El-Zaouk v Draybi

Family Provision Act 1982 LEGISLATION CITED : Probate and Administration Act 1898 Uniform Civil Procedure Rules 2005

Carey v Robson [2010] NSWCA 212 Foley v Ellis [2008] NSWCA 288 CASES CITED : Singer v Berghouse (No 2) (1994) 181 CLR 201; [1994] hca 40 Spencer v Commonwealth of Australia [2010] HCA 28 Vigolo v Bostin [2005] HCA 11 (2005) 221 CLR 191 Warren v McKnight (1996) 40 NSWLR 390

PARTIES : Ramona El-Zaouk Tony Draybi

COUNSEL : R Wilson F Sinclair

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2010/116732 EL-ZAOUK v DRAYBI JUDGMENT 1 HIS HONOUR: The Defendant is the sole executor under the will of his father, Roumanos Draybi, deceased. He has applied by notice of motion, filed on 20 August 2010, to strike out proceedings commenced by Summons filed by the Plaintiff, who is his sister, and a daughter of the deceased, in which she seeks a family provision order and other relief under the Family Provision Act 1982 ("the Act"). 2 The deceased died on 20 February 2006 and the Plaintiff's Summons was filed on 11 May 2010. It is acknowledged that the Summons was served outside the period prescribed by the Act (18 months from the date of death). It is about 2 years and 9 months out of time. A claim to extend the time for the making of the application is sought in the Summons. 3 The affidavit in support of the Summons was filed on 23 July 2010. The only evidence that was filed in support of the notice of motion, until today, was an affidavit by the Defendant's solicitor. This morning, without objection, I granted leave to the Defendant to file in court, the Defendant's affidavit in the form of an executor's affidavit. It is clear from that affidavit that the prescribed notices to be served upon other eligible persons, have not, as yet, been served. 4 There is no dispute, that the Plaintiff is an eligible person, within the meaning of that term under s 6(1)(b) of the Act. There is also no dispute that she received nothing out of the estate under the terms of the deceased's Will, Probate of which Will was granted on 19 December 2006. 5 The Defendant's solicitor's evidence is that the estate was distributed "in about late 2007". There is some dispute about this, it being submitted that the evidence reveals that the real property of the deceased remains in the name of the Defendant as executor of the estate. 6 Assuming that the Defendant's assertion is correct, there is no evidence of any notice of distribution having been published in accordance with s 92 of the Probate and Administration Act 1898, prior to that distribution having taken place. Ms F Sinclair, counsel for the Defendant, informs me from the Bar Table that it is likely that such a notice was published. 7 The evidence reveals that the value of the estate, as disclosed in the Inventory of Property, was $700,000. There is no evidence of the present value of the estate. 8 The Summons seeks an order for provision out of the estate or notional estate of the deceased. However, I note that there is no specific property identified sought to be designated as notional estate disclosed. 9 The Plaintiff's affidavit filed in support of the Summons reveals that she is aged 51 years. She is married with 4 children, two of whom are under the age of 18 years. Her two older children attend university, but also live at home and are dependant. She and her husband own a property jointly in Auburn worth $900,000, which is subject to a mortgage of $410,000. She has personal liabilities of $10,000. Her husband owns a car ($10,000) and has superannuation ($8,000). He has liabilities of $8,400. Her husband's taxable income for the year ending 30 June 2009 is said to have been $13,999. The Plaintiff and her husband receive Centrelink payments of $1,892 per month. They have expenses said to total $3,575 per month. 10 Some, or all, of these facts may be in issue. For example, the Defendant tendered a copy of a search that reveals the property referred to in the Plaintiff's affidavit is solely owned by her. 11 I know nothing about the financial and material circumstances of the Defendant and/or of his brother, George, the only other beneficiary named in the Will of the deceased. The resources and needs of other claimants on the deceased's bounty are to be taken into account in determining a claim under the Act: Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [122]; Foley v Ellis [2008] NSWCA 288 at [88] and [89]; Carey v Robson [2010] NSWCA 212 at [15]. 12 The Defendant's evidence is that he paid his brother $350,000, which is said to be the value of his brother's interest in the estate. This fact may, or may not, be in issue. 13 The issues for determination in the substantive case, if it proceeds to a final hearing will be: (i) whether leave should be granted under s 16 of the Act for an extension of time for the bringing of the claim under s 7 of the Act; (ii) if leave is granted under s 16, whether, as a matter of fact, the provision made for the Plaintiff under the deceased's Will was inadequate; (iii) if the answer to (ii) is "yes", should any property be designated as notional estate; and (iv) what orders, if any, should be made for by way of provision for the Plaintiff? 14 It cannot be disputed that each of these issues will require additional facts, only some of which are revealed by the evidence filed at this time. 15 An additional issue in the proceedings is a claim, to be advanced by the Defendant, that the property owned by the deceased at the date of his death, was held in trust for the Defendant and for his brother, George. This was raised by counsel for the Defendant in submissions. 16 The Defendant's application is, in effect, one for summary dismissal. When asked the basis of that claim, rule 13.4 of the Uniform Civil Procedure Rules 2005, was relied upon. The application was said to rest upon the proposition that there is no viable grounds for the Plaintiff to contend that the time for making the claim should be extended, that the deceased failed to make adequate provision for her proper maintenance and support, and finally, that as a matter of discretion, property should be designated as notional estate. 17 In Warren v McKnight (1996) 40 NSWLR 390, the Plaintiff brought proceedings, pursuant to the Act, some ten months after the time provided for the commencement of such proceeding. Subsequent to the filing of the Plaintiff's affidavit evidence-in-chief, application was brought by the Defendant for summary dismissal of the proceedings on the basis that no reasonable cause of action had been shown. On behalf of the Plaintiff, it was argued that the Act did not contemplate the procedure for summary dismissal and that it was virtually not possible to determine that such a case was hopeless until the final hearing of the proceedings. 18 Hodgson J (as his Honour then was) did not accept that submission and held that, on the basis of the material before the court, the Plaintiff's case should be summarily dismissed. However, before making a final order, his Honour gave to the Plaintiff liberty to file supplementary material within a period of time, as it had been indicated that the Plaintiff wished to file such further material, reserving to the Defendant the opportunity to bring the matter back before him. 19 At 396, his Honour said: I do not think the Family Provision Act 1982 should be read as precluding the application of summary judgment provisions. It does operate in the context where the Supreme Court Act 1970 and the Supreme Court Rules provide for ways in which disputes can be determined and one of those ways is by summary judgment applications. I do not think that one can get from the Family Provision Act 1982 an intention to preclude the application of that rule. However, in a matter in which so much is at large, and so much subject to discretion, I would accept that it would be in rare cases that the application of the summary judgment provision would be appropriate.

20 Otherwise, the principles applicable to summary dismissal are well understood. As recently as 1 September 2010, in Spencer v Commonwealth of Australia [2010] HCA 28, French CJ and Gummow J (commencing at [21]) commented: In Three Rivers District Council v Governor and Company of the Bank of England (No 3 ), Lord Hope of Craighead discussed the scope of the inquiry on an application for summary disposition under r 24.2 of the CPR: "The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman , ... that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all." … The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said: "The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried". More recently, in Batistatos v Roads and Traffic Authority (NSW ) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following: "Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." (Omitting citations) 21 Hayne, Crennan, Kiefel and Bell JJ added at [54]-[55]: In Dey v Victorian Railways Commissioners , the Defendants moved for summary judgment on the grounds that the action was frivolous, vexatious and an abuse of process. In a passage often later cited, Dixon J said that "[a] case must be very clear indeed to justify the summary intervention of the court to prevent a Plaintiff submitting his case for determination in the appointed manner by the court with or without a jury". What Dixon J meant by "very clear" was identified by his observation that "once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process" (emphasis added). And there would be a "real question" unless the Defendant could "show that it was so certain that [the question] must be answered in the [Defendant's] favour that it would amount to an abuse of the process of the court to allow the action to go forward for determination according to the appointed modes of procedure" (emphasis added). The test identified by Dixon J in Dey can thus be seen to be a test requiring certain demonstration of the outcome of the litigation, not an assessment of the prospect of its success.

In General Steel Industries Inc v Commissioner for Railways (NSW) , Barwick CJ pointed out that previous decisions about summary termination of actions on the motion of a Defendant had been given in cases in which the so-called "inherent" jurisdiction of a court to protect itself and its processes from abuse had been invoked, and in cases where the Defendant had relied upon a particular rule of court permitting the court to strike out pleadings or dismiss an action on it being shown that a pleading "does not disclose a reasonable cause of action" or the action "being shown by the pleadings to be frivolous or vexatious". The material available to the court might differ, depending upon which power was invoked, but all the cases emphasised the need for "exceptional caution" in exercising a power to dismiss an action summarily. As Barwick CJ also pointed out in General Steel Industries , the test to be applied was expressed in many different ways, but in the end amounted to different ways of saying "that the case of the Plaintiff is so clearly untenable that it cannot possibly succeed" (emphasis added). As that formulation shows, the test to be applied was one of demonstrated certainty of outcome. (Omitting citations) 22 The general structure of family provision legislation is clear. The High Court has affirmed that an application for such provision is a two-stage process, Vigolo v Bostin at 212 - 213, agreeing with the approach in Singer v Berghouse (No 2) (1994) 181 CLR 201; [1994] HCA 40. The first stage calls for a determination of the question whether the Plaintiff has been left without adequate provision for his, or her, proper maintenance education and advancement in life. The second stage arises only if that determination is made in favour of the Plaintiff and requires the court to decide what provision ought to be made. 23 The first stage is described as "the jurisdictional question", Singer v Berghouse, at 209, per Mason CJ, Deane and McHugh JJ. The court is required to determine whether the deceased has made adequate provision during his lifetime, or out of his estate. 24 In Vigolo v Bostin, Callinan and Heydon JJ at [122] suggested the totality of the relationship was to be considered. They said: We do not therefore think that the questions which the Court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all of the potential beneficiaries must be taken into account and weighed with all of the other relevant factors. 25 Cases under the Act, often, involving complicated relationships and transactions between family members, require close consideration before a result can be determined. It is not, in an application such as this, as pointed out to counsel for the Defendant, during submissions, for the Plaintiff to establish that she will inevitably be successful at a final hearing. It is for the Defendant to establish that she cannot succeed at a final hearing. 26 On the topic of the time for making the application being extended, the evidence of the Plaintiff appears to be that: (a) she did not know, until 2010, that there was a Will, executed by the deceased; (b) she had not been told what was in the deceased's Will by the Defendant; (c) she did not know of her rights to make a claim for provision (she only sought legal advice from a legal aid solicitor after Easter 2010); and (d) she was lulled into a false sense of security by the Defendant, who she trusted, and upon whom she relied. He had said to her "Don't worry, I will fix everything". 27 The Plaintiff, through the solicitor, obtained, a copy of the deceased's Will and Probate parchment in late April 2010, she saw her present solicitor on 7 May 2010, and commenced the proceedings on 11 May 2010. Of course, by this stage, the time for making of the application had passed, but the bringing of proceedings, once the Plaintiff obtained advice, was very prompt. 28 As I have said, it may be that some, or all, of the Plaintiff's evidence will be disputed. However, it would be inappropriate to grant summary judgment on the basis of facts, said by the Defendant to be disputed, but the determination of which facts, in the Plaintiff's favour, at trial, would support her claim. I should assume, for the purpose of the summary judgment application, that any relevant disputed questions of fact will be resolved in the hearing in the Plaintiff's favour. 29 Finally, if the Defendant's evidence about the distribution of the estate is accepted, an order designating property as notional estate will have to be made. No submissions were made on behalf of the Defendant on this topic. Section 27 of the Act prohibits the court from making an order designating property as notional estate unless it has considered: (a) the importance of not interfering with reasonable expectations in relation to property; (b) the substantial justice and merits involved in making, or refusing, to make the order; and (c) any other matter which it considers relevant in the circumstances. 30 It is clear that, the evidence on this topic is far from complete. As I have stated, there is likely to be evidence from the Defendant himself, about such matters that will be relevant on the topic of exercising discretion to designate property as notional estate (other than the payment said to have been made to his brother). Furthermore, in view of the competing claims, there may well be other evidence that will be relevant to the court's discretion. 31 The Defendant has submitted that he is prejudiced if the Plaintiff is allowed to proceed to a final hearing, as significant costs will be incurred. If the Plaintiff's case fails, it is quite possible that she will be ordered to pay the costs of the proceedings and that the costs order will ensure that the Defendant is not disadvantaged by the bringing of the proceedings. The Plaintiff appears to have equity in her home and, in those circumstances, if costs are ordered to be paid by her, she appears to have a source of funds from which to pay them. 32 Exercising the extreme caution that is appropriate to applications for summary judgment, I decline to exercise my discretion to summarily terminate the proceeding. The Plaintiff's material leads me to the view that the inevitable failure of her application is not yet sufficiently clear to lead me to the conclusion that the proceeding should be summarily dismissed. 33 The Defendant's notice of motion also seeks an order that the mediation scheduled for 10 September 2010 should be vacated. In discussion about this aspect during submissions, the parties ultimately agreed that this order is necessary since, for example, the prescribed notices have not been served on other eligible persons. In addition, the Plaintiff may need to amend her Summons and, as Ms Sinclair has pointed out, a trust claim is to be advanced by the Defendant. Before any mediation, the parties, and others, should be well aware of the case that he, and she, has to meet. In the circumstances, I propose to vacate the mediation of 10 September 2010. 34 Having heard competing submissions on costs, in the circumstances of this case, I am of the view the costs of the notice of motion should be the Plaintiff's costs in the cause. 35 I make the following orders: (a) Order that the Defendant's Notice of Motion filed on 20 August 2010 be dismissed; (b) Order that the costs of the Notice of Motion be the Plaintiff's costs in the cause; (c) Order that the mediation listed on 10 September 2010 be vacated.

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