Varis v Varis
[2012] NSWSC 1553
•12 December 2012
Supreme Court
New South Wales
Medium Neutral Citation: Varis v Varis [2012] NSWSC 1553 Hearing dates: 12 November 2012 Decision date: 12 December 2012 Jurisdiction: Equity Division Before: Macready AsJ Decision: (1)Plaintiff's claim dismissed
(2)Parties to be heard on costs
Catchwords: WILLS AND ESTATES - application for family provision order by daughter of deceased - two children of deceased both beneficiaries - bulk of estate left to son - small estate - significant care provided to deceased by son - application dismissed Legislation Cited: Family Provision Act 1982
Succession Act 2006Cases Cited: Andrew v Andrew [2012] NSWCA 308
Buckland,deceased,Re [1966] VicRp 58; [1966] VR 404
Carey v Robson (2009) NSWSC 1142
Foley v Ellis [2008] NSWCA 288
Ford v Simes [2009] NSWCA 351
Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490
Kleinig v Neal (No 2) [1981] 2 NSWLR 532
Singer v Berghouse (1994) 181 CLR 201
Smilek v Public Trustee [2008] NSWCA 190
Taylor v Farrugia [2009] NSWSC 801
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191
Walker v Walker (NSWSC, 17 May 1996, Young J, unreported)Category: Principal judgment Parties: Kyriaki Varis (Plaintiff)
Costantinos Varis (Defendant)Representation: R D Wilson (Plaintiff)
R de Meyrick (Defendant)
A Butler (Alison Butler & Associates) (Plaintiff)
J Finney (CBD Law) (Defendant)
File Number(s): 2012/124060 Publication restriction: None
Judgment
This is an application under the Succession Act 2006 in respect of the estate of the late Irene Varis who died on 24 September 2011. The deceased was survived by her daughter, the plaintiff in these proceedings and her son, who is the defendant in the proceedings.
The last will of the deceased
The deceased made her last will on 9th May 2008 and in that will she gave her daughter the plaintiff a legacy of $50,000 and gave the residue to her son, the defendant. There are a number of other wills which the deceased had made earlier. On 19th November 1993 she left the whole of her estate to her son, subject to him paying her daughter 45% of the value of her real estate. On 24 October 1994 she gave her estate to her son provided that he paid her daughter 30% of the value of her real estate.
Estate of the deceased
The estate consists of the deceased's property at Terrigal which has an agreed value of $475,000. There was also household furniture, personal items, bank accounts and term deposits totalling $21,435.17. From that sum there has been paid funeral expenses of $14,321.30.
The defendant's costs until the conclusion of litigation is $51,975 on an indemnity basis and the plaintiff's costs on the ordinary basis are $49,140. It can be seen that there are no ready funds in the estate to accommodate these costs or some of them.
Family History
The deceased was born in January 1931 and was aged 80 years at the date of her death. She had two children as I have mentioned. The plaintiff was born in September 1951 and her son, the defendant, was born in February 1954. The family originally came from Greece migrating to Australia in 1960. In 1969 in circumstances to which I will refer later the plaintiff then aged 18 married her husband, Bill Melas. Earlier, when she was 15 years of age after completing her schooling, the plaintiff left the family home and went to live with his family.
In 1971 the deceased was diagnosed with schizophrenia and she continued to be treated for this during the rest of her life. In 1971 the plaintiff had a son Michael and she moved to Darwin with her family in 1976. She remained there until 1995 when she moved to Victoria with her family.
The deceased's son, Con, married in 1979 at the age of 25 and in 1986 moved to Queensland where he remained until 1988. He again lived there from 1989 to 1994.
In 1990 the deceased spent a period of six months at Redfern where she received psychiatric care and attention. Her husband died in November 1993 and it is suggested that, although no original will has been provided by the plaintiff, in 1994 the deceased made a will leaving her estate equally between the plaintiff and the defendant.
In October 1994 the deceased's Concord home was sold following the death of the deceased's husband and a property was purchased at Terrigal which had dual occupancy. The deceased lived on the top floor and the defendant and his wife lived on the ground floor. The defendant kept residing there so that he could look after his mother over the next 17 years until the death of the deceased.
I mention that the plaintiff moved down to Melbourne in 1994 because housing was cheaper there than in Sydney and unfortunately she and her husband separated in 1996 and were divorced in 1997. On 28 July 1998 the defendant was given a power of attorney by the deceased.
In May 2006 in order probably to give the defendant a break from looking after his mother as he had been bearing the lion's share of it, the plaintiff arranged for her mother to move to Melbourne where she lived for three months in the manager's residence in an aged care facility which was being run by the plaintiff. As I have mentioned the deceased made her last will on 19 May 2008.
In November of that year the plaintiff's business failed and was placed in administration. In 2009 the plaintiff, who had been working for the Australian Trading Corporation, was made redundant.
In September 2009 the defendant married Charlene Varis, his second wife. She was 23 at the time. In September 2010 the deceased moved into a nursing home as she could no longer be looked after at her home and she died on 24 September 2011. The proceedings were commenced within time on 19 April 2012. Associate Justice Hallen ordered the defendant to pay the plaintiff $25,000 on account of the legacy of $50,000. In fact, the defendant borrowed the whole amount of the legacy of $50,000 and paid it to the plaintiff.
Eligibility
The plaintiff is an eligible person.
In applications under the Family Provision Act 1982 the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a court must take. These comments are equally applicable to claims under the Succession Act. At p 209 it said the following:
"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. Take, for example, a case like Ellis v Leeder, where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."
However, as a result of Andrew v Andrew [2012] NSWCA 308, the situation is somewhat different. In that case, Barrett JA said that the two stage approach adapted under the Family Provision Act 1982 still applied to claims under the Succession Act. Basten JA held that a two stage approach was not necessary. The President thought it was an analytical question of little consequence. In the circumstances of this uncertainty, I will consider it on both bases.
The situation and life of the plaintiff
The plaintiff is 61 years of age, single, with no dependants. The plaintiff, according to her general practitioner, is a person who suffers from a number of medical difficulties which makes her future employment fairly slim. She suffers from right carpal syndrome, depression, hypertension, bursitis of the right shoulder, degenerative disc changes at L4/L5, right knee pain, ongoing anxiety/depression, asthma, fructus and lactose intolerance and sleep apnoea.
Given the medical problems which she has, I think it is fairly clear that she will not obtain paid employment. She presently receives a disability pension of $772.60 per fortnight and in the past has done a small amount of part-time hairdressing. One of her rooms in her house is set up to enable her to do this but she says she has not carried out this work over the last several months because she cannot. The plaintiff owns her three-bedroom home in Oakleigh South, Victoria which has a value of $460,000 with a mortgage to the Commonwealth Bank of $243,544. As a result of the payment of the legacy the mortgage was then no longer in default, although it cannot be long before it will again be in default.
Because of the high level of debt which the plaintiff has, her fortnightly expenses total $1,446 which includes the payment to the CBA of $753 per fortnight. This is well in excess of her income from the pension.
The plaintiff in 2008 invested her existing superannuation funds of approximately $70,000, some savings and borrowed heavily on her credit cards to put $130,000 into what she believed was short-term loans for a superannuation fund. She was repaid $30,000 over some years and recently during this year was paid another $11,000. According to her, she has been told that the person owing it is bankrupt and she is unlikely to receive any of the $90,000 she is still owed. There is no evidence other than the plaintiff's evidence to which I have referred but I am prepared to accept it and accordingly it seems that this is another decision she has made which has had very unfortunate consequences for her.
Another serious problem for the plaintiff is that she has credit card debts of $32,060. She has made a number of arrangements to repay those with the debt recovery agencies.
Plainly her financial situation is not viable.
The plaintiff's relationship with the deceased suffered in the beginning when she decided to leave home to be with her boyfriend and then later marry him. She eventually applied for permission to marry from a magistrate which he was not willing to give until her mother and father ultimately agreed, which they eventually did. She and her then fiancée were able to be married in 1969. She admits that she had a break in her relationship with the deceased at that time but plainly it was shortly mended after the marriage and there was limited contact between the plaintiff and the deceased via telephone. It was only when her mother was diagnosed with schizophrenia in 1971 that the plaintiff started to visit her. As I have mentioned in 1976 she moved to Darwin and came back for three months during that year to live with her parents so that her parents could see their grandson Michael, her child, who had been born in 1971. In the time that the plaintiff was in Darwin between 1976 and 1995 her mother visited her once and her father twice. The plaintiff probably visited her mother either once a year, or once every two years in this period. In the time the plaintiff was in Melbourne she travelled to Terrigal on one occasion to be with her mother for her birthday. There was also the occasion when she had her mother down to stay with her for three months in Melbourne.
I do not think that the breakdown in the relationship when the plaintiff was a young teenager is of importance in this case and the extent of the contact between the plaintiff and mother was not great, mainly no doubt due to the fact that the plaintiff lived elsewhere from her mother.
The plaintiff has not contributed to the estate of the deceased.
Situation in life of the Defendant
Con is 58 years of age and has recently married for the second time. His wife is now 26 and they have had their first child who was born about six weeks ago.
The defendant retired from his businesses in 2009 although his wife continued to work there until recently. The main one of his businesses was a company Super Retrievers Financial Services Pty Ltd and it seems fairly clear that that business has been suffering in recent years. Between 2010 and 2011 its gross income from trading has almost halved and it has moved from having made a profit of $61,568 in 2010 to making a loss of $60,910 in 2011. In his 2011 income tax return the defendant had a total taxable income of $21,572.
As I have mentioned before he lives in the estate property at Terrigal. He has superannuation of $72,000 which he is using to meet living expenses.
Through another company, he has a minimal interest in two racehorses which do not appear to have been particularly successful.
I have already briefly mentioned the fact that the defendant had a good relationship with the deceased and in fact devoted the last 17 years of his life to the care of his mother. This was difficult because of her illnesses. The GP who looked after the deceased has given evidence of having observed the substantial help and assistance given by the defendant to the deceased over the period.
The other thing that occurred in this period was that both were living in the house which was in the plaintiff's name. There is evidence that the defendant made a substantial number of payments towards things such as electricity bills, home maintenance, insurance, security systems, council rates, water rates and other matters. These were estimated by the defendant at $127,705. This is a very substantial contribution towards both his and his mother's expenses and there are obviously other things which he bought for her which are not included in these amounts.
Discussion
It is necessary to see how the plaintiff says that she has been left without adequate and proper provision for maintenance, education and advancement in life. She asked the Court for a legacy of $100,000 in addition to the $50,000 she has already received under the will. This is to enable her to reduce her mortgage and presumably so she can remain in her house a little bit longer before everything catches up with her once again.
The defendant submits that the summons should be dismissed because there is very little in the estate and the parties effectively are in a very similar financial situation. He also points out the enormous disparity in the care given by the defendant and the plaintiff and the defendant starting out life with children to maintain into the future and possibly even another child. All that is behind the plaintiff.
As detailed above in par 2, the deceased made a number of wills, each reducing the legacy to the plaintiff, and her final will was made in 2008. In 2007, the deceased executed documents to transfer the Terrigal property to the defendant but this was not proceeded with, apparently due to the deceased not wishing the pay approximately $18,000 in stamp duty if the transfer went ahead. The defendant submits that the deceased's actions are a clear indication of the deceased's intention that one child should get to keep the family home, together with an explanation as to why the deceased felt that was appropriate.
In Taylor v Farrugia [2009] NSWSC 801 Brereton J discussed the applicable principles which relate to a claim by an adult child against the estate of a parent, at [57] - [58]:
"It is impossible in this area to describe in terms of universal application the moral obligation or community expectation of a parent in respect of an adult child. I think, however, 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, and 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 their 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 [McGrath v Eves [2005] NSWSC 1006].
Generally speaking, the community does not expect a parent to look after his or her children for the rest of their lives and into retirement, especially when there is someone else, such a spouse, who has a prime 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 parents 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. It is no longer the case, if it ever was, that an adult child has to establish a special need before obtaining provision from the estate of a deceased parent."
There was no requirement that the deceased provide for her children equally (see, for example, Carey v Robson (2009) NSWSC 1142 at [57]). The plaintiff received approximately 10% of the estate. The discrepancy is amply explained by the small estate and the contribution Con made to the deceased's welfare.
Section 60(m) of the Succession Act expressly states that the Court may consider, when determining whether to make a family provision order, the character and conduct of the applicant before and after the date of the death of the deceased person.
While it is appropriate to consider the nature of relationship between the plaintiff and the deceased at this stage, the focus of the Succession Act is not finding out where the fault lies in a difficult relationship, but whether, in all the circumstances it would be expected by the community that the testator would have to make a greater benefaction than he or she in fact did to constitute proper or adequate provision for the plaintiff: Young J in Walker v Walker (NSWSC, 17 May 1996, unreported). His Honour noted that:
"I do not consider that there is any purpose in analysing whose fault it was that the state of non-communication came into place. In family relationships, hurts are inflicted or suffered sometimes consciously, sometimes unconsciously...It is often impossible to work out whether the degree of separation between parent and child at the date of the parent's death is solely the fault of either or whether it has come about by factors too strong for either to control or somewhere in between."
In Kleinig v Neal (No 2) [1981] 2 NSWLR 532, the court said, in relation to a situation of disharmony between parent and child that the moral duty of a testator to provide for their children continues:
"If it occurs, the parent who is just as well as wise will not allow such disharmony or disappointment to blind him to the needs of his child for maintenance, education or advancement in life.
The duty of a parent towards his child to provide for those needs on his death, if he can, continues in spite of such disharmony or disappointment and the statute obliges the court to consider whether it has been performed."
In certain circumstances, however, conduct of a child can justify a reduced, or no, provision to be made from the will of a parent. This was recognised by Bergin CJ in Eq in Ford v Simes [2009] NSWCA 351 at [71] - [72]:
"It is one thing to make provision for a child, even an adult, where the court is able to better balance the obligations of the testator with the adequacy of the provision made by the testator. However in my view it is very important for the maintenance of the integrity of the process in these types of applications that this court acknowledge once again the entitlement of testators, in certain circumstances, to make no provision for children: Pontifical Society for the Propagation of the Faith and Saint Charles Seminary, Perth v Scales [1962] HCA 19; (1961) 107 CLR 9. This is particularly so in respect of children who treat their parents callously, by withholding without proper justification, their support and love from them in their declining years. Even more so where that callousness is compounded by hostility.
It is obvious that if the estrangement from the testator is explicable, as was the case in the authorities referred to above, a claimant may still achieve an order for provision under the Act. However there will be cases in which the estrangement is such that a testator is entitled to make no provision for an estranged child. This is one of them. The deceased spent the last 14 years of his life without any assistance from the appellant; without any communication (except the abusive encounter) from the appellant; and without the benefit of the love from a child whom he had nurtured and financially assisted during his formative years."
As I said above, the plaintiff's relationship with the deceased suffered when she left home to be with her boyfriend against her parents' wishes and later married him. She also lived in Darwin from 1976 to 1994 and then moved to Melbourne where she now resides. As a consequence of their geographic separation, the extent of contact between the plaintiff and the deceased was limited. However, I do not believe there is any conduct of the plaintiff that could be considered hostile or callous and there was some contact via telephone and physical visits from time to time. There was no estrangement other than the period already referred to and the deceased continued to receive the benefit of communication and contact, albeit not as frequently as the deceased might have wished for.
Counsel for the defendant referred me to Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490 where Gibbs J commented:
"If the claimant has contributed to building up the testator's estate, or has helped him in other ways, that may give the claimant a special claim on the testator's bounty. This was recognized by Dixon C.J. in Coates v. National Trustees Executors & Agency Co. Ltd. [1956] HCA 23; (1956) 95 CLR 494, at p 510 when he said that the natural claims of a son upon his mother's testamentary bounty were 'much strengthened by his cooperation and support in the conduct of her business and of her affairs'. Perhaps the most recent example in this Court of a case in which a son's claims have been strengthened for this reason is Hughes v. National Trustees Executors & Agency Co. (Australasia) Ltd. (1979) 143 CLR 134 . There is, however, no reason in principle why a son should stand in a special position in this regard, and the authorities here consistently treated the fact that a claimant has rendered services to the testator as relevant in cases of this kind - whether the claimant be a daughter (Blore v. Lang [1960] HCA 73; (1960) 104 CLR 124, at p 129 ), a widow (E. v. E. (1915) 34 NZLR 785 , discussed in In re Worms; Worms v. Campbell (1953) NZLR 924, at p 935 ) or a widower (In re McElroy [1940] VicLawRp 74; (1940) VLR 445, at p 447 ). The claimant's conduct does not cease to be relevant if it has not been of financial benefit to the testator - if, for example, the labour has been in vain. If the claimant has made sacrifices on the testator's behalf, that is a circumstance to be considered even if no monetary saving or benefit for the testator resulted. Indeed, the very fact that a claimant has been a dutiful and devoted spouse or child is one of the relevant circumstances of the case to be considered together with all the other circumstances in deciding whether proper maintenance has been provided. (at p498)"
The defendant provided a high degree of personal support and domestic assistance to the deceased over the 18 years that he lived with her in the Terrigal property. He also expended a considerable amount of his own money meeting the deceased's household and daily expenses as well as paying for maintenance and improvements to the property. In doing so he contributed to the estate of the deceased.
In this case the deceased recognised the care provided by the defendant in her later years and made a greater provision for him out of her estate. In my view the conduct of Con in the last years of the deceased's life amounts to conduct justifying a greater provision than for the plaintiff.
The extent of the deceased's estate can be considered when determining whether adequate provision has been made, as well as the financial resources and needs of the other beneficiaries (s 60(c) and (d)).
In Foley v Ellis [2008] NSWCA 288 Sackville AJA (with whom Beazley JA agreed) stated that, in assessing whether the provision made for an applicant was inadequate, the needs of the other claimants on the deceased's bounty must be considered. His Honour said at [88] - [89]:
"... the court cannot consider the propriety and adequacy (or inadequacy) of any testamentary provision for an applicant in isolation from the resources and needs of other claimants on the deceased's bounty. These claimants include other beneficiaries entitled to a share of the deceased's estate, whether or not they themselves have made a claim under the Family Provision Act.
The point was made explicitly by Callinan and Heydon JJ in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [122] (231):
"Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question of whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances ... The age, capacities, means, and competing claims, of all of the potential beneficiaries must be taken into account and weighed with all of the other relevant factors."
In this case consideration of the other beneficiaries is especially important given the small size of the estate. In Re Buckland, deceased [1966] VicRp 58; [1966] VR 404 at 412-413 the court recognised that, in a case of a small estate, the notion of what provision was adequate would need to be adjusted accordingly:
"In many of the cases coming before the courts the decision as to what maintenance it was proper for a testator to have allowed has been influenced by the circumstances that there was competition between dependants, all with moral claims for maintenance and support out of his estate, but the estate was not large enough to meet them all. Thus, what was considered to amount to adequate provision for the proper maintenance of a claimant has been held to be less than it would otherwise have been."
While it is evident that the plaintiff has a genuine need so does her brother.
As counsel for the defendant submitted, both children of the deceased have homes worth a similar amount, both are of similar age and neither is apparently generating any meaningful current income. Both have debts, although those of the plaintiff are greater and both seem financially stretched with little means.
The testator probably recognised the self-evident fact in this case that the estate is so small that it cannot provide for all the claims on the testator's bounty. Given the plaintiff's financial circumstances, even an amount of another $100,000 will not allow her to reduce her expenditure to a point where she will be able to keep her house. Such a payment would, after costs, leave the defendant in a position where he would have to sell the house and receive about $275,000. For the plaintiff to receive $150,000 and the defendant $275,000 there is little recognition of the extensive care given to the deceased over 17 years and his financial support of the deceased of $127,075.
The Court is prohibited from interfering with the distribution of the deceased's estate, save to the extent that is necessary to ensure that adequate provision is made for the applicant's proper maintenance and advancement in life (see Smilek v Public Trustee [2008] NSWCA 190). In this case, the plaintiff's completely inappropriate financial situation, which is of her own making, cannot be rectified by the deceased. All she could do was give her a little support. In my view, the plaintiff has not been left without adequate provision.
In case I am wrong in that regard, I will turn to consider the second stage of the process as set out in Singer v Berghouse, namely whether the court should, in its discretion, make an order for provision of the plaintiff.
The defendant gave evidence of testamentary intentions of the deceased, which are relevant pursuant to s 60(2)(j) of the Succession Act. He said that on 3 September 2011 the deceased had said words to the effect:
"I have left everything to you as you have don everything for me, I don't want Kay to make any trouble for you. If she does try and explain to her when the time is right, and I am not here, that she chose her own road and neglected the care of her mother."
The deceased passed away on 24 September 2011.
On the discretionary question, the plaintiff's claim would not succeed. The plaintiff's relationship with the deceased is relevant at this stage as are Con's contributions to the deceased's welfare as her carer. There is ample evidence of the deceased's intention to provide a larger provision for Con in recognition of his services to her.
I dismiss the plaintiff's claim and will hear the parties on costs.
Decision last updated: 14 December 2012
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