Estate Lioutas; Lioutas v Papasoulis

FAMILY HISTORY, RELATIONSHIPS AND CULTURE

1. The Original Family Unit. In their early years all family members contributed to the family's accumulation of wealth (largely through the acquisition of land) in the years following the family's migration to Australia, from Greece, in the 1960s. The father migrated in 1961, the rest of the family followed in 1965. Until, at least, the respective marriages of the children, the family operated, in large measure, as a single economic unit.
2. The parents assisted each of their children from time to time. An example of this can be found in the fact that, in 1996, the father transferred land at Riverstone to each child: the plaintiff received seven lots and each of his siblings received two lots. A further three were gifted to the plaintiff in the deceased's will, and he retains the original seven given to him by his father.
3. The Plaintiff's Family Relationships. Between 1976-1996 or thereabouts, the plaintiff was married to Lydia. The marriage ended in divorce. There was one child of the marriage: a son, now qualified as a solicitor and living independently. For about 18 years following his divorce (between 1996-2014 or thereabouts) the plaintiff lived at home (at the Drummoyne property) with his parents and, after his father's death in 1997, with the deceased alone.
4. The plaintiff complains, plausibly, that, from his perspective, his relationship with the deceased was altered when, in about 2012, the deceased appointed the first defendant as her enduring attorney and guardian.
5. The plaintiff was evicted from the Drummoyne property in 2014. This was done in the name of the deceased through the agency of the first defendant. In the course of the eviction process the first defendant applied for, and obtained, a domestic violence order against the plaintiff; and, at about the same time, the plaintiff was charged with an assault on the defendants, and given the benefit of an order that no conviction be recorded.
6. None of this resounds to the credit of the plaintiff but, in the setting of this particular family, allowance needs to be made for passionate rivalries within the family; manipulative personalities enjoyed by each of the parties; the fact that, not without a personal interest in disputation with him, the first defendant might reasonably be thought to have been intent on dislodging the plaintiff from a property she expected in due course to inherit; and the fact that the plaintiff (not a person conspicuously successful in love or business) has never since had firm living arrangements to replace his settled life in the deceased's house.
7. Although the plaintiff holds a licence as an electrician, he appears to have lived in straitened financial circumstances since his eviction from the Drummoyne property in 2014. From time to time he stayed at the home of a female friend until, in about April 2017, she felt obliged to ask him to make alternative living arrangements "as soon as possible" because she was vexed with an allegation made by the defendants in these proceedings (but abandoned by them during the course of the final hearing) that, despite their vigorous denials, she and the plaintiff were living in a de facto relationship. The plaintiff currently lives in a rented home unit at Five Dock (not far from a church of which he is an active member) paying rent of $620 per week, which he fears is beyond his capacity to pay without assistance. He has applied for an aged pension, not yet approved.
8. Relations between the plaintiff and his siblings are rancorous. Each of them gave evidence, and was cross examined. The first defendant's two sons also gave evidence, and were cross examined. Each witness presented as possessed by a passionate hatred, with the plaintiff aligned against the rest. The family's emotional commitment to their respective causes led them to embrace absolutist positions which cast doubt on the objectivity, and correctness, of uncorroborated narratives.
9. In about August 2014 the plaintiff applied to the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) for guardianship and financial management of the deceased. His application was dismissed. He appealed to an Appeal Panel of NCAT. The deceased died before the appeal could be heard.
10. The First Defendant's Family. Between 1975-2014 or thereabouts the first defendant was married to Zisimos in a marriage terminated by his death. Their two sons, John (born 1980) and Chris (born 1987), both gave evidence in support of the first defendant's case. John presently resides with the first defendant in the Drummoyne property. Chris lives in a property at Dulwich Hill (the first defendant's family home) owned by the first defendant.
11. The Second Defendant's Family. The second defendant has been married to Margaret since 1983. They have two adult children no longer dependent upon them.

THE DEFENDANTS' OPEN OFFER

1. By an open letter dated 11 August 2017, the defendants made an offer to the plaintiff to compromise his claim for family provision relief by consenting to an order that, in lieu of the provision specifically made for him in the deceased's will, he receive a lump sum of $450,000, plus $50,000 in respect of his costs.
2. In form, this offer said nothing about the plaintiff's one third share in the deceased's residuary estate. However, as the proceedings have been conducted on the basis that there has been little, if any, residuary estate beyond that necessary to pay for the deceased's funeral expenses and testamentary debts, the offer was, in substance, a proposal that the plaintiff receive (in full satisfaction of any claim against the estate) approximately $200,000 by way of family provision relief in addition to the $247,953.70 due to him from the proceeds of the sale of the land gifted to him in the will.
3. The defendants' offer was not accepted by the plaintiff.

THE AMBIT OF THE PROCEEDINGS

1. In final submissions, on the fourth of five days of a hotly contested hearing of the proceedings, the defendants conceded that their opposition to the plaintiff's claim for family provision relief was limited to a contest (within the parameters of section 59(2) of the Succession Act) about the nature, and extent, of a grant of relief which, admittedly, should be made in favour of the plaintiff.
2. Other conditions for a grant of family provision relief have been satisfied: 1. As a child of the deceased, the plaintiff is an "eligible person" within the meaning of sections 57(1)(c) and 59(1)(a) of the Succession Act. He thus has standing to apply for family provision relief. 2. His summons was filed on 23 February 2016, within the time limited by section 58(2) of the Succession Act. 3. Because the plaintiff's eligibility is grounded on section 57(1)(c) of the Succession Act, it is not necessary for him to establish, for the purpose of section 59(1)(b) of the Act, that there are factors which warrant the making of his application for relief. 4. The defendants now concede that, for the purpose of section 59(1)(c) of the Succession Act, in the circumstances which now prevail, the plaintiff should be found to have been left without adequate provision for his proper maintenance, education or advancement in life.
3. The defendants' concession that the plaintiff should be found to have been left without adequate provision for his proper maintenance, etc. was correctly, if belatedly, made. It is common ground, in particular, that the plaintiff has been left without adequate provision for proper accommodation. In the context of section 59(2) of the Succession Act, the parties have joined issue about what measure of relief should be granted to the plaintiff so as to make adequate provision for his proper maintenance, etc, with particular regard to his need for accommodation. The plaintiff's more extravagant claims (including, for example, an allowance for multiple trips to Greece) have not been actively pressed. Nor has the defendants' primary contention that the will should be upheld according to its terms.
4. The contest between the parties focuses attention on section 59(2) of the Succession Act, which (implicitly relating back to the concept of "adequate provision for proper maintenance, education and advancement in life" found in section 59(1)(c)) reads as follows: "The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made."
5. It is common ground that the concepts of "adequate" and "proper" are relative to the facts of the particular case (Pontifical Society for the Propagation of the Faith v Scales (1962) 17 CLR 9 at 19) and that decision making on such topics is fact sensitive.
6. In approaching the question for which section 59(2) of the Succession Act provides, the Court must endeavour to place itself in the position of the deceased, and to consider what she ought to have done in all the circumstances of the case, in light of facts now known, treating her as wise and just, rather than fond and foolish (In re Allen [1922] NZLR 218 at 220-221; Bosch v Perpetual Trustee Company Ltd [1938] AC 463 at 478-479; Scales Case (1962) 17 CLR 9 at 19-20), making due allowance for current social conditions and standards (Goodman v Windeyer (1980) 144 CLR 490 at 502; Andrew v Andrew (2012) 81 NSWLR 656) and, generally, consulting the criteria set out in section 60 of the Act so far as they may be material.
7. Whether the Court should make an order for family provision relief (and, if so, the nature and extent of any relief granted) are questions to be addressed in the context of matters identified in section 60(2) of the Succession Act as potentially material.

THE PLAINTIFF'S CLAIM REVIEWED

1. Although their respective clients have been highly critical of the conduct of the plaintiff and of his veracity, counsel for the defendants have shrunk from a submission that the plaintiff did not have a loving relationship with the deceased. The deceased plainly did maintain such a relationship with each of her children.
2. Recognising that the plaintiff has a need for greater security in his accommodation than he presently has, the defendants have emphasised the extent of the benefits conferred on him prior to the death of the deceased: principally, but not only, the financial benefits recited by the deceased in clause 6 of her will (including the proceeds of sale of land at Rozelle) and 18 years of rent free accommodation at the deceased's home. No particular emphasis has been placed upon the fact that, in 1996, in common with his siblings, the plaintiff received land at Riverstone, but the fact of that gift needs to be acknowledged and weighed in the balance nevertheless.
3. In her evidence the first defendant invited the Court to find that the plaintiff had received other, substantial financial benefits from his parents in the years following his divorce; however, even if she is correct about that (which I doubt), it does not greatly alter the picture. In circumstances in which he has an acknowledged claim on the bounty of the deceased, the plaintiff finds himself without secure accommodation or resources substantial enough to provide security for him in retirement.
4. The plaintiff is not without resources, but there is practical uncertainty as to their accessibility and value.
5. Subject to a possible liability for capital gains tax (provisionally estimated by his Family Court "next friend" some years ago at about $135,000 but not authoritatively verified in these proceedings), together with a liability for interest and penalties, the plaintiff has an entitlement to make a claim (which has not been prosecuted by him for more than a decade) to recover up to $329,097.40, possibly together with accrued interest, currently held by the Australian Securities and Investments Commission (ASIC), under Chapter 9 of the Corporations Act 2001 Cth, as unclaimed property arising from a settlement of a property dispute, on or about 9 January 2004, in proceedings in the Family Court of Australia between him and his former wife.
6. His delay in prosecuting that claim is a function, in large part, of a dispute between him and an accountant appointed as his "next friend" in the Family Court proceedings at a time when it was perceived that he lacked capacity to manage his own affairs.
7. In the interests of all parties, and in a hope (not fully satisfied) that clarity could be brought to the status of the ASIC funds, the accountant was, on short notice, called to give evidence.
8. During the course of giving his evidence, with the benefit of independent legal advice, the accountant submitted to formal notations by the Court to the effect that: 1. he personally makes no claim to ownership of any of the funds held by ASIC. 2. he makes no further claim against the plaintiff for costs referable to any work performed by him in connection with his service as a next friend for the plaintiff. 3. he is unable to form any view as to whether any part of the funds held by ASIC may, or may not, be the subject of a liability for taxation on the part of the plaintiff. 4. the plaintiff is at liberty to apply to ASIC for the funds held by it to be paid to him or as he may direct.
9. Implicit in these notations is a withdrawal by the accountant of an earlier claim that he was entitled to object to any claim made by the plaintiff to the ASIC funds until such time as the plaintiff withdrew a threat (not acted upon for more than 10 years) that he would sue the accountant for negligence arising from the accountant's sale of matrimonial property in which the plaintiff claimed an interest.
10. The parties' common assumption that the plaintiff has an entitlement to recover at least some of the ASIC funds is accompanied by common uncertainty about whether any (and, if so, what) taxation liability might attach to those funds and, in any event, as to when the plaintiff might succeed in accessing the funds.
11. The plaintiff appears to be an author of his own misfortune in allowing the ASIC funds to remain in limbo for many years; but it is not possible, without collateral inquiries, to unearth facts upon which any exposure to taxation the plaintiff might have might be based. No party to these proceedings - not merely the plaintiff - took steps earlier than the final hearing of the proceedings to investigate the underlying facts necessary to enable the Court, with confidence, to attribute a value to the plaintiff's interest in the ASIC funds.
12. Similar uncertainty attaches to any valuation of the seven blocks of land held by the plaintiff at Riverstone. The values attributed to that land range from $62,775 (as at 4 July 2016) to $600,000 (assuming a buyer can be found for land which, because it is flood-prone, is likely to be rejected by a bank as security) in February 2018.
13. The defendants submit, and I agree, that neither end of this range of values appears to provide a reliable estimate of value, especially bearing in mind that the three (contiguous) blocks of Riverstone land sold by the first defendant in the course of administration of the deceased's estate last year realised substantially more than earlier anticipated, and the plaintiff's seven blocks (not all so well placed) are part of the same subdivision.
14. In all the circumstances, the defendants contend, and I accept, that the plaintiff's seven blocks should be valued at $210,000, the value the plaintiff himself attributed to them in an affidavit he swore on 27 April 2016. However, that said, the plaintiff is probably well justified in his evidence that it might be difficult to find a ready buyer for them, if offered for sale.
15. In addition to whatever interest he has in the ASIC funds, his seven blocks of land at Riverstone, his interest in the deceased's estate and his ownership of an old car, the plaintiff has about $50,000 in a Greek bank account which he seeks to retain in that form in anticipation of future trips to Greece, together (in common with his siblings) a small amount of other property in Greece.
16. On one view of his principal assets, the plaintiff has available resources of the order of $836,000, allowing $329,000 for the ASIC funds; $210,000 for the Riverstone land; $50,000 for the Greek bank account; and $247,000 for his interest in the deceased's estate.
17. However, there do appear to be practical problems associated with any attempt on the part of the plaintiff to access the ASIC funds and whatever value the Riverstone land has. Those problems inform the defendants' concession that the plaintiff can, and should, be found to have been left without adequate provision for his proper maintenance, etc.
18. The plaintiff's financial circumstances are no more secure when viewed on an income account than they are when viewed on a capital account. Over the past few years he has had a taxable income of approximately $14,000 per annum, although a concession in cross examination that he has received some payments in cash for electrical or other work done by him invites caution. Nevertheless, paying due regard to that need for caution, the plaintiff does appear to have had but a modest income since, at least, the time he was evicted from the deceased's house in 2014. Again, this is a factor reinforcing the defendants' concession that the plaintiff has been left without adequate provision for his proper maintenance, etc.

THE FIRST DEFENDANT'S COMPETING CLAIM ON THE BOUNTY OF THE DECEASED

1. The financial circumstances of the first defendant are better than those of either of her siblings. Independently of the deceased's will (which provides for her to receive the Drummoyne property, with an estimated value of $2 million), she owns two (unencumbered) properties at Dulwich Hill. One, her former family home is valued by her at $1.4 million. The other, an investment property, is valued by her at $1.6 million. She and one of her sons presently live at the Drummoyne property. The former family home is occupied by the other of her sons and his fiancé, and a granny flat on the property is leased at $420.00 per week. The investment property is the subject of two tenancies; one yields a weekly rental of $530.00, the other a weekly rental of $540.00. Her sole source of income is the rent she receives; she receives no pension, but enjoys a Health Card. She has a bank deposit of about $80,000 and a small amount of property in Greece.

THE SECOND DEFENDANT'S COMPETING CLAIM ON THE BOUNTY OF THE DECEASED

1. The second defendant and his wife jointly own their family home at Russell Lea (estimated to be worth $1.7 million), with a mortgage of $350,000. The second defendant has superannuation worth $273,000. He continues to own two blocks of land at Riverstone (with an estimated value of $140,000 in total), and a small amount of property in Greece. He retired on medical grounds at the end of January 2018. He and his wife are now dependent upon her income.
2. In addition to jointly owned property, his wife owns two cars (with a total estimated value of $24,000), shares with an estimated value of about $170,000 and superannuation worth $187,000. He estimates their total household income (including share dividends) at about $3,760 per fortnight, all of which is said to be absorbed by ordinary household expenditure.
3. Independently of his interest in the deceased's estate (essentially, the Rozelle land, valued at $1.75 million), he has net assets valued at about $1.1 million and his wife has net assets valued at about $1 million.

THE TASK OF THE COURT IN THESE PROCEEDINGS

1. The ambit of the parties' dispute, and the task required to be performed by the Court, are aptly summarised in the second defendant's closing written submissions (MFI 2D17, paragraphs 32-33), drawing upon statements of principle by Hallen J in Camernik v Reholc [2012] NSWSC 1537 at [159]: "[32] The deceased was not obliged to provide the plaintiff with a dwelling. However, in the circumstances of this estate there are adequate resources to make additional provision to give the plaintiff some security of tenure in a residence. The question for the Court is whether adequacy of provision requires funds to allow the plaintiff to purchase a residence outright at the estate's expense, or a lump sum to supplement his present assets and secure his present condition. [33] Some estates are simply not large enough to make such an order for provision, however, in this estate there is potentially enough to do so. Nevertheless, in Smith v Johnson [2015] NSWCA 297 the Court of Appeal held that it was a miscarriage of the judge's discretion to order provision which exceeded the plaintiff's needs."
2. To the observations of the Court of Appeal in Smith v Johnson might be added those in Sgro v Thompson [2017] NSWCA 327 at [70]-[75] about the need to pay due respect to the testamentary wishes of a deceased person, particularly (one might add) where such wishes have been given deliberate expression.

WEIGHING ALL IN THE BALANCE

1. The size of the deceased's estate and the relative affluence of the defendants are factors to be taken into account, particularly when measured against the plaintiff's acknowledged need for material assistance.
2. However, there are several factors to be weighed in the balance against any (or, perhaps more significantly, any substantial) provision for the plaintiff beyond that for which the deceased's will provides. High on the list is the deceased's deliberate testamentary explanation of the measure of provision made for the plaintiff and the first defendant, not demonstrably incorrect. Allied with that explanation is the fact that the deceased not only assisted the plaintiff substantially during her lifetime, but appears to have formed the view that she had done enough for him. There is a lingering doubt, about whether the plaintiff has done enough to advance his own interests, which focuses attention on his failure to prosecute his claim to the "unclaimed property" held by at ASIC and his failure to sell his Riverstone land, in each case attracting uncertainty about the resources available to him.
3. He has not helped his own cause by extravagant claims of entitlement, some of which suggest that the expects an "equal share" of the deceased's estate or, at least, provision which would enable him not only to provide for himself, but also for his adult son.
4. During the course of the final hearing counsel for the plaintiff moderated these claims, just as counsel for the defendants each endeavoured to bring an element of moderation to their respective clients' passionate contentions.
5. Allowance needs to be made for the fact that each party to the proceedings can point to concerns about health which reflect their respective ages (and, in the case of the second defendant, that of his wife). However, given the size of the estate, the admitted need of the plaintiff for material assistance and the resources available to the defendants, health factors do not loom large as a discrete discretionary factor.
6. For completeness, it should be noted that, although there was sufficient doubt about the plaintiff's mental capacity at the time of his Family Court proceedings to justify the appointment of a tutor to represent him in those proceedings, he presents himself to the Court in these proceedings (and nobody challenges him on his presentation) as a person capable of managing his own affairs.
7. The resigned acceptance of the defendants that a family provision order should be made to provide the plaintiff with more secure accommodation has focussed debate upon: (a) competing views about whether the plaintiff should be allowed (as he claims) a capital sum sufficient to enable him to purchase, and maintain, a double (or, in the alternative, a single) bedroom home unit or (as the defendants contend) a sum sufficient to allow him the equivalent of 12 years' rent, with an allowance for contingencies; and (b) competing views about whether the Court should measure the plaintiff's accommodation needs by reference to real estate values in or about Rozelle or Drummoyne (suburbs in which he has lived, with family, in the past) or Parramatta (more remote from his experience, but not so expensive). Factors to be taken into account, here, are, first, that the plaintiff has an active, continuing connection with a church community centred upon Haberfield, and his current rental accommodation is nearby at Five Dock, evidently a suburb of choice.
8. Weighing all in the balance, testing alternative outcomes against considerations of wisdom, justice and current community values, I incline to the view that, although the plaintiff might be afforded generosity in the grant of a legacy designed to assist him with payments of rent and living expenses, a capital sum to acquire a freehold interest in a home unit (particularly, as he would have it, conjoined with an allowance for ongoing expenses associated with a unit owned outright) cannot be justified in light of the resources available to him, the duly expressed testamentary wishes of the deceased and the reasonable expectations of his siblings to property long earmarked for them by their parents.
9. Accordingly, I propose to order that, in addition to the provision made for him in the will of the deceased, the plaintiff receive from her estate a legacy in the sum of $500,000.00 (plus his costs, assessed on the ordinary basis) charged against the title of the Drummoyne property inherited by the first defendant (as to 55%) and the title to the Rozelle property inherited by the second defendant (as to 45%), in proportions roughly equivalent to the comparative values of those two properties.
10. I propose to allow the first defendant, as the deceased's executrix, acting in consultation with the second defendant, three months to pay the plaintiff the additional provision made for him by the Court's orders. That will enable the defendants to borrow against their respective shares of the estate, or otherwise to fund what needs to be paid, in an orderly manner.
11. Having heard submissions on costs, I propose, also, to order that the costs of both defendants be paid out of the estate of the deceased, assessed on the ordinary basis, charged against the title to the Drummoyne and Rozelle properties in the same proportions applied in apportionment of the burden of orders made in favour of the plaintiff.
12. This is appropriate in circumstances in which: (a) the second defendant was joined in the proceedings because of an apprehension (which I accept was, at the time of joinder, reasonable) that the first defendant was not adequately motivated to protect his interests in her defence of the proceedings; and (b) the proceedings have been contested by each party, acting in an adversarial setting, looking particularly to advance his or her own interests, with a shared interest in due administration of the estate. This is not the usual case in which an executor has conducted proceedings on behalf of absent beneficiaries. It is more in the nature of ordinary adversarial litigation, fighting over disposition of a fund in which all parties claim an interest.
13. Although the plaintiff might experience delay in receipt of the additional provision made for him by these orders, there is no reason why he should not receive without further delay the proceeds of the first defendant's sale of the Riverstone land gifted to him by the deceased (particularly as those proceeds have been placed in a separate, interest-bearing account pending the determination of these proceedings) together with the proceeds of the deceased's bank account given to him in her will.

PROPOSED ORDERS

1. Subject to allowing the parties an opportunity to be heard as to the form of the orders to be made, I propose to make orders to the following effect: 1. ORDER that, in addition to the provision made for him in the will of the deceased, the plaintiff receive a legacy in the sum of $500,000. 2. ORDER that interest be paid on that legacy, at the rate for which the Probate and Administration Act 1898 NSW provides, accruing (if not earlier paid) from a date three months after the making of these orders. 3. ORDER that the first defendant, in her capacity as the legal personal representative of the deceased, forthwith pay to the plaintiff the net proceeds of the sale of the Riverstone land gifted to him by the will of the deceased, together with interest accrued on those proceeds, and the proceeds of the bank account gifted to him. 4. ORDER that the costs of all parties, assessed on the ordinary basis, be paid out of the estate of the deceased. 5. ORDER that the burden of payment of the legacy for which Order 1 provides, and the costs for which Order 4 provides, be charged against: 1. the Drummoyne property gifted by the will of the deceased to the first defendant, as to 55%; and 2. the Rozelle property gifted by the will of the deceased to the second defendant, as to 45%. 1. RESERVE to all parties liberty to apply for consequential relief in the working out of these orders.

EDITORIAL NOTE (21 March 2018)

1. Having allowed the parties an opportunity to be heard as to the form of the Court's orders, Lindsay J made the following orders (here omitting addresses): 1. ORDER that, in addition to the provision made for him in the will of Dimitra Lioutas (the deceased), the plaintiff receive a legacy in the sum of $500,000.00. 2. ORDER that interest be paid on that legacy, at the rate for which section 84A of the Probate and Administration Act 1898 (NSW) provides, accruing (if not earlier paid) from a date three months after the making of these orders. 3. ORDER that the first defendant, in her capacity as the legal personal representative of the deceased, forthwith pay to the plaintiff: 1. the net proceeds of the sale of the Riverstone land, being …, gifted to him by the will of the deceased, together with interest accrued on those proceeds; and 2. the proceeds, including accrued interest, of the bank account of the deceased gifted by the Will to the plaintiff 1. ORDER that the costs of all parties, assessed on the ordinary basis, be paid out of the estate of the deceased. 2. ORDER that the burden of payment of the legacy for which order 1 provides, and the costs for which Order 4 provides, be charged against: 1. the Drummoyne property, being …, gifted by the will of the deceased to the first defendant, as to 55%; and 2. the Rozelle property, being …, gifted by the will of the deceased to the second defendant, as to 45%. 1. RESERVE to all parties liberty to apply for consequential relief in the working out of these orders. 2. 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. 3. ORDER that these orders be entered forthwith.

Amendments 22 March 2018 - Formatting. 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: 22 March 2018