Butler (bht NSW Trustee & Guardian) v Morris [2012] NSWSC 748
Carey v Robson
Source
Original judgment source is linked above.
Catchwords
Butler (bht NSW Trustee & Guardian) v Morris [2012] NSWSC 748
Carey v Robson
Judgment (17 paragraphs)
[1]
Background Facts
I am satisfied that the following facts have been established, and that they provide a useful background. In relation to any disputed matters to which I refer, the following facts should be regarded as the findings of the Court.
The deceased died aged 79 years, having been born in July 1934.
The deceased married Cvetko Stojovski in January 1958, in Macedonia, and they remained married until his death in February 2003.
The deceased and Cvetko had only two children, who are the parties in the proceedings. The Plaintiff was born in October 1958 and the Defendant was born in July 1963.
Whilst in Macedonia, the family lived in a small village. It is said that the deceased had only very basic schooling and that she never learned to read or write in English.
Cvetko migrated to Australia in 1967. The deceased and the children followed about a year or so later. After arriving in Australia, Cvetko worked, for a time, in the NSW Railways, whilst the deceased worked in various factory jobs.
In May 1973, the Plaintiff, when she was not quite 15 years old, married her husband, Zivko ("Jim"), in Macedonia. They remain married and have 3 children: Peter, who was born in October 1974; Steven, who was born in November 1978; and Alexander, who was born in August 1973. (Only Peter played a role in an event that happened, to which reference will be made, but he was not a witness in the proceedings. He was, however, present in Court, virtually throughout the hearing. No evidence was given to explain his failure to be called as a witness.)
The Defendant married his first wife, Suzana, in 1988. They separated in 1998 and subsequently divorced. There were no surviving children of their marriage.
The Defendant met his current partner, Vilma, in 2000. They commenced to live together in 2001, and they now have 4 children, namely Jessica, born in January 2002, Stephanie, born in June 2003, Rebecca, born in November 2004, and Elizabeth, born in July 2010.
In about 1980, Cvetko and the deceased purchased, as joint tenants, a property at Lorraine Avenue, Bardwell Valley ("the Bardwell Valley property"), a suburb of southern Sydney. They lived in that property, together, initially with the Defendant, until Cvetko's death, and then, apart from a short time when she was hospitalised, or in a nursing home, the deceased continued to live there until early 2013, when she was admitted to a nursing home.
The evidence (part of Ex. 9) reveals that a Notice of Death, together with a copy of Cvetko's Death Certificate, was lodged under s 101 of the Real Property Act 1900 (NSW), on behalf of the deceased, in March 2003. Thereafter, until November 2012, she was the sole registered proprietor of the Bardwell Valley property.
The deceased was admitted to St George Hospital on 18 August 2012 and was discharged on 31 October 2012. Upon her admission, she was diagnosed as having suffered a left middle cerebral artery (MCA) stroke. She had been brought to the hospital with dense right hemiplegia and aphasia.
The deceased was admitted to St George Hospital, again, on 10 December 2012. She was described, then, as having suffered an acute stroke with left sided weakness.
(There is a dispute about the deceased's medical condition, during and following, her hospitalisation, but since there is no claim brought alleging an incapacity to enter the transaction that the deceased did, not much else needs to be written about this topic.)
In November 2012, the deceased transferred the Bardwell Valley property to the Defendant. A copy of the Transfer, which is dated 22 November 2012, reveals that the Defendant provided no consideration to the deceased for the transfer of the Bardwell Valley property. A valuation obtained, at the time of the transfer, revealed that its then value, for stamp duty purposes, was $900,000.
It will be necessary to return to the events surrounding the Transfer of the Bardwell Valley property by the deceased to the Defendant as it is this transaction that has been the principal cause of the proceedings. It is this property, or its proceeds of sale, that the Plaintiff seeks to have designated as notional estate.
The Defendant also disclosed that, at the time of the deceased's death, an amount of $92,440, which had belonged to the deceased, was then held in the bank accounts of the Defendant's four daughters. His evidence is that he expended amounts totalling $47,440 from these accounts, principally for the deceased's funeral and associated expenses ($42,440), and that the balance ($45,000) was paid to the Plaintiff on 22 January 2015. (The Plaintiff acknowledges receipt of the cheque and says that it was only banked many months later.)
Although there was a dispute as to the conversation between the Plaintiff and the Defendant regarding the reason for the transfer of these funds and for opening accounts in the names of the Defendant's minor children, at the hearing the proper expenditure of the funds was not in contest. Neither party suggested that any of the amounts expended should be repaid to the estate, or designated as notional estate. In particular, whatever the result of the proceedings, the Defendant did not seek to recover the amount paid to the Plaintiff out of the funds.
At the date of hearing, the parties agreed that the current market value of the Bardwell Valley property is $1,550,000. It is described in the valuation (Ex. A) as a reasonably level regular shaped block of land, with a single storey house constructed on it. The house comprises 2 to 3 bedrooms, which provides a reasonable standard of accommodation. There is a lounge room, kitchen-family room, bathroom, laundry, additional toilet, front balcony, and rear balcony. It has a single carport and converted single garage/studio storeroom, as well as a double carport.
The valuation also refers to the house as "currently being renovated with the kitchen, some electrical, painting, flooring, laundry, mezzanine bedroom yet to be completed" and it states that the valuation was conducted on an "as is" basis.
The Defendant gave evidence that he commenced these renovations in late January 2015. As at July 2015, he had spent about $50,000 on the renovations.
Subject to any submissions that may be made on costs, usually, in calculating the value of the deceased's estate and notional estate finally available for distribution, the costs of the present proceedings should be considered, with circumspection. A Plaintiff, if successful, normally, will be entitled to an order that her, or his, costs, calculated on the ordinary basis, be paid, whilst the Defendant, as the person appointed to represent the estate and notional estate, irrespective of the outcome of the proceedings, normally, will be entitled to an order that his, or her, costs, calculated on the indemnity basis, be paid out of the estate or notional estate.
The solicitor at the firm representing the Plaintiff, Mr T L Goldberg, deposed, in an affidavit sworn on 18 May 2016, that the Plaintiff's costs and disbursements, calculated on the indemnity basis, are $136,762 (upon the basis of a two day hearing). This estimate includes an "uplift premium", pursuant to a conditional costs agreement between the Plaintiff and the firm. A copy of the conditional costs agreement is not in evidence and, therefore, the Court was not provided with the percentage rate of the uplift fee, although the total amount thereof is estimated to be $24,348.
Section 323(1) of the Legal Profession Act 2004 (NSW), which applies to this case (but which was repealed from 1 July 2015, and was replaced by the Legal Profession Uniform Law 2014 (NSW)), provides that:
"A costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate."
Section 323(2) provides that a conditional costs agreement may relate to any matter, except a matter that involves criminal proceedings or proceedings under the Family Law Act 1975 (Cth).
Section 324 of the Legal Profession Act 2004, permits a conditional costs agreement that contains provision for an "uplift fee". An "uplift fee" is defined, in s 302, as "additional legal costs, excluding disbursements, payable under a costs agreement on the successful outcome of the matter to which the agreement relates".
Mr Goldberg also disclosed that the Plaintiff's costs and disbursements calculated on the ordinary basis, inclusive of GST, were estimated to be $95,733. It was agreed that if the amount of the "uplift fee" is not included as part of the Plaintiff's ordinary costs, the estimate of her costs and disbursements, calculated on the ordinary basis, would be $71,385.
Neither party made any submissions, in writing, as to the entitlement of a Plaintiff to an additional amount for costs for the uplift fee, or the reasons why any such amount should be passed on to a Defendant by an order for costs calculated on the ordinary basis.
During oral submissions, however, it seems to have been accepted that the "uplift fee" was not part of the ordinary costs of the Plaintiff: Professor G E Dal Pont in Law of Costs, (3rd ed 2013, LexisNexis) at [17.55]; T180.45 - T181.31.
The Defendant's solicitor, Ms D C Chambers, in an affidavit sworn on 25 May 2016, estimated the Defendant's costs and disbursements of the present proceedings, including counsel's fees, calculated on the indemnity basis (upon the basis of a two day hearing), to be about $84,678. Of those costs, the Defendant has paid $44,418 from his own resources, with the amount of $40,260 left to be paid. However, in calculating the amount available as the value of property to be designated as notional estate, the whole of the Defendant's costs, calculated on the ordinary basis, should be deducted.
There was no suggestion that an Offer of Compromise, or Calderbank offer, may be relevant to the determination of how costs should be borne. It was accepted by the Defendant, without demur, that if the Plaintiff were successful, she should receive her costs, calculated on the ordinary basis (and without the uplift fee), out of the estate. It was not accepted, however, by the Plaintiff, that if she were unsuccessful, that she should pay the Defendant's costs. Rather, counsel for the Plaintiff submitted that in those circumstances, there should be no order that the Plaintiff pay the Defendant's costs: T181.33 - T181.36.
I shall deal with the question of costs later in these reasons.
I shall use the estimates agreed upon to provide a guide to whether an order should be made, and the quantum of the family provision order, if any, to be made in favour of the Plaintiff.
It follows that if all of the estimates prove accurate, and if all of the costs (other than the uplift fee) are ordered to be paid out of the notional estate, the estimated amount (subject to s 89(2) of the Act, to which I shall refer) that will be available to be designated as notional estate, will be $1,393,937.
The parties were also able to agree, at the hearing, that the Defendant should be allowed a period of 3 months to satisfy any order for provision, and for costs made in favour of the Plaintiff, before an order is made for the sale of the Bardwell Valley property. The Defendant was satisfied with that amount of time being given to him to raise the necessary funds.
Finally, the parties agreed that there are no other eligible persons in respect of whom an application for a family provision order may be made.
[2]
Some Additional Matters relating to the Plaintiff and the Defendant
In September 1975, the Plaintiff's husband, Jim, and Cvetko purchased a property, also at Lorraine Avenue, Bardwell Valley, ("the Lorraine Avenue property") for $37,000. A mortgage, securing a debt of $15,000, was registered on the title to the property.
In July 1979, the Plaintiff and Jim purchased Cevtko's interest in the Lorraine Avenue property for $27,500. A mortgage securing a debt of $19,000 was registered on the title to the property. At least some of the money borrowed was used by the Plaintiff and Jim to renovate the Lorraine Avenue property.
It is the Lorraine Avenue property in which the Plaintiff and her family have lived since that time, and in which the Plaintiff and Jim now live alone. It is described as a single storey 3 bedroom house, which provides a good standard of accommodation. A detached 3 bedroom granny flat is located at the rear of the property: Ex.C. Rental from the granny flat provides an income to them.
The Bardwell Valley property was renovated in about 1988. During the renovations, which took about 12 months to complete, the deceased and Cvetko lived with the Plaintiff and Jim in the Lorraine Avenue property.
In 1998, the Plaintiff, her husband and two of their sons, Peter and Steven, purchased a property, as joint tenants, in Gipps Street, Bardwell Valley ("the Gipps Street property") for $295,000. A mortgage, securing a debt of $311,000, was registered on the title to the property.
By Transfer dated 9 April 2013, the Plaintiff and Jim transferred their interest in the Gipps Street property to Peter and Steven for $400,000. (It was said to have a value of $800,000.) They took a mortgage for the whole of the sale price. I shall return to the Plaintiff's evidence about this transaction later in these reasons.
The Gipps Street property is described as having two 3 bedroom homes built on the land. Peter and Steven each live in one of the homes.
On a date not disclosed in the evidence, shortly after his separation from Suzana, the Defendant purchased a property at Victory Street Belmore ("the Belmore property"). It is described as having a single storey, 3 bedroom house which provides a reasonable standard of accommodation. It is the home in which the Defendant, his wife, and their 4 children currently live, although when the renovations to the Bardwell Valley property are completed, they hope to move there and rent the Belmore property.
The Defendant returned to live in the Bardwell Valley property for about 4 years commencing in the late 1990s. However, it is clear from the evidence that he has not returned to live there since then.
[3]
Credibility of the Parties
I have referred to the Plaintiff's open hostility to the Defendant and her belief that he acted duplicitously in relation to the transfer of the Bardwell Valley property. Indeed, she described the Defendant and Vilma as having "planned this all along" (T108.09 - T108.23). The Plaintiff also made the blanket statement: "My brother hasn't told the truth … in this matter from the day it started" (T91.49 - T91.50).
There is a similar allegation expressed in correspondence addressed to the Defendant, from a solicitor, on behalf of the Plaintiff, in February 2015, to which reference shall be made. Even fraud is alleged in that correspondence. Finally, the Plaintiff admitted that she was "upset" with the Defendant: T101.20.
I regret to say that these views have coloured the Plaintiff's evidence. The allegations were unsubstantiated.
The Plaintiff did not accept any suggestion that the deceased had ever said that she wished to give the Bardwell Valley property to the Defendant. The following exchange in the evidence is instructive:
"Q. Your husband, Jim, has long had the attitude that the property that your mother owned at 40 Lorraine Avenue should have been transferred to your sons. Do you agree or disagree with that?
A. Disagree.
Q. You know that your brother from his marriage to Suzana lost an infant child, George. Do you remember that?
A. My brother lost a lot of children….
Q. I understand that. I'm specifically asking you about George?
A. Yes.
Q. I'm suggesting to you that about the time that George was buried that there was a gathering at your parents' home at 40 Lorraine Avenue where you were present and your husband was present and your mother was present.
A. Yes, sir.
Q. On that occasion Jim said to your mother, "Give your house to my boys. Ivan has lost his last child. He'll never have children." Do you remember him saying that?
A. No, I don't.
Q. Do you deny that?
A. I deny it because I reckon that'd be something that would come out of my brother's mouth.
Q. I suggest that your mother responded by saying, "I will never ever give you one brick from this house. This house is for my son, Ivan, not for my son in law, Zivko."
A. No, I do not remember her saying that, I'm sorry.
Q. The suggestion I'm making to you is that you were aware long before your mother had the stroke and going back as far as when George had passed away that your mother intended to give the property at 40 Lorraine Avenue to Ivan?
A. No, sir."
(When the Defendant was cross-examined about this conversation, it was not suggested that it had not occurred, but rather counsel attempted to elicit the answer that the deceased was determined to ensure that the Bardwell Valley property was to go to the Defendant: T129.27 - T129.47.)
The conversation between Jim and the deceased referred to above appeared in the Defendant's affidavit sworn 20 July 2015. The conversation was denied by the Plaintiff in her affidavit in reply, but Jim gave no evidence denying the conversation.
In addition, there were some other aspects of her evidence that also cause me some concern.
The Plaintiff, initially, suggested that her husband had contributed, equally with Cvetko, to the purchase price and to the mortgage repayments of the Lorraine Avenue property, although, ultimately, she accepted that she did not really know whether this was so.
Jim's failure to give evidence in the proceedings because "he did not want to get involved in this… matter between me and my brother" (T98.23 - T98.25) does not assist her in this regard. I note that the Plaintiff gave evidence that upon their return from Macedonia, in December 1973, she and Jim were employed as factory workers. The Lorraine Avenue property was purchased in September 1975.
The Plaintiff was not prepared to concede that Cvetko had assisted her and Jim at the time the Lorraine Avenue property was purchased, or when they purchased his interest in that property.
At the time of the initial purchase, the Plaintiff's husband was about 22 years old and the Plaintiff was about 17 years old. I think it highly unlikely that they would have been able to contribute $11,000 towards the purchase price (being one half of the purchase price that had not been borrowed).
Similarly, I do not accept that a few years later, they would have had the financial ability to pay Cevtko for his interest, even though $19,000 was borrowed at or about the time. In this regard, it is to be remembered that soon after the purchase, renovations were done to that property.
In her first affidavit, the Plaintiff did not disclose that she and Jim had been receiving rent of $400 per week from the granny flat, built on the Lorraine Avenue property. The omission was corrected in her second affidavit of 25 August 2015.
In the Plaintiff's first affidavit, she had stated that she had not sold any real estate, or made any gifts of amounts of $1,000 or more, in the previous 3 years. I have earlier set out that the Plaintiff and Jim transferred their interest in the Gipps Street property to their sons, Peter and Steven, for $400,000, and that they took a mortgage for the whole of that amount.
In cross-examination she gave the following evidence (at T19.43 - T20.09):
"Q. At the time that the property was transferred to your sons you and your husband took a mortgage from your sons for $400,000, didn't you?
A. We didn't take anything from our sons.
Q. Are you sure that you didn't enter into a mortgage to secure an amount of $400,000?
A. No.
Q. I'm going to suggest to you that on 9 April 2013 you and your husband entered into a mortgage with your sons, Peko and Slavko, to secure an amount of $400,000 being the same amount referred to in the transfer I showed you a moment ago. Do you agree with that?
A. That was done just in case the children ever got divorced. That was just a safety precaution on my children's part, so my husband and I said that so just in case if the kids got divorced we were given $400,000 and then whatever was left over in their name they could divide between them and their wives."
And then (at T21.10 - T21.22):
"Q. Firstly, I'll ask you to look at annexure A [of the mortgage] which is the second page. Just read clause 2 to yourself for a moment.
A. (No verbal reply)
Q. Do you agree with me that that clause deals with the circumstances in which the $400,000 is to be paid to your husband, doesn't it?
A. Is to be paid if the kids were divorced.
Q. I suggest to you that the effect of the clause is that you get the $400,000 back on the earliest of either 60 days from written demand, sale transfer refinance or April 2033. Do you agree with that?
A. If the kids ever get divorced. If nothing happens between now and nineteen and thirty - 2033, we don't get nothing. We don't want anything."
She acknowledged that she had not disclosed this transaction in the affidavit and when asked about it, she said "I didn't know I had to": T25.00 - T25.01.
The Plaintiff said that even though two of her sons had lived in a home constructed on the Gipps Street property, neither had paid any rent to her or her husband during the period of their joint ownership.
Later in the cross-examination, she gave the following evidence about this transaction (at T26.47 - T27.06):
"Q. At paragraph 110, which you were taken to where you said, "I've not purchased or sold any real estate" you didn't appear to refer to the transfer of your interest and your husband's interest in the Gipps Street property to your two sons.
A. But we took our name off that property so it wouldn't affect my husband's pension, because the house has always belonged to the boys, they've paid the majority of it. The reason the land was in all names is because the children did not work and you - the bank will not allow - would not give you a loan unless there is people that have a permanent position, so we put our names on there so we could get the loan but the children paid off most of the house."
The Plaintiff was cross-examined about a transfer of funds ($63,713) out of a term deposit held in her name. She gave evidence that it was all Peter's money, and that it was held in her name "because he, he didn't work at the time": T23.16 - T23.22. She conceded that there were no documents in existence that verified her evidence that the money in the term deposit in her name belonged to your son. (As stated earlier, Peter, although present throughout virtually all of the hearing, did not give evidence.)
Although it was not relevant to the paragraph in her first affidavit relating to gifts in the past three years, the Plaintiff accepted that in March 2011, she had given amounts, totalling $85,000, to her son, Alexander, from her own funds: T36.29 - T36.35.
The value of so-called "present and future needs" disclosed by the Plaintiff in her first affidavit exceeded $1.1 million, of which $520,000 was the estimate of the costs of renovation work to, and the addition of a garage on, the Lorraine Avenue property (which was slightly reduced in her latest affidavit). Further, almost $200,000 was for a recreational vehicle and for a car; $50,000 was estimated to be the costs of a wedding for her son, Steven (when he was not then, or at the date of hearing, engaged), almost $100,000 was the estimated costs of private health insurance; and $200,000 was described as a "contingency fund".
It does a Plaintiff no credit to set out as "needs" what can only be accurately described as extravagant "wants", the value of which, even on the best case being advanced, almost exceeds the value of the actual and/or notional estate of the deceased.
When asked about some of the "needs", she gave this evidence (at T85.14 - T85.19):
"Q. You don't seriously suggest that your mother was under an obligation to provide you with a recreational vehicle?
A. No. She was under no obligation to provide me with a vehicle like that but she's under an obligation to give me half of - there are two children in this family, sir, and I honestly believe that I'm entitled to something out of this estate."
There was criticism of expenditure by the Plaintiff and Jim on poker machines (Ex. 11). I do not find the criticism warranted. It does not appear to me to be extravagant.
On the other hand, I found the Defendant to be a careful witness, who seemed to be prepared, without prevarication, and in only a few words, to make concessions, for example, about the Plaintiff (T130.33-50):
"Q. Your sister, Luba, was of great assistance to your mother, wasn't she?
A. Yes.
Q. Look at your first affidavit, would you please? It's at court book page 185. You say at paragraph 16 of your affidavit sworn 20 July that you looked up to your sister?
A. Yes.
Q. That's correct. She's, I think, five years older than you?
A. Yes. Yes.
Q. You looked up to her because she was a good person?
A. Yes."
Indeed, even before the Defendant gave evidence, his counsel conceded that there was no dispute that the Plaintiff had been a loving and dutiful daughter to the deceased and that there was no criticism being made of her conduct towards the deceased.
The Defendant was cross-examined about the reasons for not having the deceased see another independent lawyer after she was discharged from hospital. He explained that there was no real point in doing so because the deceased had "no trust in lawyers": T134.
Since there has been no challenge to the validity of the transfer of the Bardwell Valley property and the issue of the deceased's capacity does not arise in these proceedings (although the suggestion was made in the correspondence to which I have referred that there would be such a challenge), there really is no reason not to accept the Defendant's evidence on this topic. Had there been a reasonable, or proper, basis to make that claim, the Plaintiff, more likely than not, would have made the claim.
The Defendant denied that he made any suggestion to the Plaintiff regarding a share of the proceeds of sale of the Bardwell Valley property, or otherwise promised to give her a share of its value. The following exchange took place at T149 - T150:
"Q. …It seems from the evidence that I heard from your sister and read in your sister's affidavits that according to her there were several discussions involving the payment to her of some amount, whether it be half or a lesser amount, if the property was transferred to you. Were there any such conversations as far as you can recollect?
A. The only conversation that I recollect, your Honour, was we sat either side of my mother and asked her the question, "What do you intend to do with the house?" and she directed us and the next recollection I have is - no, only when they sat on the back verandah and I said, "I'll give you my - the ring under my mum's money," and that was, that was the extent of the conversations.
Q. So in broad terms in respect of each conversation asserted by your sister regarding your agreement to pay her some money, whether it be half of the proceeds of sale or a lesser amount, what do you say about those conversations?
A. Not with me, your Honour.
Q. They didn't occur?
A. No.
Q. So if I understand that evidence correctly, your evidence is that she simply went along with the proposition that the property worth, according to the valuation, $900,000, would be transferred to you and that she would get nothing out of that property. Is that right?
A. Yes, yes, your Honour. On the, on the day of discussion with my mother my mother clearly said, "Not for you," and my sister clearly asked, "What about me?" and she said, "No, not - not you." That was, that's right, and my sister said, "You do what you need to do."
…
Q. Did your sister ever complain to you, during your mother's lifetime, after this conversation that you've indicated occurred in your mother's presence, namely the property was for you…about that?
A. No, your Honour."
The effect of this evidence is that it provides some rational explanation for the Plaintiff abiding what, I accept, she was told, by the deceased, about was to be done by the deceased. She appears to have accepted that the deceased wished to benefit the Defendant, rather than her, by giving him the Bardwell Valley property. It was not until some months after the deceased's death that a complaint was made by the Plaintiff to the Defendant concerning the transfer.
I accept the Defendant's denial of the Plaintiff's version of events, according to which she did not complain because he "had promised to give her half of the proceeds". Once again, had the allegation had a reasonable and proper basis, I think it is more likely than not that a claim for relief, based upon that promise, would have been made by the Plaintiff.
In many respects, the Defendant's evidence is corroborated by Vilma. I found her to be a witness who was frank and careful not to embellish. I accept that she gave reliable evidence. For example, she admitted, without prevarication, that when the deceased was discharged from St George Hospital in October 2012, she was unable to assist in looking after the deceased because of her own family commitments.
By way of further example, I refer to the following passage of evidence in cross-examination (at T153.29 - T154.19):
"Q…Even after Cvetko's passing Petra asked us to move in. She would say, 'We helped Luba so much for the last 30 years and we haven't helped Ivan at all. This house will stay with Ivan.'" Is that right?
A. Yes.
Q. And she said that more than once, did she?
A. Yes.
Q. She seemed determined that your husband is going to get that house, is that right?
A. Not determined but she, she wasn't determined. She stated it that she wanted to leave the house to Ivan because she helped [Luba] with the other house.
Q. You say she wasn't determined. She said it, you say, a number of times, "This house will stay with Ivan"?
A. Yes.
Q. So she expressed an intention that the house would stay with Ivan--
A. Yes.
Q. --more than once?
A. Yes.
Q. And it wasn't going to Luba?
A. Yes.
Q. You agree that she expressed an intention that it was not going to Luba?
A. She said, "We helped Luba." She didn't say anything about "I'm going to leave it Luba, I'm going to leave it to Ivan." She said, "I helped Luba. I'm going to leave this house to Ivan."
Q. Yes, "The house will stay with Ivan," yes, that's what she said--
A. Yes.
Q. --meaning she's going to leave it to Ivan?
A. I don't know what she wanted to do but she expressed that with me.
Q. But she said those words, "The house will stay with Ivan"?
A. Yes."
I have difficulty accepting some of the Plaintiff's evidence where it conflicts with the evidence of the Defendant and the evidence of Vilma. Indeed, I consider that she is convinced, mistakenly, of the accuracy of some of her recollections. Even though the Defendant and Vilma both have a financial stake in the result of the proceedings, taking into account the evidence overall, and my observations of him, and her, respectively, in the witness box, I am satisfied that each was a reliable witness whose evidence was coherent and consistent.
[4]
The Events surrounding the Transfer of the Bardwell Valley Property
A significant part of the evidence related to the events surrounding the transfer of the Bardwell Valley property, which evidence, of course, was the subject of some dispute. On this topic, both of the parties gave evidence, as did Ms Gordana Bozinovska, a solicitor the parties consulted, together, on 5 October 2012, and who attended upon the deceased, whilst she was a patient at St George Hospital, on 6 October 2012.
I shall deal with Ms Bozinovska's evidence first.
Ms Bozinovska is admitted to practice as a solicitor in New South Wales. She has practiced for about 10 years. She is also qualified to practice as a lawyer in Macedonia. She speaks Macedonian fluently.
Ms Bozinovska swore an affidavit on 6 May 2016 that was read in the Plaintiff's case. She was cross-examined. She stated that she had a recollection of the events that had occurred, but that she had read the documents in the file which she had produced (a copy of the contents of which formed Ex. 9) in order to prepare her affidavit. She acknowledged that the whole file had been produced and that it contained "the totality of any notes of [her] attendances in October 2012": T42.42 - T42.44.
It is clear that a number of significant matters, in respect of which she gave evidence, did not appear in her notes to which she referred. (She stated that she had not written down the conversations but "[j]ust my advice and information which I got": T44.05 - T44.07.)
It was suggested that Ms Bozinovska's recollection of events had diminished with time, and, in part, I think that this is so. However, I am satisfied that she endeavoured to provide her best recollection of the events that had occurred.
The parties consulted Ms Bozinovska on 5 October 2012. She appears to have been selected because she spoke the Macedonian language fluently, and it was thought that she would be able to communicate with the deceased. Also, she was prepared to attend the St George Hospital at which the deceased was then a patient.
Ms Bozinovska gave evidence that she saw the parties together, for about 40 minutes, on 5 October 2012, for the purpose of providing advice to them because she was informed that the deceased wished to do something about the Bardwell Valley property.
Ms Bozinovska advised the parties that there were two alternatives, one by the inter vivos transfer of the Bardwell Valley property, in which case, each of the transferor and the transferee would require separate independent advice and representation; the transferor would require an independent interpreter; and there would be stamp duty payable on the transfer, the calculation of which would require an independent valuation, which would take two weeks to obtain. She also advised them that the other alternative was to transfer the Bardwell Valley property by devise in a Will to be made by the deceased, in which case there would be no stamp duty payable. She also stated that whichever procedure was adopted, the deceased would need to be assessed to confirm that she had capacity. She told them of the sorts of questions that the deceased would be asked to test her capacity. (There is a reference to these things in the file note which forms part of Ex. 9.)
Immediately after the conference with the parties, Ms Bozinovska obtained a land titles search of the Bardwell Valley property and a copy of the Notice of Death that had been filed following the death of Cvetko. A copy of each of these documents also formed part of the documents in Ex. 9.
Included as part of Ex. 9, was a copy of an unsigned Transfer from the deceased to the Defendant relating to the Bardwell Valley property which showed a consideration of $10. Ms Bozinovska gave evidence that she had been instructed to prepare the Transfer by him, in the presence of the Plaintiff, and that she had been instructed to take the Transfer to the Hospital.
At T62, the following passage appears:
"What I'm trying to understand is what enabled you to prepare a transfer from the deceased to Ivan. What did he say about that? As opposed to the deceased transferring the property to Ivan and Luba or the deceased transferring the property to a third party. What was said about that [that] enabled you to prepare the transfer from the deceased to Ivan? Do you remember or not?
A. I remember - he said, "My mother's wish, my mother's wish is the property to pass to me" and I ask, "How many children your mother has?" They said, "Me and my sister Luba" and I--
Q. She was there?
A. She was there, and I ask, "What about Luba?" and he turn his hand towards Luba and he said, "We agree between us, we will clear between us."
Q. What does that mean?
A. That means he said something, "I will look after my mother, also Luba will come and look after my mother, and I will give to my sister something around 100, 150."
None of these matters appear in the file note which forms part of Ex. 9. Nor had she referred, in her affidavit, to any specific instructions, given by the Defendant, to prepare that Transfer, although there is a passing reference to the deceased's property being transferred to the Defendant.
In her affidavit, Ms Bozinovska stated that, during the conference, the Defendant had said that he and the Plaintiff had agreed that he was to give the Plaintiff "around $100,000 - $150,000 as her share because I will look after Mum and because of some other things, family things, she doesn't need to appear on the Will, she cannot appear on the Will but I will give to her her share."
Again, there is no reference to anything said by the Defendant along the lines stated in Ms Bozinovska's affidavit, in the file note forming part of Ex. 9. Nor is there any reference to the amounts referred to.
The Plaintiff did not advert to any such conversation, in those terms, in her first affidavit. However, she stated, in an affidavit sworn 5 November 2015, in reply, that the Defendant had said, at a later time (after he had arranged for the valuation of the Bardwell Valley property in November 2012), that she would "get $450,000 when the house is sold".
In her affidavit sworn on 9 June 2016, in response to the Defendant's affidavit of 8 June 2016, the Plaintiff stated that she had read Ms Bozinovska's affidavit but "do not recall my brother saying he would give me $100,000, however my brother did inform Ms Bozinovska words to the effect of 'I will give her her share'".
The Defendant had denied that any of these conversations occurred.
Ms Bozinovska also gave evidence that the Defendant had referred to the amount that the deceased had in the bank (about $100,000).
Ms Bozinovska attended upon the deceased, at St George Hospital on 6 October 2012. Initially present were the parties, but they left as Ms Bozinovska wished to interview the deceased alone.
She stated in her affidavit the questions that she asked the deceased and referred to the lack of response to the questions (none of which appears in her file note). She stated that the deceased "appeared… unable to speak or to indicate in any way that she understood my questions. I concluded that [she] had no capacity to give me instructions and she had no capacity to understand any legal document which I was asked to prepare for her".
However, in cross-examination, Ms Bozinovska stated that the deceased had "responded a little bit" by "moving her head".
Ms Bozinovska stated that following her attendance upon the deceased, she and the parties had a coffee together, and that she had told them of her conclusions. None of this evidence appeared in her file note.
Ms Bozinovska did not accept that the deceased's lack of response may have been due to a "conscious lack of a desire to deal with a solicitor": T54.40 - T54.43. However, she did not deny the Defendant's evidence that she had said to him and the Plaintiff, following her meeting with the deceased, the deceased was "not listening to me, she looks like she is ignoring me. In any event, since she is still in the Hospital she will need to be assessed… There is nothing I can do here. I am going to send you my account": T58.24 - T58.35.
The Plaintiff says that she remembered Ms Bozinovska saying that the deceased "is not capable of making legal decisions". Although the Plaintiff had described the deceased as not responding to her when she visited, she did not deny, in her affidavit in reply, the Defendant's version of their conversation with Ms Bozinovska following the meeting with the deceased.
A Tax Invoice, dated 8 October 2012, from Ms Bozinovska (Ex. E), relevantly refers to "Taking Instructions 05/10/2012" and "On hospital visit 06/10/2012".
There was no evidence given by Ms Bozinovska, and no information appears in her file note, about the former Act and what, if any rights thereunder, would be available to the Plaintiff if, in fact, the Bardwell Valley property was transferred to the Defendant during the deceased's lifetime, or devised to him in a Will.
As importantly, counsel for the Plaintiff did not seek leave to ask any questions about that topic. Nor did he seek leave to ask Ms Bozinovska any questions about any discussions regarding the reasons, if any, suggested for the deceased wishing to transfer the Bardwell Valley property to the Defendant, or any intentions that the deceased might have had in that regard.
Ms Bozinovska also gave evidence that she received a letter dated 5 February 2015, from Mr G Cerin, solicitor, who then acted for the Plaintiff. The letter, a copy of which was Ex. 10, was, relevantly, in the following terms:
"Mrs. Stojovski had suffered a series of strokes which had left her paralysed on one side of her body resulting at various times in having to be hospitalised, placed in respite, placed in a nursing home and eventually convalescing at her home at xxx, Bardwell Valley, where she passed away.
Mrs. Stojovski died intestate. An application for Letters of Administration of her estate was never made.
My instructions are that on one occasion you were asked to attend on Mrs. Stojovski in hospital in order to witness her signature on a Transfer document relating to the proposed transfer of her property at Bardwell Valley to her son Ivan Stojovski.
I understand that you spent some time with Mrs. Stojovski presumably with a view to being a witness to the signing of the Transfer but came to the conclusion that she was unable to understand what she was asked to sign and the Transfer at the stage remained unsigned.
However, in December 2012, Mrs. Stojovski did sign the Transfer document in favour of her son for a "Nil" consideration. The witness to the signing was an uncle of my client who has since passed away.
My client contends that at the times of signing the Transfer Mrs. Stojovski's mental faculties declined to such an extent that she was incapable of understanding what was taking place around her and therefore not in a position to make any decisions on any issues at all let alone appreciate that what she was signing was a document transferring her house solely to her son which would leave my client with no share in the estate once Mrs. Stojovski passed away. My client is now actively gathering information in support of a claim against her brother to have the transfer set aside on the basis that it was fraudulently obtained."
It is to be noted that no suggestion is made in this letter of anything said by the Defendant, in the presence of Ms Bozinovska, regarding the Defendant giving the Plaintiff "about $100,000- $150,000", "a share", "$450,000", or anything else to suggest that the Defendant had made any promise to do so. The whole tenor of the letter appears to relate to the capacity of the deceased to transfer the Bardwell Valley property to the Defendant.
Ms Bozinovska thought that she had prepared a statement, in letter form, in response, on her computer, but no copy of the statement had been included in the file produced by her. She did not state whether she had checked her computer to ascertain whether she had, in fact, done so, and whether any such statement still existed.
Both of the parties gave evidence of the circumstances surrounding the signing of the Transfer of the Bardwell Valley property.
The Plaintiff gave evidence, in her first affidavit, about the circumstances surrounding the transfer of the Bardwell Valley property. She stated that the Defendant had said, in October 2012, that it would be transferred to him alone because "[i]t's too complicated if there is more than one signature…it is easier to have it one name". In a later affidavit, she added, when repeating this conversation, that he had said, "[w]hen I sell the house, I will give you half".
She also gave evidence in the affidavit in reply that there had been a conversation following the transfer, in which the Defendant had repeated that the transfer had occurred in order to "make sure the nursing home doesn't take the house".
In her affidavit in reply, she "disagreed" that the deceased had said "Luba took her share when we gave her …Lorraine Ave" or that she had heard the deceased say "I have always helped with your children". She also added that, following the valuation of the Bardwell Valley property, the Defendant had said:
"You will get $450,000 when the house is sold. You deserve it Luba, you have worried about everyone else all of your life, especially your boys. You should spend the money on yourself, on a cruise or something."
The Plaintiff did not refer to the fact that she was present on 22 November 2012, when the deceased signed the Transfer of the Bardwell Valley property in favour of the Defendant. However, in her affidavit in reply to the Defendant's affidavit, she wrote that the Defendant had the Transfer, that he placed it in front of the deceased and said, "Mum, please sign here". She acknowledged that her uncle witnessed the deceased's signature on the Transfer and that the Defendant then signed it.
Annexed to the Plaintiff's first affidavit is a copy of a letter dated 2 February 2015, from Mr Cerin to the Defendant. It is in similar terms to the letter sent a few days later to Ms Bozinovska (Ex. 10). Relevantly, after referring to s 129 of the Act (which is part of Chapter 4 dealing with the entitlement to the whole of an intestate estate), the letter asserts that "what took place appears to have been a deliberate and well thought-out strategy on your part to take the whole of the estate for yourself and deny [the Plaintiff] her rightful share...".
(I note, in passing, that there is no allegation that it was the deceased's intention to deny the Plaintiff any share of her estate.)
The letter went on:
"One of the reasons you gave Mrs. Stojovski for wanting the property signed over to you was that if the transfer did not take place the nursing home would take possession of the property. This was simply a lie made up by you to frighten your mother into the desired course of action which you wanted and [you were] undoubtedly aware that once you became registered as owner on the title to the property you had complete control over that asset to the exclusion of my client.
My client contends that during the period when the Transfer was signed Mrs. Stojovski's mental faculties declined to such an extent that she started referring to you as "Mitre" and my client as "Georgia" which would indicate a failing state of mind. My client believes that her mother was incapable of understanding what was taking place around her and therefore not in a position to make any decisions on any issues at all let alone appreciate that what she was signing was a document transferring her house solely to you and thus leaving nothing to my client. My client is actively gathering information in support of her contention.
Whilst my client became concerned about the issue of ownership of the property and the manner in which it was acquired, you made certain statements in an attempt to pacify her such as saying that it is easier to have one signature rather than two signatures on a document when it came time to sell the property; that the one property would eventually be sold and my client would receive her half share from the sale or that the property would be transferred into the names of the "children" ie. your children and my client's children (although taking into account the ages of your children that proposal may not have been achievable). My client now realises that all of these proposed "good will" intentions of what would be done were simply clever mind games meant to give her a false sense of security and belief that eventually something positive would take place.
The reality is of course that after 2 years of your ownership the property has been left vacant and nothing at all has been done with it although you have suggested in conversations with my client that you actually want to take occupation of the property as the personal residence for you and your family. If that event takes place then my client believes you would have achieved what you set out to achieve in the first instance by taking advantage of not only Mrs. Stojovski's poor health but also my client's good nature and her naivety on relying on you to do the right thing between brother and sister following Mrs. Stojovski's death.
In essence the scenario appears to be that at a time when Mrs. Stojovski was paralysed and "non compos mentis" you deliberately took advantage of that situation depleting the estate of its major asset, which is now worth well in excess of $1,000,000.00, and leaving my client with literally nothing at all. My client considers the whole pattern of behaviour on your part as nothing short of fraudulent and she has finally woken up to the fact that something must be done in order to restore some sort of balance and equality to this situation because it cannot be allowed to continue any longer.
To this end I have advised my client that she has a legitimate claim against you for a one-half share of her late mother's estate. This claim, if it has to be contested, will end up in the Equity Division of the Supreme Court of NSW and my client has already secured the services of a Barrister to represent her at the appropriate time."
It is to be noted that there is no suggestion made in this letter of anything said by the Defendant regarding giving the Plaintiff "about $100,000- $150,000" (as stated by Ms Bozinovska). However, there is the reference to her receiving "her half share from the sale, or that the property would be transferred into the names of the "children" i.e. your children and my client's children (although taking into account the ages of your children that proposal may not have been achievable)."
Otherwise, the whole tenor of the letter appears to relate to the capacity of the deceased to transfer the Bardwell Valley property to the Defendant and the Defendant's entitlement on intestacy if the transfer of the Bardwell Valley property was set aside.
The Defendant gave detailed evidence about conversations that had occurred involving the deceased. In his first affidavit, he wrote:
"82. About two weeks after mum came home, my sister, in my mum's presence, said to me:
"I have been talking to Zivko and Peco (her son) about mum's house and they say it would be to our family's benefit, if we sold mum's house and split the money between you and me"
I said:
"This is not about you, Zivko and Peco and your family. This is about mum and what she wants".
My sister and I continued in similar vein and then we sat down, next to mum on the sofa and I said:
"Mum what do you want to happen with your house?"
Mum looked at both of us and with her left index pointed and tapped on my right knee and said, looking directly at my sister:
"The house stays with Ivan"
My sister replied:
"What about me?"
Mum again looked straight at my sister's face and with her left finger motioned left to right, and said to her:
"Not for you the house, No. You already have had your house."
I said to my sister:
"What now?"
She replied:
"Now you do whatever you need to do".
I then looked at my mum and said to her:
"Mum I'll move into the house to look after you, but it is too small for us all"
Mum said:
"I will move to the granny flat at the back"
I said:
"I'll fix the granny flat so it's nice for you, just like new."
83. About a week later, I telephoned the Land Titles Office and asked how to do a transfer of a house. I was advised that a Solicitor did not need to be involved and that I could prepare the transfer document myself and pay stamp duty on a valuation.
84. I arranged for a valuation of the house…
A few days later I prepared the Transfer. Whilst visiting mum and at that time my sister being present I left the forms and the valuation, on the dining table.
85. My uncle Kole (mum's brother) my aunt Gurga (his wife) visited my mum almost every day after she came home. On 19 November 2012, when uncle Kole and his wife Gurga came to visit, I and my sister were also there. Later my partner, Vilma and Elizabeth (our youngest daughter) also joined us.
I said to my uncle:
"Uncle, mum wants me to have the house and we have decided to move in and look after her. I will fix the granny flat which is what she wants."
My uncle said:
"I will come and help you whenever you need me"
I said:
"There is a document for her to sign, do you want to be a witness?"
My uncle said:
"Yes, there is no problem"
At the time when these words were said I, mum, uncle Kole and Luba were sitting around the table on the veranda. My partner with my youngest daughter Elizabeth and aunty Gurga sat at the table in the backyard.
My mother looked at my sister and said to her:
"Luba go and bring the papers"
My sister stood up from the table and went into the house. When she returned to the table she had in her hands the Transfer form and she gave it to me. I placed the form in front of my mum and gave her a pen which she held in her left hand. At that time my partner, Vilma, also joined us at the table.
87. My mother without hesitation signed the Transfer. I took it from her and placed it in front of my uncle and my uncle witnessed her signature. My mum at the time said:
"Adje se stori", which means it's done…
88. I took the Transfer and I hugged mum and said:
"Thank you mum, I will look after you, you are with me"
89. I took the Transfer form to a neighbour, Joe Debono, who witnessed my signature on the Transfer…
90. On 22 November 2012 I took the Transfer form with the valuation paper to the Land Titles Office, paid Stamp Duty fees of approximately $36,000. The papers were stamped and I left them at that office for processing.
91. A few days later I was visiting mum's house and my sister was there. My sister came up to me and hugged me and said:
"Congratulations on your new house"
She explained to me that she had opened the mail and that the new title had come by post. She then handed to me the title. My sister appeared to me to be pleased, I did not see any begrudging on her part towards me.
92. I then turned towards my mum at that time, with the Title in my hand and said to her:
"The Transfer is done this is the Title"
My mum said, whilst putting her hand on her chest
"Good, now I do not have to worry."
Vilma also gave evidence about what occurred. She wrote:
"20. In November 2012, Ivan asked me to go to Petra's house, because Petra was going to sign the house to Ivan. It was a weekday and our 3 oldest daughters were at school. After taking the girls to school I went to Petra's house with our youngest Elizabeth. There I found Kole (Petra's brother) Gurga (Kole's wife), Luba and Ivan. I greeted everyone and went towards the table on the grass area in the yard.
21. Later I noticed that that Ivan had papers in his hands and I approached at the table where Petra, Luba, Uncle Kole and Ivan were. I saw Ivan place in front of his mum some paper.
22. Petra proceeded to sign the paper. I took photos of the event and so did Ivan. I did this because I felt it was a big event for the family.
23. I took the photos of my own volition...
24. After the signing of the papers I saw Luba give a kiss to Ivan and hear her say:
"Congratulations Ivan, now you have a house."
I could not see any anger or animosity in Luba's face during this event."
In an affidavit sworn on 9 June 2016, the Plaintiff annexed a copy of the registered Transfer between the deceased and Ivan in relation to the Bardwell Valley property. She wrote:
"This is not the Transfer that Mum signed at her home in my presence… I know this because I was the witness for Ivan's signature on that Transfer. I clearly recall signing the Transfer and handwriting my name and address underneath. On the registered Transfer, Ivan's signature appears to have been witnessed by Mum's neighbour, Joanne De Bono."
The Plaintiff gave no evidence, in her first affidavit, when setting out the circumstances of the signing of the Transfer, that she had witnessed the Defendant's signature.
It is to be noted, also, that even though there is a reference to the Transfer, in the letters from Mr Cerin, sent in February 2015, it is not suggested that the Transfer was different from the one that had been signed by the deceased.
Indeed, in the Plaintiff's affidavit, having exhibited a copy of the Transfer to her affidavit, she identified the deceased's signature as having been witnessed by her uncle, Nick. She wrote nothing else about the Transfer.
In relation to this evidence, I prefer the evidence of the Defendant and of Vilma, to that of the Plaintiff.
[5]
Evidence regarding the extension of time
In her first affidavit, the Plaintiff set out her explanation for the delay in filing her Summons on 5 May 2015. She says that despite enquiries being made by her of the Defendant regarding the Bardwell Valley property, he would say that it could not be sold and provide spurious reasons for not being able to do so.
She also gave evidence of a discussion that occurred in October 2014 in which she, her son, Peter, and the Defendant were involved:
"120. I went to see my brother at his house in Belmore in or about October 2014. Peter came with me.
121. We went over to Ivan's house. When we got there he hadn't got home from work. We waited for him on the back veranda. There was no one home.
122. When he arrived home he sat down on the back veranda and Peter said to my brother:
"Uncle what's happening with the house?"
Ivan said to us:
"Pete, the house stays in my name. Your mother can have whatever is left of Bubba's money."
Peter said:
"What's wrong. You can't do this. Why doesn't Mum get half the house?"
My brother said to us:
"Sorry Pete, the house stays in my name."
And he said the same thing in response. Peter said:
"That isn't fair. She deserves at least something."
My brother said:
"Sorry Pete, that's the way it is."
I didn't say anything. I just sat there.
Peter said:
"If she doesn't get her share from now on I will never call you Uncle."
123. Peter's birthday was coming up in a few days, or perhaps a week later. Peter said:
"You realise I'm not going to invite you to my birthday party."
My brother said:
"So be it."
and he looked at me. I didn't say anything. The same things were said over and over again for half an hour. We were not invited in. His wife, Vilma came home during this and gave me a dirty look and slammed the gate and did not say hello. I did not understand this because I had always gotten on well with Vilma.
124. I was most distressed. At the end of the conversation my son and I left and I cried all the way home. Peter said to me:
"You've got to sue him. That's the only way you can sort this out and you're going to get anything."
I didn't know what to do. I loved my brother and I still do not believe that he would try and deprive me of a share of Mum's estate."
However, in cross-examination, a slightly different version of the events was accepted by the Plaintiff as having occurred (with editorial amendments) at T 119 - T121:
"Q. I suggest to you that after your mother died the first time that you ever raised the question of what was going to happen to the house at Lorraine Avenue which had been transferred to him was in September 2014?
A. Yes, because I was under the impression that my brother was going to sell the house and give me half. That was the agreement all along.
Q. You telephoned him on or about 12 September 2014 and you said that Peko, referring to your son, wasn't happy about the house and that you needed to talk to him?
A. Yes.
Q. And he said, "We can talk but I don't know what Peko has to do with it." Do you agree with that?
A. Yes.
Q. The next day you and Peko went around to see your brother?
A. Yes, we did.
Q. He said to you, "What's all this about?"?
A. Yes.
Q. You said, "You have to sell mum's house and give me half"?
A. No, I did not say, "You have to sell," come out and say, "You have to sell mum's house and give me half. I said, "What are we going to do about the house?" He was telling me one thing, he was telling my son totally different things. That's why we went together because all along he kept on telling me that I will get half and every time Pete would ask him he would say, "Look, Pete, mum can come and swim in the swimming pool."
Q. I want to suggest to you that this is the first time - the conversation on 12 September 2014 is the first time that you raised the question of splitting the house proceeds in half. Do you agree or disagree with that?
A. I was under the impression that my brother was going to give me half.
Q. Do you deny that it was the first time that you raised it?
A. Really seriously sat down and talked to him, yes, I agree.
Q. You've read this conversation in his affidavit, haven't you?
A. Yes.
Q. I want to put one specific thing to you in it, namely that Peko was there throughout the conversation?
A. Yes, he was.
Q. Do you agree with that? And Peko said, "I'm mum's spokesperson because she is naïve and baba," referring to your mother, "was a vegetable." Do you remember him saying that?
A. I don't remember him saying she's a vegetable. I remember - I remember him saying that he will - he is going to like - mum's naïve which, boy, am I naïve to believe everything he said.
Q. And do you agree that he said, "I'm mum's spokesperson"?
A. He probably did.
Q. And he also said, didn't he, "I've seen a solicitor and have five barristers who will take you to the cleaners"?
A. Probably. It was something that Peter would say.
Q. And he went on to say, "So you'll have to give mum half of baba's house"?
A. "You agree to give half of baba's house."
Q. No. I'm suggesting that your son went on to say, "So you," referring to Ivan, "will have to give mum half of baba's house"?
A. Yes.
Q. And your son said, "We've got 12 months to contest the will." Remember that?
A. Mum didn't have a will.
Q. No. What I'm suggesting to you is that your son Peko said at this meeting on 13 September 2014 that there was 12 months available within which you could challenge the will. Do you remember him saying that?
A. He probably did. I'm not sure.
Q. Well, the position is this, that in September 2014 your son had got some legal advice, hadn't he?
A. I don't know.
Q. Well, he'd told you, hadn't he, that he had seen a solicitor?
A. Yes, he did actually, yes.
Q. And he told you that he had advice that you had 12 months in which you could bring a claim, correct?
A. Yes."
And at T124 -T125:
Q. You say your son saw the solicitor in Earlwood. It must have been prior to September 2013 [should be 2014]?
A. Must have been. I don't know when he saw him.
Q. You were aware of the 12 month period within which you had to bring a claim?
A. No, I was not.
Q. You'd been told by your son that there was a 12 month period?
A. Well, I, I - yeah, I was told a lot of things by my son but I also believed in my brother.
Q. There was absolutely nothing to stop you bringing a claim within that 12 months after you'd been told about the period by your son, was there?
A. Absolutely none, apart from my brother telling me that everything is going to be half/half and I trusted him.
Q. By the time you had this conversation in 2013 [sic] on your evidence you were aware it wasn't going to be half/half?
A. Yes.
…
Q. What I'm suggesting to you is that you knew about the 12 month period to bring a claim at that time because Peko had told you?
A. Okay, yes.
Q. You knew certainly no later than this conversation that you weren't going to get half of the house from Ivan. Correct?
A. Yes.
Q. There was absolutely no reason in those circumstances why you couldn't have brought a claim then. Correct?
A. Correct, sir.
Q. In fact, you didn't bring a claim until May the following year. Correct?
A. Correct."
The Plaintiff gave evidence that she saw a solicitor friend, who worked at Slater and Gordon Lawyers, Ashfield on 10 January 2015 and that she contacted Mr Cerin on 12 January 2015 and made an appointment to see him that day. She said that he "never said I should or could bring a claim for Family Provision. He also did not tell me that there was a time limit to do so. Mr Cerin never mentioned the words 'notional estate' to me."
The Plaintiff saw her current solicitors on 5 May 2015 and the Summons was filed on that date.
No explanation was given by the Plaintiff, or by any legal representative who had been retained to act for her, relating to the Plaintiff's failure to litigate the matters asserted by Mr Cerin concerning the alleged incapacity of the deceased at the time of the transfer of the Bardwell Valley property or otherwise, in his letters to which reference has been made.
[6]
The Plaintiff's Financial Circumstances
I have taken the following from the Defendant's outline of submissions, which counsel for the Plaintiff accepted accurately stated the Plaintiff's and Jim's financial position:
1. They own the Lorraine Avenue property that is unencumbered. Its current value is $1.65 million (Ex. C);
2. The Plaintiff has money in a term deposit ($40,513);
3. She has superannuation ($52,487);
4. Jim has superannuation ($328,888);
5. They have a joint access account ($264,889);
6. They lease the granny flat at the Lorraine Avenue property ($400 per week), the income from which they use to support their son, Steven;
7. There is a mortgage securing $400,000, in which Peter and Steven are the mortgagors.
Neither the Plaintiff, nor Jim, currently works. Their three children are all adults, although it would seem that they still provide for each of those children.
[7]
The Defendant's Financial Circumstances
The Defendant works as an architectural draftsman. He has only been able to work two to three days a week. Vilma is aged 47. In 2011, she was injured in a motor vehicle accident and suffered dysfunction of the neck and upper right limb. She is not employed and is dependent on the Defendant.
They have four minor children, all of whom are also financially dependent upon the Defendant.
The Defendant's and Vilma's financial position was disclosed in Ex. F (amended to ensure privacy and excluding any reference to cents):
Asset 25.5.16 at hearing
1 Victory St Property $1,200,000 $1,700,000 (valuation)
2 Bardwell Valley Property $1,250,000 $1,650,000 (valuation)
3 Net Saver a/c #605 $50,085 $50,085
4 Business Transaction #429 $3,297 $3,297
5 Smart Access #240 $3,595 $3,595
6 Super - various $2,233 $2,233
7 Vilma - personal #1960 $389 $389
8 Vilma - savings #6016 $449,052 $449,052
9 Vilma - Mercer Super $21,900 $21,900
10 Mitsubishi Delica $10,000 $10,000
11 Bedford van $500 $500
12 Caravan $2,800 $2,800
13 Trailer $300 $300
Total $2,994,151 $3,894,151
Liabilities
14 CBA Home loan $125,526 $125,526
15 Mastercard $707 $707
Assets - liabilities $2,867,918 $3,767,918
Income
16 Combined income disclosed $62,000 - $67,000 p.a. $62,000 - $67,000 p.a
[8]
Their monthly expenditure is disclosed as being $9,562.
Taking into account the ownership of the Bardwell Valley property, it does seem that the Defendant's and Vilma's financial circumstances are better than the Plaintiff's and Jim's. However it is to be remembered that the Defendant and Vilma have 4 minor children to support.
[9]
The Statutory Scheme - The Act
Next, I shall discuss the statutory scheme that is relevant to the facts of the present case. I have collected the principles that are generally applicable in many other cases. For reasons to which I shall come, which relate to the inability to designate any property as notional estate, I shall not set out all of the principles again.
Usually, in cases such as the present, the Court must determine (not necessarily in the order set out below) whether:
1. The Plaintiff is an eligible person within the meaning of that term in s 57(1) of the Act;
2. The time for the making of the Plaintiff's application should be extended;
3. The Plaintiff has been left with inadequate provision for her proper maintenance, education and advancement in life; and, if so, what, if any, provision (or further provision) ought to be made out of the estate or notional estate for those purposes; and
4. Whether any property, can and should, be designated as notional estate of the deceased, it not being in issue that it would be necessary to do so for the purposes of a family provision order to be made under Part 3.2, or for the purposes of an order that the whole or part of the costs of proceedings in relation to the estate or notional estate of the deceased be paid from the notional estate of the deceased. (There will be some additional sub-questions posed in obtaining the answer to this question later in these reasons.)
These matters are not entirely distinct, but are related and overlap. For example, the strength of the substantive claim for provision is relevant to the exercise of discretion to make an order extending the time for the making of the application.
[10]
Eligibility
The key provision is s 59 of the Act. The Court must be satisfied, first, that the applicant is an eligible person within the meaning of s 57(1) (s 59(1)(a)). It is only an "eligible person" who may apply to the Court for a family provision order. Relevantly, in this case, the Plaintiff relies upon the category of eligibility referred to in s 57(1)(c) of the Act. There is no dispute that she is a child of the deceased.
The language of the relevant sub-section is expressive of the person's status, as well as her or his relationship to the deceased. There is no age limit placed on an eligible person making an application.
[11]
Extension of Time
Section 58(2) of the Act provides that an application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown. If sufficient cause is shown, then the Court, having regard to all the circumstances of the case, may extend the time for making an application.
In Moore v Randall [2012] NSWSC 184 at [39], White J said that the expression "sufficient cause" means "sufficient explanation or sufficient justification or excuse for the application not having been made within the prescribed period."
In Verzar v Verzar [2014] NSWCA 45 at [24], in the Court of Appeal, Meagher JA wrote that "[t]he sufficient cause or reason to which s 58(2) is directed is that for allowing an application to be made out of time".
Clearly, permitting the Court to "otherwise order" was included in the Act to avoid the section becoming an instrument of injustice. Yet, "[t]he time constraint imposed by s 58(2) on the making of a family provision application is not a mere formality": Verzar v Verzar [2012] NSWSC 1380 at [98] (Lindsay J). (The equivalent section in similar UK legislation has been described as "a substantive provision laid down in the Act itself, and is not a mere procedural time limit imposed by rules of court which will be treated with the indulgence appropriate to procedural rules": Re Salmon, Deceased [1981] Ch 167 at 175.)
In Madden-Smith v Madden (Estate of the late Doris Linda Madden) [2012] NSWSC 146 at [23]-[24], Pembroke J put it more strongly:
"… Section 58(2) reveals a clear legislative intention to limit applications for family provision orders to those made within a defined, and strictly confined, period. An application is made by filing an originating process commencing proceedings in the registry of the court: Section 58(3).
The short time period imposed by Section 58(2) reflects the judgment of parliament that the welfare of society in connection with the administration of deceased estates is best served by imposing a strictly limited time for making applications. This is not unreasonable. In most cases the putative claimant will be well aware of the testator's death and the (allegedly) insufficient provision made for him or her. There will only occasionally be a good excuse for not making a claim within time. In fact, experience indicates that the deceased's relatives usually pay uncommonly close attention to such matters. That is not to say that cases will not arise where, for legitimate reasons, a claimant is quite unaware of the death, or of his or her legal right to make a claim, and is unable to comply with the 12 month time limitation. In those circumstances, the statutory exception requiring 'sufficient cause' may well apply."
In Thomas v Pickering; Byrne v Pickering [2011] NSWSC 572 at [84]-[90], I set out the applicable legal principles relating to an application to extend the time, as follows:
"The decision of the court to extend time is a discretionary decision. Other than "sufficient cause being shown", there are no statutory criteria that must be taken into account. There are no rigid rules in regard to the exercise of the discretion.
The principles governing that exercise of discretion under the Act are clear. Apart from the reason(s) for the lateness of the claim, the factors to which the court must look, include whether beneficiaries under the Will would be unacceptably prejudiced if time were to be extended; whether there has been any unconscionable conduct by either side; and, finally what is the strength of the claim made by the party seeking an extension of time: see, for example, John v John; John v John [2010] NSWSC 937 at [37]- [51] per Ward J; Campbell v Chabert-McKay [2010] NSWSC 859 at [45]- [47] per White J; Durham v Durham [2010] NSWSC 389 at [15] per Ball J; Taylor v Farrugia [2009] NSWSC 801 at [14] per Brereton J; Burton v Moss [2010] NSWSC 163 at [31] ff, per Macready As J, in which the relevant earlier cases are referred to.
The onus lies on the applicant to establish sufficient cause. It will be for the court to determine the strength of the applicant's claim.
The prejudice to which the section looks is any prejudice occasioned by the delay in lodging the claim rather than any disappointment that might occur consequent upon readjustment of the interests under the will in order to make provision for the applicant: Cetojevic v Cetojevic [2006] NSWSC 431; McCann v Ward & Anor [2010] VSC 452 at [11]. Where there has been a long period since the deceased died, the lapse of time, itself, might create prejudice in any fact-finding exercise: Vasconelos v Bonetig [2011] NSWSC 1029 at [21].
In De Winter v Johnstone (NSWCA, 23 August 1995, unreported), Sheller JA held that the concept of "unconscionable conduct" referred to above was "directed towards a deliberate holding off [in bringing proceedings] designed to lull the beneficiaries into a false sense of security". Cole JA, whilst not expressing a concluded view, said that it must be doubted whether a change of mind (because of some change in the financial and material circumstances of the Plaintiff which has occurred after the expiry of the limitation period) constitutes unconscionable conduct.
As to the strength of the claim, in De Winter v Johnstone, Powell JA considered that as an application for extension of time was invariably dealt with at the time of the application for substantive relief, no extension of time ought to be granted unless it was established that the applicant seeking an extension of time would, in the event of the extension being granted, be entitled to an order for substantive relief. By contrast, Sheller JA considered that it was only necessary for the applicant to show that the application was not bound to fail.
Where the delay is not unduly long and the estate remains undistributed, ignorance during the period within which proceedings are to be commenced, of the right to claim, followed by a prompt application to extend the time once the right to claim becomes known, will usually be a sufficient explanation: Clark v Burns [2011] VSC 394 at [6]."
To refuse to make an order extending the time for the making of an application that is devoid of merit, or otherwise cannot succeed, would not visit an injustice on the applicant. As Keane JA wrote in Hills v Chalk [2008] QCA 159; [2009] 1 Qd R 409, at [31]:
"The appellants' submission was that the probability that an application for provision out of the estate will ultimately succeed is a necessary, though not sufficient, condition of the grant of an extension of time. There is support for that view. In Re Terlier, deceased, Townley J said: 'If it is improbable that the substantive application will succeed it seems idle to grant the extension.' This statement was approved by Lush J in Re Walker, Deceased where his Honour went on to add that the improbability of success 'may stem either from the condition of the estate ... or from the facts relevant to the [claimant's] claim, or from both ....'."
Also see, Andre v Perpetual Trustees WA Ltd (as Executor of the Will of Barbara Helen Owen Stewart) [2009] WASCA 14 at [42].
Meagher JA noted in Verzar v Verzar [2014] at [33]-[35]:
"There are at least two respects in which the strength of the application sought to be made out of time may be relevant to whether there is 'sufficient cause' to extend the time for making it. The first is whether the application as made has sufficient prospects of success to justify an extension. That assessment should be of the application viewed at the time it is or is likely to be heard because of the provisions of s 59(1)(c) and (2)…
The second respect in which the strength of the application may be relevant is if allowing the out of time application to proceed would or may have the effect of improving the applicant's position from that which would have obtained had the application been made in a timely manner. That is the consideration referred to by Tobias JA in Durham v Durham at [24], [37] when confirming the correctness of the approach adopted by the judge in that case and by Bryson J in Davison v Staley (unreported, Supreme Court of NSW, 21 August 1996)…
Because the assessment of adequacy of provision for proper maintenance, education and advancement in life is to be made at the time the Court is hearing the application (ss 59(1)(c) and (2)), when addressing this question it is necessary first to consider when the application would have been likely to have been heard if made in a timely manner and then to compare the position in that event with the position in fact, namely that the application has been made out of time. Ordinarily, this analysis would assume, as is usually the case and as happened in this proceeding, that the application for an extension of time and the application for substantive relief are made in one proceeding and dealt with in a single hearing. (That was not the case with applications for extensions of time made under the Testator's Family Maintenance and Guardianship of Infants Act 1916: see De Winter v Johnstone [1995] NSWCA 120 at p 17 per Powell JA)."
As well as taking into account the reasonableness of the conduct of the applicant, it will also be necessary to have regard to the history of the proceedings, the conduct of the other parties, the nature of the litigation, and the consequences for the parties of the grant, or refusal, of the application for extension of time, "the size and nature of the estate, the position of the individual applicants, the rightful expectations of those already interested under the will, and, to some extent at least, the importance that there be some finality and certainty in the administration of a deceased person's estate": Harrison v Harrison [2011] VSC 459 at [292].
As I said in Butler v Morris; Butler (bht NSW Trustee & Guardian) v Morris [2012] NSWSC 748 at [117]:
"Ultimately, justice is the paramount consideration in determining whether to extend the time for making an application…"
[12]
Inadequacy of Provision
It is only if eligibility is satisfied, and if sufficient cause for an order extending the time for the making of the Plaintiff's application is shown, that the Court must determine whether adequate provision for the proper maintenance, education or advancement in life of the applicant has not been made, relevantly, by the operation of the intestacy rules (there being no Will (s 59(1)(c)). It is this mandatory legislative imperative that drives the ultimate result, and it is only if the Court is satisfied of the inadequacy of provision that consideration is given to whether to make a family provision order (s 59(2)). Only then may "the Court… 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".
The parties were largely agreed as to the principles to be applied on this topic so it is not necessary to re-state them. I have dealt with them in many cases, the most recent of which is Hinderry v Hinderry [2016] NSWSC 780 at [207] - [275].
In this case, the operation of the rules of intestacy would apply, but since there is no property of the deceased at the date of her death, those rules also become irrelevant. Had there been property of the deceased, there is no dispute that, pursuant to s 127 of the Act, since the deceased left no spouse but had issue, her only two children, the parties to these proceedings, would be entitled to share equally the whole of the intestate estate.
In the circumstances of this case, the Plaintiff will receive nothing unless an order under the Act is made.
Adequacy of provision is not to be decided in a vacuum, or by simply looking at whether the Plaintiff has enough upon which to live. It will depend upon all of the relevant circumstances of the case including age, capacities, means and competing claims of other potential beneficiaries. In this regard, I also remember the close relationship of the Plaintiff and the deceased and the contribution made to the welfare of the deceased by her.
Considering all of the circumstances, I am prepared to conclude that the Plaintiff has established that, at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life has not been made for her by the operation of the intestacy rules.
Although it was submitted by counsel for the Defendant that no order for provision ought to be made, it was submitted, in the alternative, that her claim would be categorised as one for the contingencies of life. I respectfully agree.
[13]
Notional Estate
I have earlier referred to s 63(5) of the Act.
Section 73(1) states that Part 3.2 of the Act applies to property designated as part of the notional estate of a deceased person in the same way as it applies to property that is part of the estate of a deceased person.
Rosalind Croucher in "Contracts to Leave Property by Will and Family Provision after Barns v Barns [2003] 196 ALR 65 - Orthodoxy or Aberration?" (2005) 27(2) Sydney Law Review 263, 278 has commented on the notional estate provisions of the former Act:
"The introduction of the notional estate provisions brought to the forefront the distinction of 'estate versus notional estate' that had been implicit in the decisions on the legislation prior to the introduction of the Family Provision Act 1982 (NSW). It made explicit in the legislation that 'estate' and 'notional estate' were different. Things subject to contracts (like mutual wills) were not within the definition of 'estate'. To bring such property within the legislation required now the application of the complex procedures and definitions of 'notional estate'. This requires a particular kind of transaction, an absence of relevant consideration, a defined time frame in which the transaction took effect and a range of other matters to be considered before property can be designated as notional estate and made the subject of an order for family provision under the Act."
In New South Wales Law Reform Commission Report 110, Uniform Succession Laws: Family Provision (2005), at paragraph 3.1, "notional estate orders" are described as "orders issued by the Court which are intended to make available for family provision orders assets that are no longer part of the estate of a deceased person because they have been distributed either before or after the deceased's death (either with or without the intention of defeating applications for family provision)".
In Galt v Compagnon (NSWSC, 24 February, 1998, unrep) Einstein J, at 21, said that notional estate was "a complex concept" but shortly described it as "property which would have become part of the deceased's estate, had it not been dealt with, or had it been dealt with, by the deceased in a particular way, and in particular circumstances, prior to his or her death".
The notional estate provisions of the Act are dealt with in Part 3.3 of the Act. However, in s 3 of the Act, "notional estate" of a deceased person is defined as meaning "property designated by a notional estate order as notional estate of the deceased person". "Notional estate order" means "an order made by the Court under Chapter 3 designating property specified in the order as notional estate of a deceased person".
Section 74 of the Act provides that "relevant property transaction" means a transaction, or circumstance, affecting property and described in s 75 or s 76. "Property" includes "any valuable benefit".
Section 75 of the Act provides:
"(1) A person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being:
(a) held by another person (whether or not as trustee), or
(b) subject to a trust,
and full valuable consideration is not given to the person for doing or not doing the act.
(2) The fact that a person has entered into a relevant property transaction affecting property does not prevent the person from being taken to have entered into another relevant property transaction if the person subsequently does, or does not do, an act affecting the same property the subject of the first transaction.
(3) The making of a will by a person, or the omission of a person to make a will, does not constitute an act or omission for the purposes of subsection (1), except in so far as it constitutes a failure to exercise a power of appointment or disposition in relation to property that is not in the person's estate."
Section 76 of the Act then provides a description of some, but not all, of the circumstances that constitute the basis of a relevant property transaction for the purposes of s 75. Whilst none of the descriptions are applicable in this case, s 76(3) makes clear that nothing in the section prevents any other act or omission from constituting the basis of a relevant property transaction for the purposes of the section.
Any such circumstance is "subject to full valuable consideration not being given". Importantly, a distinction must be drawn between "valuable consideration" and "full valuable consideration": see, for example, s 76(4) of the Act.
Important, also, is the omission of the words "in money or moneys worth" after "full valuable consideration" which had appeared in s 22 of the former Act. Furthermore, the phrase "is not given" rather than "is not received" is also significant.
The expression "subject to full valuable consideration not being given", in my view, has the effect of imposing a requirement, wholly separate from the result, which is that property becomes held by another person.
Section 77(1) provides that for the purposes of Chapter 3 of the Act, a relevant property transaction is taken to have effect when the property concerned becomes held by another person, or subject to a trust, or as otherwise provided by the section. Sub-section (3) provides that a relevant property transaction consisting of circumstances described in s 76(2) (b) or (e) is taken to have been entered into immediately before, and to take effect on, the person's death, or the occurrence of the other event referred to in those paragraphs.
Section 78 of the Act provides:
"Notional estate order may be made only if family provision order or certain costs orders to be made
(1) The Court may make an order designating property as notional estate only:
(a) for the purposes of a family provision order to be made under Part 3.2, or
(b) for the purposes of an order that the whole or part of the costs of proceedings in relation to the estate or notional estate of a deceased person be paid from the notional estate of the deceased person.
(2) The Court must not make an order under subsection (1) (b) for the purposes of an order that the whole or part of an applicant's costs be paid from the notional estate of the deceased person unless the Court makes or has made a family provision order in favour of the applicant."
Section 80(1) limits the range of transactions that may qualify as "relevant property transactions." It provides that the Court may, on application by an applicant for a family provision order, or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person, if the Court is satisfied that the deceased person entered into a relevant property transaction before his, or her, death and that the transaction is a transaction to which the section applies.
It is to be noted that the power to make a notional estate order is discretionary. Even so, before the Court is able to exercise that discretion, it is necessary to establish that the transaction is one to which the section applies.
Section 80(2) provides for the section to apply only to the following relevant property transactions:
"(a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order;
(b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction;
(c) a transaction that took effect or is to take effect on, or after, the deceased person's death."
It is not essential that the applicant be able to rely upon the provisions of more than one of the sub-paragraphs identified. It is sufficient if she, or he, is able to establish the matters in any one of them.
In this case, only sub-section (a) may be relied upon since the registration of the Transfer of the Bardwell Valley property, is the transaction "when the property concerned becomes held by another person" within the Act: s 77(1), and that occurred more than one year before the deceased died, but within three years of her death.
In relation to sub-section (a), in Kastrounis v Foundouradakis [2012] NSWSC 264 at [108]-[112], I wrote:
"Section 80(2)(a) requires the relevant property transaction to be entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order. Interestingly, the section does not identify whose intention it is, but it must be the deceased's intention that is to be proved: Hildebrandt v Soncini [2007] NSWSC 1227 at [21] - [28].
In Hinde & Hinde and Anor [2008] FamCA 24, Carmody J, in another context, said:
"The ordinary natural meaning of the word "intends" is to mean, to have in mind. Relevant definitions in the Shorter Oxford English Dictionary show that what is involved is the directing of the mind, having a purposeful design. Intention is not the same as motive or desire. A person may do something fully intending to do it without desiring it at all. Euthanasia is an example. A motive is having a reason to do or not to do something. It is a subjective state of mind which cannot be conclusively established as a fact except perhaps by truthful admission."
However, more than mere contemplation by the deceased is necessary. In Cunliffe v Goodman [1950] 2 KB 237, a decision of the English Court of Appeal, Asquith L.J., again, in another context, considered, in some detail, the meaning of the term "intention". His Lordship said at 253:
"An 'intention', to my mind, connotes a state of affairs which the party 'intending' - I will call him X. - does more than merely contemplate. It connotes a state of affairs which, on the contrary, he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition. X. cannot, with any due regard to the English language, be said to 'intend' that it shall be a fine day to-morrow. At most he can hope or desire or pray that it will. Nor, short of this, can X. be said to 'intend' a particular result if its occurrence, though it may be not wholly uninfluenced by X's will, is dependent on so many other influences, accidents, and cross currents of circumstance that not merely is it likely not to be achieved at all, but, if it is achieved, X's volition will have been no more than a minor agency collaborating with, or not thwarted by, the factors which predominately determine its occurrence."
Whether the deceased has the necessary intention is a question of fact to be decided upon consideration of all the circumstances. One might expect there to be some language, written or oral, used, or adopted, by the deceased, from which the court is able to find, as a fact, the necessary intention prior to, or at, the time of, the relevant property transaction.
It is the intention with which the transaction was entered into, rather than the effect of that transaction, which is important. If that intention cannot be established, that the effect of the transaction is to wholly or partly, deny, or limit, provision, does not matter. It is not enough that the relevant property transaction has that particular result. In other words, what the subsection requires is not cause and effect, but intention and effect: Wilson v Wright (NSWSC, 25 February 1992, unreported), per Windeyer J."
I continue to hold these views as to the meaning of the subsection.
In Hildebrandt v Soncini [2007] NSWSC 1227 at [25]-[26], Macready AsJ had noted that merely intending to benefit one eligible person does not amount to an intention to deny, or limit, provision being made for another. It is the intention with which the transaction is entered into, being to wholly or partly, deny or limit provision being made out of the estate of the deceased for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order, that is essential for the sub-section to operate.
More recently, in Gillett v Nelson (No 2) [2014] NSWSC 580, Darke J referred to Kastrounis v Foundouradakis and to Hildebrandt v Soncini. His Honour also concluded, at [130], that it was the deceased's intention that was relevant. A similar view was taken by Slattery J in Manning v Matsen [2015] NSWSC 1801 at [148].
It is difficult to construe the section as requiring the Court to consider the intention of the other party to the transaction, who obtains the property as a result of the transaction, but who does not own the property prior to the transaction having effect. It must be remembered in this regard, that s 80(1) requires the Court to be satisfied that the deceased entered into a relevant property transaction before her, or his, death and that it is a transaction to which the section applies.
It is always difficult to assess the intentions of a person who has left no specific directions, or indications of that intention. The Court, in those circumstances, looks at such facts and circumstances as are available, in order to determine what was more likely to have been intended by the deceased. Regard may be had to all of the circumstances (whether before or after the time of the transaction) in determining whether, at the time of the transaction, the Court is satisfied that the deceased had the relevant intention.
It is for the party relying upon the section to establish clear and convincing proof that the deceased, by some act or words, demonstrated that it was her, or his, then intention to deny, or limit, the provision that might be ordered in a claim brought by an eligible person.
Section 83 of the Act relevantly provides that the Court must not, merely because a relevant property transaction has been entered into, make an order under s 80, unless the Court is satisfied that the relevant property transaction, or the holding of property resulting from the relevant property transaction, directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death).
The effect of a notional estate order is that a person's rights are extinguished to the extent that they are affected by a notional estate order (s 84).
Section 85 provides:
"The Court may make one or more notional estate orders in connection with the same proceedings for a family provision order, or any subsequent proceedings relating to the estate of the same deceased person."
The Court's power to make a notional estate order is also circumscribed by other sections. Section 87 provides:
"The Court must not make a notional estate order unless it has considered the following:
(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,
(c) any other matter it considers relevant in the circumstances."
In reference to s 87(a), Basten JA in Phillips v James [2014] NSWCA 4 at [125], wrote:
"While it remains true that the section… is silent as to whose 'reasonable expectations' must be considered, the requirement is a constraint on the making of a notional estate order. It is not sensibly construed as referring to the reasonable expectations of the applicant who wants a share of, but does not own, the property. Nor does it sensibly refer to the expectations of the deceased person, because the court must already have determined that an adjustment in the distribution effected by the will was appropriate: s 89(2). Since a notional estate order will only be made in relation to property which never was, or no longer is, part of the estate, it is unlikely to refer to the expectations of any person other than the person who is the present holder of an interest in the property."
Importantly, the power to make a notional estate order does not arise unless the Court is satisfied that (a) the deceased person left no estate, or (b) the deceased person's estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or (c) provision should not be made wholly out of the deceased person's estate because there are other persons entitled to apply for family provision orders or because there are special circumstances: s 88.
Section 89(1) of the Act, relevantly, provides that in determining what property should be designated as notional estate of the deceased, the Court must have regard to (a) the value and nature of any property the subject of a relevant property transaction; (b) the value and nature of any consideration given in a relevant property transaction; (c) any changes in the value of property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), in the time since the relevant property transaction was entered into; (d) whether property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), could have been used to obtain income in the time since the relevant property transaction was entered into; and (e) any other matter it considers relevant in the circumstances.
Furthermore, the Court must not designate as notional estate, property that exceeds what is necessary, in the Court's opinion, to allow the provision that should be made, or, if the Court makes an order that costs be paid from the notional estate under s 99, to allow costs to be paid as ordered, or both: s 89(2).
Section 90 of the Act provides:
"(1) This section applies to proceedings where:
(a) an application for a family provision order is made later than 12 months after the date of the death of the deceased person, or
(b) an application for a family provision order is made in relation to an estate that has been previously the subject of a family provision order.
(2) The Court must not make a notional estate order in the proceedings unless:
(a) it is satisfied that:
(i) the property to be designated as notional estate is property that was the subject of a relevant property transaction or of a distribution from the estate of a deceased person or from the estate of a deceased transferee, and
(ii) the person who holds the property holds it as a result of the relevant property transaction or distribution as trustee only, and
(iii) the property is not vested in interest in any beneficiary under the trust, or
(b) it is satisfied that there are other special circumstances that justify the making of the notional estate order."
In Underwood v Gaudron [2014] NSWSC 1055 at [202] to [204] I wrote, in regard to "other special circumstances":
"The meaning of "other special circumstances" in s 28(5) of the former Act, which was, in its terms, similar to s 90(2)(b) of the Act, has been considered in a number of cases (see, for example, Lewis v Lewis [2001] NSWSC 321; Zirkler v McKinnon [2002] NSWSC 285; Blyth v Spencer; Spencer v Neville [2005] NSWSC 653; [2007] NSWCA 33; Campbell v Chabert-McKay McKay [2010] NSWSC 859; John v John; Alexander v Jansson [2010] NSWCA 176. ("Incapacity" of the applicant was referred to in the former Act but that reference does not appear in s 90.)
The following summary regarding s 90(2)(b) may be gleaned from the authorities which dealt with s 28(5) of the former Act:
(a) The phrase is not defined in the Act and the sub-section gives no direct indication of the nature of "special circumstances". It is incapable of precise, or exhaustive, definition. The words are of indeterminate reference and it is neither possible, nor desirable, to attempt to codify the circumstances to be regarded as special.
(b) The phrase prescribes a verbal formula that is commonly used where it is intended that judicial discretion should not be confined by precise definition, or where the circumstances of potential relevance are so various as to defy precise definition.
(c) The qualifying adjective, "special", looks to circumstances that are unusual, uncommon or exceptional; the Oxford Dictionary defines "special" as meaning "of such a kind as to exceed or excel in some way that which is usual or common; exceptional in character, quality or degree". The Macquarie Dictionary states the meaning as: "of a distinct or particular character or purpose"; "being a particular one"; "particular, individual or certain"; "different from what is ordinary or usual"; "extraordinary, exceptional". This does not mean that the circumstances must be unique, but they must have a particular quality of unusualness that permits them to be described as "special".
(d) A circumstance may be "special" by reason of degree, as well as of kind; circumstances need not be unique to be special, but they will be unusual; it is legitimate to have regard to a combination of factors in reaching the conclusion that they are special.
(e) More should be demonstrated to prove "special circumstances" than to justify an extension of time; the latter requires "sufficient cause" to be shown; however, to establish such special circumstances, does not require the court to exclude circumstances considered under s 58(2).
(f) In a case where an extension of time is sought, the sub-section superimposes a further requirement, or extra hurdle, over and above the matters that a court will consider under s 87.
(g) Whether circumstances answer the description in the phrase must depend upon the context in which they occur; it is the context that allows one to say that the circumstances in one case are markedly different from those in the usual run of cases. Their existence is also, in a sense, evaluative in character.
(h) Section 28(5) of the former Act gave some indication of the types of circumstances that may count as special circumstances, namely circumstances involving such things as property not finally vesting in interest and lack of capacity in the plaintiff; those matters may amount to special circumstances under s 90.
In Cetojevic v Cetojevic, Campbell J (as his Honour then was) wrote, at [77]:
"The case law shows that no exhaustive account of what counts as 'special circumstances' has been attempted to be given. Previous decisions have held them to include incapacity as a result of infancy (Dare v Furness (1997) 44 NSWLR 493; Stojcesvska & Tosevski v Tosevski [2001] NSWSC 274 at [45]), and the strength of an applicant's claim (including her financial and other contributions to the assets of the Deceased), together with the fact that it was through no fault of hers that her application was not made within the prescribed period (Stojcesvska & Tosevski v Tosevski [2001] NSWSC 274 at [46]). They are not limited to the types of circumstance which are expressly mentioned in section 28 or circumstances closely analogous to them: Lewis v Lewis [2001] NSWSC 321 at [85].
(In Underwood v Gaudron [2015] NSWCA 269, though there was a challenge related to the contingent refusal to make a notional estate order, it was not necessary to address that ground because the appeal was dismissed for other reasons: at [5], per Basten JA (Macfarlan and Ward JJA agreeing).)
Similarly, in Charnock v Handley [2011] NSWSC 1408 at [90] I wrote, in regard to "other special circumstances"
White J in Campbell v Chabert-McKay, in relation to s 28(5) of the former Act, dealt with the term "other special circumstances". His Honour held:
"85 In Cetojevic v Cetojevic [2006] NSWSC 431 Campbell J (as his Honour then was) assumed without deciding (at [79]) that more is required to establish "other special circumstances" under s 28(5)(d) than is required to obtain an extension of time under s 16.
86 I accept that more is required to establish "other special circumstances" under s 28(5)(d) than would be required to obtain an extension of time. But I do not agree that to establish such other special circumstances the court is to exclude circumstances considered under s 16. Mr Willmott stressed that the plaintiff needed to establish not just special circumstances, but other special circumstances to justify the making of an order designating property as notional estate.
87 In my view "other special circumstances" are not special circumstances other than those considered under s 16 or s 8. Section 16 requires the court to have regard to all the circumstances of the case in deciding whether to extend time. This must include any special circumstances. Similarly, if an application is made for additional provision under s 8, the court is required by s 9(3)(d) to consider any circumstance it considers relevant.
88 The scheme of s 28(5) is that the circumstance described in s 28(5)(c) is to be regarded as a special circumstance. When s 28(5)(d) refers to "other special circumstances" it is referring to special circumstances other than that referred to in s 28(5)(c). Thus, in s 28(5)(d), the incapacity of an applicant is described as a special circumstance. But incapacity would have to be relevant to the exercise of discretion under s 16 whether to grant an extension of time.
89 For these reasons, I do not accept that matters relevant to the decision to extend time under s 16 are excluded from consideration under s 28(5)(d)."
Brereton J, in Stone v Stone [2016] NSWSC 605, after making reference to these, and a number of other decisions at [71], added at [72]:
"Factors that have contributed to findings of special circumstances have included incapacity as a result of infancy, the fact that it was no fault of the applicant that application was not made within time, the strength on the merits of an applicant's claim, the absence of prejudice (such as the fact that there has been no significant dealing with the notional estate in the meantime), and the belated falsification, after time for bringing an application for provision had expired, of a reasonable expectation that if fulfilled would have made an application unnecessary." (Omitting citations)
[14]
Designation of Property as Notional Estate
In his written submissions, all that counsel for the Plaintiff wrote was:
"The transaction was entered into with the intention of wholly or in part of denying or limiting provision being made to the Plaintiff from the deceased's estate."
There was no factual basis for this bald assertion. However, in oral submissions counsel submitted at T166 - T167:
"…the deceased, on the defendant's evidence, said - this is at court book 188
- "This house is for my son Ivan, not for son-in-law Zivko." The deceased seemed to have been determined that Luba was not going to get the house; Ivan was going to get the house. If ever there was a situation where she fulfilled that intention it's by signing the transfer.
…
They [the statements by the deceased] demonstrate an intention to deprive, at least partly, or limit provision being made to the daughter. If there is no house then the daughter can never have provision because there's no house.
HIS HONOUR: Mr Morrissey, you're conflating intention with result. That's the result, that's the consequence.
MORRISSEY: My submission is that it's both, it's both intention and result."
Similarly, all that counsel for the Defendant wrote was:
"In this case, the Transaction was not entered into with the intention wholly or in part of denying or limiting provision being made out of the Deceased's estate."
In oral submissions, he submitted that it mattered not whether the intention referred to is that of the deceased or of the Defendant. In either case, there was not a "scintilla" of evidence of the relevant intention.
In Carr v Douglass [2016] NSWSC 854, Slattery J, at [70], after dealing with the sections referred to above, formulated a series of questions that deal with the relevant sections of the Act going to notional estate. Respectfully, I agree that they provide a useful basis for the determination of the issues that arise in relation to the designation of property as notional estate:
1. Is there a "relevant property transaction" to found a notional estate claim?
2. Is a notional estate order required to make an order for family provision?
3. Is any posited relevant property transaction one to which s 80 applies?
4. Did any posited relevant property transaction disadvantage the estate or fail to benefit the estate in a specified way?
5. Do any of the restrictions or protections in s 87 prevent the making of a notional estate order?
6. What is the effect of s 90?
In relation to question (1), the parties agreed that any potential "relevant property transaction" here occurred when the deceased transferred the Bardwell Valley property, for no consideration to the Defendant. That was the doing of "any act" that "results in property" being "held by another person", within s 75.
It was not suggested that "full valuable consideration" had been given.
It is not clear precisely when the Transfer dated 22 November 2012 was registered although it was probably soon after it was signed as it was lodged on or about that day.
In answer to question (2), since there is no actual estate, a notional estate order is required to satisfy any family provision order made in favour of the Plaintiff.
In answer to question (3), only s 80(a) of the Act could apply since the transfer of the Bardwell Valley property "took effect within 3 years before the date of the death of the deceased person" and more than 1 year before her death.
However, that is not all that the Plaintiff must establish under the sub-section. She must also establish that the transaction "was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order".
I am not satisfied that s 80(2)(a) is enlivened because, amongst other things, there is simply no evidence that the relevant property transaction was entered into by the deceased with the relevant intention. There is no suggestion that the deceased was engaged in any estate, or succession, planning. Nor is there any evidence of advice given to the deceased, or to either of the parties, by Ms Bozinovska, relating to the rights of a child, as an eligible person, to make a claim under the Act. There is not even a hint that any of the persons involved was conscious, in November 2012, of the possibility of a claim being made by the Plaintiff for a family provision order after the deceased's death. Nor is there any suggestion that either the deceased, or the Defendant, held any concern about such a claim being made by the Plaintiff.
There was no evidence of any contemporaneous statement by the deceased of the requisite intention, particularly in circumstances where there had been some discussion about the making of a Will. There is no suggestion, by the Plaintiff, that the deceased said anything to the effect that she was transferring the Bardwell Valley property, wholly or partly to deny or limit any entitlement to make a claim that the Plaintiff would have in relation to her estate. There is no evidence at all that the deceased was even aware that there was such an entitlement. Nor is there any evidence of the Plaintiff indicating that she might wish to make such a claim if the Bardwell Valley property was transferred to the Defendant.
Ms Bozinovska does not give any evidence to support a conclusion that the deceased held any such intention. None of the documents she produced that were tendered record any conversation in which she was told of an intention, then held by the deceased, to transfer the Bardwell Valley property to the Defendant in order to, wholly or partly, deny or limit provision being made out of the estate for the maintenance, education or advancement in life of the Plaintiff.
Overall, the evidence reveals that the deceased felt an obligation to transfer the Bardwell Valley property to the Defendant because the Plaintiff had received her, and Cvetko's, assistance previously in relation to the Lorraine Avenue property and in the deceased looking after the Plaintiff's children when they were young.
The evidence also establishes that the deceased wished to benefit the Defendant, rather than to deny the Plaintiff, and the steps that she took in signing the Transfer in his favour were taken to facilitate the distribution of the Bardwell Valley property to him before she died.
Nor am I able to infer the requisite intention. There is no need to do so when the deceased stated her intention clearly and unambiguously. That intention was to benefit the Defendant. The conversations repeated by the Defendant, which I accept as having occurred, which I have earlier recorded, provide the evidence of that intention.
It follows that I am not satisfied that the Plaintiff has established the relevant intention.
Since s 80 does not apply, the Court cannot make an order designating the Defendant's interest in the Bardwell Valley property as notional estate. That is sufficient to resolve the proceedings in a practical sense against the Plaintiff, as there is no actual estate from which to satisfy any family provision order that the Court could have made.
To the extent that it is necessary to do so, had the posited transaction been one to which s 80 applies, I would be satisfied that it did disadvantage the estate in that there would, otherwise, be no property out of which a family provision order or a costs order may be made.
The only restrictions in s 87 preventing the making of a notional estate order relied upon is that the Defendant has spent a significant amount of money renovating the Bardwell Valley property. I am not sure that this is a relevant consideration as the expenditure appears to have been incurred after the events in October 2012 and at or about the time of the letter sent by Mr Cerin to the Defendant.
Since the Plaintiff's claim was not made within time, and since s 90(2)(a) of the Act does not apply, she must also satisfy s 90(2)(b), namely that there are "other special circumstances that justify the making of the notional estate order". I am not satisfied that there are such special circumstances.
Counsel for the Plaintiff submitted that the Plaintiff did not commence proceedings within the period prescribed by the Act, because she relied upon the Defendant's statements to the effect that he would give her a half share of the sale proceeds of the Bardwell Valley property, and that he had to wait a while after the deceased's death before he could sell it.
I am not satisfied that the Plaintiff's evidence of what she says that she was told by the Defendant about giving her a share, half of the proceeds of sale or any other amount, should be accepted. In this regard, I prefer the evidence of the Defendant to the evidence of the Plaintiff, even though there is a reference to the Defendant having made such a statement in the letter addressed to him by Mr Cerin.
I have also considered the evidence of Ms Bozinovka, but, overall, I have not been persuaded that her evidence on this topic should be accepted over the evidence of the Defendant. Importantly, there is no reference to it in her contemporaneous diary note. Had such a statement been made, it strikes me that she would have made a note about it. Her affidavit is one sworn in May 2016, more than 3.5 years after the conference with the parties. (I am not suggesting that Ms Bozinovska gave untruthful evidence. It is simply that I am unable to be satisfied, on the balance of probabilities, that it is what the Defendant said.)
Even if the statements were made, it is clear from the Plaintiff's own evidence that in the conversation in October 2014, the Defendant did not give the Plaintiff any basis for a reasonable expectation that, if fulfilled, an application for a family provision order would be unnecessary. Indeed, at the meeting of 12 October 2014, it was clear that he was not prepared to sell the Bardwell Valley property and then give the Plaintiff any share of its value.
It was also clear that there would be no ongoing relationship between the Plaintiff and the Defendant, and between their families, in the future. The Defendant accepted as much in responding to what was said by the Plaintiff and by Peter in the way that he did.
Otherwise, there are no circumstances that are unusual, uncommon or exceptional in character, quality or degree and none which differ from the ordinary or the usual. There is no suggestion of incapacity in the Plaintiff.
Furthermore, the explanation given for her not commencing proceedings, which explanation I do not accept, does not contribute to a finding of "special circumstances". In this regard, I am satisfied that she was well aware by October 12, 2014, which was within the 12 month period from the date of death, that the Defendant was not going to give her any share of the Bardwell Valley property.
The Plaintiff was also aware, from what her son had told her, that something needed to be done within 12 months from the date of death, but she did nothing until some months after the 12 month period expired. It follows that the cause of the delay does not lie with the Defendant who I am satisfied did nothing to encourage her to not commence proceedings.
The inapplicability of s 80(2)(a) and s 90(2)(b) means that the Court cannot make an order designating the Defendant's interest in the Bardwell Valley property as notional estate. That is sufficient to resolve the proceedings in a practical sense against the Plaintiff, as there is no other property in the estate to satisfy any order for family provision that the Court would have made.
Since there is no actual estate and no property that may be designated as notional estate, an order under the Act cannot be made and the Plaintiff's proceedings must be dismissed. It is unnecessary to deal with the application for the extension of time, accepting, in the circumstances, that it would be futile to make an order extending the time.
[15]
Orders
In the circumstances, I order that Defendant be appointed to conduct the proceedings and represent the deceased's estate and notional estate for the purposes of these proceedings, and that the Plaintiff's Summons be dismissed.
[16]
Costs
Section 98(1) of the Civil Procedure Act 2005 (NSW) provides that subject to the rules of Court and to this, or any other, Act, costs are in the discretion of the Court. Similarly, UCPR r 42.1, provides that costs should follow the event unless it appears to the Court that some other order should be made as to the whole, or any part of the costs.
UCPR r 42.20(1) provides that if the Court makes an order for the dismissal of proceedings, then unless the Court otherwise orders, the plaintiff must pay the defendant's costs of the proceedings to the extent to which the proceedings have been dismissed.
The effect of these rules, in this case, is that the Plaintiff must bear the Defendant's costs of the proceedings for the family provision order, unless the Court otherwise orders. The Court can only order otherwise if there is a discretionary decision to depart from what the UCPR provide.
In Commonwealth of Australia v Gretton [2008] NSWCA 117, Hodgson JA with whom Mason P agreed, observed, at [121], that:
"In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled … Departures from the general rule that costs follow the event are broadly based on a similar approach."
In Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34, at [98], that observation was cited, with apparent approval, by the Court of Appeal.
There is no suggestion that the Civil Procedure Act and the UCPR do not apply to family provision proceedings.
As I have also written in other cases, the UCPR reflect the general proposition that an award of costs is discretionary but generally, the discretion is exercised in favour of the successful party.
Because of the wording of s 98(1) of the Civil Procedure Act it is necessary to mention the relevant provision of the Succession Act 2006 (NSW). Section 99 of that Act provides that the Court may order that the costs of proceedings under Chapter 3 of that Act in relation to the estate or the notional estate of a deceased person (including costs in connection with mediation) be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit.
It is clear that s 99 of the Succession Act, also, provides for an unfettered discretion as to how the costs of the proceedings for a family provision order may be borne.
In other cases, including Harkness v Harkness (No 2) [2012] NSWSC 35 at [18]-[19], I set out the general principles that apply in cases in which a family provision order is sought. For the assistance of the parties, I repeat the principles stated which I consider relevant to the present case:
"(a) In Singer v Berghouse [1993] HCA 35; (1993) 114 ALR 521, Gaudron J, said, at 522:
'Family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the Act which, in s.33, makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. 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.'
(b) Despite the above statement, which, of course, was written in the context of a security for costs application, and in respect of proceedings under the Family Provision Act, s 99 of the Succession Act provides a wide discretion in relation to costs ('in such manner as the Court thinks fit').
(c) The view of some practitioners advising a potential applicant contemplating a claim for a family provision order, that there is little risk, and probably much to be gained, in making a claim, however tenuous, because even if the claim fails the applicant will, very likely, get his, or her, costs out of the estate and that he, or she, will not be significantly out of pocket, and the legal practitioner will receive his, or her, costs and disbursements in any event, has been thoroughly discredited.
(d) Parties should not assume that this type of litigation can be pursued, safe in the belief that costs will be paid out of the estate: Carey v Robson (No 2) [2009] NSWSC 1199; Forsyth v Sinclair (No 2) [2010] VSCA 195. It is now much more common than it previously was for an unsuccessful applicant to be ordered to pay the defendant's costs of the proceedings (Lillis v Lillis [2010] NSWSC 359 at [23]) and be disallowed his, or her, own costs.
(e) Where, as here, the issue is whether the unsuccessful applicant should bear the costs of the successful Defendant, s 98 of the Civil Procedure Act, and the rules quoted above, will apply, and, in the absence of some good reason to the contrary, there should be an order that the costs of the successful defendant be paid by the unsuccessful plaintiff: Moussa v Moussa [2006] NSWSC 509 at [5].
(f) An unsuccessful plaintiff will, usually, be ordered to pay costs where the claim was frivolous, vexatious, made with no reasonable prospects of success, or where she, or he, has been guilty of some improper conduct in the course of the proceedings: Re Sitch (No 2) [2005] VSC 383.
(g) In small estates particularly, the court should be careful not to foster the proposition that obstinacy and unreasonableness will not result in an order for costs: Dobb v Hacket (1993) 10 WAR 532, at 540.
(h) Proceedings for a family provision order involve elements of judgment and discretion beyond those at work in most inter partes litigation: Jvancich v Kennedy (No 2) [2004] NSWCA 397; Re Sherborne Estate (No 2); Vanvalen v Neaves [2005] NSWSC 1003.
(i) In exercising its discretion in relation to costs, the court will have regard to 'the overall justice of the case': Jvancich v Kennedy (No 2). The 'overall justice of the case' is 'not remote from costs following the event'. However, the court may be more willing to depart from the general principle in proceedings for a family provision order than in other types of case: Moussa v Moussa; Carey v Robson (No 2); Bartkus v Bartkus [2010] NSWSC 889 at [24].
(j) As proceedings for a family provision order are essentially for maintenance, a court may properly decide to make no order for costs, even though it were otherwise justified, against an unsuccessful applicant, if it would adversely affect the financial position which had been taken into account in dismissing the application: Morse v Morse (No 2) [2003] TASSC 145; McDougall v Rogers; Estate of James Rogers [2006] NSWSC 484; McCusker v Rutter [2010] NSWCA 318 at [34].
(k) There are also other circumstances that may lead the court to order payment out of the estate of the costs of an unsuccessful Plaintiff. The court may allow an unsuccessful plaintiff costs out of the estate, if in all the circumstances the case was meritorious, reasonable or 'borderline': McDougall v Rogers; Estate of James Rogers; Re Bodman [1972] Qd R 281; Shearer v The Public Trustee (NSWSC, Young J, 21 April 1998, unreported).
Finally, what I said in Smith v Smith (No 2) at [77], is also applicable to the facts of the present case:
'I commend to parties involved in proceedings in which a family provision order is sought, that every effort, particularly in a relatively small estate, as this one is, to conduct negotiations frankly and openly, to try to resolve the proceedings, and if there are issues or concerns about an offer that has been made, to raise any issues at the first convenient opportunity with the offeror's solicitors, so that any ambiguities, or other concerns, can be resolved. The Court should be able to see that the parties have considered what is being offered in a sensible, practical, and commercial way.'"
I have referred to these principles since then and they have been cited, with approval, by Pembroke J in Sung v Malaxos (No 2) [2015] NSWSC 290.
In addition to the above principles, I should note that the usual costs rule in an unsuccessful family provision application "reflects the policy embodied in s 56 Civil Procedure Act that litigation must be conducted responsibly and should only be commenced by a plaintiff after careful evaluation of the costs consequences likely to attend to failure": Carey v Robson; Nicolls v Robson (No 2) [2009] NSWSC 1199 at [20] (Palmer J), and that "[t]here is a public policy in the usual practice as well as the element of justice reflected in the rule that costs follow the event": Friend v Brien (No 2) [2014] NSWSC 614 at [20] (White J).
It is clear, as I noted at the commencement of these reasons, that the Plaintiff was emotionally invested in bringing these proceedings. However, that is not a matter that can, or should, be given undue weight in determining the question of how the burden of costs is to be borne.
Furthermore, she brought the proceedings secure in the belief that if she were unsuccessful, she would not have to bear the burden of her own costs. The Defendant, on the other hand, did not have that luxury and is responsible for his own costs.
I bear in mind, also, that the Defendant was protecting his own position and that this is not a case where he was seeking to uphold the terms of a Will or the operation of the rules of intestacy, for the benefit of himself and others.
An additional important matter for consideration is the relationship of the Plaintiff and the deceased. I have referred to the Defendant's evidence in this regard. There was no dispute that the Plaintiff was a loving, and dutiful daughter.
The most significant matter, it seems to me, however, is that the Defendant has received the most valuable asset that would have formed part of the deceased's estate, had its transfer not taken place. Furthermore, had the transfer of the Bardwell Valley property taken place a few months later, or not at all, different matters would have had to be considered. The result may then have been different.
Doing justice between the parties, and considering all of the facts of the case, with some hesitation, I have come to the view that this is a case where the usual order for costs should not be made. I order that the Defendant is to bear his own costs of the proceedings. It is unnecessary to make any other order.
[17]
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: 14 July 2016
Verzar v Verzar [2012] NSWSC 1380
Verzar v Verzar [2014] NSWCA 45
Wheat v Wisbey [2013] NSWSC 537
Texts Cited: G E Dal Pont Law of Costs, (3rd ed 2013, LexisNexis)
New South Wales Law Reform Commission, Uniform Succession Laws: Family Provision, Report 110, (2005)
Rosalind Croucher, "Contracts to Leave Property by Will and Family Provision after Barns v Barns [2003] 196 ALR 65 - Orthodoxy or Aberration?" (2005) 27(2) Sydney Law Review 263
Category: Principal judgment
Parties: Luba Stojanovski (Plaintiff)
Ivan Stojovski (Defendant)
Representation: Counsel:
Mr K Morrissey (Plaintiff)
Mr JE Armfield (Defendant)
Procedural Matters
As stated, the deceased died intestate and because there is no property of the deceased in New South Wales, or elsewhere, neither party made application for Letters of Administration.
An application for a family provision order may be made in respect of the estate of a deceased person. In s 3 of the Act, "deceased person" is defined as including "any person in respect of whose estate administration has been granted". Section 55 of the Act sets out the circumstances in which "administration is granted in respect of the estate of a deceased person". Section 58(1) of the Act provides that an application for a family provision order may be made whether or not administration of the estate of the deceased has been granted.
Then, s 91(2) of the Act, relevantly, provides that the Court may, if it is satisfied that it is proper to do so, grant administration in respect of the estate of the deceased person to the applicant, for the purposes only of permitting the application concerned to be dealt with, whether or not the deceased person left property in New South Wales. If it were necessary to do so, I would be prepared to make that order.
In Wheat v Wisbey [2013] NSWSC 537 at [29] - [60], I dealt with the need for a grant of administration. I do not need to repeat the matters that I set out in that case. However, it is important to note that, relevantly, s 91(2) only permits the grant of administration to "the applicant", who in the context of the section is the person who makes an application for a family provision order, or notional estate order, in respect of the estate of a deceased person.
(Consideration should be given by the legislature to amending the sub-section to include a grant being made to any suitable person, including a Defendant, for the same purpose.)
Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 7.8, provides that the Court may give the conduct of the whole, or any part, of any proceedings, to such person as it thinks fit. The parties agreed that the named Defendant is the appropriate party and contradictor of the Plaintiff's claim. He is the sole registered proprietor of the property that the Plaintiff asks the Court to designate as notional estate and, in any event, without opposition, he has represented the estate of the deceased, since the commencement of the proceedings.
An order that he be appointed to conduct the proceedings and represent the deceased's estate and notional estate for the purposes of these proceedings will be made.