Solicitors:
Armstrong Legal - for the plaintiff
Deutsch Miller - for the defendant
File Number(s): 2015/037542
[2]
Introduction
This is a claim by a 60 year old son against the estate of his father. The contrast in the respective attributes and fortunes in life of father and son is marked. The father's story is one of survival, hardship and determination. The son's life, on the other hand, seems like a modern urban fiasco - for which no one else is to blame and certainly not his father.
[3]
Tibby Revell
The plaintiff's father, known as 'Tibby', died in May 2014 aged 90 years. He was a Hungarian Jew who survived the Holocaust as a member of one of the forced labour battalions that served the interests of the Wehrmacht in Europe. His skills as a mechanic and auto-electrician made him valuable for the repair of trucks and military vehicles for the German Army, and probably saved him from death in a concentration camp. He was displaced after the war, made his way to Sweden where he met his future wife, and eventually came to Australia in 1953 with almost nothing.
In Australia, Tibby built a successful auto-electrical business known as 'Tibby Rose Auto-Electricians'. By the end of his life, he had accumulated substantial assets and lived comfortably at Elizabeth Bay with his third wife Ziggy (the defendant). His assets included the apartment at Elizabeth Bay with an estimated value of $3 million, approximately $2 million on deposit with financial institutions, shares in listed companies with an approximate market value of almost $1 million and shares in a company known as Revell Properties Pty Ltd with an estimated value of $3.9 million. The total was approximately $10 million. There were no significant liabilities. I have left out of consideration household chattels, shares and monies on deposit owned as a joint tenant with his wife. Their total estimated value was said to be $835,000 at the date of death.
By his will dated July 2009, Tibby gave legacies of $1.5 million to each of his son (the plaintiff) and his daughter (Sonya) and left the residue of his estate to his wife Tova (known as Ziggy), to whom he had been married for 22 years by the time of his death. Sonya and Ziggy make no claim on the estate and have put forward no evidence of their financial circumstances. The plaintiff is not satisfied with his legacy and has brought these proceedings seeking to obtain a more generous award pursuant to the Succession Act 2006. During his evidence, he suggested $3 million as an appropriate figure. His counsel submitted that $4.5 million represented the upper limited of his entitlement. I have reached a contrary view.
[4]
The Testator's Choice
It is desirable to re-iterate two principles that underlie this area of the law. The first is that courts do not rewrite the will of a deceased person simply because it appears to be unfair, unequal or unwise. Fairness and equality are not touchstones for relief under the Succession Act. Within the limits of the law, a testator may dispose of his estate as he sees fit. Adult children have no automatic right to a share in the estate of a parent. Nor do they have an automatic right to equality between them. That may be the system in most European countries, of which the French law of inheritance is a well-known example, but it is not the law in Australia. Freedom of testamentary disposition, subject to disturbance only where the requirements of the Act are met, is an integral part of our law.
Callaway JA put the matter succinctly in Grey v Harrison [1997] 2 VR 359 at 366:
… [I]t is one of the freedoms that shape our society, and an important human right, that a person should be free to dispose of his or her property as he or she thinks fit. Rights and freedoms must of course be exercised and enjoyed conformably with the rights and freedoms of others, but there is no equity, as it were, to interfere with a testator's dispositions unless he or she has abused that right.
And Bergin CJ in Eq emphasised the point in Ford v Simes [2009] NSWCA 351 at [71] when she said:
… it is very important for the maintenance of the integrity of the process in these types of applications that this court acknowledge once again the entitlement of testators, in certain circumstances, to make no provision for children.
The second principle is that the courts naturally respect and give deference to the considered judgment of apparently rational and sensible testators. That does not mean that, in an appropriate case where the requirements of the Act have been enlivened, the court will be constrained by the choices made by the testator. It simply means that courts acknowledge that a competent testator will usually be in a better position than a court can ever be, to assess the virtues and failings of his children. The insight borne of the testator's cumulative knowledge, experience and judgment of his own children, derived from his unique relationship with them, often constitutes a better measure of entitlement than the assessment of a court drawn from 'a few pages of affidavits sworn after his death and which only too frequently provide by an incomplete and shallow reflection of family relations and characteristics': Stott v Cook (1960) 33 ALJR 447 at 453-4, Taylor J.
Hallen J helpfully collected many relevant statements in recent authorities directed to these issues in Hinderry v Hinderry [2016] NSWSC 780 at [251]-[266]. They include Vigolo v Bostin [2005] HCA 11 at [10], Gleeson CJ; Goodsell v Wellington [2011] NSWSC 1232 at [108], Hallen J; Wilcox v Wilcox [2012] NSWSC 1138 at [23], Pembroke J; Slack v Rogan; Palffy v Rogan [2013] NSWSC 522 at [127], White J. I collected a list of the older authorities in Sung v Malaxos [2015] NSWSC 186 at [5]-[12], including Hughes v National Trustees, Executors & Agency Company 143 CLR 134 at 146, Gibbs J; Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at [19], Dixon CJ; Stott v Cook (1960) 33 ALJR 447 at 453-4,Taylor J; Hunter v Hunter (1987) 8 NSWLR 573 at 576, Kirby P. See also Salmon v Osmond [2015] NSWCA 42 at [69]-[74], Beazley P (McColl and Gleeson JJA agreeing).
[5]
A Fortunate Life
The plaintiff received a privileged, happy and affluent start in life. He attended Newington College for ten years before completing his Higher School Certificate at the Rudolph Steiner School at Middle Cove. At least twice a week Tibby drove him to school at Newington College. There were many family picnics and at least six times a year there were camping and bushwalking holidays at the Shoalhaven River, in the Royal National Park and at the Jenolan Caves in the Blue Mountains. One family holiday involved an extended European trip for two months to Hong Kong, Britain and Sweden, where Tibby's sister lived. When the plaintiff was about 10 years old Tibby commenced an exciting family building project - a six bedroom, six bathroom waterfront property in Minimbah Road, Northbridge, a location favoured by at least one former Prime Minister.
Tibby was generous to his son, more so than most fathers. When the plaintiff was 17 years of age and obtained his first driving license, Tibby gave him a gift of a Datsun Bluebird motor vehicle. When he graduated from high school later that year, he gave him a gift of a six week overseas holiday, which took him and a family friend to Tahiti, Mexico, Peru, Bolivia, Guatemala, Honduras and Ecuador. When the plaintiff's first child was born, Tibby gave him and his then wife, Susan, a gift of $5,000. The following year, he gave them an interest free loan of $35,000 with no repayment date to enable them to complete the construction of a home at Wahroonga. When the second child arrived, he gave them another gift of $5,000.
Until about 1992, when Tibby married Ziggy, there had been a long history of other generous cash gifts by Tibby to both the plaintiff and his sister. For the plaintiff, they included $20,000 after Tibby's second wife died in 1989; twice-yearly gifts of between $1,500 and $2,000 to buy clothes, most of which the plaintiff spent at the then fashionable retail outlet known as 'John & Merivale' in Angel Place, Sydney; regular birthday gifts of up to $1,000 and regular Christmas gifts of up to $1,000. Tibby also gave cash gifts to the plaintiff's children for their birthdays and at Christmas. It was a charmed life, more so than most Australian children could ever expect.
[6]
Employment History
After his secondary education, the plaintiff did not take up a trade or pursue any professional studies and his attempts at tertiary education were characterized by frequent changes of course from which he dropped out, one after another. He enrolled in, but did not finish, courses at the Randwick School of Interior Design, TAFE Ultimo (business management) and Ryde School of Hotel & Catering. He does appear to have completed various short courses in connection with hospitality and bar service. Ultimately, he achieved moderate success in his business life. His first work experience was in a Paddington interior design and lamp shade business and his first real job was with Stephenson & Co, sellers of fine bathroom and kitchen accessories.
For 22 years from 1977 to 1996, the plaintiff had a successful career at the Centre Point Tavern, where he rose from trainee manager to operations director for Sydney Tower Restaurants. This lengthy period of stable employment was followed by a time during which he changed direction - as a wine taster, agent for the sale of Tasmanian salmon, sales manager and wine promoter. He says he had a car accident in 2000 which left him 'effectively unable to work for some time'. The evidence is opaque but it is at least clear that he was waiting for the settlement of his court case, which happened in 2004-5. He then purchased, and soon sold, a café at Mosman. This was followed by the purchase of a food distribution business known as 'Rush Consulting', which the plaintiff conducted successfully with his second wife Tracey from 2007 - 2014.
The plaintiff now says that he would like to open a wine or cocktail bar in Surry Hills, Neutral Bay or on the lower North Shore. He estimates that the cost of purchase and fit out of such an enterprise would be $800,000.
[7]
Wives & Partners
The plaintiff's personal relationships have been chequered. In 1982 he married his first wife, Susan. They had two children who are now adult and independent. The marriage ended in divorce after ten years. It was followed by a relationship with a woman named Karen, with whom the plaintiff lived for approximately two years. That relationship ended in separation in 1996. In 2000, the plaintiff married his second wife, Tracey. There are three children of this relationship, aged 14, 13 and 6 years. In 2014 that marriage also ended in separation and divorce.
The plaintiff is currently in a stable relationship with a woman whose name is Lorraine. She described it as a good relationship built on honesty, communication, love and co-operation. They are now engaged to be married. The plaintiff and Lorraine live together in her two bedroom apartment in St Ives, a pleasant and prosperous suburb on Sydney's north shore. Lorraine is 54 years old and is clearly a responsible and sensible person. She is employed as a project officer for Roads & Maritimes Services NSW. Her current position is not permanent, although it is conceivable that it may become so. I gained the impression that Lorraine valued the opportunity between jobs 'to have a rest or to have a short holiday or something'.
Her most recent period without employment was for two or three weeks before taking up her current position. She told me that she earns about $2,500 per fortnight. Her taxable income to 30 June 2015 was $65,600. She has a talented daughter who is independent, has plans to marry next year and visits her mother occasionally. Lorraine has assets valued at a little more than $1 million and liabilities that are relatively modest. Her assets include her home, with an estimated value of $700,000, superannuation (approximately $300,000), an Audi motor vehicle, cash and household contents. Her mortgage balance is $99,748. She estimates that her monthly expenditure is about $3,000.
[8]
Property & Children
The three children of the plaintiff's marriage to Tracey live with their mother. The two eldest children currently do not wish to have any dealings with their father. It seems that there is an extant apprehended violence order against him. The youngest child currently spends a minimal amount of time with his father on weekends pursuant to orders of the Family Court of Australia. Notably, the arrangements made in the Family Court have the effect that if plaintiff is successful in his claim in this court to receive a sum in addition to his legacy of $1.5 million, he is bound to remit 20% of any additional sum to Tracey.
It is not clear what, if any, monies will be left to the plaintiff at the conclusion of the Family Law proceedings. The family home at Belrose and an investment property in Queensland are required to be sold. The former has already been transferred to Tracey. The business of Rush Consulting imploded following the break-up of his marriage to Tracey in 2014 and the plaintiff's health problems later that year. The sale price was $50,000.
[9]
Medical & Financial Prospects
The plaintiff had several serious medical problems in 2014, including heart by-pass surgery and the removal of several melanomas, but his prognosis is positive and there is no reasonable likelihood of permanent incapacity. In a sense, they are the sorts of ailments that many men beyond the age of 60 years can expect to encounter. He now has minimal personal assets other than his $1.5 million legacy, a $39,000 motor vehicle, cash and personal effects. He is not currently working.
Given his tribulations, there was a mildly delusional quality about the plaintiff's expectations and aspirations for the future. He seemed unwilling to accept that he should continue to live happily in a two-bedroom apartment - either that owned by his fiancé, Lorraine or one that he could afford to buy with his legacy. He insisted instead on an entitlement to a three-bedroom house in the part of Sydney to which he has become accustomed. He was not prepared to consider a move to a less expensive area, even suggesting that Hornsby was neither safe nor appropriate. The evidence disclosed a number of potentially suitable properties for sale with three bedrooms, and at affordable prices. The advertised sale prices ranged from $770,000 to $850,000. In his preferred area of St Ives, the evidence disclosed no shortage of two bedroom, two bathroom, one car space apartments for sale in the $700,000 to $800,000 price range.
[10]
A Father's Disappointment
Like any father, Tibby had hopes for his son's future happiness and prosperity but there came a time when his exasperation at what he perceived to be the plaintiff's fecklessness, affected his attitude. Tibby could be difficult and demanding, but his own life had not gone entirely smoothly, despite the success of his business. His first wife had an affair, resulting in acrimony and divorce, and his second wife died from breast cancer after only 9 years of marriage. When he married Ziggy in 1992 and commenced a new life with her at Elizabeth Bay, he was approaching his twilight years. It is not difficult to imagine that he looked forward to the peace and prosperity that he had earned, without the anxieties, burdens and responsibilities of fatherhood. By that stage, the plaintiff and his sister Sonya were both adult, able-bodied, married, independent human beings with their own children, spouses and in-laws.
Nor is it difficult to understand why Tibby's financial generosity toward the plaintiff diminished or why family Shabbat dinners with Tibby and Ziggy became less regular. The ties that bind began to loosen - understandably, naturally and inexorably. There comes a time when the problems of the son cease to be those of the father. Tibby was a positive and exuberant personality while his son was more naturally negative, and for that reason wearing, and it would seem, demanding. Tibby described his son to his close friends with sadness. He said he made him angry; that he is always in financial trouble; that he is a parasite; that he doesn't do anything with his life; that he is useless; that he doesn't like hard work; and that he only wants money. It was not a subject that he enjoyed discussing. One friend said that 'whenever Tibby spoke about Gary, he focused on his hurt and his lack of joy'.
On holidays and overseas trips, he would sometimes unburden himself to close friends. On one trip, in the year before he made his will, to Tel Aviv for a wedding and afterwards to Italy, he explained to a mutual friend that 'I'm sour about my son. We don't have any relationship. He only calls me when he wants money … But I really admire Ziggy's sons. I like speaking to them. We see them all the time'. That Tibby might have naturally gravitated toward his wife's sons and her circle of friends, even to the exclusion of his own adult son, is entirely understandable in the circumstances. They made him happier. His son did not.
One of the topics that worries and pre-occupies many elderly people approaching the end of their lives, is the distribution of their accumulated wealth. Tibby was no exception. On a number of occasions, probably many, he had discussions with close friends about what to do. He felt that his son did not deserve anything. One friend advised him 'if you leave him out of the will, he will sue you and your estate, and put Ziggy through hell. You have to leave him something, even if it is a small amount …'. There were similar conversations to the same effect on numerous occasions. Tibby thought hard about the question and consulted his solicitor. Eventually he told close friends 'I've made my will with a set inheritance for each child…I've taken your advice and listened to my lawyers and I have decided to leave each of them a set amount, but I'm not particularly happy about it'. He added 'I don't mind leaving Sonya money … I am still not happy about having to leave anything for Gary'.
Tibby's solicitor advised him to prepare a written statement explaining why he had not made any greater provision for his son than the legacy of $1.5 million. The statement was drawn up and witnessed by his solicitor, who also witnessed the will. It was made in July 2009. In addition to a potted history of his benevolence to the plaintiff, the statement recited certain facts relating to his son's financial circumstances - at least those of which Tibby was aware at that time. He could not have been expected to be fully aware of his son's financial circumstances. Nor could he have been expected to know that the plaintiff's relationship with Tracey would end in separation and divorce in 2014 or that the plaintiff would suffer problems with his health later that year.
The statement mentioned the substantial compensation payment, apparently $382,000, that the plaintiff received in 2004-5; his joint ownership with Tracey of their home at Belrose; the existence of a mortgage on the property and the belief that his son would use the compensation payment to discharge the mortgage; and the fact that the plaintiff had sold a property at Crows Nest in 2000 for $535,000. Tibby knew of the small food distribution business that the plaintiff conducted with his wife but he did not think much of it. It is unlikely he knew its precise financial position.
There is no doubt that the plaintiff's circumstances deteriorated after the date of Tibby's written statement. But the significance of the statement is not the accuracy or otherwise of the detail that was set out in it. Its accuracy could never be guaranteed and the passage of time would inevitably render some facts obsolete. What matters more is the sentiment that the statement conveys; the conviction that it demonstrates; the indication of careful thought that it reveals. Tibby felt that he had done enough over his son's lifetime and that a legacy of $1.5 million was a sufficient gesture toward him.
[11]
Community Standards
The facts of this case call to mind the words of Professor Rosalind Croucher, which were adopted by Hallen J in Penfold v Predny [2016] NSWSC 472 at [6]. She described with apparent disdain 'a cohort of independent self-sufficient 50 and 60 year olds, wanting to get more of the pie from their parents, notwithstanding that the parent had made a conscious decision that they had already had enough'. Many would regard a legacy of $1.5 million as generous, especially for a married son who was almost 60 years of age at the time of the death of his father; who had already received numerous gifts of financial assistance from his father; and who had not had a close or harmonious relationship with his father for many years.
Some may even doubt whether Tibby had a moral obligation to leave anything to his son. He had discharged his duty during his lifetime; he had long since ceased to be responsible for his son's welfare; and for more than two decades before he died, he had moved on - with a new wife, their mutual friends and her sons. At an advanced age, even the most loving parent is entitled to cut loose the shackles of the past. There will of course be individual cases where the needs of an adult child cannot be ignored. But in this case, in my view, the testator has done more than enough by leaving his son a legacy of $1.5 million.
It is not to the point that there is said to be a disproportion between the value of the estate left to Ziggy and the amount of the legacy left to the plaintiff. It was Tibby's right to prefer his wife. The residue could have been left to worthy charities of his choice and the question would still have been the same. The only legal ground for interfering with the will is if 'adequate provision for the proper maintenance or advancement in life' of the plaintiff has not been made by the will: Section 59(1)(c); Carey v Robson [2010] NSWCA 212 at [28] per Hodgson JA.
[12]
Adequate
Adequacy is of course a relative concept. It requires a broad, evaluative assessment. And for the reasons I have already explained, respect should be given to the testator's judgment. See also Slack v Rogan at [125]-[127] per White J. I do not think it matters that the plaintiff's circumstances changed, in the way they did, after the will. Tibby was not to know that the plaintiff's marriage to Tracey would end in divorce and that their business would be sold. But nor was he to know that the plaintiff would soon afterwards find love and companionship, let alone prospective marriage and modest security, with his fiancé Lorraine. And his health issues do not incapacitate him. These things tend to balance out.
For those reasons, this is not a case, in my view, where I should discount the weight to be given to Tibby's written explanation because it was, to some extent, based on incomplete or inaccurate information: Salmon v Osmond at [72] per Beazley P. As I have endeavoured to explain, the importance of the statement lies in its sentiment, its conviction and its indication of careful thought. When it is coupled with all of the other evidence that I have summarized, including the historical relationship between father and son, I do not think that Tibby would have felt it appropriate to change his will even if he could have been aware of his son's circumstances at the date of the hearing.
I have reached the conclusion that the plaintiff's legacy of $1.5 million was 'adequate' in the circumstances for his proper maintenance and advancement in life. Adequate means no more than sufficient. It does not connote generosity. It is a word of circumspection that implies no more than is necessary: Wilcox v Wilcox [2012] NSWSC 1138 at [23]. As Bray CJ said in Re Estate of Bridges (1975) 12 SASR 1 at [5-6], the will should be interfered with only 'so far as is necessary to make adequate provision … but no further'.
One yardstick of the adequacy of the plaintiff's legacy is the investment return that it would generate. As at 30 June, the average yield on blue chip shares such as the major banks, BHP, Woodside and Telstra was approximately 6%. If the legacy of $1.5 million were invested in a basket of those stocks, the annual income generated would be approximately $90,000 - to which should be added the benefits of franking credits and the likelihood of capital appreciation, subject to market fluctuations. In my view, this is 'adequate' in the circumstances that pertain to the plaintiff for his proper maintenance and advancement in life.
[13]
Costs
I am however prepared to make one concession to the plaintiff. Section 99 of the Succession Act provides for an unfettered discretion in relation to the payment of the costs of the proceedings out of the estate. An adverse costs order will detract from the adequacy of the plaintiff's provision under the will. The practical effect of such an order will be to undermine the reasoning by which I have concluded that the plaintiff's legacy of $1.5 million is adequate for his proper maintenance and advancement. Family provision cases stand apart from the usual case in which costs follow the event. They involve elements of judgment and discretion beyond those which apply in most litigation. I am willing in this case to depart from the usual order having regard to the size of the estate and the effect on the plaintiff. I do not wish to encourage other applicants to think that they can bring claims, safe in the knowledge that their costs will be paid out of the estate. But this is a special case, in which the detriment to the estate is outweighed by the considerable hardship that would be suffered by the plaintiff, if the usual order were made.
Sometimes, this reasoning leads to an order that a plaintiff be relieved from paying the defendant's costs. Sometimes it leads to an order that the estate bear the costs of both parties - the defendant on indemnity basis and the plaintiff's on the ordinary basis. In this case, I have concluded that the plaintiff, although unsuccessful, should have his costs out of the estate. As Gaudron J said in Singer v Berghouse [1993] HCA 35 at [6]:
It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate.
I therefore make the following orders:
1. Summons dismissed;
2. Defendant's costs to be paid out of the estate on an indemnity basis;
3. Plaintiff's costs to be paid out of the estate on the ordinary basis.
Subsequent to these reasons made on 7 July 2016, the parties have agreed on 19 July 2016 to the following orders which replaces order 3 above:
1. Order 3 made 7 July 2016 by Justice Pembroke is set aside and discharged.
2. No order as to the costs of the plaintiff to the intent that he bear his own costs of the proceedings.
3. The Court notes the agreement of the parties that in consideration of each consenting to the making of the orders herein, the plaintiff undertakes to the defendant and to the Court that he will not file in respect of the decision of Justice Pembroke in these proceedings an appeal or notice of intention to appeal.
[14]
Amendments
22 July 2016 - Paragraph [40] added on 22 July 2016 to reflect replacement orders.
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Decision last updated: 22 July 2016