Subasa v State Trustees Limited [2007] VSC 399 (12 October 2007)

JOSEPH SUBASA	Plaintiff

v

STATE TRUSTEES LIMITED	Defendant

JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	30 NOVEMBER 2006 and 27 JUNE 2007 (written submissions)
DATE OF JUDGMENT:	12 OCTOBER 2007
CASE MAY BE CITED AS:	SUBASA v STATE TRUSTEES LIMITED
MEDIUM NEUTRAL CITATION:	[2007] VSC 399

ADMINISTRATION AND PROBATE – Intestacy - Application by adult step-grandson for provision – Deceased in loco parentis during applicant’s childhood – Applicant unemployed by choice – Whether deceased had moral obligation to provide for him – Effect of beneficiaries’ receipt of benefit from the deceased’s overseas assets – Exceptional circumstances – Administration and Probate Act 1958, Part IV.

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R. Wells	Slater & Gordon

For the Defendant	Dr D. Kovacs	State Trustees Ltd, Legal Branch

1 Marija Subasa, nee Kovacic, was born on 21 March 1923. She died, at the age of 81, on 3 June 2004. She did not leave a will. Letters of administration of her estate were granted to the defendant, State Trustees Ltd, on 26 July 2004. The plaintiff, who is her step-grandson and therefore not a relative by blood, claims that the distribution of her estate on an intestacy would not be such as to make adequate provision for his proper maintenance and support. He accordingly seeks to rectify this by resort to Part IV of the Administration and Probate Act 1958.

2 The deceased was a widow when she died. On 1 July 1956, she had become the second wife of Josip Subasa, who was a fitter, turner and toolmaker. He died on 9 April 1987. Although his wife had no children of her own, she was survived by her step-daughter Katarina Subasa.

3 The deceased and her husband had arrived in Melbourne as migrants on 20 May 1964. At first, they rented a flat in Collingwood. They then purchased a home at 15 Southbourne Avenue, Dandenong. In 1968 or 1969, following Katarina’s arrival in Australia with her then very young son, the plaintiff, Joseph Subasa, the size of the household doubled. The deceased was then, and remained, occupied with home duties.

4 Joseph was born in Zagreb, Croatia, on 22 October 1967. He is therefore now 40 years of age, but was not much more than a baby when he commenced to live with his grandparents in Dandenong. He has never known his father, and has not been told anything about him. His mother Katarina was the third child of five born to Josip and his first wife, Agatha Subasa. Three of Katarina’s siblings are now dead. The whereabouts of the fourth are unknown.

5 The family as constituted by Josip, Marija, Katarina and Joseph did not stay together for long. In about 1972, Katarina was admitted as an inpatient to a psychiatric hospital. I understand that she has remained under some form of psychiatric care ever since. As a result, the plaintiff not only lost contact with her (never – at least so far - to have it meaningfully re-established) but was also put into a succession of institutions for children. He maintained contact with Josip and the deceased, however, because he accompanied them on day visits; and he spent additional time with them during summer holidays. He also spent a portion of his holidays in foster care.

6 In 1978, when the plaintiff was in grade 5 at the South Box Hill Primary School, he was given the choice of weekends with his grandparents or with a foster family. He chose the latter. I accept that this was because he wished to live with a family whose ages were more in keeping with the norm than could be the case when his grandparents assumed the parental role.

7 As things turned out, however, the weekends with the foster family gradually gave way to weekends with the grandparents. In the plaintiff’s words, as set out in an affidavit sworn by him on 17 June 2005:

Each time I visited my grandparents, my grandmother would have made me a cake and would have made up my room. This made me feel very welcome. I came to love spending my weekends with my grandparents as over time I began to feel part of a family again.

I also recall going on fishing and hunting trips with my grandfather when I was in primary school. My grandfather would get very excited about these outings and would start preparing all the things we needed for our trip days ahead of time. My grandmother would prepare a feast of pancakes and cold crumbed chicken to take with us on our trip.

8 So things continued into 1979. In that or the following year, however, the plaintiff left the children’s home in which he had been residing, and commenced to live with his grandparents on a full-time basis. He was to remain at 15 Southbourne Avenue for the next 18 years or so. In his affidavit, he described the move in the following words:

I was very excited when I left the children’s home to live with my grandparents. I recall walking towards my grandfather, who I recognised because of his trademark Collingwood beanie and cigarette, with my suitcase and a fluffy toy dog. I also recall that my grandmother was crying when I arrived at my grandparents’ house. She kept telling my grandfather how much I had grown up and could not stop touching my face and hair.

Although my grandparents were old fashioned and very different to my friends’ parents, they took very good care of me and treated me like a son. For example, I recall that my grandmother would make me a milky coffee every morning before school and serve it to me with the previous day’s bread crusts, which I loved. She did my washing, cleaned my room and made my bed for me until I was about 15 years old. She also gave me pocket money. My grandmother and I also argued from time to time, like any parent and teenager. For example, I remember arguing with my grandmother because she always wanted to starch my jeans, which I hated.

9 In 1980, the plaintiff enrolled in the Dandenong Technical School. By the end of the 1984 academic year he had completed year 10, and with it his formal education. His first job was as a machine operator, but by 1986 he had become a dough maker. He continued in that occupation until 1988.

10 By this time, his grandfather was dead. The plaintiff had turned 20 some 6 months after Josip’s death in April 1987. During the following decade, he was either unemployed or doing part time work only. He was asked about this during cross-examination. In response, he said that he was “bludging”. The cross-examination continued:

I was living at home with my grandmother ... enjoying life like most kids do, only I wasn’t a kid, I was a little bit older. I didn’t have [any] inspiration at that time but ... I was feeling pretty comfortable at home.

Q: I understood that, from the description of what you were doing as “bludging”?

A: I said I was bludging. I was lazy, but I didn’t say I never made [any] attempt. I did work part time here and there.

A: I had skill as a plasterer. I do have a forklift licence. So I do have certain skills, which just for me to get up and get them happening ... I lost a grandfather, so my life was starting to get taken away from me ... I had just come out of a children’s home. I got taken away from my grandparents and I do not know why ... Then I came back to my grandparents, yet nobody knows legally why I was allowed to live with them; so when my grandfather passed away certain things did go loose ... I did get a bit angry, I did sort of get away from society. I did bludge a bit, yes, but I think I’ve got on with life ... and that’s through my grandmother helping me. Otherwise I would have lost it a lot worse.

Q: You say in your affidavit that you have been employed with Bidvest since September 2003. You do not say in your affidavit what was happening between 1998 and 2003. Were you employed at that time?

A: I was working at Bidvest, I have worked at Monier Brick before that, AW Electrical. I have worked a few places in between.

Q: So that was 1998 to 2003 ... Had you applied for full time employment from that time?

A: I had applied for full time employment [at Bidvest], but ... I was not prepared to work afternoon shift because I enjoy my life with my fiancée and I don’t want to be working afternoon shifts away from her. For me to get full time employment at that company I would have to take up an afternoon shift position, and I was not prepared to do that.

A: No, because it would hinder my life with my fiancée. I don’t want ... to do that ... Not for work, not for anything. No.

A: Just through my employment agency ... but with all this happening, no, I haven’t had [any] motivation to really do much at all.

A: It would have been maybe a month after I left Bidvest. I rang up to say that I was available for work. They did not respond ... I rang them a few times after that and they still did not respond, so I decided to just take time off.

11 The long and short of it appears to be that, by his own choice, the plaintiff has been in full-time employment only occasionally since 1988. He presently has no income, and would not qualify for any form of social security benefits were he to apply for them. Moreover, he has not even applied for work since at least September 2005.

12 Twelve years ago, in 1995, the plaintiff met Lana Alexeev. Three years later, they commenced to live together. The plaintiff was then 31. They now live with Ms Alexeev’s brother at 21 Wilma Avenue, Dandenong, in a house owned by her father. According to the evidence given orally by the plaintiff in the witness box, the man to whom he refers as his “father in law” (ie his fiancée’s father) lives elsewhere. He has done since some date before the plaintiff moved into the Wilma Avenue property.

13 That evidence does not accord with that to which the plaintiff has sworn in his affidavits. In that made on 17 June 2005, he deposed that “Lana and I live with Lana’s father in Dandenong, as we are trying to save a deposit to purchase our own home. We do not pay rent but we pay the rates and maintain the property.” Consistently with this, the plaintiff swore in an affidavit made on 16 November 2006 that “I am currently living with my fiancée at her parents’ house. We live in the rumpus room of their house. I have now been living with them for five years. This living arrangement causes a great deal of stress on my relationship with my fiancée.” (My emphasis.)

14 When the plaintiff was asked in cross-examination about this, he professed not to understand what the problem was. At this point, his performance in the witness box was very unimpressive; but, on balance, I think that he was confused rather than mendacious.

15 My conclusion is that the affidavits are false. I cannot ascribe this result to any particular cause. If, however, I am correct in thinking that the plaintiff is not guilty of perjury, then he was certainly careless when he read (assuming that he read) the affidavits which, doubtless, had been prepared by his solicitors for him to sign as being the truth. There is also the possibility that his solicitors were less careful than they should have been in their preparation of this material. A finding one way or the other cannot be made on the evidence available. The fact that the plaintiff has given evidence on oath in the witness box that is so clearly inconsistent with his sworn evidence in affidavit form is nevertheless very troublesome.

16 Ms Alexeev’s brother, who lives with his sister and the plaintiff at Wilma Avenue, does not work and does not contribute to the household expenses. Asked in cross-examination why this should be so, the plaintiff answered:

Again, I don’t understand how to answer that question. That’s something he’s chosen in life. Again, I’ve told you at times when I didn’t work I was just bludging. For me to say that that’s what he’s doing, that’s not up to me to say that. So I don’t know why it’s his decision to do that.

17 On the evidence available to me, the brother’s position is the same as that of the plaintiff. Neither is employed. Neither contributes any income to the household. It seems that Ms Alexeev has shouldered the burden of being the sole financial provider for not only herself but also for two able-bodied males neither of whom are prepared to share that burden. Perhaps she prefers it that way; it will be remembered that, according to the plaintiff’s oral evidence, he was not willing to give up his afternoons with her if the price was full-time employment with Bidvest. This may have reflected her wish too; but the matter was not explored during either the plaintiff’s or Ms Alexeev’s time in the witness box.

18 In his affidavit of 17 June 2005, the plaintiff described his relationship with the deceased following the death of his grandfather Josip in 1987. He said:

My grandmother continued to look after me following my grandfather’s death. For example, she continued to prepare my lunch and dinner and on the weekends she baked me bread and cakes. She also continued to wash my clothes and clean my room for me and regularly gave me advice about what I should do with me [sic] life. She even disciplined me when I occasionally got into trouble.

19 The relationship continued after the plaintiff, in 1998, left Southbourne Avenue and commenced to live with Ms Alexeev. As the facts are recounted in the 2005 affidavit:

After I moved out of home, I visited my grandmother one [sic] or twice a week. We would usually have coffee together or go to the market. I also often cut her lawn. Lana and I also visited my grandmother together. We always made sure that she was doing well and helped her in any way we could. However, she did not need much assistance from us. Instead, she preferred to chat with us, particularly about her chickens, which she kept in the back of her yard. In fact, my grandmother did all of her own banking and shopping until just before she died.

20 When asked in his evidence in chief about the “sort of contact” which he maintained with his grandmother after he moved out of the Southbourne Avenue house, the plaintiff replied:

Pretty much visited her once a week or maybe every second week. Cut the grass if she needed it. Just pretty much kept an appearance. She was pretty much on her own ... very independent. So at times, if I did go to visit her, she might even get upset, you know what I mean? ‘What are you always doing here?’ She wanted her space; but otherwise, just because she was a small woman and she couldn’t speak a lot of English, I just kept a presence around the house when I went there after work or drove through the neighbourhood, stopping for a coffee and chit chat

Q: As she got older, you said she was independent. Was she able to completely look after herself, feed herself?

21 It was the plaintiff’s evidence that he occasionally borrowed small sums of money from the deceased “to get a packet of cigarettes or something ... I could go into the street and ask a stranger but I thought I could go to my grandmother and ask that.”

22 The picture that emerges - from the somewhat unsatisfactory evidentiary palette that must be the basis of my judgment - is of a man now entering middle age who has lived life as he chose to live it. He is not, at least in these proceedings, to be condemned for that. It nevertheless increases the difficulty of satisfying me on the balance of probabilities that the distribution of the deceased’s estate effected by the intestacy provisions of the Administration and Probate Act does not make adequate provision for the proper maintenance and support of the plaintiff. After all, the evidence is that the plaintiff has the ability to make further provision for himself. He has not done so. That powerfully endorses the proposition that the maintenance and support presently available to him is adequate.

23 If this be correct, I cannot make an order in favour of the plaintiff. Section 91(3) provides, in effect, that the Court must not order that provision be made out of Marija Subasa’s estate for his proper maintenance and support unless I am of the opinion that the distribution of that estate as effected by the laws of intestacy does not achieve that outcome. But if it is already achieved, there is no inadequacy to make good.

24 Before finally reaching the conclusion that the plaintiff is indeed currently in receipt of adequate provision for his maintenance and support, I must have regard to each of the matters specified in paragraphs (e) to (o) of s.91(4) of the Act[2] and - pursuant to s.91(4)(p) - to any other matter which I consider to be relevant. This consideration must be informed by a standard against which each of the matters are to be judged or balanced. That standard remains now as it was before the latest amendments to the Act. It is in two parts: first, whether a wise and just testator would have thought it his or her moral duty to make provision for the claimant; and, secondly, if so, what that provision should be.[3]

25 The first of the matters to which regard must be had is the relationship between the plaintiff and his (step)grandmother. The relevant evidence is set out above. The second matter is any obligation or responsibility of the deceased to the plaintiff and (there being no other applicant than Joseph Subasa) the beneficiaries of the estate.

26 Here, some further consideration of the position is necessary. In the first place, the deceased had before her death more than discharged any obligation she had to her grandson save perhaps in the devolution of her estate. She had given him much. She had received little of material worth in return. In saying this, however, I do not discount the plaintiff’s affection for his grandmother. I accept that it was substantial, and that she knew as much. This could not but have been of great comfort to her.

27 Nevertheless, as a wise and just testator, Marija Subasa may well have concluded, as her life came to an end, that she had discharged to the full any duty she had to her grandson. Not only had she fed, and clothed, and cared for, him since he came to live with her and his grandfather in 1979, but she had in addition continued to give him a roof over his head and other support in the period between her husband’s death in 1987 and the plaintiff’s departure to live with his girlfriend/fiancée some 11 years later. All this while having no independent income herself, apart from her social service entitlements, and while the plaintiff – once he left school – was, by contrast, in a position to undertake full-time employment. In these circumstances, it is not difficult to conclude that the deceased had fulfilled any moral duty she may have had to her step-grandson.

28 An important caveat nevertheless remains. It is a fact of which I can take judicial notice that for some years now, well before Marija died in June 2004, the housing market in many Australian capital cities has been very hard for young couples to enter. This is true of Melbourne. Many if not most first home buyers, no matter how hard they may have worked, and no matter how carefully they may have saved, find it difficult to finance the purchase of a house.

29 It follows that, even had the plaintiff not been – to adopt his own description of himself – a “bludger”, he and his fiancée would have battled to raise the funds to enable them to move from their present accommodation to a home of their own. That being the case, a wise and just grandmother would I think have considered it her moral duty to provide him with such assistance towards the purchase of a home as it was in her capacity to give.

30 That capacity is not to be assessed simply by asking what her financial resources were, after paying for all her debts and funeral expenses. As I have pointed out, all the matters set out in s.91(4)(e)-(p) must, unless they are obviously inapplicable, be considered. Thus, the position of beneficiaries of the estate need not be examined if there are none. But in this case beneficiaries of Marija’s (intestate) estate have been traced to Croatia. The Court must therefore have regard not only to any obligations or responsibilities that the deceased might have to them,[4] but also to their financial resources,[5] to any physical, mental or intellectual disability from which they might suffer, and any benefits they might have previously received from the deceased.[6]

31 None of these questions could be answered until all the beneficiaries have been identified. When the present application came on for trial on 30 November 2006, the defendant had not completed the steps necessary to achieve this result. Given that, on the evidence available, all the subjects of the search were located in Croatia and that the deceased was not in close contact with any of them from about 1970,[7] the process was complicated. The defendant asked for more time. I granted this request, although I was concerned that the costs of the search would swallow a disproportionate amount of a small estate. In an attempt to minimise cost and delay, I heard, before the adjournment, the oral evidence of the plaintiff and Ms Alexeev. As things turned out, this was the only viva voce evidence called by either party.

32 The defendant then proceeded, over the following six months or so, to gather what additional information it could about the deceased’s beneficiaries and about any overseas property she might have. I accept that, doing the best that can be done, it has been established that Marija (who was the eldest child in her family) had three sisters. Only one, Zorica Kovacic, survived her. Another, Katica Subasa (nee Kovacic), was the only sister who died (on 15 January 1989) leaving issue. She had on 4 April 1951 married Josip Subasa’s brother, Mijo Subasa.

33 In these circumstances, according to Croatian law, the latter’s beneficiaries are Katica’s daughter (Slavica Dominic) and son (Kresimir Subusa). Each of the two is now living in Zagreb. In accordance with Croatian law, they are the only beneficiaries not only of Marija but also of Marija’s (and their mother’s) sister, Zorica. As such, they inherited certain land of an unspecified value from their mother and their aunts, land which those three sisters in turn inherited from their mother, Slavica and Kresimir’s grandmother.

34 Each of Slavica and Kresimir has sworn an affidavit in these proceedings. Following the receipt and filing of these affidavits, counsel for both sides agreed to proceed on the basis of the evidence, whether viva voce or in the form of affidavits, then before the Court. Written submissions were received from the plaintiff and the defendant, the most recent being dated 27 June 2007.

35 In her affidavit, Slavica deposes to now being 55 years of age. She has five children, four of whom still live with their parents. Her health is indifferent, and she expects that it will at some point deteriorate further as a result of her job; she is a chemical technician (earning €600 per month) and is exposed in her work to dangerous solvents and toxins. She has assets valued at approximately €246,000, but is concerned about her financial position once she retires. She expects then to have to call upon social security benefits and upon her children. Her husband, Mijo Dominic, who was a tailor, has already retired.

36 Kresimir is now 52. He is a milling machine operator. His monthly salary is €610; his wife earns an equal amount. His assets are valued at about €255,000. Some of this is attributable to the land which Marija and her sisters inherited from their mother. As both Slavica and Kresimir attest in their affidavits, Slavica waived her interest in this land in Kresimir’s favour; but in neither affidavit does the deponent place a value on the land in question. In these circumstances, I must proceed on the basis that each sibling has already received a measure of maintenance and support from their aunt Marija. The reasoning of Ormiston J in Anderson v Taboneras[8] is analogous:

... if a beneficiary says nothing as to his or her financial position or other claims on the testator’s bounty, then the court is fairly entitled to assume that the beneficiary has no special claim other than relationship and that, in particular, he or she has adequate resources upon which to live.

37 Kresimir deposes in his affidavit to having three children, two of whom are financially dependent on him and his wife. His health is affected by the fact that he has diabetes, and a 70% disability in both hips.

38 Neither Slavica nor Kresimir had any contact with Marija once she emigrated to Australia. Each has a home. Neither lived as if a child of the deceased. Both received a share in the deceased’s Croatian estate. As best I can asses their financial position, each presently enjoys a degree of comfort, but neither is wealthy.

39 Neither beneficiary has any burden of proof to discharge: they do not need to establish an entitlement to the estate, because they have that entitlement by law. The point nevertheless remains. In my opinion the deceased did owe a moral duty to the plaintiff to make adequate provision for his proper maintenance and support; but only to the extent necessary to assist in the acquisition of a home. In the particular circumstances of this case, that moral duty over-rides any entitlement of the deceased’s nephews or nieces.

40 This is a conclusion to which I have come only after anxious consideration. It “is one of the freedoms that shape our society, and an important human right, that a person should be free to dispose of his or her property as he or she thinks fit.”[9] Moreover, as Callaway JA said later in the same paragraph:

A breach of moral duty is the justification for curial intervention and simultaneously limits its legitimate extent. So much may be derived from the concept of “proper” maintenance and support but also, and more fundamentally, from those considerations.

41 In MacEwan Shaw v Shaw,[10] Dodds-Streeton J explained the scope and purpose of the amendments which allow a step-grandson and others to apply for further provision under the Administration and Probate Act. Her Honour said:

The amended legislation, while expanding the class of eligible applicants, confers only a limited jurisdiction to interfere with freedom of testation. It does not license the court to effect a redistribution of an estate because it would satisfy notions of familial generosity, or because the claimant has few resources and the defendant taking benefits under the will is relatively well off.

Rather, it remains necessary to establish a need for provision and maintenance in the applicant in order to enliven the jurisdiction. If the need is not established, the court has no jurisdiction to make an order, no matter how large the testator’s estate. ....

Further, it is necessary to establish a breach of duty or moral obligation on the part of the testator, which constitutes a departure from the standards which a wise and just testator would have applied. There must be an abuse of the freedom of testation.

Prevailing community standards, which may alter according to changing social and economic conditions, are the criteria against which the duty and moral obligation, and any departure from them, must be measured.

According to prevailing community standards and applicable law, as consistently recognised by this Court, the obligation to maintain and provide for infants ordinarily rests upon their parents, rather than on grandparents.

For the defendant, it was submitted that in order to establish a grandparent’s moral obligation to provide for children, there must be “truly exceptional” circumstances, where, for example, it is possible to conclude that the grandchild performed special services for the deceased requiring recognition or alternatively, that the deceased assumed a parental role at least for a time or to a material degree, establishing a substantial dependency.

42 This, it seems to me, is one of those truly exceptional cases. The plaintiff is not disentitled by, or in other words the deceased’s moral duty is not negatived by, his failure to pursue employment opportunities. On the other hand (as I have noted) this failure is evidence that, apart from a need for help in the acquisition of a home, maintenance and support were not and are not a problem. And the help to which I refer would have been required whether or not the plaintiff had neglected opportunities to make his own provision for his proper maintenance and support.

43 In the result, in my opinion so much of the estate should go to the plaintiff as is necessary to enable him to put a deposit on a modest home (I define “modest” for these purposes as something equivalent in value to the least valuable of the premises at, respectively, 15 Southbourne Avenue, Dandenong and 21 Wilma Avenue, Dandenong). The balance (if any) should go to the two blood relatives of the deceased. Given that the net value of the estate is about $180,000, but that I have no evidence of the amount required to furnish the deposit I have in mind, I shall leave it to the parties to agree upon the amount which, for that purpose, the plaintiff should receive. If the parties cannot agree, I shall decide the matter after receiving relevant evidence. I shall hear counsel on the consequential appropriate orders.

^[2] The mandatory requirement that I have regard to the matters set out in s.91(4)(e)-(p) must be read as subject to the necessary qualification that such regard is only necessary to the extent that the matter is relevant in the particular circumstances of this case: Harris v Bennett & O’Brien

[2004] VSC 171

[30]

Supreme Court of Victoria

Subasa v State Trustees Limited [2007] VSC 399 (12 October 2007)