Lakshmanan v Lakshmanan

Supreme Court of NSW|2011-12-09|Before: Macready J

judgment 1HIS HONOUR: This is an application under the Succession Act 2006 in respect of the estate of the late Tirunelveli Sivagnanam Lakshmanan, who died on 1 January 2010, aged 64 years. He was survived by his widow and two daughters from his first marriage.

Deceased's last will 2The deceased made his last will on 23 June 1999, in which he appointed his two daughters as executrices and trustees. 3His estate was divided as to one-half to his widow and as to one-quarter to each of his daughters Alexis and Erin.

Assets in the estate 4As at the trial the estate consisted of the following assets: (a) his house at Milperra, worth $450,000; (b) three Mercedes cars, worth $30,000; (c) a bank account with about $200; (d) shares in his service company Oscor Pty Ltd, worth the amount of the bank account of $20,000; (e) jewellery; (f) superannuation and insurance. 5The amount received for these items was $359,532.49. From that there was paid the defendants' costs of $69,542; some debts; and a sum of $50,000, which was lent to Erin so she could buy a condominium in Chicago. 6The amount left after these payments is the sum of $202,781, which is held by the defendants' solicitor in a controlled monies account. 7There are still the following debts of the estate which have to be paid: salary for Shirley Malcolm of $18,000; defendants' costs of $18,000; rent of $2,200; and a mortgage on the home for $14,000. This is a total of $52,200. The plaintiff's costs also may have to be taken into account if the plaintiff is successful. These will amount to $59,723. 8There is a property in the Hunter Valley at Pokolbin which is vacant land. It is in the plaintiff's name. The defendant contributed $35,000 and the plaintiff, $41,572 to its purchase. Given the presumption of advancement and its non-rebuttal on the evidence, the property belongs to the plaintiff and not to the estate.

Family background 9The deceased was born in June 1946. His second wife, the plaintiff, was born in December 1953. The deceased married in March 1976. They had two children: Vittoria Alexis Lakshmanan Wheatley, who is the first defendant, born in October 1977; and Regina Erin Lakshmanan, who was born in May 1980. Unfortunately, the deceased and his wife were divorced in 1989. At that stage the girls went to live with their mother, although they continued to see their father. 10At sometime in 1989 the deceased and a Filipino woman, it is suggested, may possibly have gone through some form of ceremony of marriage, but on the state of the evidence I am not satisfied that they were ever married. 11It was in December 1990 that the deceased and the plaintiff married. The plaintiff had been living in India and she came to Australia in 1991. 12The deceased himself worked as a general practitioner. He had previous qualifications in India as a surgeon but did not pursue these in Australia. His practice was carried on at Fairfield in Sydney. 13In 2006 he went through a ceremony in which he renewed his vows of marriage with the plaintiff. 14In 2007 there was an unfortunate situation where Erin fell out with her father. The start of it was an occasion when a friend of the deceased made inappropriate sexual remarks to Erin and that caused extreme embarrassment to her. The deceased said that family was more important and friends came second, and made a number of other such statements. But then he invited the friend to Alexis's wedding, which followed some time after that. Despite a request from Erin not to ask him, he persisted in that. Although she saw him at the wedding, she did not see him again after that. 15As I have mentioned, the deceased died on 1 January 2010 and probate was granted on 12 May 2010. Although it had been suggested in correspondence that the plaintiff was going to make an application for relief under the Act in July, she actually filed her summons on 4 November 2010. That was followed the next day by the defendant filing a statement of claim in this court, seeking possession of the deceased's home. 16The matter has continued through a number of interlocutory proceedings and has just come on for trial.

Eligibility 17The plaintiff is of course an eligible person. 18In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a court must take. These comments are equally applicable to claims under the Succession Act . At page 209 the Court said the following: "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . 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. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 19As directed by the High Court, I turn to consider the various parties' situation in life.

The plaintiff's situation in life 20The plaintiff is 57 years of age, single and has no dependants. Her age would give her a life expectancy of between 28.7 and 31.36 years. She was born in India and has no family here in Australia. 21She works as a payroll manager and earns a net sum of $791 per week. Her expenses are presently $630 a week. This is supported by her taxable income, which in 2010 was $49,616 and 2011, $54,864. Her assets are as follows: the land at Pokolbin in the Hunter Valley, $70,000; savings, $38,974; superannuation, $55,081; furniture and possession, $15,000. She has liabilities for legal costs and credit cards of some $21,712. 22At the time the plaintiff and the deceased married, the deceased had the Milperra house, which he had purchased with his property settlement from his first marriage. He expressed it to his daughters as a place where they could always come and stay with him. 23He had a mortgage, and this was substantially paid off by 2008. It is apparent that it was he who paid off the mortgage and made contributions to his superannuation. He seems to have paid some utilities and the MBF accounts. An analysis of the plaintiff's accounts for two discrete periods - namely, 14 January 93 to 11 July 96 and 8 January 2001 to 16 June 2009 - shows that she paid for utilities for the house in the sum of $15,946 and paid to the deceased in the same period a sum of $30,549. She also managed to save sufficient to pay her share of the Pokolbin land and have her present savings. 24There was some evidence that the plaintiff was paid a wage from the practice: in the early 90s, $250 net per fortnight; and for the last two to three years, $600 net per fortnight. There is no doubt that this was properly charged in the books of the company as the deceased's secretary, who managed the accounts, testified to this amount. What happened was that cheques were drawn for the amount of the salary, they were cashed by the secretary and the cash given to the deceased to take home. Whether it was given to the plaintiff for her to buy groceries is a matter of doubt. Initially, she says, he only gave her $20 a week. 25The relationship between the plaintiff and the deceased was subject to much evidence. Unfortunately, much of it was ill-informed and speculative. 26It is plain that the marriage was an arranged marriage between the families. However, it is clear that each consented to the marriage. 27Although the plaintiff went home to India to see her family each year by herself (except for the first trip), there was no break in the relationship. There were suggestions made that the deceased and the plaintiff did not share a bedroom over the last eight years. Be that as it may, they still remained married and living together in that period. 28The deceased's statements about the relationship varied depending on to whom he was talking. To a male friend he made the comments about not sleeping together. 29A couple who had a good opportunity to observe them were Mr and Mrs Cullen, who lived next door for the time since the deceased bought his house at Milperra. At times they would stay in the guest bedroom when their own children and grandchildren apparently flooded their own house, leaving them nowhere left to sleep. There would be thus the occasions when they could observe merely as neighbours and friends the interaction. 30Mrs Cullen described the deceased as being quite abrupt at times. He was sometimes very condescending towards people who were not as well-educated as himself. But she denied that he treated his wife "like an irritating servant". He also repeated frequently to her - that is, to Mrs Cullen - how much she owed to Rahda and how he would not be able to get on without her. 31She observed Rahda the plaintiff cooking but if she was not around then the deceased did some cooking. This is in contrast to the time when before he was married, when in fact the deceased would eat at his neighbour's place, the Cullens, two or three times a week. 32She noted that Rahda was quite houseproud and that the house was in good order. She also obviously had to chase him to make sure that he took his medicine and no doubt was a bit of a nag in that respect. 33The other thing that is notable is that the deceased would not go out at night without the plaintiff and plainly Rahda went and did all the grocery shopping. 34One thing which she did not observe - and she was probably in a position to do so, given the positions of the houses - was to see the plaintiff frequently using the guest bedroom, where they themselves stayed when they stayed with the deceased and the plaintiff. 35Although it was an arranged marriage, it worked and was one which lasted for 20 years. It is notable that when he was 60, four years before his death, he went through with a very formal ceremony to renew his wedding vows. 36I myself would not reduce the plaintiff's claim by reason of any unhappiness in the marriage. 37It is necessary of course to give consideration to the situation in life of others having a claim on the bounty of the deceased and in this case it is the two daughters.

Situation in life of his daughter Alexis 38Alexis is 34 years of age, married and has no children, although she would like to have one. She works as a financial planner and she recently bought a business so she could do that. The profits for 2009 were $13,000; 2010, $27,089 and for 2011 are expected to be some $25,000. 39Her husband owns the unit in which they live. They keep their finances separate. He earns $110,000 per annum. He has been married before. Unfortunately, Alexis does not feel secure in her marriage and worries that it may not last. 40Alexis suffers from severe myopia and has in the past suffered from depression and post-traumatic stress disorder. 41Alexis grew up obviously with her mother after the separation. Once she could drive, she used to drive and see her father every couple of weeks. However, she did not, as her sister did not have, much support from her father. They both had to put themselves through university and pay their own university fees. Notwithstanding this, to their credit, they kept in touch with their father. 42Naturally of course, given their ages, they did not contribute to the estate.

The situation in life of Erin Lakshmanan 43Erin is 31 years of age, single and lives in Chicago, USA. She has qualifications in civil engineering and has largely completed an actuaries' course. With some of her savings of $10,000 to $15,000 and $50,000 from the estate, she bought a condominium for $537,500 in the area where she works. It is subject to a mortgage for some $480,000. 44She did have a good relationship with her father until 2007. I have already referred to the unfortunate incident which led to the breakdown of the relationship. The deceased was a stubborn man and would not apologise. No doubt in due course he may have. It is not a matter where I would criticise her and make any reduction in any moral claim she might have on the estate of the deceased. It was just unfortunate. 45Erin first suffered from chronic fatigue syndrome when she was 10 years old. She still suffers from it and she has to be careful with her health. One of the things that she has not been forthcoming in putting before the Court is her financial situation, such as her expenses and her income.

Discussion 46Widow's claims are frequently the subject of applications in this Court. The Court of Appeal in Golosky v Golosky (NSWCA, 5 October 1993, unreported) has referred to formulations of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliott v Elliott , which was approved by the Court of Appeal on 24 April 1986. There his Honour said: "Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first, to ensure that his widow be secure in her home for the rest of her life and that, if either the need arises or the whim strikes her, she have the capacity to change her home; secondly, that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring." 47There have recently been reminders about the limited use of such formulations. In Marshall v Carruthers [2002] NSWCA 47 Young JA said: "73 It must be remembered that Powell J put his proposition as a 'broad general rule'. However, there is in fact no 'standard former spouse' to which one can just apply that proposition as a rule of thumb. 74 Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue. 75 I also take this opportunity to reject Mr Ellison's submission that a person who has a claim as a class (a) eligible person ipso facto has a stronger claim than a person who comes under class (b). Indeed, in many cases, such as where there are infant children, this may not be so." 48Palmer JA concurred in these sentiments. 49The matter was again dealt with in more detail in Bladwell v Davis [2004] NSWCA 170. In that case Bryson JA, with whom Ipp JA concurred on this aspect, said: "12 There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. 'Widow takes all' is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned. 13 Observations on the claims of widows were made by Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69-70 in these terms: 'It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.' These observations were not made in the context of a competing claim or proved need by another eligible person, and were introduced by a guarded reference to a general rule and the absence of special circumstances. However, they are frequently, almost universally cited in applications where provisions for widows are under consideration. 14 In Golosky v Golosky NSWCA 5 October 1993 (unreported) the widow, second wife of the testator, was the applicant and the sons of the first marriage, the will beneficiaries whose interests were affected, were well off and did not assert financial need. The majority (Kirby P, Cripps JA concurring) ordered further provision for the widow, and Kirby P referred to Luciano v Rosenblum briefly for comparison, but also said: 'Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an 'able-bodied son' was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State. See [ Hunter v Hunter and Ors (1987) 8 NSWLR 573 (CA) 575f], 580f; cf Anderson v Teboneras and Anor [1990] VR 527. So should inflexible rules about spousal provision.' 15 In Hertzberg v Hertzberg [2003] NSWCA 311 provision ordered by Acting Master Berecry for a widow, second wife of the testator, out of a large estate was confirmed by the Court of Appeal. There was no competing claim or circumstance of need of any will beneficiary. McColl JA said at [35] in the context of the claim of a widow for the matrimonial home (which in this case the claimant owns): 'His Honour's judgment recognised the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors. In this case the situation was exacerbated where, regrettably, the previously affectionate relationship between the appellants and the respondent had, as Acting Master Berecry found, completely broken down following the execution of the deed. Thus the situation in which the deceased may well have contemplated he had left the respondent appeared to have altered.' The statement in the first sentence of this passage should be understood in its context of a claim in a very large estate where there was no competing claim based on need. 16 In Sayer v Sayer [1999] NSWCA 340 at [34] Sheller JA (with whom Davies AJA concurred) accorded primacy to the claim of a widow (of a second marriage) over the claim of a granddaughter who was an eligible person 'in the circumstances and in accordance with prevailing community standards'. This does not in my opinion express any general principle of paramountcy. 17 In Cropley v Cropley [2002] NSWSC 349 at 56 Barrett J said: 'When it comes to claims by adult children, it can be said at once that, if there is a competing claim by the widow and all claims cannot be fully accommodated, the widow's claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in aid of an adult child. That a widow's claim to maintenance out of the estate of her deceased husband is a claim which is 'paramount' and 'of a high order' is borne out by the judgments of Sheller JA in Sayer v Sayer [1999] NSWCA 340 (Davies AJA concurring) and Blackmore v Allen [2000] NSWCA 162 (Priestley JA and Foster AJA concurring). In the former case, Sheller JA described the relativities between the claims of the widow and those of an adult grandchild applicant (Francesca) as follows: "In my opinion, the question is whether [the grandchild] has satisfied the Court that there is, in the circumstances and in accordance with prevailing community standards ( Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 46), sufficient in the estate to provide for the widow's proper maintenance and advancement in life and yet leave some amount out of which provision can be made for her."' This was accepted as an accurate statement of the law by Palmer J in Latimore v Latimore (2003) NSWSC 364 at [59]. At [57] Barrett J proceeded to approach the applications according to the two-stage approach described in Singer v Berghouse (1994) 181 CLR 201. 18 In my respectful view there is an inconsistency between an approach, in the context of competing claims, to the claims of widows as paramount, and the application to the facts and circumstance of each case of s 7 and the approach established by Singer v Berghouse . Preconceptions and predispositions are likely to be the source of inadequate consideration of the process required by the Family Provision Act 1982. 19 In the application of the test in s 7, and of the exposition thereof in Singer v Berghouse by Mason CJ, Deane and McHugh JJ at 409-411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse , in full and with reference to the instant facts. Defeat of the opponents' claims does not necessarily follow from a demonstration, which the claimant can make, that all her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have to be weighed, and they too have their needs and merits." 50Interestingly Ipp J adopted this in para 1 of his judgment and also said: "1 I agree with Bryson JA, for the reasons his Honour has stated, that 'it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse (1994) 181 CLR 201...' 2 I would add, however, that 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. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others." 51Stein AJA agreed with both judges. 52Of importance here is the widow's situation. She was married for 20 years but she and the deceased had no children, no doubt because the deceased did not want further children. She works in a modest job, earning sufficient for her support but not a lot else. She will have to continue to work for at least another 16 years before she can retire and her very modest superannuation will probably increase somewhat by then. 53It is of course necessary to see how the plaintiff says that she has been left without adequate and proper provision for her maintenance, education and advancement in life. 54The plaintiff submits that she should have the home free of a mortgage, a car that she can use, a small capital sum for contingencies and two items of jewellery. The trouble is that there is little left in the estate. After payment of debts, there will only be $220,000 cash left, of which Erin has already received $50,000. The other assets are mainly the cars. 55There was some evidence that two-bedroom units could be purchased in the area close to the plaintiff's work for under $300,000. If the plaintiff were to sell the present four-bedroom home and sought to purchase a two-bedroom home, the cost would be as much, if not more than, what she would get on a sale of the present home. 56Although Erin has to be careful with her health, she has good qualifications and has the opportunity to make her way in life in good employment. 57Alexis has more difficulties but fortunately she has a husband at the moment. 58The smallness of the estate means that all parties' expectations have to be reduced. 59In my view, it is appropriate that the plaintiff shall have the house absolutely, without a mortgage, and the 2005 Mercedes C200 Compressor. She has some savings already and I have no doubt that these will increase over the coming years. 60This will leave the remaining Mercedes cars and cash for the two defendants subject to payment of the plaintiff's costs.

Orders 61The orders that I make are as follows:

In lieu of the provisions of the will of the deceased made for the plaintiff, that the plaintiff receive a bequest of: (a) the deceased's house at Milperra, free of any mortgage; (b) the 2005 Mercedes C200 Compressor; (c) the deceased's diamond ring, gold drop cluster with chain.
In lieu of the provision for residue, that the two defendants receive the residue equally. 62Subject to any submissions, I will order that the plaintiff's costs on the ordinary basis and the defendants' on an indemnity basis be paid or retained out of the estate of the deceased. 63I order that the exhibits be returned and that the parties are directed to retain the exhibits for four months.

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: 15 December 2011

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