Kalmar v Kalmar; estate of Kalmar

LEGISLATION CITED : Family Provision Act 1982 (NSW) Wills Probate & Administration Act 1898 (NSW)

Warren v McKnight (1996) 40 NSWLR 390 re Salmon (deceased) [1981] Ch 167 De Groot & Nickel, Family Provision in Australia, 2 Ed Charles v Charles (unreported, 15 March 1998) BC880291 CASES CITED : Singer v Berghouse (1994) 181 CLR 201 Bladwell v Davis [2004] NSWCA 170 re Clissold (deceased) (1970) 2 NSWLR 619 re Mercer (deceased) [1977] 1 NZLR 469 Palmer v Dolman [2004] NSWCA 361

Marija Kalmar PARTIES : v BJ Alexander John Kalmar in the estate of Jozsef Kalmar

COUNSEL : Plaintiff: D M Flaherty Defendant: A Gruzman

SOLICITORS : Plaintiff: Mullick & Associates Defendant: SAVIO Solicitors

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

6567/04 Marija Kalmar v BJ Alexander John Kalmar in the estate of Jozsef Kalmar

1 HIS HONOUR: This is an application for an order under s 7 of the Family Provision Act 1982 (NSW) that provision be made for the plaintiff's maintenance and advancement in life out of the estate of Jozsef Kalmar.

2 Jozsef Kalmar died on 26 September 2002 aged 75. The plaintiff is his widow. She is now 64. She was his second wife. The plaintiff and the deceased were married on 4 April 1997. They lived together as man and wife for about a year before they were married. They separated by no later than 19 April 2002. They were not divorced.

3 The deceased made his last will on 12 July 2002. He left his estate to his son and daughter by his first marriage in the shares of 70 per cent to his son and 30 per cent to his daughter.

4 The summons in these proceedings was not filed until 3 December 2004, more than two and a quarter years after the deceased's death.

5 Subsection 16 (2) of the Act provides: " 16 Time for application for provision … (2) An order under section 7 shall not be made unless the application for the order is made within the prescribed period in respect of that application or within such further period as the Court may, having regard to all the circumstances of the case but subject to subsection (3), by order, allow. "

6 In the present case the prescribed period is 18 months after the deceased's death (subs 16 (1)(b)).

7 That period expired on 26 March 2004. Subsections 16 (3) and (4) provide: " … (3) The Court may not make an order under subsection (2) allowing an application in relation to a deceased person to be made after the end of the prescribed period unless: (a) the parties to the proceedings concerned have consented to the application being made after the end of that period, or (b) sufficient cause is shown for the application not having been made within that period.

(4) The Court may make an order under subsection (2) with respect to an application in relation to a deceased person whether or not: (a) the prescribed period in respect of the application in relation to the deceased person has expired, (b) the application for the order under that subsection was made before that period expired, or (c) the application in relation to the deceased person has been made. "

8 In Warren v McKnight (1996) 40 NSWLR 390, Hodgson J, as his Honour then was, said (at 394) that there are four factors relevant to the exercise of the discretion to extend the time for bringing an application under the Family Provision Act. First, the sufficiency of the explanation of delay in making the claim. Secondly, whether there would be any prejudice to beneficiaries. Thirdly, whether the plaintiff has been guilty of unconscionable conduct; and fourthly, the strength of the plaintiff's case.

9 On 17 September 2003, about a year after the deceased's death, the plaintiff's solicitors wrote to the defendant and asked to be provided with a copy of the deceased's will.

10 On 10 October 2003, the defendant's solicitors refused to provide a copy of the will unless they were told what course of action the plaintiff contemplated. Without knowing what the will contained, it would be difficult for the plaintiff to answer that question.

11 On 27 November 2003, the plaintiff's solicitors repeated their request for a copy of the will and made various assertions in relation to the plaintiff's contribution to the welfare of the deceased and the circumstances of her having separated from him. There was no response to that letter.

12 The plaintiff's solicitors wrote again on 1 July 2004, after the 18 month limitation period had expired, drawing attention to s 150 of the Wills Probate & Administration Act 1898 (NSW). A copy of the will was provided on 13 July 2004. Probate was not obtained until 28 September 2004.

13 I infer that the plaintiff did not know what, if any, provision had been made for her until 13 July 2004. It was not suggested to her in cross-examination that she knew before then that she had not been left anything by the deceased in his will.

14 The defendant said in oral evidence that: "We originally sent a letter letting them know there was no mention of her in the will". He said this was done before a copy of the will was sent. I do not accept this evidence. No such letter was produced. There is no evidence beyond his uncorroborated assertion that such advice was given. In submissions, the defendant did not rely on the plaintiff having had notice that no provision was made for her before the prescribed period for making an application elapsed.

15 The purpose of the 18-month period for filing an application under the Act, and for that period being able to be shortened under s 17 of the Act, is to allow estates to be wound up with reasonable promptness. That is not a consideration in this case. No steps have been taken to administer the estate. The deceased's daughter, Mrs Thomson, has asked the defendant for her share of the estate, but the house, which is the principal asset of the estate, has not yet been sold. She paid the funeral expenses and has not yet been reimbursed for them.

16 There is no prejudice to the defendant in extending the time for making the application. The plaintiff has not acted unconscionably. She said, and I accept, that she does not remember being told by her solicitor that there was a time limit for bringing the proceedings.

17 As the deceased's widow for whom no provision was made the plaintiff has reasonable prospects of some provision being ordered. Indeed, as will later appear, I consider that an order for provision should be made for her.

18 The defendant submitted, by reference to the judgment of Sir Robert Megarry VC in Re Salmon (deceased) [1981] Ch 167, that no extension should be given because the plaintiff has a remedy against her solicitor for not advising that the proceedings be brought in time.

19 Counsel for the defendant also referred to a passage in JK De Groot & BW Nickel, Family Provision in Australia, 2 ed at 167 where the authors, referring to the decision of Young J in Charles v Charles (unreported, 15 March 1998) BC880291 say: "... in a more recent New South Wales case it was held that an extension ought not to be granted where an application comes to a solicitor before the limitation period expires and the solicitor does not file a summons within time."

20 Re Salmon is not authority for the proposition that an extension will not be given if an applicant would have a cause of action in negligence against his or her solicitor if the claim is barred by s 16.

21 In that case, Sir Robert Megarry took into account, as one of a number of relevant factors, whether a refusal to extend time would leave the applicant without redress against anybody (at 176). In that case, an extension of time was refused, but there were a number of other relevant factors, including that the estate had been largely distributed. In that case, there was no question of the executor having placed obstacles in the applicant's path.

22 Insofar as the question of alternative redress is relevant, it is not at all clear that the plaintiff would succeed in an action against her solicitor to recover as damages the amount of provision which she would otherwise be awarded had the claim been commenced in time. Without knowing the contents of the will the solicitor would not know what action the plaintiff should take, even assuming the solicitor knew what estate had been left. It might be an action to enforce the trusts of the will. It might be an action to apply for an order under the Act. The testator might have given a persuasive explanation in his will for whatever bequests he made. It would have been open to the plaintiff to obtain an order for the production of the will under s 150 of the Wills Probate & Administration Act, but it does not lie in the defendant's mouth to complain that no step was taken under that section when he refused to provide a copy of the will to the deceased's widow.

23 In Charles v Charles, Young J, as his Honour then was, said (at BC8802891 at 7): "I have said on more than one occasion that if an application under this Act comes to a solicitor before the limitation period expires and the solicitor does not lodge an application in time, then that in itself does not provide sufficient cause for the Court extending the time. It does not matter that the solicitor has been diverted from her task by counsel sitting on a brief for too long, or a Court losing a file, or her children all coming down with chicken pox at the same time, there must be something more than mere incompetence or inattention by a solicitor before time can be extended under this Act".

24 His Honour's statement that inattention or incompetence by a solicitor is an insufficient ground to warrant an order extending time does not mean that an application for extension must be refused if the limitation period expired through the fault of the solicitor. Contrary to the impression conveyed in the passage quoted from De Groot and Nickel, Family Provision in Australia, it was not held in Charles v Charles that the extension ought not to be granted in that case. In fact, an extension of time was granted as notice of intention to apply had been given before the limitation period expired and the beneficiaries were not prejudiced by an extension.

25 For these reasons I will make the order for the extension of time for commencing the proceedings as sought in para 2 of the summons.

26 I turn then to the merits of the application. Section 7 and subs 9 (2) of the Act prescribe a two-stage process for determining what provision, if any, should be made under the Act out of an estate. In Singer v Berghouse (1994) 181 CLR 201, Mason CJ, Deane and McHugh JJ said (at 209-210): "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 etc 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."

27 Subsection 9 (3) provides: 9 Provisions affecting Court's powers under secs 7 and 8 …

(3) In determining what provision (if any) ought to be made in favour of an eligible person out of the estate or notional estate of a deceased person, the Court may take into consideration: (a) any contribution made by the eligible person, whether of a financial nature or not and whether by way of providing services of any kind or in any other manner, being a contribution directly or indirectly to: (i) the acquisition, conservation or improvement of property of the deceased person, or (ii) the welfare of the deceased person, including a contribution as a homemaker, (b) the character and conduct of the eligible person before and after the death of the deceased person, (c) circumstances existing before and after the death of the deceased person, and (d) any other matter which it considers relevant in the circumstances. "

28 I consider first the size of the estate. The only substantial asset of the estate is a house at 38 Clucas Road, Regents Park. Its agreed value is $407,500.

29 It was initially common ground that if the plaintiff is entitled to an order for provision and to an order for her costs on a party/party basis, after meeting the costs of sale and the payment of those costs, and of the defendant's costs on an indemnity basis, the net distributable estate would be about $320,000.

30 However, this did not take into account funeral expenses paid by the deceased's daughter, Mrs Thomson, of about $11,500, for which she is entitled to be indemnified from the estate. Nor did it take into account rent received by the defendant for which he will be obliged to account, of about $7,500, or rates and other costs associated with the holding of the property which will be an estate expense.

31 Taking these matters into account it is reasonable to assume that the net distributable estate would be about $310,000, if an order for provision is made and the plaintiff is entitled to her costs on a party/party basis.

32 Both the plaintiff and the deceased had had prior marriages. They were both of Hungarian background. The plaintiff does not speak English. They met in April 1996 when the plaintiff was 55 and the deceased about 70. They started living together soon afterwards at the deceased's house in Regents Park. The deceased's son, the defendant, also lived in the house. The plaintiff carried out the household chores such as cooking, cleaning, washing and ironing for the deceased. The deceased suffered from physical ailments and mental illness. From shortly after their marriage in April 1997, the deceased was incontinent. The plaintiff attended to the washing of his wet and soiled clothes and bed linen.

33 A medical report prepared in July 2001 recorded that the deceased had significant problems, including non-insulin dependent diabetes, hypertension, angina and prostate cancer. He had a psychiatric history extending over forty years. At that time he was diagnosed as suffering a severe depressive illness with apparent psychotic features. He believed he was being bitten by rats when in bed. He was admitted to hospital for some weeks in August 2001 for his medications to be adjusted. By this time both he and the plaintiff regarded their marriage as being effectively over.

34 According to the defendant, in August 2001 the plaintiff moved out of the house to live with her daughter, only returning for a few hours on some weekends. The plaintiff said she moved to her daughter's house in December 2001 to look after the children of one of her daughters and the children of a neighbour. She said that she did so from Monday to Thursday, but returned to the Regents Park house on Fridays to Sundays.

35 In cross-examination, the plaintiff said that she was unaware of the deceased being admitted to hospital in August 2001. That could only be so if she had left the house by that time. However, relations between the plaintiff and the deceased had not completely broken down as the plaintiff cooked dinner for the family at Christmas in 2001.

36 The plaintiff said that after she left to stay with one of her daughters from Mondays to Thursdays, she nonetheless cleaned the house, did the laundry, the ironing, the shopping on weekends, and cooked food for the deceased and his son for the next week. This evidence was not challenged and I accept it. It is clear that the plaintiff left the house altogether by April 2002. She says she did so at the deceased's request.

37 She gave evidence that the deceased telephoned her when she was at her daughter's house and told her that his son required her to leave. She readily did so. There is nothing to contradict this evidence, although I treat it with caution. I do not think it matters whether the final separation was at the deceased's request, or at the defendant's urging, or was the plaintiff's own decision. The marriage was an unhappy one. How the final separation came about is not material. It is not possible to say who was at fault for the marriage having failed. No doubt the deceased's physical and mental illness would have made matrimonial life difficult.

38 The plaintiff made financial contributions during the marriage. She either brought to the marriage or purchased a refrigerator, dining suite, TV, glass cabinet and its contents. She took these items away with her at the end of the relationship. She left behind other items of less value which she had bought, such as kitchenware, kitchen appliances, crockery and cutlery.

39 In 1996 she received $36,500 from the estate of a de facto partner following an application under the Family Provision Act. She lent $1,000 to the defendant, which was not repaid. She spent $2,000 on honeymoon and wedding expenses. She spent at least $3,000 on improvements to the Regents Park house. She gave $10,000 to one of her daughters. Not surprisingly, there is no precise accounting as to how the balance of these moneys were spent. It is probable that a substantial part of the remaining $20,000 was spent as contributions to the every day living expenses of her and the deceased.

40 After she left the deceased, the plaintiff moved to the house of her younger daughter. There are four persons in the household: the plaintiff, her daughter, her daughter's seven-year-old son and the child's father, who is living in the house, although separated from the plaintiff's daughter. The plaintiff contributes to the rent. The plaintiff's daughter applied for and obtained a subsidised three-bedroom unit from the Department of Housing. The plaintiff has also applied for accommodation from the Department of Housing, but it is not known whether her application will be successful. She has no assets or liabilities of any significance. She receives an aged pension of $287 per week. Her expenses, including a contribution to rent of $85 per week, are $235 per week. These expenses will increase if she moves out of her daughter's residence.

41 A one-bedroom home unit in the area in which the plaintiff currently lives can be obtained at a rental starting from about $130 per week. Clearly the plaintiff has significant financial needs.

42 The defendant is 40 years old. He is currently unemployed. He is unmarried. He has a son aged 21. He listed his assets as having a total value of $5,300 and his liabilities as being $23,700. However, these liabilities include a liability of about eleven and a half thousand dollars to his sister to reimburse her for funeral expenses, which is an estate expense and otherwise taken account of in this judgment. There appears to be some underestimate of the value of his personal belongings having regard to the insurance value of the contents of the house. Nonetheless, any surplus of assets over liabilities is very modest.

43 Whilst the defendant's father was living at home, the defendant drew a carer's pension for administering his father's medications. From October 2002 until 2005 he was employed as a storeman earning a net average weekly income of about $650. He obtains rent from a boarder who now resides at the Regents Park premises. Although he appears to regard the rent as his own, it is income of the estate for which he will be obliged to account.

44 The defendant left school at 15 without obtaining his School Certificate. He has no tertiary or trade qualifications. The defendant is medically unfit for the job of a storeman. He has a heart condition which is being monitored and managed with medication. He will require an aortic valve replacement, possibly in the reasonably near future. This operation will involve a one-week stay in hospital and six weeks' convalescence. He also suffers from lower back pain, thoracic pain and foot pain. This condition is expected to deteriorate with age. He must avoid heavy, repetitive or prolonged static duties and hence is not fit for heavy manual work. The defendant's osteopathic physician recommends that he remain living at the house at Regents Park, which has few steps and is ideally suited to his disabilities. However, that will not be possible as the house will have to be sold, whether or not provision is made for the plaintiff, in order to pay Mrs Thomson her share of the estate.

45 Mrs Thomson was the deceased's daughter. She is 46. She is married and has two children, aged 12 and 14. She and her husband own a 2005 Holden wagon and a 1999 utility, but there is an associated hire purchase liability. She has savings of $9,000. Her husband owns their house, which she estimates to be worth $300,000. She and her husband live at Penrith. She works as a hairdresser at Faulconbridge on Saturday mornings, and at other times as required. She earns $110 per week for this work, on average.

46 Her husband earns $47,500 net per annum. A loan of $100,000 has been approved for them to carry out extensions to their house. She and her husband are self sufficient, although their financial circumstances are relatively modest. Presumably it was in recognition of his son's medical condition and his son's lack of financial resources that the deceased made his son his principal beneficiary.

Is Some Provision Required for the Plaintiff's Proper Maintenance?

47 I turn then to the question whether any provision is required for the proper maintenance and advancement in life of the plaintiff.

48 The deceased's estate is inadequate to meet the needs of all those with claims on him. Counsel for the plaintiff did not submit that as the deceased's widow her claim had primacy over the claims of the deceased's children. He was right in not to do so, as ss 7 and 9 of the Act do not permit of reliance on any such general rules (Bladwell v Davis [2004] NSWCA 170). Each case requires close attention to its individual circumstances.

49 In my view, the most important factors in this case are as follows, although they are not listed in order of importance.

50 First, the bond of matrimony, prime facie, gives rise to a testamentary obligation (Re Clissold (deceased) (1970) 2 NSWLR 619 at 621). Although each case will depend on its own facts, it cannot be assumed that that obligation comes to an end on the parties separating without their being divorced, at least where there has been no disentitling conduct by the claimant (Re Clissold (deceased) at 621-622; Re Mercer (deceased) [1977] 1 NZLR 469 at 672-673, cited with approval in Palmer v Dolman [2004] NSWCA 361 at [118]).

51 Contrary to the defendant's submissions, the evidence does not establish that the plaintiff had been guilty of conduct which disentitles her from consideration as an object of the testator's bounty.

52 Secondly, the marriage was a short one. Including the period of cohabitation before marriage, it lasted only a little over five years before it was over for all practical purposes.

53 Thirdly, the marriage was unhappy. It is not possible to ascribe that unhappiness as being due wholly or substantially to the fault of the plaintiff.

54 Fourthly, during the marriage and for the period of cohabitation before marriage, the plaintiff provided personal care to the deceased in his hygiene. She did the washing, cooking, shopping and other domestic chores. She contributed financially to the deceased's welfare.

55 Fifthly, the plaintiff is sixty-four years of age and speaks no English. She has little prospect of employment, except possibly by earning a little cash as a babysitter. She is dependent on welfare and has significant financial need.

56 Sixthly, the deceased's children are in their 40's. As Ipp JA said in Bladwell v Davis at [2]: "... where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. "

57 In this case, competing factors are not in equilibrium. The capacity of the deceased's children, or in the case of Mrs Thomson, the capacity of her and her husband, to earn income, is a matter to be taken into account.

58 Seventhly, the deceased had a longer and, I infer, closer bond with his children than with the plaintiff. In this case, the ties of blood are more compelling than the tie of marriage.

59 Eighthly, the defendant's prospects of employment are significantly reduced by his lack of education and more especially by his medical condition.

60 Ninthly, the defendant will require financial resources for the heart operation he needs and for his convalescence. Whilst the defendant's 21-year-old son may be able and willing to assist during his convalescence, the defendant may need the services of a nurse. The likely cost to him of the operation was not established, but the expenses of the operation and of his convalescence could be significant. The need for the operation further reduces his prospects of immediate employment.

61 Tenthly, the deceased's daughter is without significant assets of her own. She and her husband work to provide for their family and she should not be penalised for their not having made themselves a charge on the state. Their combined income is not large. They have two children to support.

62 It is necessary to make a value judgment as to whether, having regard to the competing claims of the deceased's children and the modest size of the estate, some provision is required for the plaintiff's proper maintenance and advancement in life.

63 In my view, notwithstanding the plaintiff's and the deceased's separation, and notwithstanding the other claims on this small estate, some provision is required in recognition of the services and the financial contribution the plaintiff made over about five years of marriage and cohabitation. The deceased rightly recognised his moral obligations to his children. However, I do not think he was justified in making no provision for his wife.

64 The plaintiff has a life expectancy of more than twenty years and has no assets. The provision which ought to be made for her proper maintenance, having regard to the competing claims of the estate, is a pecuniary legacy to pay for the vicissitudes of life, including the possible immediate need of a fund to pay rent for accommodation. This answers the first question posed by the Act.

65 The second question is what provision ought to be made for the plaintiff's proper maintenance.

66 I consider that, having regard to the competing claims and the small size of the estate, the pecuniary legacy should be modest. I accept that the plaintiff has a need for a provision which will provide a fund which, when invested, will be adequate to pay rent on a one bedroom apartment in the region of Sydney near to where her daughters live for the rest of her life. Counsel for the plaintiff correctly submitted that a provision of half of the net distributable estate would be needed for this purpose.

67 However, the estate is not large enough to meet all of the parties' financial needs. I do not consider that the matrimonial bond, or the services provided by the plaintiff and her financial contributions, when judged against the competing claims of the deceased's children, warrant a provision of that order. The Act requires the making of an holistic value judgment based on matters of a very general kind, (cf. Davey v Lee (1990) 13 Fam LR 688 at 689). Moreover the truth of the parties' relationship can never be known because of the testator's death, and also because the cost of a detailed investigation would be out of proportion to the amount at stake. Therefore the Court must select a figure which it considers appropriate in the circumstances, but it is impossible to justify one figure rather than another. No doubt the pursuit for individualised justice based on uncertain or indeterminate criteria, which the Act requires, produces results which are arbitrary and will therefore appear unjust to the parties. However, that is inevitable.

68 I consider that the provision which ought to be made for the plaintiff's maintenance, having regard to the competing needs and claims of the deceased's children, is an amount of $62,000, representing 20 per cent of the likely net distributable estate.

69 The parties have incurred more than $75,000 in legal costs to achieve that result. That cannot be regarded with equanimity. But I cannot blame the parties for spending money on legal costs when there are no certain criteria by which they can assess what the result of the case will be.

70 I have considered whether all or more than thirty per cent of the provision to be made for the plaintiff should be born by Mrs Thomson. I have concluded that the testator's apportionment of seventy per cent and thirty per cent of his residuary estate should not be disturbed, notwithstanding that his residuary estate will be reduced by the plaintiff's legacy.

71 The defendant's counsel submitted that if I made orders for provision in the plaintiff's favour, the defendant wished to be heard on costs.

72 I will stand the matter over to 9.30am on Wednesday 10 May 2006 in order for counsel to bring in short minutes of order consistent with these reasons and to hear any submissions on costs.

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