Papagna & Ors v Posar [2005] NSWSC 66

New South Wales Supreme Court

CITATION : Papagna & Ors v Posar [2005] NSWSC 66

HEARING DATE(S) : 01.02.05

JUDGMENT DATE : 1 February 2005

JURISDICTION : Equity Division

JUDGMENT OF : Acting Master Berecry at 1

DECISION : See paragraphs 28-36

CATCHWORDS : Family provision - Small estate - One child receives whole of estate - Extent to which court can interfere with testator's intentions - Nature of relationship - Misleading evidence as to means

LEGISLATION CITED : Family Provision Act 1982

Re Fullop, deceased (1987) 8 NSWLR 679 Perrin & Ors v Morgan & Ors 1943 AC 399 Singer v Berghouse (1994) 171 CLR 201 Kleinig v Neal (1981) 2 NSWLR 532 CASES CITED : George v Golds, unreported Bosch's case (1938) AC 463 Jackson v Riley, Cohen J, 24 February 1989, unreported Walker v Walker, Young J, 17 May 1994, unreported

George Papagna Rhonda Vertley PARTIES : Sonia Scafidi Linda Papagna Cristina Verity Posar

FILE NUMBER(S) : SC 3816.04

DM Flaherty COUNSEL : L Ellison

Mullick & Associates, Padstow SOLICITORS : Hunter Lawyers, Sydney

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ACTING MASTER BERECRY

1 February 2005

3816.04 George PAPAGNA & Ors v Cristina Verety POSAR JUDGMENT 1 CORAM: The application before me today is proceedings brought under s7 of the Family Provisions Act 1982 by summons on 7 July 2004 in respect of the estate of the late Ida Posar. 2 The plaintiffs are four children of the deceased and the defendant is also a child of the deceased. There are two other children who have not made claims against the estate. The estate has an agreed value of $200,000. The only asset in this case is a unit at Liverpool, currently occupied by the defendant. The defendant is a daughter of the deceased as a result of her second marriage. The four plaintiffs are children of the deceased's first marriage. The estate is a small estate. The costs of both sides are $60,000. The plaintiffs' costs and the defendant's costs are about equal at about $30,000. 3 All members of the family are in modest circumstances. None of the plaintiffs own their own property. The defendant, occupier of the property, does not own any real property. At various times, with the exception of George, the parties have been unemployed. Most of the parties have any particular training or skills. Linda is a trained masseur and is a personal trainer. She has been out of work from time to time but is currently in employment. She does have skills and training which would assist her in remaining in employment. The deceased, in her will, made no provision for the plaintiffs. She, however, referred to them as a class. In paragraph 4 of her will, which was submitted for probate, she states: "I have not made any provision in this, my will, for any of my other children as they are all self-supporting and are not in need of my assistance." 4 Mr Ellison made reference in his closing submissions to the size of the estate and the Court would bear in mind the right of the testatrix to dispose of her estate in whatever manner she deems fit. There are a number of cases that in fact deal with that point. Because of the size of this estate and because of the number of competing claimants, it is an important aspect in coming to a decision. In White v Barron (1980) 144 CLR at 431, the Court said, inter alia, the Court is required, at least in respect to the testatrix's position, to limit the disturbing of the testator's will to that which is necessary to achieve the purpose of the Act and not more. In Re Fullop deceased (1987) 8 NSWLR at 679, McLelland J says as follows: "It is appropriate to take into account for the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the plaintiff, the character and conduct of the plaintiff, the present and reasonably anticipated future needs of the plaintiff, the size and nature of the estate and any relevant disposition which may reduce the estate available for distribution according to the rule, the nature and relative strength of the competing claims to testamentary recognition, and any contributions of the plaintiff to the property or to the welfare of the deceased." 5 In an English decision of Perrin and Others v Morgan and Others, 1943 AC at 399, Lord Atkins gave the following judicial warning: "… judges faced with disputes over wills of the prospect of that hey might one day be obliged to meet 'the group of ghosts or dissatisfied testators' who 'according to a late Chancery judge, wait on the other bank of the Styx to receive the judicial personages who have misconstrued their wills'. 'Waiting there to', the President said, 'will be those whose wills have been interfered with unnecessarily or excessively'." 6 Mr Flaherty has referred to two cases in particular, Singer v Berghouse (1994) 171 CLR 201 and Kleinig v Neal (1981) 2 NSWLR 532, I will come to those two cases in a moment. The other matters for consideration in deciding the size of the estate, there have been once again a number of authorities that have dealt with small estates. I have already referred to Re Fullop (supra). In an unreported decision marked George v Golds, a 1986 case, I refer to the passage I read from in Re Fullop. I also refer to Bosch's case (1938) AC 463 at 477-478, and in that case the Court said as follows: "The whole circumstances have to be considered. Even in many cases where the Court comes to a decision that the will is most unjust from a moral point of view, that is not enough to make the Court alter the testator's disposition of his property. The first inquiry in every case must be what is the need of maintenance and support; and the second, what property has the deceased left." 7 In Jackson v Riley, another unreported decision, Cohen J, 24 February 1989, his Honour made a comment about the size of the estate and the claim on the estate. In some respects this case is not all that different although this estate is slightly larger. His Honour commented that where the estate is small the parties should endeavour to reach some compromise to avoid the unnecessary costs of litigation and running the matter to trial. In an unreported decision in Propert v O'Connor, 29 July 1994, Master Macready adopted the words of Cohen J in Jackson v Riley (supra) where he said, "There was a duty to compromise a claim in relation to a small estate and this is a duty upon the practitioners". 8 His Honour then made a judgment as to how the costs were to be met out of the estate. 9 In Singer v Berghouse (supra), the Court made reference to a two-stage process that is required to embark on to determine whether or not provision ought to be made out of the estate. Paraphrasing, the first stage is to determine whether or not proper or adequate provision has been made by the testator for the plaintiff. The second stage, once the Court has formed the view that adequate provision has not been made, is whether or not it is proper in the circumstances to make provision for the plaintiff. 10 The second case Mr Flaherty referred to was Walker v Walker, Young J, 17 May 1994, unreported, where he quoted from that case Holland J's decision in Kleinig v Neal (supra). The quote relied on by Mr Flaherty is as follows: "… another circumstance is that the parent was responsible for bringing the child into the world and having done so assumed a duty to be concerned for the child's welfare. A wise parent will recognise that perfect harmony between parent and child is in the nature of things not to be looked for and that, coming to adulthood, a child will want to make his own life just as the parent had done before him. Differences of outlook between different generations is not exceptional, it is the general rule, so some friction between parent and child or disappointment in a parent's hopes and expectations concerning his child will be accepted by the wise parent as almost inevitable. If it occurs, the parent who is just as well as wise will not allow such disharmony or disappointment to blind him to the needs of his child for maintenance, education or advancement in life." 11 By the deceased's will, it is clear that she has not made adequate and proper provision for the plaintiffs. In fact, she has made no provision for the plaintiffs at all. In clause 4 she gives the reasons why she has not made provisions for them. However, on the evidence before me today, it is clear that those children she had excluded from the will are not people who either then or now were in a comfortable position. They have always been people of modest assets and modest needs. It is clear from their evidence that the deceased did not really address their position when considering the terms of her will. 12 In my view the first limb of the testacy applied in Singer v Berghouse (supra) must be found in favour of the plaintiffs. However, the exercise does not end there. It is then necessary to consider what, if any, provision ought be made from the estate. 13 It will be seen from the quote taken from Re Fullop (supra) that there are a number of matters to take into account when determining whether or not an adjustment should be made in favour of one or more of the plaintiffs. 14 There was a significant part of the cross examination today taken up with the nature and quality of the relationship of all the parties with the deceased. Some of the evidence was unsatisfactory. The impression created in the witness box not only of some of the plaintiffs but also to a lesser extent of the defendant, is that whilst there may have been contact with the deceased that contact was perhaps not as regular as the parties would like to make out. So far as the defendant is concerned, it seems to me that whilst the defendant lived with her mother for most of her life, the defendant did not have details or intimate knowledge about the mother, for instance, how old she was, what year she was born. I do not say that as a criticism, it is probably very similar to most children. They may not know the exact birthdays of their parents but it does tend to take the gloss off the evidence the parties have tried to present today. In my view when it is looked at overall, when taken into account the comments of Holland J in Kleinig v Neal (supra), this family is not all that different from many other families. 15 Some of the children from time to time had a falling out with their mother. It would seem that that was never permanent and to some degree the relationships were always mended and then continued until the next dispute or proceeded with some degree of harmony. There was some evidence given that George had very little contact with his mother. From the evidence that was given today it was difficult to determine how much contact George had with his mother, but it was clear that there was some contact by George with his mother and he discussed matters of financial significance with his mother, at least on one occasion. That would indicate that at the very least George and his mother were on speaking terms but this is probably no different to many in the community today. 16 The Court is not in a position to rewrite the deceased's will. Although the plaintiffs have not been provided for, it does not follow that some provision must be made for them simply because they are children of the deceased. It is necessary for the plaintiffs to establish what proper maintenance, education and advancement in life is in respect of each of them. It is then necessary to compare their individual positions with that of the defendant. Once that exercise has been carried out then a decision can be made concerning whether or not provision ought to be made for some or all of the plaintiffs. 17 I found most of the people who gave evidence today to be unreliable witnesses. I do not put it as high as saying that they were dishonest, but there was a failure to pay sufficient attention to detail when preparing affidavits. That makes it difficult to consider their positions when determining what, if any, provision should be made for them. I will deal with each of the parties in turn in a brief format. 18 Linda is aged 34. She is currently employed as a salesperson for Nutrimetics. Her evidence today was that her income is currently $500 a week. However, her rent is about $270 per week, provision for food is $150 and she still has a mobile phone account of $55. She has little in the way of assets. A current update of her liabilities is that she has debts in the sum of approximately $3,000. However, in cross examination it became clear that Linda has worked longer than she is prepared to admit in the affidavit, and on being shown a pay statement, it is clear that she is on a greater income than that that she gave evidence in examination in chief. It would appear that Linda is currently in receipt of a wage somewhere between $770 per week and about $817 per week. Her expenses total some $475 per week. She therefore has a surplus of somewhere in excess of $300 per week. 19 Rhonda was not cross examined on her evidence. Cross examination dealt solely with the nature and quality of her relationship with her mother. Rhonda's evidence also, in part, was unconvincing. However, dealing with Rhonda's needs, she has set out in her affidavit in chief the income of both herself and her husband, her outgoings and their liabilities. As with her siblings, she does not own a home, she pays rent. No provision is made out in the estate for her. She has two matters she would like met, payment of her debts or a deposit for a home. It is clear as Mr Ellison indicated, that this estate is far too small to make provision for another child by way of deposit for a house. The liabilities set out in Rhonda's affidavit are general. There was no documentary evidence put on in relation to those debts. There was no cross examination of those debts either. It would appear that the bulk of those debts are joint debts. It is not clear with whom there is a joint liability, I would assume it is her husband. Whilst the combined family income exceeds the family outgoing, it seems to me that Rhonda has a need for which she could look to the estate to make some provision. 20 Sonia is aged 51. Her evidence is that she is unemployed and that she is in receipt of social security payments of $375 per week. Her outgoings are $308 per week. However, in the outgoings she makes no provision for her weekly food expenses and it would seem therefore that the figures that she placed for her outgoings are less than what her actual outgoings are. In all probability, having regard to the fact that she has an eight year old daughter, her expenses match or exceed her income. In one of Cristina's affidavits she raises the fact that Sonia is currently in a defacto relationship. Her defacto partner works. Neither Sonia nor Cristina were cross examined on that particular issue. It is therefore a matter which I let fall to one side in the absence of either evidence establishing the current relationship either by way of an admission in cross examination or by something more than a mere assertion by the plaintiffs. I am not prepared to accept that. 21 George is 53 years of age. He is a process worker and is currently earning approximately $640 per week. When George swore his first affidavit his gross income was $556, his outgoings were $358 and he had a surplus of $188. Much of George's evidence I found established that George was not necessarily a completely truthful and honest person. His evidence both in the witness box and in the affidavit referred in part to a significant asset that George owns, namely his family home. I find that the circumstances of his evidence in cross examination today incredulous in relation to his knowledge of whether or not he had been declared a bankrupt. His affidavit in chief suggested that he was not in a position to pay a significant debt to the Deputy Commissioner for Taxation, was unable to meet his monthly mortgage repayments and was declared bankrupt, thus leaving him without a roof over his head and with no surplus income to be administered by the Trustee in Bankruptcy to the benefit of his creditors. That could not be further from the truth. George was not a bankrupt. Belatedly he put on evidence of that fact in his second affidavit. George acknowledged that the ruse to sell the family home to his daughter was to avoid meeting his obligations to his creditors. That in itself should not deprive George of provision from his mother's estate if on balance proper provision should be made for him. 22 Each of the four plaintiffs, however, need to have their positions weighed up against that of the defendant and the testamentary intention given by the testatrix in her affidavit. 23 The defendant's evidence is that she is currently in employment earning a wage of $28,000 a year. The defendant, like some of her siblings, has been in and out of employment and does not appear to be in a position where she has acquired skills that are transferable in the market place or workplace, or has any special qualifications which could be used to her advantage in obtaining employment. An income of $28,000 is a modest income. The deceased saw fit to leave her the unit. She was cross examined concerning her time at the unit. Her evidence was that the deceased purchased the unit sometime in 1990 and thereafter lived in the unit until she died. Cristina's evidence is that she remained in the unit until about 1998 when she moved in with her boyfriend Ali for two years and then moved back in with her mother. That part of the evidence is highly contested and the plaintiffs maintain that the defendant did not in fact return to reside at the Liverpool unit. It appears clear from the defendant's evidence and the evidence of Mr McGuinness that at least Cristina has spent some significant time at the Liverpool unit. Although she resided there with her mother it is difficult to determine whether the quality of that relationship was all that much greater than the quality of the relationship that the other children had with the deceased. Nevertheless Cristina had a harmonious relationship. 24 The plaintiffs have also put on evidence of their family background and once again the comments made by Holland J in Kleinig v Neal (supra) have particular relevance. The plaintiffs could not be said to have had a happy childhood. A number of them spent time in orphanages and in convents. They spent long periods of time away from their mother during various periods of marital separation. It appears for the majority of them there was no relationship with the mother until they became adults. By then, they were also bringing up their own families, and there were constraints on the amount of time that they could spend with their mother. Their evidence was, however, that they made telephone contact with her on a regular basis. To that extent I accept their evidence. There is no reason why there would not have been telephone calls from time to time when neither the neighbours nor the defendant was present. 25 The costs to date, as I have already indicated, is $60,000. If I adopt the submissions of Mr Flaherty then there should be provision made for the plaintiffs in an amount somewhere between $60,000 and $86,000 and that would mean from this estate there will be a sum of between $120,000 and $140,000 paid out inclusive of legal fees. That would leave the defendant with a sum of less than $60,000 because it will be, as Mr Ellison pointed out, that the unit will have to be sold. The defendant will also incur the costs associated with the sale of the property. She will therefore receive a figure of far less than $60,000. It is clear that the deceased meant the defendant to benefit from her estate. 26 In my view there should be provision made for some of the plaintiffs however. The defendant is currently working. There is currently a caveat on the property which, as Mr Flaherty indicated this morning, would be removed from the property forthwith. When the impediment is lifted the defendant will not only have an unencumbered asset but also an income to service any borrowings she would have to make. 27 In respect of each of the four plaintiffs therefore I make the following orders. 28 In relation to Linda, having regard to her income that was disclosed in the course of cross examination, and the surplus she benefits over her outgoings, and having regard to the size of the debt that she currently has, that being the only claim on the estate, in my view Linda not only has the skills to remain in employment but is earning an income which is sufficient to discharge her liability. Therefore in my view, addressing the second stage in Singer v Berghouse (supra), no provision should be made for Linda. 29 In respect of George, there are two debts, one to AGC Credit for $5,000, and another debt to the Deputy Commissioner for Taxation which is said to be $30,000. George has taken a course of action whereby he divested himself of significant assets. That in itself in some way would not demonstrate that he has a need, but when one takes into account George's position, there is the possibility that he may never have to pay to the Deputy Commission for Taxation, or if he does, the Deputy Commissioner will receive payment at a rate which will probably be less than the accrued interest and penalty rates which would apply to the outstanding debts. In my view, when comparing George's position with that of Cristina, no provision should be made for George. 30 In respect of Sonia, she seeks from the estate the discharge of her debts and the provision for a new car. There is no evidence concerning the current car other than the value of about $2,000. That in itself perhaps is some indication of the age and the condition of the vehicle. However, in my view the estate should only make provision for Sonia to the extent of her liabilities of $3,000. 31 In respect of Rhonda, in my view provision should be made for her. However, her evidence is that a proportion of her liability of $34,000 are in fact joint liabilities. The estate, especially having regard to the size of the estate, should not be looked to discharge the joint liabilities completely. In my view provision should be made from the estate in the sum of $15,000 for Rhonda. 32 So far as the question of costs is concerned, Linda and George should pay their proportion of the costs incurred by the estate. 33 So far as Sonia and Rhonda are concerned, they should receive their costs from the estate on a party / party basis. 34 The estate therefore should recover the costs incurred in relation to Linda and George's claim from those two plaintiffs. 35 The balance of the estate's costs should be paid out of the estate on an indemnity basis. **********