Supreme Court New South Wales

• Medium Neutral Citation: Estate Zukowski; Domaradzka v Wawazyniuk [2014] NSWSC 1614
• Hearing dates: 11, 12 and 13 November 2014
• Decision date: 14 November 2014
• Jurisdiction: Equity Division
• Before: Lindsay J

Decision

The plaintiff (de facto widow of the deceased) should receive a legacy of $850,000 in addition to the provision made for her by the deceased. Parties to make submissions on form of orders and costs.

• Catchwords: SUCCESSION - Family provision - De facto relationship - Widow's claim - Other family relationships in competition - Relief granted
• Legislation Cited: Property (Relationships) Act 1984 NSW; Succession Act 2006 NSW
• Cases Cited: Andrew v Andrew (2012) 81 NSWLR 656 at [12]-[16]; Luciano v Rosenblum (1985) 2 NSWLR 65 at 69G-70A; Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20
• Texts Cited: -
• Category: Principal judgment
• Parties: Marzena Joanna Domaradzka (Plaintiff); Waldemar Wawrzyniuk - Executor (Defendant)
• Representation: Counsel: P Blackburn-Hart SC (Plaintiff); A Hill (Defendant); Solicitors: AWM Dickinson & Son (Plaintiff); Armstrong Legal (Defendant)
• File Number(s): 2013/00247335

Judgment

INTRODUCTION

1 This is an application made by the plaintiff, as the de facto spouse (widow) of a deceased person (Jerzy Jaroslaw Zukowski, "the deceased"), for family provision relief under chapter 3 of the Succession Act 2006 NSW.

2 The plaintiff's status as an eligible person is not in issue. It is agreed that, at the time of the deceased's death, she was living with him in a de facto relationship: Succession Act, s 57(1)(b).

3 The plaintiff's application for relief was brought within the 12 month time period prescribed by the Succession Act, s 58(2). The deceased died in early June 2013. The plaintiff's summons was filed in mid-August 2013.

4 In formal terms, the central questions for determination are:

(a) whether, viewed at the present time, adequate provision for the proper maintenance, education or advancement in life of the plaintiff has or has not been made: Succession Act, s 59(1)(c);

(b) if that question is answered by a finding that adequate provision has not been made for the plaintiff: What, if any, order for provision out of the estate of the deceased ought to be made for the maintenance, education or advancement in life of the plaintiff, having regard to the facts known to the Court at the time an order is made: Succession Act, s 59(2).

5 There is a dispute, more apparent than real, about the length of the de facto relationship between the plaintiff and the deceased (known, affectionately, as "Jurek").

6 The plaintiff says, and I accept, that she and the deceased lived together as a couple from a date in late 1998.

7 The defendant points to a Cohabitation Agreement made, by deed dated 1 February 2002, pursuant to the Property (Relationships) Act 1984 NSW. Recital "A" of the preamble to the deed records that the plaintiff and the deceased "commenced living in a de facto marriage relationship" in February 2001.

8 This 2001 date approximates the date upon which the deceased purchased, and he and the plaintiff commenced living in, a home unit in Kirribilli ("the Kirribilli unit").

9 Whatever may have been the parties' reasons for execution of the Cohabitation Agreement in terms that included recital "A", I am satisfied that they, in fact, commenced living together, as a couple, in and from late 1998. The defendant does not seriously advance a contrary case. Photographic evidence adduced by the plaintiff is consistent with the 1998 date, as is evidence of the plaintiff's sons, her former husband and a family friend.

10 I accept that the plaintiff and the deceased developed in or about 1998, and thereafter maintained throughout the balance of the deceased's life, a close and loving relationship.

11 That said, I am quite satisfied that, despite the generosity he displayed towards the plaintiff and her sons (particularly her youngest son), the deceased retained a consistent intention to maintain during his lifetime ownership and control of wealth he amassed through business dealings, and an equally strong intention to ensure that his only child (a daughter, Jessica) should be a substantial beneficiary.

12 The Cohabitation Agreement can be explained as an incident of a felt need in the deceased, scarred by a marriage breakup, to protect the property interests of himself, and Jessica, against the plaintiff (and, indirectly, her sons) should his relationship with the plaintiff end in separation, not death.

13 The relationship between the plaintiff and the deceased was not, for either of them, a first relationship. Between 1982-1992 the plaintiff was party to a marriage which produced two sons: Dominik, born in 1982; and Kamil, born in 1985. Between 1985-1995 the deceased was party to a marriage which produced Jessica, born in 1987.

14 Both the plaintiff and the deceased were born in Poland: the plaintiff in 1960, the deceased in 1957.

15 No party or participant in these proceedings attributed significance to the timing of the plaintiff's and the deceased's respective moves to Australia.

16 On both sides of their relationship, there are continuing family ties with Poland.

17 Those ties do not loom large in these proceedings.

18 However, one family connection, beyond the deceased's nuclear family, is important. The deceased's sister (Irena), also born in Poland, was brought to Australia by him in 1987. She was about six years his junior, born in 1963.

THE DECEASED'S ESTATE AND TESTAMENTARY DISPOSITIONS

19 The deceased died, aged 56 years, leaving:

(a) a Will dated 27 May 2013, probate of which was granted to the defendant (as the Executor named in the Will) on 26 September 2013; and

(b) another document (also signed by him and dated 27 May 2013) entitled "Binding Death Benefit Nomination" addressed to Pandora Superfund Limited, as trustee of "Jurek's Superannuation Fund", by which the deceased directed the trustee to pay his superannuation death benefit to the plaintiff.

20 The parties are agreed that the Nomination was effective, in itself, to confer the described benefit on the plaintiff under the terms of the Superannuation Fund's trust deed: Deed (originally dated 25 June 2001, as amended to 1 May 2012), clauses 190-191.

21 However the Will, in terms, confirmed the deceased's testamentary intention to confer that benefit on the plaintiff. Clause 15.2 of the Will provided an express gift to the plaintiff of "[the] whole of my [ie, the deceased's] entitlement to the superannuation fund called 'Jurek's Superannuation Fund', consistent with the Binding Death Benefit Nomination made by me this day." Clause 9.3 of the Will recorded the deceased's "express wish" that the plaintiff be appointed as sole director of the trustee of the super fund.

22 On his death, the deceased left a pool of assets having an agreed present value of about $8 million net of all liabilities, estate costs and commission.

23 In oral submissions, the figure (derived from the defendant's written submissions) was said to be $7,914,766. However, addition of the several components quantified in the written submissions puts the figure at $8,134,766. The two figures are reconcilable on the face of the written submissions, the touchstone of the parties' agreement. Nothing of substance turns on an apparent disparity in the figures.

24 That pool of assets comprised:

(a) the deceased's actual estate, including the whole of the issued share capital in his company, Pandora Properties Pty Limited;

(b) property held by Pandora International Pty Limited (all the shares of which were owned by the deceased) as trustee for "The Pandora Trust", a discretionary trust the objects of which do not include the plaintiff; and

(c) the deceased's beneficial entitlement in "Jurek's Superannuation Fund".

25 The property left by the deceased is primarily located in Australia. There is a small amount of property located in Poland and in Thailand; but the case has been conducted on the basis that the deceased's overseas property is comparatively insignificant, and it has no bearing on any question to be decided.

26 The deceased intended the overseas property to pass to his daughter, Jessica.

27 The Thai property is, perhaps, formally disposed of (in favour of Jessica) by a separate, Thai Will of the deceased dated 29 October 2011.

28 The deceased intended, effectively, to divide his pool of assets three ways:

(a) the bulk of his assets (with an agreed, present aggregate value of $4,091,019) was intended for his only child, Jessica: Will clauses 9.1, 13 and 16.

(b) provision (with an agreed, present aggregate value, as far as presently relevant, of $2,659.342) was intended to be made for the plaintiff, expressly acknowledged in both the Will and the Superannuation Nomination as the de facto partner of the deceased: Will clauses 9.3 and 15, read with the Nomination.

(c) provision (with an agreed, present, aggregate value of $1,384,405.00) was intended to be made for Irena: Will clauses 9.2 and 14.

29 In reciting these figures I note that they include the respective amounts of interim distributions made to the three women since the death of the deceased. Each of Jessica and Irena has received $20,000, $40,000 in total. The plaintiff has received $200,000.

30 Under clause 16 of the Will Jessica was named as the deceased's residuary beneficiary.

31 It is not necessary to detail each of the particular assets comprising the three way split between the women in the deceased's life or the precise terms upon which particular assets had been held, or controlled, by him at the time of his death.

32 It is, however, necessary to notice that the Will contemplated that significant parcels of real estate would pass to each of the deceased's intended beneficiaries:

(a) Jessica was intended to receive ownership of the Kirribilli unit, a three bedroom home unit with an agreed, present value of $2,150,000.

(b) the plaintiff was intended to receive ownership of a two bedroom unit in North Sydney ("the North Sydney unit"), with an agreed, present value of $875,000.

(c) Irena was intended to receive ownership of three parcels of land, the only one of which requires specific identification is a two bedroom unit in Cammeray ("the Cammeray unit"), with an agreed, present value of $695,000.

THE PARTIES' RESPECTIVE CASES

33 To understand the case advanced by the plaintiff, and the defendant's response to it, one must notice that:

(a) the plaintiff and the deceased lived at the Cammeray unit between 1998-2001 and (when not travelling, as they did extensively) between 2006-2013.

(b) they lived at the Kirribilli unit between 2001-2006 and (in anticipation of the deceased's death) in and from April 2013.

(c) they moved out of the Kirribilli unit between 2006-2013 because, the plaintiff says and I accept, they spent a large part of that time in world travel, and it was more convenient to do so using the smaller Cammeray unit as a base and renting out the Kirribilli unit as a means of funding travel expenses.

(d) they decided in December 2012 to move back into the Kirribilli unit, as their family home, after the deceased was diagnosed (in November 2012) with pancreatic cancer.

(e) the plaintiff claims a special affinity with the Kirribilli unit because, she says, it was acquired by the deceased, in consultation with her, as their family home.

(f) the plaintiff and the deceased were living in the Kirribilli unit at the time of his death.

(g) the provision made for the plaintiff in the deceased's Will included (in clause 18) a right of residence in the Kirribilli unit, on terms that included a requirement for payment of an occupation fee calculated by reference to outgoings, "for a period not exceeding 12 months from the date of my [the deceased's] death, or such other period as shall be agreed" between the plaintiff and Jessica.

34 I have a persistent, nagging doubt about the nature and degree of the plaintiff's personal identification with the Kirribilli unit. I accept that it has both happy and profoundly sad memories for her, and that the deceased (knowingly) disappointed an expectation that it would pass to her. Nevertheless, I apprehend that her attraction to it is not wholly unrelated to its commercial value and its perceived availability as an estate asset to be acquired in specie.

35 I do not doubt that there may be an element of sentimental attachment in the plaintiff's focus in these proceedings on the Kirribilli property but, if there is, it is not as significant a factor for the plaintiff as an interwoven element of financial calculation.

36 The plaintiff's primary case advanced a claim for the Kirribilli unit (valued at $2,150,000) to be transferred to her, on condition that she disclaim the gift to her of the North Sydney Unit (valued at $875,000). This would implicitly confer on her a financial benefit of $1,275,000 in excess of the value of the benefits she presently has (of the order of $2,639,342) under existing financial arrangements.

37 She is not amenable to a proposal that she be permitted to acquire the Kirribilli unit at market value. In essence she wants to trade the North Sydney unit for the Kirribilli unit or (if necessary) for the North Sydney unit, supplemented by a modest cash consideration.

38 In final submissions she advanced, as an alternative case, a claim for the Cammeray unit to be transferred to her unconditionally. This would implicitly confer on her a financial benefit of $695,000 in excess of the benefits that she presently has under existing arrangements. In terms of real estate, she would acquire ownership of both the Cammeray unit and the North Sydney unit.

39 When the defendant responded to the plaintiff's alternative case by suggesting that, if that case were to be viewed with favour by the Court, the better form of relief would be a legacy in favour of the plaintiff equal to the value of the Cammeray unit (so as not to disturb Irena's expectation of receiving the unit), the plaintiff demurred.

40 A substantial reason for her demurrer was a desire to avoid additional expense, not funded by such a legacy, of buying a new residence.

41 In advancing her primary case, for ownership of the Kirribilli unit, the plaintiff gave evidence that she had not enjoyed living at the Cammeray unit as a residence. Nevertheless, in advancing her alternative case (for ownership of the Cammeray unit) she insisted on the importance to her of the Cammeray unit being transferred in specie rather than by the grant of a legacy equivalent to the present value of the unit.

42 Despite amble opportunities allowed to the parties for negotiations during the course of the three day hearing, they clung to their respective primary cases until final submissions.

43 The plaintiff's alternative case has been identified, with a shift in focus from the Kirribilli unit to the Cammeray unit.

44 The defendant's primary case was that the plaintiff's summons should be dismissed with costs. Only after presentation of the plaintiff's alternative case did the defendant venture on similar territory.

45 On the defendant's alternative case, the range of relief to which the plaintiff may be entitled was said to be between $0 and $695,000 by way of a legacy to be borne by Jessica or, as they may agree, Jessica and Irena.

46 When pressed to be more specific, counsel for the defendant submitted, on the defendant's alternative case, that a legacy in the range of $400,000 - $500,000 would be appropriate.

47 In the course of the parties formulating their respective alternative cases, I intimated a disinclination to disturb any benefit conferred on Irena. The plaintiff's response was that she (the plaintiff) should have the Cammeray unit, with an adjustment of Jessica's entitlements (pursuant to the Succession Act, s 66(2)) to allow the financial burden of a gift of the Cammeray unit to be borne by Jessica, not Irena. The defendant's response was that Irena's entitlement to the Cammeray unit should not be disturbed because: (a) she proposes to allow her daughter to stay there; and (b) she has a sentimental attachment to the property because it was the first of the deceased's property purchases (in 1995).

THE SUCCESSION ACT, SS 59(1)(c) and 59(2)

48 Upon a consideration of the questions for which s 59(1)(c) and 59(2) of the Succession Act provide, informed by the criteria set out in s 60(2), adopting the perspective of a wise and just testator in the position of the deceased (Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20) and having regard to contemporary community standards (Andrew v Andrew (2012) 81 NSWLR 656 at [12]-[16]), the Court is bound to make evaluative judgements by reference to the facts of the particular case.

49 Although, ultimately, the text of the Succession Act cannot be glossed by judicial decisions, the plaintiff is entitled to be treated on a basis similar to that conventionally adopted upon an assessment of a family provision claim by a widow (Luciano v Rosenblum (1985) 2 NSWLR 65 at 69G-70A), not losing sight of competing claims on the bounty of the deceased in the persons of his daughter and his sister.

50 The facts of the present case demand that notice be taken of what appears to have been a conscientious endeavour by the deceased to occupy, himself, the seat of a wise and just testator, with a mind focussed on death as a fast approaching reality.

51 In his own way, he appears to have endeavoured to treat the plaintiff fairly, and conventionally, as a widow. He expressly acknowledged her status. He provided her with a secure residence (albeit in the form of the North Sydney unit, not the Kirribilli unit) and assets sufficient to provide a modest income stream and a fund for contingencies. This was done by his direction that she receive his superannuation death benefit, coupled with ancillary provisions in clauses 9.3 and 15.2 of his Will.

52 He also provided for her to receive the bulk of the furniture, fittings, electrical goods, white goods and furnishings within the Kirribilli unit (Will clause 15.1) and a 12 months' right of residency in the Kirribilli unit (Will clause 18).

53 In making that provision, so deliberately, he must be taken to have known that, unless he made provision for her, the plaintiff would have been without substantial assets and, in her fifties, looking towards declining employment prospects. (She is presently unemployed; with a fear of never again being able to obtain employment.) Her evidence, which I accept, is that she expressed to the deceased her disappointment in not being left the Kirribilli unit. Aware of her disappointment, he adhered to his declared intention that the unit pass to Jessica.

54 The judgment calls the deceased made in his testamentary division of property between the plaintiff, Jessica and Irena are entitled to respect; but, by the express terms of ss 59(1)(c) and 59(2) of the Succession Act, the Court is required to make an independent judgement based on a present time perspective.

55 With that perspective, should the Court now find (for the purpose of s 59(1)(c)) that the plaintiff has been left without adequate provision for her proper maintenance, education or advancement in life?

56 In approaching that question, I remind myself of Powell J's classic statement in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69G-70A:

"It seems to me [Powell J wrote] that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies."

57 I do not proceed, as the plaintiff would have me proceed, on the basis that an application of this measure requires that she be granted ownership of the Kirribilli unit. She sought title to that unit as her "home" and disclaimed any lesser right. She would not be content, for example, to have an ongoing right of residence of any description. In any event, shifts in the location of the family home between Cammeray and Kirribilli undermine any attempt to adapt Powell J's terminology ("secure in her home") too literally to the Kirribilli unit.

58 On the other hand, it seems to me, there is merit in the plaintiff's contention that the provision made by the deceased for her does not sufficiently recognise the style of life to which, in her relationship with him, she became accustomed. Having acquired sufficient wealth through success in business, he turned his attention to a life of travel in which, at his request, the plaintiff joined him. Having earlier worked throughout their relationship and played a traditional role as homemaker, she allowed herself to be taken out of the workforce in order to accommodate his desire for travel. In an established partnership, each indulged the other.

59 Of the words "adequate" and "proper" at the centre of s 59(1)(c) Dixon CJ, in Scales Case (1962) 107 CLR 9 at 19 wrote the following in a statutory context not identical with, but substantially similar to, that found in chapter 3 of the Succession Act:

"It has often been pointed out that very important words in [Testator's Family Maintenance legislation] are 'adequate provision for the proper maintenance and support' and that each of these words must be given its value. 'Adequate' and 'proper' in particular must be considered as words which must always be relative. The 'proper' maintenance and support of a son [in Scales' Case] claiming a statutory provision must be relative to his age, sex, condition and mode of life and situation generally. What is 'adequate' must be relative not only to his needs but to his own capacity and resources for meeting them. There is then a relation to be considered between these matters on the one hand, and on the other the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferable dispositions. The words 'proper maintenance and support', although they may be treated as elastic, cannot be pressed beyond their fair meaning. The Court is given not only a discretion as to the nature and amount of the provision it directs but, what is even more important, a discretion a to making a provision at all. All authorities agree that it was never meant that the Court should re-write the will of a testator. Nor was it ever intended that the freedom of testamentary disposition should be so encroached upon that a testator's decisions expressed in his will have only a prima facie effect, the real dispositive power being vested in the Court. ..."

60 An assessment whether the plaintiff has been left without "adequate" provision for her "proper" maintenance, education or advancement in life must take into account the size of the deceased's estate (with an agreed, present value of about $8 million); the length of the plaintiff's and deceased's co-habitation as a couple; the extent to which, by her domestic support of him, the plaintiff facilitated his retention, if not amassing, of wealth; the extent to which, by his generosity to her as his partner, he rendered her accustomed to a lifestyle beyond that for which he made testamentary provision; the difficulties she may face, in her mid-fifties and having given up work to travel with him, in getting fresh paid employment; the care she rendered him in his terminal illness; and the anxiety about her future suffered in consequence of his death.

61 When these factors, in particular, are taken into account, the correct finding is, in my assessment, that the plaintiff has, indeed, been left without adequate provision within the meaning of s 59(1)(c).

62 I do not lay at the deceased's door the familial obligations the plaintiff, naturally enough, feels towards her two adult sons and (by her son Dominik) her young grandson.

63 The question then (arising under s 59(2)) is: what, if anything, "ought" to be done about the inadequacy of provision made for the plaintiff?

64 An answer to that question requires a similar evaluative exercise traversing much the same ground as that occupied by s 59(1)(c).

65 In undertaking that exercise more overt attention may need to be given to the competing claims of Jessica and Irena on the bounty of the deceased. Any additional provision made for the plaintiff must be at the expense of one or the other or both of them.

66 Although their family ties with the deceased were of a different character (on the one hand, a daughter; on the other, a sister) both of them were very close to the deceased. I do not accept evidence adduced by the plaintiff to the contrary. Each of Jessica and Irena is a natural object of his bounty.

67 Nothing more about that needs to be said of Jessica, the deceased's only child.

68 Of Irena it is, perhaps, necessary to record that throughout much of her life the deceased provided her and other family members with material, as well as emotional, support. After his move from Poland to Australia, he provided material support for her and their parents still living in Poland. In 1987 he funded her trip to Australia and supported her financially while she established herself locally. He continued, thereafter, to play the role of a supportive older brother. In making his testamentary dispositions he was expressly mindful of a need to provide support, in particular, for Irena's disabled son.

69 Having regard to the modest financial circumstances of Irena and her husband, and to the calls made upon them in their pursuit of a modest lifestyle, I am disinclined to lay the burden of any additional provision made for the plaintiff on the shoulders of Irena.

70 If any additional provision is to be made for the plaintiff the burden of it should, in my assessment, be borne by the provision made by the deceased for Jessica. In terms of value, she received the lion's share of the pool of assets available to the deceased for division on his death. She is young, intelligent, presentable, well educated, engaged in continuing study and looking forward to a productive life. She can, in my assessment, bear a reduction in the provision made for her without materially affecting her present lifestyle or her future prospects. That said, I do not however lose sight of the deceased's desire to favour her with substantial testamentary provision.

71 Having regard to the deceased's deliberate allocation of future ownership of the Kirribilli unit to Jessica and of the Cammeray unit to Irena, it would not be appropriate, in my assessment, to order that either of those properties be transferred, instead, to the plaintiff. Additional provision should be made for the plaintiff but not by a form of order which could, not unfairly, be taken to involve a "rewriting" of the deceased's Will. A legacy, rather than a transfer of property in specie, is an appropriate, and sufficient, method of addressing the plaintiff's entitlement to further assistance.

72 I do not accept, as the plaintiff would have me find, that it would be appropriate to confer upon her as great an additional benefit as the $1,275,000 implicit in the primary case she advances. To grant relief of that order (with consequential costs orders) would be to displace the deceased's testamentary intentions more than is necessary to make adequate and proper provision for the plaintiff.

73 The plaintiff's alternative case is, in terms of quantum of financial benefit sought, closer to (but less generous to her than) the mark of what should be ordered as additional provision for her. In my assessment, she should be allowed, as additional provision, a legacy of $850,000.

74 In making that assessment, I record that, during the course of the final hearing, it was agreed between the parties that, should the plaintiff be denied ownership of the Kirribilli unit, she could not resist an order for delivery up of possession of the unit to the defendant. Counter balancing that, the defendant, by his counsel, accepted that the plaintiff should have until the end of February 2015 to vacate the unit, and undertook to the Court that the plaintiff would be charged no occupation fee for her occupation of the unit between the date of death of the deceased and the end of February 2015.

75 I will allow the parties an opportunity to address me on the form of relief to be granted, including an opportunity for the defendant to consult Jessica and Irena about the best means of raising funds to meet the additional provision to be made for the plaintiff.

76 Subject to that qualification, the form of orders appropriate to disposition of the case (not including costs orders) appears likely to be to the following effect:

(1) ORDER that, in addition to the provision made for her in the Will of the deceased and by his nomination of her as the recipient of his superannuation entitlements, the plaintiff receive out of the estate of the deceased a legacy in the sum of $850,000.

(2) ORDER that interest on that legacy accrue (at the rate prescribed by the Probate and Administration Act 1898 NSW, s84A ) on and from the expiry of two months from the date of these orders.

(3) ORDER, subject to further order, that the plaintiff deliver up possession of the Kirribilli unit to the defendant no later than 28 February 2015.

(4) NOTE the undertaking of the defendant to the Court that the plaintiff will be charged no occupation fee for her occupation of the Kirribilli unit between the date of death of the deceased and 28 February 2015.

(5) RESERVE liberty to apply for further orders in the implementation of these orders.

77 I will allow the parties to address me on the costs orders to be made. Prima facie, the plaintiff should have her costs, on the ordinary basis (and the defendant should have his costs on the indemnity basis) out of the estate of the deceased, bearing in mind a potential need (as in relation to the substantive relief proposed to be ordered) for special orders designed to ensure that the burden of the property charged with compliance with Court's orders is clearly identified.

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Amendments

26 November 2014 - Renumbering
Amended paragraphs: 76

Decision last updated: 26 November 2014