The Will of ANTON POGORELIC late of 47 Haig Road, Attadale, Western Australia (Dec)

Succession - Application by widow under Inheritance (Family and Dependants Provision) Act 1972 (WA) for provision from Estate of late husband - Whether entitled to matrimonial home - Relevance of lifestyle during marriage to proper provision from Estate - Whether pension entitlement a relevant factor - Turns on own facts

Inheritance (Family and Dependants Provision) Act 1972 (WA), s 6

Bondelmonte v Blanckensee [1989] WAR 305

Coates v National Trustees Executors & Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494

Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490

Grainger v The Public Trustee, unreported; SCt of WA; Library No 950670; 6 December 1995

Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134

King v White [1992] VicRp 72; [1992] 2 VR 417

Lawrence v Lawrence [2004] WASC 90

Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9

Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201

Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191

Welsh v Mulcock [1924] NZLR 673

1 MASTER NEWNES: This is an application by the plaintiff under the Inheritance (Family and Dependants Provision) Act 1972 (WA) (the "Act") for further provision from the Estate of her late husband, Anton Pogorelic (the "testator"), who died on 14 October 2003.

2 Upon his death, the testator left an Estate valued for probate purposes in an amount of $1,516,492.12. His Estate included a property in Haig Road, Attadale (the "Haig Road property"), valued at $680,000, in which the testator and the plaintiff were living at the time of his death, and another property in Wichmann Road, Attadale (the "Wichmann Road property"), valued at $450,000. His Estate also included bank deposits in the amount of some $336,000, shares to the value of some $10,000 and furniture valued at $20,000. The testator also had a 15 per cent interest in a property in Pag, Croatia, which was not taken into account for probate purposes. The value of that interest did not appear from the evidence.

3 Under the terms of the testator's Will, the plaintiff was entitled to reside in the Haig Road property for 12 months. During that time the plaintiff was to decide whether she would exercise a right of occupancy of either a property in Pag, Croatia owned by the testator or the Wichmann Road property. Upon the expiration of that 12-month period, the Haig Road property was to fall into the testator's residuary Estate. The right of occupancy of the property chosen by the plaintiff survived until the plaintiff's re-marriage or death, whichever came first, upon which the property concerned would also fall into the testator's residuary Estate. The testator's residuary Estate, after payment of debts and funeral expenses, was to be divided equally between his daughters, Elizabeth Marwick ("Elizabeth") and Vanessa Pogorelic ("Vanessa").

4 The application is brought under s 6 of the Act which, so far as relevant, provides, in effect, that where the Court is of the opinion that the dispositions effected by the Will of a deceased person do not make adequate provision from his Estate for the proper maintenance or support of (among others) his widow, the Court may, at its discretion, on application made by or on behalf of his widow, order that such provision as the Court thinks fit be made out of the Estate of the deceased for that purpose.

5 On an application of this nature the Court is required to carry out the two-stage process described by the High Court in Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201 at 208 - 210 (cited with approval by Gummow and Hayne JJ in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [75]; cf Callinan and Heydon JJ at [122]).

6 The determination of the first stage calls for an assessment of whether the provision made was inadequate for what, in all the circumstances, was the proper level of maintenance appropriate for the plaintiff having regard, amongst other things, to the plaintiff's financial position, the size and nature of the testator's Estate, the totality of the relationship between the plaintiff and the testator and other persons who have legitimate claims upon his bounty.

7 The determination of the second stage involves similar considerations. Indeed, in the first stage of the process, the Court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the plaintiff. There may, however, be some circumstances in which a Court could refuse to make an order notwithstanding that the plaintiff is found to have been left without adequate provision for proper maintenance.

8 The first question is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision stems from the fact that the Court must determine whether the plaintiff has been left without adequate provision for her proper maintenance. The decision made at the second stage, by contrast, does involve an exercise of discretion in the accepted sense.

9 In Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9, Dixon J said (at 19) that "adequate provision for the proper maintenance and support" are very important words in the statute and that each word must be given its value. "Adequate" and "proper" in particular must be considered as words which must always be relative. The "proper" maintenance and support of a person claiming a statutory provision must be relative to the person's age, sex, condition and mode of life and situation generally. What is "adequate" must be relative not only to the person's needs, but to their own capacity and resources for meeting them. There is then a relation to be considered on these matters on the one hand, and on the other, the nature, extent and character of the Estate and the other demands upon it, and also what the testator regarded as superior claims or preferable dispositions.

10 In Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490, Gibbs J said at 502:

"[T]he words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards."

11 Whether the disposition of the Estate by the deceased was not such as to make adequate provision for the proper maintenance of the plaintiff is to be determined as at the date of death of the deceased: Coates v National Trustees Executors & Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494. If that question is answered in the affirmative, the Court must then exercise its discretion to make such provision as it thinks fit, taking into account the relevant facts as they exist at the time of making the order: Bondelmonte v Blanckensee [1989] WAR 305 per Malcolm CJ at 307.

12 It is, of course, well established that, in exercising its powers under the Act, the Court is not entitled to rewrite the Will to accord with its own views of fairness or justice: Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134 at 146. The Court must limit its disturbance of a testator's Will to that which is necessary to give effect to the purposes of the Act and to no more: Pontifical Society for the Propagation of the Faith v Scales (supra) at 19.

13 The testator had previously been married to Yvonne Pogorelic, who died on 18 September 1983. There were two children of that marriage, Elizabeth, born on 15 December 1951, and Vanessa, born on 23 December 1966.

14 Elizabeth is married and has two children, a son who is now 27 years of age and a daughter who is 21 years of age. Elizabeth works as a translator and lives in Attadale with her husband, a businessman.

15 Vanessa is not married and has no children. She is employed as a copywriter with a Perth radio station. Vanessa lives in Attadale in a house she purchased in 2000.

16 The plaintiff was born on 7 September 1949 in Croatia. The plaintiff and the testator first met while the testator was on holiday in Pag, Croatia, in 1987. The plaintiff came to Australia in November 1990. There was a dispute as to whether she came to Australia simply on a visitor's visa (as Elizabeth and Vanessa contended) or as the testator's fiancée (as the plaintiff contended). It does not seem to me to matter. In any event, the testator and the plaintiff were married in Croatia on 13 July 1991. It was the plaintiff's first marriage and she has no children.

17 The plaintiff was not employed after her marriage to the testator. Prior to that, she had worked for 14 years as a bookkeeper in Croatia. According to the plaintiff, her bookkeeping qualifications are not recognised in Australia. The plaintiff says that the testator did not want her to undertake employment during their marriage and he discouraged her from obtaining qualifications in Australia. He wanted the plaintiff to be with him and to look after him.

18 Prior to his marriage, the testator had worked as a builder, but in 1991 he retired and thereafter worked only on a few occasions as a supervisor at different building sites. Following their marriage, the plaintiff performed all the housework and looked after the home. She and the testator also looked after two rental properties owned by the testator, maintaining them and preparing them for letting when tenants left.

The plaintiff's financial circumstances during the marriage

19 The plaintiff said that she and the testator enjoyed "a good lifestyle", going out often to restaurants, parties and the casino. The plaintiff said they went out for dinner to restaurants nearly every Saturday night and they went to concerts of Croatian singers whenever any notable singer came to Perth. According to the plaintiff, the testator bought her gifts, usually gold jewellery such as rings, necklaces and bracelets, for her birthdays, anniversaries and other occasions. In September 2003 he bought her a computer for her birthday. The plaintiff says she used to buy good, but not the most expensive, clothes.

20 The plaintiff gave evidence that she and the testator visited Croatia every second year, that is, in 1995, 1997, 1999, 2001 and 2002, usually staying for periods of four to six months. On those visits, the plaintiff and the testator normally stayed at the plaintiff's parents' home rent-free and were supplied free of charge with meat, fruit, vegetables and other produce by the plaintiff's family.

21 During the marriage, the testator did not receive any social security benefits. The income he earned from occasional work varied in amount from $9363 in 1992/3, $21,434 in 1993/4 and $14,840 in 1994/5 to $1860 in 1989/90, $400 in 1999/2000 and $5000 in 2000/01. The plaintiff was not in paid employment and received no social security benefits during the marriage.

22 In 2002, the testator sold a property he owned in Croatia for €60,000 and gave Elizabeth and Vanessa an amount of AUD$52,000 each from the proceeds. Elizabeth said the property was her maternal grandmother's house and was bequeathed to her and Vanessa. The testator arranged for its sale after the grandparents' death and distributed the net proceeds to herself and Vanessa. The plaintiff, on the other hand, said that the property had been left to the testator and the amounts given to Elizabeth and Vanessa were gifts.

23 The following year, 2003, the testator sold one of two properties he owned in Wichmann Road, Attadale and received net proceeds of $414,014.86. The testator gave Elizabeth and Vanessa an amount of $50,000 each from the proceeds and the sum of $14,000 was placed in a joint bank account of the testator and the plaintiff. The balance of $300,000 was deposited in an ANZ account in the testator's name. The plaintiff says that it was the testator's intention to use the ANZ deposit to cover their living expenses, holidays and travel.

24 The plaintiff says that she and the testator paid for their living expenses from rent received from the rental properties, interest on the invested money and the income that the testator earned from time to time from occasional work. The money to meet their living expenses was drawn from their joint bank account.

25 I should say that the standard of living of the plaintiff and the testator during the course of their marriage was in issue between the parties, and I will come back to that shortly.

The financial position of the parti****es as at the date of death of the testator

The financial position of the plaintiff

26 In an affidavit sworn on 20 February 2004, some four months after the testator's death, the plaintiff said that she was receiving a widow's pension of $385 per fortnight. The plaintiff said that her fortnightly expenses totalled $649.40. She had no liabilities.

27 The plaintiff had at that stage an amount of $33,000 deposited in various bank accounts, some of which was in a fixed deposit account returning interest of approximately $200 quarterly. The plaintiff had another account with a current balance of about $1200. In addition, the plaintiff had accounts in Croatia which had balances of €7210 and US$1250 respectively.

28 The plaintiff also had some small interests, jointly with other members of her family, in several properties outside Pag, in Croatia. There was no evidence as to the value of the properties but, given the small size of the plaintiff's interests, I do not consider that the plaintiff's interests are significant for present purposes.

29 The plaintiff says that in light of her age, her lack of recognised qualifications, the fact she has not worked for more than 13 years and her limited ability in the English language, it would, at the date of the testator's death, have been very difficult, if not impossible, for her to obtain paid employment, and that remains the case.

30 I should say that the plaintiff's competence in the English language was the subject of conflicting evidence. Elizabeth contended the plaintiff has a good knowledge and command of the English language and was capable of full-time clerical work. Elizabeth says the testator paid for the plaintiff to attend an English language course at Fremantle TAFE and that the plaintiff communicated confidently with Elizabeth's husband and children, who speak only English.

31 The plaintiff contended that while her oral English skills were generally adequate for ordinary social communications, her command of English was entirely inadequate for any type of clerical work. The plaintiff gave most of her evidence through an interpreter.

32 I do not consider that I am in a position to reach a concluded view as to the precise standard of the plaintiff's English language skills, but given her age, length of time out of the workforce and lack of recognised qualifications, the fact that her English language skills are limited (as I accept they are) is only one of the reasons that I consider that her prospects of obtaining any suitable employment were (and are) at best, poor. In light of the plaintiff's age, her working life would also necessarily be very short.

33 At the time of the testator's death, Elizabeth had an interest in the house in which she lived with her husband. She valued her interest at $462,000. She also had an interest in another property jointly with her husband and valued her interest in that at $95,000. Elizabeth's proportion of a joint bank account held with her husband was an amount of $176,000 and there was a further amount of $14,000 in a cheque account. Elizabeth's taxable income for the financial year ended 30 June 2003 was $42,845. She did not disclose any superannuation entitlements she had. Elizabeth had no interest in any of her husband's businesses. Her husband's assets and income were not revealed.

34 At about the time of the testator's death, Vanessa owned a property in Attadale which she estimated had a value of $290,000. She had a motor vehicle which she valued at $6500 and savings in a bank account of $3000. Vanessa's taxable income in the financial year ended 30 June 2003 was $49,884. There was no evidence as to her superannuation entitlements.

Did the testator make adequate provision for the plaintiff?

35 At the date of the testator's death, the plaintiff was 54 years of age. She had total net assets of some $48,000, plus a relatively small interest in property in Croatia. For the reasons I mentioned earlier, I consider that the plaintiff's prospects of obtaining paid employment were at best poor and, in any event, her working life would be very short.

36 The effect of the testator's Will was that from his Estate the plaintiff received only a right to live in one or other of two properties owned by the testator, during her life or until she re-married. The Will made no provision for the plaintiff's future living expenses or for circumstances where in the future the house which she had chosen to occupy became, by reason of her health, age or otherwise, no longer suitable and another form of accommodation was required.

37 In the circumstances, I am satisfied that the testator did not make adequate provision for the plaintiff's maintenance. Indeed, I did not understand the defendants seriously to contend otherwise, although no formal concession as to that was made.

38 It is necessary, then, to turn to the question of what would be an adequate provision for the plaintiff. In that context, it must be borne in mind that the Court is not entitled to rewrite the Will to accord with its own views of fairness or justice, and must disturb it only to the extent necessary to provide adequate provision for the proper maintenance and support of the plaintiff.

39 The value of the Estate as at the date of the hearing was some $2,179,000. The Estate included the Haig Road property (which was valued at $1,000,000), the Wichmann Road property (which was valued at $775,000), cash and shares of $394,669, and furniture and household goods of $8000. There was evidence that an amount of between $101,000 and $155,000 would be payable by way of capital gains tax on the sale of the Wichmann Road property, depending upon certain matters still to be ascertained. There is also a claim by the executor for fees (although the amount is in dispute) and there are likely to be some incidental costs associated with the winding up of the Estate. It would therefore seem that the value of the Estate available for distribution would be in the order of $2,000,000.

40 In an affidavit sworn on 16 November 2006, the plaintiff said that she had bank deposits in the sum of some $14,000, plus further amounts in Croatia of €8000 and US$1295. That is a total amount equivalent to approximately AUD$29,000. Her widow's pension had increased to $420.90 per fortnight. The plaintiff said that she had tried to minimise her expenses. They now totalled $405.75 per week, an increase in the order of 25 per cent over the figure given in her affidavit of 20 February 2004. In cross-examination the plaintiff attributed the increase to price rises over the period. The plaintiff said she had used savings to meet the expenses that could not be met from her pension.

41 A great deal of the evidence concerned the standard of living the plaintiff and the testator had enjoyed during their marriage and the availability of suitable accommodation for the plaintiff, apart from the Haig Road property in which the plaintiff and the testator had lived together.

42 In my view, the plaintiff sought to overstate the standard of living she had had during her marriage to the testator. I have already mentioned the plaintiff's evidence that she and the testator had enjoyed a good lifestyle, going out frequently and taking frequent overseas trips.

43 On the other hand, in describing her current circumstances the plaintiff said that the furniture in the Haig Road property was old, some of it up to 30 years old, and that many of the household appliances were old and required replacement. Her car is 10 years old. In cross-examination the plaintiff said that the testator was not interested in replacing such things while they remained functional. The plaintiff said that her clothes were now 10 years old.

44 As the testator died in October 2003, it is apparent that, at least in respect of such things as household items and clothing, the standard of living of the testator and the plaintiff was relatively modest.

45 There was also no evidence of any renovations or improvements to the Haig Road property during their marriage or of holidays or travel apart from the trips to Croatia. And while the plaintiff and the testator made a number of extended visits to Croatia, as I have mentioned, while in Croatia they were supplied with rent-free accommodation and a good deal of food and produce by the plaintiff's family.

46 Indeed, the only items clearly identified by the plaintiff as involving significant recurrent discretionary expenditure during her marriage were related to entertainment.

47 An expert witness called by the defendants, Mr Herbert, a chartered accountant, gave evidence that he had examined the records of the joint bank account upon which the plaintiff said that she and the testator had drawn for their living expenses. Mr Herbert said that in the financial years ended 30 June 2001, 30 June 2002 and 30 June 2003, total amounts of $40,036, $25,125 and $13,083 respectively were drawn. It was put to Mr Herbert by the plaintiff's counsel that that analysis overlooked the balance of $14,000 from the sale, in the financial year ended 30 June 2003, of one of the two properties the testator owned in Wichmann Road. If, as submitted by counsel for the plaintiff, that amount is to be added to the last figure, the expenditure for the financial year ended 30 June 2003 increases to $27,097. For present purposes I will take that to be the appropriate figure.

48 Counsel for the plaintiff argued that the lower figure for the financial year ended 30 June 2002 was due to the fact that the testator and the plaintiff spent six months of that year in Croatia and that the testator had also sold some furniture from a house in Pag for €2000. In each of the other two years mentioned, less time had been spent in Croatia because of the testator's ill health and accordingly the level of expenditure of the testator and the plaintiff had been higher.

49 It is, however, the plaintiff's evidence that it had been the practice of the plaintiff and the testator quite regularly to spend periods of four to six months of the year in Croatia. Had it not been for the testator's ill health, it appears that they would have done so in 2001 and 2003.

50 In determining what is adequate provision for the plaintiff, I consider that the likelihood she will choose to spend significant periods (at least in every second year) with her family in Croatia must be taken into account.

51 The plaintiff has a brother and two sisters, and friends, who live in Croatia. The plaintiff has no family in Australia and few friends. The plaintiff said that before the testator's death she had socialised with the testator's friends and so had not made her own friends. It is evident that her relationship with Vanessa, and with Elizabeth and her family, has broken down completely since the testator's death. The plaintiff said she did not know Perth well outside the area of Attadale where she had lived with the testator and did not like to travel far from that area. In cross-examination the plaintiff said that provided her health and financial circumstances permitted she would be visiting Croatia in the future, but she did not know for how long she would go, although it would be for more than a week or so. It does not appear that the plaintiff's current state of health would preclude such travel.

52 In the circumstances, despite the plaintiff's reluctance to concede the prospect of extended stays in Croatia, I consider it is most probable that the plaintiff will resume the practice of spending quite lengthy periods in Croatia and that, if she were to do so, she would again be able to obtain rent-free accommodation and the same sort of provision of free foodstuffs from her family.

53 It was submitted on behalf of the plaintiff that, during her marriage to the testator, she had enjoyed a comfortable lifestyle. On that basis, counsel referred to the evidence of an expert witness called on behalf of the plaintiff, Mr Walewski, a certified practising accountant. Mr Walewski concluded from the plaintiff's affidavit evidence and discussions he had had with the plaintiff as to her lifestyle, and by reference to a range of statistical and other information, including Australian Bureau of Statistics figures, that the plaintiff required a weekly income of $692 per week to maintain her lifestyle. The figure was thus calculated on the basis of a combination of information provided by the plaintiff and estimates based on statistical material. A difficulty, however, with Mr Walewski's report is that the content of the discussions he had with the plaintiff have not been disclosed. Although the defendants' counsel did not object to the admissibility of the report, he submitted that in those circumstances little weight should be given to it.

54 Counsel for the plaintiff also relied upon a paper (the "Westpac-ASFA report") prepared by The Association of Superannuation Funds of Australia Ltd in conjunction with Westpac, and annexed to Mr Walewski's affidavit, arguing that it confirmed that a figure in the order of that arrived at by Mr Walewski was appropriate.

55 The Westpac-ASFA report provides a budget for the lifestyle in retirement of a single female and a couple respectively, for each of a "modest lifestyle" and a "more comfortable lifestyle". It describes a "modest lifestyle" as "better than just survival on just the Age Pension but still only being able to afford fairly basic activities." It describes a "more comfortable lifestyle" as enabling the person to be involved in a broad range of leisure and recreational activities and to have a good standard of living. It includes being able to update the kitchen or bathroom at some stage, eating out from time to time, being able to entertain family or friends at home, better clothes from more upmarket stores, improved quality whitegoods and a range of computer and home entertainment items, private health insurance at the top rate, a better car, purchase of magazines and CDs and increased frequency and cost of holidays.

56 For the September quarter in 2006, the Westpac-ASFA report gave a budget breakdown showing total weekly expenditure for a "comfortable couple" of $919.92, an annual expenditure of $47,967; for a "comfortable single female" of $686.37 weekly or $35,789 annually; for a "modest couple" of $497.10 weekly or $25,929 per annum; and for a "modest single female" of $352.73 weekly or $18,393 annually.

57 Counsel for the plaintiff contended that, based upon the Westpac-ASFA table, the plaintiff should receive a capital sum that would provide her with a weekly income of $686.37, or $35,789 per annum, in accordance with the amount set out in the table for the comfortable lifestyle of a single female. That was substantially in accordance with the figure arrived at by Mr Walewski. It was submitted that such an amount was appropriate because the lifestyle of the testator and the plaintiff during their marriage accorded with the "comfortable" lifestyle so described.

58 I do not accept that. As I have said, I consider that the plaintiff sought to overstate the standard of living she had enjoyed during the marriage. On the evidence, apart from dining out and entertainment, it seems that the lifestyle of the testator and the plaintiff during their marriage was modest rather than comfortable, as those expressions are used in the Westpac-ASFA table. When regard is had to the plaintiff's evidence that the furniture was up to 30 years old, many of the household appliances were old and required replacement, and that, as at the testator's death, her clothes were some seven years old, and in the absence of any evidence as to the existence of many of the other elements described as constituting a comfortable lifestyle, it is, in my view, apparent that in general their lifestyle tended to be somewhat more frugal than the lifestyle the plaintiff sought to suggest.

59 I should also observe that the figures in the Westpac-ASFA table are of a general nature and are obviously not related to the circumstances of specific couples or individuals. They must therefore be approached with some caution (as indeed must the other statistical information used by Mr Walewski, including Australian Bureau of Statistics figures) when it is sought to apply them to particular cases. For example, the budget in the Westpac-ASFA table for a "comfortable single female" allows $38.63 per week for domestic holidays (in addition to $20.04 per week for overseas holidays). That would seem excessive in the plaintiff's circumstances. Similarly, a weekly allowance of $106.63 for "car transport and running costs" would seem to be excessive given the evidence as to the plaintiff's limited car travel. There is also nothing in the evidence which would appear to support an allowance of $1871 per annum for computer equipment.

60 The table also appears to contain some anomalies. For instance, in the allowance for food, after listing a number of specific items (the cost of which is in each case approximately halved for a single female as opposed to a couple), the table allows, for "other food", an amount of $52.55 per week for a "comfortable couple", but for a "comfortable single woman" it allows $64.07 per week. Why the figure for a "comfortable single woman" should be greater than, rather than approximately half of, that for a "comfortable couple" is difficult to understand.

61 Based on the evidence, it seems to me that the standard of living of the testator and the plaintiff during their marriage fell somewhere between the lifestyles described as "modest" and "comfortable". The expenditure of the plaintiff and the testator in the three years for which there is evidence is reasonably consistent with that assessment, having regard to the expenditure for a married couple given in each category.

62 I accept that while a claimant's standard of living during the lifetime of a deceased may be a useful yardstick, it is not necessarily decisive as to what would be an appropriate provision for the claimant in the future. That will particularly be the case where the claimant had become accustomed to a life of relative penury in circumstances where the amount available from the Estate of the deceased did not require that to continue: see Grainger v The Public Trustee, unreported; SCt of WA; Library No 950670; 6 December 1995, per Steytler J at 18; Welsh v Mulcock [1924] NZLR 673 per Salmond J at 687.

63 I should say that I do not consider that the plaintiff's standard of living with the testator could, by any reasonable measure, be described as penurious. Indeed, the plaintiff did not voice any complaint about her previous standard of living. She sought not to remedy any deficiencies of the past but simply to maintain the standard she contended she had previously enjoyed.

64 Nevertheless, I consider that the actual standard of living of the plaintiff during her marriage to the testator is not necessarily a ceiling to be imposed on the amount reasonably required for her maintenance, and regard must also be had to the size of the Estate when determining what would be an appropriate provision for the plaintiff.

65 There is no evidence that Elizabeth and Vanessa have needs that call upon the Estate and that must be weighed against the plaintiff's claim. Elizabeth and Vanessa each have their own home and are established in paid employment. Elizabeth has substantial savings and other assets. Although her husband's assets and income were not disclosed in the evidence, I think it is reasonably to be inferred from their financial position that he is a successful businessman. Their two children have reached adulthood. Vanessa has no dependants.

66 In the circumstances, in my view an appropriate provision for expenditure by the plaintiff would be an amount of $24,000 per annum.

67 At the hearing the defendants sought to adduce further evidence of Mr Herbert as to the various capital sums that would be required to produce income at a range of levels between $18,000 per annum and $40,000 per annum. The plaintiff sought time to consider that evidence. The plaintiff's expert, Mr Walewski, had, as I understood his evidence, only calculated the capital sum required to produce income at about the level for which the plaintiff contended. The question of the capital sum which the plaintiff would need to produce the expenditure level which I found to be appropriate was therefore left to be dealt with following the delivery of my reasons. I will therefore invite the parties to make further submissions on that.

68 I do not accept the plaintiff's contention that adequate provision involves her obtaining title to the Haig Road property. It is the case that the plaintiff has lived in the property since coming to Australia, but I do not regard that as decisive. The house, which is in the order of 40 years old, is a substantial one. It includes four bedrooms, two bathrooms, a lounge room, a dining room and a family room. Indeed, it is the sort of house that married couples, as they approach late middle-age, often sell in order to move to something smaller and more easily maintained.

69 There is no suggestion that the plaintiff has any strong emotional attachment to the house, nor does there appear to be any other reason that might warrant her retaining it despite the fact that it greatly exceeds her requirements. It is also relevant that the house makes up almost one-half of the value of the Estate of the testator. It is therefore a significant element in the amount available for distribution.

70 It was clear from the plaintiff's evidence in cross-examination that she was reluctant to consider any question of alternative accommodation. The plaintiff conceded, however, that she did not require a block of land as large as the 819 square metre block of the Haig Road property and that she did not need a four bedroom house. The plaintiff was prepared to concede that she did not require anything larger than a three bedroom, two bathroom house, the additional accommodation enabling her to cater for visits of family members from Croatia.

71 The plaintiff acknowledged in cross-examination that the Haig Road property would require maintenance and repair and she said that, if she had to move, she would prefer a new or near-new home. She did not accept, however, that a new or near-new house would be better suited to her circumstances.

72 Counsel for the defendants referred the plaintiff in cross-examination to a number of properties on the market in Attadale and surrounding suburbs which were described in an affidavit of an expert witness called on behalf of the plaintiff. Counsel put to the plaintiff a number of properties that he suggested were reasonable for her requirements. The plaintiff was plainly reluctant to concede that any of them were suitable. One property she thought was too close to a primary school, another she said had rooms that were too small and the windows were too high, another was too close to other units, another was too old (although it appeared from the evidence that it had been renovated), another was too small and another had only one bathroom. In most cases the plaintiff had not inspected the property concerned. The properties ranged in price from $585,000 to $725,000. The plaintiff finally said that she had no objections to a property in Bicton which was for sale at a price of $720,000.

73 It is, in my view, clear that the Haig Road property exceeds what is reasonably required by the plaintiff for her accommodation. I am satisfied on the evidence that suitable, new, near-new or renovated, accommodation with three bedrooms and two bathrooms could be obtained in Attadale or a nearby area for an amount in the order of $650,000. Taking into account the costs associated with the acquisition of such a property and removal costs, together with some new furniture and appliances that may be required, I consider that an appropriate provision for accommodation would be an amount of $700,000.

74 Finally, I should say that I do not consider that any old age or widow's pension to which the plaintiff might otherwise be entitled is properly to be taken into account in determining what is required from the Estate for her maintenance. In my view, a testator cannot simply lay off against the public purse the obligation to make adequate provision for the proper maintenance and support of their dependants so as to reduce or avoid that obligation: see King v White [1992] VicRp 72; [1992] 2 VR 417 at 424, Lawrence v Lawrence [2004] WASC 90 at [29]. The position may be different where the competing claims on the Estate are beyond the capacity of the Estate adequately to provide for, but this is not such a case.

75 I consider that an appropriate provision for the plaintiff would be a capital sum that would provide for expenditure of $24,000 per annum, an amount of $700,000 to provide suitable accommodation, and an amount for contingencies. The balance of the Estate would fall to be divided equally between Elizabeth and Vanessa under the terms of the testator's Will.

76 I will hear the parties on the capital sum required to provide for expenditure of $24,000 per annum and on the question of costs.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : POGORELIC -v- BANOVICH & ORS [2007] WASC 45 (S)

HEARD : 22, 23 NOVEMBER, 6 DECEMBER 2006 & 21 MARCH 2007

MATTER : Inheritance (Family and Dependants Provision) Act 1972 (WA)

The Will of ANTON POGORELIC late of 47 Haig Road, Attadale, Western Australia (Dec)

Succession - Application by widow under Inheritance (Family and Dependants Provision) Act 1972 (WA) - Settling of orders - Whether provision for maintenance should date from death of testator or date of trial - Date of payment of lump sum payment - Turns on own facts

Pogorelic v Banovich [2007] WASC 45

1 MASTER NEWNES: On 27 February 2007, I delivered reasons for decision on the application by the plaintiff under the Inheritance (Family and Dependants Provision) Act 1972 (WA) for further provision from the Estate of her late husband, Anton Pogorelic (the "testator"), who died on 14 October 2003: Pogorelic v Banovich [2007] WASC 45.

2 In my reasons I concluded (at [75]) that an appropriate provision for the plaintiff would be a capital sum (the "capital sum") that would provide an income of $24,000 per annum, an amount of $700,000 to enable her to purchase and move to suitable accommodation, and an amount for contingencies. I said (at [76]) that I would hear the parties on the capital sum required to provide an income of $24,000 per annum and on the question of costs.

3 On the hearing of those matters and to settle final orders, a number of matters were raised by counsel. The first was whether the plaintiff should receive the contents of the house at 47 Haig Road, Attadale (the "Haig Road property"). It was submitted by counsel on behalf of the second and third defendants that the Haig Road property contained some personal items of the testator of sentimental value to his clients. In my view, the appropriate order is that the plaintiff be entitled to the furniture and household appliances at the Haig Road property and that the Will of the testator be varied to that extent.

4 The next issue was, in effect, whether the plaintiff should be at liberty to reside at the Haig Road property rent free until the full amount to which she is entitled under the Will, as varied by the orders of the Court, is paid to her.

5 It was submitted by counsel for the plaintiff that the plaintiff should be able to live at the Haig Road property until she received payment in full or settlement of the sale of the Haig Road property, whichever was the earlier.

6 It was submitted on behalf of the second and third defendants that the appropriate order is that the plaintiff should be at liberty to reside rent free at the Haig Road property until 21 days after the sum of $800,000 was paid to her. That is, the sum of $700,000 to provide alternative accommodation and a further sum of $100,000 advanced from the capital sum. It was submitted that it will be necessary for the executor to prepare the Haig Road property for sale and it was therefore appropriate that vacant possession be given to the executor for that purpose. The plaintiff would be paid the balance of the sum due to her under the orders of the Court upon the settlement of the sale of the Haig Road property.

7 What is to happen to the Haig Road property pending its sale may well properly be a matter in the first instance for the executor, but the parties have sought to have this issue resolved now and, in the unfortunate circumstance that the relationship between the plaintiff and the second and third defendants has obviously broken down completely, it seems inevitable that it will have to be resolved at some stage.

8 On neither view of the matter is it contemplated that the plaintiff will necessarily have a right to reside in the Haig Road property until the settlement of the sale of it. The plaintiff says she should have the right to do so until the settlement of the sale unless the full amount due to her is paid in the meantime, and the second and third defendants say the plaintiff should have the right to do so until 21 days after the sum of $800,000 is paid to her, so the property can then be prepared for sale.

9 There is no perfect solution to this issue. In the end, I consider the appropriate orders are essentially those proposed by the second and third defendants, namely, that the plaintiff be at liberty to reside at the Haig Road property rent free until 28 days (rather than the 21 days proposed) after the payment to her of the sum of $800,000, that the balance of the sum due to her be paid upon settlement of the sale of the Haig Road property, and the parties have liberty to apply in the event that the balance of the sum is not paid within six months of the date of these orders.

10 The amount of the capital sum required to provide an income of $24,000 per annum was agreed between the parties, subject to the determination of the appropriate interest rate. Two interest rates were advanced, the first by the plaintiff, being the rate of 5.69 per cent per annum referred to in the evidence of the plaintiff's expert witness, Mr Walewski, and the other by the second and third defendants, being the rate of 6.69 per cent referred to in the evidence of the second and third defendant's expert, Mr Herbert.

11 It was submitted on behalf of the plaintiff that the more conservative rate of interest referred to by Mr Walewski was appropriate, as the plaintiff was reliant upon the maintenance of the capital sum in order to provide her with an income for her lifetime and therefore was entitled to invest it in a manner which was free from risk. The higher rate of interest referred to by Mr Herbert inevitably involved a higher degree of risk. It was also submitted that Mr Herbert did not have the relevant expertise to give an opinion as to an appropriate interest rate at which funds of this nature should be invested.

12 It was submitted on behalf of the second and third defendants that the rate of interest referred to by Mr Walewski was, commercially, unrealistically low. The rate referred to by Mr Herbert was itself a conservative rate for the investment of retirement funds and it was therefore an appropriate rate in the present case.

13 In my view, it is appropriate to take the more conservative rate of 5.69 per cent referred to by Mr Walewski. The plaintiff will be dependant upon the capital sum remaining intact in order to provide her with the income necessary for her proper maintenance. In those circumstances, the plaintiff is entitled to invest the moneys in an investment which will ensure that it is not put at risk and where she can be assured that the income will be maintained.

14 There was a further issue concerning the date from which the income was to be taken to be payable to the plaintiff for the purposes of calculating the capital sum, namely whether it should be taken to be payable from the date of the testator's death or from the date the orders were made. That has a significant effect on the amount of the capital sum.

15 It was submitted on behalf of the plaintiff that the income should be taken to be payable from the date of the testator's death. To do otherwise would be to assume that the plaintiff has had an adequate income for the past three years, when clearly she has not. It would be an incongruous result if it were found that adequate provision had not been made from the date of the death of the testator but that that position should be remedied only from the date the orders were made.

16 It was submitted on behalf of the second and third defendants that the provision of income should be calculated from the date upon which the orders were made. While the adequacy of the provision made under the testator's Will was determined as at the testator's death, the assessment of the plaintiff's needs were made as at the date of judgment. The provision of the income should therefore run from the latter date. Any backdating of the income to the date of the testator's death would simply amount to a windfall of a lump sum to the plaintiff. Counsel submitted that there was no evidence that the plaintiff had had to borrow money to live over that period or had incurred other liabilities for which she needed to be compensated.

17 I do not accept the plaintiff's argument that the income should be taken to be payable from the date of the testator's death. The assessment of the plaintiff's needs was as at the date of trial. No assessment was made as to what would have been necessary to make an adequate provision over the period between the testator's death and trial and, quite properly, the evidence was not directed to that. And it cannot be assumed that it would be the same as the provision assessed at trial. In the interim, for instance, the plaintiff had received a widow's pension and possibly other benefits ancillary to that. The income assessed as necessary for her future maintenance excludes any such entitlement. Moreover, the provision for her maintenance is just that; it is not compensation for any diminution that may have occurred in her standard of living in the meantime.

18 I should add that, to the extent it may be relevant, it does not appear that the plaintiff's lifestyle has been substantially reduced over the period of some three years since the testator's death. Although the plaintiff said in evidence that she had tried to minimise her expenditure, the increase of more than 20 per cent in her expenditure in the period February 2004 and November 2006, and total expenses of $405.75 per week (or an annualised amount of some $21,000) as at November 2006, suggests that her attempts at minimisation have had only limited success.

19 It is the case, however, that the bank deposits of the plaintiff were reduced from some $48,000 to $29,000 between February 2004 and November 2006. The plaintiff said she used those savings to meet expenses that could not be met from her pension. On precisely what sort of expenses the funds were used was not disclosed.

20 I consider that in the circumstances the appropriate course is to make provision for maintenance effective from the date upon which reasons for judgment were given on 27 February 2007. On the figures agreed between the parties, based on an interest rate of 5.69 per cent that requires a capital sum of $457,630.

21 I indicated in my reasons for decision that I consider there should be some provision for contingencies and I would allow a sum of $20,000 in respect of that. That would restore the plaintiff's savings to an amount of some $48,000, to guard her against the vicissitudes of life that cannot otherwise be met from her income. The capital sum and the sum for contingencies would therefore amount to a total of $477,630.

22 There was an issue between the parties as to whether the amounts payable to the plaintiff should bear interest from 20 April 2007, as contended by the plaintiff, or from 21 June 2007, as contended by the second and third defendants. I consider they should bear interest under s 143A of the Administration Act 1903 (WA) from 20 April 2007 until payment.

23 There was also an issue between the parties as to the costs and disbursements incurred by the parties in the proceedings. The plaintiff sought an order that the limit under item 11 of the prescribed scale of costs be removed pursuant to s 215(2) of the Legal Practice Act 2003 (WA). The second and third defendants sought instead an order that item 16 of the scale be substituted for item 11, so that the higher limit under item 16 would be applicable. Neither party contended that the limit under item 11 was appropriate.

24 There was no evidence before me as to the costs incurred by the parties in the proceedings and no submissions were directed to that. I accept, however, that having regard to the nature of the hearing and the fact that it extended into three sitting days, on taxation the costs of each party should not be subject to the limit under item 11. I do not, however, consider that it is appropriate to import item 16, which is concerned with the costs of getting up in an action, into the taxation of the costs. The proper course, in my view, is to remove the limit in item 11. It will be for the parties to satisfy the taxing officer as to the amount of the costs that should be allowed on taxation.

25 The plaintiff also sought an order that the parties each be allowed the costs of expert evidence as a disbursement. That was opposed by the second and third defendants who submitted that the costs of the expert evidence should be taxed in the normal way. The amount allowed would therefore be a matter for the taxing officer. I accept that submission. I do not have before me the costs of the respective experts and, in my view, it is a matter properly left to the taxing officer.

26 I would therefore propose to make the orders to the following effect:

"1. The orders made on 7 October 2004 be and are discharged.

2. The Will of the testator be varied by:

(b) inserting in lieu thereof a new clause 2 providing that:

2.3 the furniture and household appliances at 47 Haig Road, Attadale."

3. Goldi Pogorelic be at liberty to reside at 47 Haig Road, Attadale on a rent free basis until 28 days after payment to her of the sum of $800,000 in part payment of the sums payable under paragraph 2(b)2.1 and paragraph 2(b)2.2 above.

4. The balance of the sums referred to in paragraph 2(b)2.1 and paragraph 2(b)2.2 above be paid to Goldi Pogorelic on settlement of the sale of 47 Haig Road, Attadale.

5. The sums referred to in paragraph 2(b)2.1 and paragraph 2(b)2.2 above bear interest under s 143A of the Administration Act 1903 (WA) on the balance outstanding from time to time at the rate of 5 per centum per annum from 20 April 2007 until payment.

6. A certified copy of this order be included in the probate and that the first defendant do produce the grant to the Court for that purpose.

7. The limit under Item 11 of the Supreme Court Scale of Costs be removed, pursuant to s 215(2) of the Legal Practice Act 2003 (WA).

8. The costs of all parties be taxed, if not agreed, and be paid by the executor out of the residue of the Estate.

9. The parties have liberty to apply if the sums referred to in paragraph 2(b)2.1 and paragraph 2(b) 2.2 above have not been paid in full by the expiration of six months from the date of these orders.

10. The parties have liberty to apply generally."

27 I will hear the parties on the precise form of the orders.