Stojanov v Stojanov
[2021] VCC 1991
•13 December 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| FAMILY PROPERTY LIST |
Case No. CI-20-01900
IN THE MATTER of Part IV of the Administration and Probate Act 1958
and
IN THE MATTER of the Will and Estate of LILJANA STOJANOVA (deceased)
| NADINE STOJANOV | Plaintiff | |
| v | ||
| DAVID STOJANOV | Defendant | |
| (who is sued as executor of the Will and Estate of the above-named deceased) | ||
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JUDGE: | HER HONOUR JUDGE CLAYTON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 and 17 November 2021 | |
DATE OF JUDGMENT: | 13 December 2021 | |
CASE MAY BE CITED AS: | Stojanov v Stojanov | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1991 | |
REASONS FOR JUDGMENT
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Subject:TESTATOR’S FAMILY MAINTENANCE
Catchwords: Application for further provision – adult daughter – whether adequate provision made for proper maintenance and support
Legislation Cited: Administration and Probate Act 1958
Cases Cited:Herszlikowicz v Czarny, [2005] VSC 354; Brinkkotter v Pelling [2006] VSC 101; Baulch v State Trustees Limited [2008] VSC 22; Leyden v McVeigh [2009] VSC 164; Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494; Blore v Lang (1960) 104 CLR 124; Prosser v Twiss [1970] VR 225; Slack v Rogan [2013] NSWSC 522; Bosch v Perpetual Trustee Co Ltd [1938] AC 463; Walsh v Walsh [2013] NSWSC 1065; Re Marsella; Marsella v Wareham [2018] VSC 312; Firth v Reeves [2019] VSC 357; Blore v Lang [1960] HCA 73 (1960) 104 CLR 124; Jones v Smith [2016] VSCA 178; Brandon v Hanley [2014] VSC 103;
Judgment: Order that further provision be made for the plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M McKenzie | Danaher Moulton |
| For the Defendant | Mr S Newton | Anthos Advisory Pty Ltd |
HER HONOUR:
1The plaintiff makes application pursuant to Part IV of the Administration and Probate Act 1958 (“the Act”) for further provision from the estate of her mother.
Introduction
2Liljana Stojanova died on 6 February 2019, leaving a will dated 13 December 2013. She is survived by her two adult children, Nadine Stojanov and David Stojanov, the plaintiff and defendant respectively. For clarity I will refer to each of the parties by their first names in this decision.
3On 12 November 2019, Probate of the will was granted to the deceased’s executor, her son, David.
4At the trial of the proceeding, the net value of the deceased’s estate was said to be $752,858.85, comprising:
(a) a property in McKimmies Road, Lalor valued at the time of the deceased’s death at $450,000;
(b) a property in Bitola, Macedonia valued in May 2021 at approximately $60,000;
(c) the deceased’s personal estate, the current balance of which is $242,858.85.
5For reasons set out below, the actual value of the estate is likely to be something closer to $760,000.
6In addition, the deceased had a superannuation fund. The trustees of the superannuation fund determined that the benefit should be paid equally to both Nadine and David. This decision was unsuccessfully appealed by David, and both beneficiaries have now received approximately $71,000 from the fund.
7If the estate was to be distributed in accordance with the will, the distribution as between the two siblings would be as follows:
(a) David would receive the deceased’s property at 53 Greenhill Road, Greensborough or the property which was her principal place of residence at the time of her death. The deceased sold the Greensborough property prior to her death. With the proceeds of sale she bought a new property in Bundoora in which she was residing at the time of her death. Prior to her death, she transferred the title of this property to David so it does not form part of her estate;
(b) Nadine would receive the property in Bitola, Macedonia (“the Macedonian property”);
(c) David and Nadine would receive, as tenants in common in equal shares, the property at 23/68-92 McKimmies Road, Lalor (“the Lalor property”);
(d) David would receive the residue of the estate.
8At the trial, there was a dispute between the parties as to whether the Macedonian property formed part of the deceased’s estate. This was in part due to the vague history of the ownership of the property and the fact that Nadine had sworn in her first affidavit that her father had left this property to her in his will. In the defendant’s inventory of assets and liabilities dated 20 October 2019, the Bitola property was not listed. However, the Macedonian property was listed in the defendant’s subsequent inventory of assets and liabilities dated 15 November 2021 with a valuation of $60,000. This appears to be a based on a valuation of €30,000 obtained by Macedonian property valuers. However, the exchange rate as at the date of this decision is approximately one Euro to $1.56 AUD, which means that the Macedonian property is worth about $47,000 based on a €30,000 valuation. At the trial, the plaintiff sought to relinquish the Macedonian property on the basis that, as executor, David’s conduct had caused confusion and difficulty and Nadine could not be satisfied that she would ever be able to obtain a transfer of that property to her, nor be able to sell that property and derive the benefit of it. Nadine submitted that the Court should consider that property as going to the benefit of David for the purposes of assessing Nadine’s claim.
9At the time of death, the deceased’s bank accounts contained a total of $263,001.78.
10Prior to the deceased’s death, she had been receiving monthly rent of $1,433.49 for the Lalor property. It appears that rent continued to be paid into the deceased’s bank account after her death until the bank account was closed some months later. At that point the real estate agent contacted David seeking the details of a bank account into which to pay the rent. David provided a personal bank account. The rent was then paid into his personal bank account until August 2020 when the rent commenced being paid directly into the trust account of David’s then solicitor. On 17 August 2020, David transferred to his solicitor’s trust account the amount of $11,468.00, comprising eight months of rent that had been paid into his personal bank account.
11There are other amounts that have been taken from the residue of the estate. Some of them may have been properly taken, but some appear to have been incorrectly assigned as costs of the estate when they were in fact David’s personal costs. For example David’s former lawyers, Christies, appear to have taken from the estate sums of money for representing David in a retail tenancy and lease dispute unconnected with the estate. David and Nadine were also in dispute in relation to the distribution from the deceased’s superannuation fund and it appears that the legal costs incurred on David’s behalf were taken from the deceased’s estate. There are other discrepancies in the solicitor trust account for the deceased’s estate which make it difficult to ascertain what exactly comprises the residue of the estate. For the purposes of this application I will assume that it is around $263,000. This was the amount at her death, and if one offsets the funeral and other expenses appropriately paid out of the estate, and the income derived from the Lalor property, this seems to represent a fair valuation.
12In this application, Nadine seeks sole possession of the Lalor property and fifty per cent of the residue of the estate. At trial, Nadine also sought an order that she be given one of her late father’s guitars, a silver chain with a cross on it that she believes was intended for her son, Jordan, and copies of family photograph albums.
13Two issues arise:
(a) whether the distribution fails to make adequate provision for the proper maintenance and support of Nadine;
(b) if so, what further provision should be made for her benefit by making a family provision order.
The Facts
Background
The father’s will
14Mr Dimce Stojanov died on 16 January 2013, leaving a will dated 9 July 2004. His wife, Ms Liljana Stojanov, was executor and trustee of his will. In the event that Liljana predeceased him, or died during her term as executor, he appointed David as the executor and trustee of his estate.
15The estate was distributed to Liljana for her use absolutely and beneficially, in accordance with the will.
16However, in the event that Liljana did not survive Dimce, the estate was to be distributed as follows:
(a) David would receive all property and real estate in Australia;
(b) Nadine would receive the Macedonian property; and
(c) David and Nadine would receive the residue of the estate as tenants in common in equal shares.
17It is clear that, if Nadine had a belief that the Macedonian property had been left to her by her father, that belief was incorrect, and that property was appropriately within her mother’s estate to bequeath.
Nadine’s circumstances
18Nadine was born on 1 January 1971 and is 50 years of age. She was born in Bitola, Macedonia, and migrated to Australia in or about 1973. She relies on two affidavits she has sworn in this proceeding, dated 31 July 2020 and 7 May 2021.
19Nadine married ‘Vasko’ in 1989. Her parents assisted her financially with the wedding. They had three children: Danny, born in 1989; Michael, born in 1991, and Jordan, born in 1998.
20Nadine separated from her husband when she was 30 years of age. During the course of her family court proceedings involving her former husband, Nadine received financial support from her parents by way of help with grocery bills and the costs of her children’s education.
21In March 2015, Nadine relocated from Melbourne to Hobart, Tasmania. She commenced work on a part-time basis as a legal assistant at Pantheon Legal whilst studying at the University of Tasmania. It was unclear from the evidence exactly what course she was studying. In her affidavit, she said she was studying to be a lawyer. In her oral evidence, it appears that she is studying to be a paralegal with the prospect of either converting that study towards a law degree, or commencing a law degree at some future date. In any event, at trial, Nadine said that she is currently not studying.
22Nadine said in her affidavit that she was earning $4,074, which included a Centrelink study allowance of $1,074. This equates to around $940 a week. However, at trial, she said that she had ceased working as a paralegal for Pantheon Legal in about July or August 2021 because of her neck condition, and now works between 8 and 10 hours a week for a broker. She earns around $300 a week from her employment and otherwise relies on Centrelink JobSeeker benefits of $670 a fortnight. Her earnings vary from week to week, and she estimated that she earned an average of around $3000 per month.
23In her affidavit sworn 31 July 2021, Nadine says her assets comprise:
(a) savings of approximately $500;
(b) home contents with a value of around $30,000.
24She has no debts and the following monthly expenditure:
(a) rent - $1,971
(b) mobile phone - $50
(c) internet - $79
(d) food and groceries - $400
(e) electricity - $200
(f) water - $13
(g) entertainment (e.g. movies, dinners out) - $50
(h) medical expenses - $100
(i) education expenses - $800
(j) clothing - $50
(k) transport costs - $30.
25Her son has moved to Tasmania to live with her in order to help her with expenses. He puts money towards rent and groceries. She says that she does not get ‘bulk billed’ for medical appointments and has to pay out of pocket for scans and other items and that these have gone up significantly in recent times. It is not clear from her material or her evidence whether the amount she attributes to monthly medical expenses is net of any Medicare reimbursement to which she may be entitled.
David’s circumstances
26David was born on 12 January 1979 and is currently 42 years of age. He relies on affidavits sworn October 2020, 11 August 2021, and two affidavits sworn 15 November 2021. He is married to Cymantha Lane and they have two children, Kobi and Mila, aged 10 and 7 respectively.
27David previously worked as a personal trainer and owns his own business, Evolve Training Systems Pty Ltd. In his first affidavit David says he earns $80,000 per annum from his employment. In his second affidavit he disclosed that he also received income from a family trust. In 2019, this was $89,982; in 2020, this was $34,371 and in 2021, this was $29,758. In that affidavit he also disclosed rental income from his properties in the total amount of $35,218 per annum. In his affidavit of 15 November 2021, David says that he and his wife “currently have no income”. I assume that he is referring only to income derived from his business, as it has largely been closed during the COVID-19 pandemic. He still receives rental income and a distribution from the family trust.
28David has the following assets:
(a) Approximately $32,000 in superannuation;
(b) $209,412.68 in his shared bank account with Cymantha;
(c) His family home in Morecroft Avenue, Croydon, valued between $750,000 - $1,000,000;
(d) A property in Arthur Street, Bundoora. He says this property is valued at $650,000;
(e) A property in Godfrey Avenue, Cranbourne East. He says this property is valued between $460,000 and $490,000;
(f) A property in Rockbank. He says this property is valued between $360,000 and $380,000;
(g) a car of unknown value.
29David has the following liabilities:
(a) Mortgage on Croydon property of $651,559.21;
(b) Mortgage on Bundoora property of approximately $468,374.10 plus yearly expenses of $31,241.82;
(c) Mortgage on Cranbourne East property of approximately $353,873.69 plus yearly expenses of $27,542.50;
(d) Mortgage on Rockbank property of approximately $307,707.65 plus yearly expenses of $19,747.22;
(e) a debt owed to the Australian Taxation Office of $71,368.29. His wife has a debt of $66,179.62;
(f) a debt owed by his business, which is operated through the Stojanov Family trust, of $72,229.68.
30David has the following monthly expenses:
(a) mortgage repayments on Croydon property - $2,891
(b) car loan repayments of $1,446 a month
(c) electricity - $571.11
(d) gas - $398.26
(e) water rates - $140.05
(f) groceries - $2,200
(g) school tuition for his two children - $1,395
(h) fuel - $205.02
(i) Telstra mobile phones - $270
(j) Telstra internet - $110
(k) grooming - $60
(l) pets - $600
(m) land tax - $229.70
(n) children’s activities/leisure - $100
(o) food, entertainment and family outings - $1,000
(p) miscellaneous expenditure such as clothes, car repairs and maintenance, Eastlink, technology, supplies and stationary, gardening - $1,000
(q) school uniform fees - $85
(r) subscriptions (Netflix, Stan, Spotify & Foxtel) - $105
(s) building insurance - $149.22
(t) council rates - $187.67.
31In his affidavit dated 15 November 2021, David says his business is currently going “through a liquidation”. He intends to sell his investment properties in Rockbank, Bundoora and Cranbourne once the liquidation has been completed.
32There is no evidence before the Court to suggest that, with the lifting of COVID-19 restrictions, David will not be able to resume full-time employment in his profession as a business manager and personal trainer.
Provisions of the Act
33Section 90A of the Act provides that an “eligible person”’ may make an application to the Court for a “family provision order”, being an order under s91 of the Act. It is uncontroversial that Nadine is an “eligible person” within the meaning of the Act.
34Section 91(2) of the Act provides that the Court must not make a family provision order in favour of a person unless satisfied that, at the time of death, the deceased had a moral duty to provide for the eligible person’s proper maintenance and support and that the distribution of the deceased’s estate fails to make adequate provision for the proper maintenance and support of the eligible person, whether by the deceased’s will (if any), the Act’s intestacy provisions, or both.[1]
[1] Section 91(2)(d) of the Act
35Section 91(4) requires the Court to take certain matters into account in determining the provision to be made by any family provision order. These matters include the degree to which the distribution of the deceased’s estate fails to make adequate provision for the proper maintenance and support of the eligible person.[2]
[2] Section 91(4)(b) of the Act
36Section 91A provides that, in making a family provision order, the Court must have regard to certain mandatory matters and may have regard to certain discretionary factors.[3]
[3] The mandatory factors are set out in s91A(1) and the discretionary factors are set out in s91A(2) of the Act
37The Court must have regard to the deceased’s will, any evidence of the deceased’s reasons for making the dispositions in the will, and any other evidence of the deceased’s intentions in relation to providing for the eligible person.
38The Court may have regard to various other matters which are set out at s91A(2) and which are dealt with in greater detail below.
Relevant legal principles
Mandatory factors – section 91A(1) of the Act
39The courts accept that a person has a moral duty, at a minimum, to consider making provision for surviving children.[4]
[4] See Herszlikowicz v Czarny [2005] VSC 354; Brinkkotter v Pelling [2006] VSC 101; Baulch v State Trustees Limited [2008] VSC 22, and Leyden v McVeigh [2009] VSC 164
40In making the assessment as to the testator’s responsibility to provide, the Court must consider what matters were known, ought to have been known, or were reasonably foreseeable to the deceased at the time of death.[5] The assessment as to what provision the Court should make should be determined at the date of trial, taking into account the applicant’s position at that time.[6]
[5] Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494 at 507-8 (Dixon CJ)
[6]Ibid; see also Blore v Lang (1960) 104 CLR 124 at 130 (Dixon CJ); Prosser v Twiss [1970] VR 225 at 232 (Lush J); Slack v Rogan [2013] NSWSC 522 at paragraph [127] (White J)
41Famously, in an early decision, Bosch v Perpetual Trustee Co Ltd,[7] Lord Romer, giving the advice of the Privy Council, said (at 478-9):
“Their Lordships agree that in every case the court must place itself in the position of the testator and consider what he ought to have done in all the circumstances of the case, treating the testator for that purpose as a wise and just, rather than a fond and foolish, husband or father… The Act is …designed to enforce the moral obligation of a testator to use his testamentary powers for the purpose of making proper and adequate provision after his death for the support of his wife and children having regard to his means, to the means and deserts of the several claimants, and to the relative urgency of the various moral claims upon his bounty. The provision which the court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his widow and children had he been fully aware of all the relevant circumstances.”
[7] [1938] AC 463
42That moral obligation is determined by what testamentary provision a “wise and just testator” ought to consider their duty to make, in all the circumstances.
43In Walsh v Walsh,[8] Hallen J helpfully summarised a number of general principles in relation to claims made by adult children:
(a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed.
(b) It is impossible to describe in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life, such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set his, or her, children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation.
(c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child’s life and into retirement, especially when there is someone else, such as a spouse, who has a primary obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times, and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise, they would be left destitute.
(d) If the applicant has an obligation to support others, such as a parent’s obligation to support a dependent child, that will be a relevant factor in determining what is an appropriate provision for the maintenance of the applicant. But the Act does not permit orders to be made to provide for the support of third persons that the applicant, however reasonably, wishes to support, where there is no obligation of the deceased to support such persons.
(e) There is no need for an applicant adult child to show some special need or some special claim.
(f) The adult child’s lack of reserves to meet demands, particularly of ill health, which become more likely with advancing years, is a relevant consideration. Likewise, the need for financial security and a fund to protect against the ordinary vicissitudes of life, is relevant. In addition, if the applicant is unable to earn, or has a limited means of earning, an income, this could give rise to an increased call on the estate of the deceased.
(g) The applicant has the onus of satisfying the Court, on the balance of probabilities, of the justification for the claim.
(h) Although some may hold the view that equality between children requires that “adequate provision” not discriminate between children according to gender, character, conduct or financial and material circumstances, the Act is not consistent with that view. To the contrary, the Act specifically identifies, as matters that may be taken into consideration, individual conduct, circumstances, financial resources, including earning capacity, and financial needs, in the Court’s determination of an applicant’s case.
(i) There is no obligation on a parent to equalise distributions made to his, or her, children so that each child receive benefits on the same scale as the other. There is no standard measure for the extent of the duty owed by a parent to a child.
[8] [2013] NSWSC 1065 at paragraph [121] (citations omitted)
44The Act no longer allows a Court to refuse an application on the basis of so-called “disentitling conduct”. Nevertheless, character and conduct remain relevant to the extent that they alter the responsibility of the testator to make provision for the applicant.
45After the father’s death, there was a period of at least two years where Nadine did not see or speak to her mother. She describes this as a consequence of needing “time and space to grieve my father’s passing. I lost contact with my Mother and David at this time – they didn’t seem to understand that I also needed time to grieve over my father.” But goes on to say that she did not know why her mother and brother would not see or speak to her and that she felt “hurt and heartbroken” and “alone and abandoned”. She then moved to Hobart and says that this “allowed me to distance myself somewhat from the hurt and anguish I was feeling as a result of the breakdown of my relationship with my Mother and David”. Later in 2015, her mother initiated contact with her to discuss “the overseas property”. No other details about this contact were disclosed.
46Nadine says that over the next three years she would catch up with her mother when she was in Melbourne. It is not clear how often this occurred. When her mother sold her house and purchased the Bundoora property which she transferred to David, Nadine says that “I gave my Mother some space after the sale and purchase of the properties – she was undergoing cancer treatment at the time”. She says that her mother became upset with her in September 2018. Nadine knew that her mother had been diagnosed with cancer but says that “she seemed reasonably well until this point in time”. Nadine next contacted her mother in November 2018 to get the name of her (Nadine’s) former doctor. This was their last conversation prior to her mother’s admission to hospital. Nadine was not aware that her mother’s condition had deteriorated rapidly.
47Upon becoming aware of her mother’s condition, Nadine came to Melbourne and spent about a month attending to her mother in hospital prior to her death. During this time, she says that her mother requested that she and David be jointly appointed power of attorney.
48A family friend, Lena Kuzmanov, also swore an affidavit and attended for cross-examination. She described the deceased as her best friend. Ms Kuzmanov said that she had known Nadine since she came to Australia as an infant, and had attended Nadine’s engagement and wedding.
49She said that after her father’s death, Nadine had barely visited the deceased, attending only on one occasion at the Bundoora house and seeing her on a single other occasion when they met at a local shopping centre. She said the deceased was very upset about the state of her relationship with Nadine, that Nadine never called her to ask after her health, even after her cancer diagnosis, and that she only ever made contact when she wanted money.
50Nadine denies these allegations and further says that she had little to do with Ms Kuzmanov whilst growing up and doubts that Ms Kuzmanov would have knowledge about her relationship with her mother.
51David also says that Nadine had a very difficult and strained relationship with both parents, that after Nadine left home, family events would often end in fights between Nadine and their parents over money, and that she was constantly asking them for money to recover jewellery she had pawned, make mortgage payments and cover her living expenses. He says there were frequent periods where she did not speak to her parents for weeks and that her father did not want Nadine present when he was terminally ill, although in fact she was present. He says that Nadine cut off all contact for six years after her father’s death. He says that, apart from a brief attempt to resume contact made by the deceased in 2018, Nadine had no contact with the deceased until about six weeks prior to her death.
52Nadine denies these allegations.
53The evidence demonstrates that there was a lengthy period of at least two years when Nadine had no contact at all with her mother. Subsequently, she had limited contact. Although Nadine may have sought money from time to time, and admits receiving financial assistance during her separation from her husband, it seems unlikely that with such limited contact, there was a “constant” request for money. If there had been frequent requests by Nadine for money, it is likely that these had occurred prior to the more limited contact between Nadine and the deceased following the father’s death.
54At the time of her death, the deceased would, or should have been aware that Nadine was a person without any property, living on her own with few assets and some historical health issues. Although for some years they did not have personal contact or what could be considered a close relationship, this is relevant to the extent of the provision to Nadine. None of the evidence before the Court negates the moral duty that the deceased had to provide for Nadine.
55The Act requires the Court to consider what is “adequate” for “proper” maintenance. The distinction between the words was described by Lord Romer in Bosch v Perpetual Trustee Co Ltd[9] in an oft cited passage:
“The first thing to be noticed is that the powers given to the court only arise when any of the persons mentioned is left without adequate provision for his or her proper maintenance, which word will be used in this judgment where necessary as including education and advancement. 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 often can 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’.
...
The amount to be provided is not to be measured solely by the need of maintenance. It would be so if the court were concerned merely with adequacy. But the court has to consider what is proper maintenance, and therefore the property left by the testator has to be taken into consideration.”
[9] (Supra) at 476-477
56McMillan J observed in Re Marsella[10] that “‘proper maintenance and support’ means provision from the estate not simply to alleviate poverty, but also to take into account the vicissitudes of life”.
[10] [2018] VSC 312 at paragraph [82]
57However, as set out by John Dixon J in Firth v Reeves,[11] a case involving an application for further provision under the Act brought by an adult daughter, “[c]oncepts of ‘fairness’ or ‘equality’ of treatment between beneficiaries have little role to play in determining the jurisdictional question, and equality of treatment is not a necessary element of testamentary duty”.
[11] [2019] VSC 357 at paragraph [72]
58The position was explained by Fullagar and Menzies JJ in Blore v Lang:[12]
“The measure to be applied is not what has been given to the one, but what the other needs for his or her proper maintenance, giving due regard to all the circumstances of the case. The Testator’s Family Maintenance Act is legislation for remedying, within such limits as a wide discretion would set, breaches of a testator's moral duty to make adequate provision for the proper maintenance of his family — not for the making of what may appear to the court to be a fair distribution of a deceased person's estate among the members of his family. ... Equality is not something to be achieved by the application of the Act, although in some cases equality may set a limit to the order to be made — for instance, where there is not enough to provide proper maintenance for all entitled to consideration whose need is the same.”
[12] [1960] HCA 73 (1960) 104 CLR 124 at 135
59In Jones v Smith,[13] Ferguson JA (as she then was) set out that “[t]here is no requirement that parents treat their children equally”. Her Honour continued:
“Indeed, it may be difficult for an adult child in a sound financial position to establish the jurisdictional requirements. The concept of ‘need’ is relevant when considering whether the testator has made adequate provision for the proper maintenance and support of any claimant. However, ‘need’ is a relative concept and must be considered in all the circumstances of the case. Adult children did not have to establish some special need or circumstances before relief would be granted.”[14]
[13] [2016] VSCA 178 at paragraph [38]
[14] Ibid (citations omitted)
Evidence of the deceased’s reasons for making the disposition in the will and any other evidence of the deceased’s intentions in relation to providing for Nadine
60Nadine says in her affidavit that in about 1996 her parents discussed their wills with her. At that time David was 17, and she was married and owned two houses. They proposed leaving their house to David and leaving their “overseas assets” to her. She agreed as “I had two properties already and thought this was a fair arrangement given my age and asset position and David’s age and asset position”. It is unclear whether the “overseas assets” ever consisted of anything more than the Macedonian property.
61The father’s will maintained this agreed arrangement and left the residue to both parties equally. The deceased’s will changed the distribution from the father’s will to leave the residue entirely to David. There is no evidence that the deceased discussed this with either of her children. Obviously, the asset position of both Nadine and David changed significantly between 1996 and the date of making the will in 2013.
62By 2013, Nadine was divorced, owned no property and had no significant assets. David had married, was working full time and operating his own business and either owned or was on his way to owning a substantial portfolio of properties.
63The deceased’s intention to leave David the property in which she was living at the time of her death was realised prior to her death by her transfer of the title of the Bundoora property to him.
64David says he recalls Nadine telling both her parents “numerous times” that she did not want any of the Australian property and that she wanted the Macedonian property. This seems unlikely, especially given his evidence that she had very limited contact with either of her parents and that contact consisted largely of her asking them for money.
65Ms Kuzmanov said that the deceased told her the terms of the will and that the deceased “knew that when she died Nadine was going to be trouble”. Ms Kuzmanov said that the deceased was very upset by the status of her relationship with Nadine and the fact that Nadine rarely visited or called and “would only contact her parents when she needed money”. She gave evidence that the deceased had told her that “the property in Lalor is half-half and that her superannuation will go half-half, she’s got the money left over from selling the Greensborough property would go to David.” This appears to refer to the residue. However, Ms Kuzmanov said that a couple of days before she died, the deceased “begged” her to “get them to senses, especially Nadia (Nadine), because she said to me, ‘I know she’s going to be trouble’, to come to an understanding so they won’t come to this, to go to court, and she asked me, ‘Tell David to give money to the boys’ which means Nadia’s boys, and I said that to David and he said ‘No worries’. He said ‘I will do that’.”
66She gave evidence that the deceased had asked her to tell David to give the boys $30,000 each, and that the deceased “just wanted them to be close”. She said she passed this along to David and David told her that things were fine between him and Nadine’s sons.
67The evidence demonstrates that the deceased intended to provide more for her son than for her daughter. Even if the deceased had believed that the Macedonian property and the Bundoora property were of equivalent value, which seems highly unlikely, she left the not-insignificant residue of her estate solely to David. Her will provides for a different distribution than the father’s will, which left the residue to both children equally. This demonstrates that she had carefully considered the dispositions in her will and they did not merely reflect the content of a long-ago conversation with Nadine when Nadine was in a significantly better asset position than David.
68It can be inferred that this was because of her particularly close relationship with David, and the fact that he provided significant support to her during her life. However, it is clear that the deceased considered that she did have an obligation to make provision for Nadine and it is likely that the deceased also wanted to ensure that Nadine’s sons were taken care of by David.
Discretionary factors – section 91A(2) of the Act
The nature of the relationship between Nadine and the deceased and David and the deceased
69At the trial of the proceeding, the net value of the deceased’s estate was about $760,000.
70Nadine seeks a family provision order providing for the full benefit of the Lalor property and 50 per cent of the residue. This would reduce the share paid to David by approximately $628,500.[15]
[15] Section 91A(2)(l) of the Act
71David’s financial circumstances are significantly better than Nadine’s.
72Nadine is presently 50 years of age.[16] She is single and has no dependents and no other person has any liability to maintain her.[17]
[16] Section 91A(2)(f) of the Act
[17] Section 91A(2)(j) of the Act
73The deceased did not owe any specific obligations to any person.[18] During her life the deceased did occasionally provide support to Nadine, by helping with mortgage repayments and groceries during the period of Nadine’s Family Court proceedings. The deceased was not financially maintaining Nadine at the time of her death.[19]
[18] Section 91A(2)(b) of the Act
[19] Section 91A(2)(i) of the Act
74As set out above, Nadine and the deceased did not have a great deal of contact in the years since the death of the father, although Nadine was in attendance for the last month of the deceased’s life.
75In contrast, David had a close relationship with his mother throughout his life. He visited her at least three times a week, undertook various tasks for her, including mowing her lawn, and provided significant support to her during her illness.
Financial resources, earning capacity and financial needs of the parties
76The financial resources and needs of both parties are set out above.
77David submits that he has a competing need as he has a wife and two dependent children and his ability to earn an income from his business has been significantly impeded by the COVID-19 pandemic. Although he has substantial assets, he says he also has significant debts and liabilities and that his business is going through a liquidation.
78There is nothing to suggest that David has any impediment to his ability to earn an income, whether it is in his occupation as a personal trainer or from other endeavours. Aside from the considerable stress caused by the pandemic and its impact on his business, as well as the stress associated with this court case, he is a fit and healthy man.
79His affidavit material and his answers in cross-examination demonstrated a lack of candour with the Court which led me to consider his evidence as to his financial position was unreliable.
80For example he did not disclose all his income, including the rental income from his various properties and significant income from a family trust until these issues were raised in Nadine’s reply affidavit, despite putting into evidence his liabilities and debts.
81He provided valuations of his properties that would appear to be on the lower end of the spectrum, given the purported modest increase over purchase price despite the real estate boom underway in Melbourne. The two properties from which he receives rent are, on his evidence, running at a loss – the cost of maintaining the properties far exceeding the rent he receives. There would seem to be no purpose in maintaining such properties unless there was a significant capital growth, to make up for the year-on-year loss he is realising. For a person with three investment properties, as well a family home, he professed a lack of awareness of the market value of those properties which was difficult to accept.
82Despite the picture he painted of his dire financial situation, he has significant assets and resources and an intact earning capacity of at least $80,000 per annum. He has also received a payment in the order of $71,000 from the deceased’s superannuation fund and receives payment from a family trust.
83Nadine has the $71,000 she received from her mother’s superannuation fund. She otherwise has no assets other than household contents, no real property, and modest savings of a few hundred dollars. She has an earning capacity, but, given her age and employment history, it is unlikely to exceed her earnings at the time she swore her first affidavit of approximately $56,000 per annum.
Any physical, mental or intellectual disability of the parties
84In 1993, 1996 and 1997, Nadine was apparently diagnosed with cervical cancer and low-grade leukaemia. No other evidence was before the Court in relation to either of these conditions and it appears that she has made a full recovery and has no residual medical issues relating to cancer.
85Nadine tendered a CT scan dated 11 August 2021 which was undertaken because of sudden onset of severe headache two-and-a-half weeks prior. The CT scan showed no abnormality and no evidence of haemorrhage, infarction or lesion.
86Nadine said in her affidavit material that she had had recent concerning blood test results which might indicate motor neurone disease, but no further evidence was before the Court in relation to this and I give this no weight.
87She also tendered an MRI report dated 18 October 2021. This shows a severe cervical spinal spondylosis. Spondylosis refers to degenerative conditions of the spine, including osteoarthritis, which are typically age related and can cause pain. Nadine says she has significant pain from her neck and is awaiting specialist consultation for further diagnosis, prognosis and treatment. In the absence of any other medical material, including any treating doctor’s records or report, it is impossible to know whether this condition is likely to materially affect her ability to pursue her studies or to continue her employment. It is impossible to know whether this is a temporary aggravation of pre-existing degenerative disease which will resolve with time, medication or treatment, or whether it will progress and cause significant disability.
88As the plaintiff in this matter, it is her obligation to establish to the Court’s satisfaction that her circumstances are such as to create a need. There is insufficient evidence to be satisfied that there is any impediment to Nadine resuming her studies or returning to full-time employment.
Any contribution by Nadine to the estate or the welfare of the deceased or family
89There is no suggestion that Nadine contributed to the estate. She says she made some appointments for the deceased to see a naturopath when the deceased was diagnosed with cancer, and she attended at the hospital for the final month of the deceased’s life. These are matters to be considered but do not weigh heavily. David provided significant support and care to the deceased over the years.
90Nadine says that she financially supported David when he was “kicked out” of home in his teens and lived with her. This is disputed by David, who says he was never kicked out of home. If there was a brief period when David stayed with his sister, it is unlikely to have amounted to a significant contribution to the family finances or could be considered to have contributed to the estate.
Benefits previously given by the deceased to Nadine and to David
91The deceased and her husband paid for half of the deceased’s wedding. They provided some financial support for Nadine when she was going through a divorce. She denies that her parents contributed to the purchase of her marital home. She denies that she received a car or cars as gifts from her parents. She also denies “frequently” discussing money with her parents or her mother, or obtaining gifts of several thousand dollars at a time from the deceased. She was not cross-examined on this and she did receive any sums of money from the deceased, there is no evidence that such gifts were frequent or substantial.
92David received the following gifts from the deceased during her lifetime:
(a) The sum of $35,000 to assist him with the purchase of the Croydon property;
(b) The Bundoora property which the deceased bought for $600,000 in 2017 and transferred to David upon purchase;
(c) $125,000 gifted to David on 31 October 2018.
The character and conduct of the eligible person or any other person
93The parties have each attempted to portray the other’s relationship to the deceased, attitude and conduct as poor. Nadine says that she did spend time with her mother and remained in contact across the years “and particularly through Dad’s illness and palliative care”. In comparison, she says that David “spent very little time with our mother” when she was in hospital prior to her death and did not “prioritise seeing her on the morning that she died, despite being given reasonable notice that my mother was likely to pass away that day”. She says David is aggressive and has had “anger issues for as long as I have known him”, as well as drug issues which caused him to be kicked out of home by their father. She says that the deceased “would have agreed to anything David asked of her to keep the peace”.
94This is in stark contrast to David’s evidence that he was extremely close to his mother, saw her on average three times a week, despite living about 45 minutes away, and provided support to her during her illness, including taking her to many of her medical appointments.
95Ms Kuzmanov suggested that it was she who took the deceased to many of her medical appointments, but that David would do it when she was not available, or would collect the deceased if Ms Kuzmanov was unable to stay until the end of the appointment. Ms Kuzmanov supported David’s version of their respective relationships with the deceased.
96In contrast to Nadine’s evidence that she generally maintained contact with her mother and had a good relationship with her, David says that Nadine had little contact with her mother from the early 2000s, and that she only started seeing the deceased again shortly before her death. This was despite an attempt by the deceased to “reach out” to Nadine in 2018, which effort resulted in a further argument. David also says that he bought his mother a new car when her car was written off which was “one of my proudest moments”. He helped her move when she sold her house, arranged removalists and took a week off work to sort through the house and help with the packing. He also took her shopping for white goods and furniture.
97After consideration of the affidavit material and viva voce evidence from all the witnesses, the Court has formed the following views:
(a) Nadine presented her oral evidence in a straightforward manner and made appropriate concessions, for example in relation to her capacity to meet mortgage repayments and to purchase property. However, her affidavit material tends to put a favourable ‘spin’ on events that does not reflect reality. One example is her characterisation of the period during which she did not see her mother as “giving her mother space” after the move and cancer diagnosis, when it is more likely that they were simply not on speaking terms. Her evidence in relation to David’s relationship with his mother is not accepted. The evidence that she presented to establish the closeness of her own relationship with the deceased is confined to specific incidents – a single visit to a shopping centre together when photographs were taken, an occasion when her grandson saw the deceased and played with a guitar, an occasion when she recommended an alternative health therapy for her mother – which rather suggests that these occasions are remembered and recorded because they were relatively rare. She maintained a relationship with her mother that was characterised by periods of limited or no contact and periods of intermittent or infrequent contact. She did not provide regular emotional or other support to the deceased;
(b) David’s oral evidence was marked by an apparent degree of ignorance and a lack of knowledge of financial affairs that is difficult to accept from a man who maintains a significant property portfolio and runs his own business. For example when taken to evidence that payments for his own personal legal bills had been taken from the residue of his mother’s estate, held in the trust account of his solicitors, he repeatedly said he knew nothing about that and had not authorised any such payments. He professed a lack of knowledge of the property market that was difficult to accept. His conduct as executor of the will was deficient in areas. He failed to ensure that income from the Lalor property was paid into the estate rather than into his own bank account – a problem that was subsequently rectified. He failed to provide proper information in relation to the title to the Macedonian property until the trial, notwithstanding that there were significant delays in identifying the title due to COVID-19 and other matters. He relied on his inexperience as an executor and reliance on his solicitors to explain these deficits. His lack of candour in his original affidavit and his professed ignorance in Court lead me to treat his evidence as to his apparently dire financial position with some caution. The Court accepts his evidence as to his relationship with the deceased;
(c) Ms Kuzmanov had become involved in the family affairs due to her close relationship to the deceased. She clearly has a poor opinion of Nadine, no doubt informed in part from what she was told by the deceased, and in part from her own observations. The deceased may well have told Ms Kuzmanov that Nadine never called her except to ask for money. That does establish the truth of the statement. Ms Kuzmanov was a feisty witness, but gave her evidence honestly believing it to be true.
98It was not submitted by David that the deceased and Nadine were estranged, rather that they had an extended period in which they did not speak. Despite that, there were occasions before her death when Nadine did both see and speak with her mother and they maintained a relationship of mother and daughter. The deceased appointed both her children as medical power of attorney at the end of her life.
99As a daughter, Nadine has a strong claim on her mother’s estate.
100This is a relatively small estate. A significant reason that the estate is relatively small is because of the gifts made by the deceased to David during her lifetime, which amount to something around $760,000. The remaining estate has a value of around that same amount, $763,000, which must then necessarily be depleted upon sale of the Lalor property for payment of capital gains tax, as well as transaction costs and costs associated with litigation. Plaintiff’s counsel, with whom the defendant concurred, estimates the transaction costs and tax associated with the Lalor property in the amount of $50,000. Of the estimated $760,000, Nadine stands to get about $200,000 from the sale of the Lalor property and an amount of around $47,000 from the Bitola property (if it can be sold in the Macedonian property market). David stands to get around $463,000.
101In light of the size of the estate and the financial needs of the plaintiff, the provision made to Nadine is inadequate.
102I turn now to consider what provision should be made for the proper maintenance and support of Nadine.
103Where there is a “high degree or disproportion in the treatment of siblings there ought be something in the nature of the relationship or the wellbeing of the competing claimants which justifies that disproportion”.[20]
[20] Brandon v Hanley [2014] VSC 103 at paragraph [251]
104The only competing claimant is David and it is therefore appropriate to take into account his financial position and health as well as the position of Nadine. David has no health issues and, as set out above, although Nadine does have some health issues, these have little weight in considering her need.
105David’s earning capacity is significantly greater than Nadine’s earning capacity and he has significant assets, albeit with some significant liabilities. Nadine has no real assets to speak of.
106Where the estate is large, a “generous approach is justified”.[21] That is not the case here. The Court shall not order more than is adequate for the proper maintenance and support of the plaintiff.
[21] (Ibid) at paragraph [256]
107If the Lalor property were transferred to Nadine entirely, this would provide her with a roof over her head and a secure property in which to live. Whilst there is no obligation on a testator to provide a house to an adult child, the deceased has seen fit to do so for her son. The sale of the Macedonian property is uncertain, and at best Nadine is likely to realise only a modest sum. It is clear that both her parents wished her to have this property. Her submission that the Macedonian property ought to be given to David and “chalked up” on his side of the ledger is rejected.
108It is appropriate for Nadine to have some modest further provision from the residue in addition to the Lalor property. The sum of $75,000 from the residue, together with any proceeds from the sale of the Macedonian property, would give her a ‘nest egg’ of at around $100,000.
109Apportionment in this manner does not preserve the deceased’s testamentary wish to leave more to her son than her daughter. However, the deceased’s testamentary wish to leave David her residence had already been subsumed by her transfer of that property to him during her lifetime. She had, through her gifts, ensured that David had significantly more of her assets than Nadine. Accordingly, distribution in this manner gives sufficient regard and weight to the deceased’s testamentary wishes.
The guitars, silver cross and chain, and photograph albums
110In relation to the guitars that Nadine says belonged to her father and formed part of her mother’s estates, there was only David’s evidence that his father had gifted them to him during his lifetime. David explained that for periods of time he left them at his mother’s house as she had a spare room but that they belonged to him and he had learned to play on them. There was no proper evidence as to their value and, in any event, I cannot be satisfied that they form a part of the deceased’s estate.
111In relation to the photograph albums and a silver chain and cross which Nadine seeks as provision from the estate, there appears to be no authority for the proposition that ‘provision’ from the estate could include items of sentimental value only. David gave evidence, which the Court accepts, that the deceased had carefully distributed her jewellery and personal effects to various people, including Nadine and his wife Cymantha prior to her death. There is no evidence as to the value of a silver chain and cross, nor evidence that it was the deceased’s wish that it go to Nadine or her son, Jordan.
112It is not appropriately within the jurisdiction of s91(2) to make an order in relation to the provision of photograph albums or copies of photograph albums.
Conclusion
113The deceased had a responsibility to make provision for the proper maintenance and support of the plaintiff. The deceased’s will did not make adequate provision for the proper maintenance and support of the plaintiff.
114Adequate provision is to be made in the form of the transfer of the Lalor property to Nadine and the provision of $75,000 from the residue of the estate.
115I will hear the parties as to the appropriate form of orders and as to costs.
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