Gloria Haklany v Joe Gittany & Ors

Supreme Court of NSW|2011-11-25|Before: Slattery J

EX TEMPORE Judgment 1In these proceedings one of two daughters left out of their mother's will brings a claim under the Family Provision Act 1982 (NSW) for provision out of her mother's estate, which the will gave to their four brothers. The case is complicated at several levels. 2The sole asset in the estate is an unrealised debt of $346,000 owing to the estate by a company related to several of the brothers. Apart from the collection of this debt, the estate is in all other respects, fully administered. All the legal fees payable by the estate in respect of the estate's administration and these proceedings have now been paid. Despite uncertainty as to the payment of this debt to the estate, the plaintiff, represented by Mr Armfield, of counsel, seeks an order for provision. 3The executor of the estate appears in person to oppose the claim. The executor is the eldest brother of the plaintiff. He says that the will should not be altered and no order for provision should be made.

The Gittany Family 4It is necessary to say a little about the Gittany family. Mr Mohsen Gittany was born in Lebanon in 1926. His wife Chahide Gittany ("the testator"), whose maiden name was Halabi, was born in Lebanon in April 1927. Mohsen and Chahide were married in Lebanon and had six children. The eldest, Julie, was born in 1953. The next eldest, and the first born son, Joseph (or "Joe" as he is known), the executor of the testator's will, was born in February 1954. The other four children are Tony, born in April 1956; Charlie, born in May 1959; Gloria, born in June 1960; and Eddie, born in August 1973. 5Gloria, the younger daughter, brings these proceedings as plaintiff. Mr Joe Gittany, the eldest son is the first defendant. Mr Mohsen Gittany and the testator emigrated to Australia when the eldest children were in their early teens. They settled in Sydney where they brought the children up. Mr Mohsen Gittany apparently continued to hold real estate in a number of places in Lebanon, including the village of Ehden. 6Mr Mohsen Gittany died in 1991. The testator died in December 2008. At her death the deceased's will gave the whole of her estate to the four male children, Joseph, Tony, Charlie and Eddie. The will was made on 25 August 1995. "THIS IS THE LAST WILL AND TESTAMENT of me CHAHIDE GITTANY of [address not published] in the State of New South Wales I REVOKE all former Wills and Testamentary dispositions heretofore made by me AND DECLARE this to be my Last Will I APPOINT my son JOE GITTANY as the Executor and Trustee (hereinafter referred to as my trustee) of this my will I GIVE DEVISE and BEQUEATH the whole of my estate both real and personal of whatsoever nature and kind and wheresoever situate to my Trustee UPON TRUST to sell call in and convert into money my said real and personal estate with power or part or parts thereof without being responsible for loss and as to the monies to arise from such sale calling in and conversion PAY my funeral testamentary expenses and debts I DIRECT that my Trustees HOLD the balance thereafter IN TRUST for my four sons and said JOE GITTANY, ANTHONY GITTANY, CHARLIE GITTANY and EDWARD GITTANY as shall survive me as joint tenants." 7The will was translated into the Arabic language for the testator. The form of her signature upon it evidences her advancing age. The will does not mention the testator's eldest daughter Julie, who had by then married and became Mrs Julie Khouzame. She gave evidence in these proceedings. Nor does the will mention Gloria, who married, and became Mrs Gloria Haklany. Various explanations as to why the will was structured this way, leaving out the two daughters, have been canvassed in evidence. Whatever those explanations, based in Lebanese custom and tradition, the issue for a Court, applying the law of New South Wales, is that posed under the Family Provision Act . 8It is necessary to deal with the make up of the estate and then the course of proceedings. Now just a single asset, a chose in action is left in the estate. Only two contestants remain in these proceedings, which commenced with a number of parties.

The Estate 9The inventory . Shortly after the testator died in 2008 the executor Mr Joe Gittany was granted probate of her estate. Also filed in Court was the inventory of property set out below. Description Estimated or known value $A

Real Estate: The Merrylands Property $360,000.00
Bank Accounts: Cash Arab Bank Australia Cash Management A/c Commonwealth Bank of Australia Streamline A/c Commonwealth Bank of Australia Passbook A/c Commonwealth Bank of Australia Passbook savings A/c $NIL $31,981.68 $2,295.13 $6,981.99 $5.44
Household effects and furniture (estimated) $6,000.00
Personal effects (estimated) $800.00 TOTAL $408,064.24 10The principal asset in the estate was real estate in Merrylands ("the Merrylands property"), which the testator owned at the time of her death, as to 99/100ths. Mrs Julie Khouzame owned the other 1/100th. The other assets of the estate were cash and personal effects. 11T he deceased and Mrs Khouzame also together held another property in Bass Hill as joint registered proprietors. This property has not been listed in the inventory. Although held in their names, acquisition of the Bass Hill property was funded by Mr Joe Gittany. It is not contested that they held it beneficially for him. That property can be ignored for present purposes. 12The estate's administration has consumed all the estate's cash, which has gone on administration expenses, disbursements and legal fees. Of the total opening cash balance (in all bank accounts) of approximately $40,000, the sum of $32,000 is accounted for by legal fees paid to Sharah & Associates, Solicitors. Legal and other fees escalated when these proceedings were in preparation. Expenditure of the remaining cash has not been accounted for by the executor. 13The Merrylands Property. The Merrylands property was mortgaged to Permanent Trustee Victoria Limited for $290,000 in 2002. The mortgage moneys were advanced to Gittany Constructions Pty Limited. After the testator's death the Merrylands property was tenanted. But the tenant in the Merrylands property paid rent irregularly. The mortgage fell into arrears. By September 2010, $306,000 was owing to the mortgage. A dispute arose between Mrs Khouzame and Mr Joe Gittany about whether she, as a co-owner, would cooperate in selling the property and discharging the mortgage. The mortgage fell further into default because of the lack of revenue from the tenant and the parties' failure to agree to sell the property. The mortgagee eventually took possession of the property and sold it. There was a surplus after sale of approximately $66,000. That surplus then became the only cash in the estate. That remaining cash was in turn consumed by the estate's legal fees associated in these proceedings. 14The Remaining Estate Cash. As solicitors for the estate Sharah & Associates, then Penhall & Co, conducted these proceedings, the latter until early September 2011. A Penhall & Co memorandum of fees dated 22 September 2011, shows that once Sharah & Associates ceased to act, in about mid 2010 Penhall & Co were put in funds, by Mr Joe Gittany, in the sum of $3,000. Then Kemp Strang paid Penhall & Co the surplus sale proceeds from the Merrylands property, an amount of $66,020.63. Thus, total funds of $69,020.63 were made available to meet Penhall & Co's costs and disbursements of $44,627.75, charged to the estate for this litigation. This left a balance of $24,392.88. 15One might have thought that the executor would have applied that sum towards the estate's further administration or would still have it available. But in circumstances which have not been fully explained in the evidence, and which the plaintiff has not pursued in the contest which has occurred at trial, this sum has been expended and the expenditure has not been recorded in any estate accounts. Nor have the beneficiaries consented to this expenditure. The executor, Mr Joe Gittany, has consumed the whole $24,773.63 on expenses that he claims are related to the administration of the estate. No invoices vouching for this expenditure are in evidence before me. Whether much of it has been applied for the benefit of the estate is debatable. All the Court has is a summary tendered in evidence (Exhibit 2). I am told by both sides there is now no liquid funds left in the estate. 16Exhibit 2 is Mr Joe Gittany's own summary of this expenditure. It is reproduced below, just as he wrote it, framed as a justification of why he used the estate's money to reimburse himself for what he claims was his expenditure for the estate. "List of payments owed to Joseph Gittany:

Paid for expenses incurred by services of Sharrah Lawyers: Amount: $2,000
Paid for the costs of my mother's homeloan: Amount $10,000
Covered the costs incurred by services provided by Cambridge Lawyers: Amount: $2,000
Paid for the legal services of the barrister used by Gary Penhall: Amount: $3,000.00
Covered the costs of installing an antenna in my mother's house: Amount: $350.00
Changed two deadlocks in my mother's home after securing a lease for the tenant: Amount: $320.00
Paid for the costs incurred through the maintenance of my mother's home, these payments included:

Sydney Water: $390.45
Optus: $156.85
Electricity: $151.85
Council Rates: $704.54 Total Amount: $1,403.63

Paid for all the costs incurred by the lengthy eviction of the tenant in my mother's house. The costs incurred include the legal fees associated with the eviction of the tenant and my attendance at the Fair Trading Tribunal. I had to cover over the four day period for which I evicted the tenant and 6 days attending the tribunal and meeting with lawyers/legal services used. Amount: $2,100.00 (350*6 day period)
Went to court against Gloria Haklany and met with lawyers, this went for a 6 day period at $350 a day, costs include legal services used. Amount: $3,500.00 ($350.00 per day * 10 day period) TOTAL= $24,773.63" 17Some of this expenditure (see, for example, items 8 and 9), appears to be for the executor to be compensated for committing his own time to the estate's affairs, a matter that would usually be the subject of a Court approved claim for executor's commission. The plaintiff chose not to deploy her limited resources in such a small estate in complaining about such things, perhaps wisely. But the executor has never properly accounted for this expenditure. But Exhibit 2 at least explains why the estate now has no cash available within it. 18The Parties and the Course of Proceedings. The moneys advanced upon the mortgage of the Merrylands property became a matter of controversy between the parties. This issue caused these proceedings to be more complicated in the first instance than an application for an order for provision under the Family Provision Act 1982 would normally be. 19The executor would normally be the only defendant to a Family Provision Act claim. When Mrs Haklany first commenced these proceedings she not only joined Mr Joe Gittany, the executor, as the first defendant, but joined Mr Charlie Gittany as second defendant, Mr Anthony Gittany as third defendant, Gittany Constructions Pty Limited as fourth defendant and Mrs Julie Khouzame as fifth defendant. 20Mrs Haklany joined these additional parties so that the estate would be closer to recovering what she claimed was owed to it from transactions in 2003, by which the Merrylands property was mortgaged, with mortgage moneys being advanced to one or other of the defendants, Mrs Haklany could not readily discern exactly where the mortgage advance had gone. There were suggestions in the evidence that Gittany Constructions had received the funds. But there was also a basis to conclude on the evidence that Mr Charlie Gittany and Mr Anthony Gittany, or either of them, may have benefited from these funds. There was no suggestion that Mrs Julie Khouzame benefited from the mortgage of this Merrylands property. 21When the case first came for directions before the Court it represented something of a procedural puzzle. The proceedings were in two parts. One was a Family Provision Act claim. The other was whether or not Mrs Haklany herself, as only a beneficiary of the estate, could realise the debt which was said to be owing to the estate by one or some of those defendants (excluding Mrs Julie Khouzame). 22Preliminary argument about this puzzle took place at a directions hearing. The first day of the two day hearing before the Court, invalued submissions about whether or not the Court had jurisdiction in the proceedings as presently constituted, to determine the issues about the recovery of this debt. The plaintiff suggested on a number of bases, only one of which I need now mention, that the debt could be recovered in these proceedings, were the plaintiff to establish her entitlement to an order for provision under the Family Provision Act . The plaintiff contended that Family Provision Act 1952, s 15(1)(a)(viii) may be a basis for the Court to order, as the proceedings are presently constituted the recovery of the debt against one or other of the defendants, as an issue ancillary to the making of an order for provision. 23But as events occurred the Court did not have to decide this question. On the first day of the hearing, the second, third and fourth defendants, (represented by Mr David Ash counsel) and the plaintiff (represented by Mr John Armfield of counsel) were able to agree with the executor (representing himself) to resolve those questions. The agreement, so made, was tendered (Exhibit A). The Court was then invited to proceed with the contested Family Provision Act claim, which it did. In Exhibit A the parties agreed that Gittany Constructions, and not the other defendants, owed the sum of $346,000 to the estate. The Court has worked on that basis in the assessment of the rest of this claim. Exhibit A relevantly provided:- "With the execution of paragraph 3 below which the parties agree shall occur irrespective of the outcome of the proceedings. In the event that the court makes an order for provision in favour of Plaintiff, each of Plaintiff, First, Second, Third and Fourth Defendants consent to the making of the following orders:

Mrs Haklany's Family Provision Act Claim 25The plaintiff married her husband, Jacob, in January 1983. She said, and I accept, that she had a close relationship both with the testator and with her father. After she married, and until her father died, she saw both of them almost every day. She would either visit them at their home or they would visit her and her family at her home. To a large extent this, and the rest of the plaintiff's evidence about her relationship with her parents, is corroborated by her sister Mrs Khouzame. I found them both to be highly credible witnesses. Mr Gittany cross-examined them but to no effect. Nothing that Mr Gittany asked them or put to them caused me to doubt the correctness of the evidence that they gave on affidavit or their reliability as witnesses. 26At the time of her father's death Mrs Haklany had three young children. The second of those, Rita, born in 1987, has Down's Syndrome and ear and eye disabilities. She has required intense medical intervention and other support from an early age. After Mrs Haklany's father died she continued to visit the testator on a regular basis with her sister Mrs Khouzame. They arranged to visit the testator on alternate weekdays. They shared the duties involved in giving her assistance. On Sundays Mrs Haklany regularly made Lebanese-style breakfasts, which she and her husband would take around to the testator's home. There were periodic family gatherings for special occasions, which the testator, Mrs Haklany and her family attended. 27In his cross-examination of Mrs Haklany, Mr Joe Gittany challenged some of the evidence about Mrs Haklany's closeness to the testator or the amount of attention Mrs Haklany gave to the testator. Indirectly he also seemed to suggest that Mrs Khouzame, was not very personally close to their mother. I do not doubt the attention Mr Joe Gittany provided to his mother. But I accept the correctness of what Mrs Haklany and Mrs Khouzame say about their regular and close contact with the testator, especially in her last years. For a period the testator also resided with her daughter, Mrs Khouzame. But even when she was there, Mrs Haklany visited her. The attention Mrs Haklany gave her mother continued right up until her death. 28Mrs Haklany's and Mrs Khouzame's relationships with their mother were clearly close and devoted. Both in their demonstrated affection to their mother and in the way that they looked after her, what Mrs Haklany and Mrs Khouzame did was all that could be expected of them as children. There is very little evidence about the relationship between the four sons and their mother. That is in part a product of the fact only that the estate is not legally represented. The full available evidence does not seem to have been called for the estate. I do not suggest that the relationship between Mrs Gittany and her sons was in any way less than that of the daughters. But on the evidence before me, the relationship between the daughters and their mother was, for my assessment in this case, a close and devoted one.

Mrs Haklany 29Mrs Haklany attended Bethlehem College in Ashfield. She left school in 1975 at the end of Year 9. She did not obtain the School Certificate. In 1977 she completed a training course at the Reception Centre at Wynyard. In 1978 she completed a one year evening secretarial course at Granville TAFE. In 2001 she completed a nail technician course. 30Upon leaving school she began to work at Nyugen's supermarket as a cashier. From 1976 to 1978 she worked as a process worker at Plessey's at Meadowbank. From 1979 to 1987 she worked in a variety of secretarial positions for Barilla Real Estate, the Institute of Mechanical Engineers, Grace Bros, The Lebanese Welfare Centre, Petersham TAFE College and Bankstown TAFE College. 31Since the birth of her daughter Rita in 1987, Mrs Haklany has not been employed. Because of Rita's disabilities and as her primary carer, Mrs Haklany has been in receipt of a Centrelink carer's benefit. Otherwise her husband, Jacob, supports her. Jacob is employed by the Mission Australia Job Network. 32Mrs Haklany's children (and their current ages) are Sylvia (aged 27), Rita (aged 24), Joseph (aged 21) and Patrick (aged 15).

Mrs Haklany's Financial Position 33Mrs Haklany's financial position is not comfortable. Mrs Haklany's eldest daughter Sylvia, her daughter Rita and her other two sons, Joseph and Patrick live with Mrs Haklany and her husband Jacob. None of the children are yet fully self-supporting. Nor do they provide income to the Haklany household. In recent times, Sylvia has been in part time employment as a hairdresser. Joseph works as a electrician's assistant, whilst he is waiting to enter the Police Force. Patrick is still at school. 34In 2010, Mrs Haklany, with her daughter Sylvia, purchased for about $30,000, a retail shop selling party supplies and known as the "Pink Mix". She spent $2,310 on legal fees for the purchase and a further $6,000 on improvements after she went into possession under a lease. Of the approximate $38,000 Mrs Haklany invested in the shop, $7,000 was sourced from funds the testator gave her. Mrs Haklany borrowed the legal fees for the purchase from her sister, Mrs Khouzame. The other $6,000 was borrowed from her son, Joseph Haklany, using moneys he realised from the sale of his car. The rest of the funds used to purchase the shop appear to be still owing. 35The Pink Mix has not been travelling well financially in recent months. Mrs Haklany has given evidence to the effect that her daughter Sylvia had to leave the shop and seek employment elsewhere to earn a more reliable income, as the revenues from the shop's business would not support a wage for her. Mrs Haklany herself has been working in the shop for no wages, to make sure the rent is paid and expenses are covered. I accept her account of this. One of Mr Joe Gittany's contentions, was that Mrs Haklany had been profligate with moneys that she had received from time to time from her mother and from other sources and that she actually had no real present need for capital. It seems to me though that the continuing operation of this shop, with Mrs Haklany in effect working for no wages, is a real demonstration of her continuing need for capital. 36I do not accept Mr Joe Gittany's contentions put, both in cross-examination and then in submissions, that Mrs Haklany and her husband have squandered funds. This is the kind of submission that is often heard in proceedings such as this. Sometimes it has a basis. But even when it does have a basis it may not, unless it is serious, affect the Court's discretion. But in this case it has no basis at all. The continuing financial distress of the poorly performing Pink Mix shop is a good example of Mrs Haklany's need for capital. The shop has been put on the market; but it has not been sold. Mrs Haklany has continuing obligations under its lease. The revenue of the business does not support a wage for either Mrs Haklany or Sylvia. But until the business is sold Mrs Haklany must continue working there. 37Sylvia is in full-time employment as a hairdresser, but does not contribute to the household. Rita continues to receive Centrelink benefits but, given her personal circumstances, those benefits are entirely consumed on her care. Rita receives benefits totalling $15,091.00 per year. Patrick is at school and receives a Centrelink allowance of $104.50 per week. 38Mrs Haklany's husband Jacob will turn 54 in December 2011. Although he is in current employment. He has controlled diabetes and his overall health is not good. Mr Haklany earns $1,839.45 per fortnight. Mrs Haklany's carer's allowance for Rita is $110 per fortnight. The joint income of the household is about $1,030.00 per week, including Patrick's income. 39Mrs Haklany has provided a schedule of her famly's income and outgoings, which I accept as reliable. The schedule shows that the total Haklany family weekly outgoings are $1,447.80; there therefore is an ongoing approximate weekly deficit on the household's current account of $417.80 (being $1,447.80 less $1030.00). ITEM AMOUNT PER MONTH Home Loan $1,000.00 Council Rates $120.00 Electricity $350.00 Water Rates $120.00 Health Insurance $362.35 Home and Contents Insurance $87.48 Motor Vehicle Insurance (two vehicles) $354.00 Motor Vehicle Registration (two vehicles) $150.00 Petrol (two vehicles) $540.00 Credit Card Minimum Repayments $96.00 Food, Grocery and Personal Items $1,200.00 Mobile Phones $200.00 Internet and Home Phone Line $129.00 Optus Vision $235.00 Pool Maintenance $20.00 School fees $250.00 School Uniforms, Sports Clothing/Sports Fees $60.00 Clothing - Self, Gloria and sixteen year old son $300.00 Entertainment - Self, Gloria and daughter $200.00 Medical and chemist $200.00 Gifts $300.00 40The plaintiff and Mr Haklany also provided evidence as to their current joint assets and liabilities, which I accept as accurate. Summary of Assets and Liabilities Assets a. Real Estate $580,000.00 -$600,000.00 b. Savings (Approximate) $Nil c. Motor vehicles (Approximately) $20,000.00 d. Superannuation $61,566.89 e. Jewellery $20,000.00 f. Household contents $10,000.00 g. Boat $6,000.00 h. Loan to Sylvia and Joseph Haklany $47,000.00 i. Loan to Chady Khouzame j. Debt owed by Gittany Constructions Pty Limited $58,000.00 Liabilities a. Home loan (approximate) $311,907.44 b. HSBC Classic Credit Card $ 633.57 c. ANZ Low Rate Mastercard $1,814.26 d. Commonwealth Bank Mastercard $2,962.53 e. Aussie Mastercard $469.98" This leaves the household with net assets of the order of $600,000 but with substantial mortgage obligations. 41The Haklany family Balance Sheet is complicated by two other factors. The amount of money owing on Mr and Mrs Haklany's home loan of some $311,000 has been incurred in part to provide loans to near relatives, which they expect to be repaid. The component of the debt repayable by other family members is debts incurred (1) for the opening of a nightclub and (2) for advances to two of the defendants, Charles and Tony. This part of the mortgage borrowing is likely to be repaid to them by their relatives, although there is still a repayment risk as their advances to these relatives are unsecured. Once repayment occurs from their relatives Mr and Mrs Haklany can partially discharge their mortgage. Their core home loan liability over and above these borrowings for relatives, is an amount of $147,000. But Mrs Haklany says, and I accept that unless this core home loan liability is reduced it will not be paid off before Mr Haklany reaches retirement age. 42Neither of Mrs Haklany or her husband Jacob have been able to accumulate much superannuation through their employment. Mr Haklany has superannuation benefits of $61,566.89 which includes $28,484.12 in the Hesta Super Fund and $27,366.22 in the Commonwealth Super Fund, and $5,716.55 held by the ATO as lost superannuation. Mrs Haklany does not have any significant sum in superannuation herself. These are not adequate amounts of superannuation, for a family that has a home loan mortgage of $147,000 and where, I accept, Mrs Haklany wishes to set aside a fund for Rita, when she and her husband are no longer able to look after her. 43Mrs Haklany claims an order for provision for her advancement in life. Mr Armfield submits on her behalf that that order for provision should consist of a sum of $147,000, to repay the core home loan component of their mortgage borrowings plus a contingency amount of $50,000, to be provided out of the estate for Mrs Haklany. 44With this background it is necessary to state the legal principles that apply to the assessment of Mrs Haklany's claim.

Applicable Legal Principles 45Three aspects of the law relating to the Family Provision Act are relevant here: the general principles of the jurisdiction; the assessment of claims by adult children; and, the Court's proper approach, when no evidence is offered as to the financial position of beneficiaries under the will other than the plaintiff. I will address each of these matters in turn. 46The legal principles that apply to the jurisdiction I am called on to exercise in this case are not controversial. They have been clearly and conveniently summarised in a recent decision, Taylor v Farrugia [2009] NSWSC 801 where Brereton J said:- "[9] Applications such as these under the (NSW) Family Provision Act 1982 for provision out of the estate of a deceased person, have been described by the High Court of Australia in Singer v Berghouse (No 2) (1994) 181 CLR 201 as involving a two stage approach. The first requires the determination of the jurisdictional fact whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life, and the second - which arises only if the first is resolved affirmatively - involves the discretionary assessment of what provision ought to be made out of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process: The determination of the first stage in the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance, et cetera, appropriate for the applicant having regard, amongst other things, to the applicant's financial position, 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 upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the Court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. [10] Because the considerations relevant to both stages overlap in this way, consideration of an application under the Family Provision Act does not always divide neatly into the two questions, as Callinan J and Heydon JJ pointed out in Vigolo v Bostin [2005] HCA 11 ; (2005) 221 CLR 191, 192. Nonetheless, in an application under the Act, the court must consider, first, whether the plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education and advancement in life; and thirdly, if so, what (if any) provision or further provision ought to be made out of the estate for those purposes. The relevant principles and considerations were summarised by McClelland CJ in Eq, in Re Fulop (dec'd) (1987) 8 NSWLR 679 at 679: In making these determinations, the following principles apply: First, the Court should not interfere with the dispositions in the will except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education and advancement in life. Secondly, the expression "proper" in this context connotes a standard appropriate to all the circumstances in the case, and thirdly, the Court may take into consideration any matter (whether existing or occurring before or after the death of the deceased which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased, (b) the character and conduct of the plaintiff, (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs, (d) the size and nature of the estate of the deceased, (e) the nature and relative strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased, and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased. [11] It is important also to bear in mind the principle articulated by Young J, as his Honour then was, in Stewart v McDougall (New South Wales Supreme Court, Young J, 19 November 1987, unreported), in explaining that the court's role is limited to making adequate provision for an eligible person's proper maintenance and advancement: It is important to state what the Family Provisions Act permits a Court to do and what it does not permit a Court to do. The Act recognises that Australians have freedom to leave their property by their will as they wish with one exception. The exception is that a person must fulfil any moral duty to make proper and adequate provision for those whom the community would expect such provision to be made before they can leave money as they wish. Thus, in these cases, one does not ask if the will is fair, one does not ask if the testatrix divided her property equal, one does not as a judge ask how would I have made a will had I been the testatrix. What must be asked is did the testatrix fail in her moral duty to those who have a claim on her. Even if the Court comes to the view that the question should be answered in the affirmative, the Court still does not remake the will, but only alters it to the extent adequate provision is made for the eligible person in respect of whom the testatrix failed in her moral duty." 47In Taylor v Farrugia [2009] NSWSC 801 and Young & Grainger v Outtrim [2011] NSWSC 391 Brereton J also explained the law relating to claims under the Family Provision Act by adult children such as Mrs Haklany. In Taylor v Farrugia [2009] NSWSC 801, in particular, his Honour explained the principles thus:- "[57] These are claims by adult children. It is impossible in this area to describe in terms of universal application the moral obligation or community expectation of a parent in respect of an adult child. I think, however, it can be said that ordinarily the community expects parents to raise and educate their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, and where that is feasible; where funds allow, to provide them with a start in life - such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set their children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation [ McGrath v Eves [2005] NSWSC 1008 . [58] Generally speaking, the community does not expect a parent to look after his or her children for the rest of their lives and into retirement, especially when there is someone else, such a spouse, who has a prime obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect parents to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute. It is no longer the case, if it ever was, that an adult child has to establish a special need before obtaining provision from the estate of a deceased parent. [59] The court's attitude to the eligibility for means tested pension benefits of eligible persons and beneficiaries varies, depending on the circumstances of the case. Ordinarily, a testator makes a will and provides for those who have a claim on the testator without regard to the claimant's eligibility for a pension. However, in a small estate where there are competing claims, a testator, and this court on an application under the Act, may take into account the eligibility of a claimant for a pension as a means of deciding how such limited benefits as are available from the estate should be shared between claimants, and how those benefits might be structured. But this qualification to the principle that the burden of support should be borne in the first instance by an estate rather than by social security arises mainly, if not exclusively in smaller estates [ Parker v Public Trustee (1988) NSWSC, Young J, 31 May 1998; Whitmont v Lloyd (New South Wales Supreme Court, 31 July 1995, Bryson J unreported); King v Foster (Court of Appeal, 7 December 1995 unreported); King v White [1992] 2 VR 417 at 424 ; Shah v Perpetual Trustee Co [1981] 7 Fam LR 97 100; Gunawardena v Kanagaratnam Sri Kantha [2007] NSWSC 151 ; Chan v Tsui [2005] NSWSC 82 ." 48One feature of this case is the absence of evidence from Mr Joe Gittany, or any of the other defendants, including Mrs Khouzame, about their present financial position. Although Mrs Khouzame has been left out of the will, she now makes no claim against the estate and has made that clear in evidence. 49The principles that apply when an estate in a Family Provision Act claim advances no evidence of the financial circumstances of other beneficiaries were stated by the Victorian Supreme Court in Anderson v Teboneris [1990] VR 527 at 535, Ormiston J in the following terms:- "It has been accepted over many years that if a beneficiary says nothing as to his or her financial position or other claims on the testator's bounty, then the Court is fairly entitled to assume that the beneficiary has no special claim other than that relationship and that in particular he or she has adequate resources upon which to live." 50Mr Gittany submitted on several occasions that his financial needs and claims on the estate were more meritorious than those of Mrs Haklany. But he was unable to give to the Court a satisfactory explanation as to why he did not put on evidence to support that contention. The only explanation he gave was the fact that he was not aware of the need to put the evidence on. But I find that explanation difficult to accept. The estate had been represented by lawyers in these proceedings for well over 12 months. Indeed other relatives, the other defendants, have been represented by lawyers and by counsel, and Notices of Claim under the Family Provision Act have been served on all potential claimants. 51I infer therefore that each of the testator's other children have no special claim on their mother's bounty and that he or she has adequate resources on which to live.

Consideration of Mrs Haklany's Claim 52I am persuaded by Mr Armfield's submissions that the plaintiff is a person for whom adequate provision has not been made within the first limb of Singer v Berghouse (1994) 181 CLR 201. The mortgage borrowings over their house are clearly a central impairment to the capacity of Mrs Haklany and her husband to take any further financial steps: to provide a fund for their daughter Rita; to provide superannuation for their retirement; to pay down their other debts and to accumulate capital. The poor state of the family's accumulated superannuation supports this conclusion. 53Most of their spare family money is going into making payments on this home loan. If they are freed from that obligation, then they will be in a better position: to provide for their own retirement; to make such improvements to their own house as they choose; and, to provide for their daughter, Rita, who has pressing needs for immediate and future care.

The Estate's Case 54Against this Mr Gittany came up with two kinds of argument: one, a conventional answer to the plaintiff's claim; and the other, an unconventional answer. 55Mr Joe Gittany's conventional answer to the plaintiff's claim was that in various ways Mrs Haklany had no financial need worthy of the claim she made. Mr Gittany said that because Mrs Haklany and her husband each owned Mercedes Benz motor vehicles that the Court should not draw a conclusion that neither of them was in any kind of financial need. But the reality was that the vehicles were ten years old. They were not themselves evidence of an extravagant lifestyle. Mrs Haklany must work in the shop, for example, in the way that I have indicated, so the continuing lease liabilities do not overwhelm them. 56Mr Gittany also submitted that Mrs Haklany should now be content with a sum of $7,000 that she received from her mother, prior to her mother's death. He also pointed out that Mrs Haklany had split up some of their mother's jewellery with her sister, Mrs Khouzame, after her mother's death. But the $7,000 Mrs Haklany received prior to the testator's death was immediately invested in the purchase of the Pink Mix business for her daughter Sylvia. And it is not a large sum. Its disposition in this way shows no extravagance in my view. The sum may yet be lost if the business cannot be sold for a reasonable price. 57Mr Joe Gittany then submitted that Mrs Haklany had received other monies in recent years which, could have been used to reduce the home loan. But I do not accept that Mrs Haklany had access to substantial sums of money as Mr Gittany suspects. The fact that any moneys she did receive were not used to reduce the home loan is not evidence so much of extravagance as evidence of the fact that there were other needs in the household. 58Then, there is Mr Joe Gittany's unconventional answer to the plaintiff's claim. A central motivation for Mr Joe Gittany, and one quite evident from his submissions to the Court, was that, as the eldest male child of the family, he felt it important to ensure that the Lebanese customs of the family are respected. The Court explained to him that it does understand the importance of that point of view to him but that the statute law of New South Wales, the Family Provision Act , applies to this claim and governs the disposition of his mother's estate. 59His short contention was that after Mr Mohsen Gittany senior died in 1991, when his estate was administered, it was agreed at a kind of family conference, at which the testator expressed her wishes, that the daughters, Mrs Khouzame and Mrs Haklany, would receive $50,000 each from their father's estate. It was also said to have been agreed that the sons would receive $50,000 from the administration of their father's estate. There still is immense disagreement within the family about what the precise agreement among family members about this subject was at that time. But this much can be said. Mrs Khouzame and Mrs Haklany remain concerned that monies from the sale of land in Lebanon were not fully accounted for by their brothers after Mr Mohsen Gittany's death. Mr Joe Gittany says that the two daughters agreed to the provision of the $50,000 at that time, and he says they both acknowledged that sum to be sufficient in accordance with Lebanese tradition. 60Mr Joe Gittany explained from his perspective in his affidavit just what these Lebanese customs are. And what he said was:- "In our tradition, once our mother makes a decision of this kind, it must be respected by all of her children. Had our mother decided upon a different amount for each daughter, it was not our place to object. Following my father's death, and as the eldest son, in our tradition, I then become head of the family. However, my mother made her own decision concerning gifts to Gloria and Julie in discussion with Uncle Peter, and at a time when I was not even present." 61But there are misunderstandings about what arrangements were after Mr Mohsen Gittany's death. The daughters, Mrs Haklany and Mrs Khouzame, who both gave evidence, and whose evidence I accept, still do not understand how much land from their father's estate in Lebanon was distributed to their brothers. I do not accept that Mrs Haklany was aware until about the time her mother died that her brothers had actually received $76,000 (and not the smaller sum of $50,000 that she and her sister had received). 62But the central transaction in the proceedings, the mortgage of the Merrylands property, was itself a source of family misunderstanding. The short facts are that, in early 2003, the Merrylands property was transferred as to 1/100th from the deceased's name, where it had been shortly after her husband's death, into Mrs Khouzame's name. The Merrylands property was then mortgaged. I accept Mrs Khouzame's evidence she was not aware of this transfer or the mortgage when they happened. 63The Merrylands mortgage and associated documents show the funds were raised. The accounts of Gittany Constructions show that the company received the funds. Mr Charles Gittany also seems to have made acknowledgement of some responsibility for repayment of the funds. But those nuances are no longer relevant because of the agreement made among the plaintiff and all the defendants which acknowledges that Gittany Constructions owes the debt to the estate. 64But a remarkable feature of this transaction (the transfer and the mortgage) is that Mrs Khouzame denies that she executed any of the documents that put the Merrylands real estate in her name or that she mortgaged it. Indeed she also denies any involvement in the transactions involving the Bass Hill property. She says that the signatures purportedly in her name on all those documents were not hers. She was challenged about this in cross-examination. But I wholly accept her evidence on this subject. The signatures are not hers. Indeed it appears Mrs Khouzame's signature has been forged to facilitate a series of transactions in which someone other than her has gained a financial advantage. That is why she refused to co-operate in selling the Merrylands property and paying out the mortgage - she did not want to become involved in someone else's fraud. I mentioned in the course of submissions that this aspect of the case may be referred to the Attorney General for his consideration as to whether further police investigation is warranted. 65Mr Joe Gittany says that Mrs Khouzame signed all these documents and that Mrs Haklany was aware of the transactions. But I accept Mrs Khouzame's and Mrs Haklany's evidence that they were not so aware. 66Mr Gittany also argues that, on the basis of Mrs Khouzame's alleged knowledge of the transfer and mortgage transactions, that the disposition of family assets under the testator's will should stand, and that all family assets should be left where they are now, and that Mrs Haklany should now make no claim. His argument seems to be, that because Mrs Khouzame and Mrs Haklany were aware of and accepted the transfer and transactions, that they should not now be questioned, nor should the debt be recovered. 67The problem with that argument is that I do not accept that either Mrs Haklany or Mrs Khouzame were aware of the transactions. They only discovered them about the time of their mother's death. Secondly, it seems to be suggested that Mrs Haklany received $50,000 before her mother made her 1995 will. Mr Joes Gittany says that means in Lebanese tradition, that Mrs Haklany accepted that that was all she was ever going to receive. But it has not been established to the Court's satisfaction that Mrs Haklany assented to any such thing. Nor does it reflect the law of this State; a release of Family Provision Act rights is not binding unless approved by the Court: Family Provision Act , s 31. 68Finally, it was pointed out in argument to Mr Joe Gittany that, according to the known distribution of funds from his father's estate, even if one leaves aside the land in Lebanon, that $76,000 had been received by each of the brothers and only $50,000 by the sisters. It was put to Mr Joe Gittany that this imbalance in receipts did not seem to be a particularly good argument why Mrs Haklany should now no longer be entitled to anything from her mother's estate. 69Mr Gittany gave no satisfactory answer to this challenge in his argument. He said Mrs Haklany had been given jewellery and cash in recent times. But in my view that is no answer to the claim she makes. The jewellery that she and Mrs Khouzame split was valued in the range $6,000 - $7,000. Even taking into account the cash Mrs Haklany received, what she received was less than what it has been established was advanced to the sons through their father's estate. Consequently, Mrs Haklany's receipt of cash and jewellery seems to me to be of marginal relevance. Although I have dealt with this issue at some length, I regard it as essentially of minor relevance. It is nevertheless of high concern to Mr Gittany; and it is important for him to understand how his submissions have been dealt with.

Conclusion and Orders 70The submissions made by Mr Armfield are persuasive. I will make an order for provision in the sum of $197,000 out of the estate, structured in the way he proposes. Of this sum $147,000 represents a sum that may be applied to pay out the core component of the Haklany's home loan; and the other $50,000 is a sum that can be set aside as a contingency against future adverse events. The total amount of $197,000 will be provided by way of legacy. 71The Court will therefore make the following orders:- As to the plaintiff's application for provision out of the estate, the Court orders: (1) that the plaintiff receive by way of provision, a legacy in the sum of one hundred and ninety seven thousand dollars ($197,000) out of the estate of the late Chahide Gittany ("the deceased"); (2) that interest not accrue on the said legacy if it is paid on or before 26 December 2011. However, if not so paid, interest at the rates prescribed on judgments under s 101 Civil Procedure Act 2005 shall accrue as and from that date until the date of payment; and (3) that the plaintiff's costs of the proceedings, calculated on the ordinary basis up to and including 5 July 2011, and thereafter on the indemnity basis be paid out of the deceased's estate. As to giving effect to the order for provision and after noting:- (a) the admission by the fourth defendant that it is an estate debtor in an amount of three hundred and forty six thousand dollars ($346,000) ("the admitted debt"); (b) the agreement and acknowledgment of the plaintiff and the first to fourth defendants that neither the second nor the third defendant is an estate debtor; and (c) the acknowledgement by the fourth defendant that an example of the effect of Order 5 below would be that the plaintiff alone could issue a statutory demand to it. The Court further orders:- (4) that the admitted debt vest in the plaintiff to the extent necessary to satisfy Orders 1 to 3 above; (5) that, for the more effective realisation of the vested property and pursuant to Family Provision Act 1982, s(1)(a)(viii), the plaintiff may act by herself and without the need to join or to seek the consent of the first defendant, when seeking to recover the debt or part of the debt against the fourth defendant; (6) that, upon the application of the plaintiff pursuant to Order 5 hereof, there will be judgment for the plaintiff against the fourth defendant in the sum of $197,000 plus any interest that may accrue under Order 2 hereof and plus the costs assessed under Order 3 hereof; (7) that the proceedings against the second, third and fourth defendants be otherwise dismissed with no order as to costs; and (8) that there be reserved to the parties liberty to apply to Slattery J for orders and directions for the implementation of these orders, and there also be reserved to the parties further consideration of proceedings for the making of any further orders under Family Provision Act 1982, s 15.

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: 13 December 2011

Family Provision Act 1982(NSW)

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