Nelepkopwicz v Permanent Trustee Company Limited and anor

Supreme Court of NSW|2002-11-22

CITATION : Nelepkopwicz v Permanent Trustee Company Limited and anor [2003] NSWSC 362 HEARING DATE(S) : 1,8,15,22 November 2002, 3 February 2003 JUDGMENT DATE : 1 May 2003 JURISDICTION: Equity Division JUDGMENT OF : Master McLaughlin DECISION : (1) I order that the period within which these proceedings may be instituted be extended up to and including the date of the filing of the summons herein; (2) I order that the balance of the distributable estate of the late Ernest Popper ("the Deceased"), being the assets of the estate presently held by the Defendants, less the costs referred to in order 3 hereof and any outstanding costs and expenses of and incidental to the administration of the said estate, be held by the Defendants for the Plaintiff absolutely; (3) I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased; (4) The exhibits may be returned.

CATCHWORDS : Succession - Family Provision - Claim by exnuptial child - Proceedings out of time - Plaintiff a disable person, being intellectually retarded from birth - Financial and material circumstances of Plaintiff - Future needs of Plaintiff - Competing claims of beneficiaries. LEGISLATION CITED : Family Provision Act 1982 David Nelepkowicz (by his tutor Janina Nelepkowicz) (Plaintiff) PARTIES : Permanent Trustee Company Limited (First Defendant) Peter Rodney Karger (Second Defendant) FILE NUMBER(S) : SC 1950/02 COUNSEL : C. Simpson (Plaintiff) M. Meek (Defendants) SOLICITORS : L. Rundle & Co, Solicitors (Plaintiff) Permanent Legal Services (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1950/02 DAVID NELEPKOWICZ -v- PERMANENT TRUSTEE COMPANY LIMITED and ANOR JUDGMENT 1 MASTER: By summons filed on 19 March 2002 the Plaintiff David Nelepkowicz by his tutor Janina Nelepkowicz claims substantively an order for provision for his maintenance, education and advancement in life out of the estate of the late Ernest Popper (to whom I shall refer as "the Deceased"). 2 The Plaintiff is the exnuptial child of the Deceased. His status as such is not disputed by the Defendant. 3 The Deceased died on 11 February 2000, aged eighty. He left a will dated 12 February 1998, probate whereof was on 20 April 2000 granted to Permanent Trustee Company Limited and Peter Rodney Karger, the executors named in such will (who are the Defendants to the present proceedings). 4 The inventory of property discloses that at the time of his death the Deceased's assets consisted of moneys in bank accounts, inscribed stock, and other investments, having a total value of about $240,500. 5 By his will the Deceased gave his household chattels and effects to his daughter, Elizabeth Anne Fairweather, gave a legacy of $10,000 to a friend, and gave the residue of his estate to pay the income therefrom to such of my daughter ELIZABETH ANNE FAIRWEATHER , my granddaughter LYNDA KATHLEEN FAIRWEATHER and my grandson JONATHON BRYAN FAIRWEATHER in such proportions as my Trustees in their absolute discretion shall think fit. 6 The will contained a power of advancement, and then continued, Upon the death of the said Elizabeth Anne Fairweather (or upon my death if she has predeceased me, I DIRECT my Trustees to distribute my residuary estate to such of the said LYNDA KATHLEEN FAIRWEATHER and JONATHAN BRYAN FAIRWEATHER as are living at the date of death of the survivor of my said daughter and myself (hereinafter called the vesting date) and as also attain the age of eighteen (18) years and if both in equal shares absolutely. 7 The will made no provision for the Plaintiff. 8 Since the death of the Deceased the legacy of $10,000 has been paid, the furniture, jewellery and personal effects (having an estimated value of $18,000) have been distributed to Elizabeth Anne Fairweather and the accrued income, in an amount of $7,500, was distributed to Mrs Fairweather on 5 December 2001. The Defendants presently hold the balance of the estate, in an amount totalling about $302,000. 9 It is estimated on behalf of the Defendants that there will be liabilities totalling about $70,000 which must be paid out of the foregoing assets. 10 Further, it will be appreciated, that in calculating the value of the assets presently available for distribution the costs of the present proceedings must be taken into account. Irrespective of the outcome of the present proceedings, the Defendants will be entitled to an order that their costs be paid out of the estate. It was estimated that those costs would total about $37,000, upon the basis that the hearing occupied only one day. In the event that the Plaintiff be successful in his claim, he also will be entitled to an order that his costs be paid out of the estate. It was estimated that those costs would total about $28,400, upon the basis that the hearing would occupy only one day. Thus a total of about $65,500 must be deducted from the net assets held by the Defendants. However, for reasons which will emerge later in this judgment, the hearing did not conclude in one day, but occupied parts of a number of subsequent days. Thus, it is likely that the total costs which must be paid out of the estate will be substantially in excess of $65,500. It is possible that the totality of the costs will be at least $80,000. It would be prudent therefore to proceed upon the basis that the assets in the hands of the Defendant available for distribution will total little more than $130,000. 11 In this regard, it should be recorded that at the outset of the hearing it was stated by Counsel for the Plaintiff that the claim of the Plaintiff is limited to the undistributed assets in the estate. The Plaintiff makes no claim in respect to those assets which have already been distributed (being the cash legacy, the chattels and personal effects, and the accrued income). 12 The Plaintiff was born on 10 July 1974, of a relationship between his mother, Janina Nelepkowicz, and the Deceased. 13 According to the Plaintiff's mother (to whom I shall refer as "Mrs Nelepkowicz") she met the Deceased in the early 1970s at the Eastern Suburbs Leagues Club, where she was working as a waitress. At that time Mrs Nelepkowicz, who was of Polish birth, was divorced from her husband. She had no children. 14 Mrs Nelepkowicz was twenty-eight years younger than the Deceased, who she understood to have been a widower for ten years at the time when she met him. Mrs Nelepkowicz and the Defendant commenced a sexual relationship. The Plaintiff was born at the Crown Street Women's Hospital, the birth being difficult. He suffered brain damage during his birth. According to Mrs Nelepkowicz the Deceased, whom she said had been present at the birth, suggested shortly after the birth of the Plaintiff, "Will you have him adopted?", to which Mrs Nelepkowicz responded in the negative. 15 Although marriage had been discussed between herself and the Deceased both before and after the birth of the Plaintiff, Mrs Nelepkowicz said that the nature of her relationship with the Deceased changed after the Plaintiff was born. The relationship broke down completely when the Plaintiff was aged five. The Deceased did not ever see the Plaintiff thereafter. It was necessary for Mrs Nelepkowicz to take proceedings in the Local Court for child maintenance against the Deceased. An order in that regard was made on 20 February 1975. The amount of child maintenance was subsequently increased by orders made on 4 January 1978 and 29 October 1981. The Deceased continued to make payments until the Plaintiff attained the age of eighteen in 1992. He made no contribution towards the Plaintiff's maintenance or welfare thereafter. 16 The Plaintiff attended Windgap Handicapped School at Coogee until he was aged eighteen. He then worked in a sheltered workshop for about two weeks. Otherwise he has never been in employment or has had any other occupation. He has difficulty managing ordinary everyday living tasks. 17 Mrs Nelepkowicz is the Plaintiff's sole carer, although she on occasion has respite breaks arranged through Eastern Suburbs Disability Services. 18 The Plaintiff cannot be left alone for any period of time. He is totally dependent upon his mother. 19 The Plaintiff is able to walk, but cannot run. It is usually necessary for his mother to hold his hand. He knows his name, but not his address. He sometimes watches television. His mother sometimes reads to him. She cooks for him. She assists him in showering and toileting and attending to his personal hygiene. She dresses him. The Plaintiff cannot feed himself. 20 The Plaintiff cannot read or write. He cannot use the telephone. He cannot cut his fingernails or toenails. He has no friend of the opposite sex. He has a male friend from the handicapped school. 21 The Plaintiff receives a disability pension of $360 a fortnight, which is paid to his mother. She also receives a carer's pension of $360 a fortnight. 22 The Plaintiff and his mother maintain a frugal and modest lifestyle. They reside in Housing Commission accommodation, consisting of a two bedroom flat at Pyrmont, for which Mrs Nelepkowicz pays rent of $190 a fortnight. The flat is sparsely furnished. 23 Mrs Nelepkowicz's own health is poor. She takes prescribed Ventolin. She has been informed by her doctor that she has a heart condition. She has lost her front upper teeth but cannot afford dental care. Mrs Nelepkowicz is concerned about her ability to care for the Plaintiff as she grows older. She is presently fifty-four years of age. She is concerned for the Plaintiff's care and support if she were to predecease him. 24 There has been placed before the Court an affidavit of John Kennedy-Gould, a qualified social worker, which annexes his report dated 20 August 2002. Mr Kennedy-Gould interviewed both the Plaintiff and his mother on 30 April 2002. In his report he sets forth the results of that interview, and also his assessment and recommendations. 25 It was the opinion of Mr Kennedy-Gould that, despite the fact that David requires twenty-four hour supervision, "it cannot be reasonably said that David is an appropriate candidate for institutional care". 26 The Deceased had been married only once, to Mrs Kathleen Popper. Of that marriage was born only one child, Elizabeth Anne (born on 9 August 1955). Elizabeth (now Mrs Fairweather) is presently aged forty-seven. 27 She was married twice, firstly in 1977, but that marriage failed in the following year, and Elizabeth returned home to her father. The Deceased, his wife and Elizabeth had from 1965 resided in a house property at 261 Military Road, Dover Heights, which had been acquired by the Deceased and Mrs Kathleen Popper in February 1965. On 11 December 1965 Mrs Kathleen Popper died. Elizabeth, who was aged ten at that time, continued to reside with her father until she reached the age of sixteen in 1971. The house property at Dover Heights was registered in the name of the Deceased as surviving joint tenant on 2 May 1966. 28 Elizabeth left home for three months in August 1971, on account of the difficult relationship which at that time obtained between herself and her father (apparently he had a violent temper, and on occasion subjected Elizabeth to physical abuse). 29 On 20 November 1976 the Deceased transferred the Dover Heights property to himself and Elizabeth as joint tenants. That joint tenancy was never severed during the lifetime of the Deceased, although it would appear that the Deceased had in contemplation effecting such a severance. Upon the death of the Deceased the Dover Heights property passed to Mrs Fairweather as surviving joint tenant. She sold that property in October 2000 for $575,000, receiving net proceeds of sale in an amount of $557,967. By that time Elizabeth had married her present husband, John Fairweather, and had become the mother of two children, being Lynda (presently aged fourteen) and Jonathon (presently aged ten). It will be appreciated that the Dover Heights property did not become an asset in the estate of the Deceased. 30 In her affidavit of 4 May 2002 Mrs Faithweather sets forth how she expended the net proceeds of sale of the Dover Heights property. She sold or otherwise disposed of most of the contents of the Dover Heights property. She sold or otherwise disposed of most of the contents of her present residence at Carpenters Lane, Mardi (on the Central Coast, near Tuggerah). She paid out the mortgage which she and her husband owed on their residence ($230,000); she purchased a lounge suite ($3,750), a dining suite ($4,000); repaid a personal debt ($6,000); purchased four queen size beds ($5,000), an oak coffee table ($7,000), a refrigerator ($5,500), new kitchen ($17,500), air-conditioner ($17,500); installed a roof over the patio ($12,000), security blinds ($13,000), security sliding doors and burglar alarm system ($1,500); purchased television, DVD player, stereo, Playstation, computer and associated equipment ($24,600); installed light fittings; acquired garden tools and implements; made gifts to family members; expended money on entertainment; and paid for gardening work, construction of a retaining wall, erection of fences and a swimming pool. 31 In paragraph 41 of that affidavit Mrs Fairweather states, Due to the above expenses, every penny is now gone from the proceeds of sale of this property. 32 At the present time Mrs Fairweather and her husband have the following assets: Residence, Carpenters Lane, Mardi - $500,000 (estimated)

AMP Investment Solutions Fund (a retirement fund) - $142,000

Superanuation - $15,000 33 The total estimated liabilities of Mr and Mrs Fairweather are $3,753. 34 Mrs Fairweather is not in employment, but is a full-time wife and mother. She is in receipt of a Centrelink Carer Pension ($42.65 a week), and a Family Payment ($39.48 a week). 35 Mr Fairweather was formerly employed by Telstra, but left after twenty-three year's service in 1999, receiving a superannuation payment in a net amount of almost $163,000 and a termination payment in a net amount of about $98,000. According to Mr Fairweather that money was used to purchase the land on which their family home is located at Mardi. Whilst employed by Telstra Mr Fairweather suffered a permanent injury to his neck. Until October 2002 he was employed from home on a casual basis as a telecommunications designer. His income varied from week to week, he earning as little as $100 in some weeks. 36 Mrs Elizabeth Fairweather suffers from the results of a back injury, for which she has received medical treatment. She also suffers from osteoarthritis in her hip, for which she takes medication. In addition, Mrs Fairweather has been diagnosed with suffering from depression, and takes medication for that condition also. She also suffers from asthma, for which she takes medication. In July 2002 Mrs Fairweather was diagnosed as suffering from eczema. It was suggested that this condition was stress related. Her daughter also suffers from asthma. Mrs Fairweather's son suffers a number of health problems, including problems with his legs and feet, which require specially designed inserts for his shoes. He has also for many years been receiving speech therapy. In consequence of a gastro-intestinal reflux from which he suffered as a baby he continues to have special dietary needs. He also suffers from nosebleeds. 37 Not only does Mr Fairweather suffer from the injury to which I have already referred, but he also experiences sleep apnea, which requires him to wear a breathing machine whilst he sleeps. He also takes medication for this condition. 38 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. 39 I have had the benefit of receiving written outlines of submissions from Counsel for the respective parties and a chronology from Counsel for the Plaintiff. Those documents will be retained in the Court file. 40 At the commencement of the second day of the hearing, Friday, 8 November 2002, Counsel approached me in chambers; and subsequently in open Court Counsel for the Plaintiff expressed concern about the instructions given to him by Mrs Nelepkowicz in her capacity as tutor for the Plaintiff. Upon the application of the Plaintiff (which was not opposed by the Defendant), I adjourned the hearing, part-heard, to Friday, 15 November 2002. On that latter date the Court was informed that an application had been made on behalf of the Plaintiff to the Guardianship Tribunal. In consequence, the matter was stood over to Friday, 22 November 2002, for mention. Subsequently, Mrs Nelepkowicz was removed as tutor for the Plaintiff and the Protective Commissioner (who on 4 December 2002 became curator of the Plaintiff, pursuant to an order made under the Guardianship Act 1987) was appointed tutor in her stead. 41 The Plaintiff as a son of the Deceased is an eligible person within paragraph (b) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such he has the standing to bring the present proceedings. 42 It will be appreciated that Mrs Faithweather is also an eligible person, within the same paragraph of the definition. The affidavit of the executors filed pursuant to Part 77 rule 59 of the Supreme Court Rules discloses also as eligible persons Lynda Kathleen Fairweather and Jonathon Bryan Fairweather, being the two grandchildren of the Deceased, and Nella Davidson, described as de facto spouse. Notices of Claim have been served upon each of those persons, as well as upon Mrs Fairweather. 43 Despite the statement in the affidavit of the executors that Lynda Fairweather and Jonathon Fairweather are eligible persons, they could be such only within paragraph (d) of the definition of that phrase contained in section 6(1) of the Act. There is no evidence that either of those persons was wholly or partly dependent upon the Deceased. In consequence, I am not satisfied that either of them is an eligible person. 44 Mrs Nella Davidson was the recipient of the legacy of $10,000 provided in the will of the Deceased. The Defendants accept that she was the de facto spouse of the Deceased (but whether or not at the time of the death of the Deceased is unclear). As such she is an eligible person (within paragraph (a) of the definition if she was such at the time of the death of the Deceased; otherwise, within paragraph (d)). Although served with a notice of claim, Mrs Davidson has not made any claim against the estate of the Deceased. The legacy of $10,000 has been paid to her. 45 Since the present proceedings were not instituted within the period of eighteen months from the death of the Deceased, it is necessary at the outset to consider the application of the Plaintiff for extension of the prescribed period in which, pursuant to section 16(2) of the Act, the proceedings should be brought. That application for extension of the prescribed period is opposed by the Defendant. 46 By section 16(3) of the Act the Court is enjoined not to make an order allowing an application to be made after the expiration of the prescribed period "unless sufficient cause is shown for the application not having been made within that period". 47 The Deceased died on 11 February 2000. Accordingly, the prescribed period expired on 11 August 2001. The summons was filed on 19 March 2002. In consequence, the Plaintiff is thirteen months out of time. 48 The Plaintiff's mother did not become aware of the death of the Deceased until early February 2002, almost a year after the Deceased died. Shortly thereafter Mrs Nelepkowicz instructed solicitors on 14 February 2002, and her solicitors wrote to the executors on 26 February 2002 advising of the intention of the Plaintiff to make an application for provision. The summons was filed three weeks later, on 19 March 2002. 49 Mrs Nelepkowicz acted promptly upon becoming aware of the death of the Deceased. More importantly, however, it should be recognised that the claim is not that of Mrs Nelepkowicz, but that of the Plaintiff, who is a disable person. 50 I would, in any event, be satisfied that the circumstances of this case are such that it is appropriate to make an order that the leave be granted to the Plaintiff to bring the proceedings after the expiry of the prescribed period of eighteen months from the death of the Deceased. But, further, it will be appreciated that the Plaintiff does not seek to interfere with the assets of the estate which have already been distributed, and seeks that any order for provision be made from only the undistributed assets in the estate. That is, the Plaintiff does not seek to interfere with the legacy of $10,000, or the income which has been distributed. 51 Neither does the Plaintiff seek that any order for provision be made from notional estate of the Deceased. In this latter regard it should be observed that the executors consider that the failure of the Deceased to sever the joint tenancy between himself and his daughter may constitute a prescribed transaction (paragraph 10 of affidavit pursuant to Part 77 rule 59), with the consequence that one half of the proceeds of sale of the Dover Heights property could be available as notional property to meet any order for provision which might be made in favour of the Plaintiff, and in respect whereof the actual undistributed assets of the estate might not be adequate. But, as I have already observed, the Plaintiff does not seek to assert that there should be an order made designating part of the proceeds of sale of the Dover Heights property as notional estate of the Deceased. 52 I consider that, in those circumstances, and in the light of the attitude of the Plaintiff towards the assets which have already been distributed, there can be no prejudice to the Defendants or to the beneficiaries (in particular, Mrs Fairweather and her children) if leave be granted to the Plaintiff to bring the proceedings out of time. Accordingly, I propose to grant such leave. 53 Much of the evidence (especially the cross-examination of Mrs Nelepkowicz) and the submissions presented on behalf of the Defendants proceeded as if it were Mrs Nelepkowicz who was claiming an order for provision. It should be emphasised that it is the Plaintiff who is bringing the claim. It is the Plaintiff's financial and material circumstances and the Plaintiff's future needs which are of significance in this case, not those of his mother. 54 It is abundantly obvious that the Plaintiff is in very considerable need, and that in the absence of any provision having been made for him by the will of the Deceased he has been left without adequate provision for his proper maintenance and advancement in life. 55 The Plaintiff is secure in his present accommodation. Problems will, however, arise in the event that Mrs Nelepkowicz, who is presently aged fifty-three and whose health is not particularly good, will not always be available to act as the fulltime carer for the Plaintiff. 56 The fact that Mrs Nelepkowicz did not frankly set forth in her affidavit evidence the amount of the savings which she had accumulated from the pensions of herself and the Plaintiff (about $38,000) and the fact that during the course of 2002 Mrs Nelepkowicz had made significant drawings from her bank account ($7,106 on 10 July 2002 for a pre-paid funeral for herself and the Plaintiff and $15,000 on 12 July 2002 as a gift to the priest at St. Patrick's Church in Sydney, and apparently another substantial gift (of $10,000) to the priest at St. Patrick's Church) cannot affect or diminish the nature of the very substantial claim which the Plaintiff has against the estate of the Deceased. 57 The fact that the manner and demeanour of Mrs Nelepkowicz in the witness box did not attract the sympathy of the Court, should not in any way reflect upon the claim of the Plaintiff.

58 The Plaintiff requires twenty-four hour supervision and care, which is presently provided by his mother. Provision is required from the estate of the Deceased to allow Mrs Nelepkowicz respite and to provide a fund for the Plaintiff both during his life and after his mother's death. Mr Kennedy-Gould gave evidence as to the cost of proper respite care for fourteen hours a week and for two weeks full-time each year, that respite care being provided upon the assumption that Mrs Nelepkowicz is to continue to be the primary carer of the Plaintiff. The cost as calculated by Mr Kennedy-Gould for respite care, based upon the life expectancy of thirty-years for Mrs Nelepkowicz is almost $455,000, whilst the cost of two weeks each year for a similar period is almost $88,000. 59 There is no suggestion that the Plaintiff's intellectual disablement will impact upon his life expectancy. Assuming that he has a life expectancy of 48.66 years - that is, 18.66 years greater than that of his mother - the cost of provision of the same level of care from the date of the death of Mrs Nelepkowicz would be, in accordance with the calculations in the final submissions prepared by Counsel for the Plaintiff, be $134,556, whilst for the two weeks' respite care for the same period would be $26,000. The totality of the foregoing amounts exceeds $700,000. However, it will be appreciated that the extent to which Mrs Nelepkowicz will actively seek to utilise the availability of respite care during so much of the balance of her life (and it is unrealistic to assume her capacity to provide full-time care for the Plaintiff will last for thirty years) is problematical. 60 However, even upon the assumption that the foregoing amounts be treated as excessive (in consequence of Mrs Nelepkowicz continuing to provide full-time care without any significant respite), nevertheless the Plaintiff requires a capital fund to provide for the contingency that his mother will cease to be available to care for him, to provide for the uncertainty as to the level of unpaid assistance which will be available to him for the balance of his life (which will provide assistance when his mother ceases to care for him), and to provide for an enhancement in his modest and frugal lifestyle, his sole income presently being a pension which merely meets the cost of bare necessities. 61 It will be appreciated that upon any approach a fund to make provision for the Plaintiff for the foregoing purposes will far exceed the amount available in the distributable estate. 62 However, the claim of the Plaintiff must be approached in the light of the competing claims of other persons who have a claim upon the testamentary bounty of the Deceased. Those persons are the Deceased's daughter, Mrs Fairweather, and his two grandchildren, all of whom were there chosen objects of the testamentary beneficence of the Deceased. (The claim of Mrs Nella Davidson may be disregarded, since she, although served with a notice of claim, has made no claim upon the estate, and has received the legacy given to her by the will of the Deceased). 63 Mrs Fairweather has the security of an unencumbered and recently renovated residence. Her children have the security of a home, and no intellectual disability to inhibit their futures. 64 Although no part of the Dover Heights residence or the proceeds of sale thereof constitutes an asset in the estate of the Deceased, nevertheless the Court cannot disregard the fact that in consequence of the death of the Deceased Mrs Fairweather has received the benefit of one half of the proceeds of that sale, being a benefit in an amount of almost $280,000. She has expended a very significant part of the totality ($556,000) of the proceeds of sale of the Dover Heights residence upon discharging the mortgage upon her present home, and renovating, refurbishing and furnishing that residence. Yet there still remains unexplained what happened to a very substantial part of the proceeds of sale, perhaps as much as $200,000. 65 I have no hesitation in expressing my view that the order for provision an entitlement to which I am satisfied that the Plaintiff has otherwise established should not be reduced, let alone extinguished, on account of the competing claims of Mrs Fairweather and her children. 66 In my conclusion the Plaintiff is entitled to the entirety of the distributable estate of the Deceased, and I propose to make an order to that effect. 67 I make the following orders:

(1). I order that the period within which these proceedings may be instituted be extended up to and including the date of the filing of the summons herein.

(2). I order that the balance of the distributable estate of the late Ernest Popper ("the Deceased"), being the assets of the estate presently held by the Defendants, less the costs referred to in order 3 hereof and any outstanding costs and expenses of and incidental to the administration of the said estate, be held by the Defendants for the Plaintiff absolutely.

(3). I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased.

(4). The exhibits may be returned. **********

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