Youn v Frank
[2011] VSC 649
•16 December 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2010 5428
IN THE MATTER OF Conrad John Frank, deceased
| JEONG OK YOUN | Plaintiff |
| v | |
| DAMIAN CONRAD FRANK AND KATIE SARAH FRANK (being persons who have a substantial interest in opposing the application) | Defendants |
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JUDGE: | DALY AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2 and 3 November 2011 | |
DATE OF JUDGMENT: | 16 December 2011 | |
CASE MAY BE CITED AS: | Youn v Frank | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 649 | |
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TESTATOR’S FAMILY MAINTENANCE – Part IV of Administration and Probate Act 1958 - Intestacy provisions – Claim by widow for further provision – Adequacy of intestacy provisions - Competing obligations to adult children.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. Wells | Galbally & O’Bryan |
| For the Defendants | Mr S. Newton | Professor Phillip Hamilton |
HER HONOUR:
Mr Conrad John Frank (“John”) died on 17 June 2010 at the age of 73, after a short illness. He died without a will. By virtue of the provisions of s 51 of the Administration and Probate Act 1958 (“Act”) his estate would, in the absence of any agreement or order to the contrary, be distributed as follows: the first $100,000 (plus interest on that amount from the date of death) paid to his widow, Ms Jeong Ok Youn (“Ok”), with the residuary estate to be divided equally between Ok and John’s two adult children from his first marriage, Damian Frank and Katie Frank. As Ok considered such a distribution to be insufficient provision for her, she issued this proceeding. Damian and Katie also bring claims for further provision, contending that the estate should be distributed equally between each of Ok, Damian, and Katie.[1]
[1]See proceeding No SCI 2010/6697. Orders were made in that proceeding on 15 March 2011 that the two proceedings be heard together and that the evidence in this proceeding be treated as evidence in that proceeding.
At the time of his death, Ok estimated that the net value of John’s estate was approximately $689,265.19. However, this included approximately $39,500 attributable to various personal chattels, which, according to the intestacy provisions of the Act would automatically pass to Ok. This left the net value of the estate available for distribution at $650,000. The position was substantially similar at the time the parties went to mediation in March 2011.[2]
[2]While the estate incurred further debts between June 2010 and March 2011, the increase in the value of the property (to $930,000) made up for the increasing liabilities of the estate.
Applying the intestacy provisions of the Act to a net estate of $650,000, the estate would be distributed as follows: $283,000 to Ok (excluding any interest) and $183,000 to each of Katie and Damian.
However, by the time of the trial of the proceeding the financial position of the estate had deteriorated substantially, for a number of reasons. First, the decline in the Melbourne metropolitan property market has led to a diminution in value of the main asset of the estate, John’s property at 2A Charles Street, Brunswick (“property”), from the price at which a potential purchaser had offered to purchase it in April 2011 of $930,000, to $845,000, being the agreed valuation as at November 2011. Secondly, the estate has continued to incur debts by reason of borrowings by Ok on behalf of the estate to pay, among other things, the monthly mortgage payments of $940, outstanding rates and other expenses connected with the property, and the costs of the marketing campaign for the property early in 2011. Thirdly, the parties have incurred legal fees of approximately $70,000 to $90,000 in the conduct of this proceeding since the date of mediation. Accordingly, the agreed net value of the estate as at the time of the proceeding is somewhere between $432,000 to $456,000. This deterioration in the value of the estate over a period of a mere eight months stands as a stark reminder of the perils of litigation.
Taking the mid point of the above amount ($444,000), the application of the intestacy provisions of the Act would result in the following distribution of the estate: approximately $221,000 would pass to Ok (this amount includes an estimate in respect of interest), while Katie and Damian would each receive $111,000.
Counsel for Ok submits that having regard to the marital relationship between John and Ok, the current financial position of Ok and her current and future needs means that the moral obligation of John at the time of his death, as a wise and just testator, required him to bequeath the vast bulk of his estate to Ok in order to provide her with a secure home. He submitted that the provision that ought to made for Ok is an order vesting the title in the property in Ok, with award of any legacies to Katie and Damian to be a charge on the property. The basis for this submission is that Ok has given evidence that she expects to be able to raise finance to pay out the liabilities of the estate, including any amounts ordered to be paid to Katie and Damian, through either loan funding or a transfer of part of the equity in the property to family and/or friends. Further, counsel submitted that any provision for Katie and Damian should be modest, to a maximum level of $20,000 each.
Counsel for Damian and Katie submit that given the length of the relationship between John and Ok, the limited resources of the estate, along with the capacity of Ok to support herself both during the course of the relationship and after John’s death, the estate should be divided equally between the three parties or, at the very least, the effect of the intestacy provisions of the Act should not be disturbed.
The parties
Ok is 44 years of age. She was born and raised in South Korea. She qualified as an architect in 1989 and was employed full time in that capacity until 1999. In 2000 she decided to move to Australia. She came to Australia on a student visa and studied English. She rented an apartment in Brunswick with other international students. She discovered that in order to qualify as an architect in Australia she would have to study for a further two and half years, which she was reluctant to do. She started a business management course at RMIT but did not pursue it. In March 2000 she met John at the property when she stopped to look at some sculptures exhibited at the property when cycling home from her local shops. John lived in a mezzanine floor above the warehouse storage area, and invited her in for a cup of tea.
Over the course of 2000 she became friends with John, and became involved in a business started by him in the 1990s, selling imported furniture from Bali (“business”). They started an intimate relationship in October 2000 when she travelled to Bali with him to source stock for the business, and she moved into the property at around that time. In June 2001, as she was not attending classes at RMIT, the immigration authorities wrote to her telling her that she had to leave Australia. She deposed that John asked her to marry him. They got married on 18 August 2001. She and John continued to run the business together. Until 2003, the business traded under the name “John and Ok”, and thereafter “Orapopo Garden Art”. From time to time she or another family member advanced funds to John and Ok for the purpose of purchasing stock for the business. John also raised funds for the business by entering into loans secured against the property. They rented a store in North Fitzroy, and over the next few years ran the business together, travelling to Indonesia a few times a year to buy stock and enjoy holidays. From time to time she earned income from working outside the business. They pooled their resources. They briefly separated in 2005, but reconciled after a couple of months.
It appears that the business was wound down over the course of 2007 and 2008 for reasons, and in circumstances, which are not entirely clear from the evidence. There is some evidence that during this period John gave some consideration to selling the property and “downsizing” by relocating to a property in rural Victoria, New South Wales or Tasmania, but this did not occur. In January 2008, Ok returned to Korea to work as an architect. According to Ok, John and Ok spoke to each other several times a day while Ok was away and kept in contact by email. They met up in Vietnam for a holiday and stayed together in Korea for some time.
John returned to Australia in November 2008. Ok remained in Korea until June 2009. John had unspecified health complaints. In May 2010 he was told that he had cancer in his lung, pancreas and liver. Aggressive treatment with chemotherapy and radiotherapy was unsuccessful. He came home from hospital on 9 June 2010, and for the following eight days Ok, Katie and Damian cared for him at the property until he died.
Since John’s death, Ok has been unemployed, apart from some casual cleaning and childcare engagements. Interest payments on the mortgage secured by the property were paid by her solicitors, Galbally & O’Bryan, up to the date of mediation in March 2011. During this period, the property was put on the market. It was passed in at auction, and Ok refused an offer of $930,000, in part because she thought the offer was inadequate, and in part because she did not want to leave the property.
At around the time of mediation she met Mr Rohan Hamilton. Over time they have developed an intimate relationship. He is described as a semi‑retired solicitor and has assisted Ok financially by reimbursing Galbally & O’Bryan for the past mortgage payments, paying the marketing expenses incurred for the property after the failed sale earlier this year, funding the ongoing mortgage payments on the loan secured by the property, and paying out debts owed by the business to Ok’s sister in the sum of $17,000. However, other debts of the estate (including $11,521 acknowledged to be owed to Katie Frank by way of reimbursement of John’s funeral costs and some mortgage repayments), remain unpaid.
Ok would like to continue to live in Australia and pursue what studies are required for her to qualify to work as an architect in Australia. She wants to retain the property as her home. As well as being her home for the past 11 years, it is conveniently located and could provide suitable premises for an architect’s studio in the future. As previously noted, she believes she will be able to raise sufficient funds to be able to keep the property if the Court were to order that she receive the bulk of what remains of John’s estate.
Damian Frank and Katie Frank are the adult children of John Frank from his first marriage. John left his marriage with their mother in 1972, when Damian and Katie were very young. However, he maintained a regular and active parenting relationship with his children during their childhood and beyond. Damian and Katie spent every second weekend and took regular holidays with John and a new partner in a relationship that ended in or about 1982.
John purchased the property in or about 1984. It was run‑down and in a then undesirable neighbourhood of Brunswick. Both Katie and Damian spent periods of time living there with John as teenagers and young adults. Damian helped John with renovations on the property.
During the period between 1984 and 2000, when John met Ok, John developed an interest in Asian culture, and became increasingly dissatisfied with working as a plumber. He made many trips to Thailand and Indonesia, and when his mother died in the early 1990s, he used his inheritance to pay out the mortgage on the property and finance his travels to Asia to purchase furniture for sale in order to implement his plan to develop the business.
While during the 1990s Damian and Katie became busy with their own lives and careers, they often assisted John in the business, helping out in the store and in unpacking containers. This assistance continued after John and Ok became a partnership, particularly when they were absent overseas. Damian’s involvement in the business diminished after he moved to Sydney in 2004, but he made regular trips to Melbourne, and kept in touch with his father by telephone, email and skype.
Damian is 43 years old and lives in a rental house in Sydney, sharing with a friend. He is single. He spent much of his adult life studying, having completed a PhD in Chemistry in 2002. He has completed post-doctoral academic work, and is currently employed by the CSIRO as a research scientist, earning approximately $91,000 per annum. He is currently undertaking further part‑time education, working towards a Masters Degree in Pharmaceutical Drug Development, in order to be able to seek more lucrative work in the future. He has no assets apart from approximately $80,000 in superannuation and an encumbered motor vehicle. He has debts in the order of $55,000. In December 2008, Damian was diagnosed as HIV positive. While he is being treated with medication and is not currently suffering ill‑health, it does preclude him from taking out life insurance and may affect his ability to earn income in the future. He had not disclosed his status to John prior to his father’s death.
Katie Frank is 42 years old. She lives in a shared rental house in Flemington. She has worked in administration at the University of Melbourne for nearly 20 years. She has completed a Bachelor of Arts degree. In 2006 she bought a one bedroom flat in South Yarra, but lets the property out, which partially subsidises the mortgage payments. She is currently training to become a yoga teacher. Her salary is approximately $74,000 per year. She has superannuation of approximately $160,000. The South Yarra flat is worth approximately $280,000 and she has debts in the order of $255,000.
Some consistent themes emerged from Katie and Damian’s affidavits about the lifestyle of their father and their relationship with him. First, they described their respective relationships with their father as warm, close and positive. They each had frequent contact with their father: Damian less so after he moved to Sydney in 2004. They described John as having had a rather unconventional lifestyle with limited financial security apart from his ownership of the property. They regularly helped out in the business, particularly when John and/or John and Ok were overseas on buying trips. Both children were present for the last week of John’s life and helped to care for him. They considered Ok had overstated her role in the business and in carrying out domestic duties to assist John, and strongly disagreed with a number of negative statements made by Ok in her affidavit about their relationship with John.
In particular, they took issue with statements made by Ok in her original affidavit filed in this proceeding that “during my marriage to John, Katie and Damian had not been very close to him”, and that they had behaved inappropriately towards her after John’s death. Each of these allegations was comprehensively rebutted in the affidavits sworn by Katie and Damian, along with affidavits sworn by their mother and a family friend. Neither of the latter deponents were asked to attend for cross‑examination, and Ok’s allegations in relation to these matters were not pressed at trial.
In their affidavits Katie and Damian were critical of Ok. For example, Damian deposed as follows:
For the most part I had good relations with Ok, but as I got to know her I found her behaviour and stories insincere, exaggerated and inconsistent. Ok often behaved in an erratic, domineering and aggressive manner towards Dad and sometimes towards me. Dad was often unhappy and frustrated by the way she treated him, which he would openly state to Ok and others. I am sure that Ok and Dad had genuine moments of happiness and affection, at the beginning. But there were many examples of serious bitter arguments, estrangements and separations, particularly in later years.
Damian was also critical of Ok’s housekeeping skills, Ok’s allegedly overbearing conduct in relation to the business, and what he described as her excessive alcohol consumption. He disputed Ok’s assertion that John was retired at the time she met him, and that she was the driving force behind the business. He gave evidence that in the period prior to his death, John wanted to sell the property and “downsize” to a smaller house in the country, but that Ok resisted such proposals.
Katie was less outspoken in her criticisms of Ok, but considered that Ok’s financial contribution to the relationship was relatively minor, and that their business and lifestyle was financed by loans secured against the property. She was critical about what she perceived to be Ok’s downplaying of her role in her father’s life and in helping out in the business and in supporting Ok and her family and friends. She agreed with Damian that her father was keen to “downsize”.
The affidavit evidence of the parties was sharply divergent with respect to what occurred immediately prior to or after John’s death. In her initial affidavit, Ok accused Katie of not bringing John’s medication home from hospital, refusing to purchase firewood, and criticising her for giving John sleeping medication. She accused Damian and Katie of refusing John’s request for his last meal, organising John’s funeral without her, and immediately cleaning out the house, which included throwing out some of her things. Each of these allegations were comprehensively and credibly refuted by both Damian and Katie and other deponents who were not called upon to be cross‑examined. To the extent that it is necessary to determine any of these issues for the purpose of determining these applications, I prefer Damian and Katie’s version of events, while accepting that their opinions about Ok and her relationship with their father may have been coloured by past and current disputes and Ok’s claims in this proceeding. However, I consider that they have understated Ok’s role in the business and the financial and other contributions made by Ok to the business and to the relationship.
However, as these issues were pressed faintly at trial, and neither counsel wished to rely upon such matters and incidents as amounting to disentitling conduct, I formed the view that any claim for provision by each of them ought to be assessed on the basis that John and Ok had a relationship which, while not without its issues, was a strong marital relationship, and that both Damian and Katie had strong and warm relationships with their father. The evidence that John had wished for his estate to be divided equally between Ok, Damian and Katie, and that his wishes had been expressly conveyed to each of them was uncontested.[3] However, given that these wishes had not been expressed in a valid will, these wishes are not, of themselves, determinative.
[3]See the affidavit of Ruth Bailey sworn 15 November 2010 and the affidavit of Damian Frank sworn 29 December 2010.
Submissions
The issue in this proceeding is what moral obligation John owed each of Ok, Damian and Katie to make adequate provision for their proper maintenance and support of either or each of them and if so, what award would satisfy those obligations. In the context of the size of the estate as it currently stands, the critical issue is whether Ok, by reason of her being married to John, and having been at least partially maintained by John for the best part of ten years prior to his death, should have sufficient provision made from John’s estate to provide her with a home. Essentially, there are four options:
(a)to decline to make an order in respect of either applicant: that is, to distribute the estate in accordance with the intestacy provisions of the Act;
(b)to accede to Damian and Katie’s application: that is, distribute the estate in accordance with the uncontradicted evidence about John’s intentions that his estate should be shared equally between each of Ok, Damian and Katie;
(c)to distribute the estate in accordance with what is contended for by Ok, that is, that apart from some modest legacies to each of Katie and Damian, the bulk of the estate be distributed to Ok; or
(d)distribution of the estate substantially in favour of Ok, but with legacies to Katie and Damian which are more than token in amount.
Counsel for Ok submitted as follows:
(a)Ok and John cohabited for the best part of ten years and despite a brief separation the marriage was a close and loving one. The period in which Ok lived and worked overseas could not be categorised as a separation;
(b)John and Ok worked together in the business and pooled their resources and finances;
(c)Ok made a significant financial contribution to the relationship. Ok provided substantial assistance to the business, and she held various part‑time and full time jobs for periods during the marriage, the funds of which were used for the benefit of both John and Ok;
(d)Ok, along with Katie and Damian, cared for the deceased in the last stages of his illness;
(e)Ok is currently not earning any income and seeks to study to enable her to qualify as an architect in Australia to enable her to support herself;
(f)neither Katie nor Damian is now, or have been, financially dependent on John during their adult lives. They are both in their early forties with no dependents, and each earn good incomes;
(g)unlike Katie and Damian, any distribution which forces the sale of the property will take Ok’s home away from her;
(h)any criticism of Ok’s failure to take steps during the marriage to secure her financial future is unwarranted, as John never required her to do so; and
(i)the statutorily guaranteed legacy of $100,000 under the intestacy provisions of the Act recognises an obligation of a deceased to his or her surviving spouse. However, this legacy (set in 1994) is now insufficient to make a substantial contribution to the purchase of a median priced home in Melbourne in 2011 (as it was in 1994).
Counsel relied upon the statement of Hedigan J in King v White:[4]
It is, I believe generally recognised that a widow has a high moral claim on the estate than anybody else. In this case, that view is all the more potent because in my opinion there was and is no-one else with any moral claim on the deceased’s bounty.
[4][1992] 2 VR 417 at 423.
Counsel also relied upon the statement of Powell J in Luciano v Rosenblum:[5]
It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of the testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.
[5](1985) 2 NSWLR 65 at 69.
Counsel noted that there has been a number of more recent cases where the Court has recognised the primacy of the duty owed by a deceased to a surviving spouse,[6] such that it could not be said that this statement of principle has been overtaken by changing social mores and community standards.
[6]Downing v Downing [2003] VSC 28; Moore v Moore [2005] VSC 95; Ansloe v Journeaux [2009] VSC 250; Madden v Singvongsa [2002] VSC 316.
Counsel for Ok submitted that the obligation that a testator owes to their spouse is fundamentally different to one owed to their children, particularly in circumstances where the children are adults who have established careers, no dependants, and are completely financially independent of their parent. In particular, Ok’s security of accommodation is totally dependent upon what provision is made for her from John’s estate: the same could not be said for Damian and Katie.
Counsel noted that while it was not suggested that the Court should take upon itself the responsibility for “indexing” the statutory entitlement under the intestacy provisions of the Act such as to guarantee a surviving spouse an amount equivalent to the value of $100,000 in 1994,[7] the Court was entitled to take into account and give effect to the manifest intention behind these provisions to ensure that the surviving spouse should not lose the matrimonial home.[8]
[7]In 1994 $100,000 represented two thirds of the value of the Melbourne metropolitan median house price, but only 18% of the median house price in 2011.
[8]See Second Reading Speech in support of the 1977 amendments to the Act, Victoria, Parliamentary Debates, Legislative Council, 14 September 1977, 9503.
Ok’s primary position is that she should be awarded almost the entirety of the estate, with any (modest) legacies to be paid to Katie and Damian to be a fixed amount secured by a charge on the property. This would give Ok the opportunity to retain the property by taking over the existing mortgage or securing funds to discharge that mortgage. Alternatively, there should be sufficient provision from the estate to enable her to purchase a modest alternative property in the Brunswick area, which would cost in the range of $305,000 to $586,000.
Damian and Katie oppose Ok’s claim for any provision out of John’s estate over and above her entitlements under the intestacy provisions of the Act. Put simply, the contention made by counsel for Damian and Katie is that the primary reason why Ok finds herself in a precarious financial position is because of her failure or refusal to make the most of the opportunities open to her over the course of the past ten years to upgrade her qualifications and earn an income which is commensurate with her skills and experience. Ok is a qualified and experienced architect, but over the past ten years was content to fall in with the lifestyle of a semi-retired man in circumstances where she must have realised that she may well be left in a position where she would need to fend for herself. Counsel relied upon the statement of Warren J (as she then was) in Lee v Hearn[9] that:
It is unfortunate that he has placed himself in a situation where at the age of 50 he possibly faces a precarious future. However, it must be observed that it has been the applicant’s own poor choices and in particular what can only be described as his servile tendency to rely upon the largess of others that has left him so exposed.
[9](2002) 7 VR 595, at 611.
More specifically, counsel submitted that the question of what moral claim Ok has on John’s estate must take into account the particular circumstances of the parties involved and the circumstances generally. In this case:
(a)Ok receives a significant proportion of John’s estate pursuant to a longstanding legislative formula;
(b)Ok’s financial position and any need she has for support over and above her statutory entitlement has been caused by her failure to pursue many opportunities open to her to take reasonable steps to provide for her own financial security;
(c)the need for Ok to take steps to secure her financial independence should have been apparent from the time she commenced with her relationship: John was 30 years older than her and had no assets apart from the property, and the business by its very nature was never going to provide her with substantial income or scope for John and Ok to substantially improve their asset position;
(d)Ok made no contribution to building up the deceased’s estate and in fact her conduct after his death has caused the estate significant loss; and
(e)the defendants are persons for whom John had a duty to make provision. They both have significant financial needs despite their best efforts, and the deceased’s wishes should be taken into account in determining what distribution ought to be made.[10]
[10]See the reference in Whitehead v State Trustees [2011] VSC 424 at [64].
Counsel for Damian and Katie accepted that the contentions in the authorities relied upon by counsel for Ok were applicable in a number of cases where a widow sought further provision from her deceased husband’s estate, but noted that in many of these cases, the applicant widows were of advanced age, had limited if any capacity to undertake paid employment, and the relevant marital relationships were of many decades standing. Further, while judicial statements regarding the primacy of a testator’s obligations to a surviving spouse could provide guidance as to what the moral duty of a testator might encompass, they are not determinative, and the Court must examine and consider the extent of the moral duty in the circumstances of the particular case. In this case, the marital relationship, while not short, was not particularly long. Finally, Ok is a qualified professional in her mid forties, with many years of her working life remaining, and Damian and Katie have strong competing claims.
Counsel submitted that Katie and Damian, as the adult children of John, have strong competing claims, on the basis that:
(a)they had excellent relationships with John throughout their lives;
(b)they assisted John in the business, and provided substantial assistance and support during his final illness; and
(c)they have significant financial needs, despite their best efforts.
Counsel submitted that were the Court to make an order for further provision for Ok, the effect of which would be to reduce the entitlement of Katie and Damian, would be made to ameliorate a financial position which is caused by Ok’s own failure to take reasonable steps for her own financial welfare. The fact that the resources of the estate are inadequate to meet the claims of each of the parties is substantially due to Ok’s failure to realise the assets of the estate in an advantageous manner, and by her actions in bringing and pursuing this proceeding.
Further, the Court should give effect to John’s express wishes that the estate be shared equally.[11]
[11]Ibid ??
Finally, counsel submitted that Ok’s claims have to be viewed in the context of “prevailing community standards about what is right and appropriate”[12] and that those standards have changed over time,[13] particularly in respect of the increasing economic independence of women over recent decades, and the effects of that independence upon the concomitant obligations of a husband to provide for his wife, both during his life and after his death. In this respect, I understood counsel to be submitting that current prevailing community standards do not warrant “rewarding” women who are capable of maintaining themselves, but voluntarily assume a position of economic dependency for no good reason, particularly at the expense of others with legitimate claims.
[12]Whitehead v State Trustees [58], and the authorities referred to therein.
[13]While some provisions of s 91(4) refer only to “the applicant”, as Damian and Kate are applicants in the other proceeding, I have made findings with respect to each of the interested parties.
It was accepted by Damian and Katie that John had a moral responsibility to make provision for Ok after his death. The question is whether the distribution of the estate in accordance with either the intestacy provisions of the Act or the express wishes of John made adequate provision for the proper maintenance and support of Ok. Along with consideration of what moral duty John owed to Ok and each of his children, this question must be considered in the light of the criteria listed in s 91(4) of the Act. These criteria are set out below, along with some relevant observations arising out of the evidence.
(e)Any family or other relationship between the deceased persons and the applicant including the nature of the relationship and where relevant the length of the relationship.
Ok enjoyed a marital relationship with John for nearly ten years during which period they worked together in a business and shared their income. John provided Ok with a home. John enjoyed close and affectionate relationships with both Damian and Katie.
(f)Any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate.
John was responsible at least in part for the provision of maintenance and support to Ok. He might also be considered to have an obligation to provide a financial boost for his adult children, both of whom are single, and while not in dire need, are not affluent, and in particular do not have substantial assets.
(g)The size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject
The net estate is worth approximately $450,000. As such, it is of insufficient size to provide Ok with sufficient funds to purchase a home in her preferred location as well as provide Damian and Katie with substantial legacies.
(h)The financial resources, including earning capacity, and the financial needs of the applicant, of any other applicant and of any beneficiary of this estate at the time of the hearing and for the foreseeable future
While the plaintiff is currently unemployed and has no assets, she has qualified as an architect in Korea and with some additional study could reasonably expect to achieve qualifications as an architect in Australia. Prior to coming to Australia she had engaged in continual employment in her profession and was able to resume that profession upon her return to Korea, including an assignment building hospitals in Vietnam. She is proficient in the English language.
Damian and Katie both earn reasonable incomes, with Damian likely to have a greater income earning capacity in the future if he upgrades his qualifications so as to open up employment opportunities in the pharmaceutical industry. Katie has a better net asset position than either Damian and Ok, but her assets are modest. There is some indication from the evidence that Damian and Katie might have an expectation of an inheritance from their mother (who is in her 70s), but that is mere speculation at this stage given she is married to a man who has his own children. Ok has no such expectations.
(i)Any physical, mental or intellectual disability of any applicant or any beneficiary of the estate
Apart from Damian’s HIV status, which has had no immediate impact upon Damian’s health or earning capacity, there are no relevant disabilities.
(j) The age of the applicant
Ok is 44, and as such could expect to be able to earn income for at least another 20 years. Both Damian and Katie are slightly younger, and similar observations apply. Given their age, the possibility of any or all of them forming lasting domestic partnerships in the future could not be discounted.
(k)Any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased
Ok did not make any contribution to the building up of John’s estate, apart from a contribution to their collective living expenses of uncertain value, either through working in the business or from wages. There is some dispute in the affidavit evidence about the extent of Ok’s contribution to John’s business and to his domestic wellbeing. However, I accept she did have an active role in the business. It appears that the business and John and Ok’s lifestyle (in particular their frequent travel) were at least partially financed by loans secured against the property rather than by the earnings of the business.
While Damian and Katie would probably dispute that Ok made a positive contribution to John’s welfare, and I accept their evidence that there were numerous arguments between John and Ok about various matters, there is no evidence that John was planning to leave Ok, or that he was desperately unhappy with the relationship. The evidence of his children was that on at least two previous occasions John initiated the end of what were to him unsatisfactory relationships. The length of their relationship, the fact they worked together in the business, and their frequent travels together suggests that they enjoyed each other’s company, notwithstanding their disagreements.
According to Damian and Katie, there were frequent discussions within the family about John selling the property and “downsizing” to a home in rural New South Wales, Victoria or Tasmania, not only for lifestyle reasons, but to provide John with greater financial security. However, apparently this did not proceed in the face of opposition from Ok.
While such evidence appeared to have been advanced to cast Ok in a negative light, an alternative interpretation could also be advanced: that is, John was prepared to defer to Ok’s wishes about where to live and whether to retain the property in the interests of preserving their relationship.
The uncontested evidence of Damian and Katie is that they provided substantial unpaid assistance (or assistance reimbursed by payment in kind) to the business both prior to and after Ok’s arrival on the scene, particularly when John and Ok were overseas.
(l)Any benefits previously given by the deceased person to any applicant or any beneficiary
Neither Katie or Damian have received any substantial financial benefit from their father. They have supported themselves financially since leaving school, and have not received benefits of the nature that many young adults receive from their families when starting out in life. Katie did receive some assistance from John in making some improvements to her flat: such assistance is what could have been expected from a father who was a qualified tradesperson, and that assistance should not in any way diminish her entitlement to any part of John’s estate.
(m)Whether the applicant was being maintained by the deceased person before that person’s death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility?
Throughout most of their relationship, Ok was at least partially maintained by John. At the very least, he provided her with accommodation. It seems that he “acquiesced” in Ok’s choices to either work outside the business or to not do so. It would presumably have been apparent to John that their lifestyle, at least until 2008, whereby John and Ok would regularly travel to Asia for business and leisure for weeks or months at a time, would limit Ok’s capacity to continue further study and/or undertake secure employment, and thereby improve her financial position. As such, it could be said that John assumed some responsibility to maintain Ok.
Neither Katie or Damian were being maintained by John prior to his death.
(n) The liability of any other party to maintain the applicant
No other person has a legal liability to maintain either Ok, Damian or Katie.
While Ok is now in a new relationship, and her partner has provided her with some financial assistance since the commencement of the relationship, the evidence is that assistance is to be repaid upon the finalisation of this proceeding. It could not be said that a partner of less than a year’s standing is “liable to maintain” Ok.
(o)The character and conduct of the applicant or any other person
It was accepted by both counsel that the matters raised in the affidavit evidence and summarised in paragraphs 23 to 26 above did not amount to disentitling conduct on the part of Ok in particular. However, the somewhat erratic behaviour described by Damian and Katie in their affidavits may explain in part Ok’s failure to engage in study and/or employment in her chosen profession.
(p)Any other matter the Court considers relevant
Notwithstanding the explanations tendered by counsel for Ok in relation to her refusal to accept what in hindsight appears to have been an excellent offer to purchase the property in April 2011 (against the advice of the real estate agent engaged to sell the property and without consulting Katie and Damian), I consider that Ok’s conduct in failing to sensibly realise the assets of the estate and to limit the incurrence of further liabilities is a relevant factor to take into account when determining what provision ought to be made for Ok. This conduct has reduced the ability of the estate to make adequate provision for each of Ok, Damian and Katie.
Another matter of relevance is the uncontradicted evidence about John’s wishes regarding the eventual disposition of his estate. His expressed intention that the estate be divided three ways is relevant in at least two respects: first, given that one of these statements was made when Ok was working overseas, it strengthens Ok’s contention that their living apart did not constitute a separation, and secondly, it amounted to a recognition and acknowledgement of the obligation he owed to assist Katie and Damian to secure their financial position.
There was some dispute between counsel as to whether the Court was entitled to take into account John’s express wishes by reason of s 94(c) of the Act, which provides that the Court may:
“accept any evidence of the deceased person’s reasons for making the dispositions in his or her will (if any) and for not making proper provision for the applicant, whether or not the evidence is in writing.”
I consider that the better view is that the power to accept such evidence is limited to circumstances where a deceased had made a will, and the evidence was relevant to why a deceased had made the dispositions that he or she did, rather than the current case, where the deceased is intestate. However, little turns on this, as I can take these into account under s.91(4)(p), and while those wishes are relevant, they are not determinative.
Conclusion
In my view, having regard to:
(a)the accepted authorities that a primary obligation of a testator is to provide, to the best of his or her ability, some security for his or her surviving spouse;
(b)the factors relevant to the award of provision under s 91(4) of the Act (in particular, s 91(4)(e), (f), (h) and (m));
neither John’s stated intentions or the intestacy provisions of the Act make adequate provision for the proper maintenance and support of Ok.
There is some force in the submissions made on behalf of Katie and Damian that many of the financial difficulties that Ok currently finds herself in reflect choices made by her over the past ten years to not take steps to secure her financial future. Further, while neither Katie or Damian are in immediate need of support, they do have some need for the protection from the vicissitudes of life. The reverse side of their longstanding financial independence is that in their current circumstances, there is no real safety net they can rely upon should they lose their employment or face health problems in the future.
However, while it is true that Ok “fell in” with John’s lifestyle with apparently little regard for her long term financial security, John should have appreciated that at the time of his death Ok was substantially dependent upon him, and he had either encouraged her or had acquiesced in her becoming so. It would have been quite difficult for Ok to pursue her studies and/or maintain other professional employment in the circumstances where they travelled to Indonesia together for weeks at a time each year, presumably by mutual agreement. Therefore I would not put the position as harshly as put by counsel for Katie and Damian. In particular, contrary to the submissions of Counsel for Damian and Katie, the current case is readily distinguishable from that of the applicant in Lee v Hearn.
In Lee v Hearn, the applicant was not a domestic partner or a blood relative of the deceased, but a caretaker who lived rent free in the deceased’s holiday home, and who provided the deceased with assistance in personal tasks when she visited the apartment on holidays from time to time. The position of Ok, as the domestic partner and one time business partner of John, is markedly different from the position of the claimant in that case.
Accordingly, I find that, at the time of his death, John had an obligation to Ok to ensure that Ok had at her disposal a substantial capital sum of sufficient value to make a significant contribution to the purchase of a replacement home. Alternatively, this capital sum could be utilised in full or in part to fund further studies by Ok, or provide seed capital for a business to enable Ok to earn income and better secure her future. However, John was not obliged to in effect continue to finance Ok’s lifestyle indefinitely: that is, he was not obliged to provide Ok with sufficient resources for her to have secure accommodation and the option to determine whether or not she wished to work, particularly at the expense of the legitimate claims of Katie and Damian, even if he was able to do so. He was entitled, at the time of his death, to assume that she had the capacity to earn a reasonable income either in Australia or Korea, that there was some prospect of her re‑partnering, and that there was some scope for him to finally provide some meaningful financial assistance to his children, who had never made any financial demands upon him.
I agree with counsel for Ok that the appropriate order to make would be for the Court to make a specific award of provision for each of Damian and Katie, and for those amounts be secured as a charge against the property, with the proviso that a reasonably short period of time be established for payment of those legacies, such that in the event that payment is not made, the property would need to be sold. I would also order that the debt owed to Katie by the estate be secured by a charge in favour of her. I do so for the reasons advanced by counsel for Ok, that is, it will give Ok greater flexibility in decision-making and to leave open the possibility of her being able to retain the property if she so wishes or is able to do so (although that seems inherently unlikely). I also do so because in circumstances where a number of the liabilities of the estate have in fact been caused by Ok’s conduct since John’s death, she should take the responsibility for determining the best means of resolving those outstanding liabilities. Further, it is not clear whether all of these debts (such as the amounts owing to Mr Hamilton) are immediately due and payable: the making of further provision in such a fashion will enable Ok to resolve these matters without affecting Katie’s and Damian’s entitlements.
The amount of the legacies that I would award each of Katie and Damian would be the sum of $75,000. The sum of $75,000 would enable Damian to clear his outstanding debts and provide him with a modest nest egg. It would allow Katie to clear her non‑mortgage debts and provide a modest buffer should she elect to pursue an alternative career as she wishes to do, or assist her to reduce her outstanding mortgage liability.
Based upon the current estimate of the value of the estate of $450,000, an award of this amount will leave Ok with an amount of approximately $300,000 (perhaps more, depending upon what accommodation she can reach with Mr Hamilton regarding the outstanding liabilities of the estate). While that amount is unlikely to be sufficient to purchase a property in or around Brunswick outright, on Ok’s own evidence she expects to be in a position to raise either loan funds or an equity contribution from friends and/or family. There seems to be no reason why that assistance would not be available to her in the event she elected to purchase another property rather than retain 2A Charles Street.
I will seek submissions from counsel upon the appropriate form of order in each proceeding to give effect to these reasons.
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