Levy v Close

[2019] NSWSC 1027

Supreme Court

New South Wales

Medium Neutral Citation:	Levy v Close [2019] NSWSC 1027
Hearing dates:	25, 26 September and 11 December 2018
Decision date:	14 August 2019
Jurisdiction:	Equity
Before:	Lindsay J
Decision:	(1) In her capacity as representative of the estate of her late father, the plaintiff is entitled to enforce a resulting trust proportionate to his contribution to the cost of acquisition of a residential property in the names of the defendants.  (2) Having regard to her half interest in the deceased’s estate and enforceability of the estate’s trust entitlements, the plaintiff’s personal claim to family provision relief vis a vis the estate is to be dismissed.
Catchwords:	EQUITY – Equitable interests in property – Contribution to acquisition or improvement of another’s property – Resulting trust – Family arrangement for purchase of residence with separate accommodation of parent   EQUITY – Trusts and trustees – Resulting trust – Family arrangement for purchase of residence with separate accommodation of parent
Legislation Cited:	Conveyancing Act 1919 NSW Family Provision Act 1982 NSW Limitation Act 1969 NSW Succession Act 2006 Uniform Civil Procedure Rules 2005 NSW
Cases Cited:	Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 Black Uhlans Inc. v NSW Crime Commission [2002] NSWSC 1060 Calverly v Green (1984) 155 CLR 242 Dare v Furness (1998) 44 NSWLR 493 Scale’s Case (1962) 107 CLR 9 Verzar v Verzar [2014] NSWCA 45 Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Warren v McKnight (1996) 40 NSWLR 390
Texts Cited:	Meagher, Gummow & Lehane, Equity: Doctrine and Remedies (Lexis Nexis Butterworths, Australia, 5th ed, 2015) Chapter 38
Category:	Principal judgment
Parties:	Plaintiff: Jeanette Lynn Levy First Defendant: Judith Marie Close Second Defendant: Christopher Joseph Close
Representation:	Counsel: Plaintiff: A Blank Defendants: JE Armfield   Solicitors: Plaintiff: David Landa Stewart Lawyers Defendants: Teece Hodgson & Ward
File Number(s):	2017/00195619

Judgment

INTRODUCTION

1. In her capacity as a representative of the deceased estate of her late father (Graham Rex Crowley, “the deceased”) and, insofar as she seeks a grant of family provision relief, in her personal capacity, the plaintiff sues her sister (the first defendant) and her sister’s husband (the second defendant) for relief arising from the deceased’s contribution of funds to the defendants’ purchase of a residential property at North Narrabeen in 1982.

2. The deceased made his contribution on terms which, although the subject of disputation between the plaintiff and the defendants in other respects, uncontroversially included an agreement between the deceased and the defendants that he would reside with them (as he did), in separate accommodation, on the North Narrabeen property.

3. In essence, the plaintiff contends that, either by reference to the deceased’s will or by reference to a claimed statutory entitlement to family provision relief, she should obtain a one half share of the fruits of the deceased’s contribution to purchase of the North Narrabeen property.

4. The deceased died in 2003. In 2016 the defendants sold the North Narrabeen property and, with the proceeds of sale, purchased a residential property at Swansea. The plaintiff contends, and the defendants dispute, that in the interim period of about 13 years she sought, and obtained from the first defendant (on behalf of both defendants), an assurance that she would receive a benefit from the deceased’s estate referable to his “flat”, a reference to his separate accommodation on the North Narrabeen property.

5. The defendants having sold the North Narrabeen property, the plaintiff claims an entitlement to a proprietary remedy against the defendants’ Swansea residence.

6. The defendants’ opposition to the plaintiff’s claim for relief includes: (a) a denial that the plaintiff has discharged the onus of proof she bears in establishing that the deceased acquired a proprietary interest in the North Narrabeen property by virtue of his contribution to its purchase in the name of the defendants; and (b) reliance upon defences associated with delay in the plaintiff‘s institution of proceedings.

7. All things considered, the plaintiff’s claim is not a large one. That is because: (a) the amount contributed by the deceased to purchase of the North Narrabeen property was significant, but not large; (b) at least part of his contribution was, as the defendants contend, directed towards renovations to the property which accommodated his residence there rather than towards the purchase price of the property or its capital improvement; (c) under the will of the deceased, which has grounded the plaintiff’s appointment as a representative of the deceased’s estate in these proceedings, the beneficiaries of the estate are the plaintiff and the first defendant in equal shares, limiting the plaintiff’s share of any recovery on behalf of the estate to a half.

CONTEXT

8. The deceased died on 29 April 2003, aged nearly 77 years, survived by his two children (the plaintiff and the first defendant) and leaving a will dated 3 March 1986 probate of which has never been sought by his children, named in the will as his sole executors and, in equal shares, his sole beneficiaries.

9. The only substantial asset left by the deceased on his demise was (and remains) whatever, if any, entitlements the estate may have against the defendants in these proceedings. He died without debts.

10. At the commencement of the final hearing of these proceedings, the Court made a formal notation of an agreement between the plaintiff and the defendants to the effect, inter alia, that:

1. the only known will of the deceased is his will dated 3 March 1986, the validity of which is not in dispute.

2. the only persons with an interest in the estate of the deceased are the plaintiff and the first defendant as his daughters.

3. for the purpose of these proceedings, in respect of all claims other than her claim for family provision relief, the plaintiff asserts claims on behalf of the estate of the deceased.

11. That formal agreement was accompanied: (a) by an order, pursuant to rule 7.10 of the Uniform Civil Procedure Rules 2005 NSW and until further order of the Court, that the plaintiff be appointed to represent the estate of the deceased for the purposes of all claims made by her in the proceedings other than her claim for family provision relief; and (b) by a reservation for further consideration of the question whether any (and, if so, what) grant of probate or administration of the estate of the deceased should be made so as to facilitate an orderly administration of the estate .

12. These proceedings were commenced by a statement of claim filed on 30 June 2017, to which the defendants filed a defence on 6 September 2017. There are no other pleadings. No cross claim was filed.

13. As pleaded in her statement of claim, the plaintiff’s claim for family provision relief is expressed as a claim under Chapter 3 of the Succession Act 2006 NSW.

14. The deceased having died before that legislation was enacted, at the commencement of the final hearing the Court formally recorded the parties’ agreement that references in the statement of claim to sections 58, 59 and 79 of the Succession Act 2006 are to be read as references to comparable provisions found in the Family Provision Act 1982 NSW, the statutory predecessor of the Succession Act.

15. As a daughter of the deceased, the plaintiff has standing to apply for family provision relief under the Family Provision Act 1982. She is an “eligible person” within the meaning of that term as defined by section 6(1) of the Act.

16. Under section 16 of the Family Provision Act, the time within which the plaintiff could make an application for family provision relief (without an extension of time, by order of the Court) was limited to 18 months after the death of the deceased.

17. In the absence of consent to an extension of time, a necessary element of the plaintiff’s claim to family provision relief is her need to show “sufficient cause” for her application for relief not having been made within time.

18. The plaintiff’s claim for family provision relief was made approximately 12 years eight months outside the time limited by the Family Provision Act, section 16. The passage of such a period is not necessarily, of itself, fatal to the plaintiff’s application for family provision relief; but it is a significant hurdle for her to overcome. In deciding whether “sufficient cause” has been shown for an extension of time within which an application for family provision relief can be made, the Court customarily considers: (a) the sufficiency of any explanation of delay in a claim being made; (b) whether there would be any prejudice to beneficiaries by the grant of an extension of time; (c) whether there has been any unconscionable conduct affecting the application; and (d) the strength of the application sought to be made: Warren v McKnight (1996) 40 NSWLR 390 at 394; Dare v Furness (1998) 44 NSWLR 493 at 500; Verzar v Verzar [2014] NSWCA 45 at [25].

FAMILY RELATIONSHIPS

19. The deceased was born on 14 March 1926. At the beginning of 1981 (the year during which events central to these proceedings began to unfold) he was aged about 55 years.

20. He was married once only. His wife (the mother of the plaintiff and the first defendant) died in 1968. The plaintiff and the first defendant were the only two children of the deceased. The first defendant was born in May 1953; she is now aged about 66 years. The plaintiff was born in November 1954; she is now aged about 64 years.

21. The death of the girls’ mother when they were teenagers drew them closer to their father and together.

22. In due course, the plaintiff married, had three children (now adults) and divorced. She says, and I accept, that, as a single mother, she has always been conscious of a need to protect the interests of herself and, indirectly, her children in the deceased’s estate. She was separated from her husband, and living with the defendants, at the time the deceased died.

23. The first defendant married the second defendant in November 1974. They have two children: a daughter born in June 1981, and a son born in August 1983.

24. When aged three months, the daughter was diagnosed with severe cerebral palsy, a fact which played a part in the defendants’ decision to move their residence from Forestville to North Narrabeen. Their medical advice was that their daughter would benefit from proximity to cool sea breezes.

25. The deceased was never a wealthy man. In 1981 he was living alone at Brookvale, in a property he had purchased from the Housing Commission. It was his major asset. In that property he was living in an isolated environment, without a telephone or close support. Although aged only in his mid-fifties, he suffered from rheumatoid arthritis. His daughters regarded him as in need of assistance. He was nevertheless determined to live, and he largely did live, independently.

26. In late 1981 the deceased sold his Brookvale property for $72,000. While he was sorting out where to live after the sale, he lived for a time in a garage at the defendants’ Forestville residence.

27. At about the same time, in late 1981, confronted by their daughter’s medical diagnosis, the defendants were contemplating a move from their Forestville property to a property closer to the beach.

28. It was in that context that a proposal emerged for the deceased (in lieu of purchasing a home unit independent of any family connection) to make a contribution to the purchase of a beachside property in conjunction with the defendants, on the basis that he could live at the property, in proximity to, but separately from, the defendants.

29. The property transactions which attract attention in these proceedings are as follows:

1. On or about 30 April 1982 the defendants sold their Forestville property and, with a financial contribution from the deceased but in their own names alone, purchased the North Narrabeen property. The registered memorandum of transfer relating to the sale of the Forestville property records the selling price as $91,000, but each of the defendants has sworn that that is a clerical error, the true selling price being $99,000.

2. The North Narrabeen property was purchased for $110,000. The best evidence of the nature and extent of the deceased’s contribution to acquisition of that property (albeit not the subject of corroborative documentation) is the evidence of the defendants that the deceased paid approximately $11,000 towards the purchase price of the property; approximately $4,000 towards payment of stamp duty and legal costs associated with the purchase, together with post-acquisition payments totalling approximately $9,000 in renovation of a downstairs area in the residence which became known as his “flat”. The plaintiff has no independent knowledge of these sums, which total $24,000. In her commencement of the proceedings, she relied upon a casual statement earlier made by the first defendant estimating the deceased’s expenditure at $30,000. In her submissions she urged the Court to adopt an estimate of $30,000 or thereabouts, basing such an estimate on a reconstruction of accounts grounded upon a contention that the true selling price of the Forestville property was $91,000 (as recorded in the memorandum of transfer on sale) and an inference that the deceased’s financial contribution towards the purchase price of the North Narrabeen property was greater than necessary if the true sale price of the Forestville property was $99,000. In the absence of corroborative records, I accept the defendants’ evidence about the nature and extent of the deceased’s financial contribution to acquisition, and renovation, of the North Narrabeen property. I do so notwithstanding reservations about the defendants’ assertion that the publicly recorded sale price of their Forestville property is erroneous.

3. In 2006 the defendants sold a one-third share in the North Narrabeen property to their son. Part of what he paid them for his share was used for renovations on the property. There is no evidence, and it is not contended, that those renovations materially affected the capital value of the property.

4. Between 2007-2016 or thereabouts the defendants from time to time rented out the deceased’s “flat” for cash sums (not the subject of written corroboration) commencing at about $270 - $300 per week and ending up at about $380 - $400 per week.

5. In February 2016 the defendants and their son sold the North Narrabeen property for $1,550,000. Registration of the Memorandum of Transfer in favour of the purchasers occurred on 8 April 2016. The precise date upon which settlement of the sale occurred is not recorded in the evidence. The Memorandum of Transfer is undated.

6. In March 2016 the defendants purchased their current residence, in Swansea, for $750,000. The precise date of settlement of the purchase contract is not recorded in the evidence.

7. In March 2017 the defendants purchased an investment property in Swansea with their children for a total price of $610,000. Vis a vis their children they have a one-third share as tenants in common, an equal share being held by each of the children. As between themselves, the defendants’ one-third share is held as joint tenants. The defendants’ contribution to the purchase price was $203,333 together with (I assume) a share of incidental acquisition costs.

30. There is no dispute that the proceeds of sale of the North Narrabeen property funded the defendants’ purchase of their Swansea residence and their one-third interest in their Swansea investment property: Transcript, page 10 (lines 27-30).

31. These proceedings have been conducted on the basis that, if the plaintiff has any entitlement to relief, justice can be done without joinder in the proceedings of either of the defendants’ children.

32. In summarising the property transactions the subject of the proceedings, I have not here referred to any mortgage which encumbered the defendants’ interest in the North Narrabeen property. The defendants have not submitted that the existence of such a mortgage could serve as an impediment to a grant of equitable relief to the estate of the deceased should the plaintiff, in her capacity as a representative of the estate, establish a proprietary interest in the North Narrabeen property or, tracing the proceeds of sale of that property, in the defendants’ Swansea residence.

33. The institution, and conduct, of these proceedings appears to have soured the relationship between the plaintiff and the defendants. However, it was not until late 2015 (when the plaintiff began to insist that she receive some benefit from the deceased’s estate) that everything turned sour. A concrete example of this is the fact that on 6 May 2014 the plaintiff lent the defendants $34,000 or thereabouts for the purchase of a car and, on 18 April 2015, she lent them a further $37,700 or thereabouts for the purchase of a caravan. Negotiations for the defendants to make a payment to the plaintiff in recognition of such, if any, entitlements she might have via the estate of the deceased came to nothing but, on or about 13 April 2016, the defendants repaid the plaintiff the moneys she had lent them.

QUESTIONS OF CREDIT

34. The subject matter of these proceedings being informal family arrangements that mostly occurred long ago and remain substantially undocumented, questions of credit must be addressed.

35. The principal witnesses who gave evidence at the hearing of the proceedings, and the only ones cross examined, were (on the one side) the plaintiff and her daughter Sarah and (on the other side) each of the defendants.

36. In my assessment, each of those witnesses endeavoured to give evidence honestly but, in varying degrees, with the exception of Sarah, some of their evidence was unreliable.

37. The outcome of the plaintiff‘s representative claims, in particular, depends on an assessment of evidence about conversations that occurred, in a series of clusters, as long ago as 1981-1982 or thereabouts (when there were family discussions that led to acquisition of the North Narrabeen property) and, more recently, in 2003 (when the deceased’s estate was the subject of discussion between the plaintiff and the first defendant) and in 2015-2016 (when the plaintiff pressed her claims and the parties endeavoured unsuccessfully to negotiate a settlement of them).

38. The defendants contend that the plaintiff was driven to pursue her claims against them by the demands for action by her daughter, Sarah, who was insistent that her mother receive some benefit from the deceased’s estate. There may be an element of truth in this but, in my assessment, the more effective cause of the proceedings is that the plaintiff consistently believed, and maintained, that she had an entitlement to benefit from the deceased’s estate. She trusted that the first defendant would, as she saw it, do the right thing by her by allowing her a share of their father’s estate (which she envisaged as an amount the deceased had “invested” in the North Narrabeen property) upon a sale of the property.

39. Her patience ran out when, in early 2016, she perceived that the defendants proposed to sell the North Narrabeen property without making any allowance in her favour. Her reluctance to press the defendants more quickly than she did was a point of friction between her and Sarah which came to the defendants’ attention in real time. In broad terms, Sarah’s evidence neutralises any suggestion that the plaintiff’s reports of conversations with the first defendant are tainted by recent invention.

40. On the whole, I prefer the plaintiff‘s account of conversations (with the first defendant, in particular) over the accounts of the first defendant and, to the limited extent he was involved, the second defendant.

41. That is because, in my assessment, the defendants’ evidence was affected by an ex poste rationalisation of events, driven by a fear of economic hardship if they are called upon to pay any substantial sum of money to the plaintiff referable to the deceased’s estate. The second defendant was medically retired from his employment as a fireman in 2000. The plaintiff and the defendants are, alike, living in retirement, with attendant frailties of health.

34. On their own evidence, the defendants struggled to formulate reasons for denial of the plaintiff’s claims. The prime example of this is the defendants’ narrative of an informal arrangement made between them and the deceased (some time after acquisition of the North Narrabeen property) for the defendants to bear the burden of outgoings on the property as a means of repayment of the deceased’s contribution to the property‘s acquisition. On his own evidence, the second defendant had no memory of such an arrangement until expressly prompted by the first defendant, after which time they both claimed a clarity of memory in opposition to the plaintiff’s claims.

35. I do not accept the defendants’ evidence on this topic. I prefer the plaintiff’s evidence that, from time to time, she observed the deceased making payments to the defendants on account of outgoings.

36. In my assessment, the defendants’ account of an informal arrangement with the deceased to “repay” him his contribution is consistent with the plaintiff‘s contention that the deceased’s contribution was not made, or understood by the defendants to have been made, by way of a gift to the defendants. I do not, however, embrace reasoning that elevates a rejection of the defendants’ evidence as, of itself, proof of the contrary.

37. On the defendants’ evidence, the deceased’s contribution was not a loan. Upon that, they insist.

38. It was a contribution made without any express characterisation.

39. My rejection of the defendants’ evidence about the fact, or performance, of an informal arrangement with the deceased for “repayment” of his contribution does not carry with it a rejection of the whole of the defendants’ evidence. I accept, for example, their evidence that the deceased’s contribution was not a loan.

40. Of particular significance, I accept their evidence about the nature and extent of the deceased’s contribution to acquisition of the North Narrabeen property including, in particular, their evidence that that contribution (other than so far as related to renovations) was limited to a contribution of about $11,000 to the purchase price, and a contribution of about $4,000 to the payment of stamp duty and legal costs.

41. In deciding whether any (and, if so, what) orders should be made for administration of the deceased’s estate beyond the representative order thus far made in the proceedings I note that her decision not to make any application for probate in respect of the deceased’s will is consistent with the evidence given by her in these proceedings that she did not believe that the deceased was entitled to any share of beneficial ownership of the North Narrabeen property.

42. Her evidence is that the deceased died with a small bank balance (which was applied towards the cost of his funeral); an old car of nominal value; and a debt owed by the defendants’ daughter, which was collected and the proceeds of which were split between the plaintiff and the first defendant. This evidence, coupled with the passage of time since the deceased’s death, provides comfort in a finding that the deceased died without debts, simplifying the form of any orders to be made in favour of the plaintiff should she be found entitled to a grant of relief in these proceedings.

THE PLAINTIFF’S REPRESENTATIVE CLAIM ON BEHALF OF THE DECEASED’S ESTATE

Introduction

51. There are two aspects of the claim made by the plaintiff against the defendants in her capacity as representative of the estate of the deceased.

52. The first concerns the plaintiff‘s claim that the contribution made by the deceased in 1982 to acquisition of the North Narrabeen property in the names of the defendants resulted in him obtaining a beneficial interest in the property proportionate to the total cost of acquisition of the property.

53. The second concerns the plaintiff‘s claim that, because (the plaintiff contends) the deceased had a beneficial interest in the North Narrabeen property, the defendants are obliged to account to his estate for a share of rental income they received when, between 2007-2016, they intermittently let out the area of the property formerly occupied by the deceased’s “flat”.

Claim of proprietary interest

54. That the deceased made a financial contribution to acquisition of the North Narrabeen property in the names of the defendants in 1982 is common ground. The essential questions for determination are: (a) whether that contribution gave rise to a resulting trust in favour of the deceased proportionate to his contribution to the cost of acquisition of the property (Calverly v Green (1984) 155 CLR 242 at 246-247, 258-259 and 266-267); and (b) if so, what was the amount of the deceased’s contribution?

55. In the absence of any primary records evidencing the amount and nature of the deceased’s contribution, I accept the defendants’ evidence that the total amount contributed was of the order of $24,000 and that, of that amount, approximately $11,000 was a contribution to the purchase price of the property and approximately $4,000 was a contribution to stamp duty and legal costs associated with the purchase.

56. I accept the first defendant’s explanation that a statement made by her to the plaintiff to the effect that the deceased’s total contribution was of the order of $30,000 (not $24,000) was a casual, ill-considered statement which, on reflection, she honestly disclaims as inaccurate.

57. On her own evidence, the plaintiff has no direct, personal knowledge of the amount or nature of the deceased’s financial contribution to acquisition of the property. In the circumstances, the defendants’ evidence on this topic is the best available.

58. The defendants contend, and I accept, that, if the deceased’s estate has a viable claim to a beneficial interest in the North Narrabeen property arising from the deceased’s financial contribution to its acquisition, any entitlement of the estate is limited to the amount of approximately $15,000 expressed as a proportion of the total cost of acquisition of the property (which I take to be $114,000, the sum of a purchase price of $110,000 and incidental expenses of $4,000): Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [166]-[167]. The deceased’s expenditure on renovations (which included the cost of fitting out his “flat”) was expended after the acquisition and has not been established by evidence to have increased the capital value of the property.

59. If the estate of the deceased acquired a beneficial interest in the North Narrabeen property, by reason of a resulting trust arising from his $15,000 contribution to the cost of acquisition of the property ($114,000), his share of the property, expressed as a percentage, was 13.15 % (15/114).

60. Characterisation of the deceased’s financial contribution (that is, of approximately $15,000) to the cost of acquisition of the North Narrabeen property depends upon a factual finding as to the intention of the parties – more particularly, the intention of the deceased – in the making of the contribution: Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [165].

61. In the absence of a determinative expression of intention it is necessary, to the extent that the parties are in dispute, to survey surrounding circumstances.

62. Family Discussions, 1981-1982. It is common ground that, in family discussions leading to acquisition of the North Narrabeen property with the benefit of the deceased’s financial contribution:

1. the deceased did not in any deliberate, explicit way speak of making a gift or loan in favour of the defendants.

2. discussions proceeded on the basis that the purpose of the deceased’s contribution was to enable him to obtain separate accommodation for himself in a manner that assisted the defendants’ family as well as himself.

3. the deceased’s financial contribution was funded from the proceeds of sale of his Brookvale property, his principal asset.

63. There is no evidence, one way or the other, as to whether the deceased was aware that the North Narrabeen property was purchased in the names of the defendants, without inclusion of his name on the title.

64. Although I do not accept as fact the defendants’ evidence that, shortly after acquisition of the North Narrabeen property, they agreed with the deceased that they would “repay” his financial contribution to acquisition of the property, the defendants’ presentation of that case appears to be inconsistent with characterisation of the deceased’s contribution as a gift and, in any event, being a post-acquisition arrangement (if, contrary to my finding, it was made), the timing of it does not bear directly upon an assessment of intention, as at the time of acquisition. In the abstract, a decision to “repay” the deceased is not necessarily inconsistent with a finding of gift; but, in the absence of a clear designation of the deceased’s contribution as a gift, such a decision might be thought to tend against a finding of a gift.

65. More remote in time, but indicative of the general nature of the deceased’s relationship with his daughters, is the fact that: (a) in February 1986 he had a $60,000 lottery win the proceeds of which were distributed equally (with $20,000 each) between his two daughters and himself; and (b) the will the deceased executed on 3 March 1986 treated his daughters equally in all respects. With some force, this equality of treatment is relied upon by the plaintiff as negating any suggestion that, by assisting the defendants to purchase a property which might otherwise have been out of their financial reach and by living in close proximity to them, the deceased intended to favour the first defendant over the plaintiff.

66. Nothing was said in family discussions leading to acquisition of the North Narrabeen property to the effect that any interest acquired by the deceased in the property was intended to be limited to the duration of his life. Although not determinative of any disputed question in these proceedings, the deceased’s making of a will in favour of his daughters might be thought to be consistent with a belief that he had a property right in his “flat” to dispose of. That possibility carries little weight, though, because the will was made nearly three years after the North Narrabeen property was acquired, and shortly after the deceased did have, inter alia, an independent form of property consequent upon his lottery win.

67. The plaintiff deposes that in late 1981 she, the deceased and the first defendant had a conversation in words to the following effect:

The first defendant said:

“I would like to move closer to the coast as a cooler climate will help [the defendants’ daughter] cope with all the physiotherapy treatment she is having, but, financially, we can’t, as houses nearer the coast are more expensive.”

The deceased said:

“Instead of buying my own place, I could invest with [the first defendant] to buy a place that is nearer to the coast, a place that has a self-contained residence for me.

Talk to [the second defendant], as this could work. I will have my own place and you get to move closer to the coast which will be good for [the defendants’ daughter].

The plaintiff said:

“I think this may be good for both of you. It is definitely worth thinking about.”

68. The first defendant deposes to a conversation, at about the same time, between herself, the second defendant, the deceased and the plaintiff during which words to the following effect were said:

One of the defendants said:

“We are going to sell up and move closer to the coast. We are very concerned about your health. So is [the plaintiff]. If we can find a place with a separate flat, would you like to come and live with us?”

The deceased said:

I’ll think about it. It will need to be separate, I don’t want to live in the house with you.”

69. The first defendant deposes that, approximately one or two weeks after that conversation, the deceased said to her:

“I’ve been thinking about it and maybe it’s a good idea for me. But I want something separate”.

70. The second defendant disclaimed any clear recollection of an initial conversation with the deceased about these questions. However, he said that he did recall a conversation with the deceased in terms to the following effect:

The deceased said:

“Where are you thinking of buying? When are we going to do it?”

The second defendant said:

“We are looking for places on the northern beaches or down on the coast, where it is cooler, possibly back at Narrabeen.”

The deceased said:

“Sure. Would I need to pay rent?”

The second defendant said:

“No. You will live there with us and you can live with us.”

The deceased said:

“Okay.”

71. The first defendant deposes that, following her initial discussions with the deceased, she and her husband started looking at properties with a separate area or that could be converted into a separate area for the deceased. She deposes to a conversation between her, the second defendant and the deceased in which she or the second defendant said, “We found a couple of places but we are going to be short on funds”, to which the deceased responded, “I can give you the money that you are short” or words to that effect.

72. For her part, the plaintiff says that at no stage in the initial discussions did the deceased indicate or say that the money he was providing for the prospective property purchase was to be a “gift” to the defendants.

73. In cross examination, the first defendant agreed that the deceased did not “give money to” the defendants but, rather, he provided money “for” the defendants to purchase their property. He directly provided $11,000 towards the purchase price, and paid funds directly towards “stamp duty and legals”. The second defendant made a similar concession in his cross examination.

74. For her part, the first defendant swore as follows:

“[The deceased] did not ask to be included on the title [to any property to be purchased]. He did not say that the amount given by him was to be a loan, or was to give him an ownership interest. He did not ever raise any of these matters with me.”

75. In my assessment, the plaintiff’s and the first defendant’s respective accounts of their conversations with the deceased include an element of unconscious bias which does not entirely accord with the objective facts. On this basis, I discount the plaintiff’s attribution to the deceased of the word “invest” and the first defendant’s attribution to him of the word “give” in the context of the provision of money.

76. In my assessment, it is more probable than not that the deceased did not use any such language, loaded with legal implications. He was not a sophisticated man. Nobody in his family had legal training. It is more likely than not that it never occurred to him that his financial contribution to acquisition of the North Narrabeen property required express characterisation at all. His focus was upon adoption of arrangements that would operate for the benefit of everybody (himself included), simply clarifying that he would have separate accommodation and no obligation to pay rent. His focus was upon helping the defendants in a way which preserved his own autonomy, living independently in separate accommodation, which was “his”.

77. I infer from the whole of the evidence that, at the time of acquisition of the North Narrabeen property, the deceased intended that, by his financial contribution to purchase of the property, he acquired ownership of an interest in the property. Expressed in terms of presumptions (discussed by Campbell J in Black Uhlans Inc. v NSW Crime Commission [2002] NSWSC 1060 at [128]-[141]), on my reading of the evidence, operation must be given to a presumption of resulting trust in favour of the deceased and, following his death, his deceased estate. Upon their acquisition of the property, the defendants held the property on trust for themselves (as to a 86.85% share) and the deceased (as to a 13.15% share).

78. The defendants plead a “statute of frauds” defence by reference to sections 23C and 54A of the Conveyancing Act 1919 NSW. That defence cannot succeed. Section 23C(3) provides that that section does not affect the creation or operation of resulting, implied or constructive trusts; and the defendants did not rely upon section 54A in their submissions as having any broader application to the facts of the case than section 23C.

79. Whether the deceased’s estate is precluded, by laches or delay (or by reference to the Limitation Act 1969 NSW), from a grant of equitable relief to vindicate the deceased’s entitlement to an interest in the North Narrabeen property requires a review of events which post-date acquisition of the property.

80. The deceased’s life in his self-contained flat, 1982-2003. Renovations to the North Narrabeen property having been effected in 1982, to provide the deceased with a self-contained “flat”, through a cooperative effort largely on the part of the deceased (in the provision of funds) and the second defendant (in organising mates to helping with renovation work), the deceased lived in his flat until the time of his death in 2003.

81. During that time, he ran down his savings (bolstered by a lottery win) in the acquisition of a car and in payment of living expenses, including accommodation of a predisposition for alcohol and gambling.

82. As events transpired, the plaintiff and her children were living with the defendants and their children at the North Narrabeen property at the time of the deceased’s death. The plaintiff lived there for about a year following the breakdown of her marriage. She moved out at the end of June 2003.

83. At no time during the lifetime of the deceased did the defendants take any step to deny, or to interfere with, the deceased’s “ownership” of his “flat”. With their entire acquiescence, he exercised proprietorial rights over his “flat”, the material expression of his interest in the North Narrabeen property. There is no evidence that the defendants at any time during his lifetime denied his entitlement to occupy the “flat”. He remained in occupation of it, as his separate accommodation, as of right.

84. Nothing happened during the lifetime of the deceased which could ground a proposition that, by effluxion of time, the deceased lost an entitlement to enforce an equitable interest in the North Narrabeen property.

85. Upon his death, a question arose as between the plaintiff and the defendants as to whether the deceased’s estate had any ongoing interest in the North Narrabeen property. That question was confronted by the plaintiff and the first defendant shortly after the deceased’s death in 2003, as well as subsequently.

86. Family discussions, 2003. The plaintiff deposes that, a short time after the deceased’s funeral, she had a conversation with the first defendant in words to the following effect:

The plaintiff said:

“How are we going to sort out Dad’s things, in particular, his flat? I know money is tight at the moment. I don’t want you to have to sell your house or get a loan to pay me my share of Dad’s flat. I am okay at the moment, I can wait, but at some stage, the flat will need to be sorted. I am entitled to receive my share of the money Dad put into the joint purchase of the house.”

The first defendant said:

“Ok.”

87. The plaintiff deposes that, at this point, the first defendant did not say to her that her thinking was wrong or that she was not entitled to her “share of the value of” the deceased’s “flat”.

88. The plaintiff’s evidence, which I accept, is to the effect that (as conveyed to the first defendant on behalf of the defendants) she was at all times prepared to wait for realisation of her perceived interest in the deceased’s “flat” until such time as the defendants sold the North Narrabeen property or until such earlier time as the sisters might agree. She was content to abide a risk that a sale might occur only after her death because a major concern on her part was to ensure that, through her, her children could obtain a benefit from the deceased’s estate.

89. The first defendant agrees that there was a discussion about the deceased’s “flat” at about this time; but her recollection of its content is different.

87. Her version of what happened is encapsulated in the following evidence:

“Some time between Dad’s death at the end of April and the plaintiff moving out of our home at the end of June 2003, the plaintiff said to me: ‘What are we going to do about Dad’s flat?’ I said: ‘We repaid Dad the money he gave us, he didn’t help with any bills towards the house the entire time he lived here.’ The plaintiff said: ‘That’s all right. I don’t want anything for myself, I just want something for my kids from Pop’. The plaintiff did not say to me that she was entitled to a share of the Narrabeen House, or of the part that Dad occupied.”

91. It is common ground that, in the wake of the deceased’s death, the sisters did have a discussion about the deceased’s “flat”. On my reading of the evidence, that discussion was predicated upon an assumption on the part of the plaintiff that she had a right of inheritance vis a vis the “flat”.

92. It is also common ground that, in one form or another, the plaintiff related her concern about inheritance to a concern for her children. The plaintiff confirmed that in cross-examination.

93. It is common ground, further, that, having raised the question of the deceased’s “flat”, the plaintiff indicated to the first defendant that she was in no hurry to obtain the fruits of any right of inheritance she may have had.

94. The core difference between the sisters’ different accounts is that the first defendant asserts, and the plaintiff denies, that she implicitly denied any right of inheritance by way of an express explanation to the effect that the defendants had repaid the deceased “the money” he had given them.

95. I prefer the plaintiff’s account of the disputed conversation. In my assessment, the defendants’ narrative about “repayment” of the deceased constitutes a later reconstruction of what happened, informed by an apprehension about the economic consequences of any obligation to pay a substantial sum to the plaintiff. Even so, the first defendant concedes that there was a conversation directed towards an accounting for the deceased’s “flat”.

96. The second defendant was not privy to conversations between the sisters at this time. I infer that, as he confirmed in relation to later discussions which occurred in 2015-2016, he left it to the first defendant to speak to the plaintiff on behalf of the two of them. He left his wife to deal with her sister. The sisters were co-executors and co-beneficiaries of the deceased’s estate.

97. In substance, there was an agreement between the plaintiff and the first defendant (on behalf of herself and the second defendant), in 2003, that there would be an accounting between them for the deceased’s interest in the North Narrabeen property upon a sale of the property or earlier agreement. There was no need for an earlier accounting that could force a sale of the property against the wishes of the defendants because the respective rights of the plaintiff and the defendants referable to the interests of the estate of the deceased would be “sorted” at the time of a voluntary sale of the property by the defendants.

98. 2003-2015. The first defendant deposes that, having asked “What are we going to do about dad’s flat?” in 2003, the plaintiff did not mention the flat again until late 2015.

99. In cross examination, the plaintiff insisted that the topic was from time to time discussed by the sisters between 2003-2015. However, her affidavit evidence was silent and her oral evidence was short on details.

100. In my assessment, it is more probable than not that there were from time to time conversations between the sisters about realisation of the plaintiff’s “share” in the deceased’s “flat”. Support for this conclusion can be found in the evidence of the plaintiff’s daughter Sarah about family communications involving her in 2016, after the dispute that gave rise to these proceedings arose.

101. Two aspects of the evidence invite attention. First, an unguarded email sent by Sarah to the first defendant on 14 May 2016 referred to family dealings over a long period in which, in her assessment, the first defendant had “always avoided” discussion about the deceased’s will, “the ‘elephant in the room’ between [the plaintiff] and [the first defendant]”. Secondly, Sarah deposes that, as a consequence of that email, she received an unsolicited visit from the second defendant who (in my assessment) endeavoured to assume the role of a peacemaker. Sarah attributes to him a statement to the effect that “Apparently, [the plaintiff and the first defendant] had been speaking about [the topic of money being owed referable to the deceased’s estate] for years.” In cross-examination, his denial of that statement was accompanied by an initial concession that he could have made it. In my judgement, he did make it. I accept Sarah’s evidence.

102. Family discussions, October 2015 - May 2016. Tensions between the plaintiff and the defendants rose after the defendants decided, in late 2015, to sell the North Narrabeen property and to move “up the coast”. Those tensions culminated in a severance of social contact in May 2016 (as it happened, a preliminary to the commencement of these proceedings) when it became clear that the defendants denied any obligation to account to the plaintiff for any part of the deceased’s estate and, more especially, refused to make any allowance in favour of the plaintiff on that score.

103. There was a series of meetings (commencing in or about October 2015 and finishing up in early May 2016) in which: (a) the plaintiff pressed her claim, as she saw it, to a share of the deceased’s estate consequent upon the defendants’ sale of the North Narrabeen property; (b) that claim was articulated in terms that included a claim for a share of sale proceeds proportionate to the deceased’s contribution to purchase of the North Narrabeen property; (c) the first defendant sought to draw out the plaintiff’s claim before speaking to the second defendant about what might be done in response to the claim; (d) at one point, the first defendant offered the plaintiff a settlement of $50,000, expressing concern about the burden of having to make any payment to her at all; (e) when directly involved in discussions between the sisters, the second defendant insisted that he was not prepared to pay more than $120,000 inclusive of repayment of loan moneys the defendants then owed to the plaintiff, translating into an allowance of about $45,000 referable to the plaintiff’s estate claim; and (f) in the course of those discussions, the defendants articulated to the plaintiff (in my assessment, for the first time) their claim to have “repaid” any moneys due to the deceased.

104. Too much should not be made of the fact that the defendants were prepared to pay the plaintiff money to settle her claim, if only because towards the end of this round of discussions the first defendant characterised her offers as intended to serve, not as admissions, but as a means to resolve disputation. Nevertheless, the fact remains that (a) the plaintiff’s claim was not immediately dismissed out of hand; and (b) the evidence is capable of supporting an inference that the defendants were conscious of an obligation to account to the plaintiff for a share of the deceased’s contribution to the purchase of the North Narrabeen property.

105. The defendants’ laches defence. In my assessment, the estate of the deceased had a beneficial interest in the North Narrabeen property (that is, a 13.15% interest, proportionate to the deceased’s financial contribution to purchase of the property) up to and including the time of sale of the property - which, upon sale, converted into an equitable interest in the proceeds of sale, applied by the defendants in acquisition of the Swansea residence.

106. From the time the deceased died in 2003, with reminders from the plaintiff in occasional conversations over the following decade or so, and through discussions in 2015-2016 associated with the defendants’ sale of the North Narrabeen property, the defendants (through the first defendant) were on notice that the plaintiff maintained a claim that the estate of the deceased had an interest in the property which would have to be realised upon any sale of the property.

107. It was in the interests of the defendants to defer realisation of the estate’s interest in the North Narrabeen property during the period, until 2015-2016, they were resolved to remain in residence there.

108. Notwithstanding the passage of time, there is no foundation in fact, for a defence of laches: Meagher, Gummow & Lehane, Equity: Doctrine and Remedies (Lexis Nexis Butterworths, Australia, 5th ed, 2015), Chapter 38. Having been alerted to the plaintiff’s assertion of a claim against the North Narrabeen property, there was no basis upon which the defendants could reasonably be said to have altered their position upon an assumption that the deceased’s estate had no interest in the property. Nor did they ever alter their position on such an assumption. They remained in residence on the property until such time as it was sold by them. They did not alter their position in an material way. I do not accept their contention that they were prejudiced by a loss of evidence (destruction of records of payment of outgoings on the North Narrabeen property) in circumstances in which, for reasons independently of such evidence, I do not accept their evidence of an oral agreement with the deceased for them to “repay” his financial contribution to acquisition of the property by their payment of outgoings.

109. The defendants’ laches defence to the plaintiff’s representative claim in equity must fail. So too must any defence based upon invocation of the Limitation Act 1969 NSW; there is no basis upon which time could commence to run against the estate of the deceased until, at the earliest, the time of sale of the North Narrabeen property. That was the time at which the plaintiff and the first defendant (acting on behalf of herself and the second defendant), the two women being the sole executors and beneficiaries of the deceased’s estate, agreed that there would be an accounting for the deceased’s interest in the property.

Claim for accounting of rental proceeds

110. The plaintiff‘s claim, as representative of the estate of the deceased, to an accounting for a share of rental receipts arising from the defendants’ letting out of the deceased’s “flat” between 2007-2016 is predicated upon a finding (which I have made) that, in equity, the deceased’s estate and the defendants were co-owners of the North Narrabeen property.

111. In circumstances in which the area let out was, by earlier agreement between the deceased and the defendants, a distinct part of the North Narrabeen property reserved for his separate occupation, one might conclude that the defendants (as trustees of the interest of the estate in the property) should, prima facie, be regarded in equity as having collected rent attributable to the deceased’s “flat” on behalf of the deceased’s estate (that is to say, more particularly, on behalf of the plaintiff and the first defendant as the co-executors and co-beneficiaries of the estate), subject to due allowance for expenses: B Edgeworth, Butt’s Land Law (Law Book Co, 7th ed, Sydney, 2017) , paragraph [6.380]; Ryan v Dries [2002) NSWCA 3; 10 BPR 19,497 at [65]. Throughout the time they let out the “flat”, the defendants continued to occupy the balance of the North Narrabeen property.

112. However, upon an assumption that the estate of the deceased had a beneficial entitlement to a share of the North Narrabeen property, and that the defendants were under an equitable obligation to account to the estate as a “co-owner” of the property for rents paid for the use of the property, the parties have presented their submissions upon an assumption that the defendants are, or might be, accountable not for the whole of the rental income received on the “flat”, but for a proportion of that income commensurate with the estate’s share in the property; that is, on my findings, 13.15%.

113. On reflection, that is the basis upon which any determination of a liability to account for rental income should be made. The parties did not explore, in the evidence or their submissions about accountability for rent, the question whether the deceased’s “flat” might have been regarded as “his” beyond the time of his death. And this, notwithstanding that the plaintiff had substantially contemporaneous knowledge (without complaint) of the fact that the defendants were letting out the “flat”.

114. The evidence as to the amounts of rent received by the defendants is confined to their evidence, and it is neither complete nor entirely consistent.

115. In the absence of contemporaneous records neither defendant was confident of the rates or amounts of rent received.

116. At the lower end of the range, in 2007-2008, the first defendant’s evidence was that $270 per week was received; the second defendant’s evidence was that $300 per week was received. At the higher end of the range, for a short time in about 2016, the evidence of the second defendant was that $400 per week was received; the first defendant initially recalled the rental rate as $380 per week, but she conceded that the second defendant’s recollection of $400 per week could be correct.

117. The second defendant’s evidence was that, from about late 2008, the weekly rent rose from $300 per week to $320 per week.

118. In the absence of contemporaneous records, the interests of justice require the Court to paint with a broad brush, doing what can be done with the available evidence.

119. I proceed on the basis that, subject to adjustments, the defendants received rent of $270 per week throughout 2007 and 2008; $320 per week throughout each year between 2009-2015 inclusive; and $400 per week for eight weeks in 2016.

120. On that basis, they received a gross rental income of $14,040 in each of 2007 and 2008 ($28,080); $16,640 in each of the seven years between 2009-2015 ($116,480); and $3,200 in 2016, amounts totalling $147,760.

121. That figure requires adjustment.

122. First, although the defendants concede that the “flat” was “more or less” rented out continuously between 2007-2016, there appear to have been at least some gaps, not now readily quantifiable, between tenants. To allow for this, I take as the gross rental income received the total sum of $145,000.

123. A second adjustment must be made for outgoings expended to receive the rental income in fact received. This involves an extra layer of approximation, not only because of a lack of contemporaneous records evidencing receipts or expenditure, but because the deceased’s “flat” was “not separately metered in any way, shape or form”.

124. The second defendant’s estimate (not the subject of a competing estimate in the evidence) was that expenses for power and water attributable to the rent received for the deceased’s “flat” would have absorbed about 35 % of rental receipts. On that basis, taking the percentage as 35%, the net rental income received by the defendants for the period between 2007-2016 is estimated at a total of $94,250.

125. Adopting the methodology of the parties in their respective submissions, the deceased’s estate’s share of this income (reflecting his 13.15% interest in the North Narrabeen property) was $12,393.87 - with rounding up, $12,400.

126. The defendants contend that any claim for an account of rent on behalf of the deceased’s estate is limited to the six years prior to the filing of the statement of claim (namely, for the period after 30 June 2011) by reason of section 15 of the Limitation Act 1969, which provides: “An action on a cause of action for an account founded on a liability at law to account is not maintainable in respect of any matter if brought after the expiration of a limitation period of six years running from the date on which the matter arises”.

127. The plaintiff counters that the true character of her claim on behalf of the deceased’s estate is that of a claim to recover trust property, as a result of which the relevant limitation period (prescribed by section 47 of the Limitation Act) is 12 years, not 6.

128. On my findings, the Limitation Act does not defeat the estate‘s claim because of the agreement between all interested parties in 2003 that the estate‘s interest in the North Narrabeen property would be “sorted” only upon a sale of the property or earlier agreement. Time did not begin to run against the estate until the property‘s sale.

Conclusion: the plaintiff’s representative estate claim

129. Upon completion of the defendants’ sale of the North Narrabeen property, they became obliged to account to the estate of the deceased for $216,225, being the sum of: (a) $203,825, representing 13.15% of the $1,550,000 proceeds of sale; and (b) $12,400, representing 13.15% of the rental income received between 2007-2016.

130. The plaintiff seeks to augment the entitlement of the estate by claiming (on my findings, on the sum of $216,225) an award of “pre-judgment interest” under section 100 of the Civil Procedure Act 2005 NSW.

131. Settlement of the sale of the North Narrabeen property having occurred no later than 8 April 2016 (the date upon which the memorandum of transfer in favour of the purchasers of the property was registered), the estate can be taken to have been kept out of its money since that date.

132. Applying the Court‘s prescribed rates of interest, an amount of pre-judgment interest assessed in the sum of $40,398.88 should be allowed up to 14 August 2019, the date of “judgment”.

133. On that basis, the value of the deceased’s estate at that date is $256,623.88.

134. Subject to allowing the parties an opportunity to be heard as to the form of orders, my provisional view is that the defendants’ application of proceeds of sale of the North Narrabeen property towards their acquisition of their Swansea residence would entitle the estate to a charge over the Swansea residence for, at least, that part of the estate‘s entitlement attributable to the proceeds of sale, if not also to that part attributable to rental income. The estate would, in any event, be entitled to a money judgment representing an award of equitable compensation in the sum assessed.

135. The plaintiff‘s statement of claim pleads an allegation that the defendants are estopped from denying the estate‘s claimed entitlement by reason of representations made to the deceased (at the time of purchase of the North Narrabeen property) and the plaintiff (at the time of the deceased’s death) about his interest being accounted for. In light of the findings I have made, including my finding as to an agreement between the parties in 2003 that there would be an accounting for the deceased’s interest in the property, it is unnecessary to deal in depth with the estoppel claim, noting nevertheless that the elements of an estoppel appear to have been made out: Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429. In not earlier pressing for due administration of the deceased’s estate, the plaintiff relied upon representations made to her by the first defendant (representing herself and the second defendant) that the estate’s interest in the North Narrabeen property (and their respective derivative interests) would be “sorted” on a sale of the property. Having encouraged the plaintiff in that assumption, it would be unconscionable for the defendants, having sold the property, to depart from the assumption, to the plaintiff’s detriment.

THE PLAINTIFF’S FAMILY PROVISION CLAIM

136. The plaintiff‘s claim for relief under the Family Provision Act is dependent upon a grant, under section 16 of the Act, of an extension of the time within which the plaintiff could make an application for such relief.

137. The claim was brought more than 12 years outside the time limited by section 16. Although that delay might be explained by reference to the parties’ agreement to defer any accounting for the deceased‘s estate, the bottom line is that, as a recipient of one half of the deceased‘s small estate, in circumstances in which both she and her sister can point to needs associated with their age and health, the strength of the plaintiff‘s family provision application is not great. That is so even though, in financial terms, the first defendant is better off than the plaintiff. The plaintiff cannot reasonably claim more than half of her father‘s estate. Viewing things from a current-day perspective, a just and wise testator in the position of the deceased (to paraphrase Scale’s Case (1962) 107 CLR 9 at 19-20) would not regard the testamentary provision made for the plaintiff as inadequate vis a vis the size of the estate and calls on the deceased’s bounty.

136. In these circumstances, the appropriate determination is that the plaintiff‘s application for an extension of time (and, accordingly, her application for family provision relief) should be dismissed.

ORDERS AND COSTS

139. I propose to allow the parties an opportunity to make submissions, not only about the form of orders to be made in disposition of the proceedings, but as to the costs the proceedings.

140. In circumstances in which: (a) the estate of the deceased comprises an amount recoverable against the defendants (with or without the security of a charge over their Swansea residence); (b) the estate is free of any debt; and (c) the only persons interested in the estate are the plaintiff and the first defendant, an appropriate course might simply be to enter a judgment (with ancillary orders) in favour of the plaintiff personally for one half of the value of the estate (that is, a judgment for $128,311.94), thereby circumventing as unnecessary administrative procedures associated with a grant of probate of the deceased‘s will.

141. Although the plaintiff‘s family provision application has not been successful, its lack of success is directly related to the success of her representative estate claim. Prima facie, in these circumstances, the plaintiff is entitled to an order for the costs of proceedings on the basis that “costs follow the event”.

142. In any event, I propose to allow the parties an opportunity to be heard on such questions.

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Decision last updated: 14 August 2019