Ebert v Ebert

[2008] NSWSC 1206

CITATION:	Ebert v Ebert; Ebert v Ebert [2008] NSWSC 1206
HEARING DATE(S):	23 and 24 October 2008
JUDGMENT DATE :	14 November 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Ward J at 1
DECISION:	In 4273/07 - Order made for provision in favour of the cross-claimant. In 4560/08 - Summons dismissed. No order as to costs.
CATCHWORDS:	SUCCESSION - family provision and maintenance - failure of testator to make sufficient provision for applicant - whether child left with insufficient provision - provision found to be insufficient - whether estate included debt in respect of moneys advanced to or for benefit of adult child - whether there had a been prescribed transaction - whether an order designating property as notional estate should be made - relief granted. SUCCESSION - family provision and maintenance - practice - application for leave to extend time for making a claim against second cross-defendant - whether sufficient cause
LEGISLATION CITED:	Civil Procedure Act 2005 Family Provision Act 1982 Uniform Civil Procedure Rules
CATEGORY:	Principal judgment
CASES CITED:	De Winter v Johnstone (Court of Appeal, 23 August 1995, unreported) Delaney v Jones, [2008] NSWSC 229 Fernance v Nominal Defendant (1989) 17 NSWLR 710 Fiorentini v O’Neill (Court of Appeal, 4 December 1998, unreported Gorton v Parks (1989) 17 NSWLR 1 Gray v Gray [2004] NSWCA 408 Heydon v Perpetual Executors, Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111 Hildebrandt v Soncini [2007] NSWSC 1227 Ketteman v Hansel [1987] AC 189 Lewis v Lewis, [2001] NSWSC 321 Liff v Peasley [1980] 1 WLR 781 Massie v Laundy (Young J, 7 February 1986, unreported) Maxwell v Public Trustee [2001] NSWSC 764 Nelson v Nelson (1995) 184 CLR 538 Nicholls v Hall [2007] NSWCA 356 Pengilley v Public Trustee (Young J, 9 October 1985 unreported) Re Gilbert (1946) 46 SR NSW 318 Robinson v Tame (Court of Appeal, 9 December 1994, unreported) Singer v Berghouse (No 2) (1994) 181 CLR 201 Smith v Dayman [1994] NSWCA 286 Warren v McKnight (1996) 40 NSWLR 390 Wenham v General Credits Ltd (McLelland J, 16 December 1988, unreported)
TEXTS CITED:	De Groot and Nickel, Family Provision in Australia 3rd Ed
PARTIES:	Craig Ebert (Plaintiff in 4560/08 and Second Defendant in 4273/07) Brett Williams Ebert (Defendant in 4560/08 and Plaintiff in 4273/07) Nicole Ebert (First Defendant/Cross-claimant in 4273/07)
FILE NUMBER(S):	SC 4560/08; 4273/07
COUNSEL:	M Meek (Craig Ebert) E White (Brett Ebert) A Tibby (Nicole Ebert)
SOLICITORS:	Carroll & O'Dea (Craig Ebert) Kristofferson Legal Services (Brett Ebert) Peter Baker (Nicole Ebert)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WARD J

FRIDAY 14 NOVEMBER 2008

4560/08 CRAIG EBERT v BRETT WILLIAM EBERT AS ADMINISTRATOR FOR THE ESTATE OF THE LATE WILLIAM EDWARD STANLEY EBERT
4273/07 BRETT WILLIAM EBERT v NICOLE LOUISE EBERT & 1 ORS

Hearing dates: 23 and 24 October 2008.

JUDGMENT

1 Two sets of proceedings are on foot in relation to disputes arising in respect of the estate of the late William Edward Stanley Ebert (“deceased”). The deceased died on 25 September 2006, aged 70, leaving three adult children – Brett William Ebert (“Brett”), Craig Ebert (“Craig”) and Nicole Louise Ebert (“Nicole”). The deceased’s wife, Joyce, had pre-deceased him on 18 June 2006. The deceased left a will made on 9 August 2006, probate of which was granted to his son Brett as executor on 8 March 2007. That will revoked an earlier will (“Previous Will”) made by the deceased on 28 March 2006.

2 In proceedings No. 4273/07, Brett, in his capacity as administrator of the estate of the deceased, sought possession of a property in Alexandria (“the Property”), from Nicole, who has resided in the Property for most of her life and currently resides there. The Property is the major asset of the deceased’s estate. The possession aspect of those proceedings was, in effect, overtaken by the intervention of the mortgagee (Permanent Custodians Limited) seeking to enforce its rights over the Property due to default in repayment of the $450,000 loan secured by its registered mortgage (“April Mortgage”).

3 Brett did not resist the mortgagee’s claim to possession and has filed a submitting appearance. Nicole, I am told, has sought a number of stays against possession. In cross-examination Nicole referred to at least three occasions when she had been to court in her words “facing the bank” and said that her brothers had “left her stranded, standing there” (transcript p 74). The Property has not yet been sold. I note this because the evidence before me shows that the mortgage repayments have not been made for some time. While interest is still accruing (presumably at a default interest rate) on the loan secured by the mortgage, the value of the estate is being eroded (a matter which Brett raises as something which should be taken into account on Nicole’s application for relief).

4 What is before me in the possession proceedings is Nicole’s cross-claim under which she seeks an order pursuant to s 7 of the Family Provision Act 1982 that provision be made for her maintenance and advancement in life out of the estate and/or notional estate of the deceased. That cross-claim was filed on 31 October 2007, within the prescribed period for the making of an application pursuant to s 7 of the Family Provision Act, joining Brett as the sole cross-defendant.

5 The alleged prescribed transaction which is the subject of Nicole’s notional estate application, was the entry by the deceased (with his late wife) into the April Mortgage transaction to secure the sum of $450,000, which sum it is said was paid to the benefit of Craig and Brett and to a business in which it is alleged each of them had an interest, Parramatta Automatics Pty Limited, (“the Business”).

6 In her cross-claim Nicole has sought an order designating the $450,000 and all costs charges and interest on that amount, as notional estate. At the conclusion of the hearing it was submitted for Nicole that it would be appropriate to grant her the sum of $250,000 for her maintenance, education and advancement in life, to be paid from the residue (after distribution of legacies) of moneys received on sale of the Property and (to the extent that the said moneys fall short of $250,000) to be paid from notional estate designated from property of Brett and Craig (namely the equity that Brett has in his four bedroom house, the property Craig has in various cars, and by a charge on the Business, with interest).

7 In September 2008, Nicole filed a notice of motion seeking to join Craig as second defendant on her cross-claim. Craig’s joinder was presumably considered to be necessary as, per Handley JA in Smith v Dayman [1994] NSWCA 286, a court could not ordinarily make orders designating property as notional estate without the owners of that property being parties to the proceedings.

8 By consent on 3 October 2008 Craig was joined as the second cross-defendant to the cross-claim brought by Nicole in the first proceedings. An appearance was filed on his behalf in those proceedings on 21 October 2008.

9 In separate proceedings No 4560/08, filed 4 September 2008, Craig brought his own application pursuant to s 7 of the Family Provision Act against Brett as administrator of the deceased’s estate. Counsel appearing for Craig stated that this application was a “defensive” application. In other words, Craig makes no such application except in the event that the court were to find that the assets of the deceased’s estate include a debt in respect of some or all of the moneys advanced to Craig or the Business (in which case Craig’s application under the Family Provision Act would be for him to be relieved of the obligation to repay that loan to the estate). Otherwise, Craig seeks no provision for his maintenance and advancement in life.

10 Both Nicole and Craig are eligible persons falling within category “b” of persons entitled to apply for further provision out of the deceased’s estate pursuant to the Family Provision Act.

11 These two matters were listed together and I have made an order that evidence in the first proceedings is to be treated as evidence in the other proceedings.

Background facts

12 The deceased left a gross estate to which Brett (as executor) attributed a value for probate at $723,700.

13 The likely value of the Property, according to Brett’s affidavit affirmed 3 July 2008, is $700,000. The net estate as at the date of death, according to Brett’s affidavit, based on an estimated property value of $700,000 and a mortgage debt of $500,000, was $257,504.34 of which $213,964.55 was the net distributable estate.

14 It was submitted that the Property might sell for approximately $750,000. The indicative figure provided by solicitors for the mortgagee as to the pay-out figure in respect of the mortgage as at 1 December 2008 (ie assuming the mortgage is not paid out before then) was $540,612.04.

15 Given the increased amount owing on the April Mortgage, it appears that the net estate is now somewhere in the order of $170,000. There are specific legacies to the grandchildren totalling $30,000. Legal expenses of the proceedings have been estimated at approximately $140,000. The residue of the estate is therefore likely to be very small.

16 Each of the three children gave evidence as to his or her financial position and circumstances.

17 Brett is 49 years old and separated from his wife. He has two children and is the full time carer for one of those children, a daughter now aged 13. Estimates as to the worth of his home have ranged from about $750,000 to about $1 million. The home is mortgaged to secure a loan of approximately $300,000. Brett receives a workers’ compensation pension and child support payments; and says he is unlikely to be able to return to work.

18 Craig is 45 years old. He is married with two children (aged 21 and 5 respectively), each of whom principally resides at home. Craig and his wife rent a house. His wife works on a full time basis at Star City. Craig has been employed on a full time basis since approximately April 2004 at the Business. On the accounts in evidence before me, the Business is making an operating loss. It was described in oral submissions by Craig’s counsel as nearly insolvent.

19 Nicole is 43 years old. She is single with no children. She completed her education to the level of the School Certificate in 1980 and, after leaving school, worked in various positions until 1996 when she had an accident while at a club. This was not a work-related accident. Legal proceedings have been instituted in relation to the accident that Nicole sustained but those have not yet been resolved and the current status of those proceedings (which it was said had been delayed in part by the collapse of an insurer) is unclear. Nicole, in her oral evidence did not appear to have a clear understanding of what was happening with that claim or what losses she would be claiming.

20 Since her accident Nicole has suffered from depression, has had physical problems and has not worked full time. Nicole has been on a disability pension since February 2002. There is evidence that she has been advised to undertake physiotherapy and various gym or other programmes for her condition. Some of those costs may conceivably be met if Nicole’s personal injury claim is ultimately successful. However, it was submitted, for Nicole, that liability in those proceedings cannot be assumed.

21 Nicole has had some part time employment since 1996. She currently has a part time job collecting milk crates for which she receives payment in cigarettes as well as, from time to time, some cash. Nicole has not filed income tax returns since about 1997 or 1998. Nicole said this was because she did not believe she had an obligation to do so as her income was below the amount necessary (although she does not seem to have had advice from her accountant on that issue). Nicole asserted that the Tax Office owes her money, but she gave no evidence of any steps to recover the amount she says is owed (transcript p. 60).

Issues

22 The issues for determination are as follows

(i) Whether Nicole’s claim for an order designating as notional estate any of Craig’s property can be maintained out of time?

(ii) Whether the provision made for Nicole under the deceased’s will was inadequate as a matter of fact?

(iii) Whether the deceased’s estate includes as an asset sums advanced in 2006 by the deceased to Craig and/or Brett or the Business?

(iv) Whether the transaction by which those sums were advanced is a prescribed transaction in respect of which an order designating property as notional estate should be made?

(v) If the answer to (ii) is no, what orders if any should be made for the proper provision for Nicole?

Joinder of Craig

23 The relevance of the way in which Nicole’s cross-claim was initially constituted is that the proceedings in relation to Craig, who was joined (by consent) as a cross-defendant on 3 October 2008, were commenced on a date after the expiry of the prescribed period for making an application under s 7 of the Family Provision Act.

24 As a consequence it was contended for Craig that any claim by Nicole against him for an order for provision out of any notional estate held by him could not be made unless an extension of time were to be granted.

25 The Family Provision Act claim by Craig (his so-called “defensive claim”) is admittedly out of time as well. The explanation for the fact that this claim was out of time (given by Craig’s counsel from the bar table) was that Craig had only received legal advice a short time ago. Consent was given during the hearing on behalf of Nicole to the application being made out of time (and, I am told, Brett’s legal representative have since also confirmed Brett’s consent). As Craig’s application is defensive in nature and consent to the application has been given, I would be prepared to grant leave for Craig’s application to be brought out of time. However, given the conclusion I have reached on the status of the advances made to Craig, it is not strictly necessary to do so.

26 The position is not as simple in relation to Nicole’s cross-claim against Craig. Pursuant to s 16(3) of the Family Provision Act the court may not make an order under subsection (2) extending the prescribed period (and hence allowing an application in relation to a deceased person to be made after the end of the prescribed period) unless either the parties to the proceedings have consented to the application being made after the end of the period or sufficient cause is shown for the application not having been made within that period. Even if sufficient cause is shown, there remains a discretion in the court whether to allow an extension.

(i) Consent

27 It was said for Nicole that the effect of Craig consenting to be joined as a cross-defendant on 3 October 2008 was that he had consented to the application being made out of time for the purposes of s.16(3), and that it is appropriate for him to be joined, this being a small family and he having been on notice as to the proceedings.

28 I am not satisfied that Craig’s consent to joinder either necessarily or by inference carries with it consent to an extension of time for the making of the application: what Craig has done is to submit to the jurisdiction of the court. By analogy, a party who files a notice of appearance submitting to the jurisdiction of the court is not thereby precluded from raising, as a defence in the proceedings, that the claim made against him or her was out of time. The date of commencement of proceedings against an added party is the date the amendment is made. Just as joinder does not deprive a party of an accrued limitation defence so it does not seem to me to follow that, simply by consenting to be joined as a party, Craig must be taken to have further consented to an extension to the period in which the notional estate claim against him was to be brought.

29 This accords with the reasoning of the English Court of Appeal in Liff v Peasley [1980] 1 WLR 781. There, the second defendant, (Mr Spinks) had been joined in the proceedings after the relevant statutory limitation period had expired. Mr Spinks had been joined on an ex parte basis. An unconditional appearance was entered on his behalf and subsequently he filed a defence on the basis that the claim was statute-barred. The Court of Appeal did not find that Mr Spinks had effectively waived or otherwise precluded himself from relying upon his accrued defence based upon the expiration of the period of time provided for by the limitation period (see also Ketteman v Hansel [1987] AC 189).

30 In both Liff and Ketteman, there was discussion as to whether the date of commencement of proceedings against a joined party was the date of joinder or related back to the original commencement date of the proceedings (see also Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 718 per Gleeson CJ citing McLelland J in Wenham v General Credits Ltd (16 December 1988, unreported). This was relevant to the question whether the true basis on which a party may resist joinder when a limitation period has expired is because (in the case of the later date) the joined party had an unanswerable limitation defence and so joinder was futile or because (in the case of the earlier date) it would deprive the joined party of a limitation defence that party would otherwise have had if fresh proceedings been brought. In Ketteman (for which McLelland J indicated his approval in Wenham) and Liff, it was found (against a contrary line of authority) that the true position was that the date of joinder was treated as the date of commencement of proceedings as against the joined party. While s 65 of the Civil Procedure Act and r 6.28 of the Uniform Civil Procedure Rules now provide that this is the case, the discussion in Liff and Ketteman is instructive on the question whether, by consenting to joinder, Craig has waived any limitation defence.

31 I am of the view that the fact that Craig may have had a basis on which to resist joinder (namely that he had a strong defence on the basis that the claim against him was brought out of time), but did not do so, does not disentitle him from later relying upon that defence in the substantive proceedings.

32 It was submitted for Nicole that at the time Craig was joined it was clear that Nicole was seeking an order in relation to notional estate and was seeking, at least partly, to have that order made out of property held by Craig.

33 It was submitted for Craig that his consent was merely consent to ensure that the court had before it all the parties necessary for determination of all matters in the proceedings.

34 Craig is a beneficiary. He may well have agreed to be joined as a party in order to be heard on matters which would indirectly affect his interests as a beneficiary, quite apart from any notional estate claim. There was no evidence before me which disclosed that Craig’s consent to joinder was sought or given by reference to the nature of the relief which might be made against him.

35 I do not accept that it should be inferred from the mere fact of consent to joinder that he has at the same time thereby also consented to an application for extension of time, particularly one which, at that stage, had not been brought by Nicole.

36 It was suggested for Nicole that notional estate orders could be made in Nicole’s favour on Craig’s summons. However, Craig is only pressing his application if there is a particular outcome on Nicole’s cross-claim. The filing of Craig’s summons does not carry with it a submission to Nicole’s separate notional estate application being brought out of time.

(ii) Sufficient cause

37 In the absence of consent by Craig, an extension of time can only be made if sufficient cause is shown by Nicole for her application not being made in time.

38 The principles governing applications to extend time under the Family Provision Act were considered in Massie v Laundy (Young J, 7 February 1986, unreported) and applied in Maxwell v Public Trustee [2001] NSWSC 764. The factors to which one must look include the reason for the lateness of the claim; whether beneficiaries under the will would be unacceptably prejudiced if time were extended; and whether there has been any unconscionable conduct by either side.

39 In Warren v McKnight (1996) 40 NSWLR 390 at 394, Hodgson J noted that a relevant factor was also to the strength of the claim made by the party seeking an extension of time to bring an application of this kind. In De Winter v Johnstone (Court of Appeal, 23 August 1995, unreported), Powell J considered that as an application for extension of time was invariably dealt with at the time of the application for substantive relief, no extension of time ought to be granted unless it was established that the applicant seeking an extension of time would, in the event of the extension being granted, be entitled to an order for substantive relief. By contrast, in that case Sheller J considered that it was only necessary for the applicant to show that the application was not bound to fail.

40 Nevertheless, in the absence of consent, the existence of a sufficient explanation for the late application is critical. In Lewis v Lewis, [2001] NSWSC 321 at [82] Hodgson J (as he then was) said:

In general terms, it seems clear that matters relevant to the exercise of discretion to extend time under s 16 include the existence and strength of a case for relief under the Act, the explanation given for failure to commence proceedings in time, any prejudice caused by the late commencement of proceedings, and any unconscionable conduct by either side. The second factor, the explanation, is specifically dealt with in s 16 of the Act which, in the absence of consent, precludes an extension being granted unless “sufficient cause is shown for the application not having been made within” the prescribed period.

His Honour in that case noted that “sufficient” must mean something like “sufficient in all the circumstances to justify the granting of the extension of time”.

41 Accordingly, for leave to be granted under s 16(3) I must first be satisfied that sufficient cause has been shown for the application not having been made within the period.

42 In Maxwell, Macready M (as he then was) noted that in the absence of an explanation the only conclusion the court could make was that a party (to whom notice of the proceedings had been given or who was aware of the proceedings) was aware of his rights and had decided not to bring his own application.

43 Here, there was no explanation for Nicole’s delay in making a claim against Craig. For Nicole it was argued that the intention to claim an order for provision out of the notional estate of the deceased was clear from the time of the filing of the initial cross-claim. Nicole’s first affidavit made reference to the borrowings in question. That, however, does not assist Nicole. It merely highlights the fact that no explanation has been proffered for the delay in joining Craig.

44 It must have been apparent that, if orders were to be sought in relation to the appropriation of any of Craig’s property by way of notional estate, Craig should be joined as a party to the proceedings. The fact that Craig was on notice of Nicole’s claim against Brett (and that it included a claim for provision out of notional estate) does not overcome the problem that he was not joined within time. This gives rise to a similar conclusion to that which was reached in Maxwell, namely that Nicole was aware of the facts giving rise to a claim against Craig and had chosen not to, or had not adverted to the need to, join Craig at the relevant time.

45 Having regard to the above, I do not strictly need to consider the other factors, identified in Massie, as I am not persuaded that the threshold question has been satisfied. However, I note that for Craig it was submitted that he would suffer prejudice if an extension of time were to be granted, on the basis that by Nicole’s own acts (her refusal to vacate the Property as required under the will) Craig has not had the benefit of accommodation in the home and that the delay in joining him has allowed time to elapse (and interest to continue to accrue) on the mortgage, thus diminishing the estate.

46 It is not apparent to me that the diminution of the estate (by Nicole’s conduct in refusing to vacate the Property and by resisting a sale of the Property by the mortgagee) has been exacerbated or materially contributed to by Craig’s late joinder to this application. Craig was joined in October 2008 (following a motion filed in September 2008) and the cross-claim was heard later that month.

47 Nor was it suggested that Craig would have taken any different course, or that he has done anything in the interim to alter his position which he would not otherwise have done, had he been joined to the proceedings at an earlier time. Therefore I am not satisfied that Craig has pointed to any real prejudice in this regard.

Special circumstances

48 I should add that even if I had granted the application for leave to extend time, under s 28(5)(d) of the Family Provision Act if an order designating property as notional estate is sought in circumstances where the claim is brought out of time, the court must be satisfied that there are special circumstances that would justify the order.

49 It was contended for Craig that his financial circumstances were such that one would conclude, in effect, that the Business was insolvent and that there would be no utility in the making of an order under s 7 of the Family Provision Act in effect designating any property held by Craig as notional estate as that would be to impose a burden on Craig such that he would become bankrupt and unable to meet any order requiring him to make additional provision to Nicole.

50 It was suggested for Nicole that the company accounts were misleading in that nobody could continue a business that was making a constant loss of the kind the disclosed. Craig’s response to that was that he was not a quitter, that he had a lease (from which I infer he accepted that he had financial obligations which would not enable him simply to walk away from the Business), and that he was unlikely to be able to sell the Business. There is no evidence on which I can properly find that the accounts of the Business are incorrect or misleading. Even after the discharge of the $450,000 “loan” recorded in the accounts, it is not apparent that the Business would show any material profit.

51 Therefore, there is force in the submission that an order against Craig (given his current financial circumstances) at least insofar as it was involved a charge on his interest in the Business would be likely to have little utility. While Craig does appear to have some assets (aside from his interest in the Business) against which an order could be made, at least in the form of his ownership of or interest in one or more of the motor vehicles referred to in his affidavit, I am not satisfied that Nicole has shown special circumstances to warrant such an order against Craig.

Refusal of application for leave

52 In the absence of any explanation by Nicole for the delay in bring this claim against Craig, and having regard to the views I have formed as to the strength of her notional estate claim (which I discuss later), I refuse the application for leave under s 16(2).

Family Provision Act claim

53 Turning then to Nicole’s Family Provision Act claim which was brought within time, the test required to be applied (as outlined in Singer v Berghouse (No 2) (1994) 181 CLR 201) is a two stage test.

54 The first stage is a question of fact, namely whether the provision (if any) made for the applicant is inadequate for his or her proper maintenance, education and advancement in life. An assessment of whether the provision, if any, made was “inadequate”; involves an assessment as to what level of maintenance was appropriate having regard to the applicant’s financial position, the size and nature of the estate, the relationship between the applicant and the deceased and the relationship between the deceased and other persons who have legitimate (and in this sense competing) claims upon the deceased’s bounty.

55 The second stage, which involves the exercise of discretion, is for the court to assess the proper level of maintenance and adequate provision which should be made. The factors to be taken in account in making such a determination are contributions to the property and welfare of the deceased; the character and conduct of the applicant in relation to the deceased; and the circumstances before and after the death of the deceased (including the extent of the claims of other persons on the estate of the deceased).

What provision was made under the will?

9 August 2006 will

56 Under the will dated 9 August 2006 (after the specific legacies in favour of the deceased’s four grandchildren totalling $30,000 and the bequest of the deceased’s war service medals to his grandson), the deceased gave all his personal estate to Nicole and declared that the residue of his estate not otherwise dealt with was to be shared equally between his three children.

57 However, it was a “strict and essential condition” for Nicole to receive any gift under his will that she must immediately vacate the Property, if she had not already done so. Clause 4(f) of the will, which imposes this condition, recorded that the deceased had informed Nicole prior to 1 August 2006 that this was his wish.

58 There was evidence before me of a family meeting on 31 July 2006 at which the deceased’s solicitor, Mr Peter Kristofferson, made the testator’s intentions clear. Clause 12 of the will referred to this meeting:

Upon my instructions, my solicitor, Mr Peter David Kristofferson informed all of my children at a family conference on 31 July 2006 in general terms as to what will be set out generally in my Will and that information is as now more specifically set out in clauses 1 to 7 inclusive and in clause 9 of this Will [excepting only that I previously proposed that an amount of $110,000 described in clause 4(h) were to be $100,000] and I have decided to give the powers as are contained in clauses 8 and 11 and record the other things as are set out in this my Will.

59 As to the meeting on 31 July 2006, in her affidavit made 7 August 2008 Nicole said she recalled the meeting and that she was given little opportunity to speak; she recalled that initially the solicitor, Peter Kristofferson, had made a comment about her personal injury proceedings and that there was discussion about not selling the Property for at least two years for capital gains tax reasons. There was also a discussion at that meeting as to Nicole’s suggestion that she rent out some rooms in the house (see paragraph 35 Nicole’s affidavit). This seems to have been an idea put forward by Nicole to avoid having to move out of the Property. It did not find favour with the deceased.

60 Mr Kristofferson gave evidence as to that meeting. There was no suggestion that the advice he gave was not independent. His account of the meeting was consistent with what the deceased subsequently did – namely, he revoked the Previous Will to make careful provision for a regime under which Nicole would have to vacate the Property in order to take under the will (and by which Craig would have some financial relief while the business was in difficulties).

61 Nicole gave evidence that, after trying to leave the meeting, she “switched off” (transcript p 42) or shut her mind to what was being said to her, though she had earlier given evidence (transcript p 37) that she was told by the solicitor (Mr Kristofferson) at this meeting for the first time of her father’s wish that she leave the Property. This suggests that she well understood (though did not accept) prior to his death that her father wished her to gain a measure of independence by moving out of the family home.

62 Clause 7 of the will reiterated the deceased’s concern as to his daughter’s lack of independence. It provided:

I am concerned that my daughter, Nicole, must become independent and find permanent employment of some description and I record that I have informed her that she must vacate the house before my death if she is to receive any gift referred to in Clause 4 above of my will.

63 The deceased then gave an exclusive right of occupation of the Property to Craig (and his family) for a period of not less than 15 months and not more than 18 months after his death, subject to the “strict and essential” condition that for Craig to receive any gift under the will he must pay to Nicole or for Nicole’s benefit the amount of $150 per week, for the whole period of occupation by him and his family in the Property, and that during that period he must also make mortgage repayments of $150 per week.

64 Clause 9 of the will provided that the Property was to be sold by public auction or by way of private treaty within not less than 15 months and “not less [sic] than 18 months” from the date of the death. This must have been in error. Presumably, the sale period was in fact to be between 15 and 18 months from the date of his death. No point is taken on that issue. It appears that the significance of a sale within 18 months was to avoid capital gains tax becoming payable on the sale of the Property. If so, it may be that the net funds realised on the sale will be less than expected, given the delay in the Property being sold.

65 The will made provision for the balance of moneys from the sale of the Property to be held in trust by the deceased’s executor for three years after the Property was sold and invested as provided in Clause 4 (g).

66 It was a strict and essential condition in order for Craig to receive a gift under the will that he must commit within three years of the date of the deceased’s death to selling or retaining the Business. If he were to sell the Business, then on completion of the sale he was to give one third of the net proceeds of sale to Brett and one third to Nicole. Alternatively, if Craig chose to keep the Business then in lieu of sale and division, he was to pay the amount of $110,000 to Brett and a further $110,000 to Nicole, such payments to be made on the third anniversary of the deceased’s death.

67 Nicole accepted in cross-examination that she was aware of her father’s wish that she vacate the Property and that it was a requirement under the will (transcript p 38). She has failed to comply with the condition set out in Clause 4(f). Indeed the commencement of the possession proceedings was for the very reason that Nicole had refused to vacate the family home.

68 Nicole’s evidence was that she refused to leave the Property because it was her family home and that if Craig could not meet the interest on the mortgage “bottom line I would have found myself locked out ... then I’d be left stranded with nothing, absolutely nothing if I walk out of that home as well” (transcript p 80). Nevertheless, on a strict application of the clauses of the will, by refusing to vacate the house Nicole has forfeited her right to any legacies or bequests in her favour under the will.

69 There was a suggestion made for Nicole during the hearing that undue pressure had been brought to bear on the deceased in relation to the execution of this will. However, it is clear that the deceased had advice at the time from Mr Kristofferson and that Mr Kristofferson took steps to assure himself that the deceased had the requisite understanding of what he was doing. It was not suggested that Mr Kristofferson (albeit that he was someone who had had a business connection with each of Brett and Craig and a social connection with Nicole in the past) was not giving independent advice in this regard.

70 Both brothers denied any knowledge of the Previous Will until some time after the operative will was executed (transcript p 130 and p 140). Mr Kristofferson’s evidence was that, to his knowledge, the brothers were not aware of the Previous Will (transcript p 166).

71 There was evidence of a conversation between Brett and his father over whether Nicole was suitable as an executor (transcript p 140/141) but it is not clear whether that conversation related to the Previous Will (which would suggest Brett did have knowledge of that will) or to the later operative will at a stage when his father was contemplating its terms. Brett’s evidence was unsatisfactory on this point in that he did not appear to deny there was a conversation as to whether Nicole was fit to be executor, yet his evidence was that he was not aware of the Previous Will until later and that the first he heard of the operative will was at the 31 July 2006 family meeting. It may be that his evidence can be reconciled if the conversation as to executorship took place after the 31 July meeting but before the will. In any event, this is not a proceeding challenging the deceased’s will.

72 The deceased seems to have been conscious of the scope for one or more of his children to seek to exert pressure on him once they knew of the latest will. He included clause 14 in his will as follows:

I further record that I have no desire or intention of changing this will and wish the court to be aware that in the event that I have made a later will or change to this will (which I do not presently wish to or would prefer not to make) will only be changed by Confidential Codicil and simply because I have been hereafter been forced to do so by unbearable pressure exerted on me by one or more of my children.

73 However, clause 14 would suggest that the deceased was concerned about pressure being later placed on him to change that will not that he had felt pressured to change the Previous Will. Mr Kristofferson was not able to say from whom the deceased feared that pressure would be made (transcript p 161). It might be that one could infer the only pressure would be likely to come from Nicole since it was she that was to be required to vacate the Property and she had made clear that she did not want to do so. However, there is no basis for a finding in this regard.

74 The inclusion of clause 14 in my view weighs against the deceased and his solicitor being conscious of any improper pressure at that stage. The instructions leading up to the inclusion of that clause would presumably have caused Mr Kristofferson to be careful to satisfy himself as to the circumstances in which the will itself was being made in August 2006 before arranging for its execution. There is nothing to suggest he did not do so before he proceeded to prepare the final will.

Was the provision made for Nicole inadequate?

75 This question, relevantly, falls to be decided having regard to facts as they exist at the time of the hearing, not at the time of the death (Nicholls v Hall [2007] NSWCA 356 at [40]).

76 In the circumstances which have transpired (solely due, it must be said, to Nicole’s refusal to comply with the requirements specified under the will) there is now strictly no provision made for Nicole under the will at all.

77 In passing I note that, as I apprehend the submissions made for Nicole, even if there had been no such condition placed on the legacies in favour of Nicole it would have been contended by her that a one-third share of the residuary estate was inadequate in the circumstances. What Nicole said she thought was fair was a one-third share of the estate (transcript p 80). I infer by this she meant one-third on the assumption that the $450,000 mortgage had already been discharged.

78 As to Nicole’s financial circumstances, she is currently on a disability pension and has limited means of support. The status of her personal liability claim is uncertain.

79 The fact that Nicole currently has part-time employment (which involves some lifting of milk crates) suggests that she is capable of some level of employment, although the medical evidence (not challenged) before me was that she is unable to take on full-time employment at least if it involved physical activity such as lifting.

80 As to the size of the estate, unless an order is made designating some property as notional estate, it is likely to be very small (the diminution in its size having been contributed to in part by Nicole’s refusal to vacate the Property, after which Craig at some point ceased to meet the mortgage repayments).

81 If, as was suggested by some of the evidence there would be adverse capital gains tax implications if the Property were sold more than 18 months after the death those would also now come into play and may reduce the estate further.

82 As to Nicole’s relationship with the deceased, at a personal level Nicole’s own evidence was somewhat inconsistent. She described her father as verbally abusive at times (when he drank) but said she had a good relationship with him.

83 There was evidence (denied by Nicole) by Craig that Nicole had kicked her father and by Brett that Nicole had shouted at her father. Both Nicole and Brett were argumentative from time to time in the witness box. There have been falling-outs between all three of the siblings. The impression left with me after the evidence from all three of the siblings (and having regard to clause 6 of the will) was that this was a family not unused to family disputes or altercations and I therefore do not think much weight can be placed on the allegations of misconduct made against Nicole in this regard. The siblings seemed only too ready to cast accusations of misconduct or poor behaviour against each other; and it seems to me there is likely to have been some measure of exaggeration in their respective accounts of events. There was no evidence of any systematic mistreatment by Nicole of her father.

84 There was evidence by Nicole that she had made contributions over the years to the property of the deceased and the welfare of the deceased. Nicole gave evidence as to financial assistance she had given to her parents (when she was about 24 years old) while her parents were in a state of financial difficulty (said by her brother to have been repaid) and by way of contribution to some renovation works in respect of the Property in 1992.

85 Nicole’s mother was diagnosed with leukaemia in about 2005 and her father suffered from asbestosis and lung cancer. Nicole gave evidence as to her assistance during her mother’s terminal illness, taking her mother to doctor’s appointments and visiting her in hospital. She also gave evidence as to similar assistance she had rendered towards her father. Nicole’s evidence that she had assisted in cleaning out the house after her mother’s death was confirmed by her close friend, Karen McCartin, though Ms McCartin said that she had carried out all of the heavy work as Nicole was not able with her injuries to do that.

86 The level of assistance that Nicole had given over the years was the subject of dispute by her brothers. It was submitted against her that if Nicole and her friend, Ms McCartin, had needed to spend as much time as they said they did cleaning the house after the death of the deceased, the house must have been a “pigsty” before then and therefore Nicole cannot previously have contributed much by way of cleaning of the house. It seems to have been accepted by Nicole (and her friend Ms McCartin) that when her mother was alive it was her mother who undertook the bulk of the household cooking and cleaning.

87 Brett gave evidence that shortly before his father died he had visited his father at the Property and his father had said he had not eaten breakfast because Nicole had not bought him any food. For Nicole, it was submitted that this showed that her brother had assumed she would bear the responsibility for buying the food. There was also testimony (transcript p 59) from Nicole, that she had not had money to pay for food and (transcript p 67) that (denied by Craig), her brother Craig would come and take food from the house. In circumstances where it was not suggested that the deceased was regularly left without breakfast I do not think much weight should be placed on this incident.

88 It does not appear to have been disputed that Nicole did give assistance to her parents (even if that were to a limited extent) in the period leading up to their respective deaths and I do not place weight on the criticisms levelled at her by her brothers in this regard.

89 There was also evidence (transcript p 48) that Nicole was requested by her mother to, and did, provide assistance with the Business to help Craig in around September 2005. While it was said that her assistance there in fact only caused further problems with the Business, I accept that Nicole provided that assistance at the request of, and to help others, in the family. She has no interest in the Business.

90 Therefore, I accept that Nicole did give assistance to her parents over the years while she lived with them in the home. Whether this was greater than any assistance rendered by her brothers over that time (of which there was little or no evidence), does not seem relevant to me to be to the question as to what maintenance would have been adequate or proper for Nicole.

91 The fact that the deceased in his will had clearly turned his mind to Nicole and her needs (albeit forming the view, contrary to Nicole’s, that she would best be assisted by gaining a measure of independence and leaving the Property) including a recommendation for her to undergo counselling, confirms that the deceased felt he had some kind of moral obligation to Nicole (as well as to his other children).

92 While the deceased clearly considered it to be in Nicole’s best interest to become more independent (and the will provisions were clearly his way of attempting to bring about such a result), he nevertheless seems to have acknowledged that he should facilitate the provision of financial assistance to enable her to do so by way of the corresponding arrangement for Craig to pay her money during that period.

93 I have formed the view that to make no provision at all for Nicole (as the will, by the application of its special conditions now does, even noting that this is her own fault), is not adequate provision for Nicole’s proper maintenance having regard to her financial circumstances, disabilities and the fact that (at 43 years of age) she was largely dependent on her parents’ bounty for accommodation and support over most of her adult life and is now (having regard to her emotional state in the witness box and her apparent concerns as to bullying/intimidation by her brothers) in a stressed state.

94 Therefore, I find as a matter of fact that inadequate provision has been made for Nicole.

Size of the Estate

95 This brings me to what is comprised by the estate. Absent any order designating property as notional estate, it is very small.

96 Part of what is in dispute between the parties is whether there is any loan repayable to the estate by Craig (or, for that matter, by any combination of Craig, Brett or the Business) in respect of sums advanced by the deceased (and his late wife) and, if not, whether the $450,000 borrowed in April 2006 is a prescribed transaction by reference to which any property held by Brett should be designated as notional estate. The latter issue necessitates some consideration of the circumstances in which the Business was established and Brett’s involvement in the Business.

Acquisition of the Business

97 The Business was acquired by Craig and his wife (Valerie) for approximately $170,000. The Contract for Sale of Business clearly discloses that the purchasers were Craig and his wife. There was a dispute as to whether this was in fact Craig’s business or whether it was a business in which Craig and Brett were partners. Nicole, in the witness box, asserted that Brett was a “silent partner”, although she had earlier referred to the Business in her affidavits as Craig’s business and she said in the witness box that it was referred to in the family as Craig’s business.

98 There is no dispute that Brett provided finance totalling approximately $255,000 for the Business.

99 Craig’s evidence (which was consistent with Brett’s evidence) is that in 2004, when he wanted to acquire the Business with a friend of his (Tom Kubulay Kilincer), he asked Brett to loan him money and that on or about 31 March 2004 Brett provided funding of $170,000 to him. Brett refinanced or increased the existing mortgage over his own home of $330,000 to a mortgage of $500,000 in order to do so. A subsequent loan of $85,000 for working capital was obtained from Brett in May 2004 and at that time Brett’s mortgage was increased to $585,000.

100 Brett’s evidence (corroborated in part by Nicole’s own evidence of partial conversations she says she overheard at the time – transcript p 55) was that he was concerned as to the arrangements in relation to Craig’s acquisition of the Business because Tom was not putting any money into the Business. Brett took advice from Mr Kristofferson, which resulted in Brett entering into a Deed of Business Arrangement whereby he would take a 20% share in profits after repayment of the loan and after payment of the salary of Craig. Brett denies that he has ever expected to receive anything from the business other than repayment of the loan and interest; and both he and Craig deny that he has received any profits from the Business.

101 The Deed of Business Arrangement was entered into in March 2004 between Craig, Valerie, Brett and Craig’s friend (Tom). The deed recited that Craig was purchasing a business “together with the second party [Valerie] and the third party [Brett]” and that the parties wished to make provision for each of Valerie and Brett to have a shareholding and other interests in the business in accordance with the deed.

102 To the extent that this recital might support the conclusion that Brett was acquiring part of the Business, it is relevant to note that the operative part of the deed (see clause 1) makes clear that the capacity in which Brett was participating in the transaction was as a financier. That clause records that the parties agreed Craig and Valerie were purchasing “and the third party [Brett] is financing” the purchase of the Business. It then provided that the Business was to be operated and conducted on the terms therein including:

(a) The first party is purchasing the business together with the second party and third party on the basis set out in this deed.

103 While not wholly consistent with the opening words of clause 1, I think sub-clause (a) should be read as meaning that Craig was purchasing the business, with Valerie and Brett’s involvement in the purchase being as set out in the deed. The balance of the deed seems to make clear that Brett’s role was no more than to provide funds.

104 Clause 7 provided that after the initial period, after all expenses of the Business and before any profit or drawings from the business, the income would be applied in a minimum amount payable by way of equal monthly instalments to Brett’s mortgagee by way of repayment of the principal of the loan. Thereafter, the balance of any trading profits were to be apportioned as to 40% each to Craig and Valerie and 20% to Brett. Tom was to have the right to exercise an option to have a share in any gross pre-tax trading profits exceeding $92,000 per annum (the amount which the vendors had apparently warranted as the expected pre-sale annual income) and a corresponding obligation to contribute to proportionate losses below that figure.

105 Under clause 20 of the Deed of Business Arrangement it was clear that, while each party having an entitlement to share in the profits or losses of the business would be just and faithful to the others or other in all transactions relating to the business, it was only Craig and Tom who were obliged to attend the business during normal working hours. That clause noted that Valerie and Brett “may attend the premises of the Business at any time at their own discretion if they wish and … are free to carry on any other trade, work, profession, and … are entitled to work on a full time or part time basis as employees of any other business, providing such other business is not a competitor of the business”.

106 As far as the position of Brett is concerned, the evidence does not support the contention that Brett has a proprietary interest in the Business. Brett is not a shareholder of the company incorporated in July 2004 to carry on the Business. Nor is he a director of that company. As noted, he was not a party to the sale contract. Nor is he a party to the lease of the premises from which the Business operates.

107 The business documentation, executed with the benefit of legal advice from Mr Kristofferson (who was not cross-examined as to this aspect of the transaction) makes it clear that Brett’s role was the provision of finance and that Craig was to repay that loan. Only if profits reached a certain level was Craig to pay a share of the profits to Brett (presumably in consideration for the benefit Craig had obtained by the initial advance). At best Brett had a potential claim for moneys owing under the deed if the profits of the Business improved; not an interest as such in the Business.

108 The evidence, even on Nicole’s version of events, suggests that Brett’s involvement with the Business was no more than casual (occasional visits on the way to and from visits to a friend of Brett’s who was in Parramatta Gaol – transcript p 47). On one occasion Brett “spoke to the workers”, apparently at the request of the family that he do so. Indeed, Nicole seems to have had more involvement in the Business than Brett by reason of the fact that she worked there for some time prior to Christmas 2005. There is no evidence that Brett took any active role in the company of the kind that might have been expected if he were in fact a business partner.

Subsequent financial arrangements

109 There was apparently a falling out between Craig and Tom in early 2005. Craig continued with the Business on his own. The deceased borrowed $120,000, and took out a mortgage over the Property to secure that loan. The moneys were advanced to Craig on 18 May 2005. Those moneys (and the earlier moneys from Brett) were recorded in the books of the Business as loans. Repayments on the loans taken out by Brett and by the deceased were met out of the income of the Business.

110 There is no dispute between the siblings that in early 2006, when the business was again in a difficult situation, Craig approached his father for assistance. Craig’s evidence is that his father discussed this request with his mother and that his father said he would gather the loans (Brett’s two, of $170,000 and $85,000, and the deceased’s of $120,000) together and put them on his house but that Craig would have to make repayments on the mortgage and that if the house had to be sold then his father and mother would have to move into Brett’s place.

111 In February 2006, when the deceased’s wife was still alive, she and the deceased applied for a loan of $450,000. On 27 March 2006 the deceased’s wife gave the deceased a power of attorney, with which the deceased subsequently executed a mortgage registered over the Property securing the sum of $450,000. That sum was used to discharge the existing mortgage over the Property in respect of the May 2005 ($120,000 loan); to repay the loans Brett had taken out and secured over his own house ($255,000); and to pay a sum of approximately $70,000 to Craig or the Business. Therefore, the increase in the amount advanced by the deceased in April 2006 (having regard to the earlier $120,000 already provide to Craig) was approximately $330,000.

112 Brett’s evidence was that he knew nothing about the 2006 refinancing of the loans until about the time it took place (transcript p 138). Brett’s account is that Craig told him, before the two loans secured against his home were repaid in April 2006, that his parents were assisting him in refinancing. Brett’s evidence was that he discussed that very briefly with his father and that the deceased had said that he (Brett) should not be at risk for Craig’s business.

Was the money advanced by the deceased in April 2006 a loan repayable by Craig or the Business to the estate?

113 In evidence, Craig deposed to the following conversation with his father about the advance:

My father said to me words to the effect "You will have to make the repayments on the mortgage. However, if at any stage you can't then the house will have to be sold and we will have to move into Brett's place" At no stage did my father say to me that I would have to repay to him the principal sum that he borrowed.

114 Mortgage repayments on the $450,000 loan were met out of the Business (as had been mortgage repayments on the previous loans taken out by Brett and the advances made by the deceased in connection with the Business).

115 The books of the Business record the April 2005 moneys as a loan. It is accepted by Craig that there was an arrangement or expectation that the debt would be serviced by him during the deceased’s lifetime.

116 There is a rebuttable presumption that moneys paid from a parent to a child are advanced by way of gift (Nelson v Nelson (1995) 184 CLR 538). Even leaving aside the presumption of advancement, the onus lies upon a party asserting a loan to show that money has been paid by way of loan and not by way of gift (Heydon v Perpetual Executors, Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111; Gray v Gray [2004] NSWCA 408 per Young CJ in Eq at [15]-[16]) although the presumption of advancement may be relevant in determining the deceased’s intention (see Gray, which is in relevant respects analogous to the present case though in which the presumption was rebutted).

117 Accordingly, Nicole bears the onus of showing that the moneys advanced by the deceased constituted a loan. I do not consider that she has discharged that onus.

118 It is significant that the terms of both the Previous Will and the later operative will do not evidence an understanding by the deceased that the moneys advanced to Craig or for the purposes of the Business would be repayable as a debt to the estate. Mr Kristofferson’s evidence (not challenged in this regard) was that the deceased did not indicate that Craig owed him a debt and he said that the deceased had sought advice from another solicitor, a Mr Richard Roden, before taking out the $450,000 loan (transcript p 159).

119 Under the Previous Will, account was taken of the fact that Craig had had the benefit of advances during the deceased’s lifetime in that the entire residue was left to Nicole unless the mortgage had been repaid. At that time (28 March 2008) a loan application for the $450,000 loan had already been made.

120 The evidence of Mr Kristofferson supports the view that the deceased did not intend the advance to be repaid. Mr Kristofferson saw the deceased a number of times in or about March 2006 when he took instructions in relation to the Previous Will and July/August 2006 when he took instructions in relation to the operative will. He described the situation as one in which the deceased believed there was a “clear and present danger” in relation to the Business and its financial state; and said for that reason the deceased had included a clause in his will to allow Craig to occupy the house after his death and save some money (transcript p 166).

121 Consistent with this is the fact that the deceased’s final will adopted a regime by which the deceased in effect took into account the fact that Craig had had the benefit of the moneys so advanced, by giving Craig a choice whether to keep the benefit of those advances (and not sell the Business), since to receive any benefit under the will he had to make payments to Brett and Nicole of $110,000 each, or to sell the Business and provide a one-third share of the proceeds of sale to each of them.

122 The deceased’s last will in my view makes it abundantly clear that the deceased did not regard the moneys he had advanced to or for Craig as a loan which was to be repayable by Craig or by the corporate entity which owned the Business. Rather, clause 4(h) appears to set in place a regime whereby the deceased intended that the advances which the deceased recognised had been made by him to Craig (and which were not repayable by him) should be balanced with regard to the legacies under the will to his other children.

123 Not only is that testamentary arrangement not consistent with the deceased having any intention to recoup by way of debt the moneys advanced to Craig or his business, what it is consistent with is the deceased’s understanding or intention being that the advance was for Craig’s business and not Brett’s (since otherwise the obligation on Craig to pay any sums to Brett out of a share of the sale proceeds if he were to sell the Business or otherwise if he were to take a benefit under the will would make no sense). It is further consistent with a desire by the deceased that Brett should not personally bear the risk of the Business failing.

124 The conclusion that this was not a loan also gains some support from Nicole’s evidence of a conversation in which the deceased said he hoped Craig would not “blow the lot” this time (transcript p 28) and that if the Business went “under” the deceased and his wife would be living on sausages again; suggesting that repayment of the loan was limited to the fortunes of the Business alone.

125 The deceased appears to have taken account of the financial and personal positions of each of his children and to have decided how best their respective interests and claims on his moral bounty should be resolved in the context that Craig’s Business was in difficult financial circumstances (as had been apparent to all the family by at least the end of 2005); that Brett was exposed to the risk of the Business failing without any interest in the Business; and that Nicole was living at home and in a position of limited independence.

126 I am not satisfied that Nicole has discharged the onus on her of showing that these advances constituted a loan. Nor has the presumption arising from advances to a child been rebutted. I find that the sum advanced from the April 2006 mortgage proceeds does not constitute a loan repayable by Craig (or the Business) to the deceased’s estate and hence is not an asset of the estate.

Was there a prescribed transaction?

127 Was the transaction whereby the defendant borrowed the $450,000 and paid (or effected a repayment on behalf of Craig) of the sum of $255,000 to Brett, a prescribed transaction?

128 First, it is submitted by Craig that, to the extent that the borrowed money discharged existing loan debts, the “full valuable consideration in money or money’s worth …” was given. Clearly to the extent that the borrowed money discharged the existing debt of $120,000 on the Property, there was consideration for the transaction, but consideration for the making of a fresh advance to Craig or the Business could logically only arise if there was a promise to repay that loan (which is negated by my finding in relation to the nature of the advance to Craig or the Business).

129 The circumstances in which Brett’s mortgage was reduced in April 2006 by way of repayment from the April mortgage proceeds of the loans he had made to Craig in 2004, at a time when the deceased was being asked by Craig to assist the Business, support the conclusion that what the deceased intended was to effect the repayment, on behalf of Craig, to Brett of the amounts Brett had lent to Craig for the business.

130 Clearly Brett obtained a benefit by discharge of a substantial part of his mortgage. It is put that this was a “zero benefit” transaction as far as he was concerned. I do not accept that. Brett obtained a benefit (intangible as it may be) from the repayment of the $255,000, in that his house was no longer at risk for that amount.

131 To the extent that the moneys so borrowed were applied (whether by the deceased in his own right or, as I think more likely, by the deceased on behalf of Craig) to discharge Brett’s loan debts, the deceased received no direct consideration for that payment.

132 For the purposes of the claim against Brett I find that there was a prescribed transaction (for the purposes of s 22 of the Act) in the amount of $255,000.

133 However, to be designated as “notional estate”, this being a transaction which took effect within the period of one year before the death, this transaction must have been entered into at a time when the deceased had a moral obligation to make adequate provision for the proper maintenance, education and advancement in life of Nicole which was substantially greater than any moral obligation of the deceased to enter into the prescribed transaction (s 23(b)(ii)). The deceased’s intention is not relevant in making this assessment (if it were, that intention as discerned from the respective wills would support the view I have come to on the competing moral obligations).

134 That decision must be made having regard to the circumstances at the time of entry into the transaction, since in its terms the subsection requires an assessment of any competing moral obligation “at the time” of the transaction. I was referred to Hildebrandt v Soncini [2007] NSWSC 1227 as to the question of timing. I do not consider that, for the purposes of making such a comparison, reference should be made to circumstances after the transaction occurred.

135 Here, it is significant in terms of timing that the loan application was made in about February/March 2006 and the refinancing occurred on 28 April 2006.

136 The Previous Will was made in the intervening period (on 28 March 2006). Apart from the specific legacies to the grandchildren (which differed somewhat from the legacies in the later will), and the regime introduced in relation to occupation of the Property in the immediate period after his death, the main difference appears to be that the residue of the estate (if his wife predeceased him) was bequeathed in favour of his daughter, Nicole. Nicole was also appointed as his executor. Clause 7 provided that:

Notwithstanding the substitutional gift to my daughter set out in clause 4(d), in the event that at the later date of my death and the date of death of my wife, there is no mortgage on the title to [the Property], then the residence will be sold and the proceeds of the residence will be held in trust by substitute executor for distribution in equal shares between herself and Brett and Craig, subject first always to payment of the gifts set out in clause 4(a) and (b) having occurred.

137 As at the date on which the prescribed transaction occurred, therefore, the deceased had executed a will under which (if his wife predeceased him) the whole of the residue of the estate was to go to Nicole unless the loan of $450,000 had been repaid, in which case the residuary estate would be divided equally between the three children. This necessarily assumes that if the loan had not been repaid at the date of death, then Nicole would take the Property subject to the mortgage and would have to satisfy the then outstanding loan out of the proceeds of sale of the Property or meet the repayments herself. At that stage, the deceased could reasonably have assumed this would leave Nicole with a reasonable residuary estate (of say about $200,000).

138 It would appear from the evidence of Mr Kristofferson to which I have referred above (even without reference to the evidence of Craig, Brett and Nicole) that at this stage the Business was in a difficult financial position.

139 Indeed, the fact that the Business was in a difficult financial position at that stage cannot seriously be in doubt given that in late 2005 Nicole was asked to go and assist the Business because Craig was so stressed and Nicole herself gave evidence that she was very worried about Craig and thought he was having a breakdown (transcript p 81). Craig’s evidence was that he did not attend the Business for a period at this time because Brett had asked him to step aside and he did so “to keep the peace” (transcript p 129). Brett bore the financial risk of the loans he had secured over his own house for the benefit of the Business and there must have been a very real risk that Brett’s own position might be adversely affected if the Business failed and Brett was left to meet those loans (solely out of his disability pension). Nicole gave evidence of a conversation in which Brett referred to the prospect of losing his own home (transcript p 31).

140 Was there a substantially greater moral obligation at that stage for the deceased to preserve the estate for Nicole than to arrange his affairs to assist Brett (or Craig for that matter) in the circumstances?

141 I was referred to authority for the proposition that it cannot generally be said that a parent has an obligation to provide an adult child with a home: see Fiorentini v O’Neill (Court of Appeal, 4 December 1998, unreported) at p 15; see also Delaney v Jones, [2008] NSWSC 229.

142 The mortgage which was already on the Property was for $120,000. The deceased was increasing that mortgage by approximately $330,000 but at about the same time he had made provision for Nicole to have the whole of the residuary estate. (The fact that he later changed the will is not to the point when comparing the strength of the moral obligations he owed at the time of the April 2006 transaction).

143 I am not satisfied that in April 2006 there was a substantially greater moral obligation on the part of the deceased to preserve the assets of the estate rather than to enter into the transaction and assist one or both of his sons to avoid potential bankruptcy.

144 Accordingly, I am not prepared to make an order designating Brett’s property as notional estate.

145 For completeness, I note that it was further submitted that (were I to have found otherwise) the notional estate claim must still fail taking into account ss 27 and 28 of the Family Provision Act.

146 It was submitted for Brett that no tangible benefit flowed to Brett as a result of the repayment of the loans he had taken out over his house. I have already rejected that submission.

147 It was also said that to designate any part of Brett’s property as notional estate would be to interfere with his reasonable expectations in relation to property, in that such an order would place hardship on Brett as sole carer and might force him to sell his house. While it was contended, for Nicole, that Brett could simply increase the mortgage on his own house to meet any notional estate order, it is by no means clear that without Craig or the Business funding part of his mortgage repayments Brett would be in a position to meet them (on his disability pension alone). There is, in my view, force in the submission that any order now made which might force the sale of the house would interfere with Brett’s reasonable expectations, as sole carer of his daughter, in relation to his own property.

148 In any event, this issue does not need to be determined (nor do I need to address the submissions made by Craig as to whether there was a disponee against whom any orders could be made) as I am not persuaded that, in the circumstances there was a substantially greater moral obligation owed to Nicole than to the other two children who were at risk due to the perilous financial state of the Business.

What provision should be made for Nicole?

149 The final question, having found that there was inadequate provision for Nicole, is what is the proper provision (if any) which should be made out of the estate for her maintenance. This is a question of discretion.

150 In this regard I note that I was taken to authority for the proposition that it is neither the purpose of the Family Provision Act to ensure that there is an overall fair division of the estate: Gorton v Parks (1989) 17 NSWLR 1 at 6B, nor to deal with the “righting” of moral wrongs in the relationship between the deceased and the applicant: Robinson v Tame (Court of Appeal, 9 December 1994, unreported).

151 The determination of the second stage of the process involves similar considerations to that which I have already considered in determining that there was inadequate provision for Nicole. It was recognised in Singer that the assessment the court may arrive at in the first stage of the proceedings (as to what is the proper level of maintenance and what is adequate provision) may largely determine the order which should be made in favour of the applicant.

152 It was submitted against Nicole that there was disentitling conduct on the part of Nicole in that her actions had prevented Brett from acting in the best interest of the estate in selling the Property during a period when the mortgage was in default, attracting a default interest penalty together with associated legal expenses.

153 It was submitted that Nicole, at all material times, had treated the position as if she were the only beneficiary of the estate and had been the cause of her own need for maintenance, by failing to vacate the Property and failing to take up permanent employment. This was also relied upon as a deliberate frustration of the wishes of the deceased.

154 For Nicole, it was said that Nicole’s continued occupation of the Property (while admittedly not in accordance with the will) was not sufficient to amount to disentitling conduct. It was submitted that to be “conduct disentitling” there must be conduct which showed the complete rejection of a parent or positive ill-treatment of the parent by the child or a criminal act directed towards the parent.

155 I was referred to the statement by De Groot and Nickel in Family Provision in Australia 3rd Ed that:

Examples of conduct that has been held to amount to ‘conduct disentitling’ include failure to communicate with the deceased over a long period, not assisting in meeting the needs of the deceased (for example during the deceased’s ill health) and threats of violence to the person or property of the deceased.

156 However, in Re Gilbert (1946) 46 SR NSW 318 at 321, which was followed by Young J in Pengilley v Public Trustee (9 October 1985 unreported), it was said of disentitling conduct:

"This means character or conduct relevant to the purposes which the Act is intended to serve, for example, misconduct towards the testator, or character or conduct which shows that any need which an applicant may have for maintenance is due to his or her own fault .” (my emphasis)

157 Therefore the fact that Nicole has contributed to her own need for maintenance could amount to disentitling conduct. While I do not consider Nicole’s conduct in this regard should preclude her from any relief at all, the fact that her conduct has depleted the estate is a factor which, in the course of my discretion, would tend against any order which would notionally expand the estate (even had I been otherwise minded to make such an order) and (had the estate been greater) might have inclined me to reduce the amount of an order for provision. As it is, I have not taken this conduct into account in determining what provision should be made for Nicole.

Credibility

158 I should note that there were submissions from Craig and Brett as to the unreliability of the evidence given by Nicole; and similar submissions by Nicole against her two brothers.

159 In relation to Nicole, reference was made to the fact that she disclosed her current part-time employment only after it had been raised by Craig’s affidavit (and even then that she did not disclose the receipt of payments in cash until she amended her affidavit when called to give evidence during the hearing); that she was argumentative in the witness box and took the opportunity to volunteer answers not responsive to the questions in order to advance her case.

160 The evidence by Nicole in relation to her failure to disclose her full financial circumstances did not reflect well on her. She gave a number of explanations as to why she did not include her employment in her first affidavit - because she had been “pushed to have this job” (transcript p 58); that she did not think it was relevant (transcript p 58); and that her legal representatives must have “misheard her” (transcript p 25). The last response would potentially imply some incompetence on the part of Nicole’s legal advisers and there is no evidence from which I should draw that conclusion.

161 Similarly the evidence given in relation to the non-filing of tax returns (transcript p 60), suggested a tendency by Nicole to blame others (such as her accountant) for her actions or inaction. Nicole gave evidence that she had paid the bills after the $450,000 mortgage was entered into, and some water rates in that regard, but there was no evidence of this, just Nicole’s assertion that she had receipts of the bills she had paid (transcript p 59). It is fair, I think, to say that her evidence indicated a willingness to paint (or allow to be painted) only part of her overall financial picture in order to suit her case.

162 For Nicole it was said, in effect, that her brothers were guilty of the same conduct – that Craig understated his wife’s income from her employment and that Brett must either have lied in his tax returns for the year in which he took out the loans to help Craig or lied in the declaration made to the financier in connection with one of the loans he took out in 2004.

163 As to Craig, he corrected his affidavit evidence as to his wife’s income in the witness box. The error was not of a substantial amount and there was nothing to suggest this was not a simple error. It does not seem to me to be of much significance. While Craig did not appear to be a particularly forthcoming witness, he was not argumentative nor did he seek to tell his own story (as compared to both Brett and Nicole).

164 As to Brett, there is no evidence that he has an external income which would falsify what was included in his tax returns. In the absence of such evidence it seems more likely Brett was prepared for his income to be misrepresented to the financier for the purposes of taking out the loan to help his brother. Brett’s explanation that the lender filled in the declaration wrongly does not sit well; particularly when he signed the declaration and must be taken to have represented it was correct in order to induce the lender to make the loan.

165 Accordingly, I have treated both Brett’s and Nicole’s evidence with caution. Both would seem to be prepared, where it suits them, to present a picture of events more favourable to themselves than they might in fact be.

166 Nicole gave evidence of a history of bullying and intimidation by both her brothers. She made allegations of gambling against Craig and said he had jumped the fence and tried to force the locks on the Property; and that he had threatened her. It was put to Craig in cross-examination by Nicole’s counsel (presumably on instructions) that he had taken cash out of the Business (which he denied).

167 There was evidence in relation to certain apprehended violence orders (AVO’s), which were taken out recently on Nicole’s application against her brothers.

168 Those AVO’s were expressed in almost identical terms against each of her brothers. They noted that Nicole had attended Redfern Police Station in relation to the person named (respectively, each of the brothers) “harassing and intimating” [sic] the victim. As against both brothers, it is stated that the person named:

Is making the victim feel that she needed to commit self harm or kill herself. The victim states she can’t handle the person named turning up to her house and slipping legal documents under her door. These documents are in relation to the person named taking the victim to court over their deceased’s father’s estate? estate. The victim believes it? s the person ?s named are pressuring the victim into leaving her father’s estate, so they can have it all to themselves. [sic]

169 The AVO’s include the statement: “The victim states the person named brother is also doing the same intimidation tactics to try and wear her down to move out of her parents’ estate.”

170 Nicole was cross-examined as to the circumstances in which she had taken out the AVO’s against each of her brothers and the basis on which she had obtained them. It would appear that the intimidation or harassment which formed the (stated) basis of her application for the AVO’s related to her assertion that documents had been slipped under the door of the house for her. There was no reference to Craig jumping over the fence or trying to force locks; nor was there reference to the “Sports Inn” incident when Nicole said she had to run away from Brett.

171 In oral evidence, Nicole did not suggest (contrary to the AVO issued against him) that Brett had left any documents under her door. Her evidence that Craig left documents under door was based solely on surmise. Craig did admit that he had on occasion checked the letterbox for mail belonging to himself. However, he denied having left documents under her door.

172 There was unchallenged evidence from a process server (affidavit of Henry David Chapman 14 October 2008) that at least one of those documents (a subpoena) had been delivered by him, and not by Craig as Nicole had asserted.

173 There is no basis on which I could form the view that Brett or Craig had taken the action complained of by Nicole. However, there was no suggestion by Nicole that those AVO’s had been or would be withdrawn or not prosecuted.

174 It was submitted, as seemed to me to be the case, that Nicole was prepared to make very serious (and unsubstantiated) allegations to suit her case.

175 It may well be that Nicole has been bullied by one or other of her brothers in the past. While Ms McCartin supported Nicole’s allegations of bullying, she did so mostly in a general way. (For example the evidence of bullying against Craig by Ms McCartin seemed to be that he was “sitting around” the Property while his wife was at work.) Ms McCartin did give evidence of one incident in which Brett had sworn at Nicole and her in terms (which were not denied by Brett) which were highly offensive. Brett’s response seemed to be to suggest he was provoked. Whether or not that was the case it suggests he may have acted in a bullying fashion from time to time.

176 Brett gave evidence in a very forceful manner. He pointed frequently at counsel during cross-examination and he engaged in argument with the cross-examiner. While Nicole was giving evidence he was sitting in court for most of the time and, on at least two occasions, made audible comments. There was also evidence that he had been offensive about Ms McCartin during the hearing in telephone conversations outside the courtroom. Brett’s response to that was, in my view, unsatisfactory.

177 Craig, on the other hand, sat quietly in court and gave his evidence in a monotonous flat tone. He did not exhibit an aggressive demeanour in his answers to questions.

178 The relevance to this application of any history of bullying by the brothers is not clear to me. Conduct between siblings is not, as I understand it, a factor which the Act suggests should be taken into account on an application of this kind. If it is said that this showed them likely to be unreliable as witnesses, I do not accept that such a conclusion would follow.

179 It is apparent that there have been disputes between the siblings over the years, including prior to the deceased’s death. The deceased’s will acknowledges as much in Clause 6:

I desire that any and all family disputes between themselves and other family members come to an end. I have informed all of my children of my wishes and in particular it is my sincerest wish that they all live in harmony and understanding and respect each other, and it is my solemn wish that prior to my death my son Craig and my daughter Nicole seek separate and joint counselling with our family doctor, Daphne, or if the latter prefers counselling by a psychologist selected by her.

180 Nicole broke into tears a number of times in the witness box. She appeared clearly stressed at the prospect of leaving what had been her home through most of her life and clearly thought she had been unfairly treated (since she said she was seeking only her “fair share”) and had suggested that the case was one being conducted against her by her brothers (which she is, in fact, the moving party on this application).

181 Nicole’s apparent willingness to make serious allegations against her brothers (or at least not to correct them if, as she seemed to suggest in the witness box, the statements were what the police recorded from the history she had recounted to them) suggests Nicole’s evidence generally may be unreliable as being coloured by her desperation to remain in the Property.

182 Ultimately, however, the evidence of disputes between the siblings over the years, whatever may be the rights and wrongs between them, is not of assistance to me in determining what should be the proper provision made for Nicole out of the deceased’s estate. The only relevance I draw from the evidence of bullying/intimidation is that, whether rightly or wrongly, Nicole is very stressed about her relationship with her brothers, may well be emotionally unprepared to live an independent life, and may benefit from counselling as her father suggested. To that extent proper provision may well include financial assistance to enable such counselling.

Conclusion

183 In the events which have happened since the deceased’s death (and in particular the fact that Nicole, albeit by her own actions, has forfeited any rights under the will), it seems clear to me that there is inadequate provision, as a matter of fact, under the will for Nicole’s maintenance and advancement in life.

184 The second question is what proper provision, if any, should be made.

185 For the reasons set out above, I find that the estate does not include as a debt any part of the $450,000 advanced by the deceased and his wife to Craig or for the benefit of the Business. Nor does that transaction, insofar as it benefited Brett, amount to a prescribed transaction because I am not satisfied that, at the time it was made, the deceased had a substantially greater moral obligation to Nicole not to enter into the transaction than he had to Brett (or to Craig, for that matter) to do so.

186 Accordingly, the estate will be very small. Part of the diminution in the estate is due to the stance Nicole has taken since the deceased’s death.

187 Given the findings I have made on the status of the $450,000 loan, Craig will not (as I understand it) press his defensive application for provision under the Family Provision Act and I think it appropriate formally to dismiss that application with no order as to costs.

188 Having regard to the findings I have made, there is very little likely to be left of the residuary estate for distribution amongst the three siblings. Given Nicole’s financial circumstances and disabilities I am satisfied that the proper provision is for the whole of the residuary estate to go to Nicole.

189 I note that the effect of such an order will be to remove any incentive for Craig to make payments of the kind contemplated under clause 4(h) of the will to Brett and Nicole (since those were to be made if Craig wished to take any benefit under the will, which benefit now has been removed). However, on the evidence before me it is unlikely that Craig would have been in a position to make any such payments within the three year period from his father’s death, even were he to make such an election; and Brett would seemingly retain any rights under the Deed of Business Arrangement later to share in profits if the Business did improve considerably.

190 Accordingly, I order that, after payment of the parties’ respective legal costs out of the estate and payment of legacies to the grandchildren, any balance of the residuary estate shall be paid to Nicole. I direct that the executor apply the balance of the residuary estate to Nicole’s benefit as if the three year limitation on payment provided under the will did not apply.

191 As there remains an aspect of the possession proceedings outstanding (namely what is now to happen in relation to the writ of possession) the parties may wish to bring in short minutes of order to reflect my reasons and, in so doing, to address what should happen with the balance of the substantive proceedings.

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