ERIKA KRISTY YEE v STATE TRUSTEES LIMITED

2 On 1 December 2009, Habersberger J made an order referring this matter to me for hearing pursuant to rule 77.05 of the Supreme Court (General Civil Procedure) Rules 2005.

3 Letters of Administration were granted to the defendant, State Trustees, by this Court on 24 October 2007. Mr Wells of counsel, who appeared on behalf of State Trustees, neither consented nor opposed the relief which the plaintiffs sought. He made certain concessions which are detailed below. He cross-examined both plaintiffs briefly and assisted the Court in his closing submissions.

The application for extension of time under s 99 of the Act

4 As letters of administration were granted to State Trustees on 24 October 2007, the plaintiffs were required under the provisions of s 99 to bring the application for further provision by 24 April 2008. As such, the application is some five months out of time. Although the usual practice in this State is to seek the extension of time and, if such application is successful, issue the substantive application, as I was anxious because of the relatively modest size of the estate to save costs I indicated that both the extension application and the substantive application should be heard together.

5 The terms of s 99 of the Act indicate that the power to extend time is discretionary and must be exercised judicially. The plaintiffs bear the onus of justifying the granting of the extension. The authors of the leading Victorian text on this subject, Wills, Probate and Administration Service Victoria (Boaden, Collins, Phillips and Sparke)[1] observe at paragraphs [39,075] and following that an applicant's ignorance of his or her right to apply for provision is a relevant matter to take into account. While not being a sufficient reason of itself to extend time, the merits of the claim are a relevant consideration.

6 In Groser v Equity Trustees Limited,[2] Gillard J observed at paragraphs 37-38:

"In my respectful opinion, the strength or otherwise of the substantive claim is relevant. There is nothing in s 99 which precludes consideration of the strength of a claim and in my opinion, to deny a strong claim in circumstances where no prejudice would be suffered by any person if time was extended, would be to cause an injustice. In Re Barrett, deceased, 10 Scholl J referred to New Zealand cases which clearly recognised the relevance and importance of the strength of the plaintiff's case. In my opinion, the strength of the case is important and a relevant factor to take into account. The period of delay and the reason for it, while important, are not factors which carry much weight in the absence of real prejudice and in the face of a strong claim. . . . Justice is the paramount consideration, and to deny a person an extension of time in the face of a strong claim could amount to an injustice."

7 In their respective affidavits, the plaintiffs both indicate that they were never told that they had rights to seek further provision in relation to their mother's estate. It was not until September 2008 when their father informed them of their position in that regard that they became aware of their rights. They state that upon becoming aware of the position they instructed their solicitor to issue the present proceeding.

8 The plaintiffs are both young people and inexperienced in regard to legal matters. In my assessment, their contention that they had no knowledge of their rights to commence the current proceeding is entirely plausible. There has been no distribution of any part of the estate. Nobody is relevantly prejudiced by the making of an order for an extension to enable the substantive claim to be brought and to deny it would be to do the plaintiffs an injustice. I will make an order extending the time by which the plaintiffs are to make the application to 24 September 2008.

The substantive application for further provision under s.91 of the Act

9 The first plaintiff, Andrea, is 25 years of age. In her affidavit, she states that her mother died on 5 March 2005 without leaving a will. She states that the value of the estate is approximately $400,000 but, as will be seen below, its present value is substantially less than that figure. Her mother commenced living in a de facto relationship in 1981 with Andrea and Erika's father, Eric Yee. They never married. Andrea was born on 10 August 1984 and Erika was born on 2 May 1988. Andrea states that her mother and father signed a contract to purchase a house and land at 18 McNamara Road, Laverton, in August 1993 for $63,000. The property was registered in the deceased's name alone. They lived as a family at that address until 2001 when Eric Yee left the family and went to live in the United States of America where he lives to this time. Andrea and Erika remained with their mother at McNamara Road after Mr Yee left. At that time, Andrea and Erika were at school at Laverton Secondary College. Andrea completed year 11 and then left school.

10 Andrea states that her mother had serious problems with her health including cancer, cirrhosis of the liver, emphysema and scleroderma. The scleroderma, which is a skin disease, was so debilitating that on some days Ms Yee could barely move. Andrea states that she carried out general housekeeping and cooking and administered medication to her mother. On occasion, she would accompany her mother to the shops.

11 Shortly after their mother died, their aunt, Kim McGrath, informed Andrea that their mother had once been married to a man in order to assist him to obtain permanent residence in Australia. Although the evidence concerning this is all hearsay, Mr Wells, Counsel for the defendant, made concessions in this regard as investigations carried out by State Trustees in connection with the administration of the estate confirmed this to be the case.

12 Andrea and Erika continued to live at McNamara Road after their mother died. At the time of their mother's death, Andrea was 20 and Erika was 16. In April 2007, Andrea left McNamara Road and went to live with her partner, David Mulroy. Erika continued to live at McNamara Road on her own but in July 2007 the house burned down. As a result of the fire, the house became uninhabitable and was subsequently demolished. The insurers for the property paid for Erika's accommodation for several months. In May 2008, Erika moved in to a house in Werribee with her partner, Damian Todd. The insurers of the house at McNamara Road paid the amount necessary to Bendigo Bank to discharge the mortgage on the house, together with a further sum in respect of the house and contents. A good deal of the plaintiffs' personal belongings were destroyed in the fire. The property at McNamara Road, which was now vacant land, was sold after some apparent delay. Settlement of that sale has been effected and the net proceeds paid to State Trustees.

13 In her affidavit, Andrea describes her very modest financial circumstances. She describes the type of work she has been able to obtain in the past. Her partner works at hotels in the general vicinity. She states that she does not own a house or car and that she has no assets of any significance.

14 Erika's affidavit reveals her circumstances to be very similar to those of Andrea, although she has a very young female child, Tana. While her mother was alive, she gave her mother injections to treat her cancer and cooked and cleaned for her. She would sometimes do the food shopping. Her affidavit is very much in the same form to her sister's and reveals that, like her sister, she lives in very modest circumstances. Erika gave birth to her daughter in July 2008 and her sole source of income are her Centrelink payments. Like her sister, Erika does not own a house or car and has no assets of any significance. She recently visited her father, Eric Yee, in the United States for several months and because of her absence overseas the benefits that she receives from Centrelink were reduced but that is shortly to be readjusted.

15 The evidence contained in their respective affidavits was not displaced in cross-examination by Mr Wells, rather, it was brought up to date. Andrea stated that her mother never informed her that she was married. She now lives in rented accommodation at Laverton with her partner. She is still unemployed. Her partner, Mr Mulroy, continues to work in hotels and presently brings home $580 per week. Andrea has been in the relationship with Mr Mulroy for some five years. There are no children. Because of her financial position, she is not able to accumulate any savings.

16 In cross examination, Erika stated that she lives with her partner and her daughter at her partner's grandparents' house at Wyndham Vale near Werribee. She is not presently working and is in receipt of Centrelink payments. Her partner works for modest wages at a restaurant at Rockbank. She has not accumulated assets of any significance since swearing her affidavit. Although she had worked in the past at Hungry Jack's in Altona Meadows, she has not been able to find work. Her daughter Tana is a healthy child.

17 In an affidavit of Rebeka Pascuzzi, filed on behalf of State Trustees, the financial position of the estate is set out. As of January 2010, the estate consisted of $275,727.24 which is invested in the State Trustees' Invest Diversified Income Fund and $12,116.90 in State Trustees' Cash Common Fund. Ms Pascuzzi's affidavit details the expenses which have been paid from the funds of the estate. The gross value of the estate is put at $415,411.27. From this sum, the mortgage over the property and various other expenses have been paid, including the commissions payable to State Trustees and fees in connection with the investigation of the position in regard to the deceased's husband. These expenses, together with the further fees and expenses to finalise the estate, will mean that approximately $240,000 is available for distribution.

18 In response to matters put by Mr Dickenson, Counsel for the plaintiffs, in his opening, Mr Wells made certain concessions in regard to the position as to the deceased's husband, Ace Najdovski. These concessions are as follows:

(a) The deceased and Mr Najdovski were married in the Registry Office in Melbourne on 21 July 1981. The purpose of the marriage was to enable Mr Najdovski to remain in Australia. (Mr Dickenson contended, without an evidentiary basis, that Mr Najdovski otherwise had no right to remain in the country but this was not conceded by Mr Wells).

(b) Mr Najdovski was deported from Australia to Macedonia in the former Yugoslavia on 11 May 1982 and has never since returned to Australia.

(c) The deceased and Mr Najdovski had no further contact and were never divorced.

(d) Notwithstanding that the deceased and Mr Najdovski never divorced, Mr Najdovski married soon after he returned to the former Yugoslavia and has two adult children from that marriage.

19 I asked Counsel appearing on behalf of the parties as to the position in regard to Mr Eric Yee, Ms Yee's former defacto partner. Mr Wells indicates that the position that State Trustees takes as the contradictor to the application is that Mr Yee has no standing to make a claim against the estate of Ms Yee as he was not a domestic partner of the deceased at the time of her death. As observed above, he left Ms Yee in 2001 and went to live in the United States. As such, the only other person with any claim to participate in the estate is Mr Najdovski.

20 In an affidavit of Jenny Martelli, who is a solicitor employed in the legal branch of State Trustees, she deposes to the steps which State Trustees have taken to inform Mr Najdovski of this proceeding and how it would affect the rights he has to a distribution of Ms Yee's estate by reason of his marriage to her. Ms Martelli states that State Trustees' enquiries reveal that Mr Najdovski changed his name to Acko Trendafilovski on 13 September 1988. Mr Najdovski has provided State Trustees with a copy of the Change of Family Name Certificate. The communications with Mr Najdovski were translated into Macedonian because State Trustees considered that it was possible that Mr Najdovski did not speak English. Mr Najdovski indicated in response in the form of a formal notarised declaration that he was never divorced from Ms Yee, although it appears that he has subsequently remarried in Macedonia a woman by the name of Mare Krsteska.

21 On 3 December 2009, Ms Martelli sent a further letter to Mr Najdovski advising him that he was a beneficiary under the estate and enclosing a copy of the plaintiffs' affidavit and requested response. That letter was translated into Macedonian and is exhibited to Ms Martelli's affidavit. The letter of 3 December 2009 sets out at some length the position in regard to this application and how it will affect Mr Najdovski's rights.

22 There was no response to that letter and on 11 January 2010, Ms Martelli wrote again to Mr Najdovski. That letter was also translated into Macedonian. No response has been received.

23 In my view, Mr Najdovski has been appropriately informed of his rights in respect of Ms Yee's estate and has advertently chosen not to participate in the present proceeding in the knowledge that his failure to do so may result in his rights under intestacy to benefit from the deceased's estate being adversely effected.

24 The deceased died intestate and Mr Najdovski survived her. The provisions of s 51 of the Act provide relevantly:

"(1) . . .

(2) The partner of an intestate who leaves a child (or other issue) is entitled -

(a) to the personal chattels of the intestate; and

(b) if the intestate's residuary estate is worth not more than $100,000, to the whole of the estate; and

(c) if the intestate's residuary estate is worth more than $100,000, to -

(i) $100,000; and

(ii) interest on that amount calculated at the rate set out in sub-section (3) from the date of death of the intestate to the date of payment of that amount; and

(iii) one-third of the balance of the estate."

25 It will be seen that if the intestacy provisions are allowed to operate in these circumstances Mr Najdovski will receive $100,000 plus one-third of the balance of the estate, a total of approximately $140,000, leaving less than $50,000 to each of the plaintiffs. Counsel for the plaintiffs, Mr Dickenson, submits that the plaintiffs should each receive half of the net estate with Mr Najdovski receiving nothing.

26 The jurisdiction of the Court to make orders for further provision is outlined in s 91 of the Act which provides:

"91 Power of the Court to make maintenance order

(1) Despite anything in this Act to the contrary, the Court may order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.

(2) The Court must not make an order under subsection (1) in favour of a person unless -

(a) that person has applied for the order; or

(b) another person has applied for the order on behalf of that person.

(3) The Court must not make an order under sub-section (1) in favour of a person unless the Court is of the opinion that the distribution of the estate of the deceased person effected by -

(a) his or her will (if any); or

(b) the operation of the provisions of Part I, Division 6; or

(c) both the will and the operation of the provisions -

does not make adequate provision for the proper maintenance and support of the person.

(4) The Court in determining -

(a) whether or not the deceased had responsibility to make provision for a person; and

(b) whether or not the distribution of the estate of the deceased person as effected by -

(i) the deceased's will; or

(ii) the operation of the provisions of Part I, Division 6; or

(iii) both the will and the operation of the provisions -

makes adequate provision for the proper maintenance and support of the person; and

(c) the amount of provision (if any) which the Court may order for the person; and

(d) any other matter related to an application for an order under subsection (1) -

must have regard to -

(e) any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;

(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;

(g) the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;

(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;

(i) any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;

(j) the age of the applicant;

(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;

(l) any benefits previously given by the deceased person to any applicant or to any beneficiary;

(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;

(n) the liability of any other person to maintain the applicant;

(o) the character and conduct of the applicant or any other person;

(p) any other matter the Court considers relevant."

27 Sub-section 3(b) makes it clear that the jurisdiction is attracted in circumstances where the operation of the intestacy provisions is such that adequate provision is not made for the proper maintenance and support of the applicant for further provision.[3]

28 In Hallam v Maxwell,[4] Hansen J observed at paragraph 14:

". . . It makes no difference whether the failure of the deceased to make such provision for that person was by way of a will or the operation of the intestacy provisions in the Act or both. In the case of an intestacy, such as the present case, the matter may be approached as though the deceased had made a will which distributed his estate as on an intestacy: see Re Russell [1970] QWN 22 at 56."

29 At paragraphs 15 and following of that decision, His Honour went on to collect and consider the authorities dealing with the exercise of the discretion generally. He stated:

"[15] The question is not whether the deceased acted fairly in the disposal of his estate, nor was he required to treat his children equally. Furthermore, mere judicial opinion may not be substituted for that of the deceased as the preferred way of distributing his estate. That statement may be thought to be more applicable to the case in which the deceased leaves a will, but, on the other hand, the deceased may have determined not to leave a will and to have his estate pass to his children equally under the intestacy provisions. But even if the deceased did not so consider the matter the above statement reflects how the court approaches the matter in the situation of an intestacy.

...

[16] In Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 at 19, Dixon CJ stated:

It has often been pointed out that very important words in the statute are 'adequate provision for the proper maintenance and support' and that each of these words 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 son claiming a statutory provision must be relative to his age, sex, condition and mode of life and situation generally. What is 'adequate' must be relative not only to his needs but to his own capacity and resources for meeting them. There is then a relation to be considered between 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_."_

See too In re Allen, deceased; Allen v Manchester (1922) NZLR 218, where at 220 - 221, in a passage approved by the Privy Council in Bosch (at 479), Salmond J said:

'The Act is ... designed to enforce the moral obligation of a testator to use his testamentary powers for the purpose of making proper and adequate provision after his death for the support of his wife and children, having regard to his means, to the means and deserts of the several claimants, and to the relative urgency of the various moral claims upon his bounty. The provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his widow and children had he been fully aware of all the relevant circumstances.'

[17] Each case must depend on its own circumstances: McCosker v McCosker [1957] HCA 82; (1957) 97 CLR 566 at 576. Among these circumstances is the element of need, although that does not mean solely material need: White v Barron [1980] HCA 14; (1979) 144 CLR 431 at 457 per Wilson J. A moral claim alone is not sufficient to warrant an order for further provision: In re Anderson (1975) 11 SASR 276 at 283 per Zelling J.

[18] Good conduct and honest worth are not to be rewarded by a generous but second-hand legacy at the hands of the court. The measure to be applied is not what has been given to the one, but what the other needs for his or her proper maintenance: Blore v Lang [1960] HCA 73; (1960) 104 CLR 124 at 134 - 5 per Fullagar and Menzies JJ. See also King v White [1992] 2 VR 422 at 427 per Hedigan J.

...

[20] In assessing whether there has been a failure to make adequate provision for a spouse or child, the circumstances of the applicant at the date of death of the deceased must be considered, including the applicant's assets, his or her income and his or her capacity to earn income in the future: Blore at 128 per Dixon CJ and Anderson at 532 per Ormiston J. Once it is decided that the case is one in which the court may make an order providing for the applicant, the question of what provision ought to be made depends on somewhat different considerations, those being the circumstances that obtain at the time that the order is made: see Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490 at 499 per Gibbs J and Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 211."

1. In Bosch v Perpetual Trustee Co Limited,[5] Lord Romer adopted the passage of Salmond J in Re Allen[6] where he stated:

". . . that the Act is designed to enforce the moral obligation of a testator to use his testamentary powers for the purpose of making proper and adequate provision after his death for the proper support of his wife and children, having regard to his means, the means and desserts of the civil claimants and to the relative urgency of the various moral claims upon his bounty. The provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his widow and children, had he been fully aware of the relevant circumstances."

30 Mr Dickenson contends that the only impediment to the distribution of the entire estate to the plaintiffs is the marriage to Ace Najdovski. There is no evidence as such that the marriage was a sham and Mr Wells specifically did not concede this but, in my view, that element is not significant. Mr Najdovski departed Australia in 1982 and it is common ground that he has had nothing to do with the deceased since. The evidence concerning Mr Najdovski is imperfect but I am satisfied on the balance of probabilities that he has created an entirely new life for himself in Macedonia and any distribution to him by operation of the intestacy provisions would be a windfall to him at the expense of the persons for whom Ms Yee had the greatest and in fact only duty to provide for, the plaintiffs.

31 I am required to apply the specific statutory criteria prescribed in s 91(4) to the plaintiffs' claim. I consider that the result of the application of that criteria is as follows:

(a) "(e) any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;"

This element powerfully compels the complete distribution of the estate to the two plaintiffs. The deceased's paramount, if not only duty to make provision was to her children who were aged only 16 and 20 at the date of her death. At that time, they were both dependant upon her for accommodation and sustenance.

(b) "(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;"

The dependency of the plaintiffs, in particular Erika, who was still a minor at the date of the deceased's death, enlarges that natural responsibility. This is to be contrasted with the position of Mr Najdovski to whom in my view she had no moral obligation or responsibility. He had long since departed the scene.

(c) "(g) the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;"

As detailed above, the estate is a modest one but provision can be made for the plaintiffs, albeit to the exclusion of Mr Najdovski. The award of half of the net estate to each of them will go towards providing them with some modest resources to begin their adult life.

(d) "(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;"

As detailed above, Andrea and Erika have negligible financial resources. They both presently live on Centrelink payments with Erika having a dependant child only 18 months of age. As Mr Dickenson points out, neither they nor either of their partners have substantive earning capacity and it is hard to see how their positions will improve in that regard.

(e) "(i) any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;"

This element was not considered in Counsels' submissions to be of any relevance.

The plaintiffs are both young adults with all their adult lives before them and have very little in the way of financial resources.

(g) "(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;"

As deposed to in the affidavits and in cross-examination, both the plaintiffs cared for their mother in her protracted illness and there is nothing to indicate that they were anything but dutiful and loving daughters.

(h) "(l) any benefits previously given by the deceased person to any applicant or to any beneficiary;"

This element was not considered to be of any relevance in these circumstances.

(i) "(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;"

As detailed above, the plaintiffs were living with their mother at the time of her death with Andrea caring for her mother during her illness and Erika being at that time employed but otherwise being maintained by her mother.

(j) "(n) the liability of any other person to maintain the applicant;"

There is no other person who is legally obliged to maintain Andrea or Erika.

(k) "(o) the character and conduct of the applicant or any other person;"

The character and conduct of the plaintiffs are entirely favourable to their application.

(l) "(p) any other matter the Court considers relevant."

Mr Dickenson contends that the Court should consider the true nature of the relationship between the deceased and Mr Najdovski, contending the marriage was a sham. I do not consider that it is necessary or appropriate for me to make a finding in this regard, particularly in the absence of any admissible evidence or concession in this regard. In my view, the marriage occurred and was abandoned by Mr Najdovski so many years ago that when one assesses his entitlement for provision against the duty of the deceased to make provision for her daughters, the Court could award the plaintiffs provision of half of the net estate each without being at all troubled by his resultant exclusion.

32 On an application of the relevant case law and the statutory criteria mentioned above, I regard it as appropriate to make orders awarding the plaintiffs the net estate of the deceased as tenants in common in equal shares. At the hearing of the proceeding on 28 January 2010, I invited Counsel for the parties to submit minutes of orders in accordance with such a determination and they have done so. I make orders as follows:

1. Pursuant to s.99 of the Act the time for the making by the plaintiffs of the claim for further provision from the estate of Robyn Anne Yee be extended now for then to 24 September 2008.

2. I order that there be further provision for the plaintiffs from the estate of the deceased, Robyn Anne Yee, be made by distributing the whole of the net estate of the plaintiffs as tenants in common in equal shares.

3. The Defendant's costs of the proceeding, to be assessed on a trustee basis in default of agreement, be retained and paid out of the estate.

4. The Plaintiff's costs of the proceeding, to be assessed on a solicitor and client basis in default of agreement, be paid out of the estate.

5. An authenticated copy of this order shall be annexed to the Letters of Administration dated 24 October 2007 of the above-named deceased.

[2] [2007] VSC 27; (2007) 16 VR 101.

[3] Sub-section (3) mentions Part I, Division 6 of the Act which Division deals with the distribution of an intestate's residuary estate.

[4] (1998) VSC 131.

[5] (1938) AC 463 at pp 478-479.

[6] (1922) NZLR 218 at 220-221.