Stern v Engel [2001] NSWSC 1025 | Case summary

Total: $660 22 According to the estimation contained in his affidavit of 11 October 2001, the weekly outgoings and expenses of the Plaintiff and his wife total $937. The asserted shortfall of $277 a week is met by the Plaintiff borrowing on credit cards. They are able to do this, it was said, since until 12 March 2002 they are not paying interest upon their present housing loan (apparently, the terms of that loan provided for interest until that date to be paid in advance). 23 In addition, from time to time since March 2001 the Plaintiff and his wife have provided in their residence accommodation and board to students of the English language. It would appear that they make a profit of about $60 a week in respect of each such student. The present credit card debts of the Plaintiff and his wife total almost $8,000. 24 The affidavit of 11 October 2001 also contains the information that in 1996 the Plaintiff's stepfather died and the Plaintiff from his estate received $1,000,800. 25 According to that affidavit the Plaintiff used that inheritance, together with the proceeds of sale of the home unit at 16/205 Birrell Street, Waverley ($285,000), to purchase the Nancy Street residence. He also paid to the builder and contractor for alterations to that house property (such alterations including the construction of a swimming pool) the sum of $365,000. 26 That affidavit refers to the fact that in 1997 the Plaintiff's son attended at the Bond University to pursue a course in communications and that he graduated in 2000. The cost for his tuition and accommodation was about $160,000. 27 The Plaintiff in the foregoing affidavit of 11 October 2001 expressed a wish to sell the Bondi residence. He stated that there are currently pending two pieces of litigation, one against the builder and the other against the kitchen builders, and continued, "When we hopefully obtain a verdict we will then be able to afford to finish the house and offer it for sale". 28 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. 29 It will be appreciated that the Defendant, as a child of the Deceased, is also an eligible person within the foregoing definition. The only other eligible person is the former wife of the Deceased, Mrs Irene Johnson (an eligible person within paragraph (c) of the definition). Mrs Johnson, although served with a notice of claim, has not made a claim against the estate of the Deceased, and, indeed, has sworn an affidavit in support of the claim of the Plaintiff. 30 It cannot be emphasised too strongly that in a claim for provision under the Family Provision Act it is the responsibility of the applicant to set forth as fully and as frankly as possible all details of his financial and material circumstances, including details of his assets and liabilities, of his income and outgoings (and, where the applicant is living with a spouse, such details in respect of the spouse). 31 In the instant case this the Plaintiff has significantly failed to do. He has been far from frank, or forthcoming, especially concerning the details of his assets, and the appropriate values to be ascribed to those assets. 32 In his principal affidavit (being that of 9 February 2001) the Plaintiff ascribed to the Nancy Street house a value of $900,000. However, the epitome of mortgage which he annexed to his affidavit of 11 October 2001 refers to a valuation of that house property in an amount of $1.1 million, made by Stanley Thompson Valuers and dated 5 November 1999 (that date, it will be appreciated, being some fifteen months before the date upon which the Plaintiff swore his principal affidavit). Further, the mortgage to Key Nominees Pty Limited was executed on 12 March 2001, only a month after the date of the principal affidavit. 33 Further, the Plaintiff in neither of his affidavits made any reference to the amount of the benefit which he received from the estate of his late mother, who died on 5 July 1992. By her will, Mrs Bella Roth (formerly Stern) gave to the Plaintiff a legacy of $50,000. (It should also be noted that by that will she gave to the Plaintiff's daughter Danielle Stern a legacy of $20,000 and to the Plaintiff's son Justin Stern a legacy of $30,000.) The will of the late Mrs Bella Roth gave the rest and residue of her estate upon trust for her husband Mark Roth absolutely, provided that, in the event that he should predecease her or fail to survive her for a period of twenty-eight days, the rest and residue of that estate should be divided equally between the present Plaintiff and the present Defendant. 34 Although the Plaintiff chose to make no reference in his affidavits to the amount or nature of his inheritance from his late mother, it emerged in the course of his oral evidence under cross-examination that his mother's estate was worth in excess of $3 million; that the Plaintiff received from that estate either $50,000 (or possibly $20,000) plus a home unit in Birrell Street, Bondi, which home unit was subsequently sold in 1997 for $350,000. That home unit was subject to a mortgage of either $65,000 or $67,000, and it was necessary for the Plaintiff to pay stamp duty in an amount of either $17,000 or $18,000. In consequence, the Plaintiff received upon the death of his mother benefits totalling about $293,000 net. (The foregoing calculation appears to suggest that the direct monetary benefit which the Plaintiff received from his mother's estate was somewhat less than the legacy of $50,000 referred to in will, but more than the $20,000 which he also referred to in the course of his cross-examination.) 35 It also emerged during the course of cross-examination that the amount which the Plaintiff received from his stepfather's estate was $1,080,000, not, as stated in paragraph 5 of his more recent affidavit, $1,000,800. 36 Further, it emerged in cross-examination that the Plaintiff and his wife had previously owned shares in Telstra, which had been sold before the swearing of the affidavit of 9 February 2001. No reference is made in that affidavit to the amount of the proceeds of sale, or to the destination of those proceeds. Further, It emerged in the course of cross-examination that the Plaintiff and his wife also own a second motor vehicle, being a Hyundai, which is registered in the name of the Plaintiff's wife. When cross-examined on this omission from his affidavit evidence, the Plaintiff said that he "did not think of it". 37 I have already referred to the statement in the Plaintiff's second affidavit concerning the recent purchase (between 9 February 2001 and 11 October 2001) of a 1999 Holden motor vehicle. Despite the assertion contained in paragraph 2 of that affidavit that the purchase price was $30,000 and that the totality of that purchase price was borrowed from Suttons Motors, nevertheless under cross-examination the Plaintiff revealed that the total purchase price was $35,000, of which an amount of $30,000 was borrowed. 38 That is, the Plaintiff and his wife currently own two motor vehicles, one of which was purchased after the institution of the present proceedings, and only a few months before the hearing of the Plaintiff's claim. The recent purchase of that motor vehicle has had the consequence that the Plaintiff and his wife now have an additional liability for a monthly payment of $633. 39 The Plaintiff made no reference in his evidence, until it emerged under cross-examination, that he had received a payment by way of superannuation in an amount of $2,000, when his employment with TNT terminated in 1991. (In this regard I would here observe that, although in his oral evidence under cross-examination the Plaintiff said that he had been employed by TNT for more than 25 years, his affidavit evidence (paragraph 12 of his affidavit of 9 February 2001) indicates that the employment with TNT Couriers could have been for no longer than twenty years. Further, in his affidavit evidence he made no reference to the fact that for two years after that termination of employment he had received compensation, apparently in a weekly amount (the amount, however, being unspecified), and then by way of a lump sum payment of about $1,000. 40 The clear impression given (and, presumably, intended) by the statement of the Plaintiff in paragraph 5(b) of his principal affidavit concerning his son Justin (who at that time was living at home with his parents) was that he was a lazy layabout, unemployed and unemployable. In the Plaintiff's second affidavit a totally different picture was revealed, when it emerged that Justin holds a degree in communications from a university of highly regarded academic standards, for whom the cost of tuition and the cost of accommodation whilst pursuing his university course totalled about $160,000. By the time of the hearing Justin was no longer residing with his parents. 41 It would appear that in consequence of the deaths of his mother and his stepfather, the Plaintiff received inheritances totalling $1.37 million. In addition, he received a housing loan from RAMS of $211,000. The purchase price of the Nancy Street property was $702,500, in February 1997. In November 1999 (that being, as I understand it, after the Plaintiff had expended a considerable sum upon the restoration and renovation of that property) its value had increased to $1.1 million. Upon the foregoing calculations there would be an amount of about $410,000 not otherwise accounted for. Even if of that $410,000 the Plaintiff had expended $160,000 on the cost for tuition and accommodation of Justin at the Bond University (and the Plaintiff does not say that the totality of that cost was met by himself and his wife - Justin himself received a legacy of $30,000 from his grandmother's estate), there would still be an amount of about $250,000 unaccounted for. The Plaintiff made no effort to explain what had happened to that amount, and it would have been extremely easy for him to have done so. 42 It was the case for the Plaintiff that he had a present need, brought about by the situation of purchasing an expensive house and paying a significant sum for the enhancement of that residence. The Plaintiff has chosen not the place before the Court any precise details concerning the house itself. Apart from the valuation referred to in the epitome of mortgage, the Plaintiff did not even choose to place before the Court a present valuation of the house property. He was content to allow the Court to believe that it had a value of only $900,000, when the Plaintiff must have known that more than a year before he gave that figure, there was in existence a valuation of the property at $1.1 million. 43 The Plaintiff has not chosen to set forth details of the accommodation in the house, which, if only from its value, would seem to be a commodious and substantial residence. Neither has he offered any evidence of his attempts, if any, to sell the property. When the house is sold the Plaintiff's financial circumstances, even on his own case, will dramatically improve, and any financial problems which he presently has will cease to exist. 44 If the Plaintiff has any need, then that need can be accommodated by the immediate sale of the Nancy Street property. 45 A considerable body of evidence was presented on behalf of the Plaintiff concerning the extent of his contact with, and the nature of his relationship with the Deceased, and concerning the character of the Defendant, and the conduct of the Defendant and her daughter. 46 Most of that evidence was totally irrelevant to the matters which the Court must decide in the present proceedings. 47 However, it should here be observed that the Plaintiff did not dispute the substantial truth of the statement made by the Deceased in clause 4 of his will concerning the contact between himself and the Plaintiff (the Plaintiff under cross-examination stating that he had had no contact with the Deceased for a period of about nine years before 1989, or from 1991 until the death of the Deceased some eight years later. The statement by the Deceased contained in clause 4 of his will is, pursuant to section 32 of the Family Provision Act, admissible as evidence of the facts stated therein. 48 It should be appreciated that an order for provision is not made as a reward for good conduct. Neither is it withheld as a punishment for perceived bad conduct on the part of an applicant. 49 It cannot be emphasised too strongly that an applicant for an order for provision must establish his own case upon its own merits. It is totally beside the point that the chosen object of the testamentary beneficence of the Deceased, if she had been left without provision and had brought a claim, might, on account of what was formerly referred to as conduct disentitling, not have succeeded in such a claim. 50 The Court must approach the present claim of the Plaintiff in the light of competing claims upon the testamentary beneficence of the Deceased. In the instant case the only such competing claim is that of the Defendant. The Defendant has not placed before the Court any evidence to suggest that her financial and material circumstances are such as would have the effect of diminishing, let alone extinguishing, any order for provision an entitlement to which the Plaintiff might otherwise establish. 51 I have had the benefit of receiving from respective Counsel for the parties a chronology (together with, in the case of the Defendant, a summary of various values). Those documents will be retained in the Court file. 52 The submissions by Counsel for the Plaintiff relied largely upon the decision of the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 (especially at 209, per Mason CJ, Deane and McHugh JJ). 53 In performing the first step in the two stage process identified by the High Court, at 208, to determine whether the Plaintiff has been left without adequate provision for his maintenance or advancement in life, the Court must assess whether the absence of such provision resulted in an inadequacy in what, in all the circumstances, was the proper level of maintenance appropriate for the Plaintiff, having regard, amongst other things, to his financial position, the size and nature of the estate of the Deceased, the totality of the relationship between the Plaintiff and the Deceased, and the relationship between the Deceased and other persons who have a legitimate claim upon his bounty. The High Court, at 210, said that that question, although it involves the exercise of value judgments, is strictly one of fact (see White v Barron (1980) 144 CLR 431 at 441-443; Goodman v Windeyer (1980) 144 CLR 490 at 501-502, 509; Hunter v Hunter (1987) 8 NSWLR 573 at 576). 54 I have already referred to the failure of the Plaintiff to set forth as fully and as frankly as possible all details concerning his financial and material circumstances (and those of his wife). Further, there is a strong suspicion in this case that the Plaintiff has recently refinanced his mortgage (and will thus after 12 March 2002 increase his monthly outgoings by about $400 - from about $1,400 a month to RAMS to $1,800 a month to Key Nominee Pty Limited) and has acquired a second motor vehicle, costing $35,000 (and has thus increased his monthly outgoings by $633) essentially for the purpose of creating a significant shortfall between the total income of himself and his wife and their total outgoings and expenditure. 55 In recent years the Plaintiff, by inheritance from his mother and his stepfather, received a total net amount of more than $1.3 million. He and his wife live alone in a residence (with a swimming pool) having a value of $1.1 million. They own two motor vehicles, although the Plaintiff's state of health limits his driving activities. 56 Any financial problem which the Plaintiff may perceive at the present time can be resolved by his selling the Nancy Street house immediately. In his evidence he stated that he proposed to do so. 57 Consonant with the foregoing principles enunciated by the Judicial Committee of the Privy Council in Bosch v Perpetual Trustee Company Ltd (1938) AC 463 at 476 and Singer v Berghouse (and the authorities referred to therein), I have no hesitation in expressing my finding that the evidence demonstrates that the Plaintiff has not been left without adequate provision for his proper maintenance. 58 The foregoing finding is of itself sufficient to determine the present application. 59 But even if (contrary to the finding which I have just expressed) I were to be satisfied that the evidence demonstrates that the Plaintiff has been left without adequate provision for his proper maintenance, it would then be necessary to proceed to the second stage in the two stage process identified by the High Court in Singer v Berghouse. In performing that second stage I would not be disposed, in the exercise of the discretion of the Court, to make any order for provision for the Plaintiff. The situation in which he finds himself is one the remedy of which reposes solely in his own hands. When he chooses to sell the Nancy Street residence no intervention of the Court will be required to result in his being in a position where he has adequate provision for his proper maintenance. 60 In consequence, therefore, the claim of the Plaintiff will be dismissed. 61 Since the present proceedings have been in the nature of adversarial proceedings between the Plaintiff and the Defendant, and since the Defendant was not upholding the will of the Deceased for the benefit of any beneficiaries named therein other than herself, I consider it appropriate that the costs order which will be made in favour of the Defendant should be for costs on the party and party basis rather than (is usually appropriate to a costs order in favour of an executor) on the indemnity basis. 62 I make the following orders:

Stern v Engel

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