Solicitors: Premier Lawyers (plaintiff)
Sessions Legal (defendants)
File Number(s): 2022/318403
[2]
EX TEMPORE JUDGMENT (REVISED)
Counsel for both parties described the circumstances attending this application for family provision as very sad. They were right to do so. That is because the Court must weigh the respective positions of the plaintiff - a 52-year-old non-verbal severely disabled woman - and her mother - an 82-year-old woman now living in a nursing home and suffering from Alzheimer's Disease. That being said, and it is important that it be said, the Court must nevertheless apply legal principle rather than yield to natural human sympathy. Without disrespect, I shall refer to the parties and others by their given names.
Over the course of a more than 50-year marriage the late Luis Oliveira and his wife Felicidade had seven children. One of those children is Maria, the plaintiff. She brings these proceedings out of time under the Succession Act 2006 (NSW) (the Act) for provision from Luis' estate (the Estate), all of which passed under his will to Felicidade. As Luis' daughter, she is an eligible person under the Act.
Maria sues by her tutor Ivo, who is one of her brothers. NCAT has also appointed him as Maria's guardian as to matters of her health and wellbeing. Her financial affairs are under the management of NSW Trustee and Guardian (TAG). The defendant administrators of the Estate are two of her other brothers, John and Luis. They are also Felicidade's enduring attorneys and guardians.
It was common ground that all of Maria's current needs are being met by her NDIS package and Commonwealth pension. The case was argued for Maria on the sole basis that provision for contingencies - ultimately quantified by an open offer at $125,000 - should be made for Maria from the Estate.
Maria's claim will be dismissed. In summary, this is because it fails at every stage due to Maria's circumstances. She is a person who will spend her whole life in care. Even on the most generous view of what an allowance for contingencies might cover, the Court is not satisfied that there is or will be anything in Maria's life that will require such a fund or that cannot be adequately dealt with by recourse to the sources referred to in [15] below.
Mr T J Morahan of Counsel appeared for Maria. Mr D J A Mackay appeared for the Estate. The essential facts, which I set out in these reasons, were either common ground or beyond dispute.
[3]
Contingencies
Because it was central to the arguments, and is dispositive of every aspect of Maria's case, it will avoid repetition if I address the issue of an allowance for contingencies at the outset.
It is not uncommon for awards of further provision under the Act to contain an allowance for contingencies. The concept is also familiar from assessments, for example, for common law damages. Butterworths Australian Legal Dictionary (Butterworths, 1997, p 260) defines a contingency (albeit in tort, but I see no relevant difference from this aspect of succession law) as "an event which may be described as part of the ups and downs or vicissitudes of life, which is not specifically predictable but acknowledged as likely to occur at some time in the lives of most individuals".
In answer to my question during his opening, Mr Morahan put Maria's claim as being for $220,000. When I asked him how this had been determined he said it was something of a "stab in the dark". He made reference to whether or not the NDIS would always be available. Subsequently, he made an open offer that his client would accept $125,000, but was again unable to justify the figure beyond informing the Court that it was an amount proffered in the interests of settlement. In making these observations I intend no criticism of Mr Morahan.
During the course of his cross-examination, I asked Ivo what were the things he was worried about for his sister that might require such a fund. While he said her future needs were very difficult to predict, he referred to the possibility of her needing urgent medical treatment, something to which I return in [14] below. He then went on to speculate, in my view and with no disrespect intended, somewhat fancifully about what might happen if, given the increase in extreme weather events, the house in which Maria lives were to be flooded or the roof blew off. The house is in Padstow.
It may be accepted that specific proof of the likelihood and nature of vicissitudes is rarely required. In the torts field of discourse (where it is often discussed in the context of deductions) the assessment for vicissitudes or contingencies has been described as quasi-discretionary or intuitive: see, for example, Nestle Australia Ltd v McDougall [1998] NSWCA 158. Nevertheless, as the product of the exercise of judicial power, it must be determined rationally and for a proper purpose.
There must be a demonstrable basis both as a matter of reason and evidence for making an allowance for contingencies. In my respectful view, in most cases that is provided by an inference that the Court draws by accepting as not reasonably open to question and common knowledge (see Evidence Act 1995 (NSW), s 144) that the unexpected does happen in the course of life which may require expenditure. Putting it colloquially, it is analogous to "rainy day" savings that a prudent person tries to maintain if they can. So understood, this also explains why, in the absence of specific potentialities being established by proper evidence, such allowances are generally not large and rarely in six figures (although the size of the available estate will always be a matter to be taken into account in making any such award).
In this case I accept Mr Mackay's submission that, even allowing for the hypothetical and largely indeterminate basis of any specific award of additional provision for contingencies, Maria's circumstances do not justify as a matter of principle or on the evidence such an allowance being made. This is because Maria is in full-time care and will remain so for the rest of her life. All her current needs are being met and there is no reason to think that that will change. There is certainly nothing in the evidence upon which I could find the slightest adverse risk concerning the continuation of her NDIS package or her Commonwealth pension and, in particular, whether either of those may in the future become inadequate or disappear.
The difficulty in her case may be demonstrated when some of the hypotheticals usually cited as warranting an allowance for contingencies are considered. The most obvious is medical emergencies. However, in fact, she has already had one for a serious eye infection that tragically cost her the sight of an eye, but the fact remains that all of her care was covered, as one might expect, by Medicare. Maria will never work, so the possibility of having to live through a period of unemployment does not arise. She has no assets of value, so the threat of theft or destruction is not a possibility. Neither counsel, nor the bench, has been able to identify any even remotely likely event that could happen to Maria that would not be covered by her current or similar arrangements.
There are three other reasons drawn from the specific facts of this case as to why I am satisfied she does not need an allowance for contingencies to cover any possible requirement for funds:
1. She has approximately $26,000 under the management of TAG.
2. She will inherit $20,000 under Felicidade's will, which the parties accepted Felicidade no longer has capacity to change.
3. John gave evidence on his own behalf and on behalf of Luis, which I accept as truthful, that if Maria has further need for financial support over and above her NDIS funding then they would make provision for Maria. This assurance was subject, understandably, to ensuring that Felicidade was not put into financial difficulty by the reallocation of any of her funds to Maria. While it was not entirely clear from the evidence whether there would be any legal impediment to them doing so, given that the funds to which John was referring are Felicidade's, in practical terms any difficulty could be resolved, depending on the circumstances, by the consent of all of the siblings as future beneficiaries of Felicidade's estate being obtained, or an application being made to NCAT or this Court.
[4]
The Facts - the Estate
On 2 September 2015 Luis and Felicidade made mirror wills. The effect of those wills in the events which have happened is that Felicidade took the entire Estate. However, Luis having predeceased Felicidade, the effect of Felicidade's mirror will is that the entirety of her estate will, after payment of a $20,000 specific legacy to Maria, be divided equally between the other siblings. It was common ground that Felicidade no longer has capacity to change her will.
The Estate comprises approximately $558,000, $550,000 of which was Luis' refundable accommodation bond from the nursing home in which he was living at the time of his death. His only other asset was cash of approximately $730,000 of which he was joint tenant with Felicidade and which passed to her on survivorship. It was accepted by the parties that no issue of notional estate arose in this case even if the Court were disposed to accede to Maria's application for further provision for contingencies.
[5]
The facts - Maria
Maria is 52 years old. She has a particularly severe form of Down's Syndrome (trisomy 21) and is non-verbal. She lives with a number of other comorbidities, including autism, epilepsy, intellectual disability and alopecia. She lives in a supported share home and has full-time care in that home. She has approximately $26,000 in cash under the management of TAG and all her daily needs are met by her NDIS package and her Commonwealth pension.
[6]
The facts - Felicidade
Felicidade is now 82 years old and lives in a nursing home. She has been diagnosed with Alzheimer's Disease and a number of other comorbidities. John gave evidence that Felicidade is mobile, able to feed and care for herself, showers with assistance and is sometimes able to conduct conversations.
Insofar as her financial situation is concerned, I infer from the evidence that when it became apparent to the family that Luis and Felicidade needed to move into nursing home care in or about 2019, two properties were sold which were held jointly by Luis and Felicidade. The first was the matrimonial home at Marrickville which I was told sold for approximately $1.1 million. From this amount, the $550,000 refundable accommodation bonds were paid for both Luis and Felicidade. Another property at Budgewoi was also sold for approximately $630,000 and it is that sum, with interest and other amounts, that comprised the $730,000 I referred to in paragraph [17] above.
Felicidade has received under Luis' will the $550,000 refund of his accommodation deposit and the cash on survivorship. From that combined fund her annual expenses of approximately $48,000 are being met, being her daily care fees and related matters. The evidence is that if Felicidade lives for another ten years she would require approximately $480,000 to meet her expenses, although that estimate was given without allowing for an increase that might occur as her needs increase over time. The evidence was also that if she lived for another 20 years she would need approximately $969,000 on the same basis, again, not allowing for any increase in her needs over time. Whatever the accuracy of those assessments, there can be no doubt that Felicidade will require an income stream to meet her expenses no matter how long it is that she may live, and there is a realistic prospect that with age and the progress of Alzheimer's Disease her care needs will increase.
[7]
Extension of time
The first issue is whether or not the Court should extend the time within which these proceedings should have been commenced. Section 58(2) of the Act provides:
"An application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown or the parties to the proceedings consent to the application being made out of time."
There was no dispute that on the authorities (see, for example, De Winter v Johnstone (NSW Court of Appeal, unreported, 23 August 1995) the test of whether sufficient cause had been shown required consideration of four matters:
1. Whether the reason for the delay in bringing the claim was sufficient;
2. Whether the beneficiaries under the will would be unacceptably prejudiced by the extension of time;
3. Whether there had been any unconscionable conduct on the part of any relevant person; and
4. The strength of the plaintiff's case.
Mr Mackay candidly accepted both that there was no issue in this case of prejudice to the beneficiary if time were extended, nor was there any suggestion of unconscionable conduct by any party that rose to the point at which it could impact upon the exercise of the Court's discretion rather than being an incident of tensions within the family.
Turning to the reason for the delay in the claim being brought, the relevant chronology may be briefly stated.
Luis died on 1 May 2019.
On 17 May 2019, J S Pinto & Co, solicitors for Ivo, wrote to the Estate's solicitors (Sessions Legal) requesting a copy of Luis' will. This was provided by letter dated 3 June 2019.
On 30 August 2019, Ivo was appointed Maria's guardian by NCAT.
On 14 October 2019, NCAT dismissed an application by Ivo that he be appointed Felicidade's guardian and for review of the enduring powers of attorney that she had granted to John and Luis.
The limitation period under the Act expired on 1 May 2020.
On 8 July 2020, Sessions Legal wrote to Ivo putting him on notice that John and Luis intended to apply for administration of the Estate within 14 days.
On 21 July 2020, Ivo emailed Sessions Legal including "Please proceed with your proposed application for Administration and provide me with date of hearing with the supreme court [sic]…. I also put sessions legal [sic] on notice that the proposed sum of monies of $20K allocated to Maria Oliveira is grossly inadequate for her now and in the future". This last statement misunderstood the effect of Luis' will: Maria only received the $20,000 if Felicidade did not survive Luis by 30 days.
On 23 July 2020, Premier Lawyers - whose letter began "We advise we act on behalf of Ivo De Oliveira (and his sister, Maria)… to advise in relation to a Family Provisions Claim.." - wrote to Sessions Legal. The letter sought various information and an undertaking that there be no distribution of the Estate "until resolution of our client's claim".
Sessions Legal replied on 13 August 2020 providing information but not responding to the request for an undertaking.
On 24 November 2020, TAG was appointed as Maria's financial manager.
On 10 December 2020, Premier Lawyers wrote to Sessions Legal saying that "there will be a short delay in the commencement of proceedings as we need to confirm the Tutor…together with a reply as to [TAG's] position".
The reference to "TAG's position" was that under UCPR Part 7 Rule 7.15(3) and (4), TAG had to be Maria's tutor unless it declined or if the Court ordered otherwise.
Also on 10 December 2020, Premier Lawyers wrote to TAG asking if they would act as Maria's tutor, or if TAG declined whether it would consent to Ivo acting in that capacity. The letter concluded "Could you please us [sic] of your position as a matter of urgency as Maria's mother died on 1 May 2019 and the proceedings are thus out of time and need to be commenced as soon as possible".
By letter to TAG on 23 February 2021, Premier Lawyers followed up their 10 December 2020 letter referred to in the previous paragraph.
It appears that TAG replied by email dated 24 March 2021, but that the email was overlooked by Premier Lawyers due to a change of solicitor in their office.
On 9 April 2021, Premier Lawyers wrote to Sessions Legal including "TAG have been extremely slow in responding. We advise we are now in contact with them and await their response".
Letters of administration were granted to John and Luis on 3 June 2021.
On 16 June 2021, Sessions Legal wrote to Premier Lawyers, including:
"…Further to our letter to your office of 13 August 2020, please confirm if your client still intends on making a claim against the estate. We note your client is out of time to make a family provision claim, and all funds pursuant to the Letters of Administration will be paid to your client's mother who resides in a nursing home. Please provide a response within 14 days of the date of this letter….."
On 29 June 2021, Premier Lawyers replied:
"We…confirm our client still intends on making a claim against the Estate. We request you do not distribute the Estate at this point in time. We are awaiting instructions from our client and advice from the New South Wales TAG. We are still awaiting instructions from the NSW TAG clarifying who the tutor will be. Once this issue is clarified we will be in a position to commence proceedings."…
Also on 29 June 2021, Premier Lawyers replied to TAG's email of 24 March 2021 (see [40] above). There was no reply from TAG and Premier Lawyers wrote to TAG again on 23 August 2021. This elicited an email from a client services officer at TAG on 25 August 2021: "Thank you for your patience, I have referred the letter to our legal team for action".
The promise of action did not bear fruit. Premier Lawyers followed up TAG in writing on 31 August 2021 and 21 September 2021. A further letter was sent on 25 October 2021 to which, on the evidence before me, there was no reply from TAG.
The notice of intended distribution was published by the defendant administrators on 1 November 2021 and the Estate funds distributed to Felicidade on 17 December 2021.
On 31 August 2022, Premier Lawyers wrote to Sessions Legal:
"We refer to the above matter and seek whether there has been any distribution of assets? If so, please provide particulars of same. If there has been no distribution or partial distribution, we seek an undertaking that no further distribution will occur pending the resolution of our client's claim, in which we now have instructions to commence proceedings."
Sessions Legal replied to Premier Lawyers on 7 September 2022 confirming the Estate had been distributed and referring any further correspondence to John and Luis.
The proceedings were commenced by Ivo on 25 October 2022, more than two years out of time.
Had the Court not taken the view which it has concerning the prospects of Maria's case by reason of the issue of contingency, this is a case in which the Court would have extended the time for commencement of the proceedings. While the delay is unsatisfactory, I am not persuaded that either Ivo's quiescence after the flurry of activity in 2019 in NCAT or the delays with TAG should be visited on Maria. Given that the present case concerns a disabled person, a degree of benevolence on the part of the Court in the exercise of its discretion would be appropriate, especially where the defendants cannot identify any prejudice to Felicidade if time were extended. However, as I have said, the Court has concluded that the case as it has been brought for an allowance for contingencies must fail. The absence of merit in Maria's case militates against the grant of leave.
[8]
Adequacy of provision
If leave had been granted, the next issue would have been whether the Court was satisfied at the time of the hearing that adequate provision had not been made in Luis' will for Maria's proper maintenance, education or advancement in life (see s 59(1)(c) of the Act).
No provision was made for Maria under Luis' will in the events which have happened. Weighing the competing claims of Maria, whose needs are being met and who has no case for contingencies, against Felicidade's claim - a wife of more than 50 years, and taking into account the size of the Estate, her current circumstances and future needs - leads me to the conclusion that I do not accept that adequate provision has not been made for Maria under Luis' will. In other words, the Court does not make the requisite finding under the Act that would enliven the Court's jurisdiction to make further provision of any kind for Maria.
[9]
Further provision
For completeness, I record that, even if my conclusions concerning leave and adequacy of provision are wrong, the same considerations as I have set out in the preceding paragraph would have led me to the result that in the exercise of the Court's discretion under s 59(2) of the Act, no additional provision for contingencies would have been ordered for Maria.
The summons filed 25 October 2022 will be dismissed.
[10]
Costs
I then heard the parties as to costs. There was no issue that Ivo should pay John's costs.
Mr Mackay sought some of his client's costs on the indemnity basis. He first relied upon a Calderbank offer made on 19 December 2022 in support of an application that John's costs be paid by Ivo on the indemnity basis from the date on which that offer lapsed. I accept Mr Morahan's submission that it was not unreasonable for the plaintiff to not accept that offer when the $50,000 proposed to be paid did not include any payment in relation to John's costs, but expressly proposed that the $50,000 be held for Maria on certain terms.
Mr Mackay then tendered an offer of 27 March 2023 for an even larger principal sum to be held for Maria and which made a separate offer of a contribution towards Ivo's costs. Mr Morahan, with respect correctly, accepted that his earlier submission could not be made in relation to this offer. I accept Mr Mackay's submission that it was unreasonable in all the circumstances for Ivo not to have accepted the offer of 27 March 2023, which was open for acceptance for 28 days.
Having determined this question, I raised with the parties whether there was an issue about whether Ivo should be entitled to indemnity from Maria's estate under management. This issue was taken up in the final orders which are set out in the next paragraph.
[11]
Conclusion
The orders of the Court were:
1. Summons dismissed.
2. The plaintiff is to pay the defendant's costs of the proceedings:
1. on the ordinary basis up to and including 23 April 2023;
2. on the indemnity basis on and from 24 April 2023.
1. On or before 18 September 2023, the defendant is to file and serve full written submissions and any evidence in support of the defendant's application that Mr Ivo De Oliveira, as Maria's tutor, pay any costs the Court has ordered without recourse to Maria's estate.
2. The plaintiff is to file and serve full written submissions and any evidence in opposition to any such application on or before 16 October 2023.
3. Note the parties agree that the Court will then resolve the application on the papers unless the Court or a party otherwise requires.
[12]
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Decision last updated: 18 September 2023