Estate Kranjac; Cadden v Widdowson

THE ESTATE

1. The deceased's estate, agreed to have a value of about $1.8 million, essentially comprises the following property: 1. the family home of the deceased at Gladesville, with an estimated value of about $1,750,000. 2. cash at bank, approximately $54,000. 3. furniture and personalty, with an estimated value of about $500.00.
2. There are "collateral" disputes about the size and nature of the deceased's estate. They are "collateral" in the sense that no formal claim has been made by or on behalf of the estate for property to be returned to the estate and, for the most part, competing claims for family provision relief have been conducted on the basis that the centrally significant estate asset is the Gladesville property. No party seeks an order that property beyond the $1.8 million be accounted for to the estate except to the extent that the defendants contend that any potential grant of family provision relief in favour of the first plaintiff should be disallowed or, at least, reduced, by recognition that, on the defendants' case, she appropriated to herself $26,000 of the deceased's funds, if not also jewellery said to be worth $100,000.
3. The principal "collateral" disputes focus upon whether, during the deceased's lifetime, the first plaintiff appropriated to herself jewellery of the deceased (estimated by the second defendant to have a value of the order of $100,000) and whether she accounted to the deceased for the sum of $26,000 withdrawn from the deceased's bank account in April-May 2008 (by one withdrawal of $20,000, followed by another of $6,000) in cash.
4. A subsidiary "collateral" dispute which came to little other than an attack on the credit of the first defendant (and a demonstration that she had been assisted by the deceased during the deceased's lifetime) involved a suggestion that a home unit in an investment property, at Tennyson Point, registered in her name was believed by the deceased to have been beneficially owned by the deceased, and to have been registered in the name of the first defendant only to conceal the property from social welfare authorities. This belief may have been encouraged by the fact, deposed to by the first defendant, that the deceased gave the first defendant financial assistance, characterised by the first defendant as a loan, said by the first defendant to have been repaid by instalments colloquially spoken of between the two women as "rent" (so called because, the first defendant explained, it was sourced from rental payments received from tenants of the investment property). In the event, no formal challenge has been made to the first defendant's beneficial ownership of the property or her assertion that she repaid moneys lent to her by the deceased.
5. The same day as the deceased executed her will in 2009 she executed a statutory declaration in which she expressly acknowledged that she had received rent from the investment property and disclaimed any interest in the property.
6. In light of my determination that each of the family provision claims made in these proceedings must be dismissed, and given the absence of any formal claim for relief referable to the "collateral" disputes, it may not strictly be necessary for me to make a determination about them. In particular: Whether the first plaintiff did, or did not, appropriate the deceased's jewellery or $26,000 of the deceased's money, in my assessment her application must be dismissed for a failure to overcome the jurisdictional hurdle for which section 59(1)(c) of the Succession Act provides.
7. In large measure, the parties' disputation about their "collateral" disputes has served a principal forensic purpose of providing an occasion for them to impugn each other's credit. Much of the four days it took to hear these proceedings was taken up with inconclusive attacks on the credit of each party or, perhaps more accurately, each of the applicants. The net effect of those attacks was to diminish all parties, inviting caution across the board in the assessment of their evidence.
8. Findings on the "collateral" disputes about the size and nature of the deceased's estate are necessary, vis-a-vis the family provision claim of the first plaintiff, as, at least, bearing upon two aspects of her claim. The defendants contend that, if the Court were to find that she did misappropriate the deceased's jewellery and funds, then it should also find that: (a) she was guilty of "conduct disentitling" which would preclude the making of a family provision order in her favour; and (b) any family provision order made in her favour should take into account, by way of a reduction of benefits, the value of the property misappropriated.
9. In the face of the first plaintiff's denial, I am not prepared to find that she did appropriate to herself jewellery of the deceased. The case against her depends essentially on a disputed conversation she allegedly had with the second defendant, in which she is said to have invited him to participate in a carve up of their mother's property in 2012, shortly before the deceased transitioned to nursing home accommodation: she to take the deceased's jewellery, he the deceased's money. In the absence of reliable, independent corroborative evidence, I'm not prepared to make against the first plaintiff a grave finding that she, in effect, stole jewellery worth $100,000. The absence of a reliable inventory of the missing jewellery reinforces an underlying doubt about the allegation of theft.
10. The $26,000 said to have been misappropriated by the plaintiff is in a different category. That is because, although the first plaintiff denies retention of such a sum, she admits that, in the course of assisting her mother (she says) to hide assets from the social welfare authorities, she for a time had possession of $26,000 withdrawn from the deceased's bank account. She says there was but one withdrawal, but an examination of the deceased's bank passbook demonstrates that there were two: $20,000 was withdrawn on 21 April 2008; $6,000 on 21 May 2008. On this, at least, the first plaintiff's evidence should not be accepted. More importantly, however, I do not accept her evidence that, having taken possession of the $26,000 withdrawn from the deceased's account in cash, she handed the cash to the deceased (either at the bank or at home, according to different versions of her evidence) without any concern about its disposition. In forensic terms, the first plaintiff bears the onus of proving that, having received the money, she paid it to the deceased: Coshott v Sakic (1998) 44 NSWLR 667 at 671E. Upon a broader view of the case, in my assessment it is more probable than not that the first plaintiff (believing herself entitled to benefit from the deceased's property) retained the $26,000 for her own use and benefit.

THE DECEASED'S WILL

1. By her will, and as events have transpired, the deceased provided for her estate to be disposed of as follows: 1. the Gladesville property and its contents were given to the second defendant. 2. the deceased's jewellery (to all intents, now "missing") was given to the first defendant. 3. the residue of the estate was given to the first defendant's son (a grandson of the deceased), Liam.
2. On its face, the will purported to give to the first defendant a home unit at Tennyson Point which, with the deceased's assistance, she now holds as an investment. However, that property was purchased in the name of the first defendant; by her statutory declaration, the deceased disclaimed any interest in it; and no party seeks in these proceedings to disturb the first defendant's title to it.
3. The will made no provision for either of the plaintiffs.
4. The second defendant, who is the major beneficiary named in the deceased's will, is and was at all material times a bachelor. He has lived most of his life "at home" with the deceased or, at least, in the family home. He became her principal companion and, in time, her principal carer.

THE TIMELINESS OF FAMILY PROVISION APPLICATIONS : SUCCESSION ACT 2006 NSW, SECTION 58(2)

1. The plaintiffs' applications for family provision relief were made by a summons filed on 8 October 2015, within the time limited by section 58(2) of the Succession Act 2006.
2. The first defendant's cross summons was filed on 23 November 2015, ostensibly one day after expiry of the time limit. By an amended cross claim filed on 26 August 2016, she applies, under section 58(2) of the Succession Act, for an extension of the time within which her family provision application ought to have been made.
3. No party objects to a grant of the extension of time sought. There is no suggestion of any party suffering prejudice in the event that an extension is granted. The first defendant's delay was but a single day, a day during which the plaintiffs' summons remained undetermined. An extension of time should be granted as sought.
4. It is not necessary, in these circumstances, to dwell upon the first defendant's contention that, upon the proper construction of section 36(2) of the Interpretation Act 1987 NSW, in the factual setting of the proceedings, her application should be taken to have been made within the time limited by section 58(2) of the Succession Act.

"REPRESENTATION" OF THE DECEASED'S ESTATE

1. As one of the two persons to whom a grant of probate was made in respect of the deceased's will; as the only one of the executors not an applicant for family provision relief; and as the principal beneficiary named in the deceased's will, the second defendant assumed primary responsibility in these proceedings, as an executor, for seeking to uphold the will.
2. In a substantial respect, despite her application for a family provision order for herself, the first defendant is in the same forensic camp as the second defendant. Both have opposed the plaintiffs' claims. Both have sought to protect the second defendant's entitlement to retain the family home uncharged with the burden of a grant of family provision relief. Declaring a primary concern that the second defendant's ownership and continuing occupation of the Gladesville property not be disturbed, the first defendant has submitted that, if orders for family provision are made, they should be charged against the residuary estate (nominal though it may be) left to her son, who has played no active role in the proceedings.

ELIGIBILITY TO APPLY FOR FAMILY PROVISION RELIEF : SUCCESSION ACT, SECTIONS 57(1)(c) AND 59(1)(a)

1. There is no dispute as to the eligibility of the plaintiffs and the first defendant to apply for family provision relief. As children of the deceased, their status as "eligible persons" is established by reference to section 57(1)(c) of the Succession Act. The jurisdictional requirement of section 59(1)(a) of the Act, that the Court be satisfied of their eligibility, is plainly satisfied.

ADEQUACY OF PROVISION MADE FOR THE PROPER MAINTENANCE, ETC. OF THE APPLICANTS : SUCCESSION ACT, SECTION 59(1)(c)

Introduction

1. Each of the family provision applications made in these proceedings founders upon the jurisdictional impediment, for which section 59(1)(c) of the Succession Act provides, that the Court be satisfied that: "at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is made has not been made by the will of the deceased person…"
2. The financial circumstances of each of the applicants are such that they cannot be said to have been left without "adequate" provision for their "proper" maintenance, etc. in circumstances in which the deceased had an acknowledged obligation to make provision for the second defendant, and insufficient resources to make provision for all her children without significantly diminishing the provision made for him.

The Applicants

1. The first defendant is "asset rich, but cash poor". She is the registered proprietor of a three-bedroom home at Gladesville (ripe for redevelopment) with an estimated value of not less than $2 million or thereabouts and possibly as high as $2.8 - $3.1 million, though her estimate of value is as low as $1.4 million. Her determination to hold onto that property, and not to "downsize", is central to her claim to have been left without adequate provision. She depends for her income on an aged pension. She has no superannuation. She owes a bank about $12,000 but, otherwise, she is without any substantial debt.
2. She moved out of the family home at about the time of her marriage in 1978 and the family's move from Regent's Park to Gladesville. Between 1978 and 1982 she was party to a marriage which ended in divorce. She is single. She has no dependents. She has no children. She lives on her own. Her health is indifferent. She suffers from a variety of ailments, including problems with her eyesight, lupus, Sjogren's Syndrome, back pain and sciatica.
3. Her perceived needs include a need for repairs and renovation of her house, inside and out; a need to repay her bank loan; a need for assistance in meeting medical expenses and paying for car repairs; and a need for a fund to meet contingencies.
4. The second plaintiff married his wife Margaret in 1981, at about which time he moved out of the family home at Gladesville. She is eight years his junior, having been born in April 1961. They have one child (a son), born in September 1981. They own their home at Ryde. He works as a bus driver for Sydney Buses, but is on the verge of retirement. Margaret works on a permanent, part-time basis as an office administrator. Their home, which is unencumbered, has an estimated value of about $1.4 million. They have superannuation entitlements exceeding $600,000, and a regular combined income exceeding $1,600 per week. They have sundry other assets, including modest credit bank balances.
5. Their health is not altogether good. The second plaintiff is in remission from prostate cancer. He suffers from macular degeneration and sleep apnoea. He has sundry other aches and pains, including lower back pain. Margaret too suffers from various aches and pains, in part the product of a degenerative disc disease. She also suffers from depression, glaucoma and migraines. She walks at times with a stick. She needs extensive dental work.
6. Following a breakdown of a de facto relationship, the second plaintiff's son (then unemployed) returned to live with his parents. He himself has a son (the second plaintiff's grandson), now aged about 9 years, who spends time at the family home in Ryde during access visits.
7. The perceived needs of the second plaintiff and his wife focus upon a need for repairs and renovation of their house; Margaret's need for dental treatment; a general need for funds to cover medical expenses; and a need for a contingency fund in retirement.
8. The first defendant owns two investment properties, each with a value of about $1.1 million, subject to a relatively small mortgage over one of them well covered by financial assets valued at about $200,000.
9. She lived overseas between 1967-1979 or thereabouts. While living in London, she completed a BA (Honours) degree. She has experience in administrative roles. Between 1979-1983 she was party to a marriage which ended in divorce. Her only child, Liam, was born of that marriage in July 1980. He is no longer dependent upon her. She is single and presently lives with the second defendant, rent-free. She has no superannuation. She depends for her income on rent from her two investment properties. She suffers multiple medical conditions, including osteoarthritis and lower back pain.
10. High on her list of perceived needs is a need to protect the second defendant's right of ownership and occupancy of the family home at Gladesville, which she associates with his willingness to allow her to live with him rent free. If he were to be forced to sell that property, she fears, she would have to live in one of her investment units, with a consequent reduction in her income, or to sell one of the units, with similar effect, after payment of her debts and capital gains tax. She apprehends a need for funds to renovate the units; a need for a smaller, more economical car than the one she presently owns; a need for substantial dental treatment; and a need for a contingency fund.

The Second Defendant's Competing Interest

1. Between 1978-1998 or thereabouts the second defendant worked as a solicitor. Retrenched in 1998, he was unsuccessful in applying for other full-time jobs as a solicitor. Over time, he accepted the status of a retiree. Apart from his interest in the deceased's estate, he owns an investment unit (worth about $1.1 million) from which he derives rental income. He has no other source of income. He has a modest bank balance and his interest in the deceased's estate.
2. Never having married, he has lived most of his life in the family home of the deceased, where he continues to live. He has no children.
3. Although the plaintiffs suggest that their mother spoke of her estate being divided between her children equally, the defendants say that the deceased spoke openly of the family home passing in due course to the second defendant alone. Each party's reconstruction of the past accords with his or her case. The fact remains that, for many years, the second defendant was the deceased's principal companion and her carer. Apart from any interest he might have in her estate, he is not as financially secure as any of her other children.

The Position of the Residuary Beneficiary

1. The first defendant's son Liam has not placed before the Court evidence of his financial circumstances. His mother's evidence is that he has a Master's Degree in Engineering, and a PhD, and he is near completion of a law degree. No party has submitted that his circumstances, whatever they might be, should be seen as an impediment to a grant financial provision relief might to the applicants.

Evaluation

1. In assessing the respective needs of the applicants for family provision relief, and the resources available to them, I acknowledge that, had the deceased's estate been larger or differently constituted, it might have been open to the Court, and appropriate, to conclude that they had been left without "adequate" provision for their "proper" maintenance, etc. However, one must remain focused on the facts of the particular case, to which (as Scales case (1962) 107 CLR 9 at 19-20 reminds us) all assessments of what is "adequate" and "proper" are relative.
2. Upon a consideration of section 59(1)(c) of the Succession Act, no less than on section 59(2), the Court must have regard not only to an applicant's financial circumstances but also to the size and nature of the deceased's estate; the totality of the relationship between the applicant and the deceased; and the relationship between the deceased and other persons who have legitimate claims on her bounty: Singer v Berghouse (1994) 181 CLR 201 at 209-210; Sgro v Thompson [2017] NSWCA 327 at [70]-[75].
3. This approach to sections 59(1)(c) and 59(2) of the Succession Act is consistent with section 60 of the Act. Section 60(1) provides that the Court may have regard to matters set out in section 60(2) for the purpose of determining, inter alia, whether to make a family provision order and the nature of any order.
4. Section 60(2) enumerates a broad range of matters, one of which (found in section 60(2)(m)) is "the character and conduct of the applicant before and after the date of the death of the deceased person".
5. The Succession Act does not include any closer equivalent of section 3(2) of the (now repealed) Testator's Family Maintenance and Guardianship of Infants Act 1916 NSW. That provision read as follows: "The court may attach such conditions to [an order for family maintenance] as it thinks fit, or may refuse to make an order in favour of any person whose character or conduct is such as to disentitle him to the benefit of such an order."
6. Despite the form of the Succession Act, it is not uncommon for advocates to seek to import into the Act a concept of "conduct disentitling". Care needs to be taken, in the context of the Succession Act, not to be unduly deflected by forensic flourish.
7. The Court is entitled, if not bound, to take into account "the character and conduct" of an applicant, not as a stand alone factor but as a factor which, in all the circumstances of the particular case, is material to the evaluative judgement implicit in decision making required by section 59 of the Act. The Succession Act's approach is more nuanced than was that of the 1916 Act.
8. The first plaintiff's appropriation of $26,000 of the deceased's funds for her own purposes is a factor to be taken into account upon an application of section 59(1)(c) of the Succession Act and, if need be, section 59(2). However, it is not fatal to her claim. The greater impediments to her success are, first, her own net worth and, secondly, the second defendant's competing claim on the bounty of the deceased.
9. Each of the three applications before the Court suffers from those impediments: the applicant's net worth and the second defendant's competing claim.
10. As the deceased's principal companion and carer over a substantial period of time, as the co-occupant with her of the family home throughout that time, and as an unmarried son living in retirement and largely dependent upon her for his residence, the second defendant was (and was regarded by the deceased as being) in a position different from that of his siblings, however much they may have maintained (as I accept they all endeavoured to maintain) a close relationship with the deceased. Upon an assessment of whether the applicants have been left without "adequate" provision for their "proper" maintenance etc, allowance must be made for the fact that additional provision for the applicants, jointly or severally, can only come at the cost of the second defendant.
11. The first plaintiff and the first defendant each have a substantial amount of capital, without a substantial income; neither is getting any younger; both suffer the effects of ageing. The first plaintiff does not want to move from her home; she has no desire to "downsize". The first defendant's capacity to earn income from her investment units depends upon her retention of rent-free accommodation with the second defendant.
12. For his part, the second plaintiff's comparatively comfortable life is a product of his stable marriage and the work of his wife and himself. Comfortable though they may be, they are not without anxieties. Their son having returned home following the breakup of his de facto relationship, they are concerned about the possibility that he might resume dependency upon them. They are fast approaching retirement. They have health problems, no less than their peers.
13. However, within the limits of the resources available to her, the deceased could not confer substantial benefits on the applicants, or any of them, without diminishing provision made for the second defendant, to whom she owed a special obligation as her principal companion and carer. The deceased evidently intended that the second defendant have security of tenure in the family home, with a stable source of income. Her assessment of what was required for the proper maintenance, etc of each of her children is entitled to respect, though not determinative.
14. The deceased had a reasonable personal relationship with each of her children. The first plaintiff has a difficult, combative personality which complicated her relationship with the deceased, no less than with other people. That personality, and friction which naturally emanated from it, may explain her omission from the deceased's 1991 will, as well as her omission from the 2009 will, a cause of hurt felt by her in the last years of her mother's life. However, it would not be fair to deny the existence of a loving mother-daughter relationship between her and the deceased.
15. Casting an eye over the particular matters listed in section 60(2) of the Succession Act as possibly material to "whether to make a family provision order and the nature of any such order", the dominant feature of these proceedings remains, in my view, the size and nature of the resources available to each of the family provision applicants vis-a-vis the size and nature of the deceased's estate and the second defendant's substantial claim on the bounty of the deceased.
16. In all the circumstances, I am not satisfied, for the purpose of section 59(1)(c) of the Succession Act, that any of the applicants has been left without "adequate" provision for his or her "proper" maintenance, education or advancement in life.
17. That determination having been made, the plaintiffs' summons and the first defendant's cross claim must both be dismissed.

QUANTUM OF FAMILY PROVISION RELIEF SOUGHT : SUCCESSION ACT, SECTION 59(2)

1. Upon an assumption that (contrary to my finding) they have satisfied the jurisdictional requirement of section 59(1)(c) of the Succession Act, each of the applicants has quantified his or her particular claim for relief in terms of a legacy of the order of $50,000 - $60,000.
2. If I have erred in finding that the jurisdictional hurdle of section 59(1)(c) has not been overcome, I agree that none of the applicants could reasonably justify a claim for relief in excess of that range of legacy.
3. Within the rubric of section 59(2), but consistently with my section 59(1)(c) findings, I would hold that no family provision order should be made in favour of the applicants because no practical order could be made without unduly diminishing the provision made in the will of the deceased for the second defendant.
4. The first plaintiff's claim for relief bears an additional burden: if she were to be granted a family provision order it should, in effect, be conditioned upon a requirement that she first account to the estate of the deceased for the $26,000 retained by her from the deceased's a bank account, with an allowance for interest. In practical terms, any legacy allowed to her via a family provision order could not reasonably exceed $30,000 or thereabouts.

COSTS

1. The parties invited the Court to reserve all questions of costs pending publication of these reasons for judgment.
2. Prima facie, costs should follow the event, with each of the plaintiffs and the first defendant being jointly and severally liable for the costs of the second defendant.
3. The costs incurred by the parties are substantial, and disproportionate to the quantum of relief claimed. In final submissions, the plaintiffs estimated their costs to be of the order of $155,000, assessed on the ordinary basis. On the same basis, the first defendant estimated her costs at $50,000. Assessed on the indemnity basis, the second defendant estimated his costs at $140,000.

CONCLUSION

1. Subject to allowing the parties an opportunity to be heard about the form of the Court's orders, and costs, I propose to make orders to the following effect: 1. ORDER that the time within which the first defendant may apply for a family provision order be extended up to and including the date upon which her amended cross summons was filed. 2. ORDER that the plaintiffs' summons be dismissed. 3. ORDER that the first defendant's cross summons be dismissed. 4. ORDER that the second defendant's costs of the proceedings be paid by the first plaintiff, the second plaintiff and the first defendant on the ordinary basis.

EDITORIAL NOTE (8 March 2018)

1. After hearing from the parties (and from Mr Liam Widdowson, residuary beneficiary) Lindsay J made the following orders in disposition of the proceedings: 1. ORDER that the time within which the first defendant may apply for a family provision order be extended up to and including the date upon which her amended cross summons was filed. 2. ORDER that the plaintiffs' summons be dismissed. 3. ORDER that the first defendant's cross summons be dismissed. 4. ORDER that the plaintiffs pay the second defendant's costs of the summons assessed on the ordinary basis 5. ORDER that the first defendant pay the second defendant's costs of her cross summons, assessed on the ordinary basis. 6. ORDER that exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.

Amendments 09 March 2018 - Paragraph 30, substitution of "are" for "is" in the first line. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 March 2018