Solicitors:
Hancock Alldis & Roskov (plaintiff)
Marsdens Law Group (defendants)
File Number(s): 2014/235757
[2]
Judgment (ex tempore)
HIS HONOUR: The deceased Arsen Mickovski died on 22 August 2013 at the age of 78 leaving a will dated 29 June 2012, probate of which was granted on 27 July 2015 to the defendants Lila Gesovska and Gorica, also known as Jenny, Subotic, two of his daughters.
His estate comprised a house at Tempe said to be worth $1.05 million, although there was also a small amount of cash, it has since been consumed in testamentary expenses. The liabilities of the estate, as deposed to in the administrators' updating affidavit, comprise:
1. overdue council rates in respect of the Tempe property of $10,714.47;
2. a debt owed to the administrators for funds advanced by them for surgery for their father, the deceased, of $16,000;
3. legal fees for obtaining probate of $5,642.85;
4. the filing fee for the probate application of $1,899, which was advanced by the executors; and
5. the cost of refunding to the executors and their sister advances by them for the purposes of a monument for the deceased of $15,443.60.
In all, these liabilities total $49,699.92.
The executors' solicitor has estimated the defendants' costs of these proceedings on an indemnity basis at $52,000. I propose to fix those costs in the sum of $50,000. That means that in all, the estate liabilities, making no provision at this stage for the plaintiff's costs, amount to some $100,000, which would leave a net estate of $950,000 out of which, inter alia, provision would have to be made for the plaintiff's costs of these proceedings if the plaintiff succeeds in obtaining an order.
By his will, the testator left the household contents to his widow, the plaintiff Ljubica Mickovska, and left her a life estate in the Tempe property with provision that, at her request, the executors may sell that property and purchase another in its place. The residue or the remainder was left to the deceased's four children - the defendants, his first daughter Nada and his son Peter - in equal shares.
The plaintiff and the deceased were both born in Macedonia, the plaintiff on 1 March 1932, and the deceased on 25 August 1934. They were married on 18 February 1959, and their first child Nada was born later that year. Their second child Lila was born in 1961, and their third Gorica (Jenny) in 1963. From their marriage until about 1970, the deceased worked on a seasonal basis in the forestry industry in Macedonia. The plaintiff worked on her parents' farm. In 1970, searching for more regular employment, the deceased emigrated to Australia. In the same year, their fourth child Peter was born.
The plaintiff and the four children remained in Macedonia until 1975. The deceased found employment in Australia and, after residing in a number of boarding houses, in 1974 acquired the property at 30 Stanley Street, Tempe, subject to a mortgage. The following year, on 10 July 1975, the plaintiff and the children travelled to Australia.
From those facts, it is self-evident that at least between 1970 and 1975, the plaintiff was the exclusive home-maker and parent for the parties' four children. Shortly after arriving in Australia, the plaintiff also obtained employment. Together, the parties paid off the mortgage, which was discharged it seems in about 1979. The plaintiff remained in employment until 1989, when following a work injury, she retired and received a small lump sum. The deceased remained in employment until sometime in the late 1990s, when he took a voluntary redundancy and also received a lump sum.
During this period, it seems likely that further assets in the form of cash or savings were acquired, and it seems likely that a substantial portion of them was either advanced or given to or taken by Peter, who lost some of them as a result of dealings with one of his sisters which did not turn out as anticipated. However, those events are of minimal significance to the present issues.
It is also clear that, at least from about the time of the deceased's retirement and quite possibly earlier, the marriage was not a happy one. The deceased drank often and considerably, particularly when affected by alcohol, he could become angry and violent. The picture that emerges from the evidence is that all four children, as well as the plaintiff, suffered at his hands in this way. The picture also emerges to an extent of a plaintiff, who reciprocated at least some of the vitriol that was addressed to her by the deceased.
A flavour of the relationship is conveyed in a conversation that the plaintiff says she had with her daughter Lila following the deceased's death concerning the acquisition of a cemetery plot - a conversation which Lila did not deny in her evidence - and in the course of which, in response to a statement by Lila that Gorica had purchased cemetery plots for herself and her father, the plaintiff said: "What about me. I want to be buried next to your father. We fought continuously in life, we may as well be next to each other in death and continue to fight for eternity." While, as I have said, it is clear that the relationship deteriorated, was often unhappy, and in all probability the level of cross-contributions between the deceased and the plaintiff to each other's welfare was reduced in later years, the fact remains that, not only in the eye of the law but also in the eye of each other, they remained married. While it may be that from time to time they spoke of divorce, and while it may even be that each of them consulted a lawyer and contemplated it until they discovered it would cost money, they chose to remain married, and they continued to reside in the same home.
In applications for provision out of the estate of a deceased person under (NSW) Succession Act 2006, Ch 3, it is necessary to decide, first, whether the applicant is an eligible person; secondly, whether the applicant has been left without adequate provision for his or her proper maintenance, education, and advancement in life; and thirdly, if so, what provision ought to be made out of the estate for the applicant. While the second of those questions is one of jurisdictional fact which requires an assessment of what in all the circumstances was the proper level of maintenance appropriate for the applicant, having regard to the applicant's financial position, the size and nature of the estate, the totality of the relationship between the applicant and the deceased, including any contributions made by the applicant to the deceased's estate and or welfare, and the relationship between the deceased and other persons who have a legitimate claim upon his or her bounty; and while the third of those steps involves a discretionary judgment in which the court considers all of the facts and circumstances in order to evaluate what provision community standards would require a person in the position of the testator to make for the applicant, the considerations relevant to both stages in the process overlap, and consideration of an application under Ch 3 does not always divide neatly into the two questions, as Callinan and Heydon JJ pointed out in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at 230-231 [see generally Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201 at 208; Vigolo v Bostin at [5], [74[-[75], [112]; Lo Surdo v Public Trustee [2005] NSWSC 1186 at [44]-[50] (Hamilton J); Walker v Walker (NSW Supreme Court, Young J, 17 May 1996, unreported)].
The plaintiff in this case, being the widow of the deceased married to him at the time of his death, is plainly an eligible person, and that requires no further consideration.
The question of what provision ought as a matter of community standards be made for a widow has been addressed in numerous cases, and the obligations of a testator towards a surviving spouse have often been enunciated. The primacy of a testator's obligation to make provision for a surviving spouse has been referred to in Luciano v Rosenblum (1985) 2 NSWLR 65, O'Loughlin v O'Loughlin [2003] NSWCA 99, and Elliott v Elliott (NSW Supreme Court, Powell J, 18 May 1984, unreported) (affirmed by the Court of Appeal in Elliott v Elliott (NSW Court of Appeal, Kirby P, Glass and McHugh JJA, 24 April 1986, unreported)).
In Elliott, the plaintiff was a widow of 79 years of age who had had a happy marriage. Powell J gave the widow the whole of the small estate, and the Court of Appeal indicated that not only was that order within his Honour's discretion, but it was really the only proper order that could be made. In a passage that would later be endorsed by Young J (as his then was) in Court v Hunt (NSW Supreme Court, Young J, 29 October 1987, unreported), Powell J described the testator's duty to his widow of a longstanding and harmonious marriage as requiring, at a minimum, provision of security in her home for the rest of her life and the capacity to change it; an income sufficient for her to live in a reasonable degree of comfort; and a fund for modest luxuries and contingencies. His Honour said:
I take the view, which view I believe is supported by the authorities, that in a case such as this, where the marriage of the 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 the 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 so she has 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 worries; and thirdly, that she has available to her a fund to which she might 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.
Powell J had earlier enunciated a similar description in Luciano v Rosenblum (at 69 to 70):
It is, 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.
This so-called broad general rule was echoed by the Court of Appeal in Golosky v Golosky (NSW Court of Appeal, 5 October 1993, unreported), in which Kirby P (as his Honour then was), with whom Cripps JA agreed, said (at 16) that:
In the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse is provided with accommodation appropriate to that which she or he has been accustomed, and to the extent that the assets available permit, a fund to meet unforeseen contingencies. Consideration of other cases must be conducted with circumspection because of the inescapable detail of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it has been said that, in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse or spouse equivalent is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse or spouse equivalent should be provided as well with a fund to meet unforeseen contingencies (see Luciano v Rosenblum, 69 to 70). A mere right of residence will usually be an unsatisfactory method of providing for a spouse accommodation to fulfil the foregoing normal presupposition.
In Court v Hunt, to which I have referred, Young J said:
In this day and age, a testator who gives only a life estate to his widow and has no other direct claims on his bounty is usually not making proper provision for the widow. At the very least, the testator should consider the fact that, if the widow does survive him for a number of years, the health position will mean that she needs flexibility in her accommodation, and this sort of life estate almost always does not provide it.
In Paton v Public Trustee (NSW Supreme Court, 8 December 1988, unreported), Young J, in dealing with a long but relatively unhappy marriage, said:
Whilst if there was a very large estate, it may be that there would be a different result in an application under the Act between a happy marriage and an unhappy marriage, there is a basic minimum which the community regards as necessary for testators to provide for their spouses where their marriage has been of medium to long duration. Those basic necessities include a secure roof over the remaining spouse's head and at least a small capital sum.
Application of those general guidelines has seen surviving wives frequently given the whole or a substantial part of estates, at least when the estates are not particularly large ones. Such a case was Robertson v Pearce [2010] NSWSC 124, in which the deceased by her will had given her surviving husband a right of residence until his death, remarriage, or entry into a relationship, with remainder to her daughter and grandchildren. Macready AsJ noted that the plaintiff had paid part of the deposit for the purchase of the home, was aged 88 years, in receipt of a pension, and had $140,000 in the bank. His Honour (at [54]-[55]) said:
[54] I appreciate the situation of the defendant and her children. The defendant is in a difficult situation with her husband being out of work and her children are also in very difficult circumstances. Those needs are immediate. But it has to be appreciated the deceased can only provide for all of her dependents if she leaves an estate of a substantial size. This is not the case.
[55] In the circumstances to which I have alluded, because the main obligation of the deceased was towards her partner, and now widower of some 50 years standing, I think the only proper provision is that he should receive the whole of the estate.I am, of course, acutely conscious that there are no general rules of law in this respect, and that as the Court of Appeal has recently pointed out in Burke v Burke [2015] NSWCA 195, such observations are guidelines that may give assistance and provide guidance that are not to be elevated to rules of law.
As Basten JA had said in Chapple v Wilcox [2014] NSWCA 392; (2014) 87 NSWLR 646:
…the real provenance of these "principles" is that they constitute a reflection of community values, being a factual matter, but one as to which reasoned findings of judges with experience in these matters may well provide valuable guidance…
[they] provide a useful touchstone that may be applied with circumspection by judges called upon to ascertain and apply "the feeling and judgment of fair and reasonable members of the community" in cases of the present kind.
They provide the additional benefit of affording a certain amount of consistency in decision-making and indication of expectations and advice to litigants.
In this case, the plaintiff is some 83 years of age. Her health is, if not frail, certainly not good. She has a number of pressing medical requirements. Her English is very limited. Her income is a pension, and her expenses, constrained by that income, are very modest. She was married to the deceased for 54 years, bore him four children, and on any view was the principal home-maker and carer while they were at home. The marriage, at least in its later decades, was, as I have said, not a happy one, but in a 54 year marriage which remained on foot until the end, in which the estate is not large, the quality of the marriage, at least in its latter years, is not of enormous significance.
What is of significance is that by being a home-maker and parent and by financial contributions made to the accumulation of the deceased's estate through her employment, particularly after having arrived in Australia, the plaintiff has made significant contributions of the kind referred to in Succession Act, s 60(2)(h).
Insofar as her present needs are concerned, while her recurrent expenses are, as I have said, modest, she has an ongoing requirement for accommodation, and she has needs for potentially significant surgery.
It has not been suggested that there is any competing need on the part of any beneficiary named in the will - that is, the four children - and unsurprisingly so, since under the will in any event any benefit they might receive is in remainder only. The three daughters, in particular in the later years of their father's life, were able to put aside the history between them and their father and provide very meritorious support for him, including in terms of contributing financially for his surgery and otherwise. But essentially, the objection to the plaintiff receiving what one might ordinarily have expected a surviving spouse of 54 years to receive - being a fee simple in the matrimonial home - was that it was seen as necessary that she be protected from the possibility of making an improvident transaction in favour of the son Peter. No evidence was adduced to show that it was likely that she would embark on any such transaction, and no cross-examination was directed to her to suggest that she might do so. In those circumstances, although it may well be that it was that concern that motivated the deceased to make his will as he did, the evidence does not make good the contention that such protective arrangements are required.
It was also submitted that, rather than a fee simple, the life estate could be modified through a Crisp order which would make more extensive provision in respect of replacement residences, including extending to nursing homes, and providing and imposing an obligation, rather than a discretion, on the executors to purchase replacement accommodation if so requested. While that might well have been an option had a right of residence been proper provision in the circumstances, the concept of not only adequate but proper provision directs attention to the whole of the relationship and the obligations and responsibilities owed by the deceased to the applicant arising out of the entirety of the relationship. It seems to me that community standards in this country, in this day and age, are that where there is not much more to an estate than, as is sometimes said, a house and garden, at least in a long marriage where the estate has been accumulated as a result of the joint endeavours of both spouses over a lengthy period, albeit that one might have been the financial provider and the other the home-maker and parent, then normally the community expects that the surviving spouse will inherit the home. That in my view applies in this case.
I am satisfied that by not providing the plaintiff the fee simple in the Tempe property, the deceased failed to make adequate provision for her, and that she should receive by way of provision the whole of the net estate.
That leaves the practical problem that the estate has the liabilities to which I have referred, and no assets other than the property out of which to fund those liabilities. Unless some other means of funding them can be found - and plainly it is not the defendants' obligation personally to fund those liabilities - then the property would have to be sold in order to provide for them.
The possibility has been raised that, although the plaintiff is a pensioner, the house is unencumbered, and it may be feasible for her to obtain some finance, perhaps by way of a so-called reverse mortgage, on the security of the property, which would enable her to fund the estate to meet its liabilities and take a transfer of the house.
I propose to make orders that will enable this to be explored, and if it does prove feasible, then upon payment to the estate of the sum to which I will refer, the property be transferred to the plaintiff, but otherwise the executors will presumably have to sell the property to meet the estate's liabilities.
The Court orders that:
1. In lieu of the provision of the will of the deceased, the plaintiff receive the whole of the deceased's estate;
2. There be no order as to the plaintiff's costs to the intent that she bear her own costs;
3. The defendants' costs fixed in the sum of $50,000 be paid out of the estate of the deceased;
4. Pursuant to Succession Act, s 66(1)(a), subject to and conditional upon the plaintiff paying to the executors the sum of $100,000 within three months or within such further time as the parties may in writing agree or the Court may on application allow, the defendants transfer to the plaintiff the property situate at and known as 30 Stanley Street, Tempe, being the whole of the land comprised in folio identifier 16/8154;
5. There be liberty to apply on three days' notice in the event of any difficulty arising in the implementation of these orders.
[3]
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: 22 June 2018