Sang v Choy

1439/2003 Betty Sang v Lawrence Choy JUDGMENT 1 Master: This is an application under the Family Provision Act 1982 (NSW) in respect of the estate of the late Margaret Choy who died on 7 September 2001. The deceased had eight children, two of whom are the plaintiff and the defendant in this matter survived the deceased. The will of the deceased 2 The deceased made a will in 1970 in which she left the whole of her estate to her youngest son Lawrence, the defendant in the proceedings. On 21 May 2000 the deceased made a will in which she left "my half of the estate located and 14 Lyon St. Randwick" to her eight children. Probate of that will was not obtained, as the deceased left no estate. 3 The plaintiff has obtained a grant under section 41A of the Wills Probate and Administration Act 1898 (NSW). Any notional estate of interest in this matter is held by the defendant who was the joint owner with the deceased of her property at Randwick. He acquired the property by survivorship on the deceased's death. In these circumstances I made an order that the defendant represent the estate of the deceased for the purposes of these proceedings. Assets in the estate 4 As I have said there was no estate and after the deceased's property had been transferred to the defendant, he sold it for the sum of $860,000.00. Thereafter in accordance with his mother's wishes he paid $10,000.00 to each of his sisters save one to whom he paid $20,000.00. 5 Costs have been incurred by both parties in this matter with those of the plaintiff amounting to $44,364.00 and those of the defendant amounting to $27,265.00. Family history 6 The deceased was born on 18 June 1911 in China and she married in 1933. The plaintiff was born on 12 December 1938. In 1939 the deceased's husband arrived in Australia and commenced a business in Harris Street, Pyrmont. His wife and family were trapped in China and they came to Australia in 1946. 7 The defendant was the youngest of the children of the deceased and he was born on 21 April 1954. The plaintiff left school in 1955 to obtain work in an office for a few years. Between 1957 and 1968 she worked for her father in his business until she married in March 1968. At that stage she moved to Campsie and established her own life. Unfortunately her father died two days later. 8 Between 1968 and 1970 the plaintiff operated with her husband a Laundromat in Darlinghurst. In 1970 while Lawrence was still living at home, the plaintiff made her first will to which I have referred. 9 In 1972 the deceased and Lawrence moved to Campsie for a short time. Having tried unsuccessfully to sell the Pyrmont property, they moved back to the property, renovated it with the help of the defendant and ultimately sold it in 1981. At that stage there were discussions between the deceased and the defendant about the purchase of a unit. The deceased was not in favour of this and ultimately the property at 14 Lyon St Randwick was purchased by the deceased and Lawrence as joint tenants. 10 From her proceeds of the sale, the plaintiff contributed $74,641.00 towards the purchase price of $120,000.00. The defendant contributed $14,000.00 in cash and borrowed $36,000.00. Over the years the defendant repaid that loan from his own funds. In 1986 Lawrence married and he and his wife lived there for a short time with the deceased until they moved away from the home. 11 In 1999 the deceased was diagnosed with cancer. From this time on, her children who lived in Sydney set up a roster to stay with her on different days in the week in order to look after her. 12 On 21 May 2000 the deceased made a will to which I have referred. She also attempted to sever the joint tenancy by executing a transfer to herself and lodging it with the Registrar General pursuant to section 97 of the Real Property Act 1900 (NSW). Notice was given to the defendant of that application under the Act and he commenced proceedings in the Supreme Court on 14 June 2000 seeking an order restraining the severance of the joint tenancy. 13 In those proceedings the defendant swore an affidavit in support, which set out a history of the matter but did not record any agreement to not sever the joint tenancy. Those proceedings were compromised and orders were made in the following terms: "The Court declares that:

1. the Plaintiff and the Defendant own the land being the whole of the land as joint tenants as a result of an agreement entered into between them in or about March 1981; located at 14 Lions St, Randwick, being the whole land contained in Folio Id 13/2/97535.

2. the Registrar-General be restrained from severing the joint tenancy of the land located at 14 Lions Street, Randwick; being the whole land contained in Folio Id 13/2/975345;

3. the Plaintiff pay the Defendant's costs of the proceedings;" 14 In September 2000 the deceased was admitted to hospital and she died 7 September 2001. The summons was filed in time. Eligibility of the plaintiff 15 As a daughter of the deceased the plaintiff is clearly an eligible person. In applications under the Family Provision Act, the High Court in Singer v Berghouse (No 2) (1994) 181 CLR 201 has set out the two-stage approach that a Court must take. At page 209 it said the following:- "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

The situation in life of the plaintiff. 16 The plaintiff is aged 65 years and is married. Her husband is 73 years of age and is presently suffering from prostrate cancer, which has advanced, and he is quite sick. She has children that are not dependent upon her. The plaintiff and her husband own their own home at 32 The Boulevard, Sans Souci that is valued at $850,000.00. It is a three-bedroom home as their children only recently moved from the home on their respective marriages. They own a second-hand 1989 car worth $1500.00 and a 1970 Jaguar car that apparently is not roadworthy. They have cash savings of about $10,000.00 and pension funds having a total of $46,104.00. 17 Their income consists of pension and allocated pension, which amounts to approximately $454.00 per week. The outgoings approximate the same amount but they find great difficulty in managing on that income. 18 The plaintiff and the deceased had a good relationship and in the later years, the plaintiff, along with the other siblings helped the deceased when she was ill. During the lifetime of the deceased there was a full family life involving all the deceased's children, except perhaps one.

The situation in life of the defendant 19 The defendant is married with two young children aged 11 and 6. They live in a property at Randwick, which is unencumbered, and have other investments in real estate. The defendant does not advance his financial situation for consideration by the court and accordingly the court can put that to one side. 20 The defendant had a good relationship with the deceased and he was the last child to leave home. He assisted his mother in renovating the new property that was purchased in 1981. As well as contributing to the purchase price he carried out renovations to the kitchen. He borrowed money from his then employer AGL to enable this to occur. 21 There was a good relationship between the defendant and the deceased up until the time when there was the attempt to sever the joint tenancy. Consideration of the application 22 It is necessary to see how the plaintiff says she has been left without adequate and proper provision for her maintenance, education and advancement in life. The plaintiff has asked for a legacy of $150,000.00, which she needs to repair her existing house. She also needs to purchase a new car and the total of these requirements is $48,864.00. Although there was some suggestion in cross-examination that the house was too large for her, it is one in which she has been living for a long-time, is close to the doctors which she and husband need to consult and is one to which she has an attachment. In these circumstances I think the matters she has identified are quite appropriate. 23 The plaintiff and her husband are not members of a health fund and the necessities of life are likely to exhaust the capital fund, which gives them part of their income. In these circumstances clearly the plaintiff needs some fund to accommodate these other expenses and provide for contingencies particularly with her sick husband. 24 There is an initial question that has to be resolved in this matter in respect of notional estate. That question is whether the terms of the consent orders in the litigation will prevent the application of the notional estate provisions to the facts of the present case.

25 The relevant prescribed transaction, which is alleged under s 23(b) (iii) of the Act, is the failure of the deceased to sever the joint tenancy. By the combined effect of s 22(1)(a)(i), (4)(b) and (5) there will be a prescribed transaction if the deceased omits to sever the joint tenancy immediately before death and full valuable consideration in money or money's worth is not given for the omission of the deceased to do that act (s 22(1)(b).

26 In Wade v Harding (1987) 11 NSWLR 551 Mr Justice Young, as he then was, concluded on the facts of that case "what was forgone in not severing the joint tenancy was received by continuing to be a joint tenant." This conclusion appears to be because he formed the view that immediately before death the deceased had an equal chance with the joint tenant of benefiting by the jus accrescendi. In Cameron v Hills (Unreported, NSWSC, 26 October 1989) Needham J described that approach in these terms: "With great respect to his Honour, I find it difficult to see how a joint tenant, about to die immediately, can be said to have an equal chance of surviving the other joint tenant. The Court must look at the position the moment before death. Whatever may have been the facts in that case justifying the conclusion, there are no such facts in this case. Immediately before the death of this deceased there was no rational prospect of his surviving the defendant. Accordingly, in my opinion, no valuable consideration in money or money's worth was given for the omission of the deceased to sever the joint tenancy."

27 Provided that a deceased has suffered some injury, had a medical problem, or set in train some sequence of events as a result of which death ensues, then, like His Honour Justice Needham, I would normally conclude that there was no rational prospect of the deceased surviving his co-tenant. In the present case the deceased was very ill for some time. In these circumstances I would conclude that no valuable consideration was given and thus there would be a prescribed transaction except for the difficulty to which I will now turn. 28 The Family Provision Act relevantly contains the following provisions: "22 Prescribed transactions (1) A person shall be deemed to enter into a prescribed transaction if: (a) on or after the appointed day the person does, directly or indirectly, or omits to do, any act, as a result of which: (i) property becomes held by another person (whether or not as trustee), or (ii) property becomes subject to a trust, whether or not the property becomes in either case so held immediately, and (b) full valuable consideration in money or money's worth for the firstmentioned person's doing, or omitting to do, that act is not given. (2) Except as provided in subsections (5) and (6), a prescribed transaction referred to in subsection (1) shall, for the purposes of this Act, be deemed to take effect at the time property becomes held by a person or subject to a trust as referred to in subsection (1) (a). (3) The fact that a person has done, or omitted to do, an act as a result of which property became held by another person or subject to a trust shall not prevent a later act or omission by the firstmentioned person (as a result of which the same property becomes held by another person or subject to a trust) constituting a prescribed transaction. (4) In particular and without limiting the generality of subsection (1), a person shall, for the purposes of subsection (1) (a), be deemed to do, or omit to do, an act, as a result of which property becomes held by another person or subject to a trust if: (a) the person is entitled, on or after the appointed day, to exercise a power to appoint, or dispose of, property which is not in the person's estate but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled and, as a result of the omission to exercise the power and of the person's death or the occurrence of the other event: (i) the property becomes held by another person (whether or not as trustee) or subject to a trust (whether or not the property becomes in either case so held immediately), or (ii) another person becomes (whether or not immediately) or, if the person was previously entitled, continues to be, entitled to exercise the power, (b) holding an interest in property which would, on the person's death, become, by survivorship, held by another person (whether or not as trustee) or subject to a trust, the person is entitled, on or after the appointed day, to exercise a power to prevent the person's interest in the property becoming, on the person's death, so held or subject to that trust but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled," 29 The question that is raised is whether or not the deceased was "entitled… to exercise the power to prevent the person's interest in the property becoming on the person's death, so held…". This requires consideration of whether or not the orders to which I have referred will prevent any other means of the deceased severing the joint tenancy before her death.

30 The defendant's submission in respect of the first declaration which appears in the orders I have set out above is that there is an estoppel by judgment to the effect that the deceased and the defendant owned the land as a result of an agreement not to sever the joint tenancy. The declaration merely on its face refers to an agreement of a particular date and does not describe the nature of the agreement. The defendant suggests that it should be inferred that the nature of the agreement was one not to sever the joint tenancy. 31 It is clear that a consent order such as the one with which I am concerned, can give rise to cause of action estoppel is often difficult to determine what questions or cause of action were concluded. Normally the Court will examine all the available evidence to ascertain the matters in dispute. It is said that any issue, which the parties recognise, was the subject of the litigation and was fundamental to the judgement or order will be conclusively determined. See the cases referred to in Res Judicata, Third Edition at page 39 note 108. The proper approach to determine the scope of a consent judgement was stated by Lord Herschel LC in a re South American and Mexican Co (1895) 1 Ch 37 at 50 in these terms: " …a judgement by consent is intended to put a stop to litigation between the parties, just as much has is a judgement which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgements and were to allow questions that what really involved in the action to be fought over again in a subsequent action." 32 The only evidence that is available to assist with the interpretation of the order is the summons, which commenced the proceedings, and the affidavit filed by the defendant, who was the plaintiff in the lower court proceedings. The summons in the proceedings sought the order that was made in paragraph two of the orders and a declaration in paragraph two which reflects the same terms as the declaration which appears in paragraph one of the declaration and orders. 33 It is apparent from the affidavit in support that what prompted the application to the Court was the service of the notice sent out by the Registrar General pursuant to s 97 (5) of the Real Property Act. Section 97 is in the following terms: "97 Severance of joint tenancy by unilateral action (1) Registration of a transfer by a joint tenant of the joint tenant's interest in the land that is the subject of a joint tenancy to himself or herself severs the joint tenancy. (2) If a joint tenancy is proposed to be severed by unilateral action by one joint tenant, the Registrar-General may require the person who proposes to sever the joint tenancy to provide the Registrar-General, before recording the instrument that severs the joint tenancy, with: (a) the names and addresses of the joint tenants or, if the addresses are unknown, evidence of the efforts made by the person to locate the addresses of the joint tenants, and (b) a statement that the person is not aware of any limitation or restriction on his or her capacity or entitlement to sever the joint tenancy (arising, for example, from the capacity in which the person holds an estate or interest in the land concerned or from a private agreement). (3) The Registrar-General may require the person who proposes to sever a joint tenancy to provide additional information concerning: (a) other persons who may be affected by the severance of the joint tenancy, and (b) any limitation or restriction on the capacity or entitlement of the person to sever the joint tenancy, and

(c) any other matter that the Registrar-General considers appropriate. (4) The Registrar-General may require any information provided for the purposes of this section to be provided by statutory declaration. (5) The Registrar-General must give notice of the lodgment of a dealing for registration or recording that may sever a joint tenancy to all joint tenants in the joint tenancy (other than any joint tenant who executed the dealing, or on whose behalf the dealing was executed). Section 12A (2) and (3) applies to and with respect to a notice given under this section. (6) Despite subsection (5), the Registrar-General is not required to give notice of the lodgment of a dealing for registration or recording that may sever a joint tenancy to a joint tenant in any of the following circumstances: (a) if the proposed severance is to arise from the recording of a court order made in proceedings to which the joint tenant is a party, (b) if the proposed severance is to arise from the registration of a transfer pursuant to a writ in respect of an interest of any of the joint tenants, (c) if the dealing concerned is witnessed by the joint tenant and the dealing indicates that the joint tenancy is to be severed, (d) if the dealing is accompanied by a written acknowledgment by the joint tenant that he or she has received legal advice as to the effects of the severance of the joint tenancy, (e) if the proposed severance is to arise out of registration following an application under section 90." 34 It is apparent from the terms of s 97 (2)(b) that one reason the Registrar General might refuse to register a severance would be the existence of a private agreement not to sever the joint tenancy. However there may well be other reasons some of which are referred to in the section, which might also lead him to refuse to sever the joint tenancy, by registration of the transfer. I have already commented on the fact that the affidavit, which is the only evidence on the file, does not in fact set out any conversations or other documents, which in anyway demonstrate an agreement not to sever the joint tenancy. All it does is to report the circumstances of the purchase and discuss why a house was purchased instead of a flat. 35 It is however probably fair to conclude that what was determined was that the deceased was not entitled to have the transfer which she had signed registered by the Registrar General as an effective severance of the joint tenancy. There are other ways in which the deceased could have severed the joint tenancy which did not depend upon agreement between herself and her son. She could have transferred her interest to a third-party. Such a transfer severs the joint tenancy because it destroys the unity of title and the transfer does not require the consent of, or notification to the remaining joint tenant. It might also be terminated by an application to Court for an order to sell or partition the property pursuant to the provisions of the Conveyancing Act 1919 (NSW). 36 It would appear to me that nothing was decided already issue in the Equity proceedings, sailing either of these methods by which the deceased could have severed the joint tenancy. 37 The defendant also submits that the order made, which restrained the Registrar General from severing the joint tenancy is a perpetual restraint, is unlimited as to time and would operate to prevent any further severance taking effect. In these circumstances it was submitted that the deceased would not have the relevant power to sever the joint tenancy. It seems to me that such a restraint would have no effect upon any orders that might be made in either a partition suit or a suit for the appointment of trustees for sale pursuant to section 66G of the Conveyancing Act. In these circumstances it seems to me that the deceased did have power in this way to sever the joint tenancy and that the orders and declarations of the court which were made by consent will not prevent this result. I therefore will turn to whether or not an order should be made designating property for the purposes of satisfying any order made in favour of the plaintiff.

38 Section 27 of the Family Provision Act is in the following terms: "(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered: (a) the importance of not interfering with reasonable expectations in relation to property; (b) the substantial justice and merits involved in making or refusing to make the order; and (c) any other matter which it considers relevant in the circumstances. (2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to: (a) the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person; (b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration; (c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be; (d) whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income; and (e) any other matter which it considers relevant in the circumstances."

39 It was the submission of the defendant that there were reasonable expectations held by the defendant that he should receive the property on the death of his mother. In paragraph 34 of his affidavit he gave evidence of a conversation with his mother in which she said that she knew the property was to go to him when she died and that she wanted him to make the payments to which I have earlier referred in this judgment. That may be so, but it is also apparent from other documents, which included proposals that the defendant put to his sisters that he was prepared to compromise on some other basis. Having regard to the order, which I propose to make, there is in my view no interference with his reasonable expectations in relation to the property. 40 It was also submitted that the substantial justice and merits required that there be no such order. Reference was made to his contributions both to the purchase price and the improvements to the property and the fact that the plaintiff had left home and led an independent life since 1968. Once again having regard to the amount of the order and the matters which have been raised I think substantial justice and merits favours making an order in favour of the plaintiff who has demonstrated a proper need for provision. 41 I have already referred to the way in which the plaintiff has been left without adequate and proper provision and in my view an appropriate order is that the plaintiff receive a legacy of $100,000.00. I will hear the parties on the form of orders to be made including the property to be designated as notional estate.

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