Benz v Armstrong; Benz v Armstrong; Benz v Armstrong

[2022] NSWSC 534

Supreme Court

New South Wales

Medium Neutral Citation:

Benz v Armstrong; Benz v Armstrong; Benz v Armstrong [2022] NSWSC 534

Hearing dates:

18 – 22 October 2021

Date of orders:

5 May 2022

Decision date:

05 May 2022

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

See [306] and [307]

Catchwords:

SUCCESSION – Family provision – Claims by adult children of deceased’s first marriage – Where one or more proceedings not commenced within time – Whether sufficient cause shown to extend time – Whether adequate and proper provision not made for claimants and, if so, what provision if any should be made for claimants – Notional estate – Whether superannuation death benefit available to be designated as notional estate – Whether order designating property as notional estate should be made

Legislation Cited:

Probate and Administration Act 1898 (NSW), s 84A(3)

Succession Act 2006 (NSW), ss 3, 58, 59, 60(2), 63(5), 75, 76, 77, 78, 79, 80, 87, 88, 89, 90

Superannuation Industry (Supervision) Regulations 1994 (Cth) r 6.17A(5)(b)

Cases Cited:

Andrews v Andrews (2012) 81 NSWLR 656; [2012] NSWCA 308

Aubrey v Kain [2014] NSWSC 15

Blore v Lang (1960) 104 CLR 124

Carr v Douglass [2016] NSWSC 854

Cetojevic v Cetojevic [2006] NSWSC 431

Chan v Chan (2016) 15 ASTLR 317; [2016] NSWCA 222

Cropley v Cropley [2002] NSWSC 349

Cunliffe v Goodman [1950] 2 KB 237

Ernst v Mowbray [2004] NSWSC 1140

Estate Grundy; La Valette v Chambers-Grundy (2018) ASTLR 64; [2018] NSWSC 104

Fitness First Australia Pty Ltd v Dubow [2011] NSWSC 531

Foley v Ellis [2008] NSWCA 288

Hildebrandt v Soncini [2007] NSWSC 1227

John v John [2010] NSWSC 937

Kastrounis v Foundouradakis [2012] NSWSC 264

Kay v Archbold [2008] NSWSC 254

Keep v Bourke [2012] NSWCA 64

Kelly v Deluchi [2012] NSWSC 841

Lado Causillas v NSW Trustee & Guardian [2015] NSWSC 1204

Lemon v Mead (2017) 53 WAR 76; [2017] WASCA 215

Lewis v Lewis [2001] NSWSC 321

Limberger v Limberger; Oakman v Limberger [2021] NSWSC 474

Lloyd-Williams v Mayfield (2005) 63 NSWLR 1; [2005] NSWCA 189

Manuel v Lane [2013] NSWCA 61

McCann v Ward & Burgess [2012] VSC 63

McCann v Ward [2010] VSC 452

Moore v Randall [2012] NSWSC 184

Neale v Neale [2015] NSWCA 206

North v Daniel [2021] NSWSC 828

Page v Hull-Moody [2020] NSWSC 411

Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361

Re Estate Grant, deceased [2018] NSWSC 1031

Re Estate Luce; Turch v Tripolone [2020] NSWSC 117

Re Fulop Deceased (1987) 8 NSWLR 679

Revell v Revell [2016] NSWSC 947

Semitecolos v Semitecolos [2021] NSWSC 1508

Sgro v Thompson [2017] NSWCA 326

Singer v Berghouse (No 2) (1994) 181 CLR 201; [1994] HCA 40

Smith v Johnson (2015) 14 ASTLR 175; [2015] NSWCA 297

Soens v Rathborne [2018] NSWSC 302

Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114

Stojanovski v Stojovski [2016] NSWSC 976

Stott v Cook (1960) 33 ALJR 447

Szypica v O’Beirne [2013] NSWSC 297

Taylor v Farrugia [2009] NSWSC 801

Thomas v Pickering; Byrne v Pickering [2011] NSWSC 572

Toscano v Toscano [2017] NSWSC 419

Underwood v Gaudron (2015) 324 ALR 641; [2015] NSWCA 269

Vasconelos v Bonetig [2011] NSWSC 1029

Verzar v Verzar [2012] NSWSC 1380

Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11

Wardy v Salier [2014] NSWSC 473

West v Mann [2013] NSWSC 1852

Wheat v Wisbey [2013] NSWSC 537

Texts Cited:

de Groot and Nickel, Family Provision in Australia (6th ed, 2021, LexisNexis,)

Category:

Principal judgment

Parties:

2020/00101770
Anna Rosalba Benz (Plaintiff)
Erlita Espanol Armstrong (Defendant)

2020/00106692
Catherine Jean Benz (Plaintiff)
Erlita Espanol Armstrong (Defendant)

2020/00234101
Andrew James Benz (Plaintiff)
Erlita Espanol Armstrong (Defendant)

Representation:

Counsel:
2020/00101770
CA Vindin (Plaintiff)
A Lakeman (Defendant)

2020/00106692
GE Underwood (Plaintiff)
A Lakeman (Defendant)

2020/00234101
PJ Muscat (Plaintiff)
A Lakeman (Defendant)

Solicitors:
2020/00101770
McRay Legal (Plaintiff)
Fox and Staniland Lawyers (Defendant)

2020/00106692
Michael Rogers & Co (Plaintiff)
Fox and Staniland Lawyers (Defendant)

2020/00234101
PB Ritz Lawyers (Plaintiff)
Fox and Staniland Lawyers (Defendant)

File Number(s):

2020/00101770; 2020/00106692; 2020/00234104

Publication restriction:

Nil

Judgment

1. HER HONOUR: In October last year, I heard concurrently three sets of proceedings each involving a claim by one of the six children of the deceased (the late Dr William Benz) for provision out of the estate or notional estate of the deceased (Anna’s proceeding being 2020/00101770; Catherine’s proceeding 2020/00106692; and Andrew’s proceeding being 2020/00234104). A fourth claim for provision that had been brought by another of Dr Benz’ children (John) was settled prior to the hearing, as was a claim brought by John in the general list of the Equity Division, to which I will refer in due course (those proceedings being 2020/00092199 and 2020/00145740). In general, in these reasons I will refer to the family members, without intending any disrespect, by their first (or preferred) names.

2. The defendant in each of the three sets of proceedings is the deceased’s second wife, Ms Erlita Espanol Armstrong, who is the executor of the deceased’s estate and the main (and, as it has transpired, for all practical intents and purposes effectively the only) beneficiary under the deceased’s last Will dated 13 September 2012 (the Will). In that regard, while the residue of the estate was left to the deceased’s six children in equal shares, it is common ground that there will be nothing left in the deceased’s residuary estate to satisfy the bequests in their favour.

3. At the outset of the concurrent hearings, I ordered by consent that evidence in each set of proceedings be evidence in each other set of proceedings.

Background

Family members

4. The deceased, who was born in Shanghai, China in 1934, died on 5 April 2019, aged 84 years. The deceased had been married twice. His first wife, Dr Gwenneth Benz, to whom he was married on 23 March 1963 and with whom he had six children, died on 6 May 2011. The deceased married his second wife, Erlita, on 10 June 2012.

5. Erlita had previously been married to Colin Armstrong with whom she had one daughter (Maree), who is now aged 39. Erlita and Colin were married in December 1981 and divorced in 1985.

6. The deceased was survived by Erlita, his six adult children from his first marriage (Yvonne Michele Tridgell (known as Michele), William John Benz (known as John), Robert Bruce Benz, Anna Rosalba Benz, Andrew James Benz and Catherine Jean Benz), and his step-daughter, Maree. Neither Michele nor Robert has brought a family provision claim but each has been notified of the proceedings. Maree (who is currently living in one of the properties formerly owned by the deceased – the Pymble Property, to which I refer in due course) similarly makes no claim in relation to the deceased’s estate.

The Whitefold Trust

7. Before turning to the chronology of events, it is convenient at this point to note the existence of the Whitefold Trust (dealings in relation to which are of relevance in the context of other family litigation which followed Gwenneth’s death, including the general equity proceeding commenced by John after the deceased’s death, to which I will refer in due course).

8. The Whitefold Trust is a discretionary family trust which was established by Deed dated 15 April 1977 between John Desmond Larkins as settlor and Whitefold Pty Ltd (Whitefold) as the Trustee (the Trust Deed). In 2012 (the year that the deceased married Erlita), Harly Pty Ltd (Harly) was appointed as trustee of the Whitefold Trust in place of Whitefold.

9. The Eligible Beneficiaries of the Whitefold Trust, as defined, are: the deceased, his late wife, Gwenneth, and their children and grandchildren.

10. Pursuant to cl 3 (a) of the Trust Deed, the Trustee shall stand possessed of the trust fund and income thereof for all or such one exclusively of the others of the eligible beneficiaries and such shares or proportions as the Trustee shall at any time from shall determine. Clause 4 similarly deals with the application by the Trustee of any or all of the income as the Trustee thinks fit. Clause 7 relates to the power to pay part or any part of the trust fund, i.e., the capital of the Trust.

11. Pursuant to cl 8 of the Trust Deed, the Trustee has the power to pay or transfer the whole or any part of the trust fund to another settlement or trust “whereunder all or any of the eligible beneficiaries are beneficiaries” to be held by such trustee or trustees as an addition to the property the subject of such other settlement or trust.

12. Clause 17(a) of the Trust Deed gave the deceased the power during his lifetime to remove any trustee and to appoint a new trustee. As adverted to above, this power was exercised by the deceased in 2012 when Harly was appointed as Trustee.

Chronology of Events

Benz family upbringing

13. I have referred above to the Benz family members. The deceased was a surgeon (who practised up until only a few years before his death) with rooms for several years in a suite of offices at Bondi Junction (the deceased’s one-quarter interest in that property – to which, with a separate lot comprising a car space in the relevant strata plan, I will refer as the Bondi Junction Property – forms part of the deceased’s estate). The remaining interests in the Bondi Junction Property are held by Whitefold (as to one-half, which interest it is accepted is capable of designation as notional estate) and Erlita (as to one-quarter, following a transfer to Erlita within two weeks of the deceased’s death on 20 March 2019). (Erlita’s evidence is that this transfer occurred because the deceased wanted “to close” the Whitefold Trust – see at T 252.44-48.)

14. It is not disputed that the Benz children had a relatively privileged childhood, living in the Benz family home at Wahroonga (the Wahroonga Property), attending nearby private schools, and receiving a university education. Gwenneth, who also had qualifications as a medical practitioner, did not work during the children’s childhood (although it is said that from time to time Gwenneth assisted the deceased in his practice). Gwenneth had a keen interest in music and encouraged that interest in her children (a number of whom had musical scholarships during their secondary schooling – see Andrew’s evidence at T 112.44-112.47).

15. It appears that Gwenneth had some history of ill-health (see Andrew’s affidavit affirmed 9 September 2020 at [85]; and Anna’s acceptance in cross-examination that her mother had many medical ailments at T 49.50). Andrew referred in his affidavit to Gwenneth having gone through a period of depression (which he placed as being from about the time he finished school and started university) but in cross-examination he accepted Anna’s description as being that Gwenneth had a period of “low mood”. Anna, who is a qualified medical practitioner and presently undertaking training as a psychiatrist explained in her cross-examination that “depression” is a psychiatric diagnosis (see T 49.26; and there is no evidence of a formal diagnosis of depression). Whether Gwenneth suffered from depression as such (see Anna’s explanation at T 49.8-49.34) or experienced periods of sadness or low mood is not here to the point; nor does it seem particularly relevant. I simply note, for completeness, that each of Anna, Catherine and Andrew gave evidence of their mother having periods of sadness in the mid 1980s (so, for example, it was the evidence of Catherine that in around 1987/1988 her mother was often in tears – see at T 81; and see Andrew’s evidence at T 128.26), which coincides with the time at which the deceased commenced a relationship with Erlita (though it would be little more than speculation to postulate a causal link in that regard, particularly as it is not clear that Gwenneth knew of Erlita until some time around mid 1998 – see below).

16. It was clear from their evidence that each of the plaintiffs had a close relationship with Gwenneth.

Commencement of the relationship between Erlita and the deceased

17. There is some contention as to when Erlita and the deceased commenced cohabitation but there is no doubt that the couple’s relationship commenced during the deceased’s marriage to Gwenneth. Erlita places their cohabitation as commencing in 1986.

18. Contrary to the (implausible) evidence of Erlita on this issue (which I address in due course), the evidence of the plaintiffs is to the effect that Gwenneth was upset by the deceased’s extra-marital relationship with Erlita. This is reinforced by the terms in which, towards the end of her life, Gwenneth withdrew her then intended severance in respect of the joint tenancy she held with the deceased of the Wahroonga Property – to which I will refer shortly.

19. Erlita’s evidence is that she met the deceased in about 1982, when Erlita and her then husband, Colin, owned and operated a petrol station in Woollahra. Erlita, who emigrated to Australia from the Philippines, has book-keeping qualifications from the Philippines; and her evidence is that she worked at the garage as a book-keeper (see her evidence at T 308.46). As noted above, Erlita and Colin were divorced in 1985. (Erlita described Colin as a heavy drinker – T 311.52 and said both that she received little financially from the marital assets and that she did not want the money – T 311.)

20. Erlita’s evidence is that she and the deceased commenced cohabitation in 1986 when she was aged 24. There was around a 27 year age gap between the two (though in some of the submissions it was said that the deceased was aged 50 at the time which would put the age gap slightly lower). Erlita says that they began living together in a unit at New South Head Road, Vaucluse and later, in 1989, moved into a unit at Cook Road, Centennial Park (the Centennial Park Property).

21. Erlita’s evidence is that the deceased spent half of his time living with her in the unit (first, at Vaucluse and later at Centennial Park) and lived in the family home (with Gwenneth) at Wahroonga the rest of the time (see Erlita’s affidavit sworn on 2 October 2020 at [7]-[8]; see also her evidence in cross-examination at T 300.7-300.34). (As I understand it, Erlita’s evidence is that this proportional time sharing between the deceased’s time with her and his time at the Wahroonga Property commenced very early in their period of cohabitation.) The plaintiffs dispute this (see Andrew’s evidence in cross-examination at T 132.41-132.45; see also [104]-[105] and [122] of Andrew’s affidavit affirmed on 9 September 2020; and Catherine and Anna’s evidence is that they had no knowledge of their father’s cohabitation with Erlita) and they say that Robert was living in the Centennial Park Property between 1988 and 1989 (see T 132.8; T 80; T 51.30).

22. Erlita seems to accept that Robert was living in the Centennial Park Property at some stage before she and the deceased moved into the property in 1989 (in that her evidence is that she called Robert to tell him that they were moving in and that Robert replied that he would tell the deceased that he needed accommodation for a couple of weeks – see at T 300.46-301.20). Erlita’s evidence was that Robert gave her the keys to the property (or at least told her they were in the letterbox) (see at T 301.2) but then added that Robert was then very young (T 301.5) though presumably he was old enough to be at university and able to live on his own in the Centennial Park Property at that stage.

23. Erlita says that the deceased was “quite open about the relationship” (T 397.31) but this is inconsistent with the accounts given by the plaintiffs – and, in particular, with the account given by Andrew of a conversation with Gwenneth around the time of the deceased’s acquisition of the Pymble Property in 1998 (see below).

24. The account of Erlita that the deceased was living half the time with her from around 1986 is implausible at least if the accounts of the plaintiffs are accepted, since it beggars belief that at least Catherine (who at that time was still living at home) would not have been aware if the deceased was away from the home for half of each week on a regular basis. (I discuss below my observations of the respective witnesses but suffice it here to note that I consider Catherine to have been a credible witness.) For Erlita, it is said that there was ample opportunity for the deceased to conduct a relationship with Erlita (since he worked at Bondi Junction and played golf at The Lakes Golf Club regularly during the week). However, to state the obvious, ample opportunity to carry on an affair is not the same as living away from the family home for half of each week over a lengthy period of time.

25. I note that Erlita’s evidence in cross-examination was not wholly consistent on this issue but it seemed to me that this was most likely because Erlita was not paying close attention to the questions she was being asked. So, for example, there was the following exchange at T 300.15-300.32:

Q.   What I want to suggest to you is that at least until 1993, the deceased always returned home to [the Wahroonga Property] for the night, do you agree with me on that?

A.    Yes, but sometimes with me, yeah, sometimes, yes.

Q.    Sorry, can you repeat that answer a bit more slowly?

A.    I said sometimes with me, yes, sometimes with Mrs Gwen - Mrs Benz.

Q.    Okay, so you’re disagreeing. What I’m saying is that until 1993, so between 1986 and 1993 I’m saying he always slept at [the Wahroonga Property] and--

…

Q.    Overnight.

A.    He always stay with me - I mean, sometimes he stay with me sometimes he stay there, yes.

26. In any event, nothing here turns on this because it is accepted by the plaintiffs that the deceased and Erlita were in a relationship for a considerable period of time and the couple were married in 2012, some seven years before the deceased’s death.

27. Curiously, there was some suggestion that the deceased may have had other extra-marital relationships (Andrew referring to the deceased having bought a property for another woman that he thought was called Cindy – see T 132.17; and Erlita’s Counsel’s submissions at one point referring to “other relationships” that the deceased had – i.e., in the plural; see T 398.24) but there is no evidence of any such other relationship(s) and, again, nothing turns on it.

Alleged conversation between Erlita and Gwenneth

28. Erlita has given evidence of a telephone conversation that she says she had with Gwenneth in about December 1987 (see at [10] of Erlita’s affidavit; and T 312.46). Erlita says that she did so at the deceased’s suggestion because she had told him she did not want to be with him as he was a married man (which somewhat contradicts her evidence that she was already living with him 50% of the time at that stage). At [10], the conversation is recounted as:

Gwenneth: It’s okay, because I am not feeling well. I know my husband loves you very much.

29. In cross-examination, Erlita said (T 303.19-303.24):

A.    Well, it is this conversation. William said to ring her because I didn’t want to be with William, he was married, I was young. There is a lot of men in the world that are - are married men in my eyes before, so I asked him, I said, “Are you married?” and he said, “Yes, but my husband is - my wife is sick, so she knows about you”. Because I didn’t want to be with him, he was married. So then he was--

30. The plaintiffs are adamant that their mother was upset about the affair and would not have been cordial or friendly had such a conversation taken place (but they also maintain that Gwenneth nonetheless forgave the deceased for his infidelity and would not have countenanced divorce).

31. The conversation as recounted by Erlita is inconsistent with the tenor of the note signed by Gwenneth at the time of the withdrawal of the severance of the joint tenancy of the Wahroonga Property (and is inconsistent with the account given of the events surrounding the acquisition of the Pymble Property to which I refer below). I find the suggestion that Gwenneth acknowledged the affair and in effect gave Erlita her blessing is implausible (and most likely exaggeration on Erlita’s part or some kind of retrospective self-justification for the extra marital affair or something conveyed to her by the deceased).

Acquisition of properties

32. The deceased acquired the Centennial Park Property (which was registered in his name) in 1988 and, as noted above, Robert was living in the property for some (albeit perhaps relatively short) period of time. This is consistent with what appears to have been the deceased’s practice of acquiring property (in his or the Whitefold Trust’s name) and making that property available for his children to live in (rent-free). So, for example, a property was acquired in Paddington in which John lived (and which John now owns, as I understand it) and a property was acquired in Darlinghurst in which Catherine still lives and which was transferred to her by Whitefold as trustee of the Whitefold Trust (for consideration equivalent to the then first home owners’ benefit).

33. Also in 1988, according to Erlita, the deceased bought her a business (Erlita’s Spanish Deli in Burwood). This accords with Andrew’s recollection of the deceased starting to bring home delicatessen items (which seems to have led Andrew to have some suspicion of his father having an affair –T 133.18-133.23).

Acquisition of Pymble Property

34. In around July 1998, the deceased acquired (in his own name) a property in Pymble (the Pymble Property, i.e., the property in which Maree now lives).

35. Andrew gave evidence of an incident recounted to him by Gwenneth when Gwenneth received a telephone call from a real estate agent about an inspection of the Pymble Property (of which Gwenneth then knew nothing) and that Gwenneth had gone to the address and observed the deceased and a woman (Erlita) attending that inspection (see at T 129.47-130.27). Andrew’s evidence is that Gwenneth asked Andrew to seek legal advice on her behalf at around this time (i.e., 1998) and that he made an appointment at the Marrickville Legal Centre for this purpose(T 129). Annexed to Andrew’s affidavit affirmed 9 September 2020 is a letter dated 19 April 1998 addressed to Andrew from the Marrickville Legal Centre in which advice in relation to possible claims on the deceased’s property is set out, which corroborates Andrew’s evidence in this respect. Andrew’s evidence that Gwenneth was worried at that time was eminently plausible.

36. Whether or not the account given by Andrew of that conversation with Gwenneth was accurate (and there was some confusion in the cross-examination as to whether the inspection was before or after the purchase of the Pymble Property), it is relevant to note that, by the time of Gwenneth’s later deterioration in her health following a fall at the Wahroonga Property in 2010, it does not appear to be disputed that the deceased and Erlita were living at the Pymble Property (and after Gwenneth’s death the deceased transferred his interest in the Pymble Property to himself and Erlita as joint tenants).

37. If Andrew’s account is correct, then it would suggest that the first Gwenneth may have learnt of the deceased’s affair with Erlita (or at least became aware of Erlita’s identity) was in about 1998. Again, however, nothing here turns on this.

Gwenneth’s hospitalisation in April 2010

38. In March 2010, Gwenneth had a fall at the Wahroonga Property and broke her hip. Gwenneth was admitted to The San Hospital in Wahroonga where she had surgery. After this, Gwenneth was admitted to another private hospital for rehabilitation. It seems likely that it was at this point that the relationship between the deceased and one or more of the children began to deteriorate. It is clear from the evidence of the plaintiffs that they felt the deceased was neglectful or not caring of Gwenneth; and that the deceased did not later (after a second period of hospitalisation) allow Gwenneth to return to the Wahroonga Property. Gwenneth had a further period of hospitalisation in September 2010 and then moved in with Andrew and his wife, Fiona, for a period of about five weeks before moving to a nursing home in North Turramurra (where she subsequently died).

39. During the period that Gwenneth was staying with Andrew and Fiona in their property at least one (on the plaintiffs’ account there were two) significant event occurred (first, the attempted severance of the joint tenancy in respect of the Wahroonga Property; and, second, Erlita moving into or at the very least (on Erlita’s account) commencing to renovate or repair the Wahroonga Property).

Attempted severance of joint tenancy in respect of Wahroonga Property

40. As noted above, the Benz family home for many years was the Wahroonga Property, the title to which was in the deceased’s and Gwenneth’s names as joint tenants.

41. Catherine has deposed to an occasion in 2010, which she places after Gwenneth’s hospitalisation for the second time, when her sister Michele went to the Wahroonga Property and found that there were garbage bags containing Gwenneth’s possessions in the driveway (and see Catherine’s evidence in cross-examination at T 77.16, when she described this as “provocation”). Erlita does not appear to dispute that at some stage there were possessions in garbage bags in the driveway but she places this event as occurring later and says that the deceased had told the children to come and collect what they wanted (which seems to place this as being after Gwenneth’s death). Erlita does, however, seem to accept that she was at the Wahroonga Property (she says carrying out repairs or renovations) at around this time (and Erlita was vocal as to the filthy state of the property at the time) but Erlita insists that she and the deceased were living at the Pymble Property and did not move into the Wahroonga Property until after Gwenneth’s death.

42. In any event, while Gwenneth was at Andrew’s house, Gwenneth obtained legal advice as to the severance of the joint tenancy in respect of the Wahroonga Property. Andrew’s evidence is that Gwenneth asked him to arrange for her to receive advice from a solicitor; and that he did so (see from T 150.6). Andrew’s evidence is that a solicitor came to Andrew’s house to discuss severance (and the solicitor presumably received instructions as to the severance of the tenancy on that occasion as a document was then prepared to that effect). The document was executed on 27 October 2010. Andrew’s evidence is that it was witnessed by a neighbour (T 150.16). On 29 October 2010, the notice of severance in respect of the joint tenancy was served.

43. Erlita’s evidence, reiterated more than once, was that the deceased was very angry about this and said that he would disinherit the children. See the following exchange from T 305.13, where Erlita recounts having driven the deceased to Andrew’s house (staying outside in the car) and saying that the deceased was there for so long that she panicked and rang the police:

Q.   When you talked to William after he was in the house, he said to you that his wife and children were trying to cheat him out of the [Wahroonga Property], is that right?

A.    That’s right, yes.

Q.    He didn’t want that, did he?

A.    He didn’t want that, yes, he was angry.

Q.    Did he say anything to you about what he would do about that?

A.    He was just saying that he was so angry with the children that’s trying to put it in - from they’re not joined in as tenants in common.

Q.    Yes, and did he say he’d get that changed or he’d get that reversed?

A.    He didn’t see, maybe he will get that reversed. He didn’t see that he would get that reverse. But told the, the owner. That thing when he signed it she wasn’t in sound mind. It was – she’s not in sound mind.

Q.    He said when she signed it she wasn’t in sound mind?

A.    Yeah.

Q.    I see, and he also said that it made him very angry?

A.    Yes, he did. He was very angry, and he say that when I’m fear, I don’t trust anyone. When I finished with them, you know, he’s not, not going to leave them anything because--

Q.    He’s not going to leave them anything?

A.    ...(not transcribable).. yes. He was very angry.

44. Anna has deposed (at [34] of her affidavit sworn on 2 April 2020) that the deceased and John persuaded Gwenneth to withdraw the notice of severance. Annexed to Anna’s affidavit is a handwritten note dated 22 November 2010 (in what Anna recognised to be John’s handwriting at T 30.38) and signed by Gwenneth, advising that she no longer wished to sever the joint tenancy “on condition that Ms Erlita Armstrong of Pymble never moves into [the Wahroonga Property], nor has any ownership whatsoever in any form of [the Wahroonga Property]”.

45. The note is significant to my mind in that it makes clear Gwenneth’s wish that Erlita should have no interest in the Wahroonga Property in the future (and to that extent belies the insistence by Erlita that Gwenneth was or remained acquiescent in or accepting of Erlita’s relationship with the deceased – see at T 312.45-312.47; 313.45-131.48); and it is consistent with the plaintiffs’ contention that Gwenneth was concerned to preserve the Wahroonga Property as an inheritance for the children. It also suggests a degree of at least indifference on the deceased’s part to his then wife’s wishes insofar as the deceased (presumably cognisant of the basis on which Gwenneth had withdrawn her severance of the joint tenancy) permitted Erlita (on Erlita’s own evidence) to start repairing or renovating the Wahroonga Property even before Gwenneth’s death (and, on the plaintiffs’ account of events, permitted Erlita to move into the Wahroonga Property contrary to Gwenneth’s wishes even before her death). The evidence of Anna is that the deceased told her that Erlita had changed the locks on the Wahroonga Property while Gwenneth was in the nursing home (after an incident when Anna went to the property and was unable to obtain access) (see T 52.20).

46. It is also relevant to note, in light of Erlita’s evidence that the deceased threatened to disinherit his children, that the deceased (after Gwenneth’s death and his marriage to Erlita) took steps to transfer an interest as joint tenant in the Wahroonga Property to Erlita, transferred or caused the transfer of a one-quarter interest in the Bondi Junction Property to Erlita, and made substantial inter vivos gifts of shares to Erlita (all of which had the effect of diminishing his actual estate on his death). (Indeed, the deceased transferred an interest as joint tenant in the Pymble Property to Erlita in 2000, before Gwenneth’s death.) Erlita gave the following evidence:

Q.    After the joint tenancy was put back in place, so it’s joint tenants again not tenants in comment [sic; scil common], I think the evidence you’ve just given is that the deceased said he didn’t want to cent to go to any of his children?

A.    That’s right. He was so angry.

Q.    What I’m suggesting to you is that him saying that was a reaction to the situation with [the Wahroonga Property], wasn’t it?

A.    That’s true, yes.

47. Although the transfer recorded consideration being paid for the transfer of the one-quarter share in the Bondi Junction Property to Erlita, her evidence did not establish whether there had been any such actual payment:

Q.    One quarter is in your husband’s name, one quarter is in your name and half is in the name of that company Whitefold Pty Ltd?

A.    Yes.

Q.    Is your understanding that half, which is in the name of Whitefold Pty Ltd, is part of the family trust?

A.    That’s true, yes.

Q.    The one quarter in your name and the deceased’s name, would you accept that that was transferred out of the family trust to you and to your husband about two weeks before your husband died?

A.    Yes, cause he wanted to close the trust before we go to Europe. June 7 we supposed to fly. He wanted to close the trust obligation.

…

Q.    I see. Can I ask you to focus on my question. Do you recall, do you remember $108,750 of your money being paid to the trust for this one quarter share in the Bondi property?

A.    No, but my husband--

Q.    I see.

A.    --I don’t know, I mean -

Q.    If you skip over to the next page, 143, this is the transfer of the car space, so this is 153/SP31337, do you see that at the top?

A.    Yes.

Q.    And again the transferor is Whitefold Pty Ltd and you are the transferee. Can you see all of that?

A.    Yes.

Q.    The date again is 20 March 2019, do you see that?

A.    Yes.

…

Q.    The consideration, it says “The transferor acknowledges receipt of the consideration of $15,500, do you see that?

A.    Yes. My husband--

Q.    Do you remember $15,500 of your own money going into the trust to pay for the one quarter share of the car space?

A.    No because my husband always arranged everything in financial things so he, yeah, he did himself, yeah.

Q.    I see, so--

A.    And - sorry, and this Whitefold Pty Ltd, I think, I don’t know if this is closed. I ask my accountant.

Q.    You're not sure if it’s closed, is that what you said?

A.    Yeah, yes, I'll ask him, yes. It’s supposed to be closed I think.

48. Thus, the events following the withdrawal of the notice of severance of joint tenancy would support the conclusion that the deceased was indeed arranging his affairs in a manner that would lead to the disinheritance of his children, albeit including them in his Will as residuary beneficiaries.

Gwenneth’s death

49. At the time of Gwenneth’s death on 6 May 2011 as noted above, Gwenneth was living in a nursing home in North Turramurra and the deceased was by then openly living with Erlita either in the home he owned in Pymble – the Pymble Property, to which I will refer shortly (as Erlita contends); or in the Wahroonga Property (as the plaintiffs contend).

Litigation involving Whitefold Trust

50. After Gwenneth’s death on 6 May 2011, Catherine and Michele were appointed executors of Gwenneth’s estate by grant of probate on 24 January 2013. As executors they undoubtedly had a duty to call in the estate’s assets. Unfortunately, it appears that their attempt to comply with that duty caused a further fracturing of the relationship between the deceased and at least some of his children. Indeed, Erlita contends that the most significant event in the relationship between the plaintiffs and the deceased was the service of a statutory demand (see at T 398.30) (see below) in respect of a debate allegedly owing to Gwenneth’s estate. It is submitted for Erlita that up to that point the deceased was “generous to all he loved”. (I consider that it is more likely that the more significant event fracturing the relationship was the attempted severance by Gwenneth of the joint tenancy given Erlita’s evidence as to the deceased’s reaction to this.)

51. On 15 October 2013, Catherine and Michele served on Harly (by then the trustee of the Whitefold Trust) a statutory demand in respect of unpaid entitlements recorded in Gwenneth’s name in the accounts of the Whitefold Trust debt (i.e., for a debt allegedly owed by Harly to Gwenneth’s estate).

52. This resulted in an application by Harly (the sole director of which was the deceased) to set aside the statutory demand. Relevantly, it was contended by Harly in that proceeding that moneys had been advanced on behalf of Gwenneth by the deceased (for living, medical and funeral expenses) and that Gwenneth’s estate was indebted to the deceased in the sum of $106,633. The deceased assigned his rights in respect of that claim to Harly by an assignment dated 29 October 2013.

53. Harly’s application was part heard by Black J on 25 March 2014, when his Honour directed the parties to submit an agreed form of order providing for mediation. On 8 May 2014, the statutory demand proceeding was dismissed by consent orders.

54. However, Harly had by them also commenced separate debt recovery proceedings in the District and Local Courts, respectively, against each of Catherine, Robert, Andrew and Michele for recovery of amounts recorded in the books of the Whitefold Trust as loans to them as beneficiaries. Pausing here, it is unsurprising that this litigation would have generated tension within the family when it is understood that this litigation related to claims for recovery of amounts expended on the children’s education and the like over the years (which had been accounted for in the accounts of the Whitefold Trust as loans made to each of them). Hence, as I understand it, what Harly was seeking to recover was, inter alia, amounts expended during the children’s upbringing for their own school fees (and presumably at a time when their consent could not effectively have been given to such a loan arrangement). There was no claim made against John in this respect (no doubt because the books of the Whitefold Trust recorded a substantial amount owing to him – which led to his own litigation in due course as I explain below).

55. That litigation was ultimately resolved by a Deed of Release dated 1 May 2014 between each of Catherine, Michele, Robert, Andrew, Harly and the deceased (Deed of Release).

56. The recitals to the Deed of Release set out the history of the dispute, which was defined in cl 2 of the Deed as follows:

In this deed “Whitefold Trust Dispute” shall include all claims between the Trustee of the Whitefold Trust and Dr Benz or either of them (of the first part) and any or all of Catherine, Robert, Andrew, Dr Tridgell or the Estate of the late Gwenneth Jean Benz in respect of transactions, decisions, activities or omissions prior to the date of this deed involving:

a)   distributions of income or capital by the Whitefold Trust to eligible beneficiaries;

b)   payment or non-payment of moneys due to any eligible beneficiary;

c)   payment or non-payment of moneys due to the Whitefold Trust by any eligible beneficiary;

d)   payment of money or transfer of assets in specie by the trustee of the Whitefold Trust to any eligible beneficiary;

e)   loans to or by any eligible beneficiary;

f)   the legal and beneficial ownership of any real or personal property transferred by the trustee for the time being of the Whitefold Trust to any person;

g)   payments made by the Trustee of the Whitefold Trust to, for on behalf of any eligible beneficiary;

h)   amounts due to any eligible beneficiary on the taking of accounts of the Whitefold Trust as at the date of this agreement; and

i)   for the avoidance of doubt, includes the section 459G Proceedings, the Debt Recovery Proceedings, the Assigned Claim [each as separately defined in the deed] and their subject matter.

57. Pursuant to the Deed of Release, Harly agreed to pay the sum of $350,000 to the estate and the various proceedings were discontinued. Clause 9 of the Deed contains a broad release from Catherine, Michele, Robert and Andrew in favour of both Harly, as trustee of the Whitefold Trust, and the deceased.

58. Of the $350,000, the evidence is that this was distributed equally to Andrew and Anna (in effect, as I understand it, in an attempt to equalise the position as between the siblings in respect of the provision each had obtained during Gwenneth’s lifetime). The result, as I understand it, is that none of the other siblings obtained any benefit out of Gwenneth’s estate. The sum paid to each of Andrew and Anna was $168,000 (being half of the settlement amount of $350,000 less any costs, according to the evidence of Catherine at T 76.43). It appears that at some stage some of the siblings also contributed their own funds to provide moneys to Andrew and Anna (because one of Catherine’s needs is to repay an amount to Michele which represented Catherine’s contribution to such payments; see T 70.17 and Anna’s affidavit sworn 2 April 2020 at [10]). (This is consistent with an understanding within the family of there being a need for equity in the siblings’ share of provision from their parents’ estates.)

Marriage of the deceased and Erlita

59. As noted earlier, in 2012 the deceased married Erlita. It was noted by Erlita that Andrew was not invited to attend her wedding with the deceased (although I was not taken to any evidence to suggest that this was at the instigation of the deceased).

The Will

60. As noted, the deceased’s last Will is dated 13 September 2012 (it was made six and a half years prior to the death of the deceased; and three months after his marriage to Erlita). Probate of the Will was granted to Erlita on 11 September 2020.

60. By cl 2 of the Will, the deceased appointed Erlita as his executor and trustee. Pursuant to the Will, the deceased left to Erlita: the account balances in any pension scheme or superannuation fund or death benefit (cl 3), the Centennial Park Property (cl 4); the money in a specified bank account (ending #5092) (cl 5); and all the shares held by the deceased in public companies (cl 6). The Will directed the trustee to “do all in her power to give effect to [the deceased’s] intention” that the balance of any superannuation fund or pension scheme in which he had an interest (non-estate assets) pass to Erlita (cl 3). Pursuant to cl 7 of the Will, the residue of the estate is to be divided equally amongst the deceased’s six children.

Execution of Binding Death Benefit Nomination

62. It is not in dispute that, at the time of his death on 5 April 2019, the deceased was a member of the W V and G J Benz Superannuation Fund ABN 54 517 852 632. The corporate trustee of the Fund is an entity by the name of W V and G J Benz Pty Ltd. The deceased’s member benefit had a total value of $12,913,476 as at 1 July 2019 (comprised of $11,286,319 as an investment fund mainly comprised of listed shares and $1,627,157 as a pension amount – see the evidence of the accountant who prepared the trust accounts, Mr Kim Batcheldor from T 160.41).

63. The deceased executed a binding death benefit nomination in respect of his superannuation on 12 May 2016 (within 3 years of his death) in favour of Erlita, as his spouse. The corporate trustee (of which he was the sole director at that time), resolved to accept the binding death benefit nomination on 12 May 2016. Erlita was appointed as director of the corporate trustee subsequently, on 19 May 2016.

Deceased’s collapse in 2016

64. In 2016, the deceased collapsed on the golf course and was taken to Prince of Wales Hospital in Randwick suffering from severe pneumonia. While he was in hospital, there was an incident (Erlita calls it an assault; Catherine calls it an altercation – see T 59.35) in which Catherine and Michele went to the hospital to visit the deceased and they say that Erlita refused to allow them time alone with the deceased (it is relevant to note that the evidence was that there was a two person limit in the deceased’s hospital room at the time). Catherine readily accepts that she had attempted to remove Erlita from her chair by the bed but her description of what was done seemed minor (see T 59.27-59.29). (Erita apparently made a complaint to the police about this although nothing seems to have come of that complaint.)

Contact with deceased

65. The contact between the deceased and the plaintiffs over the period from Gwenneth’s death to the deceased’s death varied (in Andrew’s case there was very little contact and he did not even attend the deceased’s funeral). A common theme in the plaintiffs’ evidence was that Erlita was controlling and limiting their access.

Death of the deceased on 5 April 2019

66. As noted above, the deceased died after a fall at the Wahroonga Property. The deceased was on life support for a short time in the hospital before the life support was turned off and he died. Erlita was apparently interviewed by the police about the circumstances of the fall (though I make clear that there is nothing to suggest that this was other than the usual enquiry after a death at home). Erlita was quite emotional in the witness box about the deceased’s death.

John’s respective proceedings

67. As noted above, John was not a party to the above litigation involving the Whitefold Trust; nor was he a party to the Deed of Release. After the deceased’s death, John commenced proceedings on 15 May 2020 by statement of claim in this Court against both Whitefold and Harly, seeking to recover trust distributions that had been declared but not paid to him (the trust proceeding – 2020/145740).

68. There was a dispute as to the proper disclosure of distributions to John during the course of the Whitefold Trust from 1977. It was apparently conceded by the defendants (in that proceeding) that there had been a non-payment of declared distributions, the issue being the quantum of John’s entitlement (i.e., the amount of the indebtedness). The 2018 Whitefold Trust statements prepared by Mr Batcheldor showed indebtedness from the deceased and his estate to the Trust of $2,017,228 and a loan account to William J. Benz (John) of $1,944,991.

69. John also commenced a separate family provision proceeding, claiming provision out of the deceased’s estate ( 2020/00092199).

70. There was also a judicial advice application brought by Erlita, as executor of the deceased’s estate, seeking advice about the relationship between the estate and the Whitefold Trust “and who owed whom what” (see T 392.34) (2020/284384). The costs of those judicial advice proceedings were ordered to be paid out of the estate.

71. John’s respective proceedings were settled (though not before there had been a cross-claim brought by Harly in the trust proceeding against the various plaintiffs in the present proceeding). Mr Batcheldor then prepared the Whitefold Trust’s 2020-2021 Financial Statements, showing the loan account for John for $2,000,000 (which included interest) and the debts due from the estate at $2,206,557 and from Erlita personally at $272,445. The statements record small entitlements due to John’s two children and a sum of $860 due to Anna. However, as adverted to above, the 2021 Whitefold Trust’s accumulated losses amount to $139,299. Thus, after the distribution to John, there are no assets left in the Whitefold Trust.

72. Complaint is made as to the manner in which Erlita responded to the claim by John in relation to the Whitefold Trust. In particular, Anna says that, instead of speedily settling John’s claim, it was defended with vigour (including joining the present plaintiffs as cross-defendants and then Erlita commencing proceedings in her own name including them all as defendants). Anna says that the defendants filed submitting appearances but the cases continued until a few days before hearing when settlement was reached (on undisclosed terms). John’s claim was dismissed with no costs order in his favour, but a deed was executed and a payment made to him sufficient for him to abandon his family provision claim. All claims against the present plaintiffs were also dismissed, with costs, but those costs are to be paid either from the estate or from what remains of the Trust fund (the latter being now said to be nil, albeit that it is noted that Erlita’s updating material made no reference to any of this).

73. It is also relevant to note that the legal fees of the trustee of the Whitefold Trust incurred in relation to the trust litigation amounted to $253,000 (these amounts being included in the trust accounts as a liability) but that the trustee also has a liability to each of Anna, Andrew and Catherine in relation to their costs, which will not be able to be met out of the assets of the Whitefold Trust. The accountant who prepared the trust accounts (Mr Batcheldor) has given evidence that the reduction of the trust balance in the period from 1 July 2020 to 30 June 2021 is due to the payment of the Trustee’s legal and accounting expenses and that the account is now in deficit (see Mr Batcheldor’s evidence from T 170.14).

74. A spreadsheet was produced by Mr Batcheldor (see T 400.49) during the course of the hearing showing that assets and liabilities of the Trust in relation to the deceased’s estate filed on 15 October 2021 as an annexure to the affidavit of Erlita Armstrong sworn 15 October 2021. Complaint is made that this is information that should have been disclosed by Erlita (as executor) at a much earlier time (and indeed that information as to dividends on shares and rent received should also have been included). Erlita blames, variously, her accountant or her lawyers for this.

75. Complaint is also made that Erlita has intermingled trust and estate assets (and that it has been a costly and time consuming exercise for the plaintiffs to seek to ascertain the true position in this regard). Erlita’s evidence (and see Mr Batcheldor’s evidence as well) was that she sold shares of the deceased (forming part of his estate) in order to pay liabilities of the Whitefold Trust, including the settlement amount payable to John (at T 233.35-233.48):

Q.    What I was saying to you is you haven’t just sold your assets, you’ve sold estate assets to pay the liabilities?

A.    Yes, part of this money was sold to pay a lot of liabilities and to John as well, because the, the trust has got no money.

Q.    Yes. And before--

A.    I didn’t quite understand how I’m going to pay this if I don’t sell the shares and, and I, I - I sold mine and I sold William too.

Q.    Yes, that might be so. My questions though relate to the fact that before this affidavit sworn and filed at 3.53pm on Friday, you didn’t tell any of the other parties or the Court any information about this?

A.    Well, I - because as I said, I rely on all the advice from my lawyer and also my accountant who does the analysis of everything

76. The plaintiffs say (with justification in my opinion) that it has been difficult for them to ascertain precisely the position of the estate; and that there has been a lack of disclosure as to dividends earned on the estate shares (some $117,000 taken up in the bank statements in this regard). Indeed, the plaintiffs contend for special costs orders in this regard (see below).

Family provision claims

77. Each of Anna, Catherine and Andrew has brought a claim for provision out of the deceased’s estate or notional estate. At the outset, an issue arises as to whether Catherine’s summons was filed in time (and, if not, whether leave should be granted for an extension of time) and as to whether leave should be granted to Andrew to extend the time for the filing of his summons (which was undoubtedly out of time). I deal with those issues in advance of the substantive issues in the proceedings.

Distributions out of estate assets

78. It is relevant here to note that, after the commencement of the family provision claims by Anna and Catherine; and after the parties had been ordered to mediation but before the mediation was scheduled to occur, there was a transfer to Erlita of $9,282,490 in shares in specie as a death benefit pursuant to the binding death nomination (see affidavit of Mr Batcheldor, sworn 12 October 2021).

79. To avoid confusion it should be noted that there are three sets of shares that have featured in the present application.

80. First, shares worth about $1.1 million (NAB and Westpac shares) that were transferred to Erlita on two different dates in January 2019 (i.e., prior to the deceased’s death), that Erlita claimed were a Christmas gift from the deceased, although Erlita’s evidence was somewhat inconsistent in that regard in that, in cross-examination she suggested that she had made payment for those shares. Ultimately, however, Erlita reverted to these being gifts (at T 228.1-228.11):

Q.    And the second reason is in your affidavit on page 495 you say they were transferred as gifts from him, so as gifts from your husband.

A.    Yes.

Q.    For that reason do you accept that it’s more probable than not that you did not pay anything for these shares?

A.    Yes, because I don’t know, I don’t remember, because my husband do everything himself to transfer it and to, to give it to me, you know. After all I’m his wife so he can just do whatever he wants to do with whatever, but I, I don’t..(not transcribable)..

81. Second, the shares that were transferred in specie pursuant to the death benefit nomination (in the order of $9.2 million).

82. Third, shares (the Scentre shares) (being estate shares) which were sold between 17 June 2020 and 3 September 2021 (without a notice of intended distribution of estate assets by Erlita) (the documents showing the value of shares reducing in that period from $3.4 million to $1.6 million). These are the shares that Erlita says were sold in order to meet the liability of the Whitefold Trust (i.e., not an estate liability) to John (and see Mr Batcheldor’s evidence from T 200.8). The logic behind this seems to be that the estate had a liability to the Whitefold Trust and the Whitehold Trust had a separate liability to John, so Erlita caused estate shares to be sold to meet the liability to John.

The Estate

Actual estate

83. As noted above, during May and June 2020, some $9.2 million worth of shares were transferred to Erlita out of the deceased’s superannuation fund. Andrew values the shares transferred to Erlita from the deceased’s superannuation fund during May and June 2020 at $10,825,634.67 as at 3 September 2021 (see [61] of his affidavit affirmed on 1 October 2021).

84. In her then capacity as administrator of the deceased’s estate, Erlita filed an Affidavit of Administrator sworn 2 July 2020 disclosing the following estate assets: (i) a one-quarter share of the Bondi Junction Property (valued at $108,750); (ii) a one-quarter share in the garage which is a lot in the strata plan of the Bondi Junction Property (valued at $15,500); (iii) the Centennial Park Property (valued at $660,000); (iv) cash in the bank account ending #5092 ($233,886); (v) motor vehicles (valued at $75,750); (vi) a share in Whitefold (valued at $2.00); (vii) a share in Harly (valued at $2.00); (viii) furnishing and fittings and artwork (estimated at $10,060); and (ix) shares in public companies (valued at $3,409,177.83). The total value of the assets of the estate was thus said to be $4,513,127.60.

85. The expenses of the estate (totalling $2,031,533) were at that time said to be: (i) loan owed to Whitefold ($2,017,228); (ii) funeral expenses ($12,600, less paid; the balance being $400); and (iii) cemetery plot ($13,905).

86. The net value of the estate was thus calculated as at 2 July 2020 to be $2,481,594.60 (being assets of $4,513,127.60 less liabilities of $2,031,533). Following the settlement of the litigation initiated by John, the value of the net distributable estate is said to have been reduced to $2,278,463.

87. After the distributions made under the Will in favour of Erlita, the property left in the estate is the Bondi Junction Property, the motor vehicles, and the furnishing and fittings (valued at a total of $201,060).

88. As the residue of the estate ranks behind the specific gifts in the Order of Distribution in Part 2 of the Third Schedule of the Probate and Administration Act 1898 (NSW), Erlita acknowledges that the residual beneficiaries would expect to receive nothing from the estate.

89. In the updated Affidavit of Administrator sworn 11 October 2021, Erlita discloses the estate assets as being: (i) a one-half share in each of the Bondi Junction Property and the garage (together valued at $315,000); (ii) the Centennial Park Property ($849,500); (iii) three motor vehicles ($70,000); (vi) a share in Whitefold (valued at $2.00); (vii) a share in Harly (now valued at $1.00); (viii) furnishing and fittings and artwork (estimated at $10,060); and (ix) shares in public companies (now valued at $1,648,380.85). I explain in due course the change from the share identified as being the deceased’s share of the Bondi Junction Property and garage (in the updated affidavit disclosed at one-half rather than one-quarter).

90. The updated value of the assets of the estate is thus now said to be $2,892,943.85. (I note that the updated inventory of property discloses assets owned solely, as tenant in common and jointly to the value of $6,650,176.45.)

91. The expenses of the estate in the updated affidavit are now said to be: (i) liabilities of the estate ($305,798.16) and (ii) tax on unrealised capital gains ($308,683), totalling $614,481.16.

92. As to the Centennial Park Property (which was registered in the deceased’s sole name at his death) the difference between the parties is that the plaintiffs say that a recent appraisal of $1,275,000 should be preferred; whereas Erlita relies on a valuation of $849,500.

93. As to the Bondi Junction Property (including the lot for the car space), it is noted by the plaintiffs that: one-quarter of this property is actual estate (being registered in the deceased’s sole name); one-quarter is registered in Erlita’s name (but is capable of designation as notional estate having been transferred to Erlita by Whitefold about two weeks prior to the deceased’s death); and one-half is held by Whitefold. The interest held by Whitefold was acquired in its capacity as the trustee of the Whitefold Trust (the discretionary family trust of which the deceased was the ultimate controller in his lifetime) but that interest does not appear to have been transferred to Harly when it was appointed as trustee. (Erlita’s evidence is that there was a pre-signed transfer document – see T 256.13 – but it appears that there was no formal transfer ever registered nor any formal vesting order.) The position would seem to be that Whitefold still holds its interest in trust for the benefit of the Whitefold Trust although it is no longer the trustee of that trust (and Erlita did not appear to contend otherwise). The plaintiffs note that a recent appraisal estimates the value of the Bondi Junction Property (including car space) at $710,000; whereas, Erlita relies on a valuation of $630,000.

94. (Pausing here, I note the plaintiffs complain that there was late disclosure by Erlita as to the rent received from the Centennial Park Property and the Bondi Junction Property. In the spreadsheet annexed to Erlita’s latest affidavit sworn on 15 October 2021, the proceeds of rent are identified as being $52,000 in respect of the Bondi Junction Property (including the carspace) and $40,220 in respect of the Centennial Park Property.)

95. As to the shares owned by the deceased in his sole name at the date of his death, the plaintiffs note that they had a disclosed value of over $3,400,000 as at 17 June 2020 (which it is said would have meant a present value at the time of the hearing of about $4 million) but that in Erlita’s updating affidavit they were disclosed as being valued at about $1.6 million. In cross-examination, the difference was explained by reference to the sale of the Scentre shares to meet Trust liabilities, including the settlement payment to John. (The plaintiffs complain that there was late disclosure of the sale of the shares and any dividends earned on those shares. In the spreadsheet annexed to Erlita’s affidavit sworn on 15 October 2021, those dividends have a value of $117,000.)

96. Thus, on the plaintiffs’ calculations, thus, the actual estate is in the order of: one-quarter of $710,000 for Bondi Junction Property (about $177,000); shares valued at about $1.65 million; the Centennial Park Property at $1.275 million; and rental income of around $50,000 (allowing a one-quarter share of the rent for the Bondi Junction Property), thus (totalling around $3,102,050, although I am not attempting a precise arithmetical calculation here). Less the liabilities as calculated by Erlita (in the order of $615,000) that would leave a total of around $2.487 million. On Erlita’s calculations, it would be slightly less (as the values of the Bondi Junction Property and Centennial Park Property are said to be less).

Notional Estate

97. Erlita’s 2 July 2020 Affidavit of Administrator identifies the following as property that may be notional estate: (i) a one-half interest in the Wahroonga Property (valued at $1,300,000 as at 26 May 2020); (ii) a one-half interest in the Pymble Property (valued at $750,000 as at 26 May 2020); (iii) 23,889 shares in National Australia Bank ($452,935 as at 17 June 2020); and (iv) 17,148 shares in Westpac Banking Corporation ($311,236 as at 17 June 2020).

98. The updated Affidavit of Administrator sworn 11 October 2021 identifies the following property that may be notional estate: (i) a one half interest in the Wahroonga Property valued at $1,281,500 as at 30 September 2021 per the appraisal by National Property (previously valued at $1,300,000 as at 26 May 2020 per the appraisal by Soames Real Estate); (ii) a one-half interest in the Pymble Property valued at $1,140,000 as at 30 September 2021 per the appraisal by National Property (previously valued at $750,000 as at 26 May 2020 per the appraisal by Soames Real Estate); (iii) 23,889 shares in National Australia Bank (now valued at $650,736.36); (iv) 17,148 shares in Westpac Banking Corporation (now valued at $431,615.11).

97. As to the above, the Wahroonga and Pymble Properties passed by survivorship on the death of the deceased (the deceased having transferred to Erlita an interest in those properties as joint tenant with him after Gwenneth’s death and in around September 2000, respectively); the NAB shares were transferred to Erlita on 10 January 2019 and the Westpac shares were transferred to Erlita on 23 January 2019 (see Erlita’s affidavit sworn 2 July 2020 at [8]) (these being the two sets of shares amounting to $1.1 million – NAB shares $605,136; Westpac shares at $431,615). The plaintiffs say that the shares transferred from the deceased to Erlita inter vivos within the period have a present value of about $1,100,000 (and point out that there has been no disclosure of any dividends earned on those shares).

98. The plaintiffs say that the value of the Wahroonga Property is $5,125,000 (half being $2,562,500); and that the value of the Pymble Property is $2,325,000 (half being $1,162,500). Erlita, on the other hand, puts the value of the Wahroonga Property at $2,325,000 and the value of the Pymble Property at $2,238,000 (there being little difference between the valuations for the Pymble Property), with half interests in each being readily calculable.

99. While the plaintiffs say that the Whitefold Trust falls within the description of “a paradigm case for the intended application of the notional estate provisions” (noting that Erlita appears to accept that the assets of the Whitefold Trust are able to be designated as notional estate), given that there is now likely to be a deficit in the Whitefold Trust, this takes the plaintiffs nowhere. The 2020 Financial Report disclosed assets of over $1,800,000 and liabilities of about $1,500,000 but Mr Batcheldor has confirmed the current position in relation to the Whitefold Trust. On 15 October 2021, an affidavit sworn by Erlita as administrator on that date was filed to which amended financial statements of 2020 were annexed; and the plaintiffs appear to accept that, given the estate liabilities, the costs incurred in these proceedings and those involving John and the Whitefold Trust, the residue of the estate will be wholly exhausted. (The spreadsheet setting out the assets and liabilities of the deceased’s estate includes Note 6 as to a transfer to Erlita of a loan owing by the estate, which is said to have been an adjustment to wind up the trust and extinguish the debt the estate owed to the trust and the debt owed by the trust to John – see in this regard Erlita’s submissions at T 413.42-413.47.)

100. Erlita, in her updated Administrator’s affidavit of 11 October 2021, deposes to her opinion that the proceeds of the deceased’s superannuation fund do not form part of the deceased’s notional estate. (The plaintiffs dispute this – as I explain in due course.) The deceased’s superannuation death benefit of over $12,900,000 passed to Erlita by way of Binding Death Nomination and distribution.

101. On the plaintiffs’ calculations (and including the death benefit as potential notional estate) that would mean that the amount capable of designation as notional estate would be in the order of $17.9 million (or $18.3 million if three-quarters of the Bondi Junction Property were to be included as notional estate opposed to the one-quarter that was transferred to Erlita two weeks before the deceased’s death), comprised of: half of the Wahroonga Property at $2.562 million; half of the Pymble Property at $1.162 million; (at least) one-quarter of Bondi Junction Property valued at $177,000 (or alternatively three-quarters valued at $531,000); the “Christmas gift” shares valued at $1.1 million; and the death benefit superannuation funds valued at $12.9 million (with a distribution in specie having been made to Erlita of shares worth about $9.2 million).

Extension of time applications

104. As adverted to above, initially four of the deceased’s six children filed a summons seeking family provision but John’s summons filed on 24 March 2020 has been dismissed by consent.

105. Anna’s summons was filed on 3 April 2020 within time.

106. Catherine’s summons is recorded on JusticeLink as having been filed on 8 April 2020 (some three days late). An amended summons was filed on 3 June 2020 naming Erlita as the defendant. (It is not suggested that the amendment of the summons causes any prejudice. However, it was noted by Erlita that there is no prayer in the amended summons seeking to extend time for the commencement of the proceedings late nor was there any explanation for the delay in Catherine’s affidavits.)

107. During the course of the hearing of the proceedings, Catherine adduced evidence that her summons was physically lodged (by being deposited in a filing box) with the Registry on 26 March 2020 (during the outbreak of the COVID-19 pandemic when the Registry was not open for business in the ordinary course). However, it was not stamped by the Registry as filed until 8 April 2020.

108. In Fitness First Australia Pty Ltd v Dubow [2011] NSWSC 531 at [81]-[84], albeit in a different context, I considered that a distinction may be drawn between the time at which a document is lodged and the time at which it is “filed”, and I was of the view that the latter “must mean accepted (in some fashion) by the Registry staff for filing”. Catherine accepted that if this were to be the case then leave would be necessary for her application and (out of an abundance of caution) sought leave to file an amended summons seeking an additional prayer extending the time for making an application (see T 92; 367). During the course of the hearing, I gave Catherine leave to file the amended summons (T 92.43).

109. Erlita’s position in relation to Catherine’s application for an extension of time summons was that she neither opposed nor consented to the application for an extension.

110. Andrew’s summons was filed on 11 August 2020 (being about four months out of the time prescribed by s 58 of the Succession Act 2006 (NSW) (Succession Act)). There is a prayer in the summons seeking to extend the time for the late commencement of the proceeding. The position of Erlita was that the explanation for the delay in Andrew’s affidavit (see below) is unsatisfactory. Moreover, it was contended for Erlita that there was prejudice in the late commencement of Andrew’s proceeding because by then a mediation of the dispute had already occurred. I deal with this complaint below.

111. Andrew submits that sufficient cause can be demonstrated for the extension of time sought, noting that an assessment of sufficient cause involves consideration of: the strength of the claimant’s ultimate case; the explanation as to why the application was not made within time; whether there would be prejudice suffered by granting the extension, including on behalf of beneficiaries whose interests might be affected; and whether there is any conduct of the claimant or the beneficiaries relevant to the determination.

112. Andrew submits that his case for provision is a strong one, emphasising the size of the deceased’s estate and notional estate (which, as already noted, Andrew assesses as having a combined value exceeding $20,000,000) and that Andrew is named as a residuary beneficiary in the Will (which Andrew says demonstrates a recognition on the part of the deceased that provision ought be made for Andrew) but that, in the events that have happened, there is likely to be no residue available for distribution. It is submitted (as is abundantly clear) that Erlita has received, or will receive, the vast benefit of the deceased’s estate and notional estate (in addition to generous inter vivos provision from the deceased), and thus has no competing claim from a financial perspective; and that generous provision to the adult children of the deceased, including Andrew, can comfortably be accommodated without that having any practical impact on Erlita’s needs and resources.

113. As to the reason for the delay, Andrew deposes to an inability to obtain advice at an early stage in circumstances where information about the nature and value of the deceased’s estate was not available or forthcoming; and says that, after being served with formal notice of proceedings commenced by his siblings and being told by them (rather than by Erlita) that the estate was substantial, Andrew promptly obtained advice and filed his claim. In cross-examination, Andrew made reference to two other reasons: the risk of costs associated with the litigation and a fear for his physical safety (for reasons to which he had deposed but which were not read).

114. Andrew submits that there is no prejudice that will be occasioned by the extension of time, noting that the estate was the subject of four sets of extant proceedings when Andrew’s summons was filed and at that time probate had not yet been granted. Andrew says that Erlita is effectively the only person who will be affected by the proceeding and submits that the estate and notional estate is such that all of the claims (including Andrew’s claim) can be met without depriving her of the ability to maintain a more than comfortable existence for the rest of her life.

115. Further, Andrew submits that the absence of full and frank disclosure by Erlita as to the nature and value of the estate and notional estate is conduct relevant to the reasons for delay.

116. Erlita, as adverted to above, submits that Andrew’s explanation is not reasonable. It is noted that Andrew’s evidence is that he received advice (of some description) even before the deceased’s death, as to the potential need to make a family provision application and that (as Andrew accepted) he made a conscious decision not to commence proceedings within the requisite time.

117. Andrew’s proceeding was commenced after a mediation had been held (on 16 July 2020) between the other plaintiffs and Erlita. It is said for Erlita that she would now be prejudiced (whatever was said or done at that mediation – and for obvious reasons I have no information as to this) if leave were now to be granted in terms of being deprived of the ability to resolve all claims at mediation.

Determination as to extension of time

118. In Moore v Randall [2012] NSWSC 184, White J (as his Honour then was) noted (at [39]) that the expression “sufficient cause” means “sufficient explanation or sufficient justification or excuse for the application not having been made within the prescribed period”. See also John v John [2010] NSWSC 937 where I noted (at [37]-[38]) that the existence of a sufficient explanation was critical and referred to the observation by Hodgson J (as His Honour then was) in Lewis v Lewis [2001] NSWSC 321 that “sufficient” means “sufficient in all the circumstances to justify the granting of the extension of time”.

119. The principles in relation to an application for leave for an extension of time were set out by Hallen J (at [84]-[90]) in Thomas v Pickering; Byrne v Pickering [2011] NSWSC 572 and cited by his Honour again in Semitecolos v Semitecolos [2021] NSWSC 1508 (at [81]). Relevantly, his Honour noted that the prejudice to which the section looks is “any prejudice occasioned by the delay in lodging the claim rather than any disappointment that might occur consequent upon readjustment of the interests under the will in order to make provision for the applicant” (his Honour citing Cetojevic v Cetojevic [2006] NSWSC 431 per Campbell J, as his Honour then was; McCann v Ward [2010] VSC 452 at [11] per Dixon J; and noted that where there has been a long period since the death of the deceased that lapse of time might itself create prejudice in any fact-finding exercise, his Honour there citing Vasconelos v Bonetig [2011] NSWSC 1029 at [21] per White J, as his Honour then was).

120. In the present case, it is not suggested that there was a lengthy delay in the filing of the summonses from the date of death (both Catherine’s and Andrew’s summonses being filed within about three months of the period in which the statute provides for such claims to be brought and hence within 15 months of the death of the deceased).

121. In Catherine’s case, the delay in the filing of the summons was minimal. Moreover, the explanation for the delay which was ultimately proffered (namely, that it was occasioned by the difficulties in attending to the filing documents in the Registry during the course of the pandemic) was in my view a reasonable explanation and I cannot see that any prejudice whatsoever will be suffered by the grant of an extension (nor was any suggested).

122. As to the position in relation to Andrew, a three month delay is of course longer, although not excessively so. More problematic to my mind is the fact that it appears from Andrew’s affidavit that he had been advised as to the ability to make a claim for provision and he made a conscious forensic decision not to do so within the relevant time. Nevertheless, I do not accept that Erlita suffers any material prejudice from the delay. True it is that this meant that the regime for mediation of family provision claims did not operate as contemplated under the Practice Note (as there was not a mediation in which Andrew participated before the matter was listed for hearing – nor indeed by the time of the hearing itself, although as I understand it there was an unsuccessful attempt for a further court-ordered mediation). However, at most, that might have occasioned the incurring of costs of a further mediation (which as at the time of the hearing had not been arranged or agreed). Moreover, it cannot sensibly be suggested (nor was it suggested) that, had a mediation with all parties taken place prior to the hearing, it was likely that all the claims would then have been settled (obviating the need for costs of the hearing), since the parties have still not been able to reach an agreement despite a mediation in the period that the judgment was reserved and if that is indeed said to be the case it could be raised at the time of any submissions on costs. Nor could it be said that Erlita was prejudiced (as might otherwise have been the case) by having agreed to a settlement on the mistaken assumption that there would be no claim by Andrew, since no settlement at all was reached at the hearing in July 2020.

123. I by no means understate the importance for the just, quick and cheap resolution of disputes of participation in a timely way in the mediation process required under the Practice Note. However, I am not persuaded that in the present case the fact that there was not an opportunity to participate in a mediation with Andrew before the hearing amounts to prejudice in the requisite sense.

124. On the basis that I consider the delay not sufficiently prejudicial in either of the two cases, I consider that leave should be given for the extension of time that is now sought by both Catherine and Andrew; and will make orders to that effect.

Issues

125. The issues that arise in respect of each of the three plaintiffs (each of whom it is accepted is an eligible person) are: whether, considering the position as at the time of the hearing, the provision for the plaintiff was inadequate for his or her proper maintenance and advancement in life; if so, what orders should be made for his or her proper maintenance and advancement in life; and to what extent should property held jointly by, and superannuation of, the deceased be designated as notional estate of the deceased. The determination of these issues involves a multi-faceted evaluative judgment on the basis of the facts before the Court and having regard to all relevant factors including those set out in s 60(2) of the Succession Act.

126. The plaintiffs refer in this regard to what was said by Lindsay J in Re Estate Luce; Turch v Tripolone [2020] NSWSC 117 at [23]:

In approaching the question for which section 59(2) of the [Act] provides, the Court must endeavour to place itself in the position of the deceased, and to consider what [the deceased] ought to have done in all the circumstances of the case, in light of facts now known, treating [the deceased] as wise and just rather than fond and foolish, making due allowance for current social conditions and standards and, generally, consulting the criteria set out in section 60 of the Act so far as they may be material.

127. The well-endorsed observations of White JA (with whom each of McColl JA and Payne JA agreed) in Sgro v Thompson [2017] NSWCA 326 must also be borne in mind. In that case, his Honour acknowledged (at [86]) the “superior position of the testator” and went on to say that while “the court’s assessment of what is proper maintenance, education and advancement in life must be made when the court is considering the application”, considerable weight should be “given to the assessment of a capable testator or testatrix who has given due consideration to the claims on his or her estate”. That said, in Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 at [974] Brereton J, as his Honour then was, noted that the statutory family provision jurisdiction is not to be exercised on the footing that it must be approached with caution because of its intrusion on testamentary freedom.

Relevant Provisions

128. Section 59 of the Succession Act provides that:

59.   When family provision order may be made:

(1)   The Court may, on application of Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:

(a)    the person in whose favour the order is to be made is an eligible person, and

(b)    in the case of a person who is an eligible person by reason only of paragraph (d), (e) or (f) of the definition of “eligible person” in section 57--having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application, and

(c)    at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both.

(2)    The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.

129. Section 60 sets out a list of non-exhaustive factors that the Court may take into account (which I address in due course).

130. As to notional estate, s 63(5) of the Succession Act provides that:

A family provision order may be made in relation to property that is not part of the estate of a deceased person, or that has been distributed, if it is designated as notional estate of the deceased person by an order under Part 3.3.

131. The “notional estate” of a deceased person is defined in s 3 of the Succession Act to mean property designated by a notional estate order as notional estate of the deceased person. The term “notional estate order” means an order made by the Court under Chapter 3 designating property specified in the order as notional estate of a deceased person.

132. Section 76 provides that:

76   Examples of relevant property transactions

(1) The circumstances set out in subsection (2), subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of section 75.

(2)    The circumstances are as follows-

…

(e)    if a person who is a member of, or a participant in, a body (corporate or unincorporate), association, scheme, fund or plan, dies and property (immediately or at some later time) becomes held by another person (whether or not as trustee) or subject to a trust because of the person’s membership or participation and the person’s death or the occurrence of any other event,

…

(4)    For the purposes of this Chapter, in the circumstances described in subsection (2) (b), a person is not given full or any valuable consideration for not severing an interest in property held as a joint tenant merely because, by not severing that interest, the person retains, until his or her death, the benefit of the right of survivorship in respect of that property.

271. Anna submits that if she is to retain any fund for contingencies, and not be pressed beyond her ability to borrow and service a loan, her need is only met in a range above $1.6 million. It is said that there is sufficient in the estate to cover this minimum, albeit that if there is also to be provision for the other plaintiffs then designation of some property of Erlita as notional estate will be required.

Catherine’s submissions

276. It is submitted by Catherine that the provision for her under the Will is inadequate, having regard to the size of the deceased’s estate and notional estate and Catherine’s limited employment opportunities and relatively low income, which do not enable her to generate significant savings (Catherine referring to the principles set out in Singer v Berghouse and Vigolo v Bostin and Cropley v Cropley [2002] NSWSC 349 per Barrett J, as his Honour then was to the effect intervention by the Court should only be to the minimum extent necessary to make adequate provision for the proper maintenance, education and advancement in life of an applicant).

277. Catherine submits that she had a reasonable relationship with the deceased until sued by Harly; and that, with the inclusion of the NAB and Westpac shares as notional estate, the estate is sufficient to meet provision for each of the three plaintiffs (and, if not sufficient to make provision for each plaintiff, then some of the superannuation fund can be designated as notional estate).

278. As to the proper provision for Catherine, it is submitted that the relevant factors are those set out in s 60(2)(a), (b), (c), (d), (g), (i) and (j) (as to which, see the submissions as set out above). Catherine refers to the authorities relating to the principles to be considered in the case of applications by adult children (North v Daniel at [162]; Limberger v Limberger at 473-474; 475-487 per Hallen J; and Page v Hull-Moody [2020] NSWSC 411 at [176]-[185] per Hallen J) and emphasises that the Court can be more “generous” to an applicant when the estate and notional estate is very large (citing Limberger v Limberger at 478-483 per Hallen J). Catherine submits that the provision she seeks will not deprive Erlita of the ability to maintain a more than comfortable lifestyle for the remainder of her life and there is no serious prejudice to the rights of Erlita (McCann v Ward & Burgess [2012] VSC 63 at [32] per Hargrave J).

Andrew’s submissions

279. Andrew submits that generous provision should be made for him to take a broad view of his needs, and to account for his aspirations and advancement in life. Andrew invokes the statement of Gummow and Hayne JJ in Vigolo v Bostin (at [51]) to the effect that, in large estates, provision can be made even for the “well-to-do”. It is noted that Andrew and his wife have a sizeable mortgage and a desire to renovate their family home to accommodate their family.

Erlita’s submissions

280. Erlita accepts that, in the circumstances, absent an order for provision the deceased’s children can expect to receive nothing from the distribution of the estate. However, Erlita contends that the plaintiffs received a good education and are well established in life (and says that, in the cases of Anna and Catherine, they have good careers).

281. In summary, Erlita submits that Anna should receive a sum to assist her in purchasing a home (noting that Anna already has a significant deposit); that Catherine should receive a modest sum to assist her in discharging her debts and with her expenses for further education; and that any provision for Andrew would be modest. Indeed, it is submitted by Erlita that it would be open to find that Catherine and Andrew do not satisfy the jurisdictional test of being left with inadequate provision.

Determination

282. Each of the plaintiffs is an eligible person and a natural object of the deceased’s testamentary bounty. Having considered the so-called s 60 factors, and the submissions referred to above, I have concluded that inadequate provision has been made for each of the three plaintiffs in circumstances where each will receive nothing out of the deceased’s estate given the lack of assets in the Whitefold Trust fund. The estate of the deceased is a large one; there are no competing claimants in respect of the estate of the deceased; and there was an expectation within the family (both at the time Gwenneth sought to sever the joint tenancy and as reinforced by the Will) that all children would share in the deceased’s estate.

283. Relevantly, the evidence establishes a history within the family of assistance by the deceased (through the Whitefold Trust) in setting his children up in life with appropriate property holdings. There can be no doubt that, as events have transpired, the deceased’s testamentary intention that his children receive an inheritance from him was not able to be discharged. In terms of the deceased’s moral obligations to his children, it seems extraordinary to think that (absent some far more serious fracture in the relationship with his children) the deceased would have intended his children to obtain nothing at all from his very large estate, in particular when Erlita has already obtained substantial wealth both through the relationship and under the Will and where the deceased’s step-daughter, Maree, resides rent free in an apparently not insubstantial property (the Pymble Property) which passed to Erlita by way of survivorship.

284. For these reasons, and in light of the matters set out above, I consider that in all circumstances that there was not adequate or proper provision made for any of the three plaintiffs.

285. As to what, if any, provision should now be made, I find as follows.

286. First, as to Anna, I consider that the proper provision should be a sizeable capital sum to enable her to acquire a suitable two bedroom apartment in the Coogee area close to her son’s school. I accept that Anna already has a sizeable deposit but I also acknowledge the need to take into account the uncertainty as to future income and the need for sufficient superannuation or a capital sum as a buffer for the contingencies or vicissitudes of life, particularly as she has sole financial responsibility for son. I also note that the deceased had contemplated acquiring a home for Anna prior to Gwenneth’s death; and that the events that followed Gwenneth’s death (namely, the transfer of an interest as joint tenant in the property to Erlita) meant that Anna (and her siblings) obtained no interest in the Wahroonga Property under the deceased’s Will (as it did not fall into residue).

287. If a capital sum enables Anna either to acquire a unit outright or to do so with a small mortgage, then her existing savings will be adequate to permit her to meet debts or contingencies and no further amount would be necessary (also noting that Anna has an increased amount in her superannuation fund). On the basis that a two bedroom apartment is likely to cost around $2 million, and having regard to the increased savings that Anna has, I have concluded that provision should be made for Anna in the sum of $1.9 million (which should enable her to acquire a $2 million unit but leaving approximately $500,000 for contingencies).

288. Second, as to Catherine, I accept that she has had the benefit of provision during the deceased’s lifetime (including in particular the fact that Catherine was able to acquire her own property for the small amount able to be met through the first home owners’ grant). I consider that it is not unreasonable for Catherine to wish to undertake renovations to the property in which she has lived for several years; and that there is a logical reason for the proposed renovations. I do not accept the criticism that the proposed renovations amount to an overcapitalisation of the Darlinghurst Property (but even if there is force to that submission, ultimately it is at her own risk). However, I consider that adequate provision would simply be to provide a capital sum out of which Catherine can prioritise her renovation needs (without necessarily meeting the entirety of the cost of the renovations) and her wish for augmentation of her superannuation. To the extent that the renovations can be carried out by use of sum provided by way of provision, then Catherine’s existing resources would comfortably enable her to meet her other needs with a small sum as buffer for contingencies. Balancing those factors, I am of the view that Catherine should receive provision of $900,000 (which I have assessed as being around $750,000 for renovation costs and a contribution of $150,000 towards her superannuation; but which ultimately is a matter for Catherine to prioritise).

289. Andrew’s needs are more difficult to assess because he and his wife have a reasonable income and joint assets of a reasonable amount; and the position in which Andrew is placed financially is in essence a product of life choices made by Andrew and his wife. Moreover, while I accept that the estrangement between Andrew and the deceased was explicable by reference to the family tensions to which Andrew has referred, the fact remains that he was not close to the deceased by the end of the deceased’s life (as evidenced by the fact that he chose not to attend deceased’s funeral). (I place less weight on the fact that Andrew was apparently not invited to deceased’s wedding to Erlita since that seems to me to be explicable by disapproval on his part of relationship and also the possibility that it was Erlita herself who had played a part in preparing the guest list.)

290. While I accept that the authorities make clear that there is more scope to be generous or less “needs” focused in a large estate, I also bear in mind that the power to interfere with the testamentary dispositions is not unfettered – and that the task is to determine what is proper and adequate provision having regard to all the facts, in circumstances where the deceased (in this case as a result of the issues to which I have already referred) failed to do so (see in this regard Lemon v Mead (2017) 53 WAR 76; [2017] WASCA 215 at [220]-[232] per Buss P; and at [266]-[269] per Mitchell and Beech JJA).

291. Ultimately, I have concluded that the appropriate order for provision for Andrew is $900,000. This will provide him with a capital sum out of which he can discharge the existing mortgage and have a contribution towards the contemplated house renovations or to put this sum to some other use or retain it as a capital sum as provision for retirement.

292. As to the complaints made of the failure by Erlita to make full disclosure of the assets, and her dealings with the assets, in the estate and notional estate (and leaving aside for the moment the issue of the superannuation benefits), I consider that there is some force to those complaints. Erlita does not appear to have been forthcoming in her affidavits first as administrator and then as executor in relation to matters such as the manner in which settlement was effected with John; nor as to matters such as rental or dividend income in relation to estate assets. Indeed, Erlita acknowledges that her affidavit sworn 11 October 2021 was not comprehensive with respect to identifying the assets of the estate, because soon afterwards Erlita put on a second affidavit sworn 15 October 2021 (T 415-416). Erlita submits in this regard that there is a default but not a significant default (T 417.8). It seems to me that the significance or otherwise is debateable, having regard to what I say below as to the consequence of the failure. However, at least as to the position of the superannuation benefits, I accept that Erlita was acting with the benefit of legal advice at the relevant time and I do not criticise her for failing to identify the superannuation fund benefits as potential notional estate on that basis.

293. Nevertheless, the failure properly to identify the estate assets has obviously led to further costs being incurred by the plaintiffs and I consider that the plaintiffs should not bear the brunt of Erlita’s failure. I will accommodate that in the costs orders to be made.

294. That means that the total provision that I consider should be made out of the deceased’s estate amounts to $3.7 million (leaving aside the contemplated orders for costs). It is accepted by the parties that this will exceed the distributable amount of the actual estate (which is now very low having regard to the payment out of the estate shares for discharge of the Trust’s debt to John and the liabilities of the estate for legal and other fees). It is also clear that there will be insufficient in the overall actual estate for such provision to be made. On my rough calculations (see [96] above), the actual estate on the plaintiffs’ calculations is around $2.487 million (and it is less on Erlita’s calculations).

295. I should add that the premature distribution of estate assets (i.e., the shares sold to meet the liability of the Whitefold Trust to John) is of relevance in this context in that in those circumstances one available course would be that referred to by Hallen J in Soens v Rathborne [2018] NSWSC 302 at [47], in which his Honour referred to what was said by Young CJ in Ernst v Mowbray [2004] NSWSC 1140 at [65]:

However, I wish to make it quite clear that in my view that where there has been a premature distribution of the estate the Court is not obliged to consider questions of notional estate, but would make an order that the executors personally restore the money which they have taken into the estate with interest and then make an order out of the augmented actual estate.

296. There might therefore be an argument that Erlita should be ordered to repay the amount of the Scentre shares sold by her, in which case there would appear to be enough from the actual estate (the Centennial Park Property, a quarter of the Bondi Junction property and the rents and dividends of these properties) to make up the $3.7 million required for the legacies (although query whether that would be sufficient to meet any costs orders). No such suggestion was raised at the hearing (and were I to take that course then it would obviously be necessary for the parties to be heard on that issue). However, I raise it because it gives rise to the potential application of s 88(c) of the Succession Act, namely, that a notional estate order is not precluded if the Court is satisfied that provision should not be made wholly out of the deceased’s estate because there are special circumstances.

297. The concept of “special circumstances” in s 88(c) was considered by Lindsay J in Re Estate Grant, deceased [2018] NSWSC 1031 and by White J, as his Honour then was, in Wardy v Salier.

298. In the former, Lindsay J said at [211] that the parties’ agreement that a designation order could be made (there, in relation to the deceased’s superannuation entitlements) “goes some way to establishing “special circumstances”; but, by itself, it is not enough”. His Honour found that there were special circumstances based not only on that agreement but also on the desirability of not charging a particular property (for the reasons there set out); recognition that management of the corporate trustee of the superannuation fund by the administrators of the deceased’s estate was deadlocked so as to preclude any orderly decision being made about payment of those entitlements; and the fact that designation of those entitlements might serve an incidental purpose of facilitation the deceased’s estate by breaking the administrators’ deadlock.

299. In the latter, his Honour found that there were special circumstances being (see at [222]) “[i]n particular, the complexity of the estate, the uncertainty as to the value of the gifts under the will, and the fact that the deceased had built up assets in the … family trust that could have been used to discharge the debts of the estate, in particular his debts for income tax”.

300. In the present case, assuming that the deceased’s actual estate could be augmented by reason of an order for restoration of the proceeds of sale of the Scentre shares, it seems to me that there are special circumstances that would satisfy the requirement of s 88(c) of the Succession Act, namely that: while there is not an agreement that the superannuation fund benefits are available to be designated as notional estate, there is no dispute as to the other assets forming part of the potential notional estate (and the main beneficiary, Erlita, has indicated her preference that any order for notional estate be made in respect of the shares not the properties); there is some complexity to the estate (including the different interests in the Bondi Junction Property); there has been uncertainty as to the precise assets of the estate; there is uncertainty as to the quantification of the costs orders that may be borne by the estate; and there is the added complexity as to how the settlement of the trust litigation with John might be affected by an order for repayment by Erlita of the moneys that were used to pay his entitlement as against the Whitefold Trust.

301. In those circumstances, I am satisfied that even if s 88(b) of the Succession Act would not apply (because an order could be made which would augment the actual estate such that there would be sufficient funds and assets in the estate for the provision I consider ought to be made out of actual estate), then s 88(c) would apply on the basis that I am satisfied that the provision ordered should not be borne wholly out of the actual estate by reason of the special circumstances referred to above.

302. Therefore, I consider that it is appropriate to designate as notional estate sufficient property as will enable the orders for provision to be made (after recourse is made to the remaining estate shares and the Centennial Park Property, which I consider should bear the burden of the orders for provision in the first instance). In this regard, Erlita’s stated preference (if an order for notional estate were to be made) was for the designation of the “shares” (by which I understand her to be referring to the so-called Christmas gift shares (the NAB and Westpac shares worth about $1.1 million at the time of the hearing)). (I say this because Erlita did not appear to accept that the shares transferred in specie out of the superannuation fund were available to be designated as notional estate but it may well be that Erlita’s preference for any designated notional estate to be drawn out of the overall pool of shares rather than there being recourse to property.) After this, Erlita identified, in order of priority: the Centennial Park Property (which is in fact actual estate not notional estate), the Pymble Property and the Wahroonga Property (Erlita’s wish being to retain both the Pymble and Wahroonga Properties – see T 430.11; 431.33-431.35).

303. I have taken into account Erlita’s wishes in this regard but simply note that, were I to be wrong in relation to the superannuation fund benefits being available to be designated as notional estate, then I would have designated so much of the one-half interests in each of the Pymble and Wahroonga Properties as was necessary to meet the provision to be ordered (and costs) as notional estate. (I have simply assumed that it will not be necessary to go beyond the property I have indicated should be designated as notional estate but if that be wrong then I would resort to the slip rule to amend the list so as to include the Pymble and Wahroonga Properties on this hypothesis.)

304. As noted above, I have concluded that the superannuation funds are capable of designation as notional estate on the basis that the time the relevant property transaction (i.e., the failure to revoke the binding death nomination and make another in favour of one or more of the plaintiffs or the estate) is the date of death (and hence it is not necessary that the failure to revoke be an omission with the requisite intention specified in s 80(2)(a) of the Succession Act). Just as failure to sever a joint tenancy takes effect at the date of death so it seems to me does the failure to revoke a binding death nomination. I consider that there is a distinction between this situation and the situation considered by Slattery J in Carr v Douglass of a failure to renew a nomination; but if that would be wrong then I would, with respect, not follow Carr v Douglass in this respect, in preference to the reasoning in the decisions to which I have referred above.

296. As indicated, I will make orders in relation to costs in relation to Erlita’s failure to comply with her obligation to disclose fully the estate’s assets. Otherwise, I will make directions for the filing of any further written submissions as to costs that the parties may wish to make. In circumstances where Erlita is effectively the sole beneficiary it seems unnecessary to make orders as to her costs out of the estate but if that be wrong then no doubt Erlita will make submissions to that effect.

Orders

306. For the above reasons I propose to make the following orders but I will defer making the orders for 7 days to permit any submissions as to the precise form of the orders (and in case there be any further submission as to the order in which the notional estate should be designated):

In Anna’s proceeding

1. In lieu of the gift in the plaintiff’s favour under the deceased’s Will of a one-sixth equal share of the deceased’s residuary estate, order pursuant to s 59 of the Succession Act 2006 (NSW) that there be further provision out of the estate of the late Dr William Benz in favour of the plaintiff, in the form of a legacy in the amount of $1.9 million.

2. Order that the plaintiff’s costs be met out of the deceased’s estate: as to the identification of the assets of the deceased’s estate and notional estate, on an indemnity basis and, as to the balance on the ordinary basis.

3. Order that the burden of the legacy provided for in order (1) be charged as against one-third of the shares retained by the estate and the Centennial Park Property (as defined in these reasons).

4. Designate so much of the following assets (in the following order) as notional estate as is necessary for the purpose of enabling the executor of the deceased’s estate to meet the order for provision and the order for costs in favour of the plaintiff:

1. the NAB shares transferred to the defendant on 10 January 2019;

2. the Westpac shares transferred to the defendant on 23 January 2019;

3. the $9.2 million worth of shares transferred in specie to the defendant from the deceased’s superannuation fund; and

4. the Pymble Property, as defined in these reasons.

5. No interest is to be paid on the legacy if it is paid within 2 months of the making of orders; otherwise, interest calculated at the rate prescribed by s 84A(3) of the Probate and Administration Act 1898 (NSW), on unpaid legacies, is to be paid from that date until the date of payment in full.

6. Direct that any further brief written submissions as to costs be filed within 14 days, with a view to dealing with the matter on the papers if possible.

In Catherine’s proceeding

1. Extend time for the making of the plaintiff’s application for provision under s 59 of the Succession Act 2006 (NSW) to 8 April 2020.

2. In lieu of the gift in the plaintiff’s favour under the deceased’s Will of a one-sixth equal share of the deceased’s residuary estate, order pursuant to s 59 of the Succession Act 2006 (NSW) that there be further provision out of the estate of the late Dr William Benz in favour of the plaintiff, in the form of a legacy in the amount of $900,000.

3. Order that the plaintiff’s costs be met out of the deceased’s estate: as to the identification of the assets of the deceased’s estate and notional estate, on an indemnity basis and, as to the balance on the ordinary basis.

4. Order that the burden of the legacy provided for in order (2) be charged as against one-third of the shares retained by the estate and the Centennial Park Property (as defined in these reasons).

5. Designate so much of the following assets (in the following order) as notional estate as is necessary for the purpose of enabling the executor of the deceased’s estate to meet the order for provision and the order for costs in favour of the plaintiff:

1. the NAB shares transferred to the defendant on 10 January 2019;

2. the Westpac shares transferred to the defendant on 23 January 2019;

3. the $9.2 million worth of shares transferred in specie to the defendant from the deceased’s superannuation fund; and

4. the Pymble Property, as defined in these reasons.

6. No interest is to be paid on the legacy if it is paid within 2 months of the making of orders; otherwise, interest calculated at the rate prescribed by s 84A(3) of the Probate and Administration Act 1898 (NSW), on unpaid legacies, is to be paid from that date until the date of payment in full.

7. Otherwise direct that any further brief written submissions as to costs be filed within 14 days, with a view to dealing with the matter on the papers if possible.

In Andrew’s proceeding

1. Extend time for the making of the plaintiff’s application for provision under s 59 of the Succession Act 2006 (NSW) to 11 August 2020.

2. In lieu of the gift in the plaintiff’s favour under the deceased’s Will of a one-sixth equal share of the deceased’s residuary estate, order pursuant to s 59 of the Succession Act 2006 (NSW) that there be further provision out of the estate of the late Dr William Benz in favour of the plaintiff, in the form of a legacy in the amount of $900,000.

3. Order that the plaintiff’s costs be met out of the deceased’s estate: as to the identification of the assets of the deceased’s estate and notional estate, on an indemnity basis and, as to the balance on the ordinary basis.

4. Order that the burden of the legacy provided for in order (1) be charged as against one-third of the shares retained by the estate and the Centennial Park Property (as defined in these reasons).

5. Designate so much of the following assets (in the following order) as notional estate as is necessary for the purpose of enabling the executor of the deceased’s estate to meet the order for provision and the order for costs in favour of the plaintiff:

1. the NAB shares transferred to the defendant on 10 January 2019;

2. the Westpac shares transferred to the defendant on 23 January 2019;

3. the $9.2 million worth of shares transferred in specie to the defendant from the deceased’s superannuation fund; and

4. the Pymble Property, as defined in these reasons.

6. No interest is to be paid on the legacy if it is paid within 2 months of the making of orders; otherwise, interest calculated at the rate prescribed by s 84A(3) of the Probate and Administration Act 1898 (NSW), on unpaid legacies, is to be paid from that date until the date of payment in full.

7. Otherwise direct that any further brief written submissions as to costs be filed within 14 days, with a view to dealing with the matter on the papers if possible.

307. As noted above, at this stage the only order I will make in each proceeding is:

1. Direct the parties to file any brief submissions as to the form and content of the proposed orders so as to reflect these reasons within seven days.

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Decision last updated: 05 May 2022