Lykoudis v Lykoudis [1999] NSWSC 1033

New South Wales Supreme Court CITATION : Lykoudis v Lykoudis [1999] NSWSC 1033 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 1728/98 HEARING DATE(S) : 30/07/99, 16/09/99 and 20/09/99 JUDGMENT DATE : 20 September 1999

PARTIES : Michelle Lykoudis v Angelique Lykoudis JUDGMENT OF : Master Macready at 1

COUNSEL : Mr P. Blackburn-Hart for the plaintiff Mr L. Ellison for defendant SOLICITORS : Bartier Perry for the plaintiff Macedone Christie Willis - Solari Partners for the defendant CATCHWORDS : Family Provisions. Application by a daughter where the whole of the estate was left to the widow. Large estate, small legacy to plaintiff. DECISION : Paragraph 73

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THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MASTER MACREADY

MONDAY 20 SEPTEMBER 1999 1728/98 - MICHELLE LYKOUDIS v ANGELIQUE LYKOUDIS - ESTATE OF KRISTOS LYKOUDIS

JUDGMENT

1 MASTER: This is an application under the Family Provisions Act in respect of the late Kristos Lykoudis who died on 23 November 1996, aged 54 years. He was survived by his widow, the defendant, and their three children. He was also survived by the plaintiff, who was his daughter of a relationship between the deceased and Beverley Hayward, which was prior to the marriage to the defendant. 2 The deceased, by the last Will made on 15 April 1981, left the whole of his estate to his widow, the defendant. 3 It has been a somewhat difficult exercise to determine what is the value of the estate in this matter. Ultimately, during the course of the hearing Ex 1 was tendered, which was a listing of a variety of different information, including realised assets, unrealised assets, liabilities paid, liabilities outstanding. It also deals with distributions to the defendant. 4 The details of precisely what is in the estate is complicated because the defendant and the deceased, during his lifetime, conducted a wholesale rental business, and there has been sales of that business' equipment and payment of its liabilities. 5 The defendant was a partner with the deceased in the business and, accordingly, the assets were owned between them. They had joint liabilities. 6 The schedule incorporates payments of some of the liabilities in respect of that partnership. But it also includes as assets only one and a half of some of the relevant assets. 7 Probably using the schedule is the easiest way to comprehend what is the amount of the funds which will flow to the defendant. It is necessary to make some adjustments to it. 8 In the realised assets there are two items of equipment for sale, and rodeo sale. They have been included at half their sale proceeds. Accordingly, it is necessary to add in the other half of those assets in order to make the document consistent and deal with, not only the estate assets, but those assets which were owned between the deceased and the defendant as a result of their joint business. 9 When one does this the amount of the realised assets increases to $620,066. 10 Under the unrealised assets the reference to the Preston land is based upon an offer from the Local Council of $1,095,000 for that land. 11 It is apparent that there has been a valuation of that land at a higher figure, namely, $1,235,000. 12 If one takes this into account there is an addition sum of $31,300 that can be added to the total. 13 Then under 'liabilities paid' and 'liabilities outstanding' there are amounts for legal fees, and these are, effectively, the defendant's legal costs in the proceedings. Accordingly, the figure that one comes to at the end of the document is one which takes account of the defendant's legal fees. 14 Under 'outstanding liabilities' there is an amount of loan repayments of $40,000. In fact that should be reduced by $20,000 as $20,000 of these funds were provided by the defendant from her monies. The balance of $20,000 was borrowed from her mother and sister. Although not expecting to be repaid it may be that they should be taken into account in this exercise. 15 When one comes to the final figure under the heading 'paid out' on Sefton mortgage the document gives a figure of $814,138. 16 Taking account the matters that I have referred to this increases to $858,605. Or, if one includes the Preston land at the higher figure $889,905. I think the latter is more likely to be correct. 17 One then sees after this that there are amounts which have been distributed totalling $191,702. There have been payments off the mortgage and part distribution used in renovations of the defendant's home. Then there are other funds including rent collected to date. Effectively, the defendant has been paid $191,700. With this she has retained about $50,000 to $52,000 in a bank account because of the dealings with her funds and the estate's funds. 18 In these circumstances one can see that there has been a distribution of just under $200,000, of which the defendant still has $50,000. 19 Even after this distribution the amounts which will be available on the two hypotheses I have put before are $666,903 or the more likely one $698,203. 20 The costs of the plaintiff have been estimated at $46,900, which obviously is on a solicitor and client basis. Somewhat less will have to be provided for if a legacy is granted. 21 I mention at this stage that the defendant does have her own home which passed to her by survivorship on the death of the deceased. 22 I will deal with a few matters of family history. 23 The deceased was born in 1942 and the defendant was born on 10 April 1949. She is now fifty years of age. 24 In 1967 the deceased and the plaintiff's mother met. The plaintiff was born on 21 March 1970, making her now 29. 25 In 1974 the deceased and the plaintiff's mother separated. 26 On 23 February 1975 the deceased and the defendant married. They had three children, as I have mentioned. Irene, who was born on 6 February 1977 is now 22, Maria, born on 18 September 1978, is now 20, and Christopher, who was born 18 March 1987, is now 12. 27 I have mentioned that the deceased made his last Will on 15 April 1981 and died on 23 September 1996. Probate was taken out in due course, and on 28 June 1997 the plaintiff married. She was retrenched in November of that year and her first, and so far only child, Chanel was born on 15 April 1999. 28 In applications under the Family Provision Act the High Court as recently as Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a court must take. At page 209 it said the following:- "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased another persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 29 If one turns to the Plaintiff's situation one finds that she is married. She is 29 years of age with one child. She and her husband have a property at Ryde. That has a present value of $320,000. They have three vehicles, two of which are not working, totalling in value $21,500. They have savings of some $3,000. They have debts. There is a mortgage on their property of $106,374.42, and they owe the plaintiff's mother $12,100. Fortunately, they have been paying a little ahead with their mortgage and, accordingly, they have part which they can draw down, amounting to about $6,000. 30 So far as any income is concerned they are not in a good situation. The plaintiff's husband works as a bus driver earning around $410 to $810 per week. 31 The other sources of income are the Family Allowance and parenting payments. 32 The plaintiff's work is as a dancing instructor in her own business and appears to produce little income. In effect, they have somewhere around $450 to $500 a week. Their outgoings appear to be in the order of $630 per week, and they seem to be exceeding their income at the moment. 33 There was some cross-examination directed towards the testimentary intentions of the plaintiff's mother. It appears she owns a property at Greenacre, and proposes to leave it equally between the plaintiff and her other two children. 34 Given the age of the plaintiff's mother and the uncertainties of the future I really think little weight can be placed on this asset. Circumstances change as children get older, and as parents get older. 35 One of the things that has to be considered is the relationship between the plaintiff and the deceased. It is important in considering this that one bears in mind the nature of the beginning of the defendant's marriage to the deceased. 36 The defendant made it plain in paragraph 10 of her affidavit, dated 16 November 1998, that before she married the deceased they had a number of conversations about his daughter. 37 According to the defendant she only agreed to marry the deceased on condition that the child did not interfere with their life, their marriage, and any family that they raised. She obtained from the deceased an assurance that he would keep the child separate from their own proposed family. 38 The result of this was that the plaintiff and the deceased continued to have contact. However, it was not as part of the family that the deceased raised as a result of his marriage. Clearly, the plaintiff and the deceased would see each other occasionally for lunch. There would be regular phone contact, and the plaintiff, in fact, changed her surname to that of the deceased. There is evidence from other friends of the high regard the deceased had for his daughter and of his intentions to help her. 39 In fact, for instance, he did help her to purchase a car when she first acquired one. 40 Because of the arrangement that the deceased had made he clearly did not inform his own family and his wife of the extent of the contact that he had. Accordingly, it was quite a different story that was told to the defendant. 41 It is also worth noting that the deceased who seemed to be under the belief that the reason why he did not need to leave anything to the plaintiff was that the plaintiff was to receive something from her mother's brother. That, however, turned out not to be the case as the property passed to the Plaintiff's mother. 42 It is also necessary to consider the way in which the plaintiff alleges that she has been left without adequate and proper provision for her education, maintenance and advancement in life. 43 Obviously, there are some areas where her life could be improved. She has a deficiency of income. She has liabilities, which would be of assistance if she could have reduced. Obviously, something also has to be done about transport, with cars being traded in on some other car. 44 The property that they ave at Ryde is an old fibro property which they purchased, no doubt, with knowledge that it might require further work. 45 There are a whole range of things which would be advisable to do to that property, including plumbing, electrical work, new fences, fixing the fibro panels, repainting, and trying to ascertain the source of mould inside the house and to cure that problem. 46 As a result of the late service of affidavits no evidence of the amount of various needs are set out. There are photographs in evidence that show that, obviously, the house needs work on it. The yard needs some fencing work. The child requires a bed and bedroom furniture and that will have to be provided for fairly soon. 47 As well as considering the plaintiff it is necessary to consider the other persons who have claims on the deceased's bounty. In this case it is the Defendant widow and three children. 48 The asset position of the defendant is that she holds a house at Strathfield in what is described as the 'golden mile' by the valuer. It is a two storey house with five bedrooms and worth, at least, from $600,000 to $650,000. It is unencumbered and recently the defendant has been able to do some work, including building a garage, or carport, to get the house in reasonable condition. Obviously, other things would be nice to do, but certainly it is a good property. 49 She has a couple of small bank accounts. 50 There is also the $50,000 that she has in a bank account which will become available to her now this case is completed. 51 She has a car, some seven years old. 52 So far as the children are concerned, the eldest is Irene. She is in her last year at university and works part time for Mercantile Mutual. She wants to work full time there once she graduates, but has not yet heard whether there is a position. 53 Maria, who is in her third year of a four year course. She is learning to be a primary teacher and works part time on Saturdays. She will, no doubt, obtain employment as a primary teacher in the near future. 54 The son, Christopher, is 12 years of age, and his mother hopes to send him to Trinity for his education. His sisters went to Meriden. 55 The defendant has not worked during her marriage, but she did help the deceased with business. 56 Her income from the rented property is $629 per week and she will receive more income when she receives the balance of the funds that are coming to her from the estate. She gets Family Allowance for her son Christopher of $23.70 per fortnight. 57 She puts forward in her affidavit estimates of expenses of some $1278 per week. However, these, no doubt, are based on three children and the household as it exists at the moment. The two eldest children are almost self-sufficient, and will become self-sufficient in a year or two. 58 In her affidavit of 16 July, the defendant dealt with a number of other expenses which she will have. These include orthodontic work, new clothes, and then a range of future expenses. There are a whole variety of matters set out there, including provisions for the weddings of her children in the future; sums to put aside for a nest egg; trips to the United States for the children; new car; education expenses for Christopher. They total $561,582. 59 They are, however, a whole variety of what might be considered to be an optimistic list of what the defendant would like to do in the future for her children. 60 I do not wish to deprecate the good intentions of the defendant but some of the matters simply may not be able to be accommodated. 61 There is, in these matters, a balancing exercise to be performed which requires one to take into account what is the proper provision for a widow. 62 Widow's claims are frequently the subject of applications in this Court. The Court of Appeal in Goloski v Goloski, (unreported 5 October 1993) has referred to formulations of his standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2NSWLR 65 and Elliott v Elliott which was approved by the Court of Appeal on 24 april 1986. There his Honour said, "Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she has the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring." 63 Here, of course, one has many of the elements that are referred to by the Court in that passage I have quoted. There is 21 year marriage, and the defendant worked for the business and in that way assisted the build up of the assets which are now available. 64 She also raised the deceased's family. 65 Her assets situation is what might be described as reasonable. Fortunately, she has a home in a good position which will be a great backstop for her in the future once the children are educated. 66 So far as the plaintiff is concerned, one must not lose sight of the fact that the plaintiff was the deceased's daughter. There was a good relationship between the deceased and his daughter. But, although this was the case, she lived in a separate family unit and was brought up quite separately from the deceased. She was not part of his family unit for reasons none of which, of course, are the fault of the plaintiff. The extent of the ties are not the same as they were with the children of the deceased by his wife. 67 The deceased quite rightly did not provide for his children as his widow will obviously provide for them in due course. There will, of course, be no provision for the plaintiff by the Defendant widow. 68 Given the circumstances of the agreement that the deceased made at the time of his marriage he would well know that no provision would be made by the defendant for the plaintiff after her death. 69 The reason why he did not make provision seems to be his mistaken belief that the plaintiff would be otherwise well provided for. 70 In submissions it was suggested that the plaintiff should receive a legacy of $150,000. I think it is appropriate that there be some provision of a legacy for the plaintiff at this stage, but, frankly, the provision will have to be far more modest. 71 The widow is in a difficult situation. She has to provide for herself and her son Christopher. Her income will not be substantial and there is every reason why she should try and give Christopher a good education like his sisters. 72 One also has to bear in mind that if a legacy is provided there will be an impact on the estate because of the burden of costs. 73 In the circumstances I think that the appropriate order is that the plaintiff receive out of the estate of the deceased a legacy of $45,000, and I so order. 74 Subject to any submissions I order that the plaintiff's costs on a party party basis and the defendant's on an indemnity basis be paid, or retained, out of the estate of the deceased. 75 I order that the exhibits be returned.