Knespal v Knespal

Case •

[2025] NSWSC 464

•

15 May 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Knespal v Knespal [2025] NSWSC 464
Hearing dates: 29-30 April, 1 May 2025; further written submissions 5 and 6 May 2025
Decision date: 15 May 2025
Jurisdiction:Equity - Family Provision List
Before: Kunc J
Decision:

Property held on constructive trust for defendant son; family provision order made in favour of plaintiff sister

Catchwords:

SUCCESSION — Family provision — Jurisdiction — Property in respect of which order may be made — Property held on constructive trust — Crisp type order where provision borne by property subject to constructive trust

SUCCESSION — Joint and mutual wills — Parents make binding agreement with son to leave property by will to each other and then half proceeds of sale to son — Second parent to die breaches agreement by making later inconsistent will — Property held on constructive trust for son on terms of earlier mutual will — Whether that property available for sister’s family provision claim

Legislation Cited:

Succession Act 2006 (NSW)

Inheritance (Family Provision) Act 1972 (SA)

Probate and Administration Act 1898 (NSW)

Cases Cited:

Koombahtoo Local Aboriginal Land Council v Sandpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [44]

Barnes v Barnes (2003) 214 CLR 169; [2003] HCA 9

Dalton v Ellis; Estate of Bristow (2005) 65 NSWLR 134; [2005] NSWSC 125

Birmingham v Renfrew (1937) 57 CLR 666

Category:Principal judgment
Parties: Helane Suzanne Knespal (Plaintiff/Cross Defendant)
Garry Knespal (Defendant/Cross-claimant
Representation:

Counsel: M Waters (Plaintiff/Cross Defendant)
P Wallis (Defendant/Cross-claimant

Solicitors: Konstan Lawyers (Plaintiff/Cross-claimant)
Shad Partners (Defendant/Cross-claimant)
File Number(s): 2023/150023

JUDGMENT

Summary

  1. The late Freda and Frank Knespal had three children: Martin Knespal (born 1954); the defendant/cross-claimant, Garry Knespal (born 1957) and the plaintiff/cross-defendant, Helane Knespal (born 1961). Without disrespect, I shall refer to the various Knespal family members by their given names.

  2. In 1991, Frank, Freda and Helane moved into a two-bedroom unit at Bondi. With limited interruptions, Helane has lived in the unit since then including, most recently, as Freda’s carer. The unit was sold in November 2024 by the interim administrator of Freda’s estate to discharge a mortgage which Freda had granted over the unit. The estate essentially consists of the balance of the sale proceeds of the unit of approximately $2 million, which is now held in a solicitor’s trust account

  3. Helane commenced these proceedings for a family provision order under the Succession Act 2006 (NSW) from the estate. Many of the elements of Helane’s family provision claim are uncontroversial as between the parties. Neither Martin nor Garry has put his circumstances in issue for the purposes of determining Helane’s claim. The complicating factor in this case is the effect (if any) of the testamentary contract evidenced by a deed between Frank, Freda and Garry in relation to the unit.

  4. The unit was purchased in Garry’s name in July 1981 for $66,500 with stamp duty costs and fees of approximately $3,500. Frank and Freda provided (putting it neutrally) $25,000 towards the cost of the unit, with the balance financed by a mortgage from the Commonwealth Bank of Australia (CBA) under which Garry was the mortgagee, and Frank and Freda were the guarantors.

  5. Garry originally lived in the unit with Martin, but Garry later moved out and married. Frank and Freda ultimately wished to live in the unit. Under the deed, Frank, Freda and Garry agreed, among other things, that the property was “deemed” to be owned by Frank and Freda, who would be responsible for the mortgage and outgoings, and that Frank and Freda would enter into mutual wills leaving Garry “one half of the nett value of the unit at the date of the death of the survivor” of Frank and Freda, with their estates otherwise to be left equally to the three children. The deed also provided that Frank and Freda would not alter their wills without Garry’s consent.

  6. On 14 July 1988, Frank, Freda and Garry executed the deed, and Frank and Freda made wills in accordance with the deed. Frank died in 1988. Freda died in 2022. What would otherwise be, with no disrespect intended, a relatively straightforward family provision claim, is complicated by the fact that by Freda’s final will made on 26 June 2014, Freda revoked the will that she had made in July 1988 pursuant to the deed (the 1988 will). Under the final will, Helane received a right to reside in the unit potentially for life, with the eventual proceeds of sale of the unit to be divided one half to Helane and one quarter to Martin and Garry. The residue of Freda’s estate was given to each of her children equally.

  7. By his cross-claim, Garry seeks to enforce the deed. He claims half the nett proceeds of sale of the unit and one third of the residue of the estate. Helane has raised a number of defences to Garry’s reliance on the deed. However, whether or not the cross-claim is upheld, Helane presses her case for a family provision order to provide her with secure accommodation and a sum for contingencies. In practical terms, the outcome of the cross-claim will determine the primary entitlements to the distributable estate before any family provision order is made.

  8. For the reasons which follow the Court has determined:

  1. The interim administrator holds Garry’s share of the estate on the trusts in the 1988 will, so Garry is entitled to half the nett proceeds of sale of the unit and one third of the residue; and

  2. Helane is to receive additional provision so as to enable her to purchase a two bedroom unit up to a total cost (including conveyancing fees and stamp duty) of $1,250,000 and for a contingency fund of $150,000, which additional provision will be borne by Garry and secured in the amount of that additional provision in favour of Garry over whatever property Helane purchases (including any subsequent property).

  1. Ms M Waters of Counsel appeared for Helane. Mr P Wallis of Counsel appeared for Garry.

The constitution of the proceedings

  1. On 30 August 2024, Justice Lindsay made orders “without admissions of any kind from any party”, which included:

“Without admissions of any kind by any party, Lindsay J makes the following orders and notations:

1    NOTE that Monica Ross-Maranik consents to her appointment as an interim administrator of the estate of Freda Knespal (the deceased) who died on 12 May 2022.

2    ORDER, subject to further order, that Monica Ross-Maranik be appointed as interim administrator of the estate of the deceased limited to operate until 31 March 2025 or further order of the Court.

3    ORDER, subject to further order, that Monica Ross-Maranik, as the interim administrator of the estate of the Deceased, have the power to:

a.    Call in estate assets;

b.    collect rent due and payable to the estate;

c.    sell the estate real property known as XXX, Bondi Beech (“the Property”) and discharge the mortgage to the Commonwealth Bank from the proceeds of sale;

d.    lodge tax returns;

e.    pay any liabilities of the estate, including her remuneration;

f.    pay any interim provision or distribution ordered by the Court;

g.    hold the Deceased estate funds in interest bearing account on behalf of the deceased estate until further order of the Court; and

h.    do all things reasonably necessary and ancillary to 3(a) – (g).

4 ORDER that, in addition to the appointment in Order 2, pursuant to section 91 of the Succession Act 2006 (NSW), Monica Ross-Maranik be appointed administrator of the estate of the Deceased to permit the plaintiff’s application for a family provision order to be dealt with.

5    DIRECT, subject to further order, that Monica Ross-Maranik file a submitting appearance in the proceedings with the intent that the Plaintiff and the Defendant contest the real questions in dispute between them. …

7    ORDER, subject to order 8 and further order, that the plaintiff deliver up vacant possession of the Property to the administrator on settlement of the sale of the Property.

8 ORDER that any delivery up of possession of the Property by the plaintiff to the administrator pursuant to order 7 of these orders be without prejudice to any entitlement she may have against the estate of the deceased under the will of the deceased or Chapter 3 of the Succession Act 2006 NSW...

10    ORDER that an interim distribution be made to the Plaintiff in the amount of $70,000 from the proceeds of sale of the Property. …”

  1. On 3 September 2024 Ms Ross-Maranik, although not formally joined as a party, filed a submitting appearance in accordance with Lindsay J’s directions.

  2. Two practical matters arise for the consideration of the parties consequential upon his Honour’s orders and the outcome of the proceedings.

  3. First, given that the administration of the estate has been largely undertaken and, subject to the working out of these proceedings, completed, the most efficient course may be for Ms Ross-Maranik to be appointed administrator of the estate.

  4. Second, the parties have reserved their positions to make further submissions as to costs. During the course of argument, I put the parties on notice that I would require submissions in due course (noting paragraph 5 of Lindsay J’s orders) as to why costs should not be dealt with in these proceedings on the basis that it was vigorously contested inter partes litigation rather than an estate matter. There seems to me to be a real question as to whether the estate should bear the costs of the proceedings of either party, not least where that would mean that, indirectly, Martin (who has not been joined and who has played no role other than giving an affidavit) would be visited with the costs of the litigation out of his share of the estate.

Issues not requiring determination

  1. There were three issues raised by the parties which ultimately did not require determination.

  2. First, in her defence to the cross-claim Helane raised defences of estoppel and unjust enrichment. Neither of these formed any part of Ms Waters’ closing submissions (written or oral). I have therefore assumed that those defences were not pressed.

  3. Second, Frank and Freda “provided” $25,000 towards the costs of the purchase of the unit. The parties devoted some attention to whether or not that $25,000 was a gift to Garry. There was very limited evidence on the question. While I would have been inclined, on that limited evidence, to conclude that the $25,000 was a gift from Frank and Freda to Garry, it is not necessary for me to make a finding and I expressly refrain from doing so. This is because neither party was able to point to why it would be legally relevant to these proceedings. Whatever the parties’ legal and equitable rights in the unit were before the entry into the deed, those rights were subsumed into and became governed by the deed. There was no dispute that whatever rights were being asserted by Garry were based only upon the deed.

  4. Third, on the last day of the hearing I granted Helane leave to amend her defence to the cross-claim to include defences at law and, by analogy, equity under the Limitation Act 1969 (NSW) (LA). Leave was granted over Garry’s objection because Garry was unable to point to any prejudice by the amendment. The defences raised only legal issues for which I made directions that there be additional written submissions. These were provided. However, the LA defences were only potentially applicable if the Court accepted that Garry’s cause of action had arisen by what was said to be a breach of the deed by Freda proffering a new deed in 1997. For the reasons set out in [58] to [66] below, the Court rejects that submission, so no further consideration of the LA is required.

Credit

  1. Helane was the sole witness of fact in her case. She was cross-examined.

  2. Garry gave evidence in his case and was cross-examined. Mr Wallis also read a number of other affidavits in Garry’s case from witnesses who were not cross-examined and to whose evidence I was not referred at all. The parties accepted that it was the affidavit evidence of Helane and Garry, and their respective cross-examinations, to which the Court should have regard.

  3. Neither party attacked the credit of the other. Ms Waters criticised Garry’s evidence on the basis of its inadequacy, incompleteness or unreliability given the passage of time. However, she did not submit that he was a witness whose evidence, such as it was, should be found to be untruthful.

  4. Insofar as it may be necessary, the Court finds that both Helane and Garry were witnesses upon whose evidence, as far as it went, the Court could rely. Each appeared to be doing his or her best to tell the truth according to their recollection. In particular, the Court accepts Garry’s evidence of his conversations with Freda because they are consistent with the contemporaneous, written record (such as it is) and the objective course of events.

Facts

  1. The relevant facts, which the Court finds to be as follows, were not in serious issue. The debate between the parties was confined to the legal consequences of some of those facts and the amount of additional provision (if any) that should be ordered for Helane.

  2. In about July 1981, when Garry was 24 years old, he decided to purchase the unit with the intention of living there with his brother Martin. Freda and Frank introduced them to their bank manager, Mr Len Jarman from the CBA. It was Mr  Jarman who arranged a loan from the CBA to Garry, guaranteed by Frank and Freda, for the purchase of the unit and to be secured by the mortgage.

  3. Garry’s affidavit evidence was that “during the time when I was applying for the loan to purchase [the unit], Dad and Mum provided me with $25,000”. The evidence included the first page of a CBA application form for housing loan for Garry to buy the unit and referring to Frank and Freda as “debtors only”. The document lists Garry’s assets as including $25,000 described as “gift from parents”. Although the document is only the first page, the evidence does not permit the Court to infer who would have given Mr Jarman the instructions to describe the $25,000 as a gift. The deed, in its recitals, referred to the $25,000 as a “contribution by [Frank and Freda] towards the purchase price”. “Contribution” can encompass a gift and there was no suggestion in the deed that it was a sum that Frank and Freda expected to be repaid as a loan.

  4. After settlement of the unit occurred, Garry and Martin moved into the unit. They lived there together for approximately two years. Garry then moved out and eventually purchased another property as he began his family. Martin continued to live in the unit with friends and other family members. Garry’s evidence was that he paid the mortgage up until about 1991. The point was reached when neither Garry nor Martin was living in the unit.

  5. At some point in the first part of 1988, Frank and Freda told Garry that as neither he nor Martin was living in the unit, they “would like to spend some money renovating [the unit] and move in and in time pay off the mortgage”. This conversation then ensued:

“Garry: “Of course I’m not going to throw you out. What happens if you’re there for 10, 20, 30 years? What do I get?”

Mum:   “Well you know you’ll get half and then we’ll split the rest up equally between yourself, Marty and Helane”.

Garry:   “Well, okay, as long as you have your lawyer bring me something that I can read and sign”.”

  1. Frank and Freda instructed their solicitor, Mr Bernard Levy, to draft the relevant document.

  2. On 14 July 1988, Garry, Frank and Freda executed the deed in the presence of Mr Levy. On the same day, Frank and Freda made the mutual wills contemplated by the deed. Mr Levy showed Garry those wills.

  3. The deed provided (emphases added):

“RECITALS:

A.   In or about 1980 the Son acquired in his name a two bedroom strata title unit at X, Bondi known as Lot X in Strata Plan XXXX ("the Unit").

B.   The Unit was acquired in the name of the Son for $66,500 together with stamp duty costs and fees approximately $3,500, based upon a contribution by the Parents towards the purchase price of $25,000 and with the assistance of a mortgage advance of $45,000 from Commonwealth Savings Bank of Australia ("the Mortgagee) which was guaranteed by the Parents.

C.   There is presently an amount of approximately $42,000 owing on the Mortgage.

D.   The Son has not resided in the Unit for some time past and does not wish to do so in the future.

E.   The Parents now wish to reside in the Unit.

F.   To formalise their prior verbal arrangements the parties have now entered into this Deed.

NOW THIS DEED WITNESSES    as follows:

1.   The Unit shall be deemed to be owned by the Parents.

2.   At the request of the Parents the Son shall execute and hand to the Parents a Transfer of the Unit in their favour or in favour of such person or persons as the Parents require for the purpose of facilitating a sale of the Unit to permit the acquisition of a Further Residence as provided by Clause 7 hereof.

3.   The Parents or the survivor of them henceforth shall be entitled to reside in the Unit.

4.   The Parents shall be entitled henceforth to the rents and profits of the Unit and shall be liable and responsible for the payment of the balance owing under the Mortgage and for all outgoings on the Unit.

5.   The Son acknowledges that the Unit shall form part of the estate of the Parents and of the survivor of them and covenants with the Parents that in the event that the Son is shown as Registered Proprietor of the Unit at the date of the death of the survivor of the Parents then the Son thereupon shall cause the unit to be sold for fair market value so that the nett proceeds of sale shall be available for distribution under the Will of the survivor of the Parents.

6.   The Parents jointly and severally covenant and agree with the Son that they will make fresh wills whereunder upon the death of the survivor of them in addition to leaving their estates equally to their children they will leave to the Son one half of the nett value of the Unit at the date of death of the survivor of them AND the Parents further covenant and agree with the son that during their lifetime they shall refrain from making any alteration to such wills without the prior written consent of the Son.

7.   Should the Parents or should the Mother in the event that she survives the Father wish to sell the Unit for the purpose of using the proceeds of sale to facilitate the acquisition of another residence in place of the Unit then the following shall apply:-

(a)   The Parents or the Mother in the event that she survives the Father shall be entitled at their or her discretion to sell the Unit and to use the nett proceeds of sale for the acquisition of a further residence ("the Further Residence") .

(b)   The Son shall be deemed to have contributed towards the acquisition of the Further Residence an amount equal to one half of the nett proceeds received from the sale of the unit.

(c)   Upon the death of the survivor of the Parents the Son shall be entitled to receive out of the estate of the survivor of the Parents in addition to an equal share with his siblings a sum arrived at by taking a sum equal to the nett realised proceeds of sale of the Further Residence and multiplying this sum by a sum equal to one half of the nett proceeds of sale the Unit and by dividing this by a sum equal to the total purchase price of the Further Residence.

(d)   Should the Further Residence have been sold prior to the death of the survivor of the Parents then upon completion of such sale the Son shall be entitled to received out of the proceeds of sale a sum arrived at in accordance with the formula in the immediately preceding paragraph whereon the Parents shall be under no further liability to make provision out of their estate of the nature referred to in the immediately preceding sub-clause and they shall then be at liberty to alter their wills as they may see fit.”

  1. Under their mutual wills, each of Frank and Freda appointed Garry as the sole executor and left their estates to each other. However, if one of them had died, then each will contained this provision (the version which follows is taken from the 1988 will):

“4.   IN THE EVENT that my aforesaid husband shall fail to survive me for a period of thirty (30) days then I GIVE DEVISE AND BEQUEATH the whole of my estate as aforesaid to my Trustees UPON TRUST to sell call in and convert into money in all respects as my Trustees in their absolute discretion shall think fit AND I EMPOWER my Trustees in their absolute discretion to retain the whole or such part or parts of my estate as they shall think fit in the form in which it or they may be invested at my death AND I DIRECT my Trustees to· pay my just debts, funeral and testamentary expenses and all death estate succession and other duties whether of the State of New South Wales or of any other jurisdiction in which I may have assets at the date of my death and upon which duty is payable and to hold the rest and residue of my estate upon the following trusts:

( a)   In the event that prior to my death my son GARRY JOHN KNESPAL has not received his entitlement from the sale of the unit known as Lot 1 in Strata Plan XXXX at XXXX, Bondi or in lieu thereof from the sale of a further residence acquired inter alia with the proceeds of sale of such unit provision for which entitlement is contained in a Deed between myself, my husband Frank and my aforesaid son and which is dated June, 1988 THEN in the event that I still own such unit I DIRECT MY TRUSTEES to sell the unit and to pay out of the proceeds one half of the nett proceeds of sale to my son GARRY JOHN KNESPAL BUT in the event that the unit has been sold and the nett proceeds of sale have been used to acquire a further residence for me. and my husband Frank THEN I DIRECT MY TRUSTEES to sell such further residence and to pay to my aforesaid son out of the proceeds an amount arrived at by multiplying the amount of the nett proceeds of sale by a sum equal to one half of the nett proceeds received from the sale of the aforesaid unit and by dividing this sum by an amount equal to the total purchase price of such further residence. …

( b)   To pay and/or transfer the rest and residue of my estate to my children GARRY JOHN KNESPAL, MARTIN ALAN KNESPAL and HELENE SUSANNE KNESPAL or to the survivors or survivor of them and if more than one as tenants in common in equal shares. …”

  1. In 1991, Frank, Freda and Helane moved into the unit. Garry remained on the title as the registered proprietor.

  2. Frank died in November 1998. As a consequence of his death, Freda became the sole owner of a property which they had owned on the Gold Coast. In May 1999, Freda sold that property and applied at least some of the proceeds to discharge the mortgage on 15 June 1999.

  3. On 6 August 1999, Mr Levy wrote to Freda (emphasis added):

“FRESH WILL – ARRANGEMENTS WITH GARRY FOR APARTMENT XXX – COMMONWEALTH BANK GUARANTEE

We enclose a copy of draft Will and draft Deed of Arrangement prepared on the basis of our discussions with you.

Essentially, the Will provides for your three children to be appointed executors and for your estate to be divided equally between them on a basis that should any child predecease you, then his or her children, if any, would receive the share which his or her parent would have taken had they survived you.

The proposed Deed of Arrangement would entitle you during your life, to reside in the apartment or to receive a rental income from it or to call upon Garry to sell the apartment and to pay the proceeds to you. If you did not call for the sale of the apartment during your life, then following your death, Garry would be required to sell the apartment and to divide the proceeds between Helene, Martin and himself. Again, if any child predeceased, then his or her children, if any, would receive the share of his or her predeceased parent. If Garry predeceased you, the obligation of the Deed would bind his estate.

It is important to confirm that the apartment was acquired by Garry prior to 20 September 1985. If so, its ultimate sale would be free of capital gains tax. If you are unaware as to the date of the acquisition of the property, then it is essential to the proposal that we obtain from the Land Titles Office a copy of the transfer whereby Garry took title to the apartment.

We take it that you will discuss the contents of the proposed Deed with Garry so as to ensure that it is satisfactory to him.

Would you kindly telephone and discuss with us the contents of the draft Will and Deed of Arrangement.

…

We are awaiting the return from the Land Titles Office of the two Certificates of Title standing in Garry’s name, free of encumbrance, following registration of the Discharge of the Bank Mortgages. We shall contact you when both Titles are received by us.”

  1. It appears that the proposed deed of arrangement attached to the letter of 6 August 1999 was subsequently amended. So much appears from a further letter from Mr Levy to Freda on 6 October 1999 which included (emphasis added):

“Arrangements with Garry for apartment XXXX, Bondi Beach

Following our telephone discussion, we have amended the draft Deed by inserting a provision whereby in the event that at your direction, the apartment has been retained for you, upon your death, Helene will have an option to acquire the apartment provided that she pays to each of Garry and Martin, one third of its market value. As you will see from clause 2 of the Deed, Helene has one month to decide whether or not to exercise the option. The children can agree as to its then fair market value, but in the absence of agreement, a registered valuer will determine fair market value. After the value is agreed upon or determined by the valuer, Helene will then have two months in which to make the payment.

Could you please let us know whether the Deed is now satisfactory to all parties. If no further amendments are required, we will then provide enough copies so that each party to the Deed can end up holding a copy signed by all parties.

Would you please also let us know whether the draft Will forwarded to you is satisfactory so that arrangements can be made for its signature.”

  1. The proposed 1999 deed of arrangement in evidence appears to be the version referred to in Mr Levy’s 6 October 1999 letter set out in the preceding paragraph. That proposed 1999 deed was drafted to be between Freda, Garry, Martin and Helane and provided (emphasis added):

“BACKGROUND:

A   In or about 1980, a strata title apartment at XXXX Bondi known as Lot X in Strata Plan XXXX (the Unit) was purchased in the name of Garry, a son of Freda and her husband, Frank Knespal (Frank).

B.   The purchase price for the Unit was Sixty Six Thousand Five Hundred Dollars ($66,500.00) and stamp duty, costs and fees approximating Three Thousand Five Hundred Dollars ($3,500.00) were also expended on the purchase

C.   Freda and Frank provided a cash contribution of Twenty Five Thousand Dollars ($25,000.00) towards the purchase of the Unit and, in addition, accepted responsibility for an advance of Forty Five Thousand Dollars ($45,000.00) from the Commonwealth Bank of Australia secured by way of first mortgage over the Unit (the Mortgage).

D.   Freda and Frank resided in the Unit and, following Frank’s death, Freda has continued to reside therein

E.   Freda and Frank, to the time of Frank’s death, paid the instalments of principal and interest under the Mortgage as well as all rates, taxes, levies and outgoings for the Unit, and following the death of Frank, Freda continued to make those payments.

F.   On 28 May 1999, Freda paid the balance of principal and interest owing under the Mortgage.

G.   At all material times, Garry has acknowledged to Frank and/or Freda that although title to the Unit was taken in his name, the Unit beneficially belonged to Frank and Freda, and that at their request or at the request of the survivor of them, he would transfer title to the Unit to them or to the survivor of them, and upon the death of the survivor, he would then sell the Unit on the open market for fair market value and divide the net proceeds of sale equally between Martin, Helene and himself subject nevertheless to the prior option of Helene to acquire unencumbered title to the Unit from Garry upon paying to both Garry and Martin one-third of the then fair market value of the Unit on a vacant possession basis.

H.   The parties now wish to record their agreement concerning the Unit in the terms set out hereunder.   

OPERATIVE DEED:

1.   In consideration of title to the Unit remaining in his name, Garry CONVENANTS AND AGREES:

(a)   with Freda:

(i)   that on a basis that during her life or until the earlier sale of the Unit she remains responsible for all rates, taxes, levies, outgoings and reasonable maintenance and repairs to the Unit, Freda, for her life, shall be entitled to reside therein or otherwise to enjoy the rents and profits of the letting of the Unit during the remainder of her life in the event that she should choose to reside elsewhere or her health otherwise precludes her residence in the Unit; and

(ii)   upon the written request of Freda, he will with all reasonable expedition, sell the Unit on the open market for fair market value and will thereupon account to her for the proceeds of sale;

(b)   with all the parties to this Deed:

(i)    that without their prior written agreement, he shall not sell, transfer, assign, encumber, charge or otherwise deal with the title to or occupancy of the Unit, and

(ii)    upon the death of Freda and on a basis that title to the Unit then remains in his name, and provided that the option in favour of Helene to acquire title to the Unit as provided in clause 2 hereunder has not been exercised by Helene within the time thereby permitted to her with all reasonable expedition thereafter, he shall thereupon sell the Unit on the open market for fair market value and divide equally the proceeds of sale between Martin, Helane and himself or the survivor or survivors of them….

2.   Garry and Martin COVENANT and AGREE with Helen that upon the death of Freda and provided that title to the Unit remains in Garry’s name, Helene shall have an option ("the Option'') to acquire from Garry unencumbered title to the Unit with vacant possession, upon paying to each of Garry and Martin, one-third (1/3rd) of the then fair market value of the Unit on a vacant possession basis. The Option shall be on the following terms:

(a)   the Option shall be exercisable by Helene within one (1) calendar month of the death of Freda by giving written notice to Garry and to Martin;

(b)    the fair market value of the Unit on a vacant possession basis shall be as agreed upon in writing between Garry, Martin and Helene and failing agreement, then as determined by a registered valuer appointed for the purpose at the request of a party by the President for the time being of Australian Institute of Valuers and Land Economists Inc (New South Wales Division); and the valuer's costs shall be borne equally by Garry, Martin and Helene:

(c)    having determined the fair market value of the Unit, no later than two (2) calendar months thereafter, Helene shall pay to each of Garry and Martin one-third (1/3rd) of the fair market value of the Unit, and in exchange therefor, Garry shall convey unencumbered title of the Unit with vacant possession to Helene.

3.   Freda COVENANTS AND AGREES with Garry that in consideration of the covenants on his part and in her favour as contained in this Deed, during her life or until the sale of the Unit, whichever be the earlier, she shall be liable for all rates, taxes, levies, outgoings and reasonable maintenance and repairs which are payable for the Unit.”

  1. Notwithstanding that Mr Levy had drafted both the deed and the proposed 1999 deed, there is no evidence, nor could any party offer an explanation, as to why the proposed deed made no reference to the deed. There can be no doubt that the state of affairs set out in Recital G of the proposed 1999 deed was contrary to the deed and the 1988 will.

  2. The draft of Freda’s proposed will which accompanied the proposed 1999 deed included:

“1.   I REVOKE all Wills and other testamentary dispositions heretofore made by me and declare this to be my last Will and Testament.

2.   I APPOINT my sons GARRY JOHN KNESPAL and MARTIN ALAN KNESPAL and my daughter HELENE SUSANNE KNESPAL or the survivors or survivor of them to be the Executors and Trustees of this my Will and of my deceased estate and they or the survivors of them or any person appointed or entitled to act in their stead are hereinafter referred to as “my Trustees”.

3.   I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal of whatsoever nature and kind and wheresoever situate to my Trustees UPON TRUST to sell call in and convert into money in all respects as my Trustees in their absolute discretion shall think fit AND I EMPOWER my Trustees in their absolute discretion to retain the whole or any part or parts of my estate as they shall think fit in the form in which it or they may be invested at the date of my death AND I DIRECT my Trustees to pay my just debts, funeral and testamentary expenses and all death, estate, succession and other taxes and duties, if any, whether of the State of New South Wales or of any other jurisdiction in which I may have assets at the date of my death and/or upon which duty or tax is payable AND TO HOLD the rest and residue of my estate (my Residuary Estate) UPON TRUST to pay and/or transfer my Residuary Estate to my children GARRY JOHN KNESPAL, MARTIN ALAN KNESPAL and HELENE SUSANNE KNESPAL or to the survivors or survivor of them and if more than one as tenants in common in equal shares …”

  1. Garry’s affidavit evidence about the proposed 1999 deed was:

“38.    I found out about the proposed 1999 Deed when it was presented to me after it was drafted…

40.   After the proposed 1999 deed was drafted, Mum consulted with me. We spoke of [sic] words to the following effect:

Mum: “I want to change the arrangement and want Helane to be able to have first right to purchase Bondi”.

Me:   “No, I don’t think that’s fair. I don’t agree to changing the arrangement we have in place.””

  1. Garry was cross-examined about this evidence, from which he did not resile. His evidence in cross-examination included, and the Court accepts:

“WATERS

Q. In your conversation in 1999 you did not raise the importance of your 50% share in Bondi with your mother, did you?...

WITNESS: I thought my objections were covered in my recollection of the words “I didn’t think that was fair”. I didn’t feel I needed to go into chapter and verse. I just told her I didn’t think it was fair and I wasn’t going to accept the draft that she had presented to me. She didn’t come back to me with an alternative. It just wasn’t pursued.” Tcpt, 30 April 2025, p 124(24-36)

  1. The evidence does not permit a finding as to whether or not Freda showed Garry her proposed will. However, there was no dispute that neither the proposed 1999 deed nor the proposed will was ever carried into effect.

  2. There was evidence that shortly after the documents had been prepared, Freda had a dispute with Mr Levy about his fees, but if Freda had intended to give effect to the documents there is no basis to conclude that the dispute prevented her from doing so. Based on the conversation in [39] above, the fact that she did not proceed with the new arrangements, and the fact that she did not tell Garry about the 2014 will (presumably anticipating a repeat of his earlier objection), the Court finds she did not proceed because Garry did not agree to her proposal.

  3. On 14 December 2006, Garry transferred a 10% interest in the unit to Freda for the recorded consideration of $1. Stamp duty of $670.50 was paid on the transfer on 15 December 2006, based on a recorded dutiable amount of $41,000. There is no evidence as to why this transfer was made.

  4. In 2007, Garry received correspondence from the Office of State Revenue to the effect that as the owner of the unit he was required to pay land tax for the years 2001 to 2007 totalling $8,000. Garry’s affidavit evidence was:

“44.   As I was not receiving rent from the Bondi Unit, it was agreed that I would seek to have the Land Tax assessment withdrawn/repaid and the title transferred based on the 1988 Deed and that stamp duty would be paid on the value of the Bondi Unit in 1988. Mum and I had a conversation of words to the following effect:

Me:   “If I could try and get the property transferred into your name, would that work? Remember that we have the 1988 agreement.”

Mum:   “That would be great, I’d love to have it in my name.”

Me:   “Well, I will transfer the property into your name and lodge an appeal against the land tax. I will talk with the OSR and negotiate with them and explain to them what’s happened”.”

  1. Garry filed an application for a review of the land tax assessment in the Administrative Decisions Tribunal. The settlement of those proceedings expressly involved the deed, which fact fortifies my acceptance of the conversation in the preceding paragraph referring to the deed. The settlement was recorded in a letter from the Crown Solicitor’s Office to Garry on 2 April 2007 which included:

“I refer to the above matter and recent correspondences. In particular, I refer to my letter of 8 March 2007 and your letter of 20 March 2007.

In consideration of your letter of 20 March 2007, the Chief Commissioner has agreed to amend the terms of settlement as previously set out in my letter of 8 March 2007 and resolve these proceedings on the following basis:

1   The Chief Commissioner will not assess you as liable for land tax on the property located at XXX Bondi Beach ("the Bondi property") for the tax years 2001 to 2007 (inclusive) and following reassessment to exclude the Bondi property from the assessments issued, calculate the amount of $6460.40 as being available for refund. This amount is subject to any offsets provided in paragraphs [2], [4] and [5] below;

2   The Chief Commissioner will assess stamp duty at the market value of the Bondi property as at 14 July 1988. The parties agree that the market value is to be assessed at $100,000.00. On this basis, the stamp duty is assessed at $1,990.00;

3   The Chief Commissioner shall stamp the original Deed of 14 July 1988 ("the Deed") or photocopy of the Deed in accordance with the assessment in paragraph [2] above;

4 Duty of $10.00 is charged pursuant to s.57 of the Duties Act 1997 in respect of the transfer of the 10% interest in the Bondi property to your mother;

5 Pursuant to s.19 of the Taxation Administration Act 1997 ("the TAA"), the Chief Commissioner will apply the amount of $597.50 to the Deed referred to in paragraph [2] above. This amount being the difference between $607.50 paid in respect of the 10% transfer of interest in the Bondi Property to Ms Freda Knespal on 15 December 2006 and the duty payable in paragraph [4] above. Pursuant to s.19 of the TAA, the Chief Commissioner will apply $1,392.50 from the amount $6.460.40 paid in respect of the land tax liability and apply the money to the assessment referred to in paragraph [2] above;

6 Following the offsets between paragraphs [1], [2], [4] and [5] above, a refund of $5067.90 shall be made to you pursuant to s.18 of the TAA, excluding any payment of interest;

7   You withdraw your Application for Review filed with the Administrative Decisions Tribunal ("the Tribunal") on 29 November 2006 and you will not dispute in any manner, the stamp duty assessed on the Deed in accordance with paragraph [2] and [3] above.

I understand that you have agreed to settle the matter on the above basis.

Please be aware that the Chief Commissioner can only refund your monies in accordance with the terms of settlement once the application before the Tribunal is withdrawn. To this end, I reiterate my earlier request that you write to the Tribunal as soon as possible to inform them that you are withdrawing your Application for Review.”

  1. Garry withdrew his application to the Administrative Decisions Tribunal. On 2 May 2007, he transferred the balance of his interest in the unit to Freda for nil consideration. This transfer was stamped with nominal duty of $2, presumably because it was taken to be giving effect to the deed, on which duty had been levied in accordance with the settlement set out in the preceding paragraph.

  2. Helane commenced full time care of Freda from about 2013.

  3. On 26 June 2014 Freda made her final will, which appointed Helane and Garry as her executors and included (emphasis added):

“5.   I GIVE AND DEVISE my real estate property known as XXXX Avenue, Bondi Beach to my Trustees in fee simple UPON TRUST that my Trustees shall permit my said daughter HELANE SUZANNE KNESPAL to have the use and enjoyment thereof during her life or until she marries or lives in a de facto relationship and so long as she makes the same her principal place of residence during that time at her own expense, paying all outgoings in respect of the property and keeping the said property and the improvements thereon in good repair and after her death or if in the reasonable opinion of my Trustees she shall have ceased to make the same her principal place of residence or shall many or live in a de facto relationship (whichever first happens) UPON TRUST to sell same and distribute the net proceeds of sale after payment of all sale commissions and sale expenses to those of my children HELANE SUZANNE KNESPAL, GARRY JOHN KNESPAL and MARTIN ALAN KNESPAL who shall survive me by the period of 30 days and if more than one, as tenants in common in the shares one half to my said daughter HELANE SUZANNE KNESPAL and one quarter to each of my said sons GARRY JOHN KNESPAL and MARTIN ALAN KNESPAL …..

6.   I GIVE AND BEQUEATH to my Trustees all my household furniture, linen, china, electrical goods and other household items UPON TRUST to permit the said HELANE SUZANNE KNESPAL the use of same for so long as she resides in the property pursuant to the provisions contained in the preceding clause and after that time UPON TRUST for those of my children HELANE SUZANNE KNESPAL, GARRY JOHN KNESPAL and MARTIN ALAN KNESPAL who shall survive me by the period of 30 days and if more than one, as tenants in common in the shares one half to my said daughter HELANE SUZANNE KNESPAL and one quarter to each of my said sons GARRY JOHN KNESPAL and MARTIN ALAN KNESPAL …

7.   I DECLARE that whilst my said daughter HELANE SUZANNE KNESPAL shall have the right to reside in my said property XXXX Avenue, Bondi Beach, she shall have the right to have one or more flatmates with the rental to be applied in the following priorities:

(a)   towards the outgoings, maintenance and replacement costs of the property; and

(b)   the balance to be retained by the said HELANE SUZANNE KNESPAL.

8.   I GIVE DEVISE AND BEQUEATH the rest and residue of my Estate of whatsoever nature and wheresoever situate to my Trustees UPON TRUST to pay thereout all my debts funeral and testamentary expenses and any and all duties payable in respect of my Estate as a consequence of my death TO HOLD the remainder (hereinafter referred to as "my Residuary Estate") UPON TRUST for such of my children HELANE SUZANNE KNESPAL, GARRY JOHN KNESPAL and MARTIN ALAN KNESPAL who shall survive me by the period of 30 days and if more than one then as tenants in common in equal shares between them ...”

  1. On the same day as she made the final will, Freda executed an enduring power of attorney and an appointment of enduring guardians in favour of Helane, Martin and Garry. However, Martin and Garry did not execute those documents until 28 June 2019. It was on that date that Garry became aware of the final will for the first time.

  2. In 2015, the body corporate for the unit imposed substantial levies to pay for a fire order and other improvements in respect of the building of which the unit was a part. Without Garry’s prior knowledge, Freda took out a loan from CBA with the limit of $375,950 secured by a mortgage which she granted over the unit on 28 August 2015 in favour of CBA.

  3. Freda died on 12 May 2022.

  4. Helane commenced these proceedings for a family provision order by summons filed on 10 May 2023.

  5. Garry filed his cross-claim on 24 August 2023 seeking relief which includes:

“1   A declaration that the estate of the late Freda Knespal ("the Deceased") is bound by the obligations in the Deed dated 14 July 1988 between the Cross-Claimant, the Deceased and the Deceased's late husband Frank Knespal ("the Deed").

2   An order the Deceased's estate be required to perform its obligations pursuant to the Deed, including but not limited to:

a.   Selling the real property situated at XXXX Avenue, Bondi Beach in the State of New South Wales being the whole of the land in Folio Identifier XXXXX X ("the Property");

b.   Attending to payment of liabilities of the Deceased's estate; and

c.   Distributing the net sale proceeds as follows:

i.   50% to the Cross Claimant;

ii.   50% to the estate of the late Freda Knespal and the net distributable estate be divided between the Cross Claimant, the Cross Defendant and Martin Allan Knespal.

In the alternative,

3   A declaration that the Deceased's estate holds 2/3 share of the Property on trust for the benefit of the Cross-Claimant.”

  1. On 6 November 2023, CBA issued a notice of demand in relation to the loan, claiming $450,386.26.

  2. On 27 May 2024, CBA filed a statement of claim seeking possession of the unit.

  3. By the orders set out in [10] above, on 30 August 2024 Ms Ross-Maranik was appointed with authority to sell the unit.

  4. On 9 November 2024, the unit was sold at auction for $2,780,000, with the sale completing on 3 February 2025.

Was the Deed terminated in 2007?

  1. In order to determine what is in the estate for the purposes of Helane’s family provision claim, it is necessary first to resolve the parties’ contentions about the deed.

  2. On the assumption that the contract evidenced by the deed was still on foot when Freda made her final will in 2014, it was common ground that, by doing so, Freda breached the deed and that Garry’s cross-claim based on that breach was not time barred. However, Ms Waters submitted that the deed had been terminated in 2007 by Garry accepting what was submitted to be Freda’s repudiation of the deed in 1999.

  3. Ms Waters’ submission was:

  1. Freda’s repayment of the mortgage over the unit in full, the proposed 1999 deed and proposed new will evinced an intention “no longer to be bound by the contract ... or shows that [s]he intends to fulfil the contract only in a manner substantially inconsistent with [her] obligations and not in any other way”: Shevill v Builders’ Licensing Board (1982) 149 CLR 620 at 625-6 per Gibbs CJ, referred to with approval in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634; see also Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at [44];

  2. Freda’s conduct in 1999 amounted to a renunciation of her obligations, either of the deed as a whole or a fundamental obligation under it, namely to leave Garry 50% of the unit in her will. In 1999, Freda no longer agreed to the terms of the deed not to change her will;

  3. In circumstances where the breach by Freda occurred in 1999 Garry is time barred from bringing a claim under the deed by s 16 of the LA;

  4. Further, the transfers of the unit to Freda in 2007 were not made at Freda’s request, but instead were made pursuant to an agreement with the Chief Commissioner of State Revenue for the purpose of extinguishing Garry’s land tax liability. The conduct of Garry breached the provisions of Clause 2 of the deed; and

  5. The deed terminated on 2 May 2007 when the second transfer of the unit occurred.

  1. Mr Wallis submitted that Freda’s conduct in 1999 was no more than conduct in accordance with the deed, that being to seek consent to changing her will, or at least was not so inconsistent with it as to constitute repudiatory conduct. The Court accepts the latter submission. The former submission is not open because there is no evidence one way or the other as to whether Freda showed Garry her proposed will when she showed him the proposed 1999 deed.

  2. Freda’s repayment of the mortgage is irrelevant to this question. Under the deed she was responsible for the mortgage, so it necessarily was within the parties’ contemplation that this included discharge of the mortgage. I accept Mr Wallis’ submission that on its proper construction clause 2 of the deed gave Frank and Freda the right to call for a transfer of the unit other than for the purposes of buying a replacement property. The circumstance of having repaid the mortgage over the unit is an obvious example of when they may have wished to do so. This construction ensures that all of the words in clause 2 have work to do.

  3. The test as to what constitutes repudiatory conduct is whether “the conduct of one party was such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or as a fundamental obligation under it”: Koombahtoo Local Aboriginal Land Council v Sandpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [44]. If one party to a contract proposes a different arrangement for the consent of the other party without more, that could rarely, if ever, be repudiatory conduct. I do not accept that a reasonable person in Garry’s position would have understood Freda’s conduct as a repudiation or renunciation of her obligations under the deed, as opposed to nothing more than a request for consent to a new arrangement.

  4. While there is no evidence of her response, the fact remains that Freda did not give effect to the proposal and, as I have set out in [42] above, the Court is satisfied that is because Garry told her did not agree. Furthermore, Mr Levy’s letters to Freda (see [34] and [35] above) were consistent with her seeking Garry’s (and the others’) agreement. The repudiation analysis would be otherwise if there was evidence that Freda had communicated to Garry her determination to proceed with arrangements inconsistent with the deed in the face of his disagreement. There is no such evidence and the proven facts are to the contrary of such a characterisation of her conduct.

  5. Similarly, I do not accept that the transfers of the unit in 2007 from Garry to Freda terminated the deed for these reasons:

  1. Assuming Freda’s conduct in 1999 was repudiatory, it is an impossibly long bow to draw that the transfers constituted acceptance by Garry of Freda’s alleged repudiation. There is no connection between the two events. The passage of eight years is sufficient to justify that conclusion in the absence of any other evidence. However, in this case there is a clear and compelling explanation for the complete transfer in the context of the land tax issue set out in [44] to [46] above; and

  2. While it may be accepted that it was Garry who proposed the transfers rather than Freda exercising a right under the deed, the transfers were not inconsistent with the deed and were, on the evidence, agreed to by Freda in circumstances where Garry reminded her of their arrangements under the deed.

  1. For these reasons, the Court does not accept Helane’s submission that the deed had been terminated in 2007 or at any other time before Freda made her final will.

The interaction between the deed, the 1988 will and the Act

  1. It is axiomatic in family provision claims that in considering both the adequacy of provision and whose interests in the estate are to bear the burden of any additional provision, the Court must begin its analysis by determining what comprises the estate, who has an interest in the estate and in what proportion or as to what asset. There is no dispute between the parties that, if the deed had not been terminated as Helane contended, all of the proceeds of sale of the unit were available to be applied as additional provision for Helane.

  2. The difference between the parties was that in undertaking that exercise, Mr Wallis submitted that his client’s interest in the estate was, in effect, what he had been promised by the deed and the 1988 will. Ms Waters submitted that the Court should assess the parties’ interests in the estate solely by reference to their rights under the final will, making any family provision order by reference to those interests, and then only give effect to any rights Garry may have under the deed and the 1988 will on what was left after any order for provision. It was submitted that this was the conclusion required upon the proper application of the High Court’s decision in Barnes v Barnes (2003) 214 CLR 169; [2003] HCA 9. For the reasons which follow, the Court does not accept Ms Waters’ submission.

  3. A convenient starting point is to note that the parties accepted that by making the final will without Garry’s consent, Freda had breached the deed. Therefore Garry has a claim at law for damages. On the facts as found, he is entitled to such damages. However, because (as I shall explain below) the Act applies to the estate and Garry’s share in it, his measure of damages would have to be discounted to take account of the possibility (and in this case the certainty) of a family provision claim: Dalton v Ellis; Estate of Bristow (2005) 65 NSWLR 134; [2005] NSWSC 125 at [80] per Young CJ in Eq. So, for example, it is not open to Garry to be paid as a debtor in the ordinary course of administration for an amount representing his entitlement under the 1988 will simpliciter. On any view, the Court must address the family provision claim.

  4. Next, it is important to appreciate that Garry’s rights arise in the context of Freda having made a will inconsistent with that which she had promised to make and maintain. Garry’s rights derive from the application of Dixon J’s (as his Honour then was) classic statement in Birmingham v Renfrew (1937) 57 CLR 666 at 683 (emphasis added):

“It has long been established that a contract between persons to make corresponding wills gives rise to equitable obligations when one acts on the faith of such an agreement and dies leaving his will unrevoked so that the takes property under its disposition. It operates to impose upon the survivor an obligation regarded as specifically enforceable. It is true that he cannot be compelled to make and leave unrevoked testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement it is nevertheless valid as a testamentary act. But the doctrines of equity attach the obligation to the property. Its effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will which he undertook would be his last will.”

  1. It is the last sentence just quoted which is critical to the present analysis. Applying Dixon J’s approach, this means that upon Frank’s death Freda became subject to a floating obligation which crystallised on her death in a constructive trust for Garry on the terms of the trusts in his favour in the 1988 will. This description of the obligation is based upon this further aspect of Dixon J’s exposition at 689 (emphasis added):

“There is a third element which appears to me to be inherent in the nature of such a contract or agreement, although I do not think it has been expressly considered. The purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner with the property passing under the will of the party first dying. That is to say, the object of the transaction is to put the survivor in a position to enjoy for his own benefit the full ownership so that, for instance, he may convert it and expend the proceeds if he choose. But when he dies he is to bequeath what is left in the manner agreed upon. It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallize into a trust. No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is, therefore, not unqualified. But, substantially, the purpose of the arrangement will often be to allow full enjoyment for the survivor's own benefit and advantage upon condition that at his death the residue shall pass as arranged.”

  1. This passage was noted by Gleeson CJ in his judgment in Barnes at [29], but not taken further because, as his Honour noted about Barnes: “We are presently concerned with the estate of the deceased; the first to die”. The case at bar concerns the estate of the second testator to die.

  2. There is an interesting point in this case which I need not decide as to whether the rationale for the “floating” nature of the obligation identified by Dixon J in the passage quoted in [70] above applies to the facts of this case. That is because the deed and the 1988 will give Freda quite specific rights in relation to the unit, including how it may be dealt with. I do not need to explore this question because it is sufficient for present purposes to apply Dixon J’s analysis in its terms, with the result that upon Frank’s death, Freda became subject to the floating obligation which descended upon the estate at her death and crystallised into a constructive trust in favour of Garry on the terms of the 1998 will.

  3. Barnes concerned the interpretation of the Inheritance (Family Provision) Act 1972 (SA). The question was whether the property which was the subject of mutual wills was part of the “estate of the deceased person” in s 7 of that legislation from which provision could be ordered.

  4. The argument before me was conducted by reference to the judgment of Gleeson CJ in Barnes, the essential parts of which are (emphases added):

“32   Ultimately, it is the meaning and effect of the Act that must determine the outcome. Whether the question is approached on a purely textual basis, or by reference to a purposive construction, the result appears to me to be the same. In terms of s 7 of the Act, there is no justification for a conclusion that the deceased left no estate out of which provision could be made for the appellant if a court saw fit. At the time of his death the deceased was the legal and beneficial owner of his assets. They passed to his legal personal representative, the first respondent, and in the course of due administration of the estate they will, in accordance with the intention expressed in the deed, devolve by will upon the second respondent. Furthermore, the estate is under no liability to the second respondent; the deceased performed his obligations under the deed and, in consequence of that performance, his estate devolves upon the second respondent. …

34 For the reasons given by Lord Simon of Glaisdale in Schaefer v Schuhmann, this conclusion also gives effect to the manifest purpose of the Act. The general principle of public policy on which the Act was based was described by Jordan CJ in In re Morris (Deceased) (1943) 43 SR (NSW) 352, in a passage adopted on appeal in this Court by Latham CJ in Liberman v Morris (1944) 69 CLR 69 at 78, as “the making of provision for the maintenance of members of a family who are found to be in need of such maintenance when the family tie has been broken by death”. That policy is of public, as well as private, importance. To implement that policy, the legislature has conferred upon courts a discretionary jurisdiction to make provision out of a deceased person's estate in a manner that, to a greater or lesser extent, may override testamentary intention. A construction of the Act that permits a testator to nullify its operation by agreeing in advance to dispose of his or her estate in a certain fashion tends to defeat the purpose of the legislation. Such a construction is not required by the language of the Act.

35   The deed and the wills did not have the effect for which the first and second respondents contend. The assets of the deceased at the time of his death form his estate within the meaning of s 7 of the Act, and, subject to the liabilities of the deceased (which are relatively small), are available to meet an order under the Act in favour of the appellant if, in the exercise of the court's discretion, such an order is considered appropriate.”

  1. For the purposes of Ms Waters’ argument, the importance of Barnes is that it illustrates the importance of the Court’s attention being focused upon the proper construction of the applicable legalisation, in this case the Act. In its particulars, Barnes is of less relevance to this case for three reasons:

  1. First, as I have already noted, Barnes was a case about the estate of the first of the two mutual testators to die (that is to say, it would be equivalent to a case about an application for family provision from Frank’s estate);

  2. Second, it was not a case about breach of the promise to make a mutual will; and

  3. Third, and importantly for present purposes, as Gleeson CJ noted at [32] “At the time of his death, the deceased was the legal and beneficial owner of his assets”.

  1. It is these last two points, especially the third, which distinguishes Barnes from the present case. As I have set out in [70] to [72] above, at her death Freda was not the beneficial owner of those assets to which Garry was entitled under the deed and the 1988 will. She held those assets on a constructive trust in accordance with the terms of the 1988 will which crystallised upon her death. Those assets have now devolved onto the interim administrator subject to the same equities.

  2. In relation to the unit, that conclusion is made express by s 45 of the Probate and Administration Act 1898 (NSW), which provides that (emphasis added):

All real estate held by any person in trust or by way of mortgage, and vesting as aforesaid under this part [a reference to section 44], shall as from the death of such person vest in the person’s executor or administrator, subject to the trusts and equities affecting the same.

  1. Insofar as the residue of the estate is not real property, the same conclusion would nevertheless apply.

  2. It is then necessary to interpret the Act. Section 63 is the relevant provision:

63 Property that may be used for family provision orders

(1)   A family provision order may be made in relation to the estate of a deceased person.

(2)   If the deceased person died leaving a will, the estate of the deceased person includes property that would, on a grant of probate of the will, vest in the executor of the will, or would on a grant of administration with the will annexed, vest in the legal representative appointed under that grant.

(3)   A family provision order may not be made in relation to property of the estate that has been distributed by the legal representative of the estate in compliance with the requirements of section 93, except as provided by subsection (5).

(4)   Where property of the estate of a deceased person is held by the legal representative of that estate as trustee for a person or for a charitable or other purpose, the property is to be treated, for the purposes of this Chapter, as not having been distributed unless it is vested in interest in that person or for that purpose.

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

  1. In my respectful opinion, the entirety of the estate is available for the making of a family provision order by reason of s 63(2) of the Act. However, contrary to Ms Waters’ argument, what is available as having vested in the interim administrator (and therefore forms part of the distributable estate for the purpose of s 63(1) by virtue of s 63(2) of the Act), has vested subject to the equities in favour of Garry. Those equities are not to be postponed or ignored until after a family provision order has been made.

  2. Finally, I note for completeness that, to the extent it may be relevant, the property held by the interim administrator upon constructive trust on the terms of the 1988 will has not been distributed. In any event, it would be treated as not having been distributed pursuant to s 63(4) because while it is held on trust for Garry by the interim administrator, it has not vested in interest because Garry’s only present right as a beneficiary is to the due administration of the estate. Furthermore, it would not in any event be available as notional estate because the constructive trust over it arises as a result of the making of a will and is therefore not a relevant property transaction (see s 75(3) of the Act).

  3. It follows that the entire estate is available for the making of a family provision order. However, the starting point of that exercise remains to find, as the Court does, that Garry is entitled, pursuant to the trusts of the 1988 will, to that amount which is half of the proceeds of sale of the unit together with one third of the residue. I understood it to be common ground between the parties that, if this was the Court’s conclusion, they accepted that the balance of the estate was held for Martin and Helane in equal shares. If that is not the case, the Court will give the parties an opportunity to make further submissions on that point.

Helane’s family provision claim

  1. The parties informed the Court that if it came to the view which it has concerning Garry’s rights under the deed and the 1988 will, there was only a very limited area of dispute as to the amount of additional provision which should be ordered for Helane. There was no dispute that Helane is an eligible person and that, in the conclusion which the Court has reached, the final will (in effect modified by the trusts under the 1988 will in favour of Garry) does not make adequate provision for Helane.

  2. Helane is 63 years old, owns no real property and is otherwise of very modest means. She has some limited income earning capacity because she is an experienced organiser of specialised group travel.

  3. There was no dispute that Helane is entitled to proper provision for secure accommodation and an amount for contingencies. As to the latter, she has already had an interim provision order of $70,000 (see Lindsay J’s orders in [10] above) which, to her credit, she has not yet drawn upon.

  4. The real difference between the parties was whether Helane should have a two bedroom apartment which gave her the prospect of an income stream through renting out the other room, or a one bedroom apartment. I asked Helane some questions about this during the course of her cross-examination and I gained the impression that while she also wanted the second bedroom for reasons of space and having friends to come and stay with her, the prospect that she might have to supplement her income by renting out the other room was a real one for her, even if she did not approach it with great enthusiasm.

  5. Even on the assumption that the parties’ legal fees are paid from the estate, the evidence is that there are sufficient funds in the estate to provide Helane with a two bedroom unit in the eastern suburbs. I accept her evidence that the eastern suburbs is where she wishes to live, having lived in that area most of her life.

  6. Helane’s siblings have not put their affairs in issue. She cared for Freda in the last years of Freda’s life and was otherwise a loving companion to her. That conclusion is not materially tempered by peripheral disputes in the evidence (which were not referred to in closing addresses and I do not propose to attempt to resolve) about concerns the other family members had about the adequacy of Helane’s care of Freda.

  7. The Court therefore accepts that proper provision for Helane would be to enable her purchase a two bedroom unit in the eastern suburbs. This conclusion is also reached because it gives effect to Freda’s intentions for Helane under the final will. Those intentions expressly included leaving Helane a unit with a second bedroom which she could rent out and thereby earn income.

  8. Garry tendered evidence which it was submitted demonstrated that $775,000 would be adequate for Helane to purchase a two bedroom unit in the eastern suburbs. Helane’s evidence of what she described as suitable properties included properties valued between $1,000,000 and $1,300,000 (with stamp duty in the range of $40,000 - $54,000 and legal fees of approximately $5,500).

  9. Given the expensive nature of Sydney’s property market, not least in the eastern suburbs, Helane’s figures are more realistic. The Court finds that proper provision to purchase Helane’s accommodation in the form of a two bedroom unit in the eastern suburbs is $1,250,000 (inclusive of stamp duty and legal fees).

  10. Helane submitted that with a life expectancy of 22 years and superannuation of only $65,000, an allowance of $225,000 for contingencies would be appropriate. It was submitted for Garry that a contingency of $100,000 would be appropriate for Helane (including the $70,000 that she has already received by way of interim distribution), noting that Helane would shortly be eligible for the aged pension (although there was no evidence as to how much that would be).

  11. The Court finds that adequate provision for a buffer for contingencies is $150,000 (including $70,000 which she has already received). In circumstances where Helane will have the benefit of a two bedroom unit which gives her a capacity to earn income by renting out the other bedroom, I do not accept that a contingency of as much as $250,000 contended for on her behalf would be appropriate.

Conclusion

  1. After Helane has received the residue of the estate to which she is entitled under the final will, she should receive additional provision to bring her total benefit from the estate (including the $70,000 which she has already received) to $1,400,000. Mr Wallis informed the Court that it was agreed between Garry and Martin that the burden of any such additional provision should be borne by Garry from his share of the estate (calculated pursuant to his rights under the 1988 will). Given that is the case, justice as between Garry and Helane requires that Garry not lose the benefit of those funds absolutely. They should return to him on Helane’s death (or earlier repayment by her). The parties should agree on a form of order in the nature of a Crisp order whereby Garry has a first ranking security for the amount of her additional provision that he bears (including accruing interest) over any property which she purchases (or any further property which she purchases with the proceeds of sale of the first property).

  2. Garry is entitled to a declaration that his share of the estate is held on terms of the 1988 will. The parties will be given an opportunity to agree, to the extent they can, on the form of orders to give effect to these reasons and as to costs. I will make directions for written submissions and a further short hearing to resolve any outstanding matters of disagreement.

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Decision last updated: 19 May 2025

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Cases Cited

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Statutory Material Cited

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Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70