Saba v Saba

Judy's financial position

1. Judy is employed as a cross-culture psychologist and diversity trainer by the NSW Police Force. She has held this position for a number of years. Her current salary is in the order of $95,000 per annum.
2. She and her husband, Charlie, jointly own an apartment in Pyrmont which they purchased in 2003 for $380,000. Judy adduced no evidence as to the current value of that property. There is in evidence a valuation of the property dated 1 February 2011 for $570,000. No doubt it is worth more now. The deceased gave Judy $20,000 as a contribution towards the deposit.
3. The property is encumbered by a mortgage in favour of the Commonwealth Bank of Australia. The amount owing on the mortgage is currently in the order of $383,000. In circumstances that I will refer to below, Judy and her husband have been unable to reduce the debit balance of the mortgage since they purchased the property in 2003. Indeed, the current amount owing on the mortgage is little more than what was owing in 2003.
4. Judy has superannuation in the order $305,000.
5. Charlie, is a chaplain at St Vincent's Private Hospital. His income is in the order of $55,000. He has superannuation in the order of $62,000.
6. Judy is in good health. She stated that she may need an operation on her foot and "two major treatments" subsequent to a knee operation and some dental work. She did not, however, adduce any evidence as to what those procedures might cost.

Judy's relationship with the deceased

1. There is no dispute that Judy had a loving relationship with the deceased, and with her mother.
2. Ms Power, who appeared for the estate, very fairly submitted that: "It is not disputed that [Judy] had a continuous and generally harmonious relationship with the deceased. It is not disputed that [Judy] cared for the deceased in the final years of his life."
3. Ms Power submitted, and the evidence establishes, that the deceased was generally close to all of his children and that other members of the family, particularly Raymond, and his wife Ann (who lived immediately next door to the deceased) also played an active role in the care of the deceased and his wife.
4. There is no dispute about the following matters which emerge from the submissions of Mr Rogers, who appeared for Judy.
5. Judy lived at home until she married Charlie in 1995, when she was 36.
6. In 2000, in order to look after her parents, and notwithstanding that she was married, Judy moved back into the family home for three nights a week, and on Saturdays to care for her mother (who had Bell's palsy).
7. From that time on, Judy slept at the family home to care for her parents every Monday, Wednesday and Friday night and cared for them all day Saturday and every fourth Sunday.
8. She did this while holding down a full time job with the NSW Police Force and, as Mr Rogers submitted, sacrificed her own interests and those of her husband by being away from the home that they shared for lengthy periods.
9. Further, Judy and Charlie decided that they ought not to have children, in order that Judy could devote more time to the care of her parents.
10. When her mother became more ill in 2009, Judy took three months off work, partly without pay, in circumstances when her husband was at that time unemployed.
11. By this time, the deceased was himself 98, and needed assistance to look after his wife.
12. After her mother died, Judy played a major role in the deceased's medical care, day to day wellbeing, overnight routines, clothing and social needs.
13. By November 2014, when her sisters were for various reasons (which Judy has not criticised) not able to give assistance in looking after the deceased, Judy "took up the slack" (to use Mr Rogers' words) and commenced working part time, taking two days off one week and one day off the alternative week until the deceased died.
14. In the last weeks of his life, when the deceased was dying, Judy again took unpaid time off work to look after him.
15. As Mr Rogers accepted, Judy freely concedes in her evidence that other members of the family (particularly Raymond and his wife Ann) assisted with the care of their parents.
16. There is, however, considerable force in Mr Rogers' submission that "none worked so selflessly for the deceased and his family than Judy" and that "[o]ver a long period of time she sacrificed her own interests in favour of the deceased" and his wife, Judy's mother.
17. None of Judy's siblings put their financial position in issue. No other member of the family contends that they have not been adequately provided for.

The deceased's earlier will

1. The deceased made a will in 1959 in which he left his estate equally to his wife and the children equally.
2. In May 2009, after Judy's mother died, the deceased showed her a copy of that will.
3. Judy said that the deceased then said to her: "Your mother and I have had a will for a long time. I want you to keep this copy of my will. Keep it safe. I made it some months after you were born, I want you to know what your mother wanted and what I want that everything we have is to be left equally to our children…read it to me, I want to hear what it says."
4. Judy asked the deceased why he was showing her the will and he said: "[B]ecause I want you to know what our wishes are…I want you to make sure that our wishes are followed."
5. Judy said that in February 2012 her father said to her words to the effect: "I want to freshen up my will…the solicitor [who drafted the 1959 will] is no longer alive and your brothers are insistent that we put the will with a new solicitor."
6. The deceased also said: "The boys said to make it easier and to keep the peace, I should leave the house to them and some money to you and your sisters. I don't want them to give you any trouble… [D]o you know what the house might be worth?"
7. Judy said that she had no idea what the West Ryde property was worth.
8. Judy said that the deceased then said: "I hope you forgive me as I did what I did to keep the peace for you all and so that they don't cause you trouble."
9. Judy said in her affidavit: "My father said to me that he knew that Lila was financially in need, and that he wanted me to lower my mortgage. During the conversation, he mentioned the figure of $60,000 for Lila, $60,000 for Sandra and $90,000 for me. I asked him why he wanted to give me more and he said that he was worried about me and that my sisters both had children to help them whereas I did not."
10. In fact, as it turns out, the deceased left $50,000 for Lila, $50,000 for Sandra and $90,000 for Judy.
11. Each of Peter, Edmund and Raymond gave evidence before me. Each denied having any conversation with the deceased about the form of his will. In cross-examination, Mr Rogers did not put to any of Peter, Edmund and Raymond that they were "insistent" that the deceased make a new will or that they had endeavoured to persuade the deceased that it would be "easier" and would "keep the peace" were he to leave "the house to them".
12. In those circumstances, notwithstanding the deceased's statements to Judy, I cannot conclude that they played any role in the deceased's decision to leave most of his estate to his sons.
13. What is clear is that there was no falling out or estrangement between the deceased and Judy (or her sisters). Judy remained, at all times, close to the deceased, and indeed was with him when he died.

Relevant principles

1. Section 59 of the Succession Act provides that the Court may make, on the application of an "eligible person" (there is no dispute that Judy is an "eligible person"), a family provision order in relation to the estate of a deceased person if the Court is satisfied that: "…at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person…".
2. The section provides that, if the Court is so satisfied, then: "The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made."
3. I consider that the test to be applied remains the two-stage test referred to in Singer v Berghouse (No 2) (1994) 181 CLR 201; HCA 40 at 208-209; namely, determining whether adequate provision has been made in the will for Judy, and, if not, what provision should be made.
4. A different view as to the applicability of the two-stage test has been expressed by one member of the Court of Appeal (Basten JA in Andrew v Andrew (2012) 81 NSWLR 656; NSWCA 308 at [29] and [41]). Differing views were expressed by other members of the Court in that case (see Allsop P at [6] and Barrett JA at [65], [79]-[81] and [94]).
5. In Nowak v Beska [2013] NSWSC 166 Hallen J said at [113]: "It seems to me that the two stage approach adopted in the myriad of cases determined under the former Act and under the Act, including Keep v Bourke [2012] NSWCA 64, enables me, despite what has been said by Basten JA [in Andrew v Andrew], and until uncertainty is resolved, to continue to follow that approach in determining cases under the Act. As Allsop P said [in Andrew v Andrew at [6]], 'it may be an analytical question of little consequence' since what has to be decided by the Court is whether to make a family provision order and the nature of any order."
6. His Honour expressed the same view more recently in Ciric v Ciric [2015] NSWSC 313 at [86], and observed that that view was unaffected by the more recent decisions of the Court of Appeal in Phillips v James (2014) 85 NSWLR 619; NSWCA 4, Verzar v Verzar [2014] NSWCA 45 and Salmon v Osmond [2015] NSWCA 42. I agree.
7. The first stage of the two-stage test involves a question of fact, namely whether the deceased has made adequate provision for Judy's proper maintenance and advancement in life.
8. The aim of the first stage is to assess whether the Court can make an order for provision. As Hallen AsJ (as his Honour then was) said in Lajcarova v Todorov [2011] NSWSC 522 at [79]: "Unless the court comes to the conclusion that inadequate provision has been made, it is not empowered to make an award. This is commonly referred to as 'the jurisdictional question'. At this stage, the court will consider whether it can make an order for provision for the maintenance, education and advancement in life of a particular applicant."
9. The second stage, should it arise, involves an exercise of discretion. The Court must assess whether provision ought to be made in Judy's favour.
10. The object of the second stage is to assess whether the Court should make an order for provision. As Hallen AsJ said in Lajcarova v Todorov at [84]: "At the second stage, the court determines whether it should make an order, and if so, the nature of any such order, having regard to the facts known to the court at the time the order is made. The fact that the court has a discretion means that it may refuse to make an order even though the jurisdictional question has been answered in the applicant's favour."
11. Although Hallen AsJ was then considering a claim under the former Family Provision Act 1982 (NSW), I see no reason to adopt a different approach under the Succession Act.
12. It is clear that the determination of the second stage involves similar considerations to that of the first stage: Singer v Berghouse (No 2) at 209-210.
13. What is involved is "an evaluative determination of a discretionary nature, not susceptible of complete exposition" and one which is "inexact, non-scientific, not narrow or purely mathematical, and fact and circumstance specific" (Manuel v Lane [2013] NSWCA 61 at [9] per Emmett JA, with whom Meagher and Ward JJA agreed, speaking of the discretion to be exercised under s 20 of the Property (Relationships) Act 1984 (NSW); which I see as involving, in this respect, the same notions as arise under the Succession Act).
14. The guiding "principles" were summarised by Hallen AsJ in Gersbach v Blake [2011] NSWSC 368 at [94]-[96] as follows: 1. it is not appropriate to endeavour to achieve a "fair" disposition of the deceased's estate; 2. it is not part of the Court's role to achieve some kind of equity between the various claimants; 3. the Court's role is not to reward an applicant, nor to distribute the deceased's estate according to notions of fairness or equity; 4. the Court is 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; 5. rather, the Court's role is of a specific type and goes no further than a making of "adequate" provision in all the circumstances for the "proper" maintenance, education and advancement in life of an applicant (see also Bryson J in Gorton v Parks (1989) 17 NSWLR 1 at 6); 6. in considering what is adequate provision for the proper maintenance, education and advancement in life, the Court is to have regard to what is considered to be right and proper according to contemporary accepted community standards (see also Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9; HCA 19 at 19 per Dixon CJ; Walker v Walker (Supreme Court (NSW), Young J, 17 May 1996, unrep); Stern v Sekers; Sekers v Sekers [2010] NSWSC 59 at [269ff]); 7. the Court's discretion is not untrammelled, or to be exercised according to idiosyncratic notions of what is thought to be fair, or in such a way as to transgress, unnecessarily, upon the deceased's freedom of testation (see also Pontifical Society at 19 per Dixon CJ and McKenzie v Topp [2004] VSC 90 at [63] per Nettle J); and 8. freedom of testamentary disposition remains a prominent feature of the Australian legal system (see also Lajcarova v Todorov at [91]).
15. In relation to a claim under the Act by an adult child, Hallen AsJ said in Gersbach v Blake at [98]: "(a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed. (b) It is impossible to describe in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life - such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set their children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation [McGrath v Eves [2005] NSWSC 1006; Taylor v Farrugia [2009] NSWSC 801]. (c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such [as] a spouse, who has a prime obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia. (d) There is no need for an adult child to show some special need or some special claim: McCosker v McCosker (1957) 97 CLR 566; Kleinig v Neal (No 2) [1981] 2 NSWLR 532; Bondelmonte v Blanckensee [1989] WAR 305; and Hawkins v Prestage (1989) 1 WAR 37 per Nicholson J at 45." [Emphasis added]

Has adequate provision been made for Judy's maintenance and advancement in life?

1. Despite the love, care and attention that Judy showed her father, his will makes far less provision for her (and his other daughters) than for his sons.
2. Whether or not the deceased took that decision to "keep the peace", and no matter what may be the circumstances that led the deceased to make that statement, this would strike some, if not most, minds, as being unfair in the extreme to Judy and her sisters; and to Judy in particular.
3. However, as the above authorities make clear, and as was common ground before me, that is not the test in an application for provision. It is not for me to re-write the deceased's will to achieve a "fair outcome". The sole question is whether, as a matter of fact, the provision made for Judy ($90,000) is not adequate for her proper maintenance and advancement in life.
4. In that regard, Mr Rogers' submissions focussed on the mortgage over Judy and Charlie's home for which, I would infer, she is jointly and severally liable.
5. Otherwise, Mr Rogers accepted the bequest of $90,000 was sufficient to cater for Judy's medical and like needs.
6. The mortgage is large: some $383,000. Judy is 57 and Charlie is 59. Their combined incomes are in the order of $150,000. They have been unable to reduce the debt since purchasing their home, some 13 years ago. Judy said, in cross-examination, that this was because she and Charlie have been obliged to make drawings on their mortgage account to meet day to day living expenses. At least to some extent, this has been because of the time Judy has devoted to the care of the deceased, and her mother.
7. Thus Judy gave this evidence, in response to questions from me: Q. Is the reason that the mortgage remains at the level it was when you and Charlie bought the house is that you have had to redraw the mortgage from time to time to meet daily expenses, is that -- A. Yes your Honour. Q. If you had been able to repay the mortgage you would have done so? A. Absolutely. Q. If you and Charlie had been able to repay the mortgage you would have? A. Yes. … Q. Is there any link between your need to withdraw under the mortgages and the care you've given your parents? A. Yes your Honour. There were two primary occasions. One when I took three months off work when my mother was in hospital. She required someone to be with her and as I stated in my affidavit the geriatrician agreed that it would be of value to have me there. So I took three months off work or approximately. Q. Without pay? A. Part of it was with pay and part of it was with an arrangement with New South Wales Police to hold over my pay and just to allow me to just pay part of the mortgage but I was out of work for about three months and there were a number of occasions when my father had been ill I would take the occasional leave without pay to be able to have time off with him. Q. They are some of the reasons, are they, that you had to keep digging into the mortgage to stay afloat? A. There were a couple of other reasons as well your Honour. Q. Were they anything to do with the care you devoted to your parents? A. Yes because Charlie wasn't working for a regular part throughout that yes. He was studying at one part. He was in between positions quite a number of times and in order for our household to continue while I was with my parents it was essential to draw on that to pay our bills, yes."
8. There appears to be a distinct possibility that Judy and Charlie will not be able to shed their mortgage burden before they retire. Judy could use her superannuation to retire the debt, but that would leave Judy and Charlie with only Charlie's (modest) superannuation to cater for future exigencies.
9. Their home is an appreciating asset, but there is no reason to think it is appreciating at any rate beyond that elsewhere in the Sydney market. In any event, it is Judy and Charlie's residence.
10. It appears from Judy's conversation with the deceased (at [45] above) that the deceased was concerned about Judy's mortgage debt. I would infer from that conversation that his decision to give Judy a slightly greater bequest than his other daughters reflects that apprehension. The deceased clearly knew that Judy had a mortgage. There is no evidence to suggest that he knew how much the mortgage was, or how its size related to the value of the Pyrmont property. The relatively modest dollar amount by which the deceased favoured Judy over Sandra and Lila ($40,000) suggests the deceased did not understand how large the mortgage debt was. The deceased must have appreciated the amount of time that Judy was devoting to his care (and, earlier, his wife's care) and that she was taking some time off work to do so.
11. The authorities suggest that the Court's approach is that, generally, the community does not expect parents to provide unencumbered homes for their adult children. This is, of course, not a legal principle or rule, but merely the Court's assessment of what community standards expect. Every case is fact specific. This case has the special circumstance of Judy's extensive care for the deceased (and his widow). That care impeded, at least to some extent, her ability to reduce the mortgage debt.
12. Overall, I am satisfied that the deceased did not make adequate provision in his will for Judy's mortgage commitment and thus for her maintenance and advancement in life.
13. As to what provision should be made, I do not think the community would expect that the deceased leave an amount to Judy sufficient to pay out the mortgage entirely. The fact that it remains at a relatively high level is no doubt a consequence, to a certain extent, of matters other than the care Judy has devoted to her parents, and the deceased in particular. Judy is, I infer, jointly and severally liable with Charlie for the $383,000 owing under the mortgage so, in that sense, the debt is not entirely hers.
14. Accepting that these are matters of impression, and that an evaluative judgment of the kind I have described above is necessary, the conclusion to which I have come is that proper provision for Judy requires that she receive from the estate significantly more than the additional $40,000 that, I am inferring, the deceased bequeathed to her on account of her mortgage commitment.
15. Judy's "half" of the mortgage debt is an amount in the order of $190,000. Judy already receives $90,000 under the will, of which $40,000 was, I am inferring, on account of her mortgage commitments. Deduction of that $40,000 from her "half share" of the mortgage ($190.000) yields the figure of $150,000.
16. In my opinion, Judy should receive further provision in that amount.

Has Judy failed adequately to disclosure her financial position?

1. Ms Power submitted that Judy had not made adequate disclosure of her financial position and, indeed, that Judy had deliberately failed to disclose certain assets.
2. It is true that Judy's disclosure was not as fulsome as it could have been but I am satisfied that this was neither deliberate nor material. Judy said, and I accept, that she composed her affidavit with little input from her solicitor, save for matters of "clarity". I am satisfied that Judy made a genuine effort to put into her affidavit all the matters that she thought were relevant to her claim for provision and that there has been no material non-disclosure.

Conclusion

1. I invite the parties to bring in short minutes to give effect to these reasons.
2. I will hear the parties as to costs.

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: 08 November 2016