Szlazko v Travini

2946/02 - SZLAZKO v TRAVINI JUDGMENT 1 HIS HONOUR: The plaintiff seeks an order for provision under the Family Provision Act 1982. 2 The plaintiff claims to be the de facto widow of the late Andrea Antoni who died on 1 January 2001 aged 74. The estate was sworn at $690,000. It currently appears that, after legal costs, it will consist of a house at 156 Hillcrest Avenue Bankstown worth about $400,000, some shares worth $65,000 and cash in the amount of $135,000. 3 The plaintiff is currently aged 66 years. The deceased by his will made the following provision for the plaintiff: " FIRSTLY to allow BRIGITTE SZLAZKO during her life to reside in the property at 156 Hillcrest Avenue, Bankstown on the condition that she be responsible for the maintenance and upkeep of the said property including the payment of insurance, Council and water rates and all other outgoings AND FURTHER on the condition that she not re-marry or live in a de facto relationship on the premises or otherwise or enter into a permanent relationship with another man whether residing on the premises or not AND FURTHER on the condition that she not encumber by way of mortgage, caveat or in any other way the said property or lease or sub-lease the property in any way or leave the premises vacant and reside in other premises (other than for the purpose of going on holidays)." 4 The will then continued: SECONDLY I GIVE DEVISE AND BEQUEATH the balance of my estate including the property at 156 Hillcrest Avenue, Bankstown after the death of BRIGITTE SZLAZKO both real and personal of whatsoever nature and wheresoever situate unto my Trustee UPON TRUST … to be divide as follows: a) I GIVE DEVISE AND BEQUEATH TO BRIGITTE SZLAZKO a cash gift of $50,000. b) The balance of the estate shall go equally to my sisters GILDA LEGOVCIC … and MARIA PAVCOVICH … but should either of my sisters predecease me leaving children then said children shall on attaining their majority take equally the share which their parent would otherwise have taken." 5 The plaintiff says that that was not sufficient provision for her and as I have said, seeks a further order under the Act. At the hearing before me on 29 June 2004, Mr G K Burton of counsel appeared for the plaintiff and Mr J Dupree of counsel appeared for the defendant. 6 Before going further I should note the status of the defendant. The plaintiff obtained probate of the will on 10 July 2001. As she wished to make a claim against the estate she sought directions as to who should be added as defendant. The residuary beneficiaries both live in Croatia. On 17 April 2003 by consent a Registrar made the following order: "By consent the Court orders that: 1. Mr Bruno Travini of 70 Roseby Street, Drummoyne, NSW, ('the defendant') be joined as the Defendant in these proceedings. 2. The Defendant's costs of and incidental to the proceedings herein are to be paid from the estate of the late Andrea Antoni on a trustee basis. 3. Note the intention of the parties that order 2 is irrevocable."

The order as originally tendered to the Registrar did not include the words in order 3 "Note the intention of the parties that". 7 I have serious concerns about such orders being made. I recognise that some such provision may need to be made to induce a person to act as defendant. Unfortunately it may give the impression that the defendant has a carte blanche to spend as much as he likes on the defence in the knowledge that he will be indemnified in full. It would be better merely to note that the plaintiff will consent in due course to the defendant's reasonable costs and expenses on the trustee basis being paid out of the estate. 8 I do not remember seeing any material as to how Mr Bruno Travini came to be chosen as defendant or how he is in relationship if at all to the residuary beneficiaries. 9 However, a cynic would say, armed with the knowledge that he was going to get his reasonable costs on the trustee basis in any event, Mr Travini took extremely literally the various utterances of members of the Court of Appeal over the years that an executor's duty in a Family Provision Act application is to put before the Court all the necessary material that can reasonably be found and to uphold the will. For this purpose he not only obtained evidence from Croatia by affidavit (for which no-one can criticise him), he also spent time and effort issuing subpoenas and instructing counsel to closely cross examine the plaintiff. 10 It is certainly true that there are many decisions which say that the executor's duty is as I have set out. They are summarised in Professor Dickey's book Family Provision After Death (LBC, 1992) p 183 and the principal decisions are Vasiljev v Public Trustee [1974] 2 NSWLR 497; Dijkhuijs v Barclay (1988) 12 Fam LR 367 and Warren v McKnight (1996) 40 NSWLR 390. 11 However, it must be remembered that the utterances of the learned Judges in those cases were directed to a particular point. Whilst the law is that the executor is expected to put before the Court all material necessary for the Court to make its decision, none of the Judges ever thought when they were saying this that any executor would take into his head that he must defend Family Provision Act proceedings as if they were a jury trial in a fraud case. Furthermore, as is plain from judgments such as Jackson v Riley Cohen J, 24 February 1989, unreported and Propert v O'Connor Master Macready, 29 July 1994, unreported, there is a duty upon practitioners, and this attaches to defendants as well, to compromise claims in relation to small estates and to be careful when presenting evidence not to allow the costs of the defence to exceed sensible proportions. Accordingly, although the executor has the duty in the authorities, he or she must be careful to have a due sense of proportionality. These days, executors in a small estate would be expected not to look under every bushel for evidence, but to put forward before the Court the essential material and to seek to compromise, if at all possible, in a way that would save both the plaintiff and the other beneficiaries' costs. 12 Furthermore, in the instant case the position taken by the executor in upholding the will completely ignored the fact that such a position did not benefit the residuary beneficiaries one whit. If the will was kept in its existing form, then the remaindermen, one of whom is 74 and the other only survived the testator by three months, would not receive any benefaction probably for about 30 years. However, a compromise of the litigation or even if the plaintiff won, would probably see monies flowing into their purses much earlier. The defendant took the view that this was quite irrelevant because his duty was to uphold the will. Again, in my view, this was completely misguided. An executor (or a nominal defendant) has a duty to uphold the will but not to the stage where it is of no commercial benefit to anybody to do so, and certainly the cut-off point is before one reaches that stage. 13 The other problem with the defendant's case was this. The proceedings were commenced in mid-2002; they did not come on for hearing until mid-2004. The plaintiff's affidavit gave some narrative as to why she was a de facto widow. This material was not in properly admissible form. 14 It has been the practice for some years in order to minimise costs (an aim which has not been achieved), Judges and Masters permit evidence to be filed in small estates which is not in precisely admissible form according to Hoyle such as narrative statements by plaintiffs, statements of value by estate agents rather than formal valuations by valuers and the like. If it appears that material in this category is of vital importance to the case, then that message is signified to the Registrar and thereafter the parties comply with the strict rules of evidence. In the instant case, the plaintiff's evidence as to her de facto relationship was in narrative style and a lot of it was inadmissible in strict form, but at no stage did the defendant inform the Court or the plaintiff that her status as a de facto wife was in issue until objections were made to the affidavit of the plaintiff at the trial. This trial by ambush is not permitted. A person who can see that the other side has made assumptions as to what is or is not in issue is under an obligation to put that assumption at rest. If the status of a plaintiff as an eligible person is in issue that must be signalled. 15 The consequence of signalling the defendant's attitude only at the trial was that if the objection had not been withdrawn (as it was after counsel took instructions), I would have had to grant an adjournment because the plaintiff would need not only to have filed a supplementary affidavit putting her evidence in proper form, but she may also have needed to have obtained evidence from friends dealing with the fact, if it be the fact, that they saw the deceased and the plaintiff in such circumstances as the Court may infer they were living as husband and wife. 16 The objections to the narrative were withdrawn. However, the defendant maintained the position that the plaintiff must prove that she was the de facto wife of the deceased. She was criticised in addresses in not putting forward independent evidence. However, I discounted this because the way the case was run she was not alerted to the necessity to do so. 17 I hope that what I have just said will lead to more clarity in subsequent cases. 18 I now return to the facts of this case. The first matter is to deal with the submissions that were made as to the construction of the will because unless one can see what is the provision made for the plaintiff by the will one cannot continue to examine whether she was or was not left without proper provision for her maintenance etc. 19 The first matter raised was the nature of the estate given to the plaintiff by the will. In broad terms it was a life estate. However, it was very much curtailed by the conditions. The will provided that the plaintiff was to pay for the "maintenance and upkeep" of the property. These two words "maintenance" and "upkeep" are broadly synonymous; see eg Re Strickland's Will Trusts [1936] 3 All ER 1027, and both to my mind connote doing the works that normally fall to a life tenant rather than a remainderman, that is, doing the works of keeping the property in good condition, but not having to pay for capital repairs such as renewing a roof, renewing a hot water system or any renovations. 20 The testator has not made any provision as to what is to happen to these capital expenses and presumably a fund needs to be maintained to look after them. Mr Dupree, who appeared for the defendant, said that that fact supported his submission that on a true construction of the gift "secondly", the payment of the $50,000 to the plaintiff and the payment of the balance to Gilda and Maria was only to take place after the death of the plaintiff. That submission makes some sense. 21 However, the proper construction of the gift secondly is clearly that it is the balance of the estate including the remainder in 156 Hillcrest Avenue, that is the totality of what is to be given to the plaintiff and the deceased's sisters. It would be absolute nonsense that the plaintiff was only to be paid $50,000 after her own death. 22 Accordingly, in my view, the will gives to the plaintiff a type of life estate on conditions plus $50,000. The plaintiff as executrix would need to keep a fund to provide for capital works to the property and after putting aside that fund, pay the balance in equal shares to the sisters of the testator and in due course the sisters would also get a conveyance of the Bankstown property. 23 There is, of course a minor discrepancy in that the will does not say what is to happen to the property between the time of the plaintiff vacating the Bankstown property or otherwise not fulfilling the condition and her death, presumably the property has to be rented and the intermediate income would be paid to the sisters before they took the capital or it may be that the rule in Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482 would apply so that they could call for the capital upon the breach of condition. I do not need to delve into this area. 24 Accordingly, the first question is whether the "sort of life estate" given to the plaintiff plus $50,000 was proper provision for her maintenance and support etc. 25 The plaintiff migrated to Australia from Germany in 1954 when she was 16. She first met the deceased shortly after arriving in this country: he was then 27. 26 The plaintiff and the deceased became engaged in January 1959. There was some family resistance to their marriage, it would appear mainly because of the age difference between the parties and in January 1960 the plaintiff broke off the engagement and she and her parents went to live in Germany. The evidence shows that the parties endeavoured to write to each other but for some reason or other their letters were not received. In the first part of 1962 the plaintiff returned to Sydney and married a Mr Feiersinger with whom she had two children. She divorced Mr Feiersinger in October 1974 and married Mr Szlazko. 27 The deceased purchased No 156 Hillcrest Avenue Bankstown in May 1971. In October 1972 he married Hilda Enderby who died of cancer in October 1978. He remarried Helena Gadzur in December 1979, but she died of cancer in 1989. 28 The plaintiff became estranged from Mr Szlazko after he lost the family home and most possessions in a failed business venture of a bookshop. The plaintiff moved to Yagoona and she met up again with the deceased in the Bankstown shopping centre in March 1996. They immediately renewed their former friendship and the plaintiff says, saw each other and shared each other's home from that point. She says that she and the deceased lived in the deceased's home at 156 Hillcrest Avenue Bankstown as man and wife on the deceased's invitation from August 1997. In 2000 the deceased was diagnosed with cancer, the plaintiff nursed him. In November 2000 the deceased gave the plaintiff a power of attorney and on 28 November he made the will to which I have already referred. 29 Although the defendant challenges the plaintiff to show by proper evidence that she was a de facto wife, even allowing for the fact that the plaintiff's evidence is in narrative form and were it not for the objection of the defendant to it being withdrawn might not have been admitted, what material there is before me shows fairly clearly that the plaintiff was a de facto spouse. It is not the first time that the Court has come across a fact situation where childhood sweethearts have been forced apart by circumstances and later in life found each other again. Indeed, the deceased's sisters even wrote to her as "Antoni" though they may not have known her true situation. It is true that some of the bank statements were addressed to her at 8A Anderson Road Northmead even in 2000. However, the bulk of the material tends to bear out the plaintiff's claim. Most significantly, the plaintiff continually claims to be a de facto wife and very little, if any, of the cross examination was directed at her to challenge this claim. It is, of course, the case that the defendant has no personal knowledge one way or the other, but the plaintiff was tested on other matters, yet not on this. 30 Accordingly, in my view, on the balance of probabilities the plaintiff has made out her claim that she is an eligible person to make an application under the Act as a de facto widow. 31 The next matter to consider is whether proper provision was made for her by the testator's will. 32 Mr Dupree kept reminding me of the solemnity and significance and almost sanctity of a testator making his will having considered the claims upon him. One of course does take those matters into account but there would be no need for the Act at all if one stopped there. 33 Judges over the last twenty years particularly, have made it fairly plain that a provision for a widow such as that made in the instant case is entirely inappropriate for modern conditions. Indeed it is surprising to see a solicitor drawn will containing such provisions though it may well be that the client insisted upon them. 34 In Moore v Moore C/A, 16 May 1984, Hutley JA, at p 2, made it clear that a mere right of residence will usually be an unsatisfactory method of providing for a spouse's accommodation to fulfil the normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason to leave the residence. The spouse will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. Kirby P, Cripps JA agreeing, in Golosky v Golosky 5 October 1993 repeated those words with approval. In Court v Hunt 19 September 1987, I said: "In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital."

I repeated something similar in Caldwell v Ang 11 April 1991, unreported. As far as I am aware, no Judge has ever departed from those remarks. 35 In the instant case, the argument that the gift was inappropriate and insufficient is a fortiori because not only is there a life estate, it is a life estate which is hinged around with a large number of conditions and in which it is unclear as to who is to pay for capital improvements. 36 I have no difficulty at all in concluding that the life estate was not sufficient provision for the plaintiff even with the $50,000 legacy. 37 I should digress here and note that the two valuers gave evidence and were cross examined. Each of the valuers was primarily a real estate valuer; each, however, purported to value the life estate. Their basic method was that of working out the life expectancy of a 66 year old Australian female and then working out the amount that she would save in not having to pay rent for the premises over that period. This seemed to me a very odd way of approaching the value of the life interest and it was strange that there was no actuarial evidence given once the present day value of the fee simple was established. Moreover, some of the cross examination obscured the point by imprecisions such as referring the valuer to the life estate being extinguished. No-one seemed to have heard of an estate pur autre vie. 38 One usually finds values of life estate as being given by a person with actuarial experience and also usually with reference to the tables used by the revenue officers in the days of cesser duty. Primarily the value of a life estate is as set out in Rost and Collins Land Valuation and Compensation in Australia 3rd ed (1984( p 264: "The value of a life interest in property is regarded as being the value of an annuity during the life of the life tenant equal to the annual value of the property."

The methods used by the valuers approach this rule though I am not too sure whether they applied it with that much understanding. I must confess I was not impressed with either valuer, though both endeavoured to convince me of their expertise by an extremely confident mien and patter. 39 The valuers' consideration of a life estate seemed to take no account whatsoever of the possibility or probability of the life tenant applying under s 54 of the Conveyancing and Law of Property Act 1898 for the property to be sold and for the resulting fund to be administered. They also did not take account of knowledgeful persons in the market place wishing to purchase the life interest so they themselves could make such an application, nor other arrangements whereby the whole of the fee simple could be put up for sale. It seems to me that whilst both valuers spoke of the risk factor involved in anybody purchasing a life estate, they overestimated the risk factor because of their unfamiliarity with life estates and the probabilities are that the estate was worth much more than either valuer was prepared to certify. However, this is of little moment in the end result. 40 However, it is rather hard to understand why this evidence was presented at all. The plaintiff's valuer valued the life estate at $190,000 and the defendant's valuer at $105,000. Whichever was right, the evidence quite plainly demonstrates, if this is the right way of approaching the matter, the inadequacy of the plaintiff's bequest. Mr Dupree sought to use it by saying that his wise and just testator had given the estate one-third to the widow, and one-third to each of his sisters, but it is a very long bow to pull to get to that result. 41 I then pass to the second limb of the Singer v Berghouse (1994) 181 CLR 201 test, namely, in all the circumstances and bearing in mind the size of the estate, what was the provision that the community would have expected this testator to provide for his widow in order that she receive proper and adequate provision? 42 Although the plaintiff changed her views between the time of commencement of the proceedings and the time of hearing, her latest expression of desire is that her roots and support base are deeply entrenched in the Bankstown area and she does not want to leave it. She would like to renovate 156 Hillcrest Avenue and live in it as long as she could, but would like flexibility so that she could move into a retirement village including serviced accommodation if need be. She also would like to have a new car, her present vehicle being a 1991 Nissan Pulsar calculated to be worth only $3,500. A new car would cost $30,615 (a new Holden Astra automatic). 43 Mr Burton referred me to the decision of Holland J in Crisp v Burns Philp Trustee Co Ltd 18 December 1979 noted in Mason and Handler's Wills Practice at [9433]. This is, of course, the first case in a line whereby Judges recognise the need for structuring orders under the Act for widows to ensure that they had protection for the whole of their lives. 44 Mr Dupree said that the testator has sought to accommodate the people to whom he considered he owed obligations, the plaintiff, his sisters and his sisters' children and he directed his mind to it and what he did should not be disturbed. In fact, on Mr Dupree's submission the testator leaves everybody with something. So far as the plaintiff is concerned, he points out that this is not a case where there is any evidence that the plaintiff contributed to the value of the Bankstown home in any way whatsoever. 45 Mr Dupree read evidence from the testator's relatives in Croatia. The evidence showed that the testator's sisters and their kin are people who would be classed as needy and certainly do not enjoy anywhere near the lifestyle of the average Australian, even the average Australian poor person. I do not want it to be thought that I have neglected this evidentiary material. However, two points must be made. First, whilst it is undoubtedly true that there is a custom in Croatia that families help each other and richer elder brothers help poverty stricken sisters, that evidence is very much diminished when one realises that the deceased was never a Croatian at all. His village was in Italy when he lived there, it was removed into Yugoslavia by some partition just after the war, but the deceased elected to stay Italian and then came to Australia. Secondly, the testator did owe some obligation to his family. However, his obligation to his de facto widow was paramount and her needs must first be addressed. 46 On the other hand, Mr Burton for the plaintiff, puts that the plaintiff is the deceased' s primary responsibility in that she was in reality his wife for a substantial period, the parties were living in the house and there was no reason why he should not have met her needs. If he were to provide the house outright, plus the $50,000 plus something for repairs to the house, there would still be something like $110,000 to $120,000 left for the remaindermen which would be more than a reasonable observer would expect them to receive. Furthermore, they would receive that money now rather than on the death of the plaintiff. Alternatively, the house should be done up to proper standard which, although there is little evidence, would seem to be in the vicinity of $40,000 to $50,000, the plaintiff should have a car of $30,000 and a scheme be worked out whereby the plaintiff could in due course exchange the home for a home unit or villa unit and then nursing home accommodation. 47 On this last matter, the cost of villa accommodation would, it would seem, not leave much change from the sale of the Bankstown property once one took into account stamp duty, estate agent's commission, removal expenses etc. 48 In my view, Mr Burton's submissions, particularly his first submission, are to be preferred. The majority of the problems are solved if the widow has the house in fee simple. Alternative suggestions will involve administration costs. Mr Dupree mainly shrugged these off by saying that the widow as executrix would handle the matter, but when there are remaindermen who are at arm's length, each adjustment would doubtless involve correspondence, expert opinion and legal advice. In my view proper provision for the plaintiff is that she receive the property at Bankstown outright, the $50,000 which will cover the cost of putting the house into proper condition and $30,000 for a car. Thus in lieu of the provision made for her under the will of the late Andrea Antoni I order that the plaintiff receive the house and land at 156 Hillcrest Avenue Bankstown in fee simple plus a legacy of $80,000, such legacy not to carry interest if paid on or before 1 August 2004. The residue of the estate after the gift to the plaintiff is discharged, the death, funeral and testamentary expenses and the proper costs of these proceedings are discharged, is to pass to the residuary beneficiaries, namely Maria Pavcovich and the legal personal representatives of Gilda Legovcic in equal shares. The exhibits may be returned. 49 At the end of the argument I was asked not to deal with the order for costs, but to publish my reasons and then have the matter relisted so that any submissions could be put as to costs. I will formally appoint Thursday 22 July at 9.30 am, but should that date be inconvenient, provided counsel notify my Associate at least the Monday before that date, a suitable substitute time can be arranged.

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