MARINIS v JEWELLER

COUNSEL : Appellant: J R Wilson Respondent: M A Gilmour SOLICITORS : Appellant: Slattery Thompson Respondent: Jeweller Peetz CATCHWORDS : Family Provision Act 1982 - de facto spouse - adequate provision ND DECISION : Orders given 9 October 2000; Reasons given 17 October 2000; Appeal dismissed with costs

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40228/2000 SC 4632/98

MASON P GILES JA ROLFE AJA

JUDGMENT 1 THE COURT: At the conclusion of the hearing on 9 October 2000 this appeal was dismissed with costs. Our reasons follow. 2 The appellant failed in a claim under the Family Provision Act 1982. 3 The deceased died in 1997 aged about 93. Following the expulsion of the Greeks from Smyrna (Izmir) she lived in Egypt, then in Greece, before moving to Australia in 1958. Her husband died in 1960 and she had no surviving close relatives. 4 Her will was made in 1965. She appointed the appellant her executor and gave him £500 absolutely plus £600 to expend in erecting an appropriate head stone. (In fact the appellant spent $8,000 for that purpose.) She gave the residue to her brother George with a gift over, in the event of his death, to his son and daughter. George died in 1979. 5 Accordingly, the bulk of the estate passed under the will to the deceased's niece and nephew. Their ties with the deceased were primarily familial because they have always lived in Greece. There were however visits to the deceased in Australia and contact was maintained through telephone and letter. The deceased sent money to her Greek relatives, visited them in 1975, and she was godmother to each. The nephew, Dimitrios Sclavis was born in 1940. He has a dependent wife and two children and he lives in Athens in circumstances that are hardly affluent. The niece, Alexandra Sclavis was born in 1944 and her present financial circumstances are extremely strained. 6 Probate of the will was granted to the appellant. When he instituted proceedings under the Family Provision Act 1982 the respondent was appointed to represent the interests of the principal beneficiaries. 7 The deceased's estate at trial (March 2000) included: An apartment at 10/136 Darlinghurst Road, Darlinghurst valued at $210,000; A half share with the appellant in an apartment in Athens, each share being presently valued at $85,000; Cash c$1500. 8 The respondent asserted that there are additional assets of value, retained by the appellant. As the Master pointed out in his judgment, proceedings under the Act are not the proper way to resolve such disputes. 9 The costs of a 4½ day trial were about $100,000. 10 In 1960 the appellant commenced living as a boarder in the deceased's apartment at 10/136 Darlinghurst Road. That is still his home. 11 The nature of the relationship between the appellant (born in 1935) and the considerably older deceased was and remains a hotly contested issue. The appellant claimed relief under the Act on the basis that he was an "eligible person" as the de facto spouse of the deceased at the time of death (par (a)) or alternatively as a partly dependant member of the deceased's household (par (d)). Master McLaughlin was satisfied that the plaintiff was the de facto spouse of the deceased at the time of her death and it was accordingly unnecessary to address par (d) of the definition of "eligible person". He was satisfied that for a period of 37 years the couple had maintained a joint domestic establishment at the deceased's apartment, that they had a sexual relationship, that there existed a very considerable degree of mutual commitment and mutual support between them, that they acquired together an investment property in Athens, and that throughout the latter part of the deceased's life she relied upon the appellant for all physical care and support. 12 Most of these facts and the conclusion that the appellant was an eligible applicant were challenged by notice of contention. It was unnecessary for those challenges to be resolved in the appeal. 13 The appellant's claim was dismissed because the Master was not satisfied that he had been left without adequate provision for his proper maintenance. Specifically, he rejected the appellant's submission that adequate provision required that unit 10 should be transferred absolutely to the appellant. 14 These were the ultimate conclusions which are challenged in this appeal. Subject to an argument concerning one asserted error of fact, the appellant accepts that the principles that govern appellate review of discretionary decisions apply (see Singer v Berghouse (1994) 181 CLR 201 at 212). 15 The appellant led no evidence as to his current living expenses. Rather, attention was concentrated upon his capital assets and, to a lesser degree, on the extent to which he had been enabled to accumulate them in consequence of living rent free in the deceased's unit from the early 1960s. 16 The appellant came to Australia in 1956 when aged 21. He entered the deceased's residence as a lodger in 1960. As indicated, the Master concluded that a sexual and de facto relationship commenced soon after, albeit that it was kept from the deceased's Greek relatives (for fairly obvious reasons). 17 The appellant was a fitter by trade. During his working life he had various jobs, including that of foreman in the canning department at Waverley Brewery. He took redundancy in 1983 (when aged about 48). The household had access to rental income and (from 1964 onwards) the deceased's pension. 18 In 1963 the appellant purchased an investment unit at Elizabeth Bay, subject to a mortgage. This was sold in 1979. In 1974 he purchased a property at Lewisham. The mortgage on this property was discharged in 1984 and the property, presently valued at $500,000 provides an income stream from rental. 19 In 1980 the appellant purchased Unit 9/136 Darlinghurst Road, Darlinghurst. It is immediately adjacent to the deceased's unit, similar in value to it (c$210,000) and generally similar in amenity. 20 At trial the appellant's principal assets were: Unit 9/136 Darlinghurst Road $210,000

Money in bank accounts $ 45,000 21 The properties of the appellant at Lewisham, and Darlinghurst and Athens provide the appellant's present income stream. Subject to allowable expenses, the local properties produced a net profit of $23,696 in 1997-1998. Currently the Sydney properties produce $665 per week for the appellant. Retention of these properties also offers the appellant capital growth, especially since they were acquired before the imposition of capital gains tax. To date the appellant has seen fit to retain them and, as indicated, he placed before the Court no evidence as to his income needs as regards his present or future living requirements. Nor was there any exploration of the impact of the appellant turning 65 in January 2000 as regards his own pension entitlements. 22 In 1979 the appellant and the deceased purchased an apartment in Athens in equal shares. Each contributed to its acquisition from their savings. The present value is $170,000. It has been rented for some time. 23 Not long before the deceased's death, the appellant drew sums totalling $30,000 from her bank account, thereby leaving little over $1,000 in that account. The appellant gave evidence that he did this with the authority of the deceased and that it represented proper reimbursement for expenses that he had incurred for the household. There was an issue about this at trial. It was also pointed out that the appellant has not paid any rent on account of his continuing residence in the deceased's unit since her death in 1997. 24 The rights and wrongs in relation to the matters referred to in the preceding paragraph were not the subject of clear findings at trial. What is clear is that the Master addressed the question of the appellant's present need for support from the estate on the basis that the appellant would retain the cash which he withdrew from the deceased's bank account during her final days and would not be required to account to the estate for the use or occupation of his long time family home, presumably up to the time when it is sold (as it would have to be if the order below stands). During the appeal the respondent informed the Court that the matter should continue to be addressed on this basis, at least unless and until the Court was minded to overturn the Master's decision. 25 The Act prohibits the Court from ordering provision out of an estate unless satisfied of various matters (s9(2)). The Master was not satisfied. There is necessarily an element of broad judgment involved in this and that explains why the High Court has endorsed the proposition that the principles governing appellate review of discretionary decisions apply. 26 On this basis we were not persuaded that the Master erred in his conclusion, especially bearing in mind the realisable assets available to the appellant, the likelihood that the arrangements under which the appellant lived with the deceased assisted him in building up his own assets, and the absence of evidence as to his present income and outgoings or his intentions or needs for the future (cf Singer at 213). The Master was also entitled to pay some regard to the competing claims of the Greek niece and nephew as he did. We would reject the appellant's submission that adequate provision by a deceased person requires the deceased to ensure that an eligible person must be provided for to such a level as would ensure that his or her available assets are not reduced in consequence of the death and that the eligible person should not be obliged to re-arrange or re-organise his or her available assets. 27 In many cases, adequate provision for a surviving spouse will require that the spouse continue to have access to the "matrimonial home". But this is not a universal proposition. The failure to make unit 10 available to the appellant absolutely (as submitted at trial and on appeal) or alternatively, for the appellant's lifetime (as submitted on appeal) does not constitute appealable error in the particular circumstances of this case. There was no evidence of special attachment to Unit 10. Unit 9 was available as was other accommodation that the appellant might decide to acquire or rent following the winding up of the affairs of the deceased. 28 In par 14 above we referred to an additional submission, to the effect that the Master made a particular factual error in the course of his judgment which affected his ultimate determination. In par 67 he said this: It seems to me, however, that there is something strange, illogical, and even unreal, in a person who has assets totalling in value almost $900,000 claiming he has been left without adequate provision, to the extent that he must receive a further asset (being Unit 10) having a value of $210,000. That would mean that, in the event that the plaintiff were successful in his claim, he would then have assets totalling well in excess of $1,100,000. It is all very well for Counsel for the plaintiff to say that if it became necessary for the plaintiff (as was suggested on behalf of the defendant) to move into Unit 9, his income would be significantly reduced. But, if the plaintiff, in such circumstances, were to dispose of the Lewisham property and invest the proceeds of sale of about $500,000, those proceeds would, even at a conservative 5 per cent interest, return to him $25,000 a year. Thus his income would then total almost $40,000 a year, an amount considerably greater than the income which he is presently receiving.

29 The appellant submitted that the words "in such circumstances" refer to the immediately preceding sentence with the consequence that the Master assumed that the appellant could concurrently have the benefit of Unit 9 as a residence and a stream of rental income. The judgment must be read as a whole. In par 65 the Master recorded the rent of Unit 9 as $280 per week, ie $14,560 per year. In paragraph 66 he recognised that if the appellant had to leave Unit 10 and reside in Unit 9 he would lose the benefit of that rent. The "circumstances" to which the Master was referring in par 67 were clearly those posited in the first two sentences. The hypothesis in the fourth sentence and the conclusion in the fifth sentence clearly, on a reading of the whole of the judgment, proceeded on the basis that to accede to the appellant's submission could lead to a situation where he had a home, viz Unit 10; interest income from the proceeds of the sale of the Lewisham flat of $25,000 per year; and rental income from Unit 9 of $14,560 thus giving an income of "almost" $40,000 a year. The appellant's assertion of error in par 67 must therefore, be rejected. 30 For these reasons we were not persuaded that the Master erred in his ultimate determination. It was therefore unnecessary to address the respondent's contention that the appellant was not an eligible person in any event. 31 There was a belated application for indemnity costs by the respondent. We were referred to a settlement offer made on 13 June 2000, ie during the pendency of the appeal. The offer was not expressed in the form of a Calderbank offer, although that does not preclude it being taken into account on the issue of costs (cf Evidence Act 1995, s131(2)(h)). 32 The appellant has failed to obtain a result better than the offer. The offer was made some three and a half months before the hearing of the appeal by which time, presumably, a substantial portion of the costs of the appeal had been incurred and were incurred whilst the appellant was reasonably entitled to consider the offer. It is necessary for parties to give serious consideration to such offers. Parties who choose to ignore them and do not receive a better result should not assume that an indemnity costs order will not be made. On the other hand parties wishing to make offers, on which reliance for such an order can be placed, should do so early before heavy expense is incurred. 33 In the present case the circumstances to which we have just referred, coupled with the fact that it could not be said that the appeal was completely hopeless, lead to the conclusion that a proper exercise of discretion does not demand a special order for costs. *************

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