Verzar v Verzar
[2012] NSWSC 1380
•16 November 2012
Supreme Court
New South Wales
Medium Neutral Citation: Verzar v Verzar [2012] NSWSC 1380 Hearing dates: 17 and 18 September 2012 Decision date: 16 November 2012 Jurisdiction: Equity Division Before: Lindsay J Decision: Judgment for the Plaintiff. Parties invited to make submissions about the form of relief and costs.
Catchwords: SUCCESSION - family provision and maintenance - circumstances precluding relief - extension of time - plaintiff operating under a personal disability or financial constraints - defendant initiated separate proceeding against plaintiff - extension of time granted.
SUCCESSION - family provision and maintenance - failure by testator to make sufficient provision for applicant - single parent plaintiff in fear of financial insecurity - plaintiff worked hard to build up wealth with testator - defendant obliged to care for a disabled step-child - relief granted.Legislation Cited: Family Provision Act 1982 (NSW)
Succession Act 2006
Limitation Act 1969 (NSW), s 14Cases Cited: In Re Salmon, Deceased [1981] Ch 167 at 175B;
Re Guskett [1947] VLR 212 at 214.
Warren v McKnight (1996) 40 NSWLR 390 at 394E
Dare v Furness (1997) 44 NSWLR 493 at 500C
Thomas v Pickering [2011] NSWSC 572 at [84]-[90
Re Lauer [1984] VR 180
Neil v Nott [1994] HCA 23 at [9]-[10]; 68 ALJR 509; 121 ALR 148
Singer v Berghouse (1994) 181 CLR 201 at 208-211
Vigolo v Bostin (2005) 221 CLR 191
Bosch v Perpetual Trustee Company Limited [1938] AC 463 at 476.
Devereaux-Warnes v Hall (No. 3) (2007) 35 WAR 127 at [72]-]77].
Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19.
Singer v Berghouse (1994) 181 CLR 201 at 209-211.
Collins v McGain [2003] NSWCA 190 at [41]-[42] and [45]-[51].
Luciano v Rosenblum [1985] 2 NSWLR 65 at 69-70
Bladwell v Davis [2004] NSWCA 170 at [12] and [18]-[19].
Tchadovitch v Tchadovitch [2010] NSWCA 316 at [53]-[60].
Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566;
Holler v Ayre [2005] 2 Qd R 410 at 415.Texts Cited: Family Provision in Australia JK de Groot and BW Nickel, (Lexis Nexis Butterworths, Australia, 4th ed, 2012) at paragraphs [5.8]-[5.14] Category: Principal judgment Parties: S Verzar
TJ VerzarRepresentation: RD Wilson (P)
PH Blackburn-Hart SC and
T Anderson (D)
Teece Hodgson
Denes Ebner
File Number(s): 2011 / 115485
Judgment
INTRODUCTION
On 29 March 2009 one of the Plaintiff's worst fears was realised. Her husband of 17 years, her partner of 30 years, the father of their four year old daughter (Sarah) - Stephen Verzar - died.
Stephen (whose estate is the subject of the Plaintiff's claim for family provision relief under Part 3.2 of the Succession Act 2006 (NSW) in these proceedings) was just under 32 years her senior.
He was born on 12 February 1922. She was born on 23 January 1954. He died at the age of 87, when she was 55.
The respective ages of Stephen and the Plaintiff when they parented Sarah, and the Plaintiff's role as a mature-aged single parent following Stephen's death, weigh heavily in the determination of these proceedings.
Stephen left a Will dated 14 June 2007 in which the Plaintiff was named as Executrix. Probate of that Will was granted to her by this Court on 21 October 2009.
The principal beneficiaries named in the Will are the parties to these proceedings. The Plaintiff seeks relief under the Succession Act: first, an order under s 58(2) for an extension of the 12 month period, after the death of Stephen, within which an application for a family provision order must generally be made; and (b) an order for a family provision order under s 59. The Defendant is Stephen's son, and only child, by a first marriage. He was born on 6 July 1946. He was aged 62 when his father died.
The Plaintiff's summons was filed on 8 April 2011, more than two years after Stephen's death and more than a year outside the time allowed by s 58(2).
Substantial property owned by Stephen immediately before his death was owned jointly by the Plaintiff and passed to her by survivorship.
The central focus for attention in these proceedings is upon two commercial properties which were in the name of Stephen alone when he died: (a) one, in McEvoy Street, Alexandria, is the subject of a specific devise in favour of the Defendant; and (b) the other, in McCauley Street, Alexandria, passes to the Plaintiff as part of the residuary estate.
The undisputed remaining assets in the estate comprise two bank accounts with a total credit balance slightly over $55,000.00.
An allowance should be made for rent received by the Plaintiff on the two Alexandria properties since Stephen's death. The precise amount of that rent has not been established by the evidence.
However, it is agreed that, subject to any orders made in her favour in these proceedings, the Plaintiff is obliged, as Stephen's executrix, to account to the Defendant for rents received on the McEvoy Street property since Stephen's death. It is also agreed that more than $100,000.00 has been received in net rents for the McEvoy Street property in that period. $48,000.00 was received, in net rents on that property, between the date of Stephen's death (29 March 2009) and December 2010. Another $55,000.00 or so has been received since January 2011.
The credit balance of slightly over $55,000.00 in estate bank accounts represents, in substance at least, part of the rents received on the McEvoy Street property since Stephen's death.
In partial explanation of her stewardship of the Alexandria properties since Stephen's death, the Plaintiff says that the McCauley Street property has required expenditure of about $180,000.00, in repairs and maintenance, to render it a reliable source of future income for her.
The Defendant accepts that the Plaintiff is entitled to the McCauley Street property under Stephen's Will and, despite the fact that it appears not yet to have been transmitted to her in her personal capacity, he does not seek in these proceedings to disturb her enjoyment of it. Not unnaturally, though, he does want her to account for income received by her on the McEvoy Street property, some part of which she appears to have applied towards repairs to, or improvement of, the McCauley Street property since Stephen's death.
Beyond this point, the parties are not agreed in their identification of estate assets.
The Plaintiff contends that payments made by Stephen to the Defendant during Stephen's lifetime, in the total sum of $30,000.00 should be treated as payments made by way of loan. She submits that those payments should be regarded as an estate asset or, at least, be taken into account against the Defendant's interests in these proceedings.
For his part, the Defendant contends that the unpaid balance of the proceeds of sale of the business conducted by Stephen and the Plaintiff for many years, until June 2003 or thereabouts, through a corporate vehicle (Veritas Distributors Pty Limited) should be regarded as an estate asset or, at least, be taken into account against the Plaintiff's interests.
At a superficial level, there is something to be said in favour of treating both the $30,000.00 paid to the Defendant and the unpaid balance of the proceeds of sale of the family business as estate assets. However, both "assets" melt away upon closer examination.
On the one hand, if the $30,000.00 payment was made by way of loan, the Defendant's liability in debt has been extinguished by the operation of the Limitation Act 1969.
On the other hand, before the unpaid balance of the sale proceedings (said by the Plaintiff to be $335,000.00) could confidently be treated as an estate asset, one would need to overcome the hurdle of identifying their true ownership. The Plaintiff contends, and I accept, that, to the extent that they were once owned by Stephen and her personally, they were owned by them jointly, and must be taken to have passed to her by way of survivorship. In any event, she doubts whether they are presently recoverable. Instalments totalling $295,000.00 were received by her between 17 April 2009 and 22 August 2011 or thereabouts. Her assessment is, nevertheless, that she may never be paid more than that and that the purchasers of the business (known to her as friends of Stephen and herself) are not sufficiently financial to warrant expenditure in suing them.
The alternative submissions of both parties, on these peripheral aspects of the case, are to be preferred. The $30,000.00 "loan moneys" should be regarded, not as an estate asset, but as a factor to be taken into account as a benefit conferred by Stephen on the Defendant in weighing the competing entitlements of the parties. The unpaid balance of the sale proceeds should be treated, in substance, in the same way. There is a possibility, more or less remote, that the Plaintiff will receive some additional payment, and that possibility is available to be taken into account against her interests. However, it is not a determinative factor.
The focus for attention is on (a) the Alexandria properties; (b) the fact that, for practical purposes, the Plaintiff has taken the benefit and borne the burden of those properties since Stephen's death; and (c) the credit balance in the estate accounts.
Both Alexandria properties have a roughly equivalent value. As at 30 November 2011, the McEvoy Street property was estimated to have a market value of $850,000.00, and the McCauley Street property was estimated to have a market value of $900,000.00. The McEvoy Street property is, however, subject to a road widening proposal which, if implemented, would reduce its value.
The Plaintiff is not content with the provision made for her in the Will. She wants further provision of $500,000.00 which, she contends, would: (a) enable Sarah (now aged nearly eight) to be educated, to the end of her secondary studies, at a private school from which she was recently withdrawn, the Plaintiff says, for a want of funding; and (b) provide a capital sum which could be used to reduce the Plaintiff's mortgage debt and cover other expenses.
Sarah's future education expenses the subject of this claim are estimated at a total of $180,000.00, calculated at the rate of $20,000.00 per annum for nine years.
In support of her claim for a capital sum of $320,000.00, the Plaintiff points to her current indebtedness to the Westpac Bank in the sum of approximately $774,000.00, secured in part over the family home of the Plaintiff, Sarah and (formerly) Stephen. The agreed current market value of that property (a home unit in Gowrie Avenue, Bondi Junction) is $880,000.00.
The Plaintiff also points to a perceived need of a capital fund to assist her to carry out repairs to her various properties, to facilitate travel, to buy a new car to replace her present one and to meet unforseen contingencies.
The Plaintiff contends that the starting point for consideration of her claim, as Stephen's widow, is a broad general rule (commonly associated with the judgment of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69-70) to the effect that, in the absence of special circumstances, the duty of a husband, to the extent to which his assets permit him to do so, is to ensure that testamentary provision is made for his widow: (a) to provide her with a secure place of residence; (b) to provide her with an income sufficient to permit her to live in the style to which she has become accustomed; and (c) to provide her with a fund to enable her to meet unforseen contingencies.
There is no dispute between the parties that the Plaintiff is under an obligation to care for Sarah, as an infant child, and that this obligation is a relevant factor in an assessment of the Plaintiff's entitlement to provision from Stephen's estate: Goodman v Windeyer (1980) 144 CLR 490 at 498 and 505.
Taken together with the Plaintiff's submission that the costs of both parties should be paid out of Stephen's estate (and, more particularly, should be a charged against the McEvoy Street property), the effect of the Plaintiff's claim - if granted in full - would be to deny the Defendant any substantial benefit from his father's estate.
Each side estimates its costs, to the end of the two days it took to hear the proceedings, at approximately $135,000.00, assessed on an indemnity basis. If the Plaintiff were to be successful in her full claim (for $500,000.00), both sets of costs were to be charged against the McEvoy Street property (in a total sum of $270,000.00) and the market value of $850,000.00 attributed to that property is correct, allowing for expenses upon sale of the property, the Defendant would be left with virtually nothing from the estate.
The Plaintiff's pursuit of that outcome feeds the Defendant's apprehension that her belated institution of proceedings for family provision relief was, in large measure if not entirely, a defensive response to his institution of proceedings (numbered 2011/88252 in the Probate List) for the purpose of taking administration of Stephen's estate out of her hands. He commenced those proceedings consequentially upon the Plaintiff's failure to transfer the McEvoy Street property to him and to account for rental receipts referable to that property.
I hesitate to conclude that the Plaintiff is motivated by a desire to exclude the Defendant from any real participation in Stephen's estate. Nevertheless, that is the outcome for which she contends notwithstanding that (including her entitlement to the McCauley Street property under Stephen's Will) she presently owns eight properties with an estimated gross value of $3,765,000.00 and a net value (after deduction of the Westpac debt of approximately $774,000.00) of $2,991.00 or thereabouts.
The Plaintiff has assets other than real property. However, the bulk of her wealth (much of which had been owned with Stephen jointly before his death and has come to her by the right of survivorship of a joint tenant) is in the form of real property.
An understanding of the Plaintiff's case requires an appreciation of the origins and course of her relationship with Stephen and the very real sense of insecurity, and anxiety, she has experienced since his death and as a mature-aged single parent of a young child.
CONTEXT FOR THE PLAINTIFF'S CASE
Stephen was a highly educated man (with doctorates in law and economics) who emigrated to Australia from Europe in 1960/1961. In his adopted country he worked hard, in business, to build a new life and to build up assets.
The Plaintiff first met Stephen in August 1969 at the Brisbane Show. She was then a high school student, aged 15, who, with a girlfriend, was in search of casual, holiday employment. Stephen, then and in after years, was an exhibitor at the show. He sold jewellery and perfume from a stall.
He offered the Plaintiff, and her girlfriend, the holiday job they sought. From then on, while the Plaintiff was a student, she worked for him every August holidays.
Their personal relationship developed in 1975 when Stephen invited the Plaintiff to travel with him to the Adelaide show. She was then enrolled at the University of Queensland, studying for a Bachelor of Arts degree and a Diploma of Education.
Her parents did not approve of her relationship with Stephen. That is not altogether surprising. He was not only 32 years her senior, he was a married man. He had not separated from his wife at that stage. He had a son, the Defendant, more than seven years older than the Plaintiff. She was 21.
The Plaintiff was asked by her parents to leave home. She did so. For the next 10 years, she had no contact with them.
After finishing her degree, the Plaintiff took a teaching position in far north Queensland. She taught for approximately 18 months, during 1976 and part way through 1977.
Distance did not keep Stephen and the Plaintiff apart for long. He visited her in north Queensland. She travelled to Sydney to visit him. In 1977 they went overseas together, and she gave up teaching.
She moved to Brisbane for a time. Stephen invited her to move to Sydney. This she did. There she worked with Stephen in his factory and travelled with him to various shows at which he exhibited jewellery.
His business, operated through his company Veritas Distributors Pty Limited, was in the manufacture and sale of costume jewellery. Sales were both wholesale and retail.
In 1979 Stephen separated from his wife, and he and the Plaintiff commenced living together.
From that time, until Stephen's death 30 years later, they lived and worked together as a couple, always in close proximity.
Stephen's first marriage was dissolved in September 1980.
The Plaintiff joined Stephen as a director and shareholder of Veritas Distributors Pty Limited in November 1988.
The marriage of the Plaintiff and Stephen on her 38th birthday, in 1992, was a natural progression.
One thing remained. The Plaintiff wanted children. The Defendant had experienced fatherhood, with the birth of the Defendant, during his first marriage. Motherhood was an experience the Plaintiff longed to enjoy.
Despite IVF treatment in Sydney, and in Israel in 1997, the Plaintiff and Stephen remained childless.
In June 2003 they sold the business operated by Veritas Distributors Pty Limited to friends who were willing to take it over, but lacked money. The sale agreement dated 2 June 2003, bears the hallmarks of legal informality. The Plaintiff and Stephen "sold the company" to Joe and Vivian Jonoski, associated with a new company, Veritas Marketing Pty Limited.
The sale price of $820,000.00 was apportioned between stock ($750,000.00) and equipment ($70,000.00). Attribution of a "nil" value to goodwill was evidently a realistic estimate, not merely an accounting convention. The success or otherwise of the business depended upon the personal efforts of its operators.
The formal agreement provided for payment of a $100,000.00 deposit and the balance of the sale price by instalments payable over three years. In each of 2003, 2004 and 2005 the parties contemplated that an instalment would be paid after the Brisbane, Adelaide, Melbourne and Sydney shows or some combination of them.
The structure of those payments illustrates the "hands on" nature of the business; a business which had occupied the close personal attention of the Plaintiff and Stephen working as a team over many years.
They sold the business because Stephen felt that, at 81, he was too old to carry on, and because the Plaintiff wanted to grasp what she perceived to be her last chance to have a child.
With the deposit moneys received on sale of the business, they returned to Israel for further IVF treatment. This time came success. Sarah was born on 9 November 2004.
This chronology is important to an appreciation of the human story underlying these proceedings. The Plaintiff took a risk in teaming up with a man so many years her senior. She took additional risks in immersing herself in his business. She took still more in tying herself to him in marriage at a time when she was in her prime and he had reached an age when thoughts of retirement must have occupied the few idle moments that their joint business commitments allowed. Sarah was a deliberate, cherished choice for both parents, but hardly free of risk. Stephen was 82 years of age when she was born. The Plaintiff was 50, nearly 51.
The risks that the Plaintiff took in pursuit of a full life, with the love of her life, explain the depth of her emotional devastation at the loss of Stephen in 2009; her heightened sense of need for financial security since that time; and her ongoing anxiety about how she can possibly cope raising Sarah as a sole parent.
Everything came crashing down on her when Stephen died. She found it very hard to function without him.
To his credit, the Defendant saw this and offered her constructive advice. With an empathy which she is perhaps not yet fully able to recognise, he suggested to her, in 2009, that she take the benefit of grief and bereavement counselling at "Jewish Care", an organisation with which he works as a volunteer. The suggestion was taken up.
The fact that the Plaintiff remains deeply emotionally fragile was evident when she was cross examined on her evidence at the hearing of her summons. She struggled at times to respond to the focussed, but fair, questions necessarily put to her about the financial affairs of herself and Stephen's estate; her anxiety about the resources available to her and Sarah; the intermingling of her personal funds and those of the estate; her failure to administer the estate with despatch; the timing of her decision to apply for family provision relief; and her motivation in applying for such relief only after the Defendant commenced proceedings designed to crystallise, and enforce, his entitlement to the McEvoy Street property.
In my perception, the Plaintiff struggled to deal with these questions, not because she did not recognise their importance or because she played the role of an uncooperative or over-delicate witness, but because they touched an open wound.
In the three and a half years since Stephen's death, the Plaintiff has taken refuge in the expenditure of money on renovations of her real estate. Some of those renovations have been directed to enhancing the investment potential of, and commercial returns from, the McCauley Street property. Some of them have been, and others still in prospect are, directed towards a make over of the Plaintiff's family home. That make over, in part, has as a justification a desire to lighten the place up and to remove the heavy European décor reminiscent of Stephen's preferences. The Plaintiff has been struggling with Stephen's legacy and the need for her and Sarah to build a new life.
THE DEFENDANT AND HIS FAMILY CONNECTIONS
Stephen married his first wife, Susan, in Budapest, Hungary, in June 1945. The Defendant, the only child of their marriage, was born in Romania. The three of them left that country in 1960 and arrived in Australia in 1961. They settled in the eastern suburbs of Sydney.
The circumstances in which the relationship between the Plaintiff and Stephen developed have been outlined.
The Defendant appears, consistently, to have maintained a close, supportive and affectionate relationship with his father. The Plaintiff disputes that. I discount her assessment. The objective facts appear to me to support the Defendant when due allowance is made for the different circumstances of the two men. The Plaintiff herself concedes that, from 1988 (when the Defendant returned from a stint in the United States) until Stephen's death, there were twice weekly phone calls, and dinners at restaurants and at the home of the Plaintiff and Stephen; Stephen and the Defendant also had lunch together 4-5 times a year. The provision made for the Defendant in Stephen's Will is, one can readily infer, a reflection of the close relationship between father and son.
The Defendant matriculated from Vaucluse Boy's High School in 1963. He enrolled in a Chemical Engineering Degree at the University of New South Wales in 1964, but dropped out in 1965. In 1967 he completed a Construction Certificate at TAFE NSW.
From the time he dropped out of university, he has worked in or around the construction industry. In 1965-1966 he was a labourer with Stocks & Holdings. In 1966 he was an estimator with George Colman Constructions. Between 1967-1977 he was employed, in various capacities, with Westfield Limited; his last role with that company was as a project manager. In 1978-1979 he was self employed in a waterproofing business. Between 1979-1983 he was a project and development manager with City Freeholds Pty Limited. Between 1983-1988 he worked as a development manager with Tony Beck Inc. in Los Angeles. In 1989 he worked as a development manager with Tom Coleman Constructions. In 1990-1992 he was a development consultant manager to the Property Services Group. Since 1992 he has been self employed, or a joint venturer, in property related businesses.
He is no longer working full time, and his business operations in recent years have been less than successful. He claims that for the last three years he has not earned sufficient income to warrant the lodgement of income tax returns.
He married in 1968. The marriage, which ended in divorce in 1992, produced a son (Jordan), a daughter (Caitlin) and, in time, a grandson (Kira).
For the last 20 years or so, he has been in a stable and obviously close family relationship with Szuzsa Hershco, who has three adult children (sons) from an earlier relationship.
The Defendant lives with Szuzsa in Randwick, in a home unit owned by her. It is her principal asset. It is valued at about $650,000.00. It is encumbered by a debt attributable, in part, to the costs of these proceedings.
By reason of his mother's death on 28 January 2012, the Defendant now, as her principal beneficiary, himself owns two home units in Randwick. They have a combined estimated value of $1.355 million. They provide an investment income of about $5,000.00 per month. Taking them into account, the Defendant estimates that, in March 2012, his net worth was about $1.1 million.
One of Szuzsa's sons (aged about 27 years) struggles with autism and, by reason of that disability, is likely to remain dependent upon his mother and the Defendant indefinitely.
The Defendant not uncommonly cares for his disabled stepson, while Szuzsa works. He regards himself as available for work on a part time basis. His ability to work has, however been compromised by indifferent health. He has suffered from kidney and bladder stones. He has had several operations over the past five years.
Szuzsa is approximately the same age as the Plaintiff. Her working life, like that of the Plaintiff, is approaching its limits.
THE DECEASED'S WILL AND ESTATE
Stephen made provision in his Will for the Plaintiff, the Defendant, Jordan, Caitlin, Kira and Sarah but not (at least, explicitly) for any member of the Herschco household other than the Defendant.
The Will named the Plaintiff as Stephen's executrix.
Clause 3 of the Will disposed of Stephen's estate in the following terms:
"3. I GIVE DEVISE AND BEQUEATH
A. 84 McEvoy Street, Alexandria in the said State to my son TOM VERZAR and if he shall predecease me my said grandson JORDAN VERZAR and such of them as becomes beneficially entitled subject to and to meet all mortgages, unsecured creditors and liabilities arising out of or incidental to my ownership of such property to the date of my death.
B. The rest and residue of my estate both real and personal of whatsoever kind and wherever situate after payment thereout of all my just debts funeral and testamentary expenses and all duties payable in consequence of my death whether State or Federal and whether levied on my actual or on my notional estate:
I. $30,000 for such of:
The said JORDAN VERZAR; and
CATTLIN [sic] YEO
as shall survive me and if more than one then in equal shares;
II. $20,000 for KIRA VERZAR;
III. $5,000 for SARAH VERZAR;
IV. the remainder for my said wife SUSAN VERZAR and if my said wife shall predecease me or not survive me as aforesaid then the provision I have made for her shall fall to my Trustee upon Trust for such of:
- the said TOM VERZAR; and
- my said daughter SARAH VERZAR
and if more than one in equal shares."
The inventory of Stephen's property, at the time of his death, annexed to the grant of probate of the Will, records that:
(a) the only real property owned by Stephen alone comprised the McEvoy Street and McCauley Street properties, each of which was valued at $1 million, with a total value of $2 million.
(b) Stephen owed as a joint tenant with the Plaintiff: the family home, a home unit in Gowrie Avenue, Bondi Junction (with an estimated value, then, of $900,000.00); three home units in the same complex in Old South Head Road (two of which had an estimated value of $250,000.00, and the remainder of which had an estimated value of $265,000.00); and an account with Westpac that had a credit balance of $4,913.57).
As has been mentioned, in these proceedings the Plaintiff has asserted as an additional asset of the estate a loan said to have been made by Stephen to the Defendant in 2006 by three payments totalling $30,000.00. The Defendant admits receipt of that money. He says that it was a gift, not a loan. He also contends that, if it were to be characterised as a loan, any cause of action against him was extinguished earlier this year, upon expiry of the six year limitation period for which the Limitation Act 1969 (NSW), s 14 provides: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566; Holler v Ayre [2005] 2 Qd R 410 at 415.
The only evidence bearing directly upon characterisation of the 2006 payments to the Defendant is a series of cheque butts (admitted as Exhibit P1) in which each of the three payments was characterised by Stephen as a loan.
In the absence of any evidence to the contrary, I would characterise the payments as a loan rather than as a gift; but any cause of action on them has been extinguished by the operation of s 63 of the Limitation Act and, in the way the proceedings have been conducted, nothing much turns on the characterisation in any event.
In the course of final addresses, counsel for the Plaintiff said:
"In relation to the estate, it needs to be said - it's only a minor thing - but certainly the Plaintiff doesn't seek the repayment of the $30,000.00 loan by [the Defendant]. The evidence does suggest there is a loan, but that can be just taken into account as an additional benefit he would receive out of the estate...".
The $30,000.00 paid to the Defendant, as recorded in the cheque butts, must be treated as irrecoverable from the Defendant.
So viewed, the payments comprising that $30,000.00 are, for practical purposes, indistinguishable from other documented payments totalling $55,000.00 made by Stephen to the Defendant between 9 March 2005 and 6 July 2008 or thereabouts, uncontroversially characterised as gifts. All up, Stephen assisted the Defendant, during this period, with payments totalling $85,000.00.
There was insufficient cash in the estate to pay the legacies to Jordan and Caitlin, Kira and Sarah. The Plaintiff deposed to having paid those legacies, in the total amount of $55,000.00, from her own funds following her sale of a property at Bondi in 2009. That statement about funding needs to be qualified by reference to the failure of the Plaintiff to provide a full, detailed accounting of her dealings with estate property.
QUESTIONS FOR DETERMINATION
The Plaintiff's claim encounters significant hurdles from each of three perspectives:
(a) First, from the perspective of whether an order should be made under s 58(2) of the Succession Act for an extension of the time within which an application for family provision relief should be made.
(b) Secondly, from the perspective of whether, in terms of s 59(1)(c), "adequate provision for the proper maintenance, education or advancement in life" of the Plaintiff has not been made by Stephen's Will.
(c) Thirdly, from the perspective, referable to s 59(2), of what, if any, order for her provision out of Stephen's estate "ought" to be made for [her] maintenance or advancement in life ... having regard to the facts known to the Court at the time the order is made".
I refrain from characterisation of these elements of the case as "stages" because that is terminology associated with the Family Provision Act 1982 (NSW) and Singer v Berghouse (1994) 181 CLR 201 at 208-211. Since Andrew v Andrew [2012] NSWCA 308 (14 June 2012) per Allsop P at [5]-[6] and Basten JA at [27], [29] and [41] a single judge of the Court is bound, in my assessment, to regard the two-stage decision-making process identified in Singer v Berghouse, and confirmed by Vigolo v Bostin (2005) 221 CLR 191, as superseded by enactment of ss 59-60 of the Succession Act.
Although the provisions of ss 59(1)(c) and 59(2) might formerly have been treated, respectively, as re-embodiments of the first and second of the two-stages of decision-making identified in Singer v Berghouse, the test to be applied in Family Provision cases must be taken by me to have been modified.
In Andrew, Basten JA (with whom, in substance, Allsop P agreed) explained at [29]:
"... [under the Succession Act] there is a simplification of the structure of the [decision-making] process. There is no longer a two-stage process required. A degree of artificiality has thus been removed. The court should now ask what, taking all relevant factors into account, would have been adequate provision for the applicant. There is no first stage of determining whether the actual provision was 'inadequate', followed by a discretionary exercise of determining what would be adequate and what should in fact be done."
The strong dissent of Barrett JA in Andrew at [65], [69], [81]-[82], [94], [97], [145] and [148] cannot, however, remain wholly unnoticed. His Honour adhered to the view, expounded by a differently constituted Court of Appeal in Keep v Bourke [2012] NSWCA 64, that the two-stage decision-making process remains applicable under the Succession Act. At [81] he summarised that approach as follows:
"Under s 59 and s 60 ..., the task of the court, in a case of the kind under discussion [namely, where the applicant is a child of the deceased, so that no question of 'eligible person' status arises and no previous order for provision has been made], is:
(a) to determine the extent of the provision made for the maintenance, education and advancement in life of the applicant by the deceased's will or the intestacy laws;
(b) to form an opinion of the adequacy of that provision;
(c) if the opinion is one of inadequacy, to make an evaluative judgment as to what provision, if any, ought to be made out of the estate of the deceased person for the maintenance, education and advancement in life of the eligible person, having regard to the facts known to the court at the time the order is made; and
(d) in making that evaluative judgment, to take into account, as discretionary factors, the matters in s 60(2)."
The parties argued their respective cases before me by reference to Singer v Berghouse. Andrew was decided only after judgment was reserved. Counsel drew attention to it at that time, but neither sought to reargue the case. In deference to them I endeavour, in this Judgment, to explain my decision by reference to both the terms in which they presented their respective cases and Andrew.
In doing so, I make two general observations. The first is that, even if two stages are still to be recognised in the decision-making process, they involve similar considerations: Singer v Berghouse at 210; Vigolo v Bostin at 197 [5]-[6]. The second is that any conceptual dichotomy between the approaches of Singer v Berghouse and Andrew evaporates if one follows the text of the operative provisions of the Succession Act. There is, there, no express mention of a "two-stage" decision-making process, of which Singer v Berghouse spoke, or of the simplified question posed by the majority in Andrew.
THE PLAINTIFF'S APPLICATION FOR AN EXTENSION OF TIME
The time constraint imposed by s 58(2) on the making of a family provision application is not a mere formality.
An application for an extension of time cannot be taken lightly. An applicant bears an onus to "show sufficient cause" for any grant of an extension: In Re Salmon, Deceased [1981] Ch 167 at 175B; Re Guskett [1947] VLR 212 at 214; Durham v Durham (2011) 80 NSWLR 335 at [39].
What may constitute "sufficient cause" must depend on all the circumstances of the particular case. The Court is called upon to form a judgment that cannot be constrained by rigid formulae.
Nevertheless, guidance is available from earlier cases, including Warren v McKnight (1996) 40 NSWLR 390 at 394E and Dare v Furness (1997) 44 NSWLR 493 at 500C (in relation to the Family Provision Act 1982 (NSW), s 16); Thomas v Pickering [2011] NSWSC 572 at [84]-[90] (in relation to the Succession Act 2006, s 58); and (as elaborated in JK de Groot and BW Nickel, Family Provision in Australia (Lexis Nexis Butterworths, Australia, 4th ed, 2012) at paragraphs [5.8]-[5.14]) the case law of other Australian jurisdictions.
Factors which the Court may conventionally take into account upon the exercise of a power such as that for which s 59(2) provides include: (a) the sufficiency of the applicant's explanation for delay in making a claim for family provision relief; (b) any prejudice to beneficiaries occasioned by the delay, other than disappointment that might be experienced upon adjustment of entitlements consequent upon the making of an order for provision; (c) the existence of any unconscionable conduct by either side bearing upon the application for family provision relief: and (d) the strength of the applicant's case for the making of a family provision order.
Ignorance of an entitlement to apply for relief can constitute a sufficient explanation for delay; but a change of mind by the applicant does not. Nor, in itself, does a deterioration in an applicant's financial position: Re Lauer [1984] VR 180.
The fact that an applicant has been operating under a personal disability affecting his or her capacity for judgement, or financial constraints, may justify the grant of a brief indulgence to allow consideration of his or her claim on an estate unless it appears that administration of the estate would be prejudiced by that extension of time: Neil v Nott [1994] HCA 23 at [9]-[10]; 68 ALJR 509; 121 ALR 148.
The Court should be slow to grant an extension of time which may have the effect of improving an applicant's position over that which he or she would have occupied had an application for Family Provision relief been brought within time: Durham v Durham (2011) 80 NSWLR 335 at [37].
In this context, I am mindful that, in the presentation of her case, the Plaintiff drew support for her claim from the fact that the Defendant acquired the principal assets he presently has (two home units in Randwick) only as a consequence of the death of his mother on 28 January 2012. As the Plaintiff's counsel frankly acknowledged in his submissions, had the Defendant not inherited that property, her case on the merits would have been much more difficult to argue. That is a factor to be borne in mind by me in deciding whether or not to grant her application for an extension of time. I do not, however, regard it as decisive.
In these proceedings, the Defendant's opposition to a grant of an extension of time is based squarely upon criticism of the Plaintiff's explanation for her delay. He has not pointed to any material prejudice to him or to the existence of any unconscionable conduct on the part of the Plaintiff. His attack on the strength of the Plaintiff's case has not been confined to questions arising under s 59; but neither has it been deployed against her specifically in the context of her s 58 application.
The Plaintiff first learned of her right to make an application for a family provision order in early July 2010. It was not until 12 August 2010 that her attention appears to have been drawn to the existence, and terms, of s 58(2).
At that time she was hesitant to institute proceedings because of apprehension about their likely cost and, significantly, doubts about whether she was emotionally strong enough to pursue litigation.
It was not until August 2010 that the Plaintiff began to appreciate the effect of Stephen's Will vis á vis the Defendant's entitlements. She had been operating - conveniently, it might be said - under a misapprehension that the Defendant's entitlement to rent on the McEvoy Street property arose only upon transfer of the property to him at some future date, rather than from the time of Stephen's death.
The fact that the Defendant was, not unreasonably, pressing for the property to be transferred to him, and for the Plaintiff to account to him for rents received on the property, was undoubtedly a factor in her slow awakening to a need for action.
Nevertheless, it was not until 29 October 2010 that she met in conference with a barrister briefed to advise her about her entitlements. She says, frankly, that he advised her that she was adequately provided for in Stephen's Will and she should get a part time job. She also says, significantly, that she was devastated by this advice.
I do not doubt that her fragile emotional state - a profound inability to come to terms with the death of Stephen and the weight of responsibility on her as a mature-aged sole parent - explains her delay in seeking a second opinion about her entitlements or bringing some resolve to the administration of Stephen's estate.
Equally, I accept that the immediate catalyst for the Plaintiff's commencement of these proceedings was the Defendant's service upon her on 27 March 2011 of a Statement of Claim (in proceedings numbered 2011/88252) seeking orders designed to take administration of Stephen's estate out of her hands and to compel her to provide an accounting for all her dealings with estate property.
Service of that originating process necessarily involved her in court proceedings. She was no longer confronted with a dilemma about whether or not to commence proceedings. Any element of choice that had earlier confounded her was taken away. On any view, she needed to make a decision about whether or not to apply for family provision relief.
There was no further delay. On 30 March 2011 the Plaintiff first saw the solicitor whose firm, on her instructions, commenced the present proceedings. On 6 April 2011 she met in conference with that solicitor and new counsel. In the course of that conference she instructed the solicitor to commence proceedings. Those instructions were acted upon by the filing of a summons two days later.
In all the circumstances, in my opinion the appropriate course is to grant to the Plaintiff an extension of time under s 58(2) sufficient to permit her claim for relief under s 59 to be determined on its merits.
In reaching that conclusion I take into account my assessment that: (a) the Plaintiff has a meritorious claim for relief under s 59, albeit one more modest in its dimensions than her advocacy suggests; and (b) it is in the interests of justice, and the interests of both sides of Stephen's family, that the Plaintiff's claim for relief (including any allowance referable to the plaintiff's obligation to care for Sarah) be determined on its merits.
MATTERS TO BE CONSIDERED ON THE PLAINTIFF'S APPLICATION FOR FAMILY PROVISION ORDER : S 60(1)(b)
The Court is assisted in its performance of the task for which ss 59(1)(c) and 59(2) of the Succession Act provide by an enumeration, in s 60(2), of matters that may be considered by the Court. It is unnecessary to have regard to those matters in determining the status of the Plaintiff as an "eligible person". As Stephen's widow, she is plainly an eligible person under s 57(1)(a) and, accordingly, she satisfies the requirements of s 59(1)(a), and s59(1)(b) has no application to her. Section 60(1)(b) governs this case. It provides that the Court may have regard to the matters set out in s 60(2) for the purpose of determining "whether to make a Family Provision order and the nature of any such order".
Whether ss 59(1)(c) and 59(2) involve a two-stage decision-making process (as contemplated by Singer v Berghouse) or the simplified question identified in Andrew, the matters listed in s 60(2) are available for consideration.
The range of matters enumerated in s 60(2) is extensive. It culminates, in s 60(2)(p), in a grant of authority to the Court to take into account "any other matter the court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered".
As is made plain in each of ss 59(1)(c), 59(2) and 60, the tasks to be performed by the Court in deciding whether to make a Family Provision order, and the nature of any such order, require the Court to make judgments having regard to all material circumstances at the time when the Court is considering an applicant's claim for family relief.
Prudently, regard should be had to each of the matters specifically enumerated in ss 60(2)(a)-(o) as a means of ensuring that all material circumstances are taken into account. The list provides a valuable prompt against the possibility of matters of substance being overlooked.
It is not necessary in each case, however, to recite the list of matters enumerated in s 60(2) or to dwell on particular matters as if they were, in themselves, determinant of the broad judgments required to be made under s 59.
Attention remains centrally focussed on s 59.
THE ADEQUACY OF THE PROVISION MADE FOR THE PLAINTIFF: s 59(1)(c)
Section 59(1)(c) of the Succession Act relevantly provides that the Court may, on an application for family provision relief, make an order in relation to the estate of a deceased person, if it is satisfied that, at the time when it is considering the application, adequate provision for the proper maintenance, education or advancement in life of the applicant has not been made by the Will of the deceased.
The concepts of "adequate" and "proper" have a heritage that harks back, at least, to Bosch v Perpetual Trustee Company Limited [1938] AC 463 at 476. The words "adequate" and "proper" connote something different. "Adequate" is concerned with the quantum, whereas "proper" is concerned with the standard, of the maintenance, education and advancement in life of the applicant for relief: Devereaux-Warnes v Hall (No. 3) (2007) 35 WAR 127 at [72]-]77]. What is "adequate" and "proper" in a particular case depends on the circumstances of the case; the concepts they embody are relative to those circumstances, not governed by an abstract absolute: Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19.
In assessing the facts of a case, the Court is required to make an evaluative judgment about whether an applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life, having regard to all the circumstances of the case, upon the basis of its own general knowledge and experience of current social conditions and standards. Cf., Singer v Berghouse (1994) 181 CLR 201 at 209-211,
Whether an applicant for relief had a "need" was a relevant enquiry as part of the first stage of the two-stage decision making process. The enquiry could not be too narrowly focussed. Depending on the particular circumstances of the case, it required a consideration of present and future needs, including the need to guard against unforseen contingencies: Collins v McGain [2003] NSWCA 190 at [41]-[42] and [45]-[51].
The standard of provision for a widow not uncommonly identified with Luciano v Rosenblum (1985) 2 NSWLR 65 at 69-70 (upon which the Plaintiff relies in these proceedings) may provide useful guidance, and help to crystallise issues for consideration, but it does not provide an answer for all occasions. There is no inflexible rule that governs the entitlements of widows or partners generally. The facts of each case must be considered, particularly where there are competing claims on the bounty of a deceased person and the deceased's resources are insufficient to satisfy them all.
Whatever guidance one might draw from analogous cases all analogies, and any guidelines drawn from a pattern of similar cases, must yield to the text of the legislation, the duty of the Court to apply that text to the particular circumstances, and the totality of material circumstances, of each case. Preconceptions and predispositions, comforting though they may be, can be the source of inadequate consideration of the jurisdiction to be exercised: Bladwell v Davis [2004] NSWCA 170 at [12] and [18]-[19].
The Court's assessment of the question posed by s 59(1)(c) - whether or not adequate provision for the proper maintenance, education or advancement in life has been made for the Plaintiff - can, and should, be informed by the assessment made by Stephen at the time he made his Will and in the terms he made it. He plainly acknowledged that he owed a duty to make provision for both the Plaintiff and the Defendant. Recognition of such an acknowledgement is not precluded by criticism of the concept of "moral duty" as a guiding star in deciding whether or not Family Provision relief should be granted by the Court: Cf, Singer v Berghouse (1994) 181 CLR 201 at 209; Vigolo v Bostin (2005) 221 CLR 191 at 200-202 and 212-218, especially at [21], [63] and [73]. The legacies for which Stephen provided constitute a recognition of his family line (not, at least expressly, extending to the Defendant's partner and her children) and the reality that the welfare of his infant daughter, Sarah, depends upon the provision made for the Plaintiff.
Although the Court must be ever mindful not to yield to the temptation of remaking a will, or attempting to readjust entitlements to an estate in the name of fairness or equity, the terms of s 59(1)(c) dictate that a broader perspective than that of the deceased's Will must be taken. That is because the task of the Court under s 59 is to make its evaluative assessment at the time when it is considering an applicant's application for a family provision order, not at the time of the deceased's death.
In discharge of its statutory function the Court is, accordingly, able to take into account the facts that, in the three and a half years since the death of her husband, the Plaintiff has struggled to come to terms with her loss, fears of financial insecurity and anxieties about performance of her duties as a sole parent. It is able to take into account her perceived need to effect repairs to the investment properties upon which she is dependent for income and to renovate the family home to accommodate her tastes rather than those of an absent, pined-for patriarch. It is able also, to observe the Plaintiff's experience of a mortgage debt, incurred by husband and wife together at the time of acquisition of the three investment properties in Old South Head Road, but serving as an encumbrance on the family home as well as those properties.
Objectively, the Plaintiff is not badly off. Were it not for her need to care for Sarah and to cope with the anxieties of a mature-aged, single parent of a young child, she would be regarded by many in the general community as well off. Even allowing for Sarah, more than a few people would attribute that degree of prosperity to her - unless, perhaps, they took time to dwell on the course of the Plaintiff's life with Stephen and the joint efforts of both Stephen and the Plaintiff in the accumulation of such wealth as the Plaintiff (and, presumptively, Sarah) presently have.
In discharging its statutory duty to make judgments, in Family Provision cases, based upon a consideration of community values, these competing perspectives of the Plaintiff's application for relief need to be taken into account. The Court needs to be alive to such perspectives but, ultimately, it must make its own objective assessment about the judgements entrusted to its care by the community.
Towards that end, I adopt the following statement of the law by Allsop P in Andrew v Andrew [2012] NSWCA 308 at [16]:
"If I may respectfully paraphrase Sheller JA [in Permanent Trustee Co Limited v Fraser (1995) 36 NSWLR 24 at 46F-47B], the Court in assessing the matter at s 59(1) and the order that should be made under s 59(1) and (2), should be guided and assisted by considering what provision, in accordance with prevailing community standards of what is right and appropriate, ought to be made. This, Sheller JA said ... involved speaking for the feeling and judgment of fair and reasonable members of the community. It is to be emphasised that s 59(1)(c) and s 59(2) refer to the time when the Court is considering [an application for a family provision order] and the facts then known to the Court. The evaluative assessment is to be undertaken assuming full knowledge and appreciation of all the circumstances of the case. This ... makes the notion of compliance by the testator with a moral duty (on what he or she knew) apt to distract from the statutory task of the Court."
The Court's task requires an objective assessment of all the circumstances of the case on the evidence adduced by the parties. One of the factors to be taken into account is the way Stephen himself dealt with his property, not limited to the terms of his Will. He appears to have been an intelligent, thoughtful man very much alive to the claims of family members. He made his Will in 2007, about two years before his death. He allowed land owned by him in joint tenancy with the Plaintiff to pass to her by survivorship. He gave the McEvoy Street property to the Defendant, no doubt with the knowledge that the McCauley Street property would pass to the Plaintiff as his residuary beneficiary. Whether the balance of the proceeds of sale of the business he had conducted with the Plaintiff would ever be paid, he might well have doubted; but any payment, if made, would pass one way or the other (by survivorship, or as part of his residuary estate) to the Plaintiff.
The advanced age at which Stephen made decisions about these things and the presence of Sarah in his life must have given him a heightened appreciation of the competing claims of the Plaintiff and Sarah on the one hand and the Defendant and his family on the other.
His perspective is worthy of particular notice notwithstanding the changing focus of the law since 1916, when the Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW) was first enacted. That change in focus is evident in the passage of the law from the 1916 Act to the Family Provision Act 1982 (NSW) and, more recently, to the Succession Act 2006 (NSW). It is evident also in the accumulation of cases in which applicants for Family Provision have become accustomed to seeking, and judges have become accustomed to granting, orders modifying the operation of formal expressions of testamentary intention.
An accumulation of discretionary decisions can create expectations that ripen into claims of right. In the Family Provision jurisdiction, those expectations have not yet solidified into a form of proprietary right, but changing community expectations about the succession of property have displaced the notion that a person's testamentary intentions are necessarily to be accorded the respect sometimes attributed to property. The changing focus of the law is, perhaps, also reflected in the fact that the concept of a "formal" Will, itself, has fallen from favour to the extent that s 18A of the Wills Probate and Administration Act 1898 (NSW) and s 8 of the Succession Act 2006 have permitted "informal" Wills to be admitted to probate.
It is in these circumstances that the Court, in dealing with applications for Family Provision relief, has drifted away from the former gold standard of a "just and wise" testator (to use an expression attributed, first, to In Re Allen [1922] NZLR 218 at 220-221 and often associated with Bosch v Perpetual Trustee Co [1938] AC 463 at 479 and The Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20) and towards a paper currency equivalent, "community standards" of what is right and appropriate. Whatever the currency, its legitimacy ultimately depends upon acceptance within the community it serves.
Although there has been a shift in the conceptual paradigm used for the guidance of judicial decision making, the law has not moved so far away from the gold standard that intentions in fact expressed, within two years of his death by a testator who transparently sought to be both "just" and "wise" are to be ignored. In my assessment, we have such a testator here in Stephen.
The Court can, and must, take into account the facts now known. It has, in the nature of the case, a temporal advantage over Stephen. But it should not lightly discount his considered assessment of the claims upon his estate.
As the Defendant contends, and as her own counsel has frankly acknowledged, the Plaintiff could find funds for expenditure on private school fees, travel or the like, and even eliminate her mortgage debt by sale of the Old South Head Road investment properties.
However, were she to take such a course, and to increase her income by elimination of the (tax deductible) mortgage payments that presently absorb about $50,000.00 of her annual, gross income, in the short term her tax bill would increase and she would remain without the capital contingency fund which she seeks by means of a family provision order. These types of choices travel with ownership of investment properties. They are not unique to the Plaintiff. Nor is she beyond making rational, business-like decisions about them.
Her taxable income for the year ended 30 June 2012 was an estimated $140,784.00, subject to liability for tax estimated at $32,000.00, leaving a net after tax income of about $108,000.00 for the year. It was, she says, consumed by her living expenses.
Each of the objects which the Plaintiff seeks to achieve in these proceedings is, in my assessment, a legitimate one for her to pursue.
Had Stephen not died when he did, the Plaintiff and Sarah would have enjoyed, with him, the benefit of the additional resources now identified with the value attributed to the McEvoy Street property. That would have provided them, collectively, with resources to do the repair work and renovations which the Plaintiff has pursued since Stephen's death, to maintain Sarah in the school of her parent's choice, and to travel.
The parties adduced elaborate evidence from expert accountants to demonstrate, inter alia, the relationship between the Plaintiff's assets, liabilities, income and expenditure in various scenarios of the future. That evidence was driven largely by the assumptions upon which expert opinions were based. It was useful in crystallising the issues between the parties by highlighting the assumptions, more than by provision of calculations upon which reliance could be placed in making the determinations required to be made under s 59.
A family provision order is generally, ultimately based upon broader notions than found in the assessment of common law damages and the application of discount rates used to calculate the present value of future income streams: Tchadovitch v Tchadovitch [2010] NSWCA 316 at [53]-[60]. A common law claim for damages is a claim of right grounded upon facts established by evidence. A finding of fact about future events may involve difficult questions about the predictability and probability of events (as discussed in Malec v JC Hutton Pty Limited (1990) 169 CLR 638 at 639-640 and 642-643); but it is a finding of fact nevertheless and, once made, it may be determinative of a claimant's entitlement to redress.
A Family Provision application is a claim for a grant of statutory relief based upon broad evaluative and discretionary judgments about all the circumstances of the particular case. Any entitlement to relief is not easily characterised, or conceptualised, as one "of right" even if the course of judicial precedents may facilitate an assessment of a claimant's prospects for success. Some of the circumstances which the Court has to take into account on consideration of an application for Family Provision relief defy any precise calculation even if underlying facts can be identified with precision. Some, not uncommonly, relate to the present position, or future prospects, of a range of people whose claims on an estate may complement, or more likely compete with, those of the applicant for relief. The nature and range of factors to be taken into account are more qualitative and nuanced than an expert, quantitative analysis based upon accounting or actuarial assumptions can allow.
I intend no criticism of the parties to the present proceedings in counselling caution against too ready a resort to experts' reports of this nature. They are not without utility in all cases. However, in many cases they do lack utility and their preparation (including the adversarial responses they generate) imposes an unnecessary financial burden upon an estate and all interested parties.
The difficulty in the present proceedings arises from three general considerations. First, the fact that the material wellbeing of the Plaintiff depends - as it did during Stephen's lifetime following the sale of the family business and the birth of Sarah - on the maintenance of capital, from which the family's income is wholly derived. Secondly, the Plaintiff's claim must be weighed against the competing entitlement of the Defendant to share in Stephen's estate. That entitlement cannot be disregarded or readily discounted. Thirdly, Stephen's estate cannot accommodate the Plaintiff's claim in its entirety without diminishing the provision made for the Defendant in Stephen's Will.
The Plaintiff's case is grounded, at least in part, on an implicit contention that she should be entitled, indefinitely, to maintain a particular level of income and, with Sarah, to enjoy a particular standard of living (including a private school education for Sarah, regular travel and property renovations) without any need to draw on capital. This cannot be done, indefinitely, without denying the Defendant's entitlement to share in his father's estate.
On the other hand, it is unrealistic to suggest - as does the Defendant - that the Plaintiff could (or, at least, could easily) return to the teaching career she abandoned in her youth. She might, and in her own interests quite probably should, look towards part-time employment; but the Court should not too readily force that upon her. In 2011 she performed part- time, paid work for the Australian Bureau of Statistics in connection with the national census; but, by its nature, that work was not ongoing.
Full allowance needs to be made for the fact that the Plaintiff worked hard, for many years, in building up the wealth she and Stephen jointly accumulated. With Stephen, she retired from that life in order to start, to enjoy and to take responsibility for the care of a family.
On an assessment of what is "proper" for the maintenance, education and advancement in life of the Plaintiff allowance needs also to be made for the dramatic nature of the changes made in the circumstances of the Plaintiff's family life in the years immediately preceding Stephen's death. They changed dramatically with the couple's sale of their business, retirement, and the birth of Sarah.
The Plaintiff notionally accepts, as in my opinion she must accept, that following the death of Stephen, lifestyle adjustments must be made in her household. However, having retired from a full business life and become a mother late in life, she has no present inclination to return to the workforce (even on a part time basis) and, as has been remarked, she seeks to maintain a particular standard of living, indefinitely, without drawing on capital.
The decisions that Stephen and the Plaintiff made to retire from business, and to have a child after retirement, were shared decisions of both.
When, shortly after those decisions were made, Stephen made his Will he did so conscientiously and with an eye to moral obligations he owed to both branches of his family. However, in my assessment, he failed to make due allowance for adjustments necessary for the Plaintiff to make in settling in to the life of a mature-aged, single parent of Sarah dependent largely, if not wholly, on rental income.
In my assessment, as events subsequent to Stephen's death have confirmed, withdrawal of the McEvoy Street property from the resources available, and prospectively available, to the Plaintiff necessarily impacted upon her to such an extent that she must be found to have been left with less than adequate provision for her proper maintenance or advancement in life (within the meaning of s 59(1)(c)), taking into account her parental obligations towards Sarah. I am satisfied that adequate provision for the proper maintenance, education or advancement in life of the Plaintiff has not been made by Stephen's Will.
Having formed that view, I turn to s 59(2).
WHETHER ANY, AND IF SO WHAT, RELIEF SHOULD BE GRANTED TO THE PLAINTIFF: s 59(2)
Section 59(2) of the Succession Act provides that the Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the applicant, having regard to the facts known to the Court at the time the order is made.
The question whether any, and if so, what provision should be made for the Plaintiff, in addition to that for which Stephen's Will provides, must be made in the light of the competing entitlement of the Defendant to a share in Stephen's estate.
In addressing this topic, as others on a Family Provision application, the Court is guided by its perception of community standards of what is right and appropriate, speaking for the feeling and judgement of fair and reasonable members of the community, and taking into account all the circumstances of the case as currently known: Andrew at [16].
There is no mathematical formula able to be applied for the purpose of making the Court's determination. As has already been noted, presentation to the Court of elaborate accounting or actuarial evidence about future finances is of limited utility, at least in the present proceedings. That evidence is ultimately limited by the assumptions that necessarily underpin it. It cannot readily accommodate the qualitative judgements the Court has to make about a broad range of factors, including those about competing entitlements that may bear upon the claim of an applicant for relief.
Weighing the Plaintiff's claim against the observations of Powell J in Luciano v Rosenbloom (1985) 2 NSWLR 65 at 69-70, as she insists should be done, does not produce an incontrovertible or neat outcome. Taking into account the provision made for her during Stephen's lifetime (and acknowledging her substantial contribution to the building up of matrimonial property generally), she is secure in the family home; and she has investments from which, as she may determine, she can derive income or draw on capital. Sarah's youth undoubtedly makes, and will continue for a decade or so at least to make, claims upon her resources. However, the child is in good health and her future prospects are not the subject of any known constraints other than those natural to a child of her age.
The Defendant is several years older than the Plaintiff and at an age when thoughts not uncommonly turn to retirement. His position, in that respect, is not entirely dissimilar to that of the Plaintiff herself.
The Defendant's counterbalance to the Plaintiff's obligation to care for Sarah is his familial obligation to care, indefinitely, for a disabled step-son. That obligation may be of a different kind than the Plaintiff's obligation to care for Sarah; but it is no less real. It may, in fact, be a heavier burden to bear.
The fact that Stephen did not expressly acknowledge in his Will the familial obligations the Defendant has by virtue of his current, long term domestic partnership does not mean that he did not take them into account. In any event, in my assessment, the community values that guide consideration of the Plaintiff's entitlements require that the Defendant's familial obligations (including an obligation to care for a disabled step-son) be taken into account in assessing the Defendant's competing entitlement.
In weighing the competing entitlements of the Plaintiff and the Defendant, in the context of their respective financial resources and the property comprising Stephen's estate, in my assessment the proper course, at this time is: first, to recognise that since Stephen's death the Plaintiff has had the benefit of estate property (namely, the McEvoy Street property and accrued rents net of expenses) which, under the terms of Stephen's Will, should have been transferred to the Defendant but which has been deployed by her as an aid to improving other property (particularly the McCauley Street property) which she owns or to which she is entitled under the Will, as part of a process of adjustment of her affairs to life without Stephen; and, secondly, to take that benefit into account in quantification of a modest legacy to be granted to her in addition to the benefits to which she is otherwise entitled under the Will.
In the absence of a full, detailed accounting by the Plaintiff of all her dealings with estate assets since the death of Stephen, and bearing in mind that it is in the interests of both parties to make orders designed to bring their financial relationship and their related involvement in these proceedings to an end, I propose to proceed on the basis that an order should be made entitling the Plaintiff to the benefit of the income of Stephen's undistributed estate up until the time that final orders are made in these proceedings (net of any expenses incurred in the accrual of that income) as the foundation for a further legacy in the form of a lump sum amount of $100,000.00 to be charged against the McEvoy Street property. On the evidence as to receipt of rents from the McEvoy Street property, that represents a total of not less than $200,000.00 or thereabouts of provision to be made for the Plaintiff additional to that made for her in Stephen's Will.
In the language of s 59(2), I formally find that this level of provision ought to be made for the maintenance, education or advancement in life of the Plaintiff in addition to the provision made for her in Stephen's Will.
Subject to allowing the parties an opportunity to make submissions as to the precise form of relief to be granted, my intention is that the $100,000.00 legacy should be charged against the McEvoy Street property and that no more than that amount (save, possibly, for costs of the proceedings) should be charged against that property. The Defendant should, as soon as may be practicable, have the benefit of the McEvoy Street property, albeit without accrued rent, subject only to payment of the $100,000.00 legacy and such, if any, orders for costs as may be charged against it by an order of the Court for that purpose made.
The first component of the proposed additional provision for the Plaintiff will, as a practical matter, dispense with any requirement that the Plaintiff formally account for her dealings with estate property to date. Together with the second component, it takes into account the fact that the Plaintiff has had a substantial time, now, to make the property improvements and renovations she has felt moved to make in adjusting to life without Stephen.
Looking forward, the intended effect of this determination is that, subject to costs orders, the only monetary charge on the McEvoy Street property is the legacy of $100,000.00.
If, in addition to that legacy, the costs of both parties were to be paid out of the undistributed estate represented by that property, the total charge on that property would be of the order of $370,250.00, given the costs estimates provided at the hearing.
Upon the basis that the property has an agreed value of $850,000.00, the value of Stephen's estate reserved for the benefit of the Defendant is likely to be no less than $479,750.00 or thereabouts.
CONCLUSION
Having addressed the particular terms of s 59(1)(c) and 59(2), and reviewed the list of factors enumerated in s 60, I return to the question formulated by Basten JA in Andrew at [29]: What, taking all relevant factors into account, would have been adequate provision for the Plaintiff?
My answer to that question, with the benefit of knowledge of events since Stephen's death, is: an amount sufficient to provide the Plaintiff with breathing space in adjusting her life (and that of Sarah) to life without Stephen, including an allowance for repairs to rental properties and renovations of the family home.
In my assessment, the best measure of this entitlement is to be found in allowing to the Plaintiff what she has expended, and accumulated, to date in making adjustments to life without Stephen (by delay in the transfer of the McEvoy Street property to the Defendant and by enjoyment of the income of estate property in the interim) together with a further legacy of $100,000.00 in addition to the provision made for her in Stephen's Will.
As the parties have requested an opportunity to make submissions about the form of any relief to be granted, and about costs orders to be made in these and the related proceedings, I refrain from making any formal orders to give effect to these Reasons for Judgment.
At this stage, I simply publish these Reasons and invite the parties' foreshadowed submissions.
**********
Decision last updated: 16 November 2012
125
20
3