The first plaintiff Marino Zugan ("Marino"), for whom Mr M Fantin of counsel appears, is the son of the late Anna Zugan ("Anna"). The defendant Angela Zugan (nee Koppel) ("Angela"), for whom Mr A Rogers of counsel appears, is the daughter of Anna. Anna's husband, Emilio Zugan ("Emilio"), died on 21 February 1997. The second plaintiff Mr Suseli, who claimed to have been Anna's de facto partner for a number of years, abandoned his claim on the morning of the first day of the hearing.
By will dated 27 January 1999 Anna appointed Angela and Marino as joint executors and trustees of the will and provided that her estate is to be divided and distributed equally between Angela and Marino. Probate of the will was granted solely to Angela on 13 December 2013. The only substantial asset of the estate is a property in Fairy Meadow ("the Property") and the estate has a net value of between $500,000 and $510,000 before deduction of legal costs and costs incurred by Angela in defending these proceedings and the costs of sale of the Property. The net value of the estate for distribution is approximately $400,000- $410,000.
By Further Amended Summons filed 9 December 2014 Marino claims the following relief:
"1. An order that provision be made for the first plaintiffs maintenance, education and advancement in life pursuant to section 59 of the Succession Act 2006 out the estate and/or notional estate of Anna Zugan late of Fairy Meadow, deceased.
….
3. An order that the time for the second plaintiff to commence these proceedings be extended up to and including the date of filing of this Amended Summons.
4. Any other order the Court deems fit in the circumstances.
5. Costs."
There is no dispute that Marino is an eligible person within the meaning of s 59 and 60 of the Succession Act 2006 (NSW) ("the Act").
Marino relied on a number of affidavits one filed on 28 May 2014 and others dated 10 September, 27 November 2014, 5 February and 9 April 2015. He was cross examined on a number of matters but the following matters concerning his position were not in dispute:
1. he is currently 60 years of age
2. he has a degree in Bachelor of Arts, he holds a welfare work certificate and a fitting and machinery certificate. He has worked in various roles as a counsellor but has for more than fourteen years been employed as a customs officer
3. he has two children for both of whom he pays child support
4. he has no property and little savings
5. in the future he will need to pay for rental accommodation (currently $380.00 per week)
6. he has a range of medical conditions:
1. depression
2. gout
3. hypertension
4. prostatomegaly
5. sensorineural deafness (bilateral moderate)
6. rotator cuff syndrome and supraspinatus tendon tear
1. he needs some dental work
2. he is working as a customs officer for the Australian Customs and Border Protection Agency. He foreshadows that he will only be able to work for another eight years
3. he has superannuation funds of $230,000 which will be available to him on his retirement
4. he was made bankrupt on or about 7 November 2008 and was discharged from bankruptcy on 17 December 2014
I have referred to the fact that Marino was made bankrupt in 2008. He was a bankrupt at the time of the testatrix's death. Present in Court on the first day of the hearing was a solicitor who acts for Mr Giles Woodgate who was Marino's trustee in bankruptcy until the time of Marino's discharge in 2014. On the second day of the hearing Mr Price of counsel appeared on behalf of Mr Woodgate. Mr Woodgate claims that Marino's half interest in the estate as provided for by the will is in fact required to be paid to Mr Woodgate for the benefit of Marino's creditors whose claims exceed the present estimated value of that half share in the estate. Mr Woodgate accepts that were the Court to make provision for Marino beyond the interest granted to Marino in the will that provision would not be to the benefit of Mr Woodgate on behalf of the creditors.
Mr Fantin explained that Marino's position is that Marino rejects the trustee's assertion that the trustee is entitled to the 50% share of the estate.
Mr Rogers explained that his client does not challenge Marino's claim to be entitled, to the exclusion of Mr Woodgate, to the 50% of the estate and he obtained instructions from Anna to the effect that she would wish, at the determination of these proceedings, to pay Marino's share of the estate into Court so that the trustee and Marino can obtain a determination by this Court as to who is entitled to Marino's half share.
Following the indication of the agreement of the parties to that course Mr Price departed. Subsequently Mr Price sought by correspondence agreement that he be informed as to the form of orders sought by Marino, and Mr Fantin agreed to provide Mr Price with a copy of the orders proposed by him.
I raised with the parties a concern as to whether the Court would need to form a view on whether the trustee is entitled to Marino's share under the will in accordance with, in particular Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR, and whether that would be relevant in considering the adequacy of the provision made for Marino. Mr Rogers submitted that since it is Marino's case that he is not required to pay over his entitlement under the will and since Angela does not contest that assertion the Court should proceed on the basis of the case presented on behalf of Marino, namely that the 50% of the estate which will be received by him will not be required to be paid over to the trustee. Mr Rogers submitted that Marino "presents his case on the footing that the $200,000 is not the entitlement of the trustee" and that I should not "go behind that and, in effect…. [r]un a case…. the plaintiff itself is not putting" (T135.35- 136.10). Mr Fantin did not say otherwise in response: see T134.35- T137.37. Whilst I find Mr Fantin's confidence surprising in the light of Schultz and even more so given the contents of the outline of submissions of Mr Autore, Marino's solicitor, dated 28 October 2015 which seem at least on one reading to accept that Schultz did apply, I do not think it is open for me to conclude that Mr Fantin is wrong and to fashion a case for the plaintiff that his counsel did not run. Accordingly I proceed on the basis, advanced by the plaintiff, that he is entitled to 50% of the estate, an amount of at least $200,000.
It follows that the plaintiff will receive at least $200,000 and that this will alleviate the financial distress which he claims to find himself. When he retires in eight years in accordance with his intentions he will receive $233,000 super plus whatever additional accrual to his super another eight years of earnings will produce.
The defendant is 57 years old. She relied on affidavits dated 10 October 2013, 12 March 2015, 28 November 2014, 9 October 2014 and also affidavits from her sons. She works two days a week as a clerk in a hospital earning approximately $17,000 gross and $15,000 net per year. She owns a modest car worth about $5,000 and owns a motor cycle worth about $1,000. She is clinically deaf in one ear and correction to compensate for a missing stirrup could cost up to $20,000 and she also needs dental work. She also has had trouble with her eye sight, but no surgery is planned in that regard.
The defendant owns no property. Her partner (Wayne, aged 47 years) owns the house in which they reside in Melbourne and an investment unit in Geelong. Wayne earns $100,000- $110,000 per year and has $50,000 in superannuation benefits. He owns a vehicle worth about $3,000. The defendant has two adult sons one of whom lives in the Geelong apartment without paying rent but paying for electricity. The defendant has $50,000 in a bank account. She has approximately $50,0000 in superannuation.
There were problems with the plaintiff's evidence concerning his financial situation. In his affidavit he:
1. did not state what his annual income is
2. spoke of loans obtained from friends but did not specify the amounts
3. did not state what superannuation monies have accrued in his favour
The absence of this material was drawn to Mr Fantin's attention as a significant problem on the first day of the hearing. On the second day of the hearing Mr Fantin sought to tender a bundle of documents to which Mr Rogers objected. Mr Rogers indicated that if the documents were admitted over his objection he would need the opportunity to cross examine Marino further and to adduce evidence from Angela in chief that could not be comprehensive. Strictly, the beneficiary under a will who makes no claim for a family provision order does not need to provide details of his or her financial position but it is common to do so where the plaintiff relies on his lack of financial strength as a basis for his (or her) claim. Since the plaintiff did not provide any details of his earnings and superannuation, Angela had not reponded with any of her details.
Within Exh B is a tax return for 2014 year end which shows Marino having earnt, in that financial year, approximately $80,000. Another document in the same bundle suggests that Marino obtains a net figure of only $46,000 from his employment with Border Patrol. As Mr Rogers pointed out, there is a significant discrepancy between the two figures and he submitted that the Court should be wary of accepting, in the absence of payslips or other wage records, that Marino is earning anything less than $80,000 having regard to the defendant's inability to make its own enquiries due to the failure of Marino to provide information at an earlier time. I accept Mr Rogers' submission, and would add that the proof of Marino's financial position was in his own hands and should be weighed according to the power of the party to produce it (and contradict it) in accordance with Blatch v Archer (1774) 1 Cowp 63 at 65; (1774) 98 ER 969 and see Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64 per Jordan CJ (with whom Davidson and Halse Rogers JJ agreed), Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371 per Dixon CJ and Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [294] per Hodgson JA.
The document which shows Marino earning $46,000 net per annum is the first page of Exh B. It is a financial summary prepared by a Lifeline counsellor based on what Marino has told him and it shows that Marino is spending $125 per week on storage. Marino accepted that he would be able to sell what is in storage and cease to incur that cost. Marino is required to pay $536 per fortnight for the maintenance of his two children (see second page of Exh B). For the reasons identified I am unable to accept that Marino's gross earnings and hence net earnings are properly reflected in that document and proceed on the basis that he earns $80,000 gross a year from his employment and that his net earnings are greater than $46,000- Mr Rogers estimated $62,000 and Mr Fantin did not challenge that calculation: T141.
The first question which must be determined is whether by the will the testatrix has not made adequate provision for the proper maintenance, education or advancement in life of Marino. If the answer to that is that the testatrix has not made adequate provision the next question is what provision should be made. Counsel were agreed that there is a two stage process and that in considering the first question it was appropriate to look at the circumstances identified in paragraph s 60(2) of the Act which are the matters which would also need to be considered in determining what provision should be made. This agreement obviates the need to enter into the potentially contentious field which I endeavoured to summarise in Burke v Burke (2014) NSWSC 1015 [29]- [40] and which was discussed further by the Court of Appeal in Burke v Burke [2015] NSWCA 195 and see Underwood v Gaudron [2015] NSWCA 269.
In his closing submissions Mr Fantin identified as relevant to Marino's case the following subparagraphs of those listed in s 60(2) of the Act:
"(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate….
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant."
There is no dispute on the part of Angela that Marino has over the years assisted with work on the Property. There is a question as to the utility of some of that work but in any event there is evidence from Angela concerning work and similar contributions made by her and her former husband and her sons, as Mr Fantin conceded at T128.42.
Much of the affidavit material and some of the cross examination of Marino went to the question of storage of items from Marino's cleaning business that failed and various trucks in need of repair. Marino conceded that he could not remove the material from the Property because he had no place to take it to and given his bankruptcy the items became part of his bankrupt estate until the trustee disclaimed any interest in them. It was put that Marino is entitled to reclaim all of the goods owned by him and that he should be given access by Angela to the Property to enable him to collect those goods and this was not disputed. There were, in the affidavits, complaints concerning the fact that Angela's two sons lived in the Property for a time and one of them continues to do so rent free. Marino claims he could have rented out the Property for $150 per week and he claims that he is entitled to a contribution for that: see T124.17- 18. The latter point would appear to be a claim that the estate has not maximised the return on the real estate controlled by the defendant as executor which would be to the detriment of both Marino and Angela and it does not take into account the fact that Marino has stored equipment at the Property at no charge.
Mr Rogers contended that having regard to
1. the small size of the estate
2. the fact that both were dutiful children with a good relationship with the testatrix although recognising that Angela has lived in Victoria for a lengthy period, and that both contributed to the welfare of their parents, that both obtained benefits such as small loans, and rent free accommodation at different times (and in the case of Marino, storage of his chattels), that Angela's sons Dustin and Tristan lived in the Property
the provision of 50% to each of Marino and Angela is entirely unsurprising and reflects what would be expected of the testatrix.
I accept that Angela is better off than Marino because she has a partner who owns a house and a unit and does not appear to have difficulty making ends meet but she earns far less per annum than Marino, has far less superannuation and has far less prospect of building up superannuation substantially before her retirement because of her low salary. She does owe her son Tristan $8,000 of which $3,000 is an estate expense: see T89.15 and she owes tax of $5,000: see T88. She has a hearing deficit and dental issues just as Marino does. Whilst he has more medical issues than her, his medical problems do not impede him from earning a regular full time salary.
To the extent that Marino has had financial difficulties they will be much alleviated by the receipt of 50% of the estate.
Mr Rogers submitted that the function of the Court is not to achieve an overall fair disposition of the estate or equity. Support for this submission can be found in Bryson J's comments in Gorton v Parks (1989) 17 NSWLR 1 at 6 and Stephen J in Cooper v Dungan (1976) 50 ALJR 539 at 542 reminding lower Courts to be vigilant in guarding
"against a natural tendency to reform the testator's will according to what it regards as a proper total distribution of the estate rather than to restrict itself to its proper function of ensuring that adequate provision has been made for the proper maintenance and support of an applicant"
and see Stott v Cook (1960) 33 ALJR 447 Taylor J at pp 453- 4, Vigolo v Bostin [2005] HCA 11 at [10], Alexander v Jansson [2010] NSWCA 176, 20 per Brereton J with whom Basten JA and Handley AJA agreed.
[2]
Conclusion
In my view that it has not been established that even, looked at today (as the Act requires), there has not been adequate provision for Marino, an adult son of 60 years of age who is working, on a salary of $81,000 per annum with $230,000 of superannuation benefit, and who will be able to work for another eight years. In my view the provision of equal distribution to Marino and Angela "conforms with what is considered to be right and proper according to contemporary community standards" (see Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19, Vigolo v Bostin and Andrew v Andrew [2012] NSWCA 308. The first plaintiff's summons should therefore be dismissed.
I will hear the parties on costs and there will need to be consideration of the precise form of orders to be made in relation to the payment into Court of Marino's share of the net proceeds of the estate. Mr Woodgate's barrister should be given an opportunity to be heard on the form of orders.
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Decision last updated: 02 December 2015