintain and pay for his own independent accommodation was seriously diminished. Not only did he suffer from anxiety and depression but he was dependent on social security, supplemented by some casual part time work. His inability to finance alternative accommodation is well demonstrated by the fact that whilst he was studying at Flinders University he could not meet the rates levied on the Norwood home even though he was not paying rent. By 1995 Stavros’ psychological condition had deteriorated further. In that year Dr Varvounis noted Stavros’ alcohol abuse as a matter of concern.
[3] Pizimolas v Pizimolas & Zannis [2010] SASC 158 at [38].
The Judge made findings about the personal circumstances of the respondents. With respect to Irene the Judge concluded:[4]
Irene Zannis was born on 26 September 1945. She left school at the age of 18 and worked as a stenographer. She married in 1972. She lived with her husband in the Norwood home whilst they built a house at Rostrevor. I have already observed that Irene and her family moved into their own home in 1984. She subsequently separated from her husband. Irene has three children. Her two sons are aged 34 and 32, and her daughter is aged 25. Both sons still reside with their mother. Her eldest son, Michael, is blind and is dependant on social security benefits. The middle child is tertiary educated, in employment and financially independent. Her daughter also resides at home and is in employment. There is a $100,000 mortgage on her Athelstone home. Irene also owns land at Flagstaff Hill which is valued at a little over $200,000. Between about 2003 and 2006 Irene received $15,600 by way of gift from her mother. The money was the proceeds of the sale of a beach property in Gennadi which she had been promised as part of her dowry.
Irene Zannis testified that she helped her mother by providing meals and assisting her to clean the house from the time that her father began to suffer from dementia. After Maria herself came to suffer from dementia, Irene attended almost every morning to ensure that she took medication prescribed for her developing memory loss. She would at the same time encourage her mother to eat breakfast. Stavros Pizimolas accepted that Irene assumed responsibility for meeting his mother’s personal needs as her condition deteriorated.
In the 12 month period leading to her mother’s admission, Irene would also visit the Norwood home during and after work. She often received distressing telephone calls from her mother when she was not able to cope with difficulties she had encountered around the house. On one particular occasion she was called to the Norwood home late at night because her mother had soiled herself. She spent some hours cleaning up without any assistance from Stavros who stayed, for most of that time, in his room.
Eventually Irene arranged for District Nurses to administer Maria’s morning medication. Unfortunately on many occasions they could not find Maria because she had wandered away from the Norwood home. Irene Zannis also engaged Mr Tieste to do maintenance jobs on the Norwood home.
Every Sunday Irene Zannis or her son took Maria to church.
It may be observed that there was no finding of need or “relative need” with respect to Irene.
[4] Pizimolas v Pizimolas & Zannis [2010] SASC 158 at [40]-[44].
With respect to Phillip the Judge made the following findings:[5]
Phillip Pizimolas is the eldest of the children of Maria and Yannis Pizimolas. He is married with two adult children. He has a home in Unley, was given a property in Greece by his parents and also part owns a commercial property at Mile End through a family trust. Phillip Pizimolas gave evidence that he took his mother to visit Yannis Pizimolas’ grave at the Payneham Cemetery every Sunday. From there Phillip would take his mother to the Norwood home or to his home in Unley, where she would stay for lunch.
Phillip Pizimolas organised an identity wrist bracelet for his mother but after she learnt to remove it he replaced it with a neck bracelet. As I have already observed, Phillip engaged Mr Tieste to mow the lawns.
[5] Pizimolas v Pizimolas & Zannis [2010] SASC 158 at [45]-[46].
Again it may be observed that these findings do not suggest any case of need or “relative need” on the part of Phillip.
The Judge dismissed Stavros’ claim as he considered that the one-third share of the Norwood home left to Stavros was not an inadequate provision having regard to the size of the estate and the relative needs of the other beneficiaries.
I also dismiss the plaintiff’s family provision claim because a third share of the Norwood home is not inadequate provision having regard to the size of the estate and the relative needs of the other beneficiaries. I elaborate on my reasons further below.
One difficulty that confronts the respondents in their capacity as executors, and in their personal capacity, is that they as the “other beneficiaries” had no “relative needs”. They both appear to have assets of some substance. There is no suggestion that either suffers any limitation in their ability to provide for their ongoing maintenance or welfare. They did not establish any case of need or relative need.
Counsel for the respondents accepted that the evidence did not support the conclusion of the Judge with respect to Irene and Phillip’s “relative needs”. It was said that they did not contend for such a finding.
As mentioned, there was a further error of fact. The Judge found:[6]
Since 1996 Stavros has worked part time from home, both for the Australian Bureau of Statistics and for the accounting firm KPMG. The net financial benefit from his employment is that his pension is supplemented by about $20 to $30 a week.
[6] Pizimolas v Pizimolas & Zannis [2010] SASC 158 at [28].
This was incorrect as conceded by counsel for the respondents on the appeal. Stavros had not been employed at all since some time in 2006. He was, according to the evidence, unemployable at the time of trial. His pension had not been “supplemented” since 2006. The Judge was in error in proceeding to assess Stavros’ position on the basis that he, at the time of the trial, had an earning capacity and was in fact able to supplement his pension.
In these circumstances, as earlier discussed, the reasons of the Judge are flawed.
A Reconsideration
Section 7(1) of the Inheritance (Family Provision) Act provides:
(1)     Where—
(a)     a person has died domiciled in the State or owning real or personal property in the State; and
(b)     by reason of his testamentary dispositions or the operation of the laws of intestacy or both, a person entitled to claim the benefit of this Act is left without adequate provision for his proper maintenance, education or advancement in life,
the Court may in its discretion, upon application by or on behalf of a person so entitled, order that such provision as the Court thinks fit be made out of the estate of the deceased person for the maintenance, education or advancement of the person so entitled.
Analogous statutory provisions to those relevant in the present proceeding were discussed by the High Court in Vigolo v Bostin.[7] Gleeson CJ summarised the legislative position as follows:
The general structure of the Act follows a form familiar in all Australian States, and pioneered in New Zealand. The key provision is s 6. The power of a court to make an order under the Act is enlivened by the formation of an opinion that the disposition of the deceased's estate effected by will, or the law relating to intestacy, is not such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of a person mentioned in s 7. The court is empowered, at its discretion, to order that such provision as the court thinks fit is made out of the estate of the deceased for that purpose. An order takes effect as a codicil to the will, or in the case of intestacy, as a modification to the applicable rules of distribution (s 10).
What has been described as the two-stage approach to the exercise of such a statutory power was explained by this Court in Singer v Berghouse, and is not in controversy in this appeal. It is evident that, depending upon the stage of consideration involved, the following judgments are required by the terms of s 6. What kind of provision for the matters referred to in that section should be regarded as adequate? What should be regarded as proper maintenance, support, education or advancement in life in the case of a particular applicant? If the court comes to exercise its discretion to make an order in favour of an applicant, what should it regard as fit provision for the purposes referred to in the section? Upon whom should the burden of such an order fall?
Each of those judgments is to be made by reference to criteria that are expressed in the most general terms. Two of the key words are "proper" and "fit". Fitness and propriety are value-laden concepts. Those values must have a source external to the decision-maker. Morality is the source of many of the values that are expressed in the common law, in statutes, and in discretionary judicial decision-making.
…
These basic features of what is commonly called testator's family maintenance legislation have existed in Australia for almost a century. Such legislation is imbued with concepts of entitlement and disentitlement, claims and obligations, propriety and fitness, related to questions of inheritance. Australian courts, guided by decisions of this Court and of the Privy Council, have interpreted and applied the legislation by giving it a purposive construction. In its original form, the legislation conferred upon courts, in limited circumstances, a discretionary power to interfere with the exercise of freedom of testamentary disposition. Where such an interference was regarded as justified, it defeated the intention of a testator, and conferred a benefit upon an applicant at the expense of others whom the testator intended to benefit. From the beginning, a number of fundamental issues were obvious. Was this an extensive power to re-write a testator's will to make it conform to a judge's idea of how an estate should be distributed, or was it more limited, and, if so, in what way? Were issues of adequacy and propriety to be decided by reference only to minimum standards of subsistence? Was this merely a power to relieve the state of the burden of supporting indigent people? What account was to be taken of the expectations and needs of persons other than an applicant where a testator had made provision for such persons? In what circumstances should a testator's decision to disinherit a family member on grounds of character or conduct prevail?
[footnote omitted]
[7] Vigolo v Bostin (2005) 221 CLR 191 at 196-198.
It is to be observed that Maria’s estate is modest. At the date of death, Maria’s estate had a value of about $650,000.00. The Judge calculated the interest of Stavros to be approximately $203,000.00. The property at Norwood has not yet been sold and it may be expected that the present value of the estate has increased. It is unfortunate that the matter not only went to trial, but is now the subject of appeal. There is a real risk that legal costs will substantially erode the estate and as a consequence the parties’ interests in the estate. There is every reason for this Court to finally determine the matter. As noted above, both counsel agreed that this Court should proceed to do so.
At the time of Maria’s death Stavros suffered from an anxiety depressive state and a formal diagnosis of alcoholism had been made. It was the medical opinion that his alcoholism had been exacerbated as a result of the emotional stress of residing with his ageing mother. The Pizimolas family doctor, Dr Michael Varvounis, provided affidavit and oral evidence at the trial. Dr Varvounis deposed that Maria was very dependant on Stavros and would suffer anguish if he did not reside with her. He further deposed:
[Stavros] suffers from various medical problems. He has sympathetic reflex dystrophy of the left knee and has suffered from anxiety and depression since June 1995. He suffers panic attacks. He became dependant on alcohol by June 2006 and is an alcoholic. He was diagnosed with hepatitis in March 2007. On the 25/7/2009 the plaintiff collapsed and was hospitalized for some six days. He suffered bleeding in his brain which was due to a fall after an unconscious collapse.
[Stavros] had a vulnerable personality prior to looking after his mother and father. His father had dementia and was admitted to a nursing home in 1998, He then continued to look after his mother. Because of his pre-existing problems he did not have the emotional capacity to look after his senile mother. This resulted in him becoming dependent on alcohol to cope and resulted in the worsening in his depression and other psychological problems.

As a consequence of his emotional, mental and psychological disabilities Stavros was substantially incapacitated for employment. At the time of trial he was in the opinion of Dr Varvounis, unemployable. The home known to Stavros throughout his life would, according to the terms of Maria’s will, be sold. His only asset of any substance apart from his interest in Maria’s estate appears to be a property in Greece, given to him by his parents. He receives a modest rental income from this property - something less than $80.00 per week. He receives a pension. It may be safely concluded that Stavros has limited assets and a severely limited capacity to provide for his future welfare.
As earlier observed, the Judge’s primary findings with respect to Stavros have not been challenged on appeal. As noted above, those findings allow the conclusion that Stavros is mentally and physically disabled, at the very least substantially incapacitated for employment and with limited assets. If he were to purchase a modest property from his one-third interest in the estate he would in all probability need to borrow. He might be expected to encounter considerable difficulty in that respect having regard to his personal circumstances. He will also incur the expense of furnishing any property he is to purchase.
Phillip, Irene and Stavros were each given property in Greece. If Stavros were to dispose of his property it would further increase the gulf between his personal circumstances and those of his siblings.
In Singer v Berghouse,[8] Mason CJ, Deane and McHugh JJ said of analogous interstate provisions:
It is clear that, under these provisions, the court is required to carry out a two-stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant. The first stage has been described as the “jurisdictional question”. That description means no more than that the court’s power to make an order in favour of an applicant under s 7 is conditioned upon the court being satisfied of the state of affairs predicated in s 9(2)(a).
…
The first question is, was the provision (if any) made for the applicant “inadequate for [his or her] proper maintenance, education and advancement in life”? The difference between “adequate” and “proper” and the interrelationship which exists between “adequate provision” and “proper maintenance” etc were explained in Bosch v Perpetual Trustee Co Ltd. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased’s estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance…
[8] Singer v Berghouse (1994) 181 CLR 201 at 208-209.
When determining whether Maria has failed to make adequate provision out of her estate for the proper maintenance of the plaintiff, it is necessary to consider what is meant by the words “adequate” and “proper”.
The Privy Council commented on the distinction between the words “adequate” and “proper” in Bosch v Perpetual Trustee Co Ltd:[9]
The use of the word "proper" in this connection is of considerable importance. It connotes something different from the word "adequate". A small sum may be sufficient for the "adequate" maintenance of a child, for instance, but, having regard to the child's station in life and the fortune of his father, it may be wholly insufficient for his "proper" maintenance. So, too, a sum may be quite insufficient for the "adequate" maintenance of a child and yet may be sufficient for his maintenance on a scale that is "proper" in all the circumstances. A father with a large family and a small fortune can often only afford to leave each of his children a sum insufficient for his "adequate" maintenance. Nevertheless, such sum cannot be described as not providing for his "proper" maintenance, taking into consideration "all the circumstances of the case" as the subsection requires shall be done.
[9] Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 476.
In McCosker v McCosker,[10] Dixon CJ and Williams J observed:
The question is whether, in all the circumstances of the case, it can be said that the respondent has been left by the testator without adequate provision for his proper maintenance, education and advancement in life. As the Privy Council said in Bosch v. Perpetual Trustee Co. (Ltd.) the word "proper" in this collocation of words is of considerable importance. It means "proper" in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement in life must be considered in the light of all the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent.
[footnotes omitted]
[10] McCosker v McCosker (1957) 97 CLR 566 at 571-572.
Stavros, on the unchallenged findings of the Judge, was in need of maintenance and advancement, in accordance with the accepted interpretation of the terms of section 7 of the Inheritance (Family Provision) Act. The proper maintenance of Stavros calls for sufficient monies for the acquisition of a modest home. Stavros would then have his pension and a small amount from the nett rents from his property in Greece to meet his other needs. Stavros has made out his claim that inadequate provision was made by Maria for his proper maintenance. I would order that he receive a legacy of $100,000.00 from the estate and that the balance of the estate be divided equally between Irene, Phillip and Stavros. The legacy of $100,000.00 will provide Stavros the ability to purchase a modest home.
There is one further matter to be addressed. The Judge upheld a claim made by Irene and Phillip in their capacity as executors for mesne profit. In that respect the Judge ordered that Stavros pay $12,000.00 for his continued occupancy of the Norwood home from the date of Maria’s death to the date of trial. In my view this order should be set aside. In fixing a legacy of $100,000.00, I have proceeded on the basis that Stavros should have been able to continue to occupy the Norwood home free of payment by way of rent until the date of judgment and a short time thereafter. Stavros should be responsible for the rates and taxes and other outgoings of the property from the date of Maria’s death until he ceases occupation. I have also had regard to the fact that the rest and residue in which Stavros has a one-third interest will be reduced pro rata by the legacy of $100,000.00.
Conclusion
I would allow the appeal. I would hear the parties as to the terms of the order to be made including the date on which Stavros is to vacate the Norwood home, and as to costs.
SULAN J: I would allow the appeal. I agree with the reasons of Gray J and the orders that he proposes.