Henry v Hancock

[2016] NSWSC 71

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Henry v Hancock [2016] NSWSC 71
Hearing dates:	9, 10, 11, 14 December 2015
Date of orders:	16 February 2016
Decision date:	16 February 2016
Jurisdiction:	Equity - Family Provision List
Before:	Brereton J
Decision:	Summons dismissed with costs
Catchwords:	SUCCESSION – family provision – application by adult daughter – where claim made nearly 6 years out of time – whether time should be extended – relevant considerations – where plaintiff decides not to claim because of hope of benefit from defendant – where expectation of inheritance from defendant falsified after time expired – unconscionable conduct – held, sufficient cause for not making application within 18 months established but subsequent delay not satisfactorily explained – held, extension refused – where only available estate is notional estate – whether special circumstances established – held, special circumstances not established – whether plaintiff left with inadequate provision – where plaintiff in circumstances of financial need that was associated with failure of her company’s business – where strong competing claim of deceased’s surviving spouse – where plaintiff has received substantial benefits from deceased during lifetime and defendant – held, not left with inadequate provision and alternatively, as a matter of discretion, provision should not be made
Legislation Cited:	(CTH) Corporations Act 2001, s 436A, s 439A (NSW) Testator’s Family Maintenance and Guardianship of Infants Act 1916 (NSW) Family Provision Act 1982, s 7, s 9(2), s 9(3)(a), s 16, s 27(1)(a), s 28(5) (NSW) Succession Act 2006, s 90
Cases Cited:	Alexander v Jansson [2010] NSWCA 176 Application of O and P [2005] NSWSC 1297 Baker v The Queen [2004] HCA 45; (2004) 210 ALR 1; (2004) 78 ALJR 1483 Barker v Magee [2001] NSWSC 563 Bladwell v Davis [2004] NSWCA 170 Burke v Burke [2015] NSWCA 195 Campbell v Chabert-McKay [2010] NSWSC 859 Cetojevic v Cetojevic [2006] NSWSC 431 Charnock v Handley [2011] NSWSC 1408 Dare v Furness (1998) 44 NSWLR 493 De Winter v Johnstone (NSWCA, 23 August 1995 unreported); BC9505226; [1995] NSWCA 120 Director-General Department of Community Services v The Adoptive Parents [2005] NSWCA 385 Diver v Neal [2009] NSWCA 54 Fancett v Ware (NSWSC, Needham J, 3 June 1986 unreported) Foley v Foley [2008] NSWSC 233 Hastings v Hastings [2010] NSWCA 197 Hughes v National Trustees Executors & Agency Co of Australasia Ltd (1979) 143 CLR 134 John v John [2010] NSWSC 937 Kohari v Snow [2013] NSWSC 452 Lewis v Lewis [2001] NSWSC 321 Massie v Laundy (NSWSC, Wales, Young J, 7 February 1986 unreported) McGrath v Eves [2005] NSWSC 1006 Newman v Newman [2015] NSWSC 1207 Pitkin v Henderson [2001] NSWSC 207 Re Anderson (dec’d) (1975) 11 SASR 276 Re Fulop Deceased (1987) 8 NSWLR 679 Re Guskett [1947] VLR 212 Salmon v Osmond [2015] NSWCA 42 Seeto v Seeto [2013] NSWSC 1232 Sikorski v Michalowski [2007] NSWSC 666 Singer v Berghouse (No 2) (1994) 181 CLR 201 Slack v Rogan; Palffy v Rogan [2013] NSWSC 522 Smith v Johnson [2015] NSWCA 297 Stewart v McDougall (NSWSC, Young J, 19 November 1987 unreported) Stojcesvska v Tosevski [2001] NSWSC 274 Taylor v Farrugia [2009] NSWSC 801 Underwood v Gaudron [2014] NSWSC 1055 Vasconelos v Bonetig [2011] NSWSC 1029 Verzar v Verzar [2014] NSWCA 45 Vigolo v Bostin (2005) 221 CLR 191 Warren v McKnight (1996) 40 NSWLR 390 Zirkler v McKinnon [2002] NSWSC 285
Texts Cited:	W Lonergan, The Valuation of Businesses, Shares and Other Equity, 4th ed (2003).
Category:	Principal judgment
Parties:	Donna-Lee Henry (plaintiff) William Charles Hancock (defendant)
Representation:	Counsel: M Bridger w J. Webb (plaintiff) R Brender (defendant)   Solicitors: CA Williams Legal (plaintiff) Kennedy & Cooke (defendant)
File Number(s):	2013/275166

Judgment

1. Beverley Florence Hancock died on 23 June 2006 aged 64 years. By her last will, dated 30 May 1997, she left the whole of her estate to her husband the defendant William Charles Hancock (with whom she had cohabited since 1975 and married in 1989), who also succeeded by survivorship to their home, business partnership, and joint bank account, and was the designated beneficiary in respect of her interest in a self-managed superannuation fund, the Hancock Family Superannuation Fund (“the Superfund”). By summons filed on 11 September 2013, nearly six years out of time, her daughter of an earlier relationship, the plaintiff Donna-Lee Henry (now aged 50) – to whom administration was granted on 24 July 2014, for the purpose only of an application being made under the (NSW) Family Provision Act 1982 (“the FP Act”) – claims a designating order in respect of property now held by the defendant, and provision out of notional estate of the deceased. The application falls under the FP Act because the deceased died in 2006.

2. In the context of this case, in which the plaintiff as a daughter of the deceased is plainly an eligible person, and any order for provision could be made only out of notional estate, the essential issues are:

1. Has the plaintiff established sufficient cause for not having made the application within time, and if so should time be extended as a matter of discretion;

2. If so, are there special circumstances (for the purposes of the FP Act, s 28(5)) such as to permit a designating order to be made in respect of notional estate, notwithstanding that the application is made out of time; and

3. Has the plaintiff been left with inadequate provision for her maintenance and advancement in life, and if so what, if any, provision should be made for her?

3. However, as is usual in applications under the FP Act (and its predecessor the (NSW) Testator’s Family Maintenance and Guardianship of Infants Act 1916 (“the TFM Act”) and successor the (NSW) Succession Act 2006 (“the Succession Act”)), those issues are not entirely distinct, but are related and overlap: the strength of the substantive claim for provision is relevant to the discretion to extend time and whether there are “special circumstances”, and considerations relevant to the extension of time can also inform whether there are “special circumstances”.

Family history

4. The deceased was born on 13 July 1941. She had two children: a son Dale born of a relationship with one Reginald Murley in 1963, now 52; and the plaintiff, who was born of a short-lived relationship with one Kevin Windle on 25 August 1965. The deceased lost custody of Dale, who was raised by his father’s sister and had no contact with the deceased until he was in his twenties. Although, after the plaintiff established contact with him when she attained 16 years, he then met the deceased on a few occasions, they did not get along. The plaintiff was raised by her mother, and her birth father had very little involvement in her childhood.

5. The deceased and the defendant commenced to cohabit in 1975, when the plaintiff was aged 10. Over the following decade, the defendant became an important figure in the plaintiff’s life, and she regarded him as her father. This continued after the plaintiff left home in 1986 at the age of 21 years, and, from time to time over the next nine years, she returned to stay for periods of varying length with the deceased and the defendant.

6. After 14 years of cohabitation, the deceased and the defendant were married on 31 March 1989, and their marriage subsisted for a further 17 years until the deceased’s death.

Milperra and Chipping Norton

7. On 8 September 1992, the defendant and the deceased, as joint tenants, purchased their first home in Milperra for $230,000, funded by a mortgage loan of $200,000.

8. In 1995 and 1996, the defendant inherited two house properties from the estates of his mother and uncle. These realised $350,000, which he applied to the purchase of a holiday house at Cormorant Avenue, Sussex Inlet for $312,000 (in July 1996), and to discharge the mortgage on the Milperra home (on 13 May 1997). The Milperra home was thereafter sold on 14 November 1997 for $265,000, and the proceeds, together with a mortgage loan, were used to purchase a home at Chipping Norton for $450,000.

9. In 1998, the defendant and his business partner sold their business, from which each received $2.7 million. The defendant used about $250,000 from this source to discharge the mortgage on Chipping Norton.

10. In October 1998, the plaintiff, who had been living in the Chipping Norton property, became engaged to Greg Henry. They were married on 20 March 1999, and their twin children Joshua and Tarah-Lee were born later that year. In late 1998 or early 1999, before their wedding, there were discussions between the defendant, the deceased and the plaintiff in respect of the future of the Chipping Norton property, which culminated in an offer to the plaintiff of a loan of $200,000 from the proceeds of its sale, interest free, and repayable at $1,000 per month – although it seems clear that it was never expected that it would be repaid in full. Chipping Norton was sold, for about $500,000, and the deceased and the defendant, who had increasingly been spending time at Cormorant Ave, moved there permanently. In February 1999, $56,500 was advanced to the plaintiff, who used it as a deposit on a house at Revesby. A further $143,500 was advanced to her following the wedding. The plaintiff made repayments of $1,000 per month from November 1999 until December 2003, when they were suspended by agreement, in circumstances described below.

Sussex Inlet

11. On 18 June 1999, the defendant and the deceased as joint tenants acquired a block of land at Corang Avenue, Sussex Inlet, for $190,000. Using part of the proceeds of the sale of the defendant’s business, they built a house and other improvements, at a cost of about $450,000. That house became their home, and they sold Cormorant Ave on 15 December 2000, for $365,000.

12. In February 2001, the Superfund was established, with the deceased and the defendant as its trustees; they were also the members of the Superfund, and the deceased named the defendant as her designated beneficiary for the purposes of the fund. In March 2001, the Superfund purchased the land and business of the Alonga Waterfront Cabin Park at 166 River Rd, Sussex Inlet, for $1.3 million, using further funds from the sale of the defendant’s business which had until then been invested in a deposit with the Commonwealth Bank in the defendant’s name alone.

13. In March 2002, the deceased and the defendant purchased a caravan and travelled for a while. During this period, the plaintiff performed some work at Alonga. In December 2002, arrangements were made for a friend of the plaintiff, Rebecca Beer, to manage Alonga. The plaintiff says she managed Alonga for four weeks, and remained for a further four weeks to train Rebecca. The defendant agrees that the plaintiff worked at Alonga for about four weeks around this time.

14. In December 2003, the plaintiff asked the deceased if she could suspend repayments on the loan because of financial difficulties. The deceased agreed, and said that she would review the position in a further 12 months. Neither the deceased nor the defendant have raised the matter since, and no further repayments have been made; it is clear that the defendant was agreeable to requiring no further payments, and regards the balance of the loan as a gift to the plaintiff.

15. In mid-2004, the deceased dismissed Rebecca, and this triggered an estrangement between the plaintiff and the deceased, which lasted until 2005. Alonga was placed on the market for sale in 2005, but did not sell. The deceased and the defendant travelled overseas for a while, but this was truncated when the defendant became ill.

The death-bed conversation

16. The deceased was diagnosed with cancer in early 2006, by which time she and the plaintiff were reconciled, and the plaintiff provided support, companionship and assistance to the deceased for the remainder of her life. In May 2006, the deceased was admitted to hospital at Berry for a week. Although she returned to her home, her condition deteriorated on 13 June 2006, and she was returned to the hospital. On 14 June, she told the defendant that she wished to speak to him and the plaintiff together, and he conveyed that to the plaintiff. On 15 June, a conversation took place between the three at the hospital. The plaintiff says that the deceased said to her, in the defendant’s presence: “We have decided to buy you the big house with the verandah”, and that Alonga was for sale, which “will provide the funds to buy the big house for you”. She says that the deceased then said to the defendant: “Look after Donna and the kids. You both need to take care of each other. I want everything to go to Donna after you go. Can you promise me that?”, to which the defendant replied: “Yes, Bev, I’ll look after her. You know that”. The defendant, who was distressed, went outside, and the deceased said to the plaintiff – on her evidence, not in the presence of the defendant – “Everything I own is for you and your children. Bill knows that. He will look after you”.

17. The defendant acknowledges that he said that he would look after the plaintiff, and that he went outside because he was very upset by the deceased’s condition, but does not recall the other aspects to which I have referred. He says that in the circumstances he said whatever he could to comfort the deceased on her deathbed. He says that any discussion about a home for the plaintiff had contemplated a home in which he and the plaintiff’s family might reside.

18. The plaintiff’s version was not the subject of cross-examination, and the defendant concedes that his recollection of these distressing events a decade ago is poor. I accept the plaintiff’s version. But in doing so, it is important to note that:

1. On her evidence, the last of the statements referred to above: “Everything I own is for you and your children. Bill knows that. He will look after you” was not made in the defendant’s presence, but while he was outside;

2. Just what the deceased may have had intended when she referred to “everything” – and in particular whether it was intended to include her interest as joint tenant in Corang Ave, and her superannuation entitlement – is not clear; and

3. Any reference to a new home for the plaintiff’s family contemplated a home in which the defendant also would reside.

19. The plaintiff and the defendant took the deceased home to Corang Ave on 19 June, where she and the defendant cared for her until her death on 23 June 2006.

The estate

20. The deceased’s actual estate amounted to only about $31,173, comprising jewellery, personal and household effects worth about $10,000; a 2004 Ford Falcon motor vehicle worth about $20,000; and 219 shares in IAG worth $1,173.

21. In addition, the deceased held jointly with the defendant their Corang Ave property, then worth $960,000 (her notional half thus being $480,000), a bank account with Macquarie Bank of $268 (her half being $134); and a bank account with National Australia Bank of $43,699 (her half being $21,850). She and the deceased were partners in the business of Alonga, which was said to be worth about $300,000 (her notional half thus being $150,000; however, in reality, as will appear below, the business had no value additional to the land, owned by the Superfund, on which it was conducted). It can be deduced, from movements in the annual accounts of the Superfund following her death, that her member’s account in the superannuation fund was about $762,893. [1]  Thus, the deceased’s interest in the assets from which she could have made provision for the plaintiff, and which could now potentially be designated as notional estate, amounted to about $1,264,877.

    1. Although there is no direct evidence of the state of the deceased’s member’s account, there is evidence that she was a member of the Superfund. The 2006 member’s account statement for the defendant shows an increase from 2005 ($1.106m) to 2006 ($1.869m). That increase cannot be explained by income earnt during the year, or by revaluation of assets (as the overall asset position of the Superfund did not materially change). The probable explanation is that the increase in the defendant’s member’s account reflected a transfer to his account of the balance of the deceased’s account, in conformity with her nomination of him as her designated beneficiary.

After the deceased’s death

22. Corang Ave was transferred to the defendant as surviving joint tenant on 24 July 2006, and Alonga also to him (as surviving trustee of the Superfund) on the same date. As explained above, the deceased’s superannuation benefit (of about $762,893) was transferred to the defendant as her designated beneficiary with effect from 30 June 2006. With the defendant’s agreement, the plaintiff received the deceased’s jewellery, personal and household effects worth about $10,000, and the 2004 Ford Falcon motor vehicle worth about $20,000.

23. In June 2006, the plaintiff raised with the defendant the prospect of their buying a house in which they might all reside, and they inspected a number of properties, but the defendant decided to remain at Sussex Inlet; one reason for this was that it became apparent to the defendant that the plaintiff’s vision was not that he would be a full member of the household, but might reside in a “granny-flat”.

24. In July or August 2006, with the defendant’s concurrence, the plaintiff arranged for Rebecca Beer to return to assist with the management of Alonga. The plaintiff rendered some minor services to Alonga (typing about six letters, and ordering some sheets and curtains) during this period.

25. On 21 August 2006, the defendant made a will in favour of the plaintiff, and appointed her his power of attorney.

26. In May 2007, disharmony emerged between Rebecca Beer and the plaintiff, who appears to have become suspicious of the nature of Rebecca’s relationship with the defendant, and on the defendant’s sixtieth birthday on 12 May 2007, there was an argument in respect of Rebecca between the defendant and the plaintiff, who said she thought Rebecca should leave Alonga. Nonetheless in June 2007, the defendant accompanied the plaintiff and her family on a holiday to Queensland, and on 13 July 2007, the defendant caused the plaintiff to be appointed his co-trustee of the Superfund.

Plaintiff seeks advice and decides not to claim

27. In late 2007, the plaintiff became interested in acquiring a childcare business at Hilltop, and requested the defendant’s assistance as a guarantor for a loan for that purpose. The defendant thought that he was being asked to guarantee $350,000, but then learned that the guarantee would extend to the entire loan of $860,000, and he became hesitant. In February 2008, the plaintiff commenced to investigate the means by which a will could be challenged. As a result, she learned that the limitation period of 18 months from the deceased’s death had recently expired – on 23 December 2007 – but that it was possible to seek an extension of time.

28. On or about 22 February 2008, following a conference with Mr Cheney of Turner Freeman solicitors the previous day, the plaintiff decided not to make a family provision claim, but that if necessary she would consider in due course bringing a claim for provision out of the defendant’s estate after his death. At least from this point, she was aware of her rights. She did not mention to the defendant that she had contemplated such a claim. Despite her denial, I am satisfied that at least one of the factors in her decision not to claim at that time was the hope that he would agree to provide the security required for the purchase of the childcare centre – it being self-evident that he would not likely do so if informed that the plaintiff was considering making a claim. Turner Freeman wrote to her on 22 February summarising their preliminary advice, which referred to her “delicate relationship” with her stepfather, that she was out of time but it was open to apply to the court for an extension, and that “in the circumstances (although we note we cannot give you comprehensive advice without seeing the documents referred to above), you have decided not to bring a claim against your mother’s estate but will, if necessary, consider bringing a claim against your stepfather’s estate”. In a later email to Mr Cheney (on 12 August 2009) she said that in February 2008 “I was afraid of sabotaging my relationship with my stepfather”.

27. The defendant ultimately agreed to provide the requisite security, and on 28 March 2008, the plaintiff’s company D-Lee’s Kids Pty Ltd completed the purchase of the freehold and business of a childcare centre at Hilltop for a total of $820,000, with a loan from the ME Bank of $860,000 which was guaranteed by the defendant and secured over his Corang Ave home. The defendant had also advanced the deposit of $40,000, of which the plaintiff has repaid $29,000.

28. According to the plaintiff, in May 2008 she spent a weekend with the defendant, during which he assured her “it is all yours”. The defendant did not recollect but did not deny this, and it is probable that he said something to that effect; at that stage, she was the beneficiary of his will, the co-trustee of his superannuation fund, and held his power of attorney.

29. At about the same time, the plaintiff pressed the defendant to dismiss Rebecca Beer from Alonga. He did not do so. From about this point, the plaintiff and the defendant became increasingly estranged, and there was little further contact between them.

The defendant remarries

32. On 30 May 2009, the defendant married Rebecca. The defendant informed the plaintiff of this in June 2009, and requested that she collect the deceased’s personalty from Corang Ave, as he was moving to Alonga. Subsequently, in about July, the defendant also removed the plaintiff as a trustee of the Superfund and appointed Rebecca in her place, and revoked the power of attorney. The plaintiff attended at Corang Ave to collect the deceased’s personalty, and, in the course of an argument with the defendant, struck him. Since then, they have been more or less completely estranged, although it is evident that they are not without continuing feelings for each other, and the estrangement is a cause of distress to both of them.

The plaintiff again decides not to claim

33. In July 2009, the plaintiff consulted Turnbull Hill solicitors by telephone about a potential claim, and she received from them a letter dated 3 July 2009 which, although largely in generic form, informed her that she was out of time to make a claim, that in some special circumstances it was possible to obtain an extension, and that advice should be sought “as soon as possible after the death, in order to ensure your rights are protected”.

34. In August 2009, the plaintiff again consulted Turner Freeman, specifically seeking advice as to the circumstances in which an extension of time to claim under the FP Act might be granted. She had a conference with Mr Cheney on 31 August, who suggested that initially they write to the defendant’s lawyers foreshadowing a claim and inviting negotiations; this advice was confirmed in a letter on 2 September 2009, which referred to the fact that she was out of time, but suggested that there might be grounds for an extension. On her instructions, that firm on 16 September 2009 wrote a letter to the defendant’s solicitors Kennedy & Cooke, outlining her claim and inviting negotiations. On 9 October 2009, Kennedy & Cooke responded on behalf of the defendant, unequivocally rejecting the plaintiff’s claim. By letter dated 12 November 2009, Turner Freeman advised the plaintiff that her prospects were not good, that they were not prepared to act on a contingency basis, and:

It is imperative, if you have any intention at all to bring a claim, that you discuss any questions you might have with the writer as soon as possible and, if it is your preference to do so, obtain independent legal advice and file your summons before 23 December 2009. If you wish to discuss the above, please telephone Ian Cheney of this office.

35. While the date of 23 December 2009 was based on a misconception that time expired then (whereas it had in fact expired two years earlier), the plaintiff was aware that that was erroneous. On 3 December 2009, she responded to Mr Cheney by telephone, and told him that she had read the letter, and while disappointed, she accepted that the risks of losing and a costs order against her outweighed the potential benefits of a claim. She said that she would contact Mr Cheney if the defendant died, and they discussed the “3 year claw back provisions”, plainly a reference to potential prescribed transactions by the defendant before his death.

36. Also in November 2009, the plaintiff and her husband sold their home in Tahmoor for $235,000, and purchased – in the name of her husband alone – a replacement home in Thirlmere for $560,000; the purchase price was almost entirely borrowed on mortgage loan.

37. The plaintiff says that she was beset by financial, domestic, physical and emotional problems during 2010.

Sale of Corang Ave

38. The defendant was no longer able to maintain Corang Ave, and in 2010 decided to sell it. As it was third-party security for the plaintiff’s childcare loan, he sought to substitute a cash bond, using the proceeds, as the security. The plaintiff did not at first co-operate in this, and sought advice from Turner Freeman in late 2010 and early 2011 in respect of the proposed transaction. Eventually, after some delay, the transaction proceeded, and the sale of Corang Ave was completed in March 2011, with $860,000 from the proceeds being placed in a term deposit as substituted security for the plaintiff’s loan.

39. Meanwhile, in July 2010, the defendant and Rebecca purchased a home at 394 Sussex Inlet Road for $691,000. The purchase was completed in September 2010, with a mortgage advance of $566,000.

The plaintiff ultimately claims

40. The plaintiff was referred to her current solicitors in April 2011. Thereafter – the evidence does not reveal when – a brief was delivered to counsel, for advice.

41. The plaintiff says that she had a nervous breakdown between August and December 2012.

42. On 20 February 2013, counsel returned the brief, without having provided any advice. The plaintiff eventually filed her summons on 11 September 2013.

43. On 1 October 2014, the plaintiff and her husband sold their investment property at Chapman Street, Tahmoor for $310,000; the net proceeds of $56,256 were applied to tax liabilities and legal expenses.

44. In January 2015, the plaintiff spoke to the defendant on the telephone, and unsuccessfully endeavoured to visit him at a nursing home in which he was then accommodated.

Insolvency of the plaintiff’s company

45. On 4 August 2015, D-Lee’s Kids Pty Ltd was served with an application by the Deputy Commissioner for Taxation for winding-up in insolvency, in respect of tax debts and superannuation guarantee contributions amounting to $347,237. On 1 September 2015, the company appointed a voluntary administrator pursuant to (CTH) Corporations Act 2001, s 436A. The Administrator’s report under the Corporations Act, s 439A, dated 29 September 2015, recommended that the creditors vote in favour of a resolution that the company enter into a Deed of Company Arrangement (“DOCA”), and on 7 October 2015, the creditors resolved that the company enter into a DOCA, which was duly executed on 28 October 2015. The terms and effect of the DOCA are elaborated below.

Extension of time

46. FP Act s 16 relevantly provides as follows:

16 Time for application for provision

(1) In this section, prescribed period in respect of an application in relation to a deceased person, means:

(a) where the Court has, in an order made under section 17, specified a period in relation to the application – that period, or

(b) in any other case – the period of 18 months after the death of the deceased person.

(2) An order under section 7 shall not be made unless the application for the order is made within the prescribed period in respect of that application or within such further period as the Court may, having regard to all the circumstances of the case but subject to subsection (3), by order, allow.

(3) The Court may not make an order under subsection (2) allowing an application in relation to a deceased person to be made after the end of the prescribed period unless:

(a) the parties to the proceedings concerned have consented to the application being made after the end of that period, or

(b) sufficient cause is shown for the application not having been made within that period.

…

47. The effect of the section is to confer on the court a discretion to extend time, having regard to all the circumstances of the case, but only if sufficient cause is shown for the application not having been made within the 18 months period. An applicant for such an extension must demonstrate that there was sufficient cause for not having made the application within time – that is to say, within the 18 months period. So much is mandatory. This requires some explanation for the failure to make the application during that period. Once sufficient cause is shown for not making the application within that period, the discretion is enlivened. It is not a jurisdictional prerequisite that sufficient cause be shown for any further delay after the expiry of the 18 months period; however, any such further delay and the reasons for it are plainly part of “all the circumstances of the case”, to which the court must have regard in exercising the discretion. Other discretionary considerations include whether the extension of time would occasion prejudice to any beneficiary under the will; whether there is any unconscionable conduct on the part of the applicant (which is essentially concerned with deliberate decisions not to make an application, upon which an executor or a beneficiary has acted to their detriment); and the strength of the applicants case for relief under the Act. [2] A mere change of mind on the part of an eligible person, who has decided not to make a claim – even if that change of mind is triggered by the success of a claim of another eligible person, or by another eligible person bringing a claim – is ordinarily not sufficient cause for granting an extension of time. [3]

    2. Re Guskett [1947] VLR 212; Massie v Laundy (NSWSC, Young J, 7 February 1986 unreported); Fancett v Ware (NSWSC, Needham J, 3 June 1986 unreported); De Winter v Johnstone (NSWCA, 23 August 1995 unreported); BC9505226; [1995] NSWCA 120; Warren v McKnight (1996) 40 NSWLR 390 at 394E; Taylor v Farrugia [2009] NSWSC 801 at [14]; Vasconelos v Bonetig [2011] NSWSC 1029 at [16] (White J); Verzar v Verzar [2014] NSWCA 45 at [25].

    3. Zirkler v McKinnon [2002] NSWSC 285; Foley v Foley [2008] NSWSC 233; Taylor v Farrugia [2009] NSWSC 801 at [14].

48. The period of 18 months from the date of the deceased’s death within which an application ought to have been made expired on 23 December 2007; the plaintiff’s application was not commenced until 11 September 2013.

49. Thus the first question is whether sufficient cause is shown for the application not having been made within the 18 months period. In my judgment, the plaintiff has shown sufficient cause for the application not having been made within the 18 months period. Not only was she not aware of her rights at the expiration of that period (although she became aware of them not long thereafter), but more significantly, she was then the sole beneficiary of the defendant’s will, a trustee of his superannuation fund, held his power of attorney, and had a legitimate expectation, based on the death-bed conversation and the defendant’s subsequent actions, that she would in due course be the beneficiary of his estate. There was then no other apparent claim on his testamentary bounty. In those circumstances, it was entirely reasonable for her not to make a claim on the deceased’s estate, anticipating that she would in due course be provided for by the defendant, and recognising the primacy of the deceased’s obligation to him during his lifetime.

50. Having surmounted that hurdle, the plaintiff must also persuade the court that the discretion to extend time should be exercised in her favour, having regard to all the circumstances. Those circumstances relevantly include that in February 2008, the defendant was expressing some reluctance to give the guarantee she needed if she were to purchase the childcare business. Having ascertained that she was out of time, she obtained advice from Turner Freeman, and she decided in the circumstances not to make a claim, for reasons that included avoiding damaging her delicate relationship with the defendant. Thereafter, the defendant – unaware that she had been contemplating making a claim – gave the guarantee she needed, thereby conferring on her a very substantial benefit and exposing himself and his assets to considerable risk. It cannot be conceived that he would voluntarily have done so had he known that there would be a family provision claim, and in my view there is no doubt that the plaintiff’s then decision not to make a claim was influenced by her judgment that if she did so, he would not give the guarantee she wanted. This is the type of “unconscionable conduct” to which the cases refer, and counts as a significant discretionary factor against extending time.

51. Next, following the estrangement in which the plaintiff’s resentment of the defendant’s relationship with Rebecca appears to have been a major contributing factor, the defendant married Rebecca in May 2009, and in July, removed the plaintiff as trustee of the Superfund and his power of attorney. From this point at least, it must have been apparent that whatever expectation the plaintiff had previously had of inheritance from the defendant was no longer realistic. The circumstances that had amounted to sufficient cause for not applying earlier ceased to exist from this point.

52. In that context, in July 2009, she received advice from Turnbull Hill. While it is correct that much of the letter was rather formulaic, it drew attention, in the context of the time limits, to the need to obtain advice “as soon as possible” after the death. Then, in August 2009, she was advised by Turner Freeman that she might have “reasonable prospects in succeeding in a claim under the FPA”, that the time in which she could make a claim had expired; that in “exceptional circumstances” it was possible for the Court to extend the time; that she would need to establish that there were “factors warranting” her bringing a claim because the defendant was not her “biological father”, and she would need to pass “that further threshold test”; and to engage in some sort of mediated settlement rather than engage in expensive litigation. While in some respects that advice was misconceived, those aspects did bear on the importance of acting expeditiously. In October 2009, the defendant by solicitors firmly rejected her invitation to negotiate, and indicated that any claim would be opposed. In December 2009, having been advised by Turner Freeman that her prospects were not good, and that any action should be taken as soon as possible, she decided that the risks outweighed the benefits, and decided not to claim.

53. Had proceedings been commenced promptly after July 2009, a case for an extension could well have been made on the basis that failure to claim earlier was sufficiently explained by the plaintiff’s legitimate expectation of inheritance in due course from the defendant, and its later falsification. But – even if one does not hold the plaintiff responsible for the delay in obtaining counsel’s advice – the period from June 2009 to April 2011 is not adequately explained. She received advice and made a considered decision in late 2009 not to make a claim, and the advice included the importance of acting quickly if action was to be taken. It was submitted for the plaintiff that she was not advised that time was of the essence in respect of commencing proceedings for an extension of time after the 18 months period had expired, but she was at least twice advised of the need to act expeditiously, and in any event it should be self-evident that this was as much if not more the case after time had expired than before. It was also submitted that she was without sufficient funds to instruct solicitors, but her financial position has not materially improved; she was as able then as now to find solicitors who might act for her without requiring upfront payment, and she and her husband in late 2009 sold their home and purchased a new one in the husband’s name alone. She was receiving about $1,000 a week (before tax) from the childcare business, and in addition her husband was earning about $1,500 per week gross from his employment. While this is by no means a high income, I am unpersuaded that she was in a position where with reasonable efforts she could not have found lawyers to act for her, as she later did.

54. In truth, all that has happened since late 2009 is that she has changed her mind about making a claim. Moreover, particularly in a case that was already out of time, it is difficult to see why her solicitors would await counsel’s advice – let alone for 18 months – before at least instituting proceedings for the purpose of minimising any further delay.

55. During this period, on the other hand, the defendant changed his position by selling Corang Avenue, creating the term deposit, and purchasing his current place of residence. While this may not have resulted in prejudice in the sense of material disadvantage – as the term deposit represents proceeds which would otherwise have been caught by his guarantee, and he has effectively substituted one residence for another – nonetheless, having clearly rejected the plaintiff’s claim in October 2009, he has proceeded to arrange his life and affairs in the absence of a claim. A pension from the Superfund provides his main source of income. Meantime, his own health has deteriorated.

56. In my view, although there was sufficient cause for the plaintiff’s failure to commence proceedings within time, and her not doing so at least until July 2009 is adequately explained, the combination of her informed decision in February 2008 not to make a claim, in circumstances where she knew she was already out of time – a decision which was calculated to maximise the prospects that the defendant would agree to provide the childcare centre guarantee, which she desired and he duly provided, which he would not likely have done had he been apprised that she was contemplating a claim – and the absence of satisfactory explanation for her failure to institute proceedings by the end of 2009, after her claim had been rebuffed and when she had advice of the importance of acting promptly and made a considered decision not to do so, tell against an exercise in her favour of the discretion to extend time up to 11 September 2013. Together, these matters persuade me that the discretion to extend time should not be exercised in favour of the plaintiff.

57. This conclusion is reinforced by the circumstance that the plaintiff can only succeed if she obtains a designating order; such order can be made in the circumstances of this case only if there are “special circumstances” within s 28(5); and that establishing “special circumstances” requires something more than is required merely to secure an extension of time within which to commence proceedings.

Special circumstances

58. The FP Act, s 28 (Designation of property as notional estate – powers and restrictions) relevantly provides:

(5) On an application in relation to a deceased person, being an application:

(a) made pursuant to an order under section 16 allowing the application to be made, or

(b) for an order under section 8 for additional provision,

the Court shall not make an order designating property as notional estate of the deceased person by reason of a prescribed transaction or a distribution unless it is satisfied:

(c) that:

(i) the property was the subject of the prescribed transaction or distribution,

(ii) the person by whom it is held holds the property as a result of the prescribed transaction or distribution as trustee only, and

(iii) the property is not vested in interest in any beneficiary under the trust, or

(d) that there are other special circumstances (including, in the case of an application made as referred to in paragraph (a), the incapacity, during any relevant period, of the person by or on whose behalf the application is made) which justify the making of an order so designating the property.

59. While there was no predecessor in the TFM Act, this provision is reflected in Succession Act, s 90 (Restrictions on out of time or additional applications), which provides:

(1) This section applies to proceedings where:

(a) an application for a family provision order is made later than 12 months after the date of the death of the deceased person, or

(b) an application for a family provision order is made in relation to an estate that has been previously the subject of a family provision order.

(2) The Court must not make a notional estate order in the proceedings unless:

(a) it is satisfied that:

(i) the property to be designated as notional estate is property that was the subject of a relevant property transaction or of a distribution from the estate of a deceased person or from the estate of a deceased transferee, and

(ii) the person who holds the property holds it as a result of the relevant property transaction or distribution as trustee only, and

(iii) the property is not vested in interest in any beneficiary under the trust, or

(b) it is satisfied that there are other special circumstances that justify the making of the notional estate order.

60. The use of the formula “special circumstances” reflects an intention that judicial discretion not be confined by a list of relevant factors, by capturing circumstances of potential relevance which are so various as to defy precise definition. [4] Circumstances are special if they are unusual, uncommon or exceptional in character, quality or degree; if they differ from the ordinary or the usual; or if they are particular or individual; but they need not be unique. [5] Circumstances may be special by reason of their weight as well as their quality, and because of a combination of factors. [6] The terms of s 28(5) indicate that property not vesting in interest, incapacity, and circumstances analogous thereto, may constitute special circumstances; but special circumstances are not limited to those suggested by the terms of the section or closely analogous to them. [7] Factors that contribute to a decision to extend time under s 16 can also contribute to a finding of “special circumstances”; [8] however, more is required to establish special circumstances under s 28(5)(d) than to justify an extension of time under s 16. [9]

    4. Cetojevic v Cetojevic [2006] NSWSC 431 at [77], applying Application of O and P [2005] NSWSC 1297 at [57]-[60]; Director-General Department of Community Services v The Adoptive Parents [2005] NSWCA 385 at [44]; Baker v The Queen [2004] HCA 45; (2004) 210 ALR 1; (2004) 78 ALJR 1483 at [13].

    5. Charnock v Handley [2011] NSWSC 1408 at [89] (Hallen AsJ); Underwood v Gaudron [2014] NSWSC 1055 at [203] (Hallen J).

    6. Cetojevic v Cetojevic [2006] NSWSC 431 at [77].

    7. Lewis v Lewis [2001] NSWSC 321 at [85] (Hodgson J); Cetojevic v Cetojevic [2006] NSWSC 431 at [77] (Campbell J); see also Barker v Magee [2001] NSWSC 563 at [51] (Macready M).

    8. Campbell v Chabert-McKay [2010] NSWSC 859 at [87]-[88] (White J); Seeto v Seeto [2013] NSWSC 1232 at [116] (Slattery J); Charnock v Handley [2011] NSWSC 1408 at [89] (Hallen AsJ); Underwood v Gaudron [2014] NSWSC 1055 at [203] (Hallen J).

    9. Campbell v Chabert-McKay [2010] NSWSC 859 at [86]

61. Factors that have contributed to findings of special circumstances have included incapacity as a result of infancy,[10] the fact that it was no fault of the applicant that application was not made within time,[11] the strength on the merits of an applicant’s claim,[12] the absence of prejudice (such as the fact that there has been no significant dealing with the notional estate in the meantime),[13] and the belated falsification, after time for bringing an application under the Act had expired, of a reasonable expectation that if fulfilled would have made an application unnecessary. [14]

    10. Dare v Furness (1998) 44 NSWLR 493; Stojcesvska v Tosevski [2001] NSWSC 274 at [45]

    11. Stojcesvska v Tosevski [2001] NSWSC 274 at [46]; Cetojevic v Cetojevic [2006] NSWSC 431 at [77]; Pitkin v Henderson [2001] NSWSC 207; Sikorski v Michalowski [2007] NSWSC 666.

    12. Stojcesvska v Tosevski [2001] NSWSC 274 at [46]; Cetojevic v Cetojevic [2006] NSWSC 431 at [77], [79]; Campbell v Chabert-McKay [2010] NSWSC 859

    13. Campbell v Chabert-McKay [2010] NSWSC 859; John v John [2010] NSWSC 937;

    14. Alexander v Jansson [2010] NSWCA 176 at [24].

62. Had the only relevant circumstances been the falsification in July 2009 of the plaintiff’s expectation of inheritance from the defendant, a finding of special circumstances might well have been made. But given the plaintiff’s decision, with knowledge of her rights, not to make a claim while seeking the defendant’s guarantee for the childcare loan, and later in December 2009 not to make a claim after weighing the risks and benefits, leaving the defendant in the meantime not only to give the guarantee she sought but otherwise to arrange his life and affairs on the footing that there was no claim, special circumstances such as to justify belatedly disturbing his reasonable expectations in relation to property – a consideration expressly made relevant by s 27(1)(a) – are not established. Alternatively put, given that special circumstances involve something more than would be required for a mere extension of time under s 16, I can be all the more readily satisfied in this case that an extension should not be granted where it would be without utility unless special circumstances were established.

Inadequate provision?

63. Lest I be incorrect in respect of an extension of time and special circumstances, I shall address the plaintiff’s claim for provision on the merits.

64. Applications such as these under the FP Act for provision out of the estate of a deceased person have been described by the High Court of Australia in Singer v Berghouse (No 2) [15] as involving a two stage approach. The first requires the determination of the jurisdictional fact – whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second – which arises only if the first is resolved affirmatively – involves the discretionary assessment of what provision ought to be made out of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process:

The determination of the first stage in the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance, et cetera, appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. 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.

15. (1994) 181 CLR 201.

65. That said, because the considerations relevant to both stages overlap, consideration of a family provision application does not always divide neatly into the two questions, as Callinan and Heydon JJ pointed out in Vigolo v Bostin. [16] Nonetheless, on an application by an eligible person under the FP Act, the court must consider whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education and advancement in life; and if so, what (if any) provision or further provision ought to be made out of the estate for those purposes.

    16. (2005) 221 CLR 191, 192.

66. Under the FP Act – unlike its predecessor – the court considers both these questions as at the date of hearing; s 9(2) requires the court to determine whether the provision (if any) made in favour of an eligible person by the deceased person, either during the person’s lifetime or out of the person’s estate, is inadequate for his or her proper maintenance, education and advancement in life, as at the time the court is determining whether or not to make a family provision order; while s 7 requires the court in determining what provision should be made out of the estate or notional estate of the deceased person for the maintenance, education or advancement in life of the eligible person to have regard to the circumstances at the time the order is made.

67. The relevant principles and considerations that inform those questions were summarised by McLelland J, in Re Fulop Deceased:[17]

In making these determinations, the following principles apply: First, the Court should not interfere with the dispositions in the will except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education and advancement in life. Secondly, the expression 'proper' in this context connotes a standard appropriate to all the circumstances in the case, and thirdly, the Court may take into consideration any matter (whether existing or occurring before or after the death of the deceased which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased, (b) the character and conduct of the plaintiff, (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs, (d) the size and nature of the estate of the deceased, (e) the nature and relative strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased, and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased.

17. (1987) 8 NSWLR 679.

68. It is important also to bear in mind the principle articulated by Young J, as he then was, in Stewart v McDougall, [18] in explaining that the court's role is limited to making adequate provision for an eligible person's proper maintenance and advancement:

It is important to state what the Family Provision Act permits a Court to do and what it does not permit a Court to do. The Act recognises that Australians have freedom to leave their property by their will as they wish with one exception. The exception is that a person must fulfil any moral duty to make proper and adequate provision for those whom the community would expect such provision to be made before they can leave money as they wish. Thus, in these cases, one does not ask if the will is fair, one does not ask if the testatrix divided her property equal, one does not as a judge ask how would I have made a will had I been the testatrix. What must be asked is did the testatrix fail in her moral duty to those who have a claim on her. Even if the Court comes to the view that the question should be answered in the affirmative, the Court still does not remake the will, but only alters it to the extent adequate provision is made for the eligible person in respect of whom the testatrix failed in her moral duty.

18. (NSWSC, Young J, 19 November 1987, unreported).

69. Formerly, the yardstick which was applied was that of the wise and just testator. Nowadays, it is fashionable to couch it in terms of “community standards”, although I am not at all sure that this is any different from the moral obligation of a wise and just testator and, as has not infrequently been pointed out, there is no ascertainable external community standard to guide the decision, which involves a broad evaluative judgment unconstrained by preconceptions and predispositions, and affording due respect to the judgment of a capable testator who appears to have duly considered the claims on his or her testamentary bounty – subject to the qualification that the court’s determination is made having regard to the circumstances at the time of the hearing, rather than at the time of the testator’s will or death. [19]

    19. Bladwell v Davis [2004] NSWCA 170 at [12]-[19]; Slack v Rogan; Palffy v Rogan [2013] NSWSC 522 at [125] (White J); Burke v Burke [2015] NSWCA 195 at [101]-[102] (Ward JA).

70. Fair and reasonable members of the community may well differ as to whether a parent owes a moral or natural obligation to an able-bodied adult child such as to fetter the parent’s testamentary freedom. [20] In Taylor v Farrugia,[21] in a passage which appears subsequently to have received general approval,[22] I said of a claim by an adult child:

These are claims by adult children. 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].

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.

20. Hastings v Hastings [2010] NSWCA 197 at [20] (Basten JA); Burke v Burke [2015] NSWCA 195 at [104]-[105] (Ward JA).

21. [2009] NSWSC 801.

22. See, for example, Kohari v Snow [2013] NSWSC 452 at [121]; Salmon v Osmond [2015] NSWCA 42 at [109]; Newman v Newman [2015] NSWSC 1207 at [114] (Hallen J); Burke v Burke [2015] NSWCA 195 at [106] (Ward JA); Smith v Johnson [2015] NSWCA 297 at [92] (Sackville AJA).

The plaintiff

71. The plaintiff is now 50 years of age. She has been married to Greg since 1998. They have three dependent school age children – their twin children Joshua and Tarah-Lee born in 1999 are now aged 16, while their third child Codi-Jayne born in 2002 is now aged 13.

72. The plaintiff lived with the deceased and the defendant until she was 21 years of age, and thereafter intermittently until 1997. She was educated to year 10, and has since gained a secretarial diploma and a Certificate 4 in Community Services Welfare, and completed a number of workshops and various studies in childcare. She has been employed as a secretary, receptionist and personal assistant. Since 2008, she has been proprietor of her own childcare centre.

73. In 1992, she was diagnosed with depression, for which she continues to be treated by a general practitioner on a mental health care management plan. She has hepatitis C, for which she is treated with interferon, and an associated risk of cancer of the liver. She suffers from chronic obstructive pulmonary disease and asthma, bronchitis, chest infections and chronic rhinitis. She has a past history of cannabis abuse, which she has apparently overcome.

74. Her financial position, and that of her husband Greg, are summarised in the following table:

Assets	Title	Plaintiff	Husband	Total
Jewellery	P	10000	0	10000
Superannuation	P	4500	0	4500
Bank account	Jt	30	30	60
Furniture and effects	Jt	1500	1500	0
Superannuation	H	0	58000	58000
Thirlmere home	H	0	620000	620000
Motorcycle	H	0	12000	12000
Total	16030	691530	704560
Less, liabilities	Title	Plaintiff	Husband	Total
Mortgage [23]	H	0	620000	620000
Credit cards	P	22000	0	22000
Legal expenses	P	4624	0	4624
Credit cards	H	0	7500	7500
Line of credit	Jt	4000	4000	8000
Total	30624	631500	662124

23. It is not entirely clear whether the plaintiff is personally liable jointly with her husband or as a guarantor in respect of the home mortgage, but as a matter of practical reality the liability would be satisfied out of the home which is in his name so I have attributed the entirety to him. From the perspective of the overall financial position of the plaintiff’s family, it makes little difference.

75. Thus, leaving aside the position of the preschool/day-care centre, the combined assets of the plaintiff and her husband amount to $704,560, with liabilities of $662,124, leaving a net position of $42,436.

76. The plaintiff’s gross income (by way of salary from D-Lee’s Kids Pty Limited) during 2015 was approximately $67,000; while her husband’s gross income (including a lease component for a motor vehicle) was about $158,000, so that their total household income is in the order of $225,000 per annum, before tax. Their annual expenses amount to about $122,000.

77. The plaintiff is the sole director of and shareholder in D-Lee’s Kids Pty Limited, which trades as Hilltop Preschool Daycare Centre, and is now subject to a Deed of Company Arrangement. The company’s assets comprise its land at Linda Street Hilltop (to which $594,286 is attributed), and the business conducted from it (to which $353,383 is attributed). Its liabilities comprise a loan from the ME Bank of $770,475, priority employee creditors of $241,760, and unsecured creditors of $543,947.

78. Under the DOCA, the company and/or the plaintiff are to contribute to the Deed Fund, within 21 days of notice by the Deed Administrator (which is to be given on or around 18 December 2015), an amount sufficient to enable:

1. payment in full of the Deed Administrator’s costs, remuneration and expenses. These are estimated at $68,969;

2. payment in full of priority creditors and the secured creditor. The secured creditor is owed $770,475, and the priority creditors $188,626; and

3. payment of a dividend of 20c in the dollar to ordinary unsecured creditors. Unsecured creditors amount to $420,184, and $84,037 is required to produce a 20c dividend.

79. Accordingly, the total contributions that would be required for that purpose would be approximately $1,094,485. While it was anticipated that the plaintiff would make the contributions, in whole or in part, from an award made in these proceedings, under clause 6.4 of the DOCA, if the plaintiff is unable to pay those contributions, she must cause the company to sell the property and business within six months (and, inferentially, pay the proceeds into the Deed Fund). The Deed Fund will be distributed, firstly in payment of the Deed Administrator’s remuneration and expenses, secondly in payment of priority employee creditors, and thirdly pari passu to ordinary unsecured creditors (presumably, all after payment of the secured creditors).

80. In his s 439A report to creditors, the administrator reported having obtained an appraisal of the company’s land and business, suggesting that it could achieve a sale price of $800,000 to $1,000,000. If it were to sell for $1,000,000, it would at least clear the secured creditor, so that the defendant’s guarantee would not be called upon. However, if the land and business were to sell for only $800,000, administration or liquidation expenses of between $70,000 and $100,000 could reduce the amount available for the secured creditor to as little as $700,000, which could leave the defendant exposed on his guarantee to the extent of about $100,000.

79. If the Deed Fund Contribution in the amount calculated by the administrator and notified to the plaintiff is not paid, the Deed Administrator can terminate the Deed (under clause 13.3(f), for “non-payment of the Deed Fund Contribution”), which would almost inevitably result in the company going into liquidation. Although there is a possibility that the plaintiff would be visited with personal liability for the company’s unpaid taxation liabilities (or at least some of them), this appears unlikely in circumstances where she has taken steps to place the company into administration, albeit belatedly, and appears to have virtually no personal assets. In any event, the family home, which was purchased in her husband’s name, is not in jeopardy.

The defendant

82. The defendant is now aged 68, and is in relatively poor health: he had an aneurysm in 1996; he suffers from chronic obstructive pulmonary disease (for which he is treated by a respiratory physician), blood pressure and hypertension (for which he is treated by a general practitioner), prostate cancer (for which he is treated by a urologist), and heart disease (for which he is treated by a cardiologist).

83. He has been married to Rebecca since 2009. They jointly own 394 Sussex Inlet Road, which is worth about $775,000. He has a term deposit of $860,000 (which is security for the plaintiff’s childcare loan); based on the above assessment of the DOCA, there is a significant risk that this will be called on to the extent of up to $100,000. He has personal bank accounts totalling $347, a motor vehicle worth $4,000 and a boat worth $30,000. He owns the former partnership business of Alonga, and is the sole member of the Superfund, which is in the pension phase. However, as explained below, other than cash at bank of $2,547, the business has no value apart from the land, which is worth about $1.5 million. Although he was criticised for not disclosing various other minor assets – such as horses, and farm plant and machinery – I do not regard these as material in the circumstances. He and Rebecca owe $548,000 on the home loan for 394 Sussex Inlet Road. He has a credit card liability of $23,335, and a land tax liability of $32,400.

84. By way of income, he receives interest on the term deposit of $1,767 to $1,920 per month (about $23,000 per annum); and a pension from the Superfund of $98,000 per annum. I am unpersuaded that he has failed to disclose taxable income. Rebecca receives a $3,000 per annum carer’s allowance (for caring for the defendant), and $38,000 allowance from Life Without Barriers (for acting as a foster carer, the costs associated with which are likely to substantially exceed the allowance). Thus their total income is in the order of $162,000 per annum.

85. His and Rebecca’s financial position is summarised in the following table:

Assets	Title	Defendant	Wife	Total
394 Sussex Inlet Rd	Jt	387500	387500	775000
Term deposit	D	860000	0	860000
Bank accounts	D	347	0	347
Alonga business	D	2547	0	0
Superannuation[24]	D	1543973	0	1543973
Boat	D	30000	0	30000
Motor vehicle	D	4000	0	4000
Total	2828367	387500	3213320
Less, liabilities	Title	Defendant	Wife	Total
Mortgage on 394 Sussex Inlet	Jt	274000	274000	548000
Credit cards	D	23335	0	23335
Land tax	D	32400	0	32400
Provision for guarantee[25]	D	100000	0	100000
Total	429735	274000	703735

24. See [115] below.

25. See [80] above.

86. Thus his net assets amount to $2,398,632, and his wife’s to $113,500, a total of $2,512,132.

87. In recent years the defendant has been reunited with his 41 year old son Matthew, born to a girlfriend in 1973, whom he had not seen for over 30 years, and has discovered that he has four grandchildren by Matthew.

88. The trustee of the Superfund is now W & R Hancock Pty Ltd, and the defendant and Rebecca are members of the Superfund. The most recent available financial statements are those for the year ended 30 June 2014, which report that there are net assets available to pay benefits of $1,343,973 (based on attributing $1.3 million to the Alonga land), and a liability for accrued benefits, all of which are vested, to the defendant of the same amount. This indicates that although the Superfund is in the pension phase and the defendant is drawing a pension of $98,000 per annum, his benefits have vested and he could realise for his own benefit the whole of the net assets of the fund.

89. However, there was a substantial issue as to the value of the property. The plaintiff (relying on the evidence of Mr Austin) contended that the land and business together were worth $1.9 million (of which $1.45 million was attributable to the land and $450,000 to the business). The defendant (relying on the evidence of Mr Rogers, the defendant’s valuer) contended that the land, valued as land only without regard to the business, was worth $1.35 million, and (relying on the evidence of Mr Mansfield) that the business had no additional or separate value.

90. The valuation exercise is complicated by a number of factors. One is that the legal structures that have been adopted involve separate ownership: while the land was and remains owned by the Superfund, the business was owned formerly by the partnership of the defendant and the deceased, and now by the defendant. It was for that reason that the defendant contended that the two should be valued separately, and that the land value should disregard the business. However, it is a fundamental principle of valuation that one must first ascertain the highest and best use of the land. It is manifest that in reality, the business has no value apart from the land: a standalone leasehold business would not be viable after provision for rent and proprietors’ remuneration, and the only potential purchaser is one who would acquire the land for use as an owner-operated cabin park. For any such purchaser, the business would be a relevant and important consideration. For valuation purposes, separation of the business from the land is an artificial exercise, contrary to principle – as Mr Rogers conceded; he acknowledged that but-for his instructions to disregard the business, he would have taken into account the financial results produced by the property, because the only likely purchaser would be a person interested in purchasing the property as a going concern. Accordingly, I do not accept the defendant’s approach, and prefer the plaintiff’s. However, that does not mean that I wholly accept the evidence of Mr Austin, nor that nothing is to be gained from the evidence of Mr Rogers and Mr Mansfield.

91. The subject property is a waterfront cabin park of 6627m2, on which there are 14 cabins. According to the financial statements, after adjustments, the annual turnover is $220,000 and net operating profit $20,000; this has been reasonably consistent for the last three financial years.

92. The sales evidence traversed a number of more or less comparable properties; the most relevant, in order of recency, were as follows:

1. Peace Resorts, a nearby waterfront property of 4,888m2 on River Road at Sussex Inlet, was sold by a liquidator in or about April 2015 for $1.8 million. It comprises 15 new cabins, but had no reliable historical financial records.

2. Anchor Bay, a very well maintained bed and breakfast style motel property of 12 rooms on 1,807m2, with a turnover of $340,000 and net operating profit of $166,000, sold in July 2014 for $1,200,000 (indicating a yield of 13.5%). This is a very different type of property, some distance away at Greenwell Point, and of use only for deriving some indication of the yield derived from properties in the tourist accommodation industry.

3. Laguna Lodge, at 160 River Road, Sussex Inlet, a cabin and caravan park with 6 renovated 1960 two-bedroom units and 6 caravan sites, on 5,052m2, and a reported turnover of $90,000, sold in June 2013 for $1,250,000 (an indicative yield of 4%). However, the reliability of the reported results is doubtful.

4. Seacrest, a property of 14,100m2 on Sussex Road, Sussex Inlet, with turnover of $410,000 and net operating profit of $287,000, sold in May 2013 for $2,050,000 (indicating a yield of 14%). It is a much larger property than the subject, with 96 van sites, and 4 new holiday cabins.

5. Palm Beach, a property of 6,051m2, with a turnover of $279,000 and net operating profit of $207,000, sold in July 2012 for $1,525,000 (indicating a yield of 13.6%). It has 11 cabins and 55 caravan sites.

93. Using a capitalisation of maintainable earnings approach, Mr Austin valued the land and business together at $1.9 million. Mr Austin opined that with “fair average management” it should generate turnover of at least $306,000 and net operating profit of $216,000, and that this implied that it was poorly managed or that there were unaccounted for receipts. He said that most comparable operations had at least a 60% occupancy rate, and for the subject not to do so implied either that it was very poorly managed or that the reported figures did not reflect reality. It became apparent that Mr Austin believed that there was “a whole lot of cash that’s not been put through the books”, but the evidence did not sustain that assumption. While the evidence revealed that there were some cash takings, it also appeared that from time to time cash was banked. I am not satisfied that the financial statements are materially understated.

94. Mr Mansfield conceded that a turnover of $306,000 might be achievable, but only with increased expenditure on wages, improvements, capital equipment, marketing and increased management time and expertise. He was of the view that to achieve this, the expenditure allowed by Mr Austin should be increased by at least $24,500, and in addition that provision should be made for proprietors’ remuneration or notional wages, and notional rent. While I accept that Mr Mansfield’s adding back of $24,500 of Mr Austin’s adjustments to expenditure is appropriate, in my view, Mr Austin was correct in saying that the subject had to be treated in this respect in the same manner as the comparables, and as there was no provision for the proprietors’ remuneration or wages, or rent, in the financial results of the comparables – in each case, net operating profits were calculated without provision for a management wage or notional rent – none should be made in respect of the subject. This is reinforced by the circumstance that any purchaser would likely be a prospective owner-operator, and a stand-alone leasehold business paying rent would not be viable. Moreover, as one is valuing the land, not a stand-alone leasehold business, notional rent is irrelevant (as Mr Mansfield accepted). Mr Austin’s net maintainable earnings of $216,363, reduced by $24,500, results in $191,843.

95. The next question is whether the property should be valued on the basis of “fair average management”, as distinct from historical results. Lonergan observes that while there are three possible ways to value a business or entity – (1) ‘as is’ in the hands of the existing owners, (2) ‘as is’ but with the removal of glaring inefficiencies, or (3) in the hands of a new owner able to achieve synergies and other benefits – “it is generally inappropriate to value on the basis that the new owner is able to achieve full synergistic and other improvements”, because such an approach is often misguided, as steps taken to improve profitability often also have other (sometimes unexpected) consequences, often require upfront capital expenditure, and almost always take some time to implement; moreover, many willing but not anxious buyers acquire businesses with a view to improving their performance, and there would be no gain to be made if the price reflected the capital value of the expected profit improvements. He concludes that, as a general guide, the valuation should reflect the removal of glaring inefficiencies but not other extra profit improvements that the purchaser alone can make as a result of their special skills or synergy benefits. [26] When this principle was put to him, Mr Austin accepted that it was inappropriate to value on the basis that a purchaser would obtain full synergistic or other improvements.

    26. W. Lonergan, The Valuation of Businesses, Shares and Other Equity, 4th ed, (2003) pp24-25.

96. In this case, while the future improvements would require an increased management effort, they do not reflect the special skills of a particular purchaser, or synergies that only that purchaser can achieve; achievement of a 60% occupancy rate appears to be more in the nature of removal of glaring inefficiencies. Accordingly, I adopt net maintainable earnings of $190,000.

97. Mr Austin capitalised his net maintainable earnings of $216,343 at 11.5%. This yield was said to be derived from the comparable sales, to which I have referred. However, it was not supported by the sales evidence, which (disregarding the dubious Laguna Lodge results) indicates a yield of 13.5 to 14%. Mr Austin suggested that this was explicable, in the case of Anchor Bay by the circumstance that it was a split site with some additional management burdens, and in the case of Seacrest by the circumstance that the land was crown leasehold. These seem faint explanations, where there was no evidence of any reasonably comparable property with a yield below 13.5%. Mr Mansfield thought that a yield of 14% was more appropriate, on account of the risk and effort involved in achieving the increase in turnover to in excess of $300,000 and maintaining the relatively older improvements (vis-à-vis the comparables). In my view there is considerable force in this, and I adopt it. $190,000 capitalised at 14% produces $1,357,142.

98. However, while this implies a valuation of $1.35 million, the future maintainable earnings figure is somewhat speculative, and there is room for debate as to the attribution of the benefit of future improvements. For those reasons, it is appropriate to consider alternative valuation approaches.

99. A direct comparison approach uses the comparables not to derive a yield (as Mr Austin did), but to describe the range of value of comparable properties and place the subject property within that range. Plainly, of the comparables, the most useful (in the sense of those most like the subject) are Laguna Lodge, Palm Beach and Peace Resorts.

100. Laguna Lodge ($1,250,000, June 2013), is very close to the subject. The land (5052m2) is smaller than the subject (6627m2), and the improvements fewer, though newer and better (6 renovated 1960 two-bedroom units and 6 caravan sites). Like the subject, it is subject to flood inundation. Its reported results of turnover of $90,000 are significantly inferior to the subject, though of dubious reliability. The subject is superior having regard to land size, improvements and reported financial performance.

101. Palm Beach ($1,525,000, July 2012), the oldest sale, is not waterfront and is more remote from the subject. The subject is slightly superior in land size (6051m2) and location, slightly inferior in improvements (while Palm Beach has 11 cabins, fewer than the subject’s 14, this is more than offset by its 55 caravan sites, which the subject does not have), inferior reported results (Palm Beach’s advised turnover of $279,000 and operating profit of $207,000 is superior to the reported results for the subject, though comparable to Mr Austin’s assessment of the subject’s potential with fair average management). The plaintiff’s valuer Mr Austin rejected the proposition that it was the best comparable, because (he said) it was not a waterfront property. The defendant’s valuer Mr Rogers did not consider this sale, but in cross-examination suggested that, by reference to the income it was producing, it was not inferior to the subject. Overall, in my assessment, the two properties are quite closely comparable, though the caravan sites might give Palm Beach a slight advantage in earning potential.

102. Peace Resorts ($1.8 million, April 2015), the most recent sale, is, like the subject, a waterfront property, close by the subject (four or five properties down River Road). The subject is inferior in improvements (Peace Resorts has 15 new cabins, fitted out, built in 2013 or 2014), but comparable in location, and superior in size (Peace Resorts is only 4888m2); moreover the sale was by a liquidator, there were no reliable historical financial records, and there was no going concern at the time of sale, so a purchaser would have had to incur start-up costs. Mr Rogers was of the view that the circumstance that Alonga was a going concern was distinctly outweighed by the superior improvements on Peace Resorts. Having regard to the difference in the improvements and the start-up costs, I would assess the subject as overall slightly inferior.

103. Mr Rogers said that the market had improved slightly over the last twelve months, by perhaps 5 to 10%. Applying a 10% increase to Palm Beach (now more than 3 years old) would indicate a price of at least $1,677,500. Applying only a 5% increase to Laguna Lodge (now more than 2 years old) would indicate a price of at least $1,312,500.

104. On that analysis, I would conclude that the direct comparison method indicates that the capitalisation of maintainable earnings produces too conservative a result. Essentially, this is because in the context of this type of property, a purchaser will rely to a considerable extent on his or her assessment of the capacity of the property to generate income, based on the improvements and facilities, rather than on the reported figures which will often be viewed with some scepticism. Giving greatest weight to Palm Beach, adjusted by 10% to bring it up to date, and allowing for its possibly slightly superior earning capacity having regard to the improvements, I would have attributed a value of $1,650,000 to the subject.

105. Investment properties may be valued by reference to the capitalised value to the owner of the future rents. The Alonga business pays rent to the Superfund of $96,000 per annum. This is not an arms-length transaction, and thus the capitalisation of rent should be treated with caution; nonetheless, it provides some indication of the value of the property to the Superfund as its owner. Mr Rogers confirmed that an appropriate capitalisation rate for a risk-free investment would be in the order of 3 to 4%, and for a high quality rental investment property with an A-grade tenant, would be in the order of 6 to 7%; for a lower-grade tenant and lower-quality property, in the order of 8 to 10%. As in this case the “tenant” is entirely under the control of the landlord, it may be regarded from this landlord’s perspective as entirely reliable and thus very high quality. Annual rent of $96,000 capitalised at 6% indicates a value (to the lessor – in this case the Superfund) of $1.6 million. This tends to support the result I have reached on the direct comparison approach.

106. The foregoing is based on evidence of sales before August 2015. On 27 August 2015, the property was inundated by a flood, which occasioned some damage to the property and improvements, though the extent of the damage was disputed. Mr Rogers inspected the property shortly before the hearing, as well as when he undertook his valuation, and on the latter occasion observed certain damage to the property and the improvements on it, although his evidence does not establish that the damage had taken place since his first inspection: while he said that he had not on his earlier inspection noticed damage to the extent observed on the later occasion, he was unable to say that any or all of the damage was not already present prior to the August 2015 inundation. He opined that the damage observed would mean that as a result of the damage a purchaser would want a discount. He said that the amount of the discount was very difficult to ascertain, and there were no directly comparable sales, but the price might be $1 million, plus or minus 10 or 20%. This range – $800,000 to $1,200,000 – represents a discount of between $150,000 and $550,000 on his valuation of $1.35 million.

93. Mr Austin, having been shown reports prepared by loss adjusters for Alonga’s insurers, opined that the flood damage would have a “highly minimal” effect on the valuation; the buildings were already very old (more than 60 years) and had almost certainly been previously inundated, and all the adjacent properties were also flood-prone. He acknowledged that there would be “some reduction”, but not a significant one.

94. Mr Austin’s reference that the adjacent properties were all flood prone is not persuasive because, if they incurred damage, their value too would presumably have depreciated. While the extent of the damage to Alonga is not clearly established, it is clear that the property has incurred damage, which was not noted by either valuer at the time of their original valuations. This suggests that the damage observed recently by Mr Rogers was associated with the flood; in any event, the presence of damage – whenever it was incurred – will have an impact on a purchaser. However, some repairs have already been effected. The Park was not closed during the September school holidays, although business was less than usual for that period. An insurance claim has been submitted, and it is by no means certain that it will be declined.

95. Whether or not some or all of the damage was attributable to the flood or preceded it, its existence would provide a purchaser with a bargaining lever. It was not taken into account in the pre-flood valuations and is not reflected in the comparables. Thus, some allowance must be made for it. The evidence does not admit of any precision in this respect, because there is no acceptable evidence of the cost of repairs, and – as Mr Rogers said – no comparable sale. Mr Austin did not inspect the damage and offered no figure. Although the absence of acceptable evidence of the extent of damage and cost of repairs precludes acceptance of so large a discount as $550,000 (the extreme end of Mr Roger’s range), his more conservative assessment of a discount of $150,000 is the most satisfactory available evidence, although it is necessary to factor in the possibilities, on the one hand, that it could be more, and, on the other, that there could be an insurance recovery. Doing the best I can with inadequate evidence, I propose to allow a discount of $150,000 from the pre-flood valuation of $1.65 million.

96. The result is that in my judgment the value of the property, including the business, is $1.5 million. Substituting this for the $1.3 million adopted in the 2014 Superfund accounts, the net assets available to pay benefits are $1,543,973, and the defendant’s accrued benefits equate that amount.

Evaluation

111. It is the plaintiff’s case that substantial provision of no less than $750,000 be made for her, by designating $750,000 of the cash security held by the ME Bank as notional estate. The defendant submitted that she had not been left with inadequate provision, and that no family provision order should be made.

112. In considering whether the plaintiff has been left with inadequate provision for her maintenance and advancement, the starting and strongest point is her financial position. She and her husband have three children to support, combined credit card debts of $37,500, a mortgage secured by the Thirlmere property of $620,000, and a surplus of assets over liabilities of only $42,000. But while their position is undoubtedly precarious, she has a husband, who has the primary responsibility for her maintenance and support, and that of their children. Their combined gross annual income of $225,000 appears adequate to service their outgoings of $122,000. Moreover, their current position must be attributed largely to her management of the childcare business, which has failed, apparently largely due to her persistent disregard of taxation and superannuation guarantee obligations over several years, while she continued to draw a salary (in excess of $1,000 per week gross in 2010, increasing to $1,292 in 2013) for herself.

113. Any provision for the plaintiff is likely to be used to contribute to the Deed Fund. While I readily accept that payment of an eligible person’s creditors can be maintenance or advancement of the eligible person,[27] in this case the payment would be not of her creditors but of the company’s creditors, for which she does not appear to be personally liable; as explained above, her personal position does not appear to be exposed to the company’s liabilities. Thus, while a family provision order may assist the plaintiff to meet her undertaking to contribute to the Deed Fund, and ultimately enable her company to pay its creditors under the DOCA, it would not materially contribute to her own maintenance or advancement.

     27. See, for example, Diver v Neal [2009] NSWCA 54, [1] (Allsop P), [69] (Basten JA).

114. The plaintiff submits that she provided assistance to the deceased and the defendant during their lifetime. I accept that she occasionally helped out with management of Alonga if they were travelling, that she arranged for her friend Rebecca to work there, and she occasionally looked after their home when they were absent. She also assisted the deceased in caring for the defendant when he was became ill in 1996, and provided emotional care and support to her then. She provided care and support to the deceased during her terminal illness over the last six months or so of her life. However, it has to be said that there is nothing remarkable about these contributions to the welfare and estate of the deceased.

115. The plaintiff invokes the deathbed conversation in support of her claim. While I accept that promises made and expectations raised by a testator can be relevant to the ascertainment of what is proper provision,[28] the deathbed conversation relied on in this case did not establish a legitimate expectation of inheritance from the deceased; if anything, it pertained to what would happen after the defendant’s demise. Moreover, it would be unreasonable to hold the defendant to what he may have said when his wife was in extremis and he would have said anything to give her comfort. And in this day and age, a surviving spouse is not expected to remain forever in solitude and not take another partner; indeed in my view, it is usually unreasonable to condition provision on him (or her) doing so.

     28. See Re Anderson (dec’d) (1975) 11 SASR 276 at 284; Hughes v National Trustees Executors & Agency Co of Australasia Ltd (1979) 143 CLR 134 at 148; and Alexander v Jansson [2010] NSWCA 176 at [18] (Brereton J; Basten JA and Handley AJA concurring).

116. Moreover, the plaintiff has received significant benefits from the deceased and the defendant, during the deceased’s lifetime, and after her death, including the cost of her education at Hurstville Secretarial College; $23,000 to pay out her Celica motor vehicle in 1995 when she was 28 years of age; $20,000 being the cost of her wedding in 1999; an interest free loan of $200,000 in 1999 (from the proceeds of the Chipping Norton property), of which $40,000 was repaid and the balance forgiven; her mother’s motor vehicle, from her estate in 2006, which she later traded in (in or about 2012) for $5,000; the deposit on the childcare centre of $40,000 in 2008, from the defendant, of which $29,000 has been repaid; the guarantee of her company’s debt to the ME Bank of $860,000, by the defendant, also in 2008, in respect of which there is a substantial risk that up to $100,000 will be called upon; her mother’s jewellery, furniture and personal effects, from her estate in 2006, worth about $10,000.

117. The deceased’s only assets of significance were her interest (as a joint tenant with the defendant) in Corang Ave, and her member’s account in the Superfund. Her primary testamentary obligation was undoubtedly to the defendant, as her life partner of 31 years and surviving spouse. The strength of his claim is accentuated in this case by his deteriorating health, and particularly by his extensive contributions to the deceased’s estate and welfare, to which s 9(3)(a) directs attention. The defendant made very substantial contributions to the estate (or notional estate) and welfare of the deceased: he was her life partner; he cared for and supported her throughout their cohabitation and marriage; and his inheritance and the sale of his business provided the source of funds which was ultimately reflected in their main joint assets, Corang Ave and the Superfund, which are the assets which comprise the potential notional estate, and the establishment of the Superfund and its acquisition of Alonga.

118. Corang Ave was their joint home, and it would have been contrary to her moral obligation to the defendant to have severed the joint tenancy and deprived her surviving spouse, whose contributions had largely funded the acquisition and construction of the home, of it. As to her superannuation interest, it appears that the defendant and the deceased were reliant on their joint superannuation pensions for their income; and once again, although in the deceased’s name, her superannuation interest was the result of contributions by the defendant from the sale of his business.

119. In my view, having regard to the primacy of the deceased’s obligation to the defendant; the provision already made for the plaintiff by the deceased and the defendant – including, at her request, to assist her to acquire the childcare business, the consequences of the failure of which she now seeks provision to address; and the circumstance that her current situation is the consequence of her management of the childcare business (and non-payment of taxation and superannuation guarantee obligations over a number of years); it cannot be said that the plaintiff has been left with inadequate provision. While the deceased made her last will, leaving the whole of her estate to the defendant, as long ago as 30 May 1997 – before the defendant sold his business, before the plaintiff’s marriage, and before the birth of the plaintiff’s children – nonetheless, had the deceased revisited it prior to her death – and the death-bed conversation suggests that she was conscious that the defendant would inherit her assets – in the circumstances then prevailing her will would still have reflected a proper appreciation of the respective claims, and an acknowledgement of the primacy of the defendant’s claim, based on his status as her long-term spouse, his needs in the context of his age and his declining health, and his very substantial contributions. In my view, this remains so, notwithstanding the subsequent changes in the plaintiff’s circumstances – including the defendant’s remarriage, and the failure of the plaintiff’s childcare business – not least because the defendant has already made a significant contribution at the plaintiff’s request to her acquisition of the childcare centre, notwithstanding that it has failed under her management, largely due to the disregard of taxation obligations. Whether expressed in terms of moral obligation or community expectations, the deceased was not obliged to make provision for the plaintiff out of Corang Ave (or its proceeds) and her superannuation interest, to the detriment of the defendant, essentially to enable the plaintiff to remediate the consequences of an unsuccessful commercial venture; indeed she would likely have failed in her moral obligation to the defendant had she done so.

120. Even if it were considered that the plaintiff had been left with inadequate provision, I would not as a matter of discretion make an order in her favour, having regard to the matters referred to in the foregoing paragraph – in particular, her own responsibility for her current position, and the adverse impact of an order on the defendant, who has already downsized his home, and – by reason of the requirement to set aside the term deposit to secure the childcare loan – incurred a substantial mortgage, which is currently in default. If the term deposit were designated notional estate, he would be left with the burden of that mortgage. If his superannuation interest were designated notional estate, the practical consequence would be a sale of Alonga, which would adversely impact his income and deprive him of an asset to the acquisition of which he had practically exclusively contributed from the sale of his business, and which was intended to provide for his retirement. This would disturb previously settled arrangements for his retirement, and diminish his capacity to provide for himself and his wife in his remaining years. Moreover, any provision made for the plaintiff would facilitate satisfaction of the creditors of D-Lee’s Kids, rather than the maintenance and advancement of the plaintiff.

121. None of this is to deny that the defendant may in due course have some obligation to make provision for the plaintiff: he may well have to consider and weigh the competing claims on his estate of Rebecca as his surviving (but relatively short-term) spouse, his recently rediscovered son, and the plaintiff (as his some-time dependent member of the household and step-daughter), whose claim to inherit from her mother was properly subordinated by the deceased to the defendant’s primary claim.

Conclusion

122. My conclusions may be summarised as follows.

123. Although there was sufficient cause for the plaintiff’s failure to commence proceedings within time, and there was sufficient cause for her not doing so at least until July 2009, her failure to institute proceedings by the end of 2009, after her claim had been rebuffed and when she had advice of the importance of acting promptly but made a considered decision not to do so, is not. Effectively, having made a decision in December 2009 not to make a claim, she has merely changed her mind. Moreover, her decision in February 2008 not to make a claim, in circumstances where she knew she was already out of time and had advice as to her rights, was one which was calculated to maximise the prospects that the defendant would agree to provide the guarantee she needed to raise funds to acquire the childcare centre, which he duly provided, when he would not likely have done so had he been apprised that she was contemplating a claim. Together, these matters persuade me that the discretion to extend time should not be exercised in favour of the plaintiff.

124. Had the only relevant circumstances been the falsification in July 2009 of the plaintiff’s expectation of inheritance from the defendant, a finding of special circumstances might well have been made. But given the plaintiff’s decision, with knowledge of her rights, not to make a claim while seeking the defendant’s guarantee for the childcare loan, and later in December 2009 not to make a claim after weighing the risks and benefits, leaving the defendant in the meantime not only to give the guarantee she wanted, but also otherwise to arrange his life and affairs on the footing that there was no claim, special circumstances such as to justify disturbing his reasonable expectations in relation to property are not established. Alternatively put, given that special circumstances involve something more than would be required for a mere extension of time under s 16, I can be all the more readily satisfied in this case that an extension should not be granted where it would be without utility unless special circumstances were established.

125. Having regard to the primacy of the deceased’s obligation to the defendant, including the strength of his contribution-based claim; the provision already made for the plaintiff by the deceased and the defendant – including, at her request, to assist her to acquire the childcare business, the consequences of the failure of which she now seeks provision to address; and the circumstance that her current situation is the consequence of her management of the childcare business (and non-payment of taxation and superannuation guarantee obligations over a number of years); it cannot be said that the plaintiff has been left with inadequate provision.

126. Even if it were considered that the plaintiff had been left with inadequate provision, I would not as a matter of discretion make an order in her favour, having regard to the matters referred to in the foregoing paragraph (in particular, her responsibility for her current position); the impact of an order on the defendant – as, if the term deposit were designated notional estate, he would be left with the burden of the mortgage he was compelled to incur to acquire his current home while the proceeds of Corang Ave are tied up as security for the guarantee, and if his superannuation interest were designated notional estate, the consequence would be a sale of Alonga, adversely impacting his income and depriving him of an asset to the acquisition of which he had practically exclusively contributed from the sale of his business, and which was intended to provide for his retirement; and that any provision made for the plaintiff would facilitate satisfaction of the creditors of D-Lee’s Kids, rather than the maintenance and advancement of the plaintiff.

127. The summons will therefore be dismissed. Prima facie, the plaintiff should pay the defendant’s costs, but I will reserve liberty to apply to set aside or vary that order lest either party wishes to contend for a different costs order.

128. The Court therefore orders that:

1. The summons be dismissed;

2. The plaintiff pay the defendant’s costs;

3. The parties have liberty to apply within seven days to vary or set aside order (2).

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Endnotes

Amendments

17 February 2016 - Correction to formatting of footnotes.

Paragraph [67], change McLelland CJ in Eq to McLelland J.

Decision last updated: 17 February 2016