Pogorelic v Banovich
[2007] WASC 45 (S)
•27 FEBRUARY 2007
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | POGORELIC -v- BANOVICH & ORS [2007] WASC 45 (S) |
| CORAM | : MASTER NEWNES | ||
| HEARD |
| ||
| DELIVERED | : 27 FEBRUARY 2007 | ||
| SUPPLEMENTARY | |||
| DECISION | : 3 APRIL 2007 | ||
| FILE NO/S |
| ||
| MATTER |
|
and
The Will of ANTON POGORELIC late of 47 Haig
Road, Attadale, Western Australia (Dec)
| BETWEEN | : GOLDI POGORELIC |
Plaintiff
AND
MILOVAN ALEXANDER BANOVICH
First Defendant
ELIZABETH MARWICK
Second Defendant
VANESSA KATHERINE POGORELIC
Third Defendant
Catchwords:
Succession - Application by widow under Inheritance (Family and Dependants Provision) Act 1972 (WA) - Settling of orders - Whether provision for maintenance should date from death of testator or date of trial - Date of payment of lump sum payment - Turns on own facts
Legislation:
Nil
Result:
Final orders made
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr J C Curthoys |
| First Defendant | : | Ms H K Nore |
| Second Defendant | : | Dr P R MacMillan |
| Third Defendant | : | Dr P R MacMillan |
Solicitors:
| Plaintiff | : | Frichot & Frichot |
| First Defendant | : | Cullen Babington Hughes |
| Second Defendant | : | Chan Galic |
| Third Defendant | : | Chan Galic |
Case(s) referred to in judgment(s):
Pogorelic v Banovich [2007] WASC 45
[2007] WASC 45 (S)
MASTER NEWNES
MASTER NEWNES: On 27 February 2007, I delivered reasons for decision on the application by the plaintiff under the Inheritance (Family and Dependants Provision) Act 1972 (WA) for further provision from the Estate of her late husband, Anton Pogorelic (the "testator"), who died on 14 October 2003: Pogorelic v Banovich [2007] WASC 45.
2 In my reasons I concluded (at [75]) that an appropriate provision for
the plaintiff would be a capital sum (the "capital sum") that would provide an income of $24,000 per annum, an amount of $700,000 to enable her to purchase and move to suitable accommodation, and an amount for contingencies. I said (at [76]) that I would hear the parties on the capital sum required to provide an income of $24,000 per annum and on the question of costs.
3 On the hearing of those matters and to settle final orders, a number of
matters were raised by counsel. The first was whether the plaintiff should receive the contents of the house at 47 Haig Road, Attadale (the "Haig Road property"). It was submitted by counsel on behalf of the second and third defendants that the Haig Road property contained some personal items of the testator of sentimental value to his clients. In my view, the appropriate order is that the plaintiff be entitled to the furniture and household appliances at the Haig Road property and that the Will of the testator be varied to that extent.
4 The next issue was, in effect, whether the plaintiff should be at
liberty to reside at the Haig Road property rent free until the full amount to which she is entitled under the Will, as varied by the orders of the Court, is paid to her.
5 It was submitted by counsel for the plaintiff that the plaintiff should
be able to live at the Haig Road property until she received payment in full or settlement of the sale of the Haig Road property, whichever was the earlier.
6 It was submitted on behalf of the second and third defendants that the
appropriate order is that the plaintiff should be at liberty to reside rent free at the Haig Road property until 21 days after the sum of $800,000 was paid to her. That is, the sum of $700,000 to provide alternative accommodation and a further sum of $100,000 advanced from the capital sum. It was submitted that it will be necessary for the executor to prepare the Haig Road property for sale and it was therefore appropriate that vacant possession be given to the executor for that purpose. The plaintiff
[2007] WASC 45 (S)
MASTER NEWNES
would be paid the balance of the sum due to her under the orders of the
Court upon the settlement of the sale of the Haig Road property.7 What is to happen to the Haig Road property pending its sale may
well properly be a matter in the first instance for the executor, but the parties have sought to have this issue resolved now and, in the unfortunate circumstance that the relationship between the plaintiff and the second and third defendants has obviously broken down completely, it seems inevitable that it will have to be resolved at some stage.
8 On neither view of the matter is it contemplated that the plaintiff will
necessarily have a right to reside in the Haig Road property until the settlement of the sale of it. The plaintiff says she should have the right to do so until the settlement of the sale unless the full amount due to her is paid in the meantime, and the second and third defendants say the plaintiff should have the right to do so until 21 days after the sum of $800,000 is paid to her, so the property can then be prepared for sale.
9 There is no perfect solution to this issue. In the end, I consider the
appropriate orders are essentially those proposed by the second and third defendants, namely, that the plaintiff be at liberty to reside at the Haig Road property rent free until 28 days (rather than the 21 days proposed) after the payment to her of the sum of $800,000, that the balance of the sum due to her be paid upon settlement of the sale of the Haig Road property, and the parties have liberty to apply in the event that the balance of the sum is not paid within six months of the date of these orders.
10 The amount of the capital sum required to provide an income of
$24,000 per annum was agreed between the parties, subject to the determination of the appropriate interest rate. Two interest rates were advanced, the first by the plaintiff, being the rate of 5.69 per cent per annum referred to in the evidence of the plaintiff's expert witness, Mr Walewski, and the other by the second and third defendants, being the rate of 6.69 per cent referred to in the evidence of the second and third defendant's expert, Mr Herbert.
11 It was submitted on behalf of the plaintiff that the more conservative
rate of interest referred to by Mr Walewski was appropriate, as the plaintiff was reliant upon the maintenance of the capital sum in order to provide her with an income for her lifetime and therefore was entitled to invest it in a manner which was free from risk. The higher rate of interest referred to by Mr Herbert inevitably involved a higher degree of risk. It was also submitted that Mr Herbert did not have the relevant expertise to
[2007] WASC 45 (S)
MASTER NEWNES
give an opinion as to an appropriate interest rate at which funds of this
nature should be invested.12 It was submitted on behalf of the second and third defendants that the
rate of interest referred to by Mr Walewski was, commercially, unrealistically low. The rate referred to by Mr Herbert was itself a conservative rate for the investment of retirement funds and it was therefore an appropriate rate in the present case.
13 In my view, it is appropriate to take the more conservative rate of
5.69 per cent referred to by Mr Walewski. The plaintiff will be dependant upon the capital sum remaining intact in order to provide her with the income necessary for her proper maintenance. In those circumstances, the plaintiff is entitled to invest the moneys in an investment which will ensure that it is not put at risk and where she can be assured that the income will be maintained.
14 There was a further issue concerning the date from which the income
was to be taken to be payable to the plaintiff for the purposes of calculating the capital sum, namely whether it should be taken to be payable from the date of the testator's death or from the date the orders were made. That has a significant effect on the amount of the capital sum.
15 It was submitted on behalf of the plaintiff that the income should be
taken to be payable from the date of the testator's death. To do otherwise would be to assume that the plaintiff has had an adequate income for the past three years, when clearly she has not. It would be an incongruous result if it were found that adequate provision had not been made from the date of the death of the testator but that that position should be remedied only from the date the orders were made.
16 It was submitted on behalf of the second and third defendants that the
provision of income should be calculated from the date upon which the orders were made. While the adequacy of the provision made under the testator's Will was determined as at the testator's death, the assessment of the plaintiff's needs were made as at the date of judgment. The provision of the income should therefore run from the latter date. Any backdating of the income to the date of the testator's death would simply amount to a windfall of a lump sum to the plaintiff. Counsel submitted that there was no evidence that the plaintiff had had to borrow money to live over that period or had incurred other liabilities for which she needed to be compensated.
[2007] WASC 45 (S)
MASTER NEWNES
17 I do not accept the plaintiff's argument that the income should be
taken to be payable from the date of the testator's death. The assessment of the plaintiff's needs was as at the date of trial. No assessment was made as to what would have been necessary to make an adequate provision over the period between the testator's death and trial and, quite properly, the evidence was not directed to that. And it cannot be assumed that it would be the same as the provision assessed at trial. In the interim, for instance, the plaintiff had received a widow's pension and possibly other benefits ancillary to that. The income assessed as necessary for her future maintenance excludes any such entitlement. Moreover, the provision for her maintenance is just that; it is not compensation for any diminution that may have occurred in her standard of living in the meantime.
18 I should add that, to the extent it may be relevant, it does not appear
that the plaintiff's lifestyle has been substantially reduced over the period of some three years since the testator's death. Although the plaintiff said in evidence that she had tried to minimise her expenditure, the increase of more than 20 per cent in her expenditure in the period February 2004 and November 2006, and total expenses of $405.75 per week (or an annualised amount of some $21,000) as at November 2006, suggests that her attempts at minimisation have had only limited success.
19 It is the case, however, that the bank deposits of the plaintiff were
reduced from some $48,000 to $29,000 between February 2004 and November 2006. The plaintiff said she used those savings to meet expenses that could not be met from her pension. On precisely what sort of expenses the funds were used was not disclosed.
20 I consider that in the circumstances the appropriate course is to make
provision for maintenance effective from the date upon which reasons for judgment were given on 27 February 2007. On the figures agreed between the parties, based on an interest rate of 5.69 per cent that requires a capital sum of $457,630.
21 I indicated in my reasons for decision that I consider there should be
some provision for contingencies and I would allow a sum of $20,000 in respect of that. That would restore the plaintiff's savings to an amount of some $48,000, to guard her against the vicissitudes of life that cannot otherwise be met from her income. The capital sum and the sum for contingencies would therefore amount to a total of $477,630.
[2007] WASC 45 (S)
MASTER NEWNES
22 There was an issue between the parties as to whether the amounts
payable to the plaintiff should bear interest from 20 April 2007, as contended by the plaintiff, or from 21 June 2007, as contended by the second and third defendants. I consider they should bear interest under s 143A of the Administration Act 1903 (WA) from 20 April 2007 until payment.
23 There was also an issue between the parties as to the costs and
disbursements incurred by the parties in the proceedings. The plaintiff sought an order that the limit under item 11 of the prescribed scale of costs be removed pursuant to s 215(2) of the Legal Practice Act 2003 (WA). The second and third defendants sought instead an order that item 16 of the scale be substituted for item 11, so that the higher limit under item 16 would be applicable. Neither party contended that the limit under item 11 was appropriate.
24 There was no evidence before me as to the costs incurred by the
parties in the proceedings and no submissions were directed to that. I accept, however, that having regard to the nature of the hearing and the fact that it extended into three sitting days, on taxation the costs of each party should not be subject to the limit under item 11. I do not, however, consider that it is appropriate to import item 16, which is concerned with the costs of getting up in an action, into the taxation of the costs. The proper course, in my view, is to remove the limit in item 11. It will be for the parties to satisfy the taxing officer as to the amount of the costs that should be allowed on taxation.
25 The plaintiff also sought an order that the parties each be allowed the
costs of expert evidence as a disbursement. That was opposed by the second and third defendants who submitted that the costs of the expert evidence should be taxed in the normal way. The amount allowed would therefore be a matter for the taxing officer. I accept that submission. I do not have before me the costs of the respective experts and, in my view, it is a matter properly left to the taxing officer.
I would therefore propose to make the orders to the following effect:
"1. The orders made on 7 October 2004 be and are
discharged.
2. The Will of the testator be varied by:
(a) deleting clauses 2, 3, 4 and 5;
[2007] WASC 45 (S)
MASTER NEWNES
(b) inserting in lieu thereof a new clause 2 providing that: "I give to my wife Goldi Pogorelic:
2.1 the sum of $700,000 2.2 the further sum of $477,630 2.3 the furniture and household appliances at
47 Haig Road, Attadale."3. Goldi Pogorelic be at liberty to reside at 47 Haig Road, Attadale on a rent free basis until 28 days after payment to her of the sum of $800,000 in part payment of the sums payable under paragraph 2(b)2.1 and paragraph 2(b)2.2 above.
4. The balance of the sums referred to in paragraph 2(b)2.1 and paragraph 2(b)2.2 above be paid to Goldi Pogorelic on settlement of the sale of 47 Haig Road, Attadale.
5. The sums referred to in paragraph 2(b)2.1 and paragraph 2(b)2.2 above bear interest under s 143A of the Administration Act 1903 (WA) on the balance outstanding from time to time at the rate of 5 per centum per annum from 20 April 2007 until payment.
6. A certified copy of this order be included in the probate and that the first defendant do produce the grant to the Court for that purpose.
7. The limit under Item 11 of the Supreme Court Scale of Costs be removed, pursuant to s 215(2) of the Legal Practice Act 2003 (WA).
8. The costs of all parties be taxed, if not agreed, and be paid by the executor out of the residue of the Estate.
9. The parties have liberty to apply if the sums referred to in paragraph 2(b)2.1 and paragraph 2(b) 2.2 above have not been paid in full by the expiration of six months from the date of these orders.
10. The parties have liberty to apply generally."
[2007] WASC 45 (S)
MASTER NEWNES
I will hear the parties on the precise form of the orders.
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