BROWN v FAGGOTER SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SHELLER JA, SHEPPARD and FITZGERALD AJJA 13 November 1998, 4 November 1998 [1998] NSWCA 44 FAMILY Provision Act s7, s8 and s9 — failure to give sufficient weight to critically important impact on the appellant's life of the disadvantages associated with appellant's relationship with the deceased is appealable error. Sheller JA I agree with Fitzgerald AJA. Sheppard AJA In this matter I have had the advantage of reading the judgment to be delivered by Fitzgerald AJA. I am in agreement with his Honours reasons and conclusions, and with the orders which he proposes. Fitzgerald AJA The appellant, Mrs Robyn Brown, who is about 50 years of age, applied for provision for her maintenance and advancement out of the Estate of Aldur Kaljo (the "deceased") pursuant to s7 of the Family Provision Act 1982. The application was dismissed on 11 June 1997 under subs9(1) of that Act. It is accepted that the appellant is an "eligible person" in relation to the deceased within the meaning of subs6(1) of the Family Provision Act in that she is: "a person: (i) who was, at any particular time, wholly or partly dependent upon the deceased person; and (ii) who... was, at that particular time or at any other time, a member of a household of which the deceased person was a member..."!. The Court's powers under s7 and s8 of the Family Provision Act are subject to s9. So far as is presently material, subs9(1) provides that, where an application is made for an order under s7 by a person such as the appellant, "... the Court shall first determine whether, in its opinion, having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application and shall refuse to proceed with the determination of the application and to make the order unless it is satisfied that there are those factors". The deceased died on 27 December 1994, aged 63. Probate of his will dated 21 April 1972 was granted on 30 November 1995. The whole of his estate, which was valued at more than $55 million, was given to his three children, Therese Marie Kaljo, Richard Aldur Kaljo and Philip Aldur Kaljo, in equal shares. The trial judge noted that, while there had been no precise designation of what assets had been distributed and what assets remain undistributed... it is accepted that no problems would arise from this and that when the extent of any orders made in favour of the [appellant] is known then appropriate orders can be fashioned to ensure that such orders can be met". 1. Family Provision Act subs6(1), "eligible person" para(d). 2 UNREPORTED JUDGMENTS The appellant is a hairdresser who first married in 1969, and had two children, Melissa Brown, who was born that year, and Trent Brown, who was born in 1971. The marriage was unsuccessful and the appellant and Mr Brown were divorced in 1974. The appellant had met the deceased in 1972. She had a hairdressing salon at Blakehurst and lived in premises attached to that business. The deceased and his family were customers. At the time when he met the appellant, the deceased's marriage was breaking up and he and his wife subsequently divorced. During the period leading up to the divorce, there were disputes between the deceased and his wife over custody of their children, who were then living with their mother. The deceased was living with his father nearby, and had access to his children at his father's house at weekends and on other occasions. He commenced to spend nights with the appellant when he was not in the children's company. In May 1973, the appellant and her two children moved to a house at Kyle Bay, and the deceased paid all the outgoings in respect of that home but not the expenses for daily living. Although he continued to spend two or sometimes three nights a week at his father's house, the deceased principally lived with the appellant and her children at Kyle Bay. During this time, he persuaded the appellant to sell her hairdressing business and to give up her idea of modelling for a career. The trial judge said: "At least by 1974 I am satisfied the relationship was a closer one and to all intents a de facto relationship. About the end of 1975 the family left Kyle Bay and moved to Box Road, Sylvania and in 1976 [the deceased] began to look for houses in the Eastern Suburbs. In October 1976 [the deceased] completed the purchase of a property known as 'Uig Lodge' in Wentworth Avenue, Point Piper for $500,000... [The appellant] took part in looking at suitable properties, but I am satisfied that the [deceased] made the decisions. She took some part in organising renovations and re-decorations in the home. [The deceased], [the appellant], Melissa and Trent moved in this new home at 'Uig Lodge'. It was reasonably substantial and domestic assistance was available." The trial judge went on to refer to the attitude adopted by the deceased and the appellant to her children. She considered that the deceased, who was not interested in children, came first. All the children's needs at home were provided by the deceased but there was little family life as such. The children were not allowed to have friends at Uig Lodge, they seldom were allowed to go out, and, if they went out with the appellant and the deceased, they were "left to their own devices". The children did not have their meals with the appellant and the deceased, who "... was interested in his own social life and his parties and having [the appellant] there to some extent on show as his wife and the hostess in the house". The trial judge found that "... the time at Uig Lodge came to an end in March 1978", when the appellant and her children moved to a flat in Roslyndale Avenue, Woollahra. His Honour continued: "...[the appellant] was the one who decided to leave. She had concerns about the many visitors to Uig Lodge and their conduct and the conduct of [the deceased] with some of the young women. There was concern about this and its effect on her children.... She went out and found the flat and paid the bond and the first month's rent with a cheque of the [deceased] telling him that he would have to meet this, which he did. By this time [the deceased] had commenced a relationship of a sort with Vicki Dwyer who moved in to Uig Lodge some time URJ BROWN v FAGGOTER (Fitzgerald AJA) 3 in the second half of 1978. In spite of that [the deceased] maintained contact with [the appellant], called regularly at Woollahra, went out with her from time to time and, on her evidence, continued to have occasional sexual intercourse with her. [The appellant] maintained the family through freelance hairdressing and a little modelling and television work.... I am satisfied that the family, while it led a frugal life in the Roslyndale Avenue flat, as compared with that at Uig Lodge, was not in desperate straits and that there was adequate food and clothing. [The deceased] provided no benefits for them during this time. [The appellant] remained at Roslyndale Avenue until about 1982.... [The appellant] then lived at various places in the eastern suburbs.... There were all modest establishments. She says that on 27 December 1985, she moved back into Uig Lodge... There is a dispute about the new relationship and how long it lasted. In the end the evidence made it clear that it lasted for less than three months and ended sometime in March 1986. It might have even had had a few breaks during that period. Nevertheless I accept that during this period [the appellant] was resident in Uig lodge albeit that there more difficulties, probably because she had more objections to the conduct of the deceased and some of his friends and some of the friends of his children. Nevertheless, it would have been called a de facto relationship, not substantially different from that which had existed some eight or nine years previously, although perhaps of not such intensity... Once again [the appellant] left of her own accord..." The deceased paid half of the rent of the flat at Double Bay in which the appellant lived for a short period after she had left Uig House for the second time. She then moved to Manly in an effort to distance herself from the deceased, and thereafter she changed accommodation on a number of occasions, generally renting small, one bedroom apartments. She purchased another hairdressing business, using $8000 the deceased had given her for that purpose. That business was successful only until 1992. The appellant and the deceased continued to maintain contact throughout the whole period, and the trial judge found that "... in about 1991 she placed $10,000 on deposit with his company, he having said that he could get her a better rate of interest than she could get elsewhere. He matched that amount with a gift of $10,000 and it seems that [the appellant] might have added some further sums.... she ultimately withdrew the money over a period, although she said [the deceased] was not happy about that". The appellant had at least one relationship in the interval between the two periods when she resided at Uig Lodge, and again after 1987. While on an overseas trip with her daughter Melissa in 1993, she met Mr Eric Xanthopolis. The trial judge said: "Thereafter she made a number of trips to visit him in various parts of the world, including one in November 1993 to Singapore, one in February 1994 to Malaysia and other trips to Singapore and Taipei and finally a trip to Greece in 1994. By this time she had decided that she would leave Australia and had sold her business here, although due to a purchaser failing to complete a sale, she had to sell the business at a lower price than she would otherwise have done. It is obvious that she had some doubts about entering into her new marriage, and she says that there was some pressure on her by Mr Xanthopolis to do so. In any event they were married in June 1995. 4 UNREPORTED JUDGMENTS Mr Brown, her first husband, died shortly thereafter, and [the appellant] came to Sydney to be with her children. She returned to Mr Xanthopolis but the marriage was not a success and she left him in December 1995 and returned to Australia... At the present time [the appellant] and Melissa are living together at a flat at Woolloomooloo. Divorce proceedings have been commenced in the United States by Mr Xanthopolis and [the appellant] does not expect to receive anything by way of settlement as a result of her marriage. [The appellant] is not working. She said that she hoped to return to work next year and that she is not well enough to work at the present time. She has a sleeping difficulty and has had this since she was 20. She has problems with her feet. She has no assets and she is living on social security. I am satisfied that she could work in the hairdressing business, at least, part time at the present time, and that she could run such a business if she had enough capital to commence one. There is one further matter of importance so far as the [the appellant's] claim is concerned. In late 1987 [the deceased] gave instructions to his solicitor to prepare a new will which will, if executed, would have provided a legacy of $250,000 to [the appellant]. It was not executed. [The appellant] says that she continued to see [the deceased] between 1987 and 1991, even though it is conceded that he entered into a de facto relationship with Saroya Barr in 1990 which continued up to his death. She says [the deceased] said to her in 1991 that he would always look after her. The fact is however, that he had never done so." Later, under a "Summary of Facts..." relating to the appellant, the trial judge said: "To sum up this rather long history: [the appellant] and [the deceased] were in a close relationship from 1973 until at least 1977 and probably 1978. For most of that time [the appellant] was entirely dependent on [the deceased]. At least during the time at Uig Lodge she was held out to be his wife and conducted herself as such and preferred his interests to those of her children and acted as a hostess at his numerous parties and provided normal services as a wife to him including, as I understood the evidence, the preparation of ordinary meals from time to time, even though a housekeeper was in residence. Between 1978 and 1985 she and [the deceased] remained in contact. They had a sexual relationship from time to time. Apart from the odd present, nothing was provided for [the appellant] by [the deceased] and of course from late 1978 for five years or more he was in a defacto relationship with Vicki Dwyer and this was known to [the appellant]. There was a short period of resumed relationship at Uig Lodge at the end of 1985 and early 1986, but once again [the appellant] moved out of her own volition and her move to Manly from Double Bay was an attempt to distance herself from [the deceased]. That was not successful and contacts remained, even though in 1990 [the deceased] ended up in his final de facto relationship. [The appellant] had planned a new life with Xanthopolis during 1994 and had sold up in Sydney to move to the United States, although the marriage did not take place until 1995, after the death of [the deceased], and in fact only lasted about six months. The [appellant] is not in good health but she could work. She has no assets and no income other than the sickness benefits. She had other relationships... She in no way dedicated her life to the deceased and waited his return; in fact she obviously considered her life was better if she were away from him although they remained drawn to each other to some extent." In considering whether there were factors which warranted the making of the appellant's application, the trial judge expressed the opinion that "the various decisions", a number of which he had referred to, required "a reasonably strict URJ BROWN v FAGGOTER (Fitzgerald AJA) 5 test", and said that it was necessary for the appellant to establish that her "relationship" with the deceased was "... one which of its nature, gives rise to a claim for consideration for provision under a will as a natural object of bounty in the same way as it is acknowledged a spouse or child has a such a claim. 'Natural' in this sense is more limited than 'appropriate'. Later his Honour said: "[The appellant's] claim is... difficult. One reason for that is the change in circumstances of [the appellant] which has occurred between the death of [the deceased] and the present time. At the date of his death [the appellant] had put in place all arrangements in preparation for leaving Australia and commencing a new life with Mr Xanthopolis. She married Mr Xanthopolis but at the date of the hearing the marriage appeared to have come to an end, even if not in formal divorce at this stage. In considering whether there are factors which warrant the making of the application by [the appellant], she would put the following matters as being significant: (a) her continuous relationship with [the deceased] was when she was aged between 26 and 31 years; (b) her giving up her work during that time at his request; (c) her contribution to his life as home maker during their period together; (d) her constant communication and relationship with [the deceased] after 1978 and the short period of resumed full relationship in 1985/86; (e) the fact the De Facto Relationships Act 1984 was of no assistance to her; (f) the gift of $8,000.00 to her to help her into the new business and the gift of $10,000.00 to her when she deposited a similar sum in his company. (g) the fact that [the deceased] continued to visit her at Fairlight and that he suggested assisting her in the purchase of a unit; (h) the fact that in 1987 [the deceased] contemplated making a will under which [the appellant] would received the sum of $250,000.00; (i) her present position and predicament. As against this, the [the respondents] put the following matters: (j) that the long term relationship ended 19 years ago; (k) the subsequent personal relationships of [the appellant]... (1) the partings in 1978 and 1986 were at the will and decision of [the appellant]; (m) the giving up of work is not relevant, as [the appellant] commenced a successful business again (n) the circumstances changed a great deal after the instructions were given for the 1987 will which would explain its not being executed. (0) the life and activities of [the appellant] at least after 1993 clearly indicated that the relationship was regarded by her as having ended. I have taken these matters into account and of course have also taken into account the whole story over 25 years. I have concluded that if I were determining the question of "factors warranting" at the date of death of [the deceased] I would have found that those factors were not present. I would not have thought [the appellant] to be a natural object of the bounty of the deceased or more properly that right-minded persons would have considered she was. She 6 UNREPORTED JUDGMENTS was not looking to [the deceased] for provision and would not, I think, have been thought of as a natural object of provision. It is because the position in which the [appellant] now finds herself has altered since the death of the deceased that I have wavered. The [appellant] is worse off financially than she was in 1994; she has not the means of buying a new business, although she could work as a hairdresser. She still has health problems, although she has had those since she was about twenty years of age. The question is whether the changed position which has arisen from the break up of her marriage to Mr Xanthopolis calls for a different conclusion. I have come to the conclusion that it does not. 1997 is over ten years since [the appellant] left Uig Lodge for the second time and about nineteen years since she left it for the first time. It is not suggested that there was ever any promise of marriage, or I think, that on the second occasion that she could have thought the relationship could be in any way permanent. [The appellant] was well aware of [the deceased's] subsequent relationships. I am not suggesting that [the appellant] did not contribute substantially to the well being of [the deceased] while she was residing with him and the fact that the De Facto Relationships Act 1984 was not in force in 1978 needs to be taken into account, although the strength of any claim had it been in force is not established. I do not think that reasonable people aware of the factors would have been particularly surprised had [the appellant] been given a legacy under a will of [the deceased] had he died in 1997; but I do not consider they would have thought that she was a person who was a natural object of the bounty of the deceased. The wealth of a testator is more relevant to "proper provision" and "legitimate claim" than it is to the first hurdle question. I find that there are not reasons which warrant the bringing of the application and thus according to the Act I should go no further." Shortly stated, the appellant's case was that the trial judge applied the wrong test in determining whether there were factors which warranted the making of her application within the meaning of subs9(1) of the Family Provision Act, and that factors (a) to (i) above, which his Honour described as "'put by [the appellant] as being significant", warranted the making of the application. It was submitted that his Honour had erred in not making an order pursuant to s7 of the Family Provision Act requiring the payment of $845,000 to the appellant for the acquisition by her of the following assets: "Accommodation in a three bedroom flat in the eastern suburbs $ 450,000.00 Furniture $ 20,000.00 Car $ 25,000.00 Capital sum $ 350,000.00 $ 845,000.00 The respondent argued that, on a fair reading of his entire judgment, the trial judge had not applied a wrong test for the purpose of subs9(1), and that this Court was not justified in interfering with his Honour's conclusion on an evaluation of "all the circumstances" that the deceased had no testamentary obligation to the appellant. It was pointed out that, although the appeal involves a rehearing and the Court is in as good a position as the trial judge to determine what inference should be drawn from the circumstances, the principles which govern appellate URJ BROWN v FAGGOTER (Fitzgerald AJA) 7 review of discretionary decisions are applicable2. Contrary to the respondent's submission, that does not mean that the appeal must be dismissed unless the trial judge erred in law3. Subs9(1) is considered difficult to implement in practice. As Priestley JA pointed out in Churton v Christian4+ in most cases it is very difficult to see how the Court could comply with the command that it should 'first' determine whether there were factors which warranted the making of the application 'having regard to all the circumstances of the case (whether past or present)' until all the evidence that any party wished to put before it concerning the case was before the Court and the Court had had an opportunity to have regard to the circumstances shown by that evidence. There may be cases where the executor thought the applicant would have no chance of succeeding because the criteria in s6(1)(c) or s6(1)(d) of the definition of "eligible person" in s6(1) were not satisfied as in the case, for example, where the applicant was neither wholly nor partly dependent upon the deceased person at any particular time or never a member of a household of which the deceased person was a member. Such might be a discrete issue suitable for a preliminary hearing and not requiring an investigation of other circumstances such as the applicant's need. Provided its operation is appropriately limited to unwarranted applications, subs9(1) has a potentially useful operation in ensuring that estates are not wasted on futile proceedings What needs to be emphasised, however, is that the Court is not authorised by the subsection to refuse to proceed with an application if there are "factors which warrant the making of the application". Once the Court is satisfied that such factors exist, the application must be determined on the merits. While an onus is cast on an applicant by the subsection, it is only an onus to establish that the application was warranted. In my opinion, the trial judge was wrong in his view that subs9(1) involves a "reasonably strict test". The requirement that an application is warranted is fulfilled if the application has reasonable prospects of success. It need not be demonstrated for the purpose of subs9(1) that the application is entitled to succeed; ie, that an order in favour of the applicant is warranted. Conversely, if an application is entitled to succeed, it is axiomatic that the making of the application was warranted. S9(1) applies only to applications made by persons claiming to be eligible persons pursuant to s6(1)(c) and s6(1)(d) of the definition of "eligible persons" in 6(1), being persons 'who would generally be regarded as a natural object of testamentary recognition by a deceasedS' or 'when circumstances of their relationship with the deceased are set out [would] immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition®*. An application might be unwarranted for any one of a number of reasons; eg, because the criteria of eligibility were not met, adequate provision was made for the applicant by the deceased, the applicant is not in need of provision for his or her maintenance, education or advancement in life, or because the deceased had no testamentary obligation to the applicant. Many of the prior decisions on subs9(1) of the Act are primarily concerned with the latter issue. The subsection requires that "all the Singer v Berghouse (1994) 181 CLR 201, 212. House v R (1936) 55 CLR 499, 504-505. (1988) 13 NSWLR 241 at 249. Re Fulop Deceased (1987) 8 NSWLR 679 at 681. Churton v Christia at 251 AnNRwWN 8 UNREPORTED JUDGMENTS circumstances of the case (past and present)" be considered, which includes circumstances subsequent to a deceased's death and even subsequent to the making of the application. The trial judge and both parties accepted that to be so, and I will proceed on that basis. Although his Honour's judgment indicates that he was aware of the relevant factors, in my opinion his analysis of those factors and the relative importance he attached to them were flawed. In particular, I consider that he failed to give sufficient weight to the critically important impact on the appellant's life of the disadvantages which were associated with her relationship with the deceased, by underestimating those disadvantages because of the period which had elapsed since they lived together as husband and wife. This is an appealable error'. The deceased and the appellant formed a relationship akin to that of husband and wife when she was an attractive woman in her mid-20s, with a successful business and a promising career. She abandoned her business to become his "wife" and hostess, and they lived together until she was 31. That component in their relationship terminated because of his lifestyle, including his sexual relationships with other women, which she considered unsuited to living with him as a family with her children. I am satisfied that the appellant's career was significantly disadvantaged by that interruption in her working life, so that she lost business opportunities and that her prospects of - acquiring capital were significantly diminished. After their de facto marriage ended, the deceased and the appellant remained in contact until his death, they had sexual relations from time to time, and, for a period, they resumed cohabitation as de facto spouses. However, the appellant's career at no time returned to its prior level of success after she gave up her business to live with the deceased in about 1974. She is not in good health, is aged about 50, and has no assets and no income other than sickness benefits. She could work, but only on a part-time basis. It was not disputed that a need for maintenance and advancement was demonstrated and that no provision was made for her by the deceased in his lifetime or by his will and that his estate is ample for any appropriate order in favour of the appellant. In my opinion, the circumstances described point strongly to a conclusion that the appellant is entitled to an order that provision be made for her maintenance and advancement in life out of the estate of the deceased. Both parties were agreed that, if the Court came to this conclusion, an order should be made providing the appellant with a legacy. The respondent contended that the sum of $100,000 nominated by the trial judge is appropriate while the appellant sought $845,000, as noted above. Neither figure seems to me to be suitable. In my opinion, a sum of $300,000 would adequately meet the appellant's reasonable needs and appropriately reflect the extent of the deceased's testamentary obligation to her. In summary, the appeal should be allowed and the orders made in the court below set aside. An order should be made providing the appellant with a legacy of $300,000 out of the deceased's estate. The costs of the appellant and the respondents should be paid out of the deceased's estate on an indemnity basis. 7. See, for example, Lovell v Lovell (1950) 81 CLR 513, 519-5201, 525-526; 528; 533-534; Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 60 per Mason J, with whom Gibbs CJ agreed "generally" and Dawson J agreed. URJ BROWN v FAGGOTER (Fitzgerald AJA) 9 Appeal allowed and the orders made in the court set aside. Order to be made providing appellant with a legacy of $300,000 out of the deceased's estate. Costs of appellant and respondents to be paid out of the deceased's estate on an indemnity basis. Counsel for the appellant: Dr C Birch Solicitors for the appellant: Thurlow Fisher Counsel for the respondent: N C Hutley SC Solicitors for the respondent: Glover & Glover