Cowap v Cowap

1. [1]

   BELL P: I agree with Macfarlan JA.

2. [2]

   MACFARLAN JA: On 11 December 2015 Mr Geoffrey Cowap died aged 85. By his will, signed over three years earlier (10 August 2012), he left the whole of his estate to his wife of 57 years, Ms Barbara Cowap, the present appellant. The principal asset of the deceased’s estate is the matrimonial home at Springrange in which the appellant has resided for 32 years.

3. [3]

   The respondent is aged 64 and is a child of the appellant’s first marriage. He was adopted by the deceased. There are five adult children of the marriage between the deceased and the appellant. After a four day hearing before Kunc J in the Equity Division, his Honour delivered an ex tempore judgment concluding that an order should be made under s 59 of the Succession Act 2006 (NSW) for provision out of the deceased’s estate for the respondent in the amount of $600,000. His Honour made formal orders, including as to designation of property as notional estate, on 2 October 2019.

4. [4]

   The appellant appealed to this Court on a number of grounds, the principal of which was that the primary judge failed to give adequate weight to the claim of the appellant on the testator’s bounty and that the provision ordered in favour of the respondent was accordingly manifestly excessive. For the reasons that appear below, I consider that the appeal should be dismissed.

The deceased’s property

1. [5]

   The deceased’s actual estate was only of nominal value but at the date of his death he held the following property (with values stated at the date of the hearing) jointly with the appellant:

2. [6]

   The half of these assets to which the appellant succeeded by way of survivorship was eligible to be designated as notional estate for the purposes of the respondent’s claim under the Succession Act.

3. [7]

   The Springrange property is a rural residential property of 22.87 hectares in area, about 4.5km east of the highway linking Canberra with Yass. Erected on it is an approximately 50 year old four bedroom home, together with a garage and some other ancillary structures.

The appellant’s circumstances

1. [8]

   The appellant and the deceased had a loving and happy marriage. Their children are now aged between 49 and 64, with the respondent being the eldest. There was no evidence as to the present financial circumstances of any of the children, other than the respondent.

2. [9]

   The appellant was aged 90 at the time of the judgment at first instance and is in good health. In addition to the property at Springrange, the appellant owns shares and cash to the values of $423,151.80 and $55,227.92 respectively. These amounts include the share of the corresponding jointly owned assets to which the appellant succeeded by survivorship.

3. [10]

   The appellant’s income is principally derived from a British Civil Service widow’s pension, which fluctuates with the exchange rate but at the date of the hearing at first instance was $23,400 per annum. She also obtains income from a Centrelink part pension ($13,520 per annum) and investment income from her cash and shares ($14,139.36 per annum). Her total average income is therefore in the order of $50,000 per annum.

4. [11]

   Her income is principally used to pay expenses in the amount of about $40,000 but, as well, she incurred some $23,281 over the 12 months prior to the hearing at first instance for a new water tank, the installation of a bore and reverse cycle heating and air conditioning.

The respondent’s circumstances

1. [12]

   At the date of the deceased’s death, the respondent was in good health, having earlier engaged in careers in the ski industry, sports marketing and the manufacture and distribution of nutritional products for athletes.

2. [13]

   On 26 May 2016 the respondent had a heart attack and underwent major heart surgery. He suffered a brain injury during the heart attack and had another cardiac arrest on 1 June 2016, as a result of which he underwent emergency surgery. He was in a coma for a substantial period before ultimately being discharged from hospital in March 2017.

3. [14]

   As a result of his heart attacks he has been left with some 12 different conditions which include the following:

   1. (1)

      Hypoxic brain injury causing ongoing cognitive deficit;

   2. (2)

      Nerve damage causing bladder dysfunction. This requires the respondent to self-catheterise;

   3. (3)

      Nerve damage, especially in his hips and legs, so that he cannot stand or walk unsupported. He walks around the house with the aid of two crutches and when outside uses a wheelchair. On 27 February 2019, shortly after he moved into a two-storey rented house at Rouse Hill, he felt very disoriented, lost his balance and fell, resulting in a fracture to his spine. Following the fall, he is unable to get up the stairs without assistance;

   4. (4)

      His balance and stability have been affected by the nerve damage and a bilateral foot drop;

   5. (5)

      He has osteoporosis, as a result of which he has a high risk of sustaining a fracture if he falls;

   6. (6)

      He has gastrointestinal issues (Crohn’s disease, ulcerative proctitis and focal colitis) which affect his bowel function and significantly affect his way of life. He also has incontinence at times;

   7. (7)

      The damage to his nerves affects his ability to self-regulate his body temperature. He always feels cold and suffers in the heat because his body cannot cool itself down.

4. [15]

   In evidence the respondent described his injuries as having had a “huge impact” on him. He cannot work anymore, is not self-sufficient and cannot support his daughter. His rehabilitation specialist, Dr Cesar Uy, has advised him that he has achieved his maximal expected recovery and cannot expect to again perform complex tasks involving high level cognitive function.

5. [16]

   The respondent is cared for by his former de facto partner, Ms Tatjana Zajic, with whom he has one child, Isabella. Isabella is now a 21 year old university student who lives with the respondent and Ms Zajic. Ms Zajic receives a carer’s pension of $739.70 per fortnight and derives some other limited income from cleaning work and making jewellery. She does not own real property and has savings of about $50,000. The primary judge found that the relationship between Ms Zajic and the respondent is now that of carer and recipient of care, and “does not have the incidents of being a couple”.

6. [17]

   So far as the respondent’s accommodation needs are concerned, Dr Uy advised as follows in his report of 18 June 2019:

7. [18]

   Mr Sean O’Grady, senior occupational therapist at Westmead Hospital advised, to similar effect, as follows:

8. [19]

   In a similar vein, Ms Sarah Cowap, one of the respondent’s sisters, gave evidence of her inability to have her brother for respite visits at her home in Adelaide because her house “is not set up at all. [It has] a very narrow corridor and … the bathroom and toilet are very small”.

The judgment at first instance

1. [20]

   Near the commencement of his judgment, the primary judge stated his overall conclusions as follows (at Judgment [12]):

2. [21]

   Having described the circumstances of the estate and of the parties, his Honour said (Judgment [58]):

3. [22]

   His Honour then referred to his earlier identification of the respondent’s claim as one for provision of $600,000 to enable him to build a modular kit home ($270,000), land ($250,000), a car ($20,000) and an amount for contingencies ($60,000) and described these figures as unchallenged. His Honour then concluded as follows:

Additional evidence on appeal

1. [23]

   By notice of motion heard at the appeal hearing, the appellant sought to adduce additional evidence concerning the value of the home in which the appellant lives and concerning damages claims made by the respondent, and by Ms Zajic and Isabella, against the respondent’s medical practitioners. The application was rejected for the following reasons.

2. [24]

   The Court’s power to receive additional evidence on appeal is conferred by s 75A of the Supreme Court Act 1970 (NSW), which relevantly is in the following terms:

3. [25]

   As is apparent from these provisions, “special grounds” are required to be established for the admission of evidence of matters occurring before the hearing at first instance (“further evidence”), whilst there is no such requirement in relation to evidence of matters occurring after the hearing (“fresh evidence”). In general, the following conditions must be satisfied in order to establish “special grounds”:

The value of the property

1. [26]

   The evidence of value adduced at the hearing at first instance comprised two reports, each entitled “Comparative Market Assessment” and dated almost a year before the hearing.

2. [27]

   The first was a report dated 19 September 2018 by Mr George Southwell of Ray White Rural Yass. It refers to his inspection of the property on 17 September 2018 and contains details of the sales of a number of “comparable” properties that Mr Southwell took into account in reaching his “Appraisal Price” for the property of $1,300,000 to $1,400,000.

3. [28]

   The second was a report dated 12 September 2018 prepared for the appellant by Mr Mark Johnstone of Ray White Canberra. Mr Johnstone refers to the sales of some “comparable” properties and arrives at a “Price Range” of $1,250,000 to $1,400,000 for the property. A reference by the respondent’s counsel at the commencement of the hearing on 19 August 2019 to the property having been valued “uncontroversially” at about $1,350,000 was not at any time sought to be contradicted by the appellant. As a result, the primary judge proceeded upon the basis that that was its value.

4. [29]

   The additional evidence on this topic sought to be adduced on appeal was a valuation report dated 24 October 2019 prepared by Mr Colin Davies of Colin Davies & Associates. The report refers to his inspection of the property on 23 October 2019, which was about two months after the judgment at first instance. It values the property at $900,000. The sales of “comparable” properties to which Mr Davies refers occurred on 23 May 2019, 8 March 2019 and 13 July 2019, each being dates well prior to the date (19 August 2019) of the commencement of the hearing at first instance.

5. [30]

   The Court rejected the tender of Mr Davies’ report for the following reasons.

6. [31]

   First, the appellant did not show that evidence to the effect of Mr Davies’ report could not have been obtained by the exercise of reasonable diligence for use at the hearing at first instance (see [25] above). On the contrary, the dates of the sales of “comparable” properties relied upon by Mr Davies suggest that it could have been.

7. [32]

   Secondly, contrary to the appellant’s assertion, Mr Davies’ report does not constitute a “Material Matter Since Judgment”. In the absence of evidence that the value of the property changed between the date of judgment and the date of Mr Davies’ report, the inference arising from the report is that it records circumstances subsisting before the hearing. As a result, s 75A(8) required the appellant to establish “special grounds” for the admission of the evidence. She did not do that.

8. [33]

   Thirdly, as to the condition that the evidence be “credible” (see [25] above), the difference between the 2018 assessments of value on the one hand and Mr Davies’ October 2019 valuation on the other (a decrease of some 28-35% in 13 months) raises a question as to the correctness of either the former or the latter, or both. At least it can be said that Mr Davies’ report is not obviously correct.

9. [34]

   Fourthly, as stated in Akins, “there must be a high degree of probability that there would be a different verdict” if the evidence were admitted (see [25] above). No more can however be said on this topic than that if Mr Davies’ report were admitted, it would be arguable that there should have been a different order for provision made at first instance. This does not meet the “high degree of probability” test.

10. [35]

    Fifthly, by obtaining and tendering Mr Southwell’s and Mr Johnstone’s reports, the parties demonstrated that they were clearly conscious of the relevance of the value of the property to the outcome of the proceedings. Yet they chose to rest on the reports they obtained in 2018, without updating them prior to the hearing nearly 12 months later. The Court should not exercise its discretion in favour of admission of the later valuation report when the parties, and the appellant in particular, made a forensic choice not to seek to obtain such evidence at an earlier time.

The damages actions

1. [36]

   The appellant also sought to read an affidavit of her lawyer, Ms Barbara Campbell, deposing to her discovery after judgment of the existence of Supreme Court proceedings relating to the respondent’s medical conditions. The relevant proceedings have been brought by the respondent, for damages for medical negligence, and by Ms Zajic and Isabella, for damages for nervous shock, against the respondent’s medical practitioners. Ms Campbell deposed that these proceedings were not disclosed to the appellant in the course of the Succession Act proceedings.

2. [37]

   The appellant’s tender of this evidence in this Court failed at least for the reason that she did not establish that there was a “high degree of probability that [if it were admitted] there would be a different verdict”, being the second condition stated in Akins (see [25] above). Whether or not the proceedings might ultimately produce damages awards is a matter of complete speculation. Unsurprisingly, the appellant made no attempt to adduce evidence from which the outcome might have been predicted. Indeed, she did not even proffer the defences filed by the defendants to the Supreme Court proceedings (or state that they had not yet been filed), even though Ms Campbell had access to the Court files in those proceedings. Not only might the three proceedings produce no benefit for the plaintiffs, they might instead result in substantial liabilities for their own, as well as the defendants’, costs.

Grounds 1-5 and 8: the competing claims of the appellant and the respondent

1. [38]

   I address these grounds together as they are dealt with together in the appellant’s written submissions. As the grounds are effectively submissions which reflect the way in which the appellant’s case was put on appeal, I set them out in full below. Before doing so, I note that the remaining grounds of appeal (Grounds 6, 7 and, in light of the Court’s conclusions on the other grounds, 9) were not pressed.

2. [39]

   The relevant grounds of appeal are as follows:

3. [40]

   In her written submissions, the appellant encapsulated the thrust of these contentions as follows:

4. [41]

   As a general response to these contentions it must first be said that the proposition that the primary judge committed appellable error by failing to give “sufficient weight” to aspects of the appellant’s claim cannot be sustained.

5. [42]

   In exercising his discretion as to the provision that should be ordered in favour of the respondent, it was for his Honour to determine what weight should be given to relevant factors. That an appellate court might consider that greater or lesser weight should have been given to such factors does not constitute a basis for the court interfering with a discretionary decision (see for example, Bugmy v The Queen (2013) 249 CLR 571; [2013] HCA 37 at [24]). Instead it is necessary for an appellant to establish error in accordance with the principles stated in House v The King (1936) 55 CLR 499 at 505, which require it to be shown that there has been an error of principle or as to the facts, a failure to take into account a relevant consideration, or that the decision is “unreasonable or plainly unjust” (ibid).

6. [43]

   A complaint, such as made by the appellant in the present case, that insufficient weight has been given to relevant factors “tacitly concedes” that the factors have not been left out of account altogether (Majid v R [2010] NSWCCA 121 at [40]). In any event, it is plain from his judgment that the primary judge did in fact give earnest consideration to the essence of the matters said to have been given insufficient weight (see [20]-[22] above).

7. [44]

   In her written submissions, the appellant sought to support her general contentions by making six particular points as follows.

8. [45]

   First, she criticised the way in which the respondent’s accommodation claim was advanced. She pointed out that the respondent’s initial claim for provision that would enable him to build on the residential property which his mother occupies was not feasible and was abandoned. This matter of history does not however advance the appellant’s case in any significant way.

9. [46]

   The appellant also pointed out that in his evidence the respondent sought a lesser amount to satisfy his accommodation claim than the primary judge ultimately awarded. The primary judge however satisfactorily addressed this point as follows (at Judgment [19]):

10. [47]

    The appellant then described the respondent’s claim as “essentially unarticulated” but the respondent, through his counsel, sought the $600,000 provision that he was ultimately awarded and there was evidence to support the elements of the claim. His Honour’s acceptance of the claim was not, as the appellant submitted, based on the respondent’s evidence that he would probably be “evicted” from his present rental premises. Rather, it was based upon his Honour’s conclusion that the respondent’s physical and mental condition was such that he needed to own his accommodation and not be subject to the insecurity and potential lack of suitability of rental accommodation (see Judgment [58] quoted in [21] above). This conclusion derived support from the expert and other evidence before his Honour (see [17]-[19] above).

11. [48]

    Secondly, the appellant submitted that the primary judge failed to consider reasonably practicable alternatives to the respondent receiving provision to enable him to purchase land and a kit home. In particular, the appellant suggested that the respondent would be able to find suitable rental accommodation and that he had “managed different accommodation” in the years since his heart attack. Against this stands the primary judge’s conclusion, which was reasonably open to him, that the respondent needed secure accommodation tailored to his needs. The evidence did not demonstrate that renting would satisfy this need. Nor was it a fair summary of the evidence to say, as the appellant submitted, that the respondent had “managed” the varying accommodation he had had since his heart attacks. Rather, the evidence indicated that the respondent had encountered difficulties in using rental accommodation and that, as his Honour held, in financial terms the respondent and Ms Zajic were “just able to cover their living expenses and nothing more”. In any event, in exercising his discretion his Honour was not confined to consideration of the bare necessities of life (Steinmetz v Shannon [2019] NSWCA 114 at [132] per Brereton JA).

12. [49]

    Thirdly, the appellant submitted that Department of Housing long term disabled housing and nursing home accommodation were reasonable alternatives that the primary judge should have considered. The respondent however gave unchallenged and uncontradicted evidence that there was a 10 year waiting list for public housing. As for nursing home accommodation, the respondent’s affidavit referred to his strong aversion to nursing homes. He said that if he had to go into a nursing home, he thought he would die.

13. [50]

    His Honour was conscious of this aversion as the respondent also referred to it in cross-examination. It was a matter to be taken into account, along with many other factors, including the appellant’s own strong preference concerning her accommodation, in the balancing process which his Honour had to undertake. His Honour clearly did so as he referred to it as one of the “possibilities” for the respondent’s future. The effect of his orders was to reject it.

14. [51]

    Fourthly, the appellant submitted that “there was a paucity of evidence supporting the amount of provision for any outright accommodation”. It is correct that the evidence was limited but it was sufficient for the respondent to give the primary judge some guidance in the making of his discretionary decision as to the amount of the provision that should be awarded in favour of the respondent. The respondent, for example, provided some evidence of costs of kit homes and land costs.

15. [52]

    Fifthly, the appellant complained that the primary judge founded his conclusions, in part, on his acceptance of a proposition that she “will eventually have to leave the Property” (see Judgment [74] quoted in [22] above). The appellant submitted that there was no evidence to support this proposition and that it was not put to her in cross-examination. There are however two ways in which the proposition could be understood, neither of which involves error on the part of the primary judge.

16. [53]

    First, it may be that his Honour was simply stating, perhaps euphemistically, a truism that, whether or not illness or other circumstances might cause the appellant to leave the property earlier, her eventual death would result in that occurring. Bearing in mind her age (91), the potential length of her remaining life would inevitably be far shorter than the three decades or so that the 64 year old respondent might remain alive.

17. [54]

    Alternatively, his Honour may simply have been intending to state, in general terms, the uncontroversial proposition that common experience indicates that illness, or simply the ageing process, would probably eventually result in the appellant having to leave the property.

18. [55]

    Sixthly, the appellant submitted that the primary judge erred in concluding that her claim to remain in the property could be “adequately described as a deep sentimental attachment”. The primary judge did not however treat the appellant’s claim as simply based on a “deep sentimental attachment” to the property. His Honour referred to that attachment, which was a factor appropriate for him to take into account, after earlier specifically recognising the appellant’s claim based on a long and happy marriage to the deceased by referring to Luciano v Rosenblum (1985) 2 NSWLR 65. In that case, Powell J said at 69-70:

19. [56]

    Two other specific matters are raised in the grounds of appeal quoted in [39] above. First, it is contended that the primary judge failed to give “adequate weight to the testamentary scheme of the testator”. His Honour was fully cognisant of the terms of the deceased’s will, but its contents became of limited significance when the respondent’s circumstances changed so dramatically and tragically when he had heart attacks after the deceased’s death.

20. [57]

    Secondly, the appellant contends in Ground 8 that the primary judge erred in finding that the respondent’s needs are “immediate” when “the evidence before the Court was that [the respondent’s] current lease in their current modern four bedroom home had no risk of the lease expiring”. In cross-examination Ms Zajic accepted the ill-defined proposition that “there’s no likelihood of an eviction in the short term” but it was clear from the respondent’s evidence that they occupied the property under a 12 month lease that had about six months left to run. Moreover, it is apparent from his Honour’s findings that the currently rented property is inadequate for the respondent’s needs, at least because it is two-storey and the respondent cannot climb stairs on his own (see [14(3)] above). Further, his Honour’s conclusion that the respondent’s needs are pressing had an adequate foundation in the evidence referred to at [14] above.

Conclusion

1. [58]

   Returning to the House v The King principles (see [42] above), it follows from the above consideration of the specific points raised by the appellant that she has not established any error of principle or as to the facts, or any failure to take into account material considerations. Her case must therefore rest on the proposition that the primary judge’s discretionary decision was “unreasonable or plainly unjust”. It is not however enough in this respect that an appellate court would have exercised the discretion differently (Lowndes v The Queen (1999) 195 CLR 665 at [15]). To be appellable, the first instance decision must be found to be outside the range of alternative ways in which the discretion could reasonably have been exercised.

2. [59]

   I do not consider the primary judge’s decision to be of this character. His Honour carefully weighed the competing claims of the appellant and respondent. He properly recognised the appellant’s strong claims on the testator’s bounty arising out of her long marriage and occupation of the former matrimonial home, to which the appellant had significant emotional attachment. On the other hand, his Honour also recognised the very significant needs of the respondent, which came into existence after the testator’s death. As his counsel described it, the respondent has a “severe and permanent disability, including cognitive impairment”. His Honour’s resolution of these competing considerations has not been shown to be unreasonable and therefore outside the range of outcomes at which his Honour could properly have arrived.

3. [60]

   For the reasons given above, the appeal should be dismissed with costs.

4. [61]

   WHITE JA: I agree with Macfarlan JA.