Frohlich v Herborn
[2012] NSWSC 338
•10 April 2012
Supreme Court
New South Wales
Case Title: Frohlich v Herborn Medium Neutral Citation: [2012] NSWSC 338 Hearing Date(s): 19 March 2012 - 23 March 2012 Decision Date: 10 April 2012 Jurisdiction: Equity Division Before: Stevenson J
Decision: 1.Property not held on constructive trust as to a half share as claimed by plaintiff.
2.Adequate provision for the proper maintenance and advancement in life not made for the plaintiff in the will of the deceased. Plaintiff left with 1/3 interest in the property. Further provision made under s 59 of the Succession Act out of the estate of the deceased of a 1/6 interest in remaining 2/3 of the property.
Catchwords: TRUSTS - whether deceased held property on a constructive trust for plaintiff as to a half share
SUCCESSION - family provision and maintenance - application by one of six children for provision from father's estate pursuant to s 59 of the Succession Act 2006 - whether inadequate provision made for plaintiff and, if so, what provision ought to be made
Legislation Cited: Succession Act 2006
Family Provision Act 1982Cases Cited: Andrew v Andrew [2011] NSWSC 115
Ashton v Pratt (No 2) (2012) NSWSC 3
Cooper v Dungan (1976) 50 ALJR 539
Delaforce v Simpson-Cook (2010) 78 NSWLR 483
Giumelli v Giumelli (1999) 196 CLR 101
Grant v Edwards [1986] Ch 638
Green v Green (1989) 17 NSWLR 343
Hulme v Graham [2010] NSWSC 1281
Laidlaw & Anor v Kellie; Laidlaw (bht NSW Trustee & Guardian) v Rusiti & Ors [2011] NSWSC 740
Lajcarova v Todorov [2011] NSWSC 522
Maharaj v Jai Chand [1986] AC 898
Mann v Starkey [2008] NSWSC 263
Singer v Berghouse (No 2) (1994) 181 CLR 201
Taylor v Farrugia [2009] NSWSC 801
Watson v Foxman (1995) 49 NSWLR 315Texts Cited: S Walmsley et al, Professional Liability in Australia, 2nd ed (2007)
Category: Principal judgment Parties: Robert Frohlich (plaintiff)
Katriona Herborn (first defendant)
Timothy Herborn (second defendant)Representation - Counsel: Mr J O Anderson (plaintiff)
Mr M K Meek SC (defendants)- Solicitors: GHS Legal Lawyers (plaintiff)
J.P. O'Neill (defendants)File number(s): SC 2010/261407
Publication Restriction:
JUDGMENT
Introduction and Background
The plaintiff, Robert Frohlich, is the youngest of six children born to Walter Frohlich who died on 22 May 2010 and Frances Frohlich who died on 20 May 2006.
The plaintiff was born on 2 October 1960 and is now aged 51.
The plaintiff's siblings are: -
(a)Helen Mulligan born on 23 December 1950 (now aged 61);
(b)Katriona Herborn born on 31 August 1952 (now aged 59);
(c)Twins, Martin Frohlich and Michele Toomey born on 31 July 1954 (now aged 57); and
(d)Gregory Frohlich born on 26 August 1956 (now aged 55).
The plaintiff is married to Elizabeth Frohlich, known as Libby.
For convenience and without intending any disrespect, I shall refer in this judgment to the plaintiff, his parents, his wife and his siblings by their first names. Where convenient, I shall refer to Robert's siblings as "the Siblings" or "his Siblings".
Walter was the registered proprietor of the land at 78 Kenneth Street, Longueville NSW (the Longueville Property).
Katriona, and her husband, Mr Timothy Herborn are the executors of Walter's estate.
Robert claims the following relief: -
(a)a declaration that Walter held the title and interest in the Longueville Property on trust for him as to a half share as tenants in common;
(b)an order that Katriona and Timothy, as executors of Walter's estate, transfer the Longueville Property to Robert on condition that Robert pay to Walter's estate within 12 months an amount equivalent to half of the value of the Longueville Property;
(c)alternatively, a declaration that Walter's interest in the Longueville Property be charged with the sums contributed by Robert to the second storey extension of the house property situated on the Longueville Property and to its conservation and maintenance;
(d)alternatively, an order pursuant to s 59 of the Succession Act 2006 (the Act) that provision be made for Robert's maintenance out of Walter's estate, and, particularly an order providing for the transfer by Katriona and Timothy, as executors of Walter's estate, to Robert of a half share of the Longueville Property.
When the proceedings were commenced, Robert also sought, in the alternative to the declaration referred to in paragraph [8](a) above, a declaration that Walter held the title and interest in the Longueville Property upon trust for Robert and himself "in such proportions as the court seems just". By an Amended Statement of Claim filed at the outset of the hearing on 19 March 2012, that claim was abandoned.
So far as concerns the declaration referred to in paragraph [8](c) that Walter's interest in the Longueville Property be charged with the sums contributed by Robert, that matter was not pursued in final submissions and is, as I understand, not pressed.
The questions for determination by me are thus whether the constructive trust alleged has been made out and, in the alternative whether provision should be made for Robert under the Act.
The Basis of the Constructive Trust Claim
The basis of Robert's claim for a constructive trust is an agreement that he alleges that he reached with Walter in July 1989 (the Alleged Agreement) and a representation allegedly made by Walter in 1993.
The Alleged Agreement is said to have arisen from a conversation between Robert and Walter at the Longueville Property. It is clear from a reference in a diary kept by Frances that this conversation took place on 24 July 1989. Present on that occasion were Robert, Libby, Walter and Frances.
Robert claims he had two earlier conversations with Frances, and one with both Walter and Frances that led to the 24 July 1989 conversation.
The 1993 representation allegedly arose out of a conversation at the Longueville Property between Robert and Walter some time after May 1993.
The pleaded case is that: -
"In 1989 [Robert] entered into an agreement with Walter to pay for the cost of a first floor extension to the Longueville Property to provide accommodation for [Robert and Libby], and to enable Robert to provide ongoing care for Walter and Frances, on the basis that Robert would own half the Longueville Property" and;
"In or about 1993, Walter promised [Robert] that he would leave him half the Longueville property in his will".
It is also pleaded that:
"In reliance on the promises, [Robert] performed the bargain and acted to his detriment in failing to obtain alternative accommodation for himself and his family".
Matters not in dispute
There is no dispute about the following matters.
In September 1988 Robert and Libby were involved in a motor vehicle collision. As a result Robert suffered serious injuries including an intra-cerebral haemorrhage, a complicated fracture of the right acetabulum and a dislocation of the right hip. He remained in hospital for about eight weeks and was unable to return to his previous employment as a location sound recordist in television. He was left with significant shortening of the leg and requires the use of a walking stick.
By 1989 all of Robert's siblings, except Michele, had left the Sydney metropolitan area. They have not since returned. Katriona is a medical practitioner who lives at Blackheath. Martin is a primary school principal who lives at Adamstown Heights near Newcastle. Gregory is also a primary school principal who lives at Tuggerawong on the central coast of New South Wales. Helen is a musician/music teacher who lives at Clear Creek near Bathurst.
In around March 1990 Robert and Libby moved into a spare room at the Longueville Property.
Construction of the second storey addition to the Longueville Property commenced in September 1990. Construction was completed in around October 1991.
In order to fund the construction Walter lent Robert $170,000 at an interest rate equivalent to 2 per cent greater than the amount paid by Macquarie Bank for funds on deposit.
Construction of the second storey addition cost $247,373.13.
To the extent that such cost exceeded the $170,000 lent by Walter to Robert, the construction was at Robert's cost.
Robert repaid the $170,000 loan as follows: -
(a)$20,000 on 16 March 1991;
(b)$100,000 on 7 March 1993;
(c)$50,000 on 28 May 1993; and
(d)$19,003.17 in or around July to September 1993.
Following completion of the addition, Robert and Libby (and subsequently their four children) lived in the upstairs extension of the Longueville Property.
Except for a period of three years between 1997 and 2000 (when they resided in Singapore) Robert, Libby and their children have resided continuously at the Longueville Property. They are living there to the present day.
During the period when Robert, Libby and the children were in Singapore, Libby's parents, Mr David and Mrs Diane Groves, lived in the upstairs area of the Longueville Property.
During the time that building work was in progress, Robert and Libby paid Walter an amount of $100 per week in respect of their occupation at the Longueville Property.
Once construction was completed and Robert and Libby moved into the upstairs extension, Walter invoiced Robert and Libby on a monthly basis for an amount equal to 1/2 of what Walter described as "joint home expenses" being utilities (gas, electricity and water) and council and water rates.
Robert paid those invoices as well as 1/2 of occasional repairs and the like which had been paid by Walter. Robert and Libby also paid for occasional maintenance and repairs.
In or about 2004 Walter agreed that there was no further need for Robert and Libby to pay any share of the "outgoings" because "you are doing a lot more for me now because of my sight problem".
From around 2004 Robert was also managing Walter's personal affairs.
Throughout the period of their occupation at the Longueville Property Robert and Libby provided care for Walter and Frances.
There is no dispute that care was afforded. There is a dispute as to the extent of such care.
The relationship between Robert and Walter broke down in about June 2009, some three years after Frances died.
On 4 July 2009 a meeting took place between Robert, Libby, Walter, Katriona and Gregory. At the meeting Robert raised with his father, and Gregory and Katriona, his contentions as to his "equitable interest" in the Longueville Property. I shall return to the circumstances of that meeting below.
On 13 July 2009 Robert lodged a caveat on the title of the Longueville Property claiming an interest in the property as follows: -
"Interest pursuant to Constructive Trust between the Caveators, Robert Frohlich and Elizabeth Frohlich, and the registered proprietor."
The facts by virtue of which such interest was claimed were described as: -
"The registered proprietor is a constructive trustee for part of the property in favour of the caveator's, Robert Frohlich and Elizabeth Frohlich."
A short time later, 22 July 2009, Walter executed his last will, probate of which was granted to Katriona and Timothy on 4 August 2010. The details of that will are set out below.
At around this time Robert and Libby ceased to care for Walter. Michele and Martin engaged Mr Jeremy Folland to provide live-in care for Walter.
The Estate
According to the executors' first affidavit, Walter's estate, as set out in the inventory of property, was as follows:
| Longueville Property | $2,500,000.00 |
| Property at 12 Cassia Close, Watanobbi | $300,000.00 |
| St George Access Account | $1,000.89 |
| St George Retirement Access Cheque A/c | $4,220.64 |
| St George Direct Saver Account | $52,359.61 |
| Macquarie Bank Account | $17,340.17 |
| Westpac shares (5814) | $129,535.92 |
| BGP Holdings shares (9) | $9.00 |
| Charter Hall Direct Property Fund Units (65,783.5900) | $39,470.15 |
| Macquarie Martin Place Trust Units (18,000) | $15,300.00 |
| Ethane Pipeline Income Fund Securities (5,250) | $7,035.00 |
| ALE Property Group Stapled Securities (20,000) | $42,800.00 |
| GPT Group Stapled Securities (9) | $5.04 |
| Shares in L'Orana Investments Pty Ltd (750) | $1,500,000.00 |
| Debt due by L'Orana Investments Pty Ltd | $115,000.00 |
| MBF overpayment | $2.23 |
| Total | $4,724,078.65 |
According to the executors' second affidavit, the updated position regarding Walter's assets is as follows: -
| Longueville property | $2,830,000.00-$2,100,000.00 |
| Property at 12 Cassia Close, Watanobbi | $300,000.00 |
| Shares in L'Orana Investments Pty Ltd (750) | $1,690,000.00 |
| Cash in Bank accounts | $102,000.00 |
| Debt due by L'Orana Investments Pty Ltd | $250,000.00 |
| Westpac shares | $120,000.00 |
| ALE Property Group Stapled Securities (20,000) | $40,000.00 |
| Stapled Securities in Ethane Pipeline Income Fund | $10,500.00 |
| Units in Charter Hall Direct Property Fund Units | $36,000.00 |
| Shares and Stapled Securities in BGP Holdings and GPT Group | $30.00 |
| Total: | $5,378,530-$4,648,530 |
There are no disclosed liabilities of Walter's estate other than the costs of these proceedings and administration expenses associated with finalising the estate. There will need to be provision for tax. This is expected to be in the order of $43,750.
The executors' costs of these proceedings will be in the order of $175,000.
It is also possible that the executors will claim commission. However, subject to that, making allowance for the executors' costs of these proceedings the net estate is in the order of $4,429,780 to $5,159,780.
No part of the estate has been distributed.
Walter's prior wills
Robert claims that Walter made a will in 1993. That will cannot be located and is, accordingly, not in evidence.
Walter made a will on 24 September 1999. The witnesses to that will were Libby and her father, Mr David Groves.
Clauses 5-8 of that will provided as follows: -
"5. I give my wife FRANCES FROHLICH life tenancy and occupation, of the lower storey of the family home, at 78 Kenneth Street, Longueville, in the State of New South Wales. My son ROBERT FROHLICH has paid me in full for the building extensions to the family home, so he or his heirs shall herewith be entitled to continue in occupancy of the upper storey of the home whilst my dear wife FRANCES FROHLICH is living. The parties mentioned in this paragraph are to jointly have use of, and be responsible for the maintenance of common facilities, as well as meet all outgoings of the home during this period.
6. Upon the death of my dear wife FRANCES FROHLICH, I give, devise and bequeath the upper storey of the family home, at 78 Kenneth Street, Longueville, in the State of New South Wales, to my son ROBERT FROHLICH, or his heirs, as a tenancy in common.
7. Upon the death of my dear wife FRANCES FROHLICH, I give, devise and bequeath the remainder of my estate both real and personal and of whatsoever nature and kind and wheresoever situate to my Trustee upon trust to pay thereout the funeral expenses payable in the consequence of her death, and divide the balance then remaining into six (6) shares and to hold such shares upon the following trusts:
(a) To hold one share for my son ROBERT FROHLICH being the greater of:
(i) one-half (½) of the unimproved land value of my real property situated at 78 Kenneth Street, Longueville, in the State of New South Wales, as a tenancy in common; or
(ii) an equal sixth (1/6) of the net value of my estate. Such share to include one-half (½) of the unimproved land value of my real property situated at 78 Kenneth Street, Longueville, in the State of New South Wales, as a tenancy in common.
(b) To hold the other five (5) equal shares for such of my daughters HELEN MULLIGAN, KATRIONA HERBORN and MICHELE TOOMEY, and my sons MARTIN FROHLICH and GREGORY FROHLICH as shall survive me and if more than one in equal shares between them as tenants in common.
Provided that should any son or daughter of mine predecease me or shall not proved to be living at the expiration of one (1) month after the date of my death, leaving heirs who shall survive me and attain the age of twenty-one (21) years, such heirs shall take, and if more than one in equal shares, as tenants in common the share which his, her or their predecessor would have taken had he or she survived me.
If the trusts of any share under this clause fail that share shall be divided between the others in equal shares.
8. I direct my Trustee, upon the death of my dear wife FRANCES FROHLICH, to grant to my son ROBERT FROHLICH, or his heirs, the option to purchase the lower storey and the remaining one-half (½) of the unimproved land value of my real property situated at 78 Kenneth Street, Longueville, in the State of New South Wales, within an agreed period of not less than one (1) year from her death, for a sum to be agreed in accordance with market value at that time, upon such conditions and upon such terms as to payment as the Trustee in his/her absolute discretion shall decide." (emphasis added)
Walter's final will
As I have mentioned, Walter made his final will on 22 July 2009, shortly after the 4 July 2009 meeting and the lodgement by Robert of the 13 July 2009 caveat on the title of the Longueville Property.
Clauses 8-11 of that will provided as follows: -
"8. Subject to clause 10 of this my will I GIVE & DEVISE my property at 78 Kenneth Street, Longueville ("the home") to my son ROBERT FROHLICH upon condition that:-
he notifies my Trustees in writing that he wishes to receive the home as part of his inheritance within 30 days of being advised by my Trustees in writing of this right;
he pays to each of my other five (5) children namely HELEN MULLIGAN, KATRIONA HERBORN, MICHELE TOOMEY, MARTIN FROHLICH and GREGORY FROHLICH, (or if any of them has predeceased me, the beneficiary or group of beneficiaries that takes in place of my deceased child) an amount equivalent to two fifteenths (2/15ths) of the value of the home as at the date of my death as determined by a valuer of at least 5 years experience in valuing properties such as the home, such valuer to be agreed between my said son ROBERT FROHLICH and my Trustees, failing such agreement, the property shall be valued by an appropriately qualified valuer nominated by the president of the Property Institute Inc New South Wales Division or if the said Institute ceases to exist prior to a nomination being made, by the President of the body which replaces the said institute; and
he pays all the amounts payable pursuant to sub-paragraph (b) of this clause by the later of the date 12 months after my death or 9 months after my Trustees notify him of this right in accordance with sub-paragraph (a) of this clause.
9. Subject to clause 10 of this my will IN THE EVENT that my said son ROBERT FROHLICH does not comply with all of the conditions referred to in clause 8 above or notifies my Trustees in writing that he does not wish to receive the home as part of his inheritance I GIVE AND DEVISE the home to my Trustees UPON TRUST for sale and to divide the proceeds of the sale as follows:-
(a) to give to my said son ROBERT FROHLICH one-third (1/3) of the net proceeds of sale; and
(b) to give each of my other five (5) children namely HELEN MULLIGAN, KATRIONA HERBORN, MICHELE TOOMEY, MARTIN FROHLICH AND GREGORY FROHLICH a two fifteenth (2/15) share in the net proceeds of sale.
10. IN THE EVENT that it is determined that I have been a trustee of any part of the home in favour of my said son ROBERT FROHLICH and/or any member of his family such that I am not entitled to dispose of that part of the home by my will, clauses 8 and 9 of this my will shall not apply and I GIVE AND DEVISE my interest in the home to my TRUSTEES UPON TRUST for sale and to divide the net proceeds of such sale equally between such of my six (6) children namely HELEN MULLIGAN, KATRIONA HERBORN, MICHELE TOOMEY, MARTIN FROHLICH, GREGORY FROHLICH and ROBERT FROHLICH who survive me and if more that one equally.
11. I GIVE, DEVISE AND BEQUEATH the rest and residue of my estate of whatsoever kind and wheresoever situate to such of my six (6) children namely HELEN MULLIGAN, KATRIONA HERBORN, MICHELE TOOMEY, MARTIN FROHLICH, GREGORY FROHLICH and ROBERT FROHLICH as survive me and if more than one equally."
The proper construction of the 2009 will
Apart from the Longueville Property, the residue of Walter's estate is to be divided equally between his six children.
So far as the Longueville Property is concerned, assuming that it is not "determined" (by the Court) that Walter has been a "trustee of any part of the home" in favour of Robert or any member of this family, then Robert is bequeathed a 1/3 interest and the Longueville Property and his Siblings an equal share of the balance of the remaining 2/3 interest; that is a 2/15 interest each.
On the other hand, if it is "determined" that Walter has been a "trustee of any part of the home" in favour of Robert or his family, then the remaining interest of Walter's in the home (that is that interest which is not determined to be held on trust by Walter for Robert or his family) is to be divided equally between the six children (that is, including Robert).
The valuation of the Longueville Property
There is no expert evidence before the Court as to the value of the Longueville Property at the time that the renovations were effected and nor of the increase to such value attributable, as at the time of construction, to those renovations.
However, there is evidence that shortly after building work commenced at the Longueville Property, Robert and Libby attended the auction of 82 Kenneth Street, Longueville. Robert described that property as "similar" to the Longueville Property "albeit on 10% more land". 82 Kenneth Street sold for $531,000. In argument, Mr Meek SC, who appeared for the defendants, accepted that this figure provided some evidence that the value of the Longueville Property in or about 1990 was in the order of $500,000.
Mr Ronnie Gedeon was appointed by the Court as an expert to give an opinion as to the present value of the Longueville Property.
Pursuant to leave granted by the Chief Judge in Equity on 22 September 2011, Robert adduced evidence from a further valuer, Mr Bernie Galletti as to the present value of the Longueville Property.
According to Mr Gedeon, the current value of the Longueville Property is $2.6 million.
According to Mr Galletti, the current value of the Longueville Property is $2.25 million.
As has been said in the context of discussion of valuers' liability in Walmsley et al, Professional Liability in Australia, 2nd ed (2007) at 889:-
"If 'several valuers valuing the same property on the same basis at the same date produce different assessments, it does not follow that one only of them is rights, that any of them is wrong or that any of the valuers was negligent. The cases speak of an 'acceptable range of figures that a competent valuer using due skill and care would reach' (Mount Banking Corporation v Bryan Cooper & Co [1002] 2 EGLR 142 at 149) and an 'acceptable margin of error' (Trade Credits Ltd v Baillieu Knight Frank (NSW) Pty Ltd (1985) Aust Torts Reports 80-757 at 69,529)': Flemington properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271 at 290".
Neither valuer asserted that the other had made any error of principle in coming to their opinion.
The difference between the valuations arose from the valuers' differing opinions as to the comparability of properties recently sold in the Longueville area. Both valuers were tested in cross-examination and both appeared to me to have a rational basis for the opinions they expressed as to comparable sales. The impression I gained from their evidence was that the issue was one in respect of which informed professional minds might legitimately differ.
Both valuers impressed me as being experienced and competent professionals who were endeavouring to make the best judgment they could as to the value of the Longueville Property.
My finding is that the value of the Longueville property lies mid way between the views expressed by Messrs Gedeon and Galletti, namely in the order of $2.425 million.
Mr Gedeon and Mr Galletti agreed that the current value of the improvements on the Longueville Property comprised by the house itself (leaving aside such value as can be attributed to the garage and fencing) is $350,000.
In Mr Gedeon's opinion the value of such improvements attributable to the 1990 renovations is $176,000 (that is approximately 50 per cent of the total value).
According to Mr Galletti, the value of the improvements attributable to the 1990 renovations is $268,000 (that is approximately 76 per cent of the total value).
In this regard, I preferred Mr Gedeon's opinion. Mr Galletti's opinion placed considerable weight on the fact that the 1990 renovations resulted in a second floor from which city skyline views can be enjoyed. But as Mr Gedeon said, "the view is owned and belongs to the land, it doesn't belong to the first floor, it doesn't belong to the ground floor". Mr Gedeon's point, which I accept, was that the potential view from a first floor extension is a matter inherent in the land itself, rather than in the bricks and mortar comprised by the first floor extension.
L'Orana Investments Pty Limited
L'Orana Investments Pty Limited ("L'Orana") was registered on 2 December 1959. The initial shareholders of the company were Walter and his brother, Paul Frohlich, each holding 50 per cent of the issued shares.
In about 1969 L'Orana acquired a block of 12 residential units at 16 First Avenue, Eastwood, for about $121,000. L'Orana remains owner of that property. It also owns shares in listed companies.
In the 1960s Walter gifted to Robert and his Siblings shareholding in the company.
Thereafter Walter held 1/3 of the ordinary shares in L'Orana. Robert and each of his Siblings hold the remaining 2/3 shareholding equally.
Pursuant to a settlement of related proceedings in this Court on 24 February 2012, the Siblings agreed to purchase Robert's interest in L'Orana (including his 1/6 interest in Walter's 1/3 interest) for $875,000.00 with payment to be made on the date of completion of the sale of the Longueville Property, or transfer of that property to Robert, whichever is earlier.
The entitlement of Robert and his Siblings under the will
On the assumption that clauses 8, 9 and 11 of the will are operative, Robert has an approximate entitlement under Walter's estate of between approximately $1.08 million and $1.327 million. Each of Robert's siblings has an approximate entitlement of between $626,666 and $771,462.
The relevant principles of equity
The principles governing the circumstances in which a constructive trust will be held to arise were discussed by Gleeson CJ in Green v Green (1989) 17 NSWLR 343.
The Chief Justice said: -
"...it is now well-settled that there are circumstances in which a court of equity will intervene to declare the existence of a proprietary interest in a family home on the part of the spouse or de facto partner, and the unifying principle underlying the cases where such intervention is regarded as appropriate is that in the circumstances of the case, and in accordance with equitable doctrines, it will be unconscionable on the part of the person against whom the claim is set up to refuse to recognise the existence of the equitable interest: Baumgartner v Baumgartner (1987) 164 CLR 137 and 147 per Mason CJ, Wilson and Dean." (at 353F)
Although the Chief Justice was speaking of claims made by a spouse or de facto partner, the same principles must apply when a child asserts the proprietary interest.
The Chief Justice continued: -
"The most common case of intervention of that kind to be found in the law reports is the case where the person in whose favour a constructive trust is found has, directly or indirectly, made a financial contribution towards the cost of acquiring, improving, or maintaining the property in question." (at 353G)
The Chief Justice (at 354F) cited with approval the observations of the Privy Council in Maharaj v Jai Chand [1986] AC 898 at 907: -
"In such cases a contract or an express trust as at the time of the acquisition may not be established, because of lack of certainty or consideration or non-compliance with statutory requirements of writing, but a constructive trust may be established by an inferred common intention subsequently acted upon by the making of contributions or other action to the detriment of the claimant party. And it has been held that, in the absence of evidence to the contrary, the right inference is that the claimant acted in the belief that she (or he) would have an interest in the house and not merely out of love and affection."
The Lordships were speaking of a claim between an unmarried couple, but this passage also has application here.
The Chief Justice referred to Grant v Edwards [1986] Ch 638 and said: -
"In the judgment of Vice-Chancellor Browne-Wilkinson in Grant v Edwards his Lordship identified as two matters to be demonstrated when a party seeks to establish a constructive trust based on actual intention, first, that there was a common intention that both should have a beneficial interest, and secondly, that the claimant acted to his or her detriment on the basis of that common intention.
His Lordship pointed out that proof of such common intention can be direct, as for example, by evidence of express agreement or the making of admissions, or such common intention can be inferred from the making of contributions to the cost of a property, or meeting expenses in maintaining it." (at 355B)
Finally, the Chief Justice observed that: -
"...in a given case the relevant events leading to the finding of an interest in the claimant may occur after acquisition [of the relevant property]." (at 355G)
The principles of equitable and proprietary estoppel were recently considered by the Court of Appeal in Delaforce v Simpson-Cook (2010) 78 NSWLR 483. Handley AJA said: -
"The detriment that makes an estoppel enforceable is that which the party asserting the estoppel would suffer, as a result of his or her original change of position, if the assumption which induced it was repudiated by the parties estopped." (at [42])
"The court should, prima facie, enforce a reasonable expectation which the party bound created or encourage." (at [63]).
In the same case Allsop P said: -
"Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how is can be cured, its proportionally to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation of promise made, even if not contractual in character. Equity has always had a place in keeping parties to representations or promises." (at [3])
The equity is a broader one based on the just and conscionable satisfaction in appropriate fashion of the equity arising from the expectation created in another by encouragement or representation." (at [4])
In Delaforce v Simpson-Cook the Court also confirmed that, following the judgment of the High Court in Giumelli v Giumelli (1999) 196 CLR 101, the notion of only affording the "minimum equity" in cases of equitable or proprietary estoppel is no longer a governing principle (at [3] per Allsop P and [59] per Handley AJA). That aspect of the Court's decision does not arise here.
Robert's case
Thus, in relation to the constructive trust alleged, there are two matters to consider.
First, was there a "common understanding" between Walter and Robert that Robert would have a 1/2 interest in the Longueville property?
Robert seeks to prove such a common intention by proving the Alleged Agreement; that is an express agreement that if Robert paid for the construction of the first floor extension to the Longueville Property, Robert "would own 1/2 the Longueville Property".
Thus, Robert's claim for a constructive trust stands or falls on the question of whether the Alleged Agreement was made.
As I have said, at the commencement of the hearing, Robert filed an Amended Statement of Claim which abandoned an earlier plea, in the alternative, for a declaration that Walter held the Longueville Property on trust for Robert and himself "in such proportions as the court seems just".
Second, if there was such a common understanding, did Robert act to his detriment on the basis of it?
Similarly, in relation to the alleged representation, there are also two matters to consider. First, was the representation made? Second, did Robert act to his detriment on the basis of it?
The absence of a contradictor
As will be seen, Robert's claim arises from a conversation that he claims he had with Walter in July 1989. The conversation occurred in an informal family setting.
The only note made of the conversation was one made by Frances in her diary.
Since July 1999, the first written assertion that Robert has made of the Alleged Agreement is, so far as the evidence reveals, in the pleadings in these proceedings.
In those circumstances, I must bear in mind the oft-cited observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319: -
"Furthermore human memory of what was said in a conversation is fallible for a variety of reason, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details of then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court 'must feel an actual persuasion of its occurrence of existence'."
I must also bear in mind that two key participants in this conversation, Walter and Frances, are not available to give evidence.
As Brereton J said recently in Ashton v Pratt (No 2) (2012) NSWSC 3 at [18]: -
"In the case of a claim against a deceased estate founded on the oral utterances of the deceased, which only the deceased could have denied, the Court scrutinises the claimant's evidence closely [(Plunkett v Ball (1915) 19 CLR 544, 548-549 (Isaacs J); Bovaird v Frost [2009] NSWSC 337, [45]; Varma v Varma [2010] NSWSC 786, [418] - [422]), and although there is no absolute legal requirement for it, ordinarily looks for some corroboration (Re Hodgson (1886) 31 ChD 177; Weeks v Hrubala [2008] NSWSC 162, [20] (Young CJ in Eq)".
Credit of Robert and Libby
In these circumstances the creditability of the two participants in the conversation who have given evidence of it, Robert and Libby, assumes special importance.
I have considerable reservations about the manner in which Robert gave his evidence.
Often, his response to questions asked in cross-examination was not responsive. He often took the opportunity to make a gratuitous and unresponsive assertion in an argumentative tone. An example arose at his cross-examination as follows: -
| Mr Meek Q: | Your mother recorded important things, didn't she? |
| A: | Yes. |
| Q: | And you agree that something about you owning a half of the place would be an important thing to record? |
| A: | No, because my mother didn't perceive she owned half of the place, she perceived it was entirely my father's. |
| Q: | So is that your explanation for why you think the diary didn't record that? |
| A: | Yes. |
| Q: | You know that you mother recorded many things about your father, don't you? |
| A: | Yes, including [him] calling her a liar and things like that. Yes, I do." |
The last answer was both gratuitous and unresponsive.
Another example of Robert's tendency to give unresponsive answers can been seen from the following passage during which Robert was being asked about Frances's diary: -
| Mr Meek Q: | "Why do you need a seven bedroom house in Longueville, Mr Frohlich? |
| A: | I have four children and upstairs has been too small for us for some time. My mother, before she died, suggested that upon her passing that my two eldest sons should move downstairs. However, at a dinner one night Katriona cornered my eldest son and said, 'About you moving downstairs, it isn't going to happen'. |
| His Honour Q: | Do you regard what you just said as a response to the question you were just asked? |
| A: | Yes, your Honour, I do." |
Robert gave his evidence in a combative fashion and seemed ready to reject propositions put to him without adequate consideration. He also gave some evidence that stretched credulity.
For example, in relation to the caveat that he lodged on the title of the Longueville Property on 13 July 2009, he was asked in cross-examination why that caveat did not refer to the alleged agreement between Robert and Walter.
Robert alleged that the reason for this was that he had received legal advice, from a solicitor at Ryde, who he named, that "we could not have a caveat that asserted a claim based on an agreement, a verbal agreement."
The following exchange took place: -
| His Honour Q: | "Do you say you asked [the solicitor] whether it was possible to refer to the agreement? |
| A: | Yes, we did. We explained the agreement and -- |
| Q: | That's not what I asked you. Do you say it is your recollection that you asked [the solicitor] whether you could refer to the agreement in the caveat itself? |
| A: | Yes, your Honour. |
| Q: | And you say he gave you advice that that was not legally possible? |
| A: | That's right." |
I found that evidence to be implausible.
Robert also asserted that he only "scan read" Frances's diaries and asserted that he "had to read over 17,500 pages of handwritten diaries" and that he could not say he "went over them in detail".
I regard this evidence as highly improbable. As I will discuss below, Frances's diaries are very detailed. Robert must have had a particular interest in what those diaries recorded about the conversations he had deposed to as having occurred in 1989. Further, Robert exhibited to his affidavit in reply some 40 pages of typed extracts from the diaries for the period 1988 to 2006. It is obvious he considered them with great care.
As will be discussed further below, the evidence of Robert and Libby is that the idea of Robert funding construction of a second storey at the Longueville Property (with compensation from his car accident) was first raised at a meeting with Walter and Frances at a restaurant.
Both Robert and Libby, in their initial affidavits, identified that restaurant at the Black Stump restaurant in North Sydney. After Robert and Libby swore those affidavits, a copy of Frances's diary for the relevant period was made available to them. That diary reveals that the conversation took place at a restaurant called Don Paco's in Crows Nest.
Both Robert and Libby denied that, before swearing their initial affidavits, they discussed this detail with the other. Both asserted that it was a coincidence that they had both nominated the Black Stump restaurant as being the venue for the conversation in question.
Libby asserted that her "visual memory" was that the meeting took place at the Black Stump restaurant and that "I can visualise where we sat in terms of placement around the table". She said that she now realised, having read Frances's diary, that conversation took place at the Crows Nest restaurant.
It seems to me that Robert and Libby must have, prior to swearing their affidavits, discussed the venue of this conversation. I do not accept their evidence that they did not.
In her initial affidavit, Libby referred to the conversation that she placed as having taken place at the Black Stump restaurant in North Sydney but gave no evidence of the critical conversation, a short time later in which the agreement was allegedly made.
It was only in her affidavit in reply, sworn after Frances's diaries were available, that she gave evidence of the critical conversation.
In cross-examination Libby was asked questions about why it was, in her first affidavit, that she only deposed to the conversation at the Black Stump. The following evidence ensued: -
| Mr Meek Q: | "Do you agree with me that there was just one conversation relating to the 1989 discussions about building the addition? |
| A: | Yes. |
| Q: | And that was your best recollection of the events that occurred in 1989 regarding the additions at that time, was that right? |
| A: | That was one of the conversations, yes, I though the primary conversation. |
| His Honour Q: | Did you complete your answer? |
| A: | I did. |
| Q: | I think you said that was one of the conversations? |
| A: | That was the primary conversation at the time. |
| Mr Meek Q: | It's the only conversation that you've set out in your affidavit regarding those events, isn't it? |
| A: | Yes. |
| Q: | And the reason why it's the only conversation you set out in that affidavit regarding those events in 1989 is because it was the only conversation that you could recall at that time; that's right isn't it? |
| A: | No. |
| Q: | Do you say at the time you swore this affidavit that you could recall other conversations regarding the events in 1989? |
| A: | Yes. |
| Q: | Why did you not set them out in the affidavit? |
| A: | I recall this conversation with Robert's father. I also had conversations with his mother. |
| Q: | But you didn't see fit to set them out; is that right? |
| A: | No." |
I took this evidence to mean that when Libby swore her first affidavit she could not only recall the conversation she deposed to in that affidavit but also could recall "conversations with his mother", that is with Frances.
In her second affidavit, sworn after Frances's diaries became available, Libby located the restaurant conversation to be at Crows Nest (not North Sydney) and, for the first time, gave evidence of the critical conversation in which the agreement was allegedly made.
The language that Libby then attributed to Walter is very similar to that attributed to him by Robert.
That fact, combined with the fact that Libby could not remember that conversation at all when she swore her first affidavit causes me to be very cautious about accepting her account of it.
Robert's evidence as to the Alleged Agreement
Robert gave evidence of four conversations in 1989 which he described in his affidavit as "conversations forming the basis of the agreement".
First conversation
Robert gave evidence of the following conversation with Frances: -
| Robert: | "You appear upset, Mum. What's the matter? |
| Mother: | Your father is letting the place go to rack-and-ruin, it's very hard for me to turn these taps off, the lights switches are starting to not work and the roof is leaking... Your father is allowing the place to get run-down, as he figures we're getting old, he's planning on selling-up and moving us into a retirement village, because all he needs is somewhere where he can sleep, read his newspaper and eat the meals which his wife prepares for him. I don't want to leave Longueville, my life is here, and I don't want to have to get rid of all my things so that he can move us into somewhere smaller. He's only thinking about himself." |
Although Robert had not referred to Libby's presence in his affidavit, in cross-examination Robert said that Libby was present on this occasion.
Second conversation
Robert said this conversation occurred at the Longueville Property. In cross-examination he said Libby was also present (although there is no reference to this in Robert's affidavit). According to that affidavit the following conversation occurred: -
| Robert: | "Mum, you know how you mentioned that Dad intends to sell the house soon and move you into a retirement village, well Libby and I have an idea. |
| Mother: | What's that? |
| Robert: | You know how Libby and I have been looking to buy a house around here? |
| Mother: | Yes. |
| Robert: | We thought that maybe it would be a good idea if we we were to rip the old roof off this house and build a second storey. That way you won't have to move, as we will live here to be around to look after you into your old age. The house will also get a new roof in the process, because I should be able to pay for it with the money I get from the accident. |
| Mother: | That does sound like an idea... That would be a wonderful idea, but you'll have to talk to your father about that. As it's his house, you'll have to ask him." |
Libby made no reference to the first or second conversations in her affidavit although, as I have mentioned, she did say in cross-examination that at the time she swore her first affidavit, she could recall having some conversations with Frances. It may well be that these are those conversations.
Both Robert and Libby were challenged in cross-examination about whether or not they were in a position to "buy a house around here" as Robert claims he said to Frances. I will return to that aspect below.
Third conversation
This is the conversation that, in their initial affidavits, both Robert and Libby placed as having taken place at the Black Stump restaurant in North Sydney.
According to Robert's affidavit, the following conversation took place: -
| Robert: | "Mum told us the other day that you are intending to sell Longueville and move into a retirement village soon, and as the house is in need of a new roof... |
| Father: | Yes, I've been thinking of selling soon, because we don't need such a big house anymore. |
| Robert: | Well you know that Libby and I have been looking to buy a house locally, so we've been thinking that maybe it would be a good idea if we were to build a second storey on Longueville so that Mum and you can stay there as you get older and won't have to move out. That way we will be around to look after you both into your old age. |
| Father: | Yes, that sounds like a good idea. |
| Mother: | Yes, I think it is as well. |
| Robert: | This was Libby and I will be around to look after the lawns and maintenance of the property." |
In her first affidavit, Libby gave an account of this conversation (also placing it at the Black Stump restaurant). Libby's account of the conversation is very similar to that of Robert's, although Libby also said the following took place: -
| Frances: | "I think it is a good, my friend's daughter did that. |
| Libby: | Built a second storey on her home? |
| Frances: | Yes, her daughter and son-in-law live downstairs and she lives upstairs." |
As I have mentioned earlier, Frances made a note of this conversation in her diary.
Before setting out what Frances's diary note said, I should make a number of observations about Frances's diaries in general.
It is evident that Frances was a passionate diarist. She maintained a daily diary in which she set out, in great detail, her daily activities and observations about such matters as her painting activities (she was, I have been told from the bar table, a noted artist), details of visits and telephone conversations from family and friends and a myriad of other such matters. A selection of Frances's diary takes up some 400 pages of the Court Book. I have been told that these entries did not comprise all those that Frances made over the years.
Frances's diary entry for 22 July 1989 includes the following entry: -
"This evening we took Rob & Libby to dinner at Don Pacos. Rob asked W. abt. possibility of their building a dwelling on top of our house. W thought it a good idea."
There is no earlier reference in Frances's diaries to the notion of Robert and Libby "building a dwelling on top of our house". The language used by Frances in her diary note of 22 July 1989 suggests that she was hearing about this "possibility" for the first time.
If, as Robert asserts there had been, an earlier reference to it, it seems to me likely that Frances would have made a note of it in her diary. The fact that she did not, suggests to me that either there was no such earlier reference or, if there was, it was made by Robert only in casual or fleeting terms.
Fourth conversation
This is the critical conversation in which, according to Robert, the Alleged Agreement was made.
Robert's account of the conversation is as follows: -
| Robert: | "Now that you've had some time to think about our idea to build a second storey and be here to look after you. |
| Father: | Yes, yes. So how big a second storey do you wish to build? |
| Robert: | I thought that we'd just replicate the existing house, and go up wall-to-wall, giving us enough room for our family as well. |
| Father: | Yes, that's good. |
| Mother (from the kitchen): | We need a new roof. |
| Father: | Yes, yes. So if you build this second storey and move in to help look after us and the house, then I suppose you'll own half the place. |
| Robert: | Yes, I suppose I will. |
| Father: | Okay. |
| Robert: | That way we won't have to buy another house for us to live in, so I'd like to get going with building as soon as possible. |
| Mother (from the kitchen): | Oh yes we'll need to, as these things take time. |
| Robert: | As you know, I'm expecting to receive more than what the building of a second storey will cost, from the accident. |
| Father: | Yes, I know. |
| Robert: | As I currently don't have the full amount of money to cover the costs, are you able to lend me the money to fund it, or should I just get a mortgage? Libby and I have enough to pay for some of it, like the fittings and stuff. |
| Father: | No, no, I should be able to get it out of L'Orana (the family company) so I'll lend you the money as long as you pay me interest on it. |
| Robert: | How much interest do you want? |
| Father: | I think whatever Macquarie Bank will pay for their cash management trust plus 2%. |
| Robert: | Oh, okay...I think that's similar to what a mortgage would cost me anyway." (emphasis added) |
As I have mentioned, in her initial affidavit, Libby made no reference to this conversation.
In her later affidavit, after production of Frances's diaries, Libby said that, during a further conversation (to that at the Crows Nest restaurant) which took place a few weeks later at the Longueville Property, Walter said words to the effect: -
"Okay, so if you build a second storey and are here to look after us then you'll own half the place". (emphasis added)
Libby went a little further when during cross-examination she was asked to give an account of this conversation without reference to her affidavit.
She said: -
"We started to discuss about what the building would entail and Robert said to his father that it would be - he thought it would be we need to build wall to wall, you know, up to the second storey, so doubling the house, effectively, if we intended to live there long-term with our family. We had one child, Samantha, but we intended to obviously have children, and his father said, 'oh okay, that sounds like a good idea'. Then we talked about - he said: -'Well, that way you would then basically own half the house, half the property" and Robert said yes, he supposed he would." (emphasis added)
In the passage of Libby's evidence that I have emphasised, she initially said that Walter had referred to "half the house" and then corrected herself to say "half the property".
The significance of this is made clear below during discussion of later comments attributed by various witnesses to Walter.
Those conversations suggest Walter drew a distinction, in his own mind, between a half interest in the "house" (that is the physical structure) on the one hand, and a half interest in the "land" or "property" (that is the land and buildings) on the other. Libby was plainly aware of this when she gave evidence.
Robert and Libby's affidavit evidence attributed to Walter the expression half "the place" - which could mean either the "house" or the "house and land".
It is telling that Libby's initial response was to attribute to Walter the expression half "the house". The fact that she quickly corrected that to "half the property" indicates to me that Libby was well aware of the evidence given by others as to what Walter said, and was anxious to ensure that her evidence was consistent with her husband's case.
It is evident from Frances's diary that this conversation occurred on 24 July 1989, two days after the conversation at the restaurant.
Frances's diary note reads, relevantly: -
"Rob called in & had a snack lunch before catching bus to Chatswood. Later, he & Libby came in, bringing a new electric blanket for W's (early) birthday present. Discussed possibility of building a flat on top of our house."
This is the only contemporaneous record of what occurred on this occasion. Frances refers to the subject of discussion as being no more than "the possibility" of building the upstairs extension.
Statements attributed to Walter
A number of witnesses gave evidence about statements that Walter made concerning his arrangements with Robert relevant to the upstairs extension.
Gregory recalled that, during the 1990s, Walter said to him on a number of occasions: -
"Robert paid for the upstairs extension so he owns 1/2 the house. As he lives here, I will make provision in my will so Robert can buy the rest of you out if he wants to when I die."
Gregory recalled that, on a number of occasions in the early 2000s, Walter said to him: -
"Robert and I each own half the house, but really the value is in the land."
Gregory recalled that, on one such occasion, Walter pointed to a nearby house that had been recently demolished and rebuilt, despite being extensively renovated and extended only a few years earlier.
I have referred to a meeting which took place on 4 July 2009. I shall return to the circumstances of that meeting below. Gregory said that, after the meeting, Walter said to him words to the effect: -
"What does Robert want? He has always wanted to live here and we let him build upstairs after his accident when he couldn't have afforded to buy in Longueville otherwise. I acknowledge that he paid for upstairs and so it should be his. I don't think its worth what it cost him to build but I don't want him to be disadvantaged so I've given him about $500,000 more than the rest of you in the will. I've also given him the right to keep the house by paying you out as I always said I would."
Martin recalled that on numerous occasions after the second storey renovation was completed, Walter said to him words to the effect: -
"Rob owns half the house as he paid for it."
Martin also recalled Walter often saying: -
"I want to leave all the children an equal share in the property when I go."
Martin said that Walter did not ever indicate to him that he wished to sell the Longueville Property and told him on several occasions: -
"The value of the property is in the land not in the house." And
"I don't want to overcapitalize."
In cross-examination, Martin agreed that Walter had told people that he intended to give Robert the opportunity to buy "the other half of the house".
Martin also said: -
"I don't know that he ever said to me he [that is Robert] owned half the house. He said he had an interest in the house."
Katriona said that on numerous occasions, from the time the extension was built until his death, Walter said to her words to the effect: -
"The land value in the property is mine. Robert and I own the house."
Mr and Mrs Groves also gave evidence of statements made to them by Walter during the period that they lived in the upstairs of the Longueville Property (when Robert and Libby and their children were living in Singapore).
Mr Groves said that, during the three years that he and Mrs Groves lived at the Longueville Property, Walter gave them a quarterly invoice and said something to the effect: -
"Here is the bill for Robert's share of the house expenses."
Mr Groves said that on the first such occasion he asked Walter why Robert needed to pay these expenses and that Walter replied: -
"Robert owns half the property so he pays 50 percent of these expenses."
However, in cross-examination, Mr Groves agreed that Walter may have referred to Robert owning 1/2 the "house" rather than 1/2 the "property" and said that: -
"I couldn't be certain because I didn't differentiate between the property or house."
Mrs Groves gave evidence that, on this occasion her husband asked Walter whether Robert usually paid the quarterly invoices and that Walter replied: -
"Yes, yes he pays those...he does own half the house."
Mrs Groves's evidence was not challenged.
I have mentioned that around June 2009, the relationship between Robert and Walter broke down.
Following the meeting of 4 July 2009, the lodging by Robert of the caveat on the title of the Longueville Property on 13 July 2009, and the making by Walter of his final will on 22 July 2009, Walter made a "statement" to Martin, which Martin recorded in a four page document.
That document was used by the defendant's solicitor, Mr O'Neill, to prepare a statutory declaration that Walter ultimately made on 13 October 2009 (some seven months before his death).
By this time Walter's eyesight had deteriorated substantially such that it was necessary for Mr O'Neill to attend at the Longueville Property and read the statutory declaration before witnessing Walter's signature on the document.
The statutory declaration represents the only statement in writing by Walter about the matters with which these proceedings are concerned.
I appreciate that at the time Walter made the statutory declaration his relationship with Robert had broken down. Walter was by this time 90 years of age and near the end of his life. The statutory declaration was based upon the "statement" that Walter had made to Martin. It is clear from the evidence that Martin and Katriona had played some role in the composition of the document.
However, its final form was prepared by Mr O'Neill who attended on Walter, read to him the statutory declaration, and witnessed his signature on it. Mr O'Neill had sworn an affidavit in the proceedings (concerning costs) but was not cross-examined about the circumstances of the statutory declaration (or at all).
In those circumstances, my opinion is that there is no reason to doubt that the statutory declaration represents an accurate statement of Walter's views on the date it was made.
In the statutory declaration Walter said: -
"There was no agreement made with Robert and Libby concerning my house before they built upstairs at No 78 Kenneth Street Longueville. My understanding was that they would build upstairs where they would live and that Frances and I would continue to live downstairs. I would remain the owner of the property...
The only remarks I ever made to Robert were words to the effect, 'I don't want to invest too much money downstairs because whoever buys the property after Mum and I go will probably pull down the house and put his own building up'. In my opinion the value of the property has always been in the land. As far as resale goes the additions have probably made no difference at all to the property's value. Many local houses have been demolished and the new owners have built from scratch...
....my current will does in fact provide Robert with significantly greater benefits than those which I have provided to my other children. I did this because Robert had spent money building at Longueville and as he didn't have a house that would appreciate in value, like my other children, I did not want him to be disadvantaged...
As stated above there was never any agreement about Robert and Libby having any equity in the land."
I do not read the statutory declaration as being a repudiation by Walter of what Gregory, Martin and Katriona had reported that Walter had said earlier, namely that, in Walter's view, Robert had an "interest" in the Longueville Property which Walter described as being something to the effect "half the house".
Rather, what Walter was at pains to state in the statutory declaration was that there was not what he regarded as an "agreement" to that effect.
That seems to be consistent with a conversation Libby said occurred a few months earlier, on 21 June 2009 in which she says Walter denied there was an "agreement" and said: -
"What agreement? There was nothing in writing, so there was no agreement. You put in $250,000 and I am being generous and leaving you $500,000."
I shall return to this conversation further when I consider in more detail the events of 2009.
Statements by Robert about his interest in the Longueville Property
Michele and Martin said that Robert had never asserted to them that Walter had said that he had a half interest in the Longueville Property.
Robert asserted that he said to Gregory "I own half of Longueville".
Gregory said that he could not recall that conversation but would have disputed the assertion, had it been made.
What was the common intention?
It seems probable that some arrangement or understanding was reached between Walter and Robert concerning the manner in which his proposed expenditure on the first floor extension would be recognised.
As a matter of ordinary human experience, it seems highly unlikely that Robert would agree to fund the extension without receiving from Walter some indication of a means by which he would retain the benefit of that expenditure.
On Robert's own account of it, all that was said was that Walter "supposed" that if Robert built "the second storey" he would own "half the place". On that account, Robert said that he "supposed" he would.
On Robert's account, Walter referred to owning half the "place", rather than half the "property" or the "house".
In Libby's earliest account of the conversation (in her affidavit), she used the same language ("half the place").
Significantly, when asked to give an account of the conversation in cross-examination without regard to her affidavit of the words she attributed to Walter were that Robert would own "half the house", which she then corrected to "half the property" (see paragraph 146 above).
I do not think it unfair to Libby to conclude that she added that correction in order to align her evidence to Robert's case and that, in fact, she has no recollection of Walter referring to "half the property".
The statements that Gregory, Martin, Katriona and Mrs Groves recall Walter making suggest that he understood the arrangement to be that Robert owned 1/2 "the house", and that he drew a distinction, in his own mind, between "the house" and the land.
It will be recalled that Mr Groves's recollection was a little more equivocal, but consistent with the recollection of the other witnesses.
It seems probable that insofar as Walter and Robert turned their minds to what interest Robert should have in the Longueville Property, they would have in mind an interest proportionate to the proposed renovation.
On the face of it, what was proposed was to double the size of the house by erecting a second storey which (to use Robert's words) would "replicate the existing house, and go up wall to wall". Thus, what was proposed was, in effect, to double the size of the existing dwelling.
On the face of it, the granting to Robert of a half interest in the house itself would seem to be in proportion to that kind of proposal.
On the other hand, the conferral on Robert of a half interest in the whole property (that is, house and land) would seem to be out of proportion to Robert's proposed investment.
This is especially so if (as Walter evidently then believed, and as the valuation evidence shows now to be the case) the value of the land at the Longueville Property constituted the major component of the value of the property as a whole.
In all these circumstances, I am satisfied that Walter did not say anything about Robert having an interest in "half the property".
I am also satisfied that if, as Robert and Libby assert, Walter referred to a half interest "in the place", Walter meant a half interest in the house itself, and not in the property as a whole.
I am also satisfied that this must also have been Robert's understanding.
That this is so is confirmed, in my opinion, by later events.
The 1993 will discussion
As I have indicated, in addition to the Alleged Agreement, Robert claims that in 1993, Walter promised him that he would leave him 1/2 the Longueville Property in his will.
In February 1993 Robert obtained an award of damages from this Court in relation to the 1988 accident. After reimbursement of social security payments, Robert received an amount of approximately $515,000 in or about May 1993.
Robert used part of this money to finalise repayment to Walter of the $170,000 lent by Walter to Robert to fund the construction at the Longueville Property.
Robert gave evidence of a conversation with Walter in around May 1993 as follows: -
| Robert: | "Now that I've fully paid you back the loan, how are we going recognise my part ownership of the house? Will we get someone to draft a deed or something? |
| Father: | Well no, no. I don't want Jenny to have a claim on the property. So, I'll put it in my will." |
| Robert: | I'd also like to buy your half of Longueville from you as well. I'd obviously give you and Mum life-tenancy. |
| Father: | No, I'll leave your half in my will. Anyway none of your brothers or sisters, other than Michele, live in Sydney and they all own their houses. Michele will probably remarry to someone who either already has a house or they'll buy one together." (emphasis added) |
The reference to "Jenny" was a reference to Robert's former wife. At the time of the conversation litigation was on foot between Robert his former wife. Libby gave evidence that, at the time of this conversation, Robert's former wife had caused to be served on Walter a subpoena to produce documents and that Walter was very concerned about that development.
Libby gave a similar account of the conversation. She also attributed to Robert the words "my part ownership of the house".
The fact that Robert referred to his part ownership "of the house" (rather than of "the property" or something similar) may suggest, in my opinion, that Robert had the same understanding as Walter as to the arrangements between them and thus as to the subject of the Alleged Agreement.
Certainly, that must have been how Walter understood what Robert said.
I accept that, in common parlance, one often speaks of "my house" as meaning not only the physical structure of a home, but also the land upon which it is built.
Whether this is what Robert had in mind is something that must be further considered in light of later events.
Robert's evidence concerning reliance
Robert gave the following evidence in his affidavit under the heading "Reliance and Detriment": -
"Had my father not said that I would have a 50% share of the house before construction started, and subsequently that he would leave me 50% of the house in his will, I would not have borrowed money to construct the second storey. Instead, Libby and I would have purchased a house in the local area. The house two-doors down Kenneth Street sold for $531,000 at about that time."
Both Robert and Libby gave evidence that, in or around 1989 and 1990 they were looking in the Longueville area to buy a property.
Before me, there was debate as to whether between the date of the Alleged Agreement in July 1989 and the commencement of construction at the Longueville Property in September 1990, Robert and Libby could have afforded to purchase a property in Longueville.
In my opinion, to a large extent, this debate was beside the point.
What Robert must show is that, first, there was a common intention that he would have beneficial interest in the Longueville Property, and second, that he acted to his detriment on the basis of that common intention.
Leaving aside the question of precisely what that common intention was, it seems to be plain that Robert acted to his detriment by borrowing money from Walter to effect the extensions, committing himself to repayment of that loan (with interest) and using his own funds to pay the balance needed to carry out the work.
Robert and Libby gave evidence that, but for the alleged agreement with Walter, they would have looked to purchase a house in the Longueville Property area for an amount in the vicinity of $500,000.
I accept Mr Meek's submission that the evidence shows that it was unlikely that Robert and Libby could have afforded to purchase such a property in 1989 or 1990.
At that time Robert said he had approximately $80,000 in liquid assets which could have been used as a deposit for a property. Had Robert used such funds to pay a deposit on the property, he (and/or Libby) would have had to borrow something in the order of $400,000 to buy a property of the kind proposed. There is no evidence that, in 1989 and 1990 Robert and Libby could have serviced such a loan. On the contrary, the evidence points strongly to the conclusion that they could not.
However, at that time, Robert had a legitimate expectation that he would receive a substantial payment by way of compensation for the injuries sustained in the 1988 accident. Ultimately, in early 1993 he received a payment in the order of $515,000.
In all those circumstances, it appears to me that the probability is that, based on what Walter said to him in July 1989, Robert decided to commit himself to funding the extension of the Longueville Property and thus allocating part of his future compensation payment to that commitment, rather than pursuing, later, a property purchase elsewhere.
In that regard, the die was cast by the time of the 1993 conversation with Walter. By then, the extension had been completed and paid for. There is no evidence of further detriment or reliance by Robert based on what Walter is alleged to have said in 1993.
Of course, the question remains as to the nature of the common understanding in reliance on which Robert took these steps.
The 1993 and 1999 wills
Walter made a will in 1993. That will is not in evidence.
Robert denied having any involvement in the creation of the 1993 will. However the evidence suggests that Robert did have an involvement in the 1993 will.
On 30 July 1999, Frances made a diary note: -
"Got home to find W quite upset over the wording of his will - which Rob drew up in 93 some time ago. It did not coincide with the original draft. I advised him to make another will immediately - with a solicitor this time. I can't imagine that R would try to cheat, but the document was not clearly worded. I doubt whether it would stand up to any challenge that I might provoke."
It is plain from that note that Walter told Frances that Robert had drawn up the 1993 will. There was no dispute between Walter and Robert at this time. There is no reason why Walter would have made this statement to Frances unless it was true.
As I have said earlier, in cross-examination Robert initially denied having seen the 1993 will. But Robert's own evidence (which I will refer to below) makes clear that that this cannot be so. Robert denied having any involvement in the preparation of the 1993 will. It seems to me that Frances's note of 30 July 1999 shows that this evidence must also be wrong.
Walter turned 80 on 20 August 1999. Robert gave evidence that he returned to Sydney from Singapore for Walter's 80th birthday party. Robert said that on that occasion Walter gave him a copy of his 1993 will and asked him: -
"Would you please type my will into your computer and add these new clauses I have written to create an 'education fund' for the grandchildren."
Robert agreed that he typed the 1999 will into his computer. Robert said that he "merely transcribed what my father had written document for him".
That document became Walter's will of 24 September 1999, which was witnessed by Libby and by Mr Groves.
In argument, it was suggested that the form of the 1999 will was corroborative of Robert's contention that Walter had agreed to give him a half interest in the Longueville Property as a whole.
I do not agree. As I have set out above, the will provided that, upon the death of Frances, the "upper storey of the family home at 78 Kenneth Street, Longueville" was to be bequeathed to Robert.
It then provided that the balance of the estate was to be divided into six shares and that Robert's share was to be the greater of (a) half of the unimproved value of the Longueville Property or (b) an equal 1/6 share of the balance of the estate (that is excluding the "upper storey of the family home" bequest to Robert).
To the extent that the 1999 will purported to leave Robert the "upper storey" of the home at the Longueville Property, it was consistent with Walter's statements to the effect that "Robert owns half the house".
Insofar as the will contained a bequest to Robert for half of the unimproved value of the land at the Longueville Property it is, in my opinion, at best equivocal as if Robert was to receive that amount he would receive nothing further from the residue of the estate.
This is certainly how Robert saw it. He said: -
"I agree that the 1999 will was inconsistent with our agreement. I was never happy with it, but it did indicate that I had fully paid for the building works which I knew were of more value than the existing structure due to the upstairs having substantially better views and that the downstairs was still in need of renovation.
In hindsight, I now realise that I should have stood up to him, however at the time I was trying not to rock the boat, and did not want to upset my mother. I also somewhat caught between a rock and a hard place, as I had already invested over $250,000 of my personal injury money into the property some 10 years earlier, and had no guarantee that my father would give it back to me or that he may even possibly tell me and my family to move on."
In cross-examination Robert was asked why he did not challenge his father about the 1999 will. He responded by saying: -
"You didn't know my father. He wasn't the sort of person who you could challenge to change something. When he'd made up his mind to do something that was the way it was going to be."
However, Robert gave evidence in his affidavit that he did speak to Walter about the 1999 will. He said he telephoned Walter from Singapore and the following conversation took place: -
| Robert: | "Why have you only left me half the house in such a roundabout way? |
| Walter: | What do you mean? |
| Robert: | For me to get half the house, I have to give up any claim to my share of the rest of your estate. That was never part of our agreement nor have we discussed it before. |
| Walter: | The rest of my estate won't be worth very much. The bulk of my wealth is in here (Longueville), so you wont be giving up much at all." |
Robert said that Walter continued by saying that he planned to distribute the residue of his estate before he died "so you won't be left out at all".
I conclude, from Frances's diary note of 30 July 1999 that, contrary to Robert's denial, he drew up Walter's 1993 will.
I conclude from Robert's evidence that, relevantly, the 24 September 1999 will was in the same or similar terms to the 1993 will.
I conclude from the conversation Robert had with Walter that he knew that Walter had made a will that was inconsistent with the Alleged Agreement.
The events of 2009
It is common ground that relations between Walter and Robert deteriorated and that there was a falling out between them in June 2009.
Katriona gave evidence that in about May 2009, whilst she was visiting Walter, Walter gave her a copy of the 1999 will and asked her to get it checked saying "it needs to be cleaned up. We do not need all those provisions about your mother living here".
Katriona said she showed the will to a friend of hers who was a barrister and that thereafter she said to Walter: -
"Our barrister friend thinks there will be problems with the will and it should be drafted by specialist solicitor."
One obvious "problem" with the 1999 will was the purported bequest to Robert of the "upper storey of the family home" at the Longueville Property.
Michele gave evidence that in about May 2009, Walter said to her: -
"I'm going to change my will. I want to give Robert something for what he's put into the house and split the rest between all of you. I also want to remove all reference to your mother. When I told Robert that I was intending to rewrite the will he got very angry and said 'I'll move out of the property immediately'. I hadn't even told him what I was planning to do."
In his statutory declaration of 13 October 2009 Walter said: -
"The [1999] will referred to 'upstairs' and 'downstairs' which the solicitor advised me is not a clear definition for dividing a property. There is only one title and I only ever consented to Robert building upstairs. The land remains my property per the title.
At first I thought the conditions on the new will suggested by the solicitor were too much to Robert's advantage but then I agreed to them. When I told Robert that I was drawing up a new will he didn't ask me what the terms of the new will were but he said 'I'll leave tomorrow'."
Robert asserted that at this time Walter was suffering "from the early signs of dementia, including forgetfulness and paranoia" and that he was becoming "increasingly negative and aggressive towards Libby and me".
Robert claims that in June 2009 Walter said to him: -
"I have briefed a solicitor to draft a new will and I worked out your equity in the house will be one-fifth."
On 16 June 2009, Libby said the following conversation took place: -
| Libby: | "Walter, I have just come down to discuss your will. It greatly concerns us that you have decided to change your will, as your will is meant to acknowledge our agreement. We have put a lot of money into the house and given up a lot to look after you and Frances. |
| Walter: | Well my last will was unworkable. |
| Libby: | So how have you changed it, how do you recognize our interest in the home? |
| Walter: | Well, I was trying to tell Robert but he wouldn't listen, but I've decided to leave you 20% of the house. |
| Libby: | But you agreed to leave us half of the place in your will. Why didn't you come and discuss this with us first? |
| Walter: | When Katriona was here I said that I thought Robert was going to be a trouble maker over my will, so I asked her to read me the will and someone had tampered with it. So I asked her to take it to a lawyer, and she said she would take it to a barrister friend of hers, who said the will was unworkable. |
| Libby: | What do you mean tampered with it? |
| Walter: | Well you see, it didn't say what I though it said, so someone must have tampered with it. |
| Libby: | But who would tamper with your will? |
| Walter: | Well someone did. Robert must have tampered with it. Anyway when I tried to talk to him about the new will, he stormed off before I could explain, so he must be guilty. |
| Libby: | Guilty of what? Robert would not have tampered with your will, Walter how could he? Robert only left the room because you had accused him of being a trouble maker and that he had contested Frances's will, and because of that you had changed your will. He didn't challenge Frances [sic] will. He left the room because he was upset that you had accused him of something he hadn't done. I would be upset if you had said that to me, anybody would have been and now you are accusing him of tampering with your will." |
On 21 June 2009 Libby alleged the following conversation took place: -
| Libby: | "Walter we are really concerned about how you have come to the figure of 20% in terms of our share in the property and the agreement that you would leave us half the property. What about our agreement? 20% doesn't even recognize our investment. We've put a lot of money into this place and have looked after you and Frances like we agreed to. |
| Walter: | What agreement? There was nothing in writing, so there was no agreement. You put in $250,000 and I am being generous leaving you $500,000. |
| Libby: | You said that you would recognize our agreement in your will. |
| Walter: | Well you have no capital gain. If you had built a second storey on a house at Bankstown it would only be worth that. |
| Libby: | But this is not Bankstown. Walter if we had put that money into the bank we would have quadrupled it in 20 years. |
| Walter: | Well it wasn't a very astute investment then was it? Anyway, you don't have any legal right. Maybe you have a moral right to live here, only if I let you. |
| Libby: | This is our home Walter and we have every right to live here." |
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant.'
[58] And by the comments of Callinan and Heydon JJ in Vigolo v Bostin (at 230-231):
'We do not therefore think that the questions which the court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in the arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all the potential beneficiaries must be taken into account and weighed with all of the other relevant factors.'"
General principles
In addition to the above matters, there are some general principles that are relevant in this case.
First, freedom of testamentary disposition remains a prominent feature of the Australian legal system: Lajcarova v Todorov at [91].
Furthermore, the court must be vigilant in guarding "against a natural tendency to reform the deceased's will according to what it regards as a proper total distribution of the estate rather than to restrict itself to proper function of ensuring that adequate provision has been made for the proper maintenance and support of an applicant": Cooper v Dungan (1976) 50 ALJR 539 at 542.
Also, there is no obligation upon a deceased to treat all of his or her children equally: Lajcarova v Todorov.
Claims made by adult child
The question of provision for adult children was considered by Brereton J in Taylor v Farrugia [2009] NSWSC 801. His Honour said:-
"[57] It is impossible in this area to describe in terms of universal application the moral obligation or community expectation of a parent in respect of an adult child. I think, however, it can be said that ordinarily the community expects parents to raise and educate their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, and where that is feasible; where funds allow, to provide them with a start in life - such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set their children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation [McGrath v Eves [2005] NSWSC 1006].
[58] Generally speaking, the community does not expect a parent to look after his or her children for the rest of their lives and into retirement, especially when there is someone else, such a spouse, who has a prime obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect parents to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute. It is no longer the case, if it ever was, that an adult child has to establish a special need before obtaining provision from the estate of a deceased parent".
Assessment of adequacy of provision
Section 59(1)(c) of the Act does not define the norm by which the court must determine whether the provision is inadequate for the applicant's proper maintenance, education and advancement in life.
As Hallen AsJ said in Laidlaw & Anor v Kellie; Laidlaw (bht NSW Trustee & Guardian) v Rusiti & Ors [2011] NSWSC 740: -
"The question would appear to be answered by an evaluation that takes the court to the provision actually made in the deceased's Will [...] on the one hand, and to the requirement for maintenance, education and advancement in life of the applicant on the other". (at [43])
Accordingly, it is necessary to consider what provision Robert received under the will.
The provision made for Robert
Otherwise than in respect of the Longueville Property (including Walter's shareholding in L'Orana), Robert and his Siblings received an equal share in Walter's estate. That was a very valuable bequest. Before me there was no suggestion that this aspect of Walter's disposition of his estate was not adequate.
So far as concerns the Longueville Property, Robert received a greater share than his Siblings. He received 1/3. The Siblings shared equally in the remaining 2/3: that is 2/15 each.
But, of course, Robert had made a considerable financial investment in the Longueville property. That is a matter that may be taken into account: s 60(2)(h).
There is no suggestion that any of the Siblings made any such contribution to the improvement of the Longueville Property.
And, Robert (and Libby) provided considerable care for Walter, and for Frances. That is a matter which also may be taken into account: s 60(2)(h).
There was debate before me as to the extent of the care afforded by Robert and Libby. But, on any view of the evidence, it was more - considerably more - than that provided by Robert's siblings.
To say that involves no criticism of the Siblings. All but one of the Siblings (Michele) were living outside Sydney at all relevant times. Robert and Libby were living in the same house as Walter and Frances. It would be in the ordinary nature of things that, living in such close proximity, they would carry most of the responsibility of affording such care as was needed to Walter and Frances.
It was common ground that, from around 2004, Robert took care of Walter's personal affairs and his business interests in L'Orana. Until the falling out in June 2009, Robert was also Walter's attorney under power.
It is also relevant to consider what Walter intended to achieve with his will, and what he said about that matter: s 60(2)(j) of the Act.
Martin recalled Walter often saying: -
"I want to leave all the children an equal share in the property when I go."
Thus, although, the law imposed no obligation on a deceased to treat his or her children equally, Walter stated that this was his intention.
His disposition of the residue of his estate, apart from the Longueville Property, equally between his six children reflects this.
So do the terms of clause 10 of Walter's will. That clause provided that if it was "determined" that Walter held any part of the Longueville Property on trust for Robert, clauses 8 and 9 of the will (providing, in effect, for Robert to get a 1/3 share of the Longueville Property and for the Siblings to share equally the balance) would not apply.
In that event, Walter's interest in the Longueville Property (that is, that part not determined to be held on trust for Robert) was to be divided equally between Robert and the Siblings. Thus, if it were determined that Walter held part of the Longueville Property on trust for Robert, Walter intended that Robert would nonetheless share equally with his Siblings in the remainder.
I have held that Walter did not hold any part of the Longueville Property on trust for Robert. Accordingly clause 10 of the will is not engaged. It does, however, provide an insight into Walter's intentions.
In about May 2009, Walter said to Michele:
"I'm going to change my will. I want to give Robert something for what he's put into the house and split the rest between all of you."
According to Greg's affidavit, Walter told Gregory, after the 4 July 2009 meeting: -
"I acknowledge that he paid for upstairs and so it should be his. I don't think its worth what it cost him to build but I don't want him to be disadvantaged so I've given him about $500,000 more than the rest of you in the will. I've also given him the right to keep the house by paying you out as I always said I would."
In his statutory declaration of 13 October 2009, Walter said:
"...my current will does in fact provide Robert with significantly greater benefits than those which I have provided to my other children. I did this because Robert had spent money building at Longueville and as he didn't have a house that would appreciate in value, like my other children, I did it want him to be disadvantaged".
There are a number of factors at play here.
First, Walter said he wanted to leave all his children "an equal share" in the property, by which Walter may have meant all of his estate, or just the Longueville Property.
Further, Walter seems to have recognised that, by reason of Robert's investment of a considerable part of his accident compensation into the Longueville Property, Robert had been deprived of an opportunity to invest that money in an appreciating asset of his own. As Brereton J observed in Taylor v Farrugia (supra), this is a matter capable of relevance.
On the other hand, so far as the Longueville Property is concerned, he wanted to "give Robert something for what he's put into the house" (because "he paid for upstairs so it should be his") - and "split the rest between all of you".
I would understand that comment to mean that Walter wanted to bequeath to Robert an interest to reflect his "investment" in the Longueville Property - and, seemingly, no more - and bequeath "the rest" to Robert's siblings.
It will be recalled that in 1990, when the renovations were effected, the evidence suggests the Longueville Property was worth something in the order of $500,000. Robert invested approximately $250,000 into the Longueville Property.
As we have seen, at the meeting of 4 July 2009, Robert argued that the effect of the expenditure of that $250,000 increased the value of the Longueville Property by an equal amount, to $750,000, so that Robert's "investment" then represented 1/3 of the property's then value.
There is no expert evidence before me to justify this conclusion, but it does not seem to be unreasonable. The renovations must have caused the value of the Longueville Property to increase, and the increase must have been in an order something near the amount expended.
The fact that, very shortly after the 4 July 2009 meeting, Walter made a will leaving Robert a 1/3 interest in the property, in circumstances where his view at that time was that he should leave Robert "something for what he's put into the house" suggests this was also Walter's opinion.
It is true that Messrs Gedeon and Galletti agree that, now, the house itself is only worth $350,000 and thus a small proportion of the overall value of the Longueville Property - and that the present value of Robert's improvements is even less.
But I do not think it reasonable to assess the "value" of Robert's contribution by reference to the present value of the improvements on the property. Nor, it seems, did Walter.
In these circumstances I find that Walter's bequest to Robert, in clauses 8 and 9 of his will, of a 1/3 interest in the Longueville Property was intended by Walter to do no more than return to Robert his "investment', in 1990 terms, in the Longueville Property, and that, in broad terms that is in fact the effect of the bequest.
The corollary of that finding is a finding that Walter did not intend to, and did not in fact in clauses 8 and 9 of his will, make any bequest to Robert in respect of the Longueville Property qua Robert's position as his child, notwithstanding his earlier statements to the effect that he wished to deal with all his children equally.
Instead, by clauses 8 and 9 of his will, Walter has left to the Siblings, alone, that part of the value of the Longueville Property that does not, in this sense, represent recoupment to Robert of his "investment". He has left Robert no part of that part of the property's value.
This is to be contrasted with clause 10 of the will which, had it been engaged, would have left Robert an equal share in that part of the property's value.
In my opinion, these matters point to the inadequacy of the provision made by Walter for Robert in clauses 8 and 9 of his will.
However, there are other matters I must consider.
Robert's financial circumstances
An applicant for family provision must make a full and frank disclosure of his or her financial circumstances. One reason for this is that, absent such disclosure, the Court cannot make an informed determination as to adequacy of provision.
In Mann v Starkey [2008] NSWSC 263 White J said: -
"It has often been said that an applicant for provision must make a full and frank disclosure of his or her 'financial and material circumstances' (eg Fraser v Venables (Supreme Court of New South Wales, McLaughlin M, 30 September 1998 unreported); BC9805011; Draper v Nixon [1999] NSWSC 629 at [35]; Bennett v Bennett [2001] NSWSC 987 at [23]; Ernst v Ryf [2001] NSWSC 1167 at [37]; Van Ooyen v O'Driscoll [2002] NSWSC 445 at [55], [56]; Zaleski v Patterson [2005] NSWSC 54 at [42]; Troy v Slede [2005] NSWSC 1080 at [20]; Wheatley v Wheatley [2006] NSWCA 262 at [26])." (at [25])
Mr Meek submitted that Robert had failed to make full and frank disclosure and that the Court could not be confident that he had placed before it all of the financial resources available to him.
Robert disclosed assets which he valued at approximately $1.67 million, including a property at 49 Mawson Street, Shortland. He also disclosed assets in Libby's name, including a property at 285 Coxs River Road, Little Hartley, valued at $454,475. The total assets disclosed were said to be worth in the number $2.25 million against which liabilities of sum $750,000 were disclosed.
Robert disclosed that his and Libby's total income was in the order of $93,000 per year and that their total monthly expenses were in the order of $14,500 such that: -
"Our combined monthly expenses exceed our gross monthly income by approximately $7,682 per month. We live on month by month basis and are unable to save any money."
Mr Meek was not able to point to any particular asset, or source of income that either Robert or Libby had failed to disclose.
However, Robert was given notice to produce his personal income tax returns, and those of his company, Bigger Than Ben Hur Pty Limited.
He gave evidence that his last personal tax return was filed in respect of the year 30 June 2006. He later purported to correct this by saying that his last tax return was filed in respect of the year 30 June 2007. He agreed that he had not caused Bigger Than Ben Hur Pty Limited to lodge a tax return since the year ended 30 June 2008.
Robert gave the following evidence: -
| Mr Meek Q: | "Well before any dispute arose with your father in 2009 you had not lodged tax returns; do you agree with that? |
| A: | Yes |
| Q: | And you were earning income during that period? |
| A: | I was a PAYG employee, yes. |
| Q: | And you knew it was your civic duty to lodge tax returns? |
| A: | I believe that the tax department will chase me up if they require them. |
| His Honour Q: | You don't propose to do anything about filing tax returns unless they do? |
| A: | I do. I plan to get up to date, hopefully fairly soon. |
| Q: | I think you had better because one thing I can do is refer these matters to the Australian Taxation Office. You had better think about your position because, absent an undertaking from you that you will properly get your tax affairs up to date, I may well do that." |
In due course, Robert gave an undertaking, through his counsel Mr Anderson, that he would cause his tax affairs to be brought up to date by the end of April 2012.
So far as the tax returns for Bigger Than Ben Hur Pty Limited were concerned, the evidence disclosed that in July 2010, the Australian Taxation Office had brought court proceedings in relation to the failure of Bigger Than Ben Hur Pty Limited to lodge tax returns. A fine was imposed by reason of that failure. Robert said: -
"The company was delinquent, I admit that."
Robert's attitude to the question of Bigger Than Ben Hur Pty Limited lodging tax returns was revealed by the following exchange in cross-examination: -
| Mr Meek Q: | "You know that company ought to lodge tax returns, don't you? |
| A: | Yes. |
| Q: | You have seen fit not to lodge such tax returns, haven't you? |
| A: | I have been very busy over the last couple of years. |
| Q: | The last four years you say you haven't had time to attend to lodge tax returns for that company, is that right? |
| A: | No, I said that last return was, I suppose it probably - well, it's 2012, no, it's three years. |
| Q: | Whatever the period, you have seen fit not to lodge those returns, you agree with that? |
| A: | Actually it's only two years, yes. |
| His Honour Q: | Did you say it's only two years? |
| A: | We lodge -- |
| Q: | Sorry, did you say it's only two years? |
| A: | Yes. |
| Q: | What do I get from that, that it's not significant to fail to lodge tax returns if it's only for two years? |
| A: | No, I'm saying that there has been minimal income so I don't believe there will be a debt payable to the Tax Office. I haven't done the fine calculations. |
In the affidavit Robert swore setting out his financial position, he said: -
"Currently, Libby and I have not filed tax returns for two years. I do not know how much tax and penalties we owe at present. I am now in the process of preparing these and will hopefully have lodged them soon."
In light of the evidence which I have set out above, given by Robert in cross-examination about his personal tax returns, this passage in his affidavit was quite misleading, if not downright false.
When asked questions about that passage, Robert gave the following evidence: -
| Mr Meek Q: | "When you swore this affidavit that wasn't a correct statement of the position in relation to you, was it? |
| A: | Well, we hadn't filed tax returns for two years. |
| Q: | You know that wasn't a proper disclosure of your failure to lodge to tax returns, don't you? |
| A: | My personal tax returns haven't been filed for more than two years, yes." |
Roberts's initial response to Mr Meek's suggestion that the passage in the affidavit that I have set out was not correct, it was, in my opinion, disingenuous in the extreme. He was seeking to argue that the literal truth of the words he had used in the affidavit. It is obvious that his affidavit misstated the position.
The fact that Robert gave this evidence is a factor capable of relevance to, although as I will explain below, not in the result determinative of, the manner in which I approach the second stage of the enquiry under s 59 of the Act.
The section 60 Factors
I know turn to the various factors enumerated in s 60(2) of the Act.
I will consider these matters in the context of the two stage process referred to above (adequacy of provision, and, if inadequacy be found, the provision which ought to be made) as this will permit the application of the statutory criteria to be weighed comparatively in relation to the claims.
Where necessary, I shall also consider the competing claim of Robert's five siblings as, in effect, the beneficiaries named in Walter's will in relation to the 2/3 of the Longueville Property: see Lajcarova v Todorov (supra) at [96].
To some extent, this analysis will involve repetition of matters set out above in relation to the constructive trust claim and of the matters considered above under the heading "The provision made for Robert".
(a) any family, or other, relationship between the applicant and the deceased person, including the nature and duration of the relationship
This aspect has been dealt with at some length earlier in this judgment.
Robert is Walter's youngest son. He lived with his parents at the Longueville Property until he was about 21 years of age. In 1990, after a divorce and a serious motor vehicle accident, he moved back into the Longueville Property, first downstairs and subsequently upstairs upon completion of the extension. He has lived upstairs (with Libby and their children) since then.
The evidence shows that Robert had a close relationship with both his parents for most of the time they lived together at the Longueville Property. I have referred above to the falling out with Walter in June 2009.
As I have mentioned, Robert provided care to his parents.
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate
It was not suggested that, apart from any obligation, or responsibility, arising as a result of their relationship as parent and child, Walter had any legal, or financial, obligation to Robert imposed upon him by statute or common law.
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered
It was not suggested in argument that there was any notional estate, or that the matters in this sub-paragraph were otherwise relevant.
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate
I have set an outline of Robert's financial position above.
I have set out in an annexure to this judgment, the outline prepared by Mr Meek of the financial position of Robert, and the Siblings. Mr Anderson did not suggest there to be any inaccuracy in this summary. So far as the summary refers to Robert's financial position, it includes some of the matters I have referred to above.
Each of the Siblings accepted that they were in a comfortable financial position.
All of the Siblings, except Martin, said they did not assert that their financial position was a reason why no further provision should be made for Robert under Walter's will. Martin said he had no view about the matter and that it was a matter for the Court.
(e) if the applicant is cohabiting with another person - the financial circumstances of the other person
Robert commenced a de facto relationship with Libby in May 1987. They were married on 14 January 1994.
Libby is employed as a part-time/casual teacher at a high school. In 2011 she was employed to teach for five days per fortnight. In 2012 Libby is employed to teach for three days per fortnight. She has not been successful in securing a permanent position.
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated
As a result of a motor vehicle collision in 1988, Robert suffered serious injuries including an intra-cerebral haemorrhage, a complicated fracture of the right acetabulum and a dislocation of the right hip. Robert has been advised that he will require surgery and subsequent rehabilitation at some stage in the future.
Libby has been diagnosed as having early-onset macular degeneration. Her medical costs will probably escalate in the future.
In October 2011, Katriona suffered a severe ankle injury, which is likely to impede her ability to conduct her general medical practice.
(g) the age of the applicant when the application is being considered
Robert was born on 2 October 1960, and is 51 years old.
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant
Robert identifies financial contribution that he has made to the conservation and improvement of the estate of the deceased.
In relation to the Longueville Property, Robert paid for the 1990 extensions. He also paid 1/2 the council and water rates from 1991 to 2004, and since Walter's death. He has also paid for maintenance of the property from time to time.
Robert (and Libby) provided care to Walter and to Frances.
As I have said earlier, before me, there was a dispute as to the need that Walter and Frances had for care during the period 1990 to 2004.
There was no dispute that after 2004 both Walter and Frances required increasing care and that, to a large extent, that care was provided by Robert and Libby.
I do not consider that it is necessary that I conduct a detailed analysis of the contentions of the parties about this matter. It appears to me to be clear from the evidence that, by virtue of their residence in the same house, to the extent that Walter and Frances required care it was given, if not primarily, then to a large extent by Robert and Libby.
(i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate
It was not suggested that Walter had made provision for Robert during Walter's lifetime, apart from the making of the loan in 1990 of $170,000 for the construction of the extension.
As I have set out above, leaving aside the Longueville Property, Walter has bequeathed Robert an equal 1/6 interest in his estate.
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person
In Andrew v Andrew, Hallen AsJ held: -
"While the Court will consider any explanations given by the deceased in the will, or elsewhere, for excluding a particular person as a beneficiary, such explanations do not relieve the court from engaging in the enquiry required by the Act: Slack-Smith v Slack-Smith [2010] NSWSC 625 at [27]. What an explanation may do is cast light on the relationship between the deceased and that person, at least from the deceased's perspective". (at [25])
There is evidence about the testamentary intentions of the deceased.
First, there are the remarks made by Walter to Martin, Gregory and Michele that I have set out above.
Second, Walter made two earlier wills, in 1993 and 1999. I have discussed those wills above. I found those wills to be equivocal in the context of Robert's contentions concerning the Alleged Agreement.
However, they do suggest that Walter long recognised the appropriateness of making a bequest to Robert in respect of the Longueville Property to reflect his expenditure on the property, and over and above a bequest in Robert's favour qua his position as one of Walter's six children.
Third, Walter made the statutory declaration of 13 October 2009 in which he stated, as I have earlier set out, that he had under his will provided Robert with "significantly greater benefits" than his other children "because Robert had spent money building at Longueville and as he didn't have a house that would appreciate in value, like my other children, I did not want him to be disadvantaged"
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the court considers it relevant, the extent to which and the basis on which the deceased person did so
There is no evidence of any direct maintenance by Walter of Robert.
Walter did permit Robert and his family to live upstairs at the Longueville Property without charge, other than 1/2 of utilities and, until 2004, 1/2 the council and water rates.
I do not think this factor weighs heavily, if at all, in the balance.
After all, Robert and his family were living in that part of the house Robert had paid for.
(l) whether any other person is liable to support the applicant
In early 1993, Robert received approximately $500,000 in compensation for the injuries he sustained in the accident of 1988.
Otherwise, apart from the Commonwealth Government's responsibility to continue to provide Robert (along with all other Australians) with a pension in due course, there is no other person with a liability to support him.
(m) the character and conduct of the applicant before and after the date of the death of the deceased person
Mr Meek submitted that there was evidence that Robert had treated Walter in a "shabby" fashion from time to time.
Mr Meek pointed to some acrimonious correspondence from Robert to Walter in July 2009, after the falling out, and to Robert's evidence that, thereafter, he hardly spoke to his father.
It does seem clear that Walter and Robert became estranged in mid 2009, to the point where Robert did not visit his father in hospital immediately before his death.
However, I am not able to form view about the rights and wrongs (if there are any) of those circumstances.
In my opinion it is necessary to look at Robert's relationship with Walter in a broader view and in the context that, for almost 20 years Robert (and Libby) lived with Walter and Frances in relative harmony.
It is true that Frances's diary notes point to occasions of family friction, which may have been caused by Robert's sharp reaction to events.
In cross-examination, Katriona, who is a medical practitioner, agreed that it was not uncommon for people who had suffered injuries of the kind suffered by Robert following the 1988 accident "to become, in general parlance, a little bitter and twisted".
That may explain Robert's reaction to some events over the years.
I do not think it is a factor on which I can place any particular weight when evaluating Robert's claim for provision.
(n) the conduct of any other person before, and after, the date of the death of the deceased person
There was no conduct of any other person relevant to my consideration of this matter.
(o) any relevant Aboriginal or Torres Strait Islander customary law
This factor is not relevant in the present case.
(p) any other matter the court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered
As I have mentioned, at the meeting on 4 July 2009 with Walter, Katriona and Gregory, Robert (and Libby) argued that, so far as concerns the Longueville Property, Walter should leave Robert 1/3 interest in that property "outside of the division apportioned by any will".
Before me, Mr Anderson did not put Robert's claim for family provision on this basis.
Mr Anderson argued that provision should be made on the basis of "the same facts" as those relied upon in relation to Robert's claim for a construction, being matters of detriment and reliance (expenditure on the extensions at the Longueville Property and the allegedly foregone opportunity to purchase in the Longueville area).
Mr Anderson's written submissions did not address the Act claim and, ultimately his oral submission in regard to the Act were: -
"As a fall back position, if your Honour decided that there was [not] an entitlement to a one half interest, then nevertheless your Honour would make an order under the Succession Act for greater provision than that which is already made based on the same facts."
(In the transcript the word "not" is missing but that was the sense of the submission Mr Anderson put).
Mr Meek submitted that a factor relevant to my overall consideration of the claim for provision was that Robert had, as it were, staked his claim in the proceedings upon the existence of the Alleged Agreement and that he should not be permitted to seek provision on a basis inconsistent with that argument.
I accept that there is some force in this submission although, as I will discuss now, I do not think it decisive.
Conclusion as to provision
Taking all these matters into consideration, and in particular the matters discussed above under the heading "The provision made for Robert", the conclusion I have come to is that, so far as concerns the Longueville Property, the provision made by Walter for Robert in clauses 8 and 9 of his will is not adequate.
This is because such provision does no more than recognise Robert's investment in the property and provide for recoupment by Robert of the value of that investment.
In effect, Walter has made no provision for Robert in relation to that part of the Longueville Property as does not represent his investment in it.
Walter said he wished to treat his children equally. But, in my opinion, the effect of clauses 8 and 9 of Walter's will (which, as I have discussed, is to be contrasted with clause 10, had it been engaged) is that, in relation to the Longueville property, he has not done so.
I take into account what I regard as Robert's misstatement of his financial position, so far as concerns the lodgement of income tax returns. I also take into account that the provision I intend to order be made for Robert out of the estate is not that which, in terms, was advocated on Robert's behalf and does not reflect the Alleged Agreement.
The conclusion I have reached is that the position that Robert put forward at the meeting of 4 July 2009 was reasonable, namely that, based on the 1990 figures he then posited, proper provision for him involved recoupment of his investment in the Longueville Property, together with an equal share with the Siblings in the balance of the value of that property.
I have made findings concerning credit critical of Robert. But I do not think those findings affect this conclusion. Nor do I think it appropriate to allow those findings to deter me from addressing the questions posed by the Act and answering those questions in accordance with the requirements of the Act, as explained in the authorities.
In my opinion, the proper provision that should be made for Robert, in addition to the 1/3 interest left to him in the will, is that he should also receive an equal share, with his five siblings, in the remaining 2/3 of the property.
Thus, the further provision that should be made for Robert is for 1/6 of the remaining 2/3 (that is a further 1/9) of the Longueville Property, making a total interest of 4/9, or approximately 44.4 per cent of the property.
That would have the effect of reducing the Siblings' share of the Longueville Property from 2/15 (or approximately 13.33 per cent) to 1/9 (or approximately 11.11 per cent) interest each.
In view of the evidence before me as to the Siblings' financial position, I do not consider this adjustment against their interests to be a reason why provision should not be made as I propose.
Otherwise, in my opinion, Robert's claim should be dismissed.
I invite the parties to bring in short minutes to reflect these reasons and to make submissions as to what order should be made as to the costs of the proceedings.
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Annexure A
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