Sung v Malaxos

This is a family provision claim by a woman who met Robert Kingsbury (the testator) when he was aged 56 years and she was 37 years. They had a relationship of some sort but both kept their financial affairs quite separate and the plaintiff made no monetary contribution to the testator’s expenses of life. When the testator died in November 2013 aged 83 years, he left a will that provided for the division of his estate between his daughter and the plaintiff. Unfortunately, the plaintiff is not satisfied with that division and wants more, even though the testator’s daughter and her husband have negligible income, almost no assets and do not own their own home. In contrast, the plaintiff owns real estate at Buderim in Queensland, earns a gross salary of $95,050 per annum in full time employment as a social worker, has a superannuation balance of approximately $233,017 and has recently received $179,320 from the estate of her late father. Admittedly, she is now approaching the end of her working life.

The principal asset of the estate is a property at Lilyfield. Its estimated value is between $1.25 million to $1.45 million. The value of the gross distributable estate is likely to be between $1 million and $1.25 million. By his will, the testator directed that his Lilyfield property, which the plaintiff had come to share with him as her residence, be sold within six months of his death and that the net proceeds of sale be apportioned as to one-third to the plaintiff and two-thirds to his daughter.

The plaintiff’s principal factual contention is that ‘she does not wish to move from the Lilyfield property’. She adds however that, if the property must be sold as the testator directed, she should be entitled to a house, not an apartment; close to Lilyfield; with a garden; with room for her cats; with at least two bedrooms so that she has a study and space for visitors; in good repair and otherwise of reasonable amenity. She also seeks a fund to meet contingencies. In pursuit of this claim she has spent an inordinate sum – in excess of $100,000 – in legal fees and expenses, all of which she says she should recover (on the ordinary basis) from the assets of the estate – whether she wins or loses.

For the reasons that follow, I have reached the conclusion that it would be contrary to law to accede to the plaintiff’s claim. Her litany of requirements, if granted, would not merely flout the reasonable, fair and rational scheme of testamentary disposition that the testator intended, but would operate to the serious disadvantage of the testator’s daughter and her husband, without being at all justified by the statutory criteria specified in Chapter 3 of the Succession Act 2006.

This is a suitable occasion to reiterate that the court’s intervention in these cases is limited only to those situations where there has been a failure in the circumstances to make ‘adequate’ and ‘proper’ provision for an eligible person to whom the testator owed a moral obligation. Those advising claimants should bear in mind that courts steadfastly resist the temptation to rewrite the will of a deceased person simply because it appears to be unfair, unequal or unwise. Fairness and equality are not touchstones for relief under the Succession Act.

In Hughes v National Trustees, Executors & Agency Company [1979] HCA2; 143 CLR 134 at 146, Gibbs J said:

In Pontifical Society for the Propagation of the Faith v Scales (1961-62) 107 CLR 9, Dixon CJ explained, at 19:

In Stott v Cook (1960) 33 ALJR 447, Taylor J observed, at 453-4:

In Hunter v Hunter (1987) 8 NSWLR 573 Kirby P said at 576:

Hallen J has re-stated the principle in a number of cases. See for example, Nagy v Marton [2014] NSWSC 540 at [128] – [134]; Kusmo v Kusmo [2014] NSWSC 1704 at [105] – [110]; Dodds v Dodds [2013] NSWSC 1933 at [107] – [111]; Bowditch v New South Wales Trustee and Guardian [2012] NSWSC 275 at [105] – [107] and Goodswell v Wellington [2011] NSWSC 1232 at [108]. In the last-mentioned case, Hallen AsJ (as he then was) said at [108]:

In Kusmo v Kusmo His Honour said at [106]:

And finally in Wilcox v Wilcox [2012] NSWSC 1138 at [23], Madden-Smith v Madden [2012] NSWSC 146 at [30]-[34] and Brand v Brand [2015] NSWSC 52 at [21]-[23] I emphasised that the role of the court is not to ride roughshod over a testator’s intentions. See also Salmon v Osmond [2015] NSWCA 42 at [69] – [77].

The fact of the matter is that in this case, the testator, with the intimate knowledge that only he could have had of the nature and quality of his own unique relationship with the plaintiff, and with a father’s understanding of the trials and tribulations of his daughter, formed the view that (1) he did not want the plaintiff to have his house or to continue living in it and (2) that it would be a sufficient discharge of his moral obligation to her if she received a monetary sum sufficient for her to live in more modest accommodation for the rest of her life.

Who am I to override such an apparently rational and reasonable approach? There are no circumstances in this case that warrant the making of a family provision order. In particular, there is no justification for concluding that the provision made for the plaintiff in the testator’s will was not adequate for her proper maintenance in life. This is especially so having regard to the size of the estate and the needs of the testator’s daughter. I have set out the detailed facts in the following paragraphs.

When the plaintiff met the testator, she was residing at 28 Elizabeth Street, Paddington where she rented two rooms. One room was used as a bedroom and the other as her office. The testator was living in Greenwich. The plaintiff had no dependents. She continued to rent the Paddington premises and two rooms for the next 7 years and then rented one room for the next 20 years. She ceased the rental only recently after the testator’s death.

In about late 1988 the plaintiff moved into the testator’s then home in Balmain. From around 1996 the testator received a part-pension and subsequently a full pension. In 1997 he purchased the Lilyfield Property for $420,000, using his own funds to purchase, improve and repair it. The plaintiff moved to the Lilyfield Property with the testator and has since continued to reside there free of any rent or occupation fee.

In 1997 the plaintiff was a purchaser of a property in Buderim, Queensland. The purchase price was $160,000. She is now the sole registered proprietor. The plaintiff says that she intends to rent the property to her nephew at $100 per week. He pays for water, gas, electricity, pool, garden and septic tank maintenance. It had not previously been rented.

Throughout their relationship the plaintiff and the testator each maintained their own separate financial arrangements. The plaintiff held, and continues to hold, 8 separate bank accounts in her own name. The testator held one bank account in his own name. There was no sharing. Each paid their personal expenses from his or her own accounts. Each paid separately for – the costs of their respective properties and the maintenance and insurance of them; their individual private health insurance (and not insurance as a couple); the costs of purchasing and running their respective motor vehicles; and their separate clothing and entertainment expenses. Each took their vacations separately both overseas and within Australia, save on two occasions. In 2000 the testator and the plaintiff travelled to Buderim and in 2009 they went to New Zealand.

The plaintiff’s will executed on 17 February 2008 did not provide for the testator. It left her estate to her three sisters and her nephew in equal shares. I doubt that the plaintiff provided as much care and assistance to the testator as she suggested. She herself gave evidence that during 2013 the testator was regularly out and about driving alone. He drove himself to local medical appointments, his catheter change group and to the COPD group at Balmain Hospital twice each week. He even drove the plaintiff to the airport on 22 September 2013 on one of a number of occasions when she left him alone while she visited her property at Buderim.

The plaintiff is now 65 years of age and remains in full employment as a social worker. She hopes to retire in a few years time. She currently has approximately $45,000 in cash at bank, most of which she inherited from her late father. Her property at Buderim has an estimated value of $370,000 to $425,000. The balance owing on the mortgage on the property is approximately $172,000. Her updated summary of assets and liabilities reveals assets of between $690,727 and $710,727 including superannuation of $233,016.99. Her liabilities are said to be $146,632.25. In addition, the value of her one third entitlement pursuant to the will of the testator is approximately $400,000. And she continues to earn $95,050 per annum. She will accrue further superannuation. Her superannuation is currently available to her in part through the ‘transition to retirement’ scheme under the taxation legislation. She has accrued 5 weeks extended paid leave.

I should add that the plaintiff’s father died in 2008 and that she received an initial payment of $155,000 from his estate. In 2013 she received a further $20,000 and in 2015 she received a further $4,320, making a total to date of $179,320.

Brita Benjamin is the only child of the testator. Her financial position is and has been for many years unstable and insecure. Her father’s desire to make provision for her as best he can, without ignoring the plaintiff, is wholly understandable. Brita is 53 years of age and works irregularly in various jobs including at Lifeline, as a stills photographer, as a make-up artist and sometimes as a cleaner. Her taxable income was $1,981 in 2011, $5,776 in 2012, nil in 2013 and $13,728 in 2014. She has been married to James Benjamin for the past 26 years. They have two daughters aged 25 and 23 who no longer reside with them. Brita and James currently live in a small flat underneath the home of Brita’s mother at Whale Beach. As at April 2014 the combined assets of Brita and James comprised a share portfolio, cash at bank and superannuation, with a total value of $161,603.88.

James is also aged 53 and currently works two days each week in a friend’s business and earns $25 per hour. He is hopeful that the business will succeed and expand. His track record does not however provide grounds for optimism. His taxable income was $8,468 in 2010, $7,744 in 2011, $5,776 in 2012 and $338 in 2013. From November 2013 and until June 2014, he received an unemployment benefit of $426.55 per fortnight.

Brita and James are also the shareholders of a company called J & B Benjamin Holdings Pty Ltd, which was registered in 1991. The company has run at a loss for most of its recent existence. Its accumulated losses were $74,909 in 2009, $71,400 in 2010, $7,416 in 2011, $125,042 in 2012 and $131,480 in 2013. Although the cross examination of Brita and James sought to establish that they were relatively financially comfortable, I am quite satisfied that their situation is as difficult as they both explained. I accept that the company structure assists them to some extent and no doubt operates to minimise their taxable incomes. But each was an impressive witness whose evidence I accept.

It is not necessary to provide a detailed historical account of the financial misfortunes of Brita and James. What matters more is their current situation. It is sufficient to say that financial hardship descended on them like a cloud in 1995 when James was retrenched from his position at NatWest Markets. He was unemployed for the following 13 months, as a result of which the family relocated to Robertson and later to nearby Mount Murray. The testator lent them $90,000 and James requalified as a teacher at Wollongong University, but does not appear to have made a success of it. James and Brita repaid $20,000 and possibly $40,000 of the $90,000 loan. In 2010 the testator extinguished the debt.

I accept James’ evidence that he had a manic episode in 2004 and was diagnosed as being bi-polar. Although the plaintiff’s counsel complained of the absence of formal medical corroboration, I do not doubt what he said. The more significant point however, is that James has not worked seriously or effectively in the finance industry since that time. In 2011, after their children finished school, and with some of the net proceeds of the sale of the Mount Murray property, Brita and James travelled overseas for a lengthy period. They spent approximately $110,000. After their return to Australia, they moved into Brita’s mother’s property at Whale Beach. And in 2012 they entered into a contract with Brita’s mother and her partner for $84,403 to build a flat underneath the property in which they could reside. This arrangement has allowed them to live rent free but provides no security of tenure. I should point out that there was no evidence of the age, health or testamentary intention of Brita’s mother but I have taken into account the prospect that Brita may one day be her mother’s beneficiary.

An applicant will only be entitled to provision if the court is satisfied that they are an ‘eligible person’ for the purposes of the Act and the deceased has failed in his or her moral duty. In Singer v Berghouse (1994) 181 CLR 201 and Vigolo v Bostin (2005) 221 CLR 191 the High Court said that courts hearing family provision cases should conduct a two-stage inquiry. The first stage involves a determination of whether the provision, in the absence of intervention by the court, is ‘adequate’ for the proper maintenance, support, education or advancement in life of the plaintiff. The second stage requires the court to engage in a discretionary exercise to determine what provision ought to be made: See also Andrew v Andrew [2012] NSWCA 308 at [69]-[71] (per Barrett JA).

I recently said in Chandler v Coulson [2015] NSWSC 172:

It may also be helpful to repeat what I said in Brand v Brand [2015] NSWSC 52:

Section 60(2) of the Act sets out the matters that may be considered by the court in determining whether to make a family provision order. Those matters include the following that are relevant to this case:

In his analysis of Section 60(2) in Gwenda Jane Toth v Ronda Sedelia Graham [2014] NSWSC 393, Kunc J said at [10(11)], and I gratefully adopt:

Applying these principles, and having regard to each of the Section 60 factors that I have mentioned, I am satisfied that the manner in which the testator divided his estate was carefully considered and appropriate. It was adequate for her proper maintenance in all the circumstances. He made two wills, each of which reflected his appreciation of the competing demands of his daughter and the plaintiff, and his assessment of what he thought was a reasonable response to those demands. He recognised that he had a moral obligation to both his daughter and the plaintiff but concluded that his daughter and her husband had a greater need for financial assistance than the plaintiff.

The testamentary disposition that the testator prescribed was soundly based. It is supported by the facts and not undermined by the financial circumstances of Brita and the plaintiff that were revealed in the evidence. The totality of the evidentiary picture supports the wisdom and justice of the testator’s apportionment. I can see no reason to depart from it. The plaintiff’s affidavits, inevitably self-serving, and sworn after the death of the testator, do not persuade me otherwise

As I have observed, the plaintiff is financially secure and has sufficient funds to live a comfortable and fulfilling life after the Lilyfield property is sold. She is also in reasonable health and has the capacity to continue working for at least a few years. After she receives her share of the testator’s estate she will have assets of in excess of $1 million for her living and personal expenses. She will have to adjust to smaller accommodation, which on the evidence she will be able to afford, or rent. According to the evidence, the market value of a one bedroom apartment in the Lilyfield area is between $450,000 and $600,000. And she will need to live a more modest existence. This is a reality for many widows, let alone persons such as the plaintiff, whose relationship with the testator was more equivocal and uncertain, despite its longevity, than that of a conventional wife. Although the context was different, the following remark by Hallen J in Nagy v Marton at [252] is apposite:

I dismiss the plaintiff’s claim and will hear submissions on costs.