Torok v Becker

[2020] NSWSC 1570

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Torok v Becker [2020] NSWSC 1570

Hearing dates:

30 September; 1, 6–7, 9 October 2020

Date of orders:

9 November 2020

Decision date:

09 November 2020

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Direct the parties to provide written submissions within seven days as to the form of the orders to be made to reflect these reasons and as to costs.

Catchwords:

EQUITY — Undue influence — Relationships giving rise to presumption of undue influence — Actual undue influence — Relevant factors — Unconscionable conduct — Special disability or disadvantage

SUCCESSION — Family provision — Claim by adult child — Notional estate — Whether order designating property as notional estate should be made

Legislation Cited:

Partnership Act 1892 (NSW), ss 1, 2

Succession Act 2006 (NSW), ss 59, 60, 75, 76, 78, 80, 87

Cases Cited:

Ahmad v Ahmad [2002] NSWSC 579

Allcard v Skinner (1887) 36 Ch D 145

Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308

Asset Risk Management v Hyndes [1999] NSWCA 201

Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923; [1992] 4 All ER 955

Barkley v Barkley Brown [2009] NSWSC 76

Bayside Council v Estate of Goodman [2019] NSWSC 530

Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81

Bova v Avati [2009] NSWSC 921

Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66

Burke v Burke (No 2) [2015] NSWCA 195

Camernik v Reholc [2012] NSWSC 1537

Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited (1974) 131 CLR 321; [1974] HCA 22

Collings v Vakas [2006] NSWSC 393

Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447; [1983] HCA 14

Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731; [2005] NSWCA 110

Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68

Doss v Doss (1843) 3 Moo Ind App 175; 18 ER 464

Foye v Foye [2008] NSWSC 1305

Hewitt v Gardner [2009] NSWSC 705

Hildebrandt v Soncini [2007] NSWSC 1227

Hospital Products Limited v United Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64

Huguenin v Basely (1807) 14 Ves Jun Supp 273

In re Coomber [1911] 1 Ch 723

In re Everett; Executor Trustee and Agency Company of South Australia Limited v Everett [1917] SALR 52

In the Estate of the late Anthony Marras [2014] NSWSC 915

Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep)

Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Kastrounis v Foundouradakis [2012] NSWSC 264

Leary v NSW Trustee and Guardian [2017] NSWSC 1113

Lord Chedworth v Edwards (1802) 8 Ves Jun 46; 32 ER 68

Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61

Mayfield v Public Trustee [2009] NSWSC 330

McDonald v O’Connor [2019] NSWSC 261

McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623

Mentick v Olsen [2020] NSWCA 182

Moore v Aubusson [2020] NSWSC 1466

Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710

Nicholas v Tubb [2016] TASSC 53

Nielsen v Kongspark [2019] NSWSC 1821

Page v Hull-Moody [2020] NSWSC 411

Page v Page [2016] NSWSC 1218

Pearse v Green (1819) 1 Jac & W 135 at 140; 37 ER 327

Peninsular and Oriental Steam Navigation Company v Johnson [1937-1938] 60 CLR 189; [1938] HCA 16

Perochinsky v Kirschner [2013] NSWSC 400

Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14

Poosathurai v Kannappa Chettiar (1919) LR 47 Ind App 1

Reynolds v Bonnici [2017] NSWSC 828

Rhodes v Bate (1866) LR 1 Ch App 252

Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153

Rosebanner Pty Limited v Energy Australia (2009) 223 FLR 406; [2009] NSWSC 43

Sgro v Thompson [2017] NSWCA 326

Singh v Singh [2015] NSWSC 1457

Spong v Spong (1914) 18 CLR 544; [1914] HCA 52

Stivactas v Michaletos (No 2) [1994] ANZ ConvR 252

Stone v Stone [2019] NSWSC 233

Torok v Becker [2019] NSWSC 1662

Toscano v Toscano [2017] NSWSC 419

Towson v Francis [2017] NSWSC 1034

Tulloch (deceased) v Braybon (No 2) [2010] NSWSC 650

Turner v Windever [2003] NSWSC 1147

Underwood v Gaudron [2014] NSWSC 1055

United Dominions Corporation Limited v Brian Proprietary Limited (1985) 157 CLR 1; [1985] HCA 49

Urane v Whipper [2001] NSWSC 796

Warman International Limited v Dwyer (1995) 182 CLR 544 at 577; [1995] HCA 18

Watton v MacTaggart [2020] NSWSC 1233

Whereat v Duff [1972] 2 NSWLR 147

Winefield v Clarke [2008] NSWSC 882

Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriting Ltd [1995] QB 174; [1995] 3 All ER 211

Texts Cited:

Ford and Lee, Principles of the Law of Trusts (1st ed, 1983, Law Book Co)

Jordan, Administration of the Estates of Deceased Persons (3rd ed, 1948, Government Printer)

Meagher Gummow & Lehane, Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis)

Sir Anthony Mason, “The Impact of Equitable Doctrine on the Law of Contract” (1998) 27 Anglo-American Law Review 1

Underhill and Hayton, Underhill’s Law of Trusts and Trustees (13th ed, 1979, Butterworths)

Category:

Principal judgment

Parties:

Lara Caroline Torok (First Plaintiff)
Lara Caroline Torok as legal representative of the estate of the late Isolde Becker (Second Plaintiff)
David Theodore Becker (Defendant)

Representation:

Counsel:
D Smallbone (Plaintiffs)
P Russell (Defendant)

Solicitors:
Prime Lawyers (Plaintiffs)
Austin Giugni Martin Lawyers (Defendant)

File Number(s):

2019/00337892

Publication restriction:

Nil

Judgment

1. HER HONOUR: This matter was listed before me for hearing from the Expedition List. The reason for expedition lay in the fact that there was in place, in effect, a freezing order regime which limited the use that the defendant could make of funds from which he would otherwise be able to conduct his business and make provision for his family but where even the limited use that the defendant was then permitted to make out of those funds would inevitably deplete the funds available to meet any judgment that the plaintiff might obtain in these proceedings. By consent, at the conclusion of the hearing, when judgment was reserved, there was amendment to that regime further limiting the defendant’s ability to have access to the disputed funds.

Introduction

2. Broadly, by way of introduction, the dispute between the parties is yet another unfortunate example of disputes between siblings over a deceased parent’s estate, involving complaint as to events that occurred prior to the deceased’s death with allegations (amongst others) of undue influence and unconscionable conduct on the part of the defendant.

3. The family in question is the Becker family. Mrs Isolde Becker (the deceased) died of pneumonia on 13 July 2019 aged 82. The deceased had survived her husband, Dr Theodore Becker, who had died three years earlier, aged 93. The deceased and her husband had two children, Lara Caroline Torok (the first plaintiff) and David Theodore Becker (the defendant). I will refer to the family members, intending no disrespect, by their first names. I note that Lara is also the second plaintiff in these proceedings in her capacity as the legal representative of the estate of the deceased, Lara having been appointed by Robb J as the estate’s representative for that purpose (see Torok v Becker [2019] NSWSC 1662 (Torok v Becker (2019)) (see also the relevant principles in relation to such appointments referred to in Bayside Council v Estate of Goodman [2019] NSWSC 530; and Hewitt v Gardner [2009] NSWSC 705).

4. By her last Will dated 31 August 2016, the deceased made provision for each of her two children in the form of pecuniary legacies ($1 million to Lara and $2 million to David), with the residue of the estate to be divided equally between them. At the time of making of the Will in August 2016, Lara says that the net value of the deceased’s estate (which included a property at Glenhaven) was estimated to be not less than $3,037,800. David appears not to dispute this, since he says that, at the time of the 2016 Will, it was estimated that the deceased’s then residence at Glenhaven would sell for between $6 million and $7 million (David’s 17 March 2020 affidavit at [97]-[98]). Whatever may have been the market value of the Glenhaven property in August 2016, it is clear that, as at that time, the deceased had not insignificant assets from which she would no doubt have anticipated her testamentary intentions would be satisfied. As it was, however, by the time of her death in July 2019, the deceased held no real estate, only a small number of shares, cash totalling $2,917.57, and (on David’s evidence) very little personal items or furniture.

5. The circumstances in which the deceased’s estate was diminished to such an extent, including by way of the purchase of a house in Beaumont Hills in the names of David and his wife (Susan Mary Becker) (using some $1,522,272.03 of the proceeds of sale of the deceased’s Glenhaven residence) (the Beaumont Hills Property) and by way of electronic transfers of substantial funds from the deceased’s bank account to David’s account or, it is alleged, for his benefit) are the subject of the undue influence and unconscionable conduct claims now brought against David. The electronic funds transfers (whether used for the purchase of the Beaumont Hills Property or otherwise for David’s benefit) are also the subject of a claim that David is liable, as a fiduciary, to account therefor.

6. In summary, Lara contends that David received (or had the benefit of) funds totalling some $2,958,525.13 from the deceased following the making of her August 2016 Will and that, from the period after David and his family moved into the deceased’s Glenhaven residence in 2014, David benefited by the receipt of amounts (including the abovementioned funds) totalling $3,298,326.13. There is also a claim in relation to the apparent disposal by David of various chattels of the deceased.

7. In the alternative, in the event that the amounts received or transferred to David or for his benefit are held to have been authorised by the deceased and/or were valid gifts to him, then Lara brings a claim for provision pursuant to s 59 of the Succession Act 2006 (NSW) (Succession Act).

8. For the reasons set out below, I am of the view that the primary claims brought by Lara are made good and that it is therefore unnecessary to deal with the Succession Act claim (but I will nevertheless set out, in due course, what would have been my findings in relation to that claim had it arise for determination).

Background

9. By way of background, as already noted, the deceased and her husband had two children (Lara and David). The deceased’s husband (Dr Becker) was a general practitioner who continued to practise as a doctor until he retired in his mid-80’s. The deceased had assisted Dr Becker in his medical practice as a secretary until the birth of their children. The deceased was Dr Becker’s second wife and Dr Becker had three children from his earlier marriage. Those children do not feature in this dispute (although there was some evidence from Lara that Dr Becker had told her that he had made provision for each of his first three children – see T 62, which may serve to explain his undoubted generosity also to Lara during his lifetime).

10. In 1988, the deceased and Dr Becker, as joint tenants, purchased a property in Glenhaven, NSW (the Glenhaven Property). At some time thereafter, they demolished the existing house on the property and built a large six-bedroom house on the land, financed by a $500,000 loan from the Commonwealth Bank of Australia (CBA). They lived in the Glenhaven Property (which became the family home) for much of the rest of their respective lives.

11. On 21 December 1995, Dr Becker and the deceased made mirror Wills (and in March 2007 and April 2008 he and the deceased made mirror codicils). I will refer in due course to the content of the relevant testamentary documents (see [38] below).

12. Following her schooling, Lara remained living with her parents while she completed degrees at Sydney University in occupational therapy and physiotherapy. David did not pursue a tertiary education. He enrolled in an information technology course and subsequently established a business of carpet overlocking and binding, manufacturing mats, rugs and floor runners from carpet offcuts.

13. In 2004, David left the Glenhaven Property. He and Susan moved into a home they had built on land they had purchased in Kellyville (the Kellyville Property). Also in 2004, Lara married Adam Torok, who is now a practising solicitor but who was then still a student, studying law and working in various part-time jobs. Following their wedding, Adam moved into the Glenhaven Property with Lara and her parents.

14. Lara and Adam remained living at the Glenhaven Property until July 2005, when they moved into their own home at Baulkham Hills. Later, for a period of time in 2007, Adam and Lara moved back into the Glenhaven Property while they renovated a residence on land they had purchased at Wallacia (the Wallacia Property).

Financial accommodation provided to Lara (and Adam)

15. It is not disputed that, over the course of their lives, Dr Becker and the deceased provided financial accommodation to Lara (and Adam) by way of the provision of guarantees to secure a succession of loans. It is relevant to note that the financial accommodation consisted in the first instance of the provision of guarantees secured over the Glenhaven Property (not loans, as such, as was suggested in some of the evidence). However, in 2007 (when Dr Becker retired) the extant loans which were then secured by way of those guarantees were paid out by way of refinance obtained by Dr Becker and the deceased from a Homesafe “reverse mortgage” (about which I will say more in due course); and later, according to Lara, after Lara and Adam had paid a certain amount towards repayment of the amount referrable to the loans that had been guaranteed for their benefit, Dr Becker (and the deceased) in effect forgave the balance of the amount repayable by Lara in that regard.

16. Lara accepted in cross-examination that she had approached her parents for financial assistance over the years and that they had been generous (in her words, “amazing”) in the provision of that assistance. Both Lara and Adam accepted that they could not have acquired the assets that they did (at those times) without the assistance of the deceased and Dr Becker (see, for example, Lara’s evidence at T 62).

17. Pausing here, it seems that David may have a sense of grievance that similar accommodation was not made to him as it was to Lara (and Adam), at least insofar as the financial accommodation to his sister was a matter on which no little emphasis was placed in submissions in this matter and, according to Adam, David pressed him for information about this. In that regard, Adam’s evidence is that (by 2015) David had questioned him a number of times as to the amount of financial accommodation his parents had given Lara and Adam with regular frequency: along the lines, “[s]o how much money have my parents given to you and Lara?” and “[y]ou must know what they gave you” (see Adam’s 9 April 2020 affidavit at [20]).

18. Whether or not David did feel aggrieved at the disconformity in provision made as between he and Lara during their lifetimes, it is evident from the deceased’s testamentary instruments and, in particular, the instructions given by her in relation to her ultimate Will (as recorded by her, and David’s, solicitor) that the deceased wanted to “even things up” between her two children.

19. The guarantees provided by Dr Becker and the deceased (secured over the Homebush Property) in relation to borrowings by or for Lara’s benefit were as follows.

(a)    The Homebush Guarantee

20. The first of the guarantees (the Homebush Guarantee) was in connection with the purchase by Lara and Adam in November 2004 of an apartment in Homebush. Lara says this was an investment property bought at the suggestion of her father. CBA (with whom the deceased and Dr Becker had their home loan) provided the funding for that purchase (apart from the deposit, which Lara says she and Adam provided out of their savings). The loan secured by the Homebush Guarantee was serviced by Adam and Lara directly with CBA. The Homebush loan was paid out in full when the Homebush Property was subsequently sold in 2006 at around the time of the purchase of the Wallacia Property (see below).

(b)    The Baulkham Hills Guarantee

21. In July 2005, Adam and Lara purchased a home in Baulkham Hills. Again, the purchase was financed by CBA. In June 2005, the deceased and her husband gave a guarantee in respect of the Baulkham Hills home loan (limited to an amount of approximately $450,000) (the Baulkham Hills Guarantee). The loan secured by the Baulkham Hills Guarantee was again serviced by Adam and Lara directly with CBA. The Baulkham Hills loan was paid out in full when the property was sold in 2006 (at the time that Lara and Adam acquired the Wallacia Property).

(c)    The Physiotherapy Guarantee

22. In early 2006, Lara, who by that time had worked as a physiotherapist for two years, purchased (through a company incorporated for that purpose – Lara Torok Pty Ltd) her own physiotherapy and hydrotherapy practice in Penrith, Nepean Manipulative Physiotherapy and Hydrotherapy Centre (with, she says, her father’s encouragement).

23. The deceased and Dr Becker guaranteed a bank loan of $160,000 for the purchase (the Physiotherapy Guarantee), and also provided a bank guarantee in the amount of $13,479.98 in relation to the practice (it seems likely that this was by way of a bond for the lease by the company of the business premises from which the physiotherapy practice operated). The Physiotherapy Guarantee was secured over the Glenhaven Property. Lara’s company was the principal debtor in respect of the loan secured by the Physiotherapy Guarantee, and serviced the Physiotherapy loan by direct debit payments to the CBA.

(d)    The Wallacia Guarantee

24. In late 2006, Lara and Adam purchased a property at Wallacia, with the intention of making this their family home. Dr Becker and the deceased again provided a guarantee securing the finance obtained for the acquisition of the Wallacia Property. On settlement of the Wallacia Property purchase, CBA created two facilities – one, in the amount of $722,000, which related to that part of the loan secured over the Wallacia Property itself; the other, in the amount of $180,000, which was secured by way of guarantee given by Dr Becker and the deceased and secured over the Glenhaven Property (the Wallacia Guarantee). Following settlement of the Wallacia purchase, Adam and Lara serviced the loan secured by the Wallacia Guarantee by way of direct debit payments to CBA (see Ex 6).

2007 codicils

25. On 21 March 2007, the deceased made a codicil to her 21 December 1995 Will in which she directed her executors to take into account advances (with interest) made to each of Lara and David, when dividing her estate equally between them.

26. The 2007 codicil refers to an advance to Lara in the amount of $38,000 in May 2005 and an advance to David in the amount of $160,000 at the same date. It is accepted that there was an error in the drafting of the codicil, in that the relevant amounts were transposed (i.e., the amount of $160,000 was referable to the Physiotherapy Guarantee and was for the benefit of Lara, not David, and vice versa). Some time later, on 29 April 2014, Mrs Becker corrected the codicil to note that the advance of $160,000 was to Lara, and the advance of $38,000 was to David.

27. Pausing here, as already noted, there had not been an advance, as such, to Lara of $160,000 as at the date of the 2007 codicil; rather, Dr Becker and the deceased had provided security by way of guarantee secured by mortgage over the Glenhaven Property for the Physiotherapy loan in the amount of $160,000 (thus putting their assets at risk but without the outlay by them of any funds at that stage).

Retirement of Dr Becker and refinance of Glenhaven home loan

28. In 2007, at the age of 84, Dr Becker retired from his medical practice. At the time, Lara and Adam were back living at the Glenhaven Property (while the Wallacia Property was being renovated) and there were still on foot the loan the subject of the Wallacia Guarantee and the loan in respect of the Physiotherapy Guarantee ((see Lara’s 26 October 2019 affidavit at [91]; [97]-[98]).

28. At around the time of Dr Becker’s retirement (and, it is said, unbeknownst to Lara or Adam), Dr Becker and the deceased’s existing loan with CBA was in the amount of approximately $545,000.

29. On 31 May 2007, Dr Becker and the deceased sent a facsimile transmission to their solicitor, Mr Ken Austin, in relation to the proposed refinancing of their CBA loan by way of entry into a “reverse mortgage” arrangement with “Homesafe”. In that document, the payout figures for the refinance appeared as follows:

$409,000.00 plus

$160,000.00 Guarantee for business for Lara Torok Pty Limited, plus $179,000.00 Guarantee for home loan.

31. For Lara, it is said that the $409,000 figure noted in the above facsimile transmission was the approximate payout figure of the deceased and Dr Becker’s then $545,000 loan, less the offsetting amount of funds in their mortgage interest saver account at the time.

32. Consistent with the above there is a note by the deceased in June 2007 as follows:

Lara & Adam

$160,000 Business guarantee

$179,000 Home guarantee

$339,000 Total guarantee

Our Mortgage $408,707.

33. On 22 June 2007, Dr Becker and the deceased settled the refinance of their CBA loan with Homesafe. The total amount of the refinancing was $853,325 (see Lara’s 16 October 2019 affidavit at [74]). The refinance encompassed the payout of the Physiotherapy Guarantee ($160,928.26), the Wallacia Guarantee ($177,967.56), and Dr Becker and the deceased’s home loan in respect of the Glenhaven Property. After repayment of those amounts, the Homesafe loan made available to Dr Becker and the deceased an amount of approximately $93,000.

34. David points out that the effect of the above was that the 2007 refinancing (by way of reverse mortgage) of the Glenhaven Property was increased by the sum of $338,895.82 to reflect the payout of the borrowings attributable to Lara and Adam. (This is not disputed.) David’s evidence is that this was a matter about which the deceased and Dr Becker were very concerned (see David’s 8 November 2019 affidavit at [10]-[11] and [19], and his 17 March 2020 affidavit at [38], [41], [45]-[50], [52] and [96]). (I interpose to note that I treat that evidence with some caution in the absence of any independent corroboration of any such concern at the relevant time i.e., when the Homesafe mortgage was taken out. I also refer in due course to evidence as to the deceased’s reported concern, at a later time, about the Homesafe mortgage, in the context of the Glenhaven Property sale; which concern appears to have been prompted to some extent by David at least insofar as it appears he took the deceased to a financial planner for advice about the mortgage – see below.)

35. David relies on the discharge of Lara and Adam’s loans, via the reverse mortgage, as amounting to financial accommodation in favour of Lara (as it plainly was).

Discharge of Physiotherapy and Wallacia Guarantees

36. As noted above, at the time of the Homesafe refinance of the CBA loans, Lara and Adam were living at the Glenhaven Property. Lara cannot recall how she came to learn of the refinance of the Glenhaven Property but presumes that it was because she had noticed at least one of the CBA loans “disappear” from her internet banking account. Adam similarly made reference to this.

37. Lara’s evidence is that, after she learnt about the refinance, Dr Becker directed her to start making repayments of the loans which related to the Physiotherapy Guarantee ($160,928.26, including fees) and the Wallacia Guarantee ($177,967.56 at the time of refinance) into Dr Becker and the deceased’s joint bank account in the amount of $1,100 per fortnight. That is corroborated by the evidence of such transfers commencing around then and by the codicils executed by the deceased and Dr Becker in April 2008 (see below).

2008 Codicils

38. On 1 April 2008, Dr Becker and the deceased executed mirror codicils to their Wills in which each directed their executor to take into account the sum of $338,895.82 (which Lara notes comprised the sum of $177,967.56 (Wallacia Guarantee) and the sum of $160,928.26 (Physiotherapy Guarantee)) refinanced by them, when making an equal distribution between Lara and David. The codicils recorded that the said amount was being repaid by Lara at $2,200 per calendar month, interest free. (The codicils did not, however, record those two separate components of the sum of $338,895.82 but nothing turns on this.)

Payment to Dr Becker and the deceased of $1,100 per fortnight from July 2007

39. Between July 2007 and 2009, Lara continued to pay Dr Becker and the deceased the amount of $1,100 per fortnight directly to their nominated bank accounts (as adverted to above, copies of bank transfers were in evidence).

40. Lara’s evidence is that, in 2009, Lara was approached by Dr Becker to change the payment method from direct transfer to cash (to enable he and his wife to claim a part-pension) and that from then Lara started making repayments by cash instead of bank transfer. Lara’s evidence is that she and Adam continued making cash repayments to Dr Becker and the deceased up until March 2010. There is no evidence of any complaint by Dr Becker (or the deceased at least at that stage) as to any failure to do so.

Sale of physiotherapy business and later forgiveness of balance of the loans

41. Lara’s evidence is that, in about February 2010, when she was pregnant with her first child, Lara had discussions with her father in which Dr Becker advised Lara to sell the physiotherapy business to allow her to concentrate on raising a family. (Lara’s evidence was that her father thought a mother should stay at home with her family – see T 76.32.)

42. Lara’s evidence is that the decision to sell the physiotherapy practice, which was profitable according to Lara, was made in the context of the arrangement that Lara and Adam would not then need to continue making the monthly repayments to her parents. She said that she would not have sold the practice without knowing that they did not have to meet the $2,200 monthly repayments (T 71). (The practice was not sold for a profit – Lara’s evidence is that the market for the sale of such practices at the time was that they were lucky even to be able to sell the physiotherapy practice when they did.)

43. Lara says that her father told her that he wanted no part of the sale proceeds (approximately $135,000) and directed Lara to stop making all loan repayments to him and the deceased in order to enable Lara and Adam to service their own home loan, and focus on raising a family. Adam similarly gives evidence of a discussion at which he was present in the kitchen at the Glenhaven Property with Lara, Dr Becker and the deceased, at which he says Dr Becker said “You don’t have to worry about repaying us as we have made it equal in our wills”. Again, this is consistent with the codicils made in 2008.

44. Lara thus contends for a finding that, while Dr Becker and the deceased provided Adam and her with financial accommodation in the form of forgiveness of the $338,895.82 paid by Dr Becker and the deceased as part of the 2007 Homesafe refinance, that sum had already been noted by Dr Becker and the deceased in their respective Wills to ensure an equal division between their children (as part of a regime in which Lara and Adam had repaid Dr Becker and the deceased upwards of $55,000 following the making of the Homesafe refinance). That accords with the evidence; and I so find.

Carpet interlocking business joint enterprise

45. By 2011, David had been operating his own carpet overlocking and binding business for a number of years. In 2011 Lara and Adam went into business with David, trading as “Sydney Overlocking” (Lara says against Dr Becker’s advice but with the deceased’s support). There was no signed written agreement in relation to the business arrangements between the siblings (and their spouses), though there was some suggestion in Lara’s evidence that a draft partnership agreement had been prepared at some time. Lara referred to it in a later letter to her mother as a “partnership” and said in cross-examination there was a verbal partnership agreement (T 80).

46. Lara’s evidence is that the carpet overlocking business in which the siblings and their spouses were jointly involved was an amalgamation of David’s business and a business that she and Adam acquired and for which they paid cash out of the proceeds of sale of the physiotherapy business in order to invest in the carpet business (T 73). Lara’s evidence is thus that she and Adam had invested their capital at that time in the carpet business.

47. Whether or not the business arrangement between the siblings was, as a matter of law, a partnership as such (see the definition of partnership in s 1(1) of the Partnership Act1892 (NSW) (Partnership Act), as being the relation which exists between persons carrying on business in common with a view of profit, and s 2 of the Partnership Act which sets out various rules to which regard shall be had in determining whether a partnership does or does not exist; and see also the discussion of the test of partnership in Bova v Avati [2009] NSWSC 921), there was on any view of things a joint venture (see United Dominions Corporation Limited v Brian Proprietary Limited (1985) 157 CLR 1; [1985] HCA 49 (United Dominions) at 10, per Mason J (as his Honour then was), Brennan and Deane JJ) between the siblings and their spouses in relation to the carpet overlocking business from around 2011 through to February 2016. Lara confirmed in the witness box that all four (she and Adam, David and Susan) were shareholders and directors of the entity carrying on the business. On all accounts, the joint enterprise ended very acrimoniously (see below).

Deterioration of Dr Becker’s health and his move to an aged care facility

48. In 2014, Dr Becker was admitted to hospital suffering chest pain. It does not appear to be disputed that his health had been slowly deteriorating, and it is said that he was by then exhibiting symptoms of dementia. Lara, however, is adamant that at that stage her father was exhibiting only mild dementia (which I note here not as amounting to any evidence of his actual medical condition at the time but simply because it informs Lara’s apparent disagreement at that time as to the necessity for placement of her father into a nursing home – see T 94).

49. Lara gives evidence that she suggested to David at some stage in 2014 (see her affidavit affirmed 26 October 2019 at [133]) that their parents downsize to a smaller property; and that David rejected any such proposition, telling Lara: “Don’t be stupid Lara. We need to make them keep Glenhaven for as long as possible. That is our inheritance. Just imagine, we’d be set for life”. David does not refer to this conversation or whether it occurred, but he did say in cross-examination that he did not discuss downsizing with his mother (see at T 276), but in any event, it does not appear to be disputed that the deceased at that stage did not agree to any suggestion that the Glenhaven Property be sold (whether to allow the couple to “downsize”, or otherwise).

50. In any event, in 2014, after his hospitalisation, Dr Becker moved to live in “The Poplars” aged care facility in Epping. He never returned to live in the Glenhaven Property. In connection with his admission to The Poplars, payment of an accommodation bond in the amount of $590,000 was required (the Accommodation Bond).

51. On David’s evidence, he and his wife Susan sold their Kellyville Property at that time in order to be in a position to pay the Accommodation Bond for Dr Becker’s admission to The Poplars. (This is of relevance given his evidence as to the deceased’s later concern that they had done so “for no reason” in order to pay the Accommodation Bond – see David’s 8 November 2019 affidavit at [16], and his 17 March 2020 affidavit at [59] and [88].)

52. Indeed, prior to the commencement of the proceedings, David’s solicitors (Austin Guigni Martin), by letter dated 11 October 2019, made the assertion that part of the proceeds of the sale of the Kellyville Property had been used to pay part of the Accommodation Bond (an assertion that it is here accepted was incorrect). The letter stated that:

In 2014, Theodore’s health deteriorated and he moved into Poplars Nursing Home. The deceased and Theodore did not have sufficient funds for the accommodation bond. Our client sold his Kellyville property and used part of the proceeds to pay the shortfall of the bond. The deceased was on her own in the Glenhaven property and our client and his wife gave up full-time work to become the deceased’s full-time live-in carers. [Emphasis added]

53. However, it is clear from documents produced on subpoena in these proceedings (and it is not here disputed) that it was simply incorrect for David’s solicitors to assert that David had paid any part of the Accommodation Bond (what in fact happened was that it was paid in two tranches from the deceased’s and Dr Becker’s own funds); just as it was incorrect for them to assert that the deceased and Dr Becker did not have sufficient funds for the Accommodation Bond. As at 2014, Dr Becker and the deceased had sums totalling $720,000 on term deposit with the Commonwealth Bank (being term deposits #6319 ($80,000); #2828 ($500,000); #6217 ($90,000); #2836 ($50,000)). (I hasten to add that I make no criticism of David’s solicitors in this regard, since it is not suggested that they knew those statements were incorrect at the time they were made on behalf of their client.)

54. In David’s first affidavit in these proceedings sworn 8 November 2019 (made after the documents establishing the incorrectness of above propositions had been produced on subpoena), David deposes that he had intended to pay the Accommodation Bond, until such time as it was discovered that his parents had adequate funds to do so (and he referred to advice from an unidentified financial planner that it was in his mother’s interests for the bond to be paid from the deceased and Dr Becker’s funds) (see David’s 8 November 2019 affidavit at [13]-[15], and 17 March 2020 affidavit at [54]; [56]-[59]).

55. Pausing here, this is by no means the only statement contained in correspondence from David’s solicitors (which correspondence one can only assume was on instructions from David) that has turned out to be incorrect (or perhaps, viewed more charitably, to be incomplete). For example, the “Bitcoin” correspondence, and the early correspondence as to the extent of any gifts or loans by the deceased, to which I refer below, are but two more topics on which responses by David’s solicitors were later shown to be incorrect or incomplete. Again, no doubt, that was primarily a product of the solicitors’ instructions. However, as I address in due course, this reinforces the serious doubts I have as to the reliability of much of David’s evidence in general.

56. I also note that there was some suggestion in cross-examination of David that the sale of the Kellyville Property may have been due to financial difficulties on David and Susan’s part but this was denied by David (and seemed to be based a misreading of his affidavit evidence as to the disposition of the proceeds of sale (i.e., where he deposed to an amount paid to discharge the couple’s personal debts, it appears from his evidence in cross-examination that by this he meant the mortgage debt on the property itself). Be that as it may, as I understand it, after the sale of the Kellyville Property, David and Susan had around $290,000 in net proceeds of sale (see below) but they chose not to purchase another property – instead they remained living rent-free with the deceased for whom (they say) they were the full-time live-in carers from 2014. That latter assertion also seems likely to be a somewhat exaggerated claim since David was working on various business ventures (the carpet business and a proposed Tesla business) during at least some of the period from 2014 (and, he says, he was supervising the renovations of the Glenhaven Property). Nevertheless, I accept that David and Susan lived with, and provided day-to-day care for, the deceased from 2014 (and for most of the rest of the deceased’s life).

57. I will return in due course to the question of the reverse mortgage (see below).

Corrective codicil

58. As adverted to above, on 29 April 2014, the deceased made a codicil correcting the 2009 codicil (Ex D).

David and Susan relocate their family to the Glenhaven Property

59. As also adverted to above, in about July 2014, David and Susan sold the Kellyville Property. David and Susan and their two children, then moved into the Glenhaven Property. The Kellyville Property was sold for $821,500.00 (Ex A). Upon the sale of the Kellyville Property, after repayment of the mortgage on that property, David and Susan received the sum of $298,657.73 together with the sum of $62,200, being the balance of the deposit (David’s 8 November 2019 affidavit at [14], and 17 March 2020 affidavit at [58]).

NetBank Saver Account in deceased’s name

60. On 15 January 2015, David was allocated NetBank Access to his CBA account.

61. On 5 February 2015, a new “NetBank Saver” account was opened with the CBA in the name of the deceased. Lara says that, prior to February 2015, Dr Becker and the deceased’s accounts reveal a course of dealing with those accounts in which Dr Becker and the deceased made payments by cheque and withdrawals of cash from the ATM; and contends that the opening of a NetBank account marks a distinct change of banking practice in that regard. There seems little doubt that David assisted the deceased to open that NetBank account. (Indeed, David’s evidence is that the deceased did not have a computer when he first moved into the Glenhaven Property and he admitted at T 196 that he taught his mother “NetBanking”.)

62. On 8 February 2015, the first electronic external transfer on any of the deceased’s accounts was effected. It was the transfer of the sum of $1,249.00 from the deceased’s account into David’s CBA account. The transfer contained the description “Pay IPhone” (David says, in his affidavit of 17 March 2020 at [81], that this was a reimbursement to him for the purchase of an iPhone for his mother).

63. Pausing here, I note that a substantial complaint in the proceedings is that, in the years from 2015, numerous electronic transfers were made from the deceased’s accounts (using her NetBank facility) of sums of money into the accounts of: David, David’s and Susan’s company (S&D Becker Pty Ltd); or Tesla (to purchase a new vehicle for David), in amounts exceeding $1.77 million (see below).

Breakdown of the “partnership” or joint venture between the siblings

64. Lara’s evidence is that, in 2015, the carpet overlocking business was losing money; and it appears there was concern as to the lack of time David was spending in the company.

65. In June 2015, David travelled to the United States of America (apparently to pursue a business of importing and selling Tesla after-sale parts) (see David’s 17 March 2020 affidavit at [89]). (It seems that part of the discord between the siblings as to the carpet joint venture at around this time was as to David’s commitment or lack of commitment to it; that being of some significance since Lara’s evidence is that it was David who had the relevant client contacts.)

66. On 11 November 2015, (consistent with his then business plan being to be involved in the sale of Tesla after-sale parts), David bought a Tesla model S motor vehicle for the sum of $214,636.50.

67. Lara’s evidence is that, by January 2016, the carpet overlocking business had no money to pay its staff and that she arranged a transfer from her home loan offset account to ensure that the business paid the wages (see Lara’s 26 October 2019 affidavit at [159]-[161]). There is also evidence that at some stage Lara expressed to the deceased her concerns at David’s role in the business but Lara understood that the deceased did not want to become involved in a dispute between the siblings.

64. On 5 February 2016, David wrote a letter of resignation in relation to the carpet overlocking business (Ex A), stating:

5 February 2016

Adam Torok,

I am informing you as of today the 5 February 2016 I am formally resigning as a Director from Sydney Overlocking PTY LTD due to ongoing unresolvable problems. I will continue to be a 50% shareholder however you can do what you like with the company from this point on.

Phone numbers [xxx] and [xxx] will be removed from Sydney Overlocking today 5 Feb 2015.

In order to keep the company going I am willing to offer services as follows:

If you require contract cutting service for Sydney Overlooking, I am offering three hours or less per day at $80.00 per hour. Cutting service will be invoiced directly to Sydney Overlocking, my payment terms are weekly. No payment no more cutting. Two of us cutting effectively 6 hours work time (I will inform you if I am unavailable at any point well in advance [sic]

I will provide contract technical support for machinery, computer, or other items that can’t be resolved by yourself charged at $120.00 per hour or per call out.

If you require holidays I can provide Management service for Sydney Overlocking at a fee.

There is a large debt which I have greatly reduced that needs to be paid to myself to the amount of $20.000. I have investigated bookwork and bank statements beyond 2013 and found various inconsistencies to the excess of way over $35.000.

I am willing to give you one month to pay me the reduced amount of $20.000 or if you are unable to do so I will require evidence to support your inability to pay out your debt. Please note there is approximately $85.000 of outstanding debtors to Sydney Overlocking. I see no reason why you can’t pay me promptly.

If you don’t want to pay back the debt I will have no option but to relinquish my offer to subcontract to Sydney Overlocking and we can part ways.

What I have set out is NOT NEGOTIABLE it is up to you what you want to do from here.

Please respond to me by midday on Monday 8^th February or I will consider no deal and we can part ways.

Regards

David Becker.

[Emphasis in the original]

69. Lara’s evidence is that she and Adam then had no choice but to close the business (since David had all the client contacts) (see Lara’s 26 October 2019 affidavit at [162]-[163]).

70. Lara readily accepted in the witness box that the last time she spoke to David was at this time (she says when she asked him to assist in the payment of staff wages and, as I understand it, David refused to do so).

71. Significantly, whoever was to blame for the clearly acrimonious end to the joint venture or partnership between the siblings and their spouses, the consequence of this (one way or another), was that communications between the deceased and Lara were impaired. In effect, David says this was Lara’s fault (and that Lara at all times was able to contact the deceased); Lara says, in effect, that David isolated her from their mother and, by inference at least, suggests that David ‘poisoned’ the deceased’s mind against Lara. Wherever the truth lies in that regard, it is apparent that as a result of the breakdown in the relationship between David and Lara, the deceased was then clearly more susceptible to influence by David on whom she was by then increasingly dependent for her physical and emotional needs.

Change to deceased’s mobile telephone number

72. Lara’s evidence is that on 6 February 2016 (the day after David tendered his “resignation” from the carpet overlocking business), Lara spoke to the deceased who told her that “David is extremely upset and I think it would be best if you and Adam no longer came to the house” (see Lara’s 26 October 2019 affidavit at [159]-[165]).

73. It appears that on the same day the deceased’s telephone number was changed. Lara says that in the months which followed she was unable to raise her mother on the telephone. It appears that the deceased’s mobile phone number had been changed (see the Amaysim contract; and David’s cross-examination at T 210-211), although David says that the landline was unaffected (see David’s 17 March 2020 affidavit at [55]). David maintains (but Lara disputes) that Lara was at all times able to contact the deceased. There seems little doubt, however, that it was David who effected the changes to the deceased’s telephone numbers although David says “we” changed the mobile phones (he says to obtain a different payment plan) (see T 277).

74. Relevantly, this is another instance of incomplete or inaccurate statements being made on David’s behalf. Through his solicitors, David denied that he had an Amaysim telephone account whereas in fact it seems that there were at least four such accounts (see T 210-211) and David’s explanation for this in the witness box was that he forgot about them and he thought the accounts were with Optus. This is another instance where his account is unreliable (and even if he simply forgot about the accounts, this suggests a lack of any real attention to the production of accurate or complete information as and when that was requested in the course of the proceedings). I say more about this in due course.

75. Lara’s account of concern at being unable to contact the deceased in this period is corroborated by the fact that she made a police report at around this time (something one would think an extreme step to take had Lara in fact been able to make contact with the deceased at the time, as David asserted she was). Lara’s evidence in the witness box (given in a resigned fashion) was that the deceased was angry that the police had been called; and Lara accepted (at least in hindsight) that the deceased would have found it mortifying for her neighbours to see the police attending at the premises. My impression was that Lara’s concern for her mother’s welfare was genuine (not least because once that concern was resolved (by the police having checked on her mother) Lara did not pursue it any further though she maintains she was still upset at the lack of contact with her mother).

Renovation of Glenhaven Property

76. David says that, in the period from mid-2016 to 24 June 2017, substantial landscaping and renovation works were undertaken to the Glenhaven Property (David’s 8 November 2019 affidavit at [19]-[20], and 19 March 2020 at [3]-[19] and [99]). David says that he contributed to the cost of renovations of the Glenhaven Property by using his own money and the net proceeds of sale of the Kellyville Property referred to above (David’s 8 November 2019 affidavit at [14] and [25], and 17 March 2020 affidavit at [56]-[58]). A DVD containing video footage (taken from a drone) was in evidence showing the extent of the landscaping works carried out to the Glenhaven Property prior to its sale (the probative force of which was limited by the difficulty in ascertaining precisely what was done to the property, although it was evident that extensive landscaping works had been carried out).

77. Criticism was made, through David’s cross-examination, that there had been no independent advice as to how best to market the property and whether the renovations were necessary (or prudent) to undertake for that purpose. David’s evidence was that he had some (seemingly informal) advice from a friend who was a real estate agent friend (but not from the real estate agent ultimately involved in relation to the sale of the Glenhaven Property). (I interpose to note that the prudence or otherwise of making extensive renovations to a property prior to its proposed sale, particularly in light of the prospect that this might amount to over-capitalisation, highlights the vulnerability of the deceased insofar as there is no suggestion that she had any independent advice on this issue – and extensive viewing of home renovation programmes, even assuming that to have been the deceased’s interest, would hardly qualify as expert advice on the subject.)

Death of Dr Becker

78. Lara’s evidence is that between January 2016 and April 2016 she continued to visit her father at The Poplars (see Lara’s 26 October 2019 affidavit at [177]). Dr Becker died on 6 May 2016.

79. Lara’s evidence is that she arranged for a private viewing on the day of the funeral to mourn her father’s death and, later, at Bondi Beach scattered some her father’s ashes (which Adam had collected from the deceased at a pre-arranged place) (see Lara’s 26 October 2019 affidavit at [184]-[187]). David’s evidence is that the deceased was upset that Lara did not attend her father’s funeral. It is not apparent that David (or the deceased) was aware of the private viewing at that time.

80. There is a dispute as to whether or not David did not permit the deceased to get out of the car when Adam invited her for a coffee on the occasion that the ashes were collected (as Adam says) (see Adam’s 9 April 2020 affidavit at [50]), or whether the deceased simply did not like Adam and did not wish to join him for coffee (as David says) (see T 278.16). However, there is no dispute that there was an occasion when some of the ashes were given to Adam for Lara’s benefit.

Contact with the deceased after Dr Becker’s funeral

81. According to Lara, by the time Adam collected Dr Becker’s ashes from the deceased, Lara had obtained her mother’s new telephone number from Lara and David’s cousin, Melita (see Lara’s 26 October 2019 affidavit at [188]). (Melita did not give evidence in the proceedings but I was not asked to draw any Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference about this; nor do I here do so.)

Instructions for a new Will for the deceased

82. On 10 May 2016, David and the deceased together attended the offices of Austin Giugni Martin to give instructions as to the estate of Dr Becker. At that time instructions were provided for a new Will for the deceased. There is nothing in the solicitor’s file note to suggest that the deceased gave those instructions in the absence of David (and there was no evidence adduced from the solicitor to elucidate this one way or the other).

83. On 13 May 2016, David’s solicitor in the present proceedings, Mr Giugni, sent David an email with a draft for the deceased’s Will, a draft statement of the deceased’s intention in relation to her Will, Power of Attorney, and Appointment of Enduring Guardian. The draft Will provided for an unspecified legacy to David with the balance of residue to be divided equally between the siblings. (It is of relevance to note that the communication in relation to the Will was directed to David not the deceased, suggesting that the instructions were being communicated by or at least through David.)

84. On 18 May 2016, the deceased attended the offices of Austin Giugni Martin and executed a Power of Attorney appointing David as her attorney. David accepted the appointment at the same time. On that occasion the deceased collected her draft Will. Mr Giugni’s file note of the 18 May 2016 conference is as follows:

Meeting with Mrs Becker. She took away her will to consider what she wanted to give David [to] even things up with Lara. Lara has paid some of her loan back and she and her Husband did not wish to charge interest.

She wants to even things out with David and compensate him for living with her and not buying his own house. She will get back to me with a figure and then we can finalise her will. She did sign POA and EG forms and will look at the statements as to explaining why she is not leaving everything 50/50 between David and Lara.

[Emphasis added]

85. Pausing here, the draft statement explaining the differential legacies as between siblings was never finalised and in the absence of any evidence as to the basis on which it was drafted I cannot be confident that it recorded the deceased’s then instructions to the solicitor (as opposed, say, to the possibility that it represented David’s thoughts or observations as may have been conveyed by him to the solicitor).

86. On 30 May 2016, Mr Giugni provided written advice as to the Homesafe reverse mortgage. Tellingly, that advice was again addressed to David. In summary, Mr Guigni advised as to the “three triggers that can cause money to be made payable to Homesafe”, and that in each scenario, Homesafe would be entitled to 65% of the sale proceeds less any applicable rebates (Ex C). The final paragraph of the letter reads:

Otherwise, we request your advice as to the status of the Wills [sic] and what figures should be inserted into that document so it may be completed and signed.

87. Relevantly, when one refers to the mortgage there was no time specified within which the Glenhaven Property had to be sold in order to repay the mortgage. Rather, the significance of the advice received by David was that there would be a rebate (early sale rebate) of the percentage otherwise payable to the lender out of the proceeds of sale depending on when the property was sold. It was thus in the interests of those who might inherit the deceased’s estate for the Homesafe mortgage to be repaid sooner rather than later but there was no imperative from the perspective of someone in the position of the deceased that the Homesafe mortgage be discharged sooner rather than later (at least unless there came a point where, on the sale of the secured property there would not be sufficient funds to meet, say, an accommodation bond for aged care or nursing home accommodation were that to be necessary – and there is no suggestion there this was the case here).

Lara’s letter to her mother

88. Lara’s evidence is that, shortly after receiving her mother’s new telephone number, she spoke with her mother and arranged for her to have lunch at Lara’s Wallacia Property, at which time Lara read her mother a letter with her view of the recent events (see Lara’s 26 October 2019 affidavit at [190]). Lara’s evidence was that this was because the deceased had not heard her “side” of the story. Lara said the letter had taken some time to write and that it took a while to read to her mother.

89. David contends that this letter contained a number of provable lies or falsehoods (T 371): first, that it referred to a partnership (whereas he says no partnership agreement was ever entered into); second, that it talked about a requirement for six months’ notice (again pointing to the lack of a written agreement); third, that it suggested that David would thereafter receive (or expected to receive) 50% of the earnings without doing any work (whereas, it is said that historically only salaries were drawn from the company and no dividends had been paid); fourth, that it said David had demanded the sum of $36,000 (whereas, he had demanded the sum of $20,000); and, fifth, that David had demanded payment of a rate of $360 per hour for future work (whereas the hourly rate suggested in the letter was different).

90. Pausing here, it was accepted by Lara that some of the above assertions made by her in the letter were incorrect (such as the amount she attributed to the demands by David for payment and as to the stipulated hourly rate for future work); and Lara accepted that there was not a written partnership agreement (though she maintained that there was a verbal partnership agreement – see at T 80). Lara’s explanation for the errors in the document she read out to the deceased at this meeting was that she was preparing the letter at a time when she did not have David’s resignation letter with her. Further, insofar as Lara had described David’s resignation letter as extremely threatening, that seems indeed to have been Lara’s perspective of the position adopted by David in the letter and there is some substance to such a complaint even if it might be said to have been somewhat overstated.

91. I consider that the weight sought to be placed on these matters by David is misplaced. The tenor of the letter (insofar as it related to the end of the siblings’ joint venture or joint enterprise into the carpet overlocking business) seems to me to reflect in substance what had happened. David had resigned without notice (leaving aside whether he had any obligation to give such notice, one might have expected some notice of his departure from the business to have been given, if only as a matter of courtesy to his business colleagues); David had indicated that he was leaving the business to Lara and Adam (though, of course, that meant little if, as Lara says, David had all the customer contacts); and David had set out the terms on which he (and his wife would be prepared to continue to work in the business (albeit that those terms were not accurately stated in the letter Lara read to her mother). More relevantly, perhaps, it is apparent from the letter that this was putting Lara’s perspective as to the breakdown of the business relationship (and one would assume that the deceased would have understood it as such and that there was or may well have been another side to the story, namely David’s side, about which the deceased was clearly capable of speaking to David had she wished).

92. As to the issue whether there was a partnership (and the emphasis sought to be placed on this as a “provable lie”), as adverted to above, I do not consider that anything turns on this. In both United Dominions and Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep), it was recognised that there may be a joint venture which does not constitute a partnership; what is important is the substance of the transaction (see Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited (1974) 131 CLR 321 at 327;[1974] HCA 22).

93. Clearly, in the present case there was a business or commercial venture being undertaken jointly in relation to the carpet overlocking business between, on the one hand, David and Susan and, on the other hand, Lara and Adam. Therefore, whether this was in truth a partnership, as a matter of law, is not material. What is relevant is that the joint enterprise clearly ended acrimoniously (Lara’s evidence is that she never spoke to David again). It is not necessary to determine where the fault for that breakdown lies (indeed, there may well have been fault on both sides). What is clear, however, is that once the relationship between Lara and David broke down (at around the time of the 5 February 2016 letter), this was followed by a strain in the relationship between Lara and the deceased (again, as to whose fault that was is not relevant to the primary claims brought by Lara – although it would be of relevance to the alternative family provision claim). The relevance of this is that it means that the deceased became increasingly dependent on her relationship with David for care and assistance.

94. Lara quite readily admitted that the letter she read to her mother (over a lengthy period of time) was an attempt by her to “smear” David’s character (see T 79), but she denied that she wanted David “out of” her mother’s life “altogether”. Instead, in effect, Lara says that she wanted David’s influence removed (i.e., that the deceased and David did not continue to live together), so that Lara would be able to visit her mother again (saying, with obvious emotion in the witness box, “I wanted her back in my life” – see at T 84), which was something that Lara obviously considered was not possible while David was living with the deceased (though David does not accept this). Lara accepted that her plan (at this stage) was to make David leave the Glenhaven Property (see T 85) and, tellingly, insofar as it reinforces the evident animosity between them, she regarded David as “collateral damage” (se T 83). Lara accepted that she thought her mother was under David’s control (T 98) and that she blamed David for the breakdown in her relationship with her mother (“absolutely” – see T 77) (though as to the latter Lara said that this was her view in hindsight (T 77), and that she did not know what was going on at the time).

95. David made much of the fact that the options that Lara put before her mother in the letter read out by Lara at the Wallacia lunch all involved the deceased living alone or in accommodation separate from both Lara and her family and David and his family, those options being: that the deceased remain at the Glenhaven Property with ACAT assistance (but that David and his family leave the Glenhaven Property); that the deceased build separate accommodation on the Wallacia Property (at the deceased’s expense); and that the deceased move into a “luxury” retirement village in the Cobbity area. (Ironically, given the criticism made by David of those options, the final accommodation proposed by David for the deceased was in a rental duplex separate but next door to David’s family; i.e., he seems to have had no difficulty with the motion of the deceased living in separate premises at that stage albeit close by – a not dissimilar arrangement to the second of the options Lara had proposed; and, as I understand it, the deceased was living in a “granny flat’ in the Beaumont Hills Property, not the main residence, as such.)

88. Lara’s evidence is that, at the Wallacia meeting in about June 2016, the deceased said words to the effect “[a]fter your father died David told me that you wanted to sell Glenhaven so you could get your hands on your share of your inheritance and put me in a nursing home” and “David has been making me feel guilty” and “I don’t know how to make him leave”. In answer to a query as to why the phone was disconnected, Lara says that the deceased said “David told me I had to stop the sales people from calling” (see Lara’s 26 October 2019 affidavit at [191]).

89. Pausing here, I accept the caution required to be exercised in accepting one party’s version of conversations with a deceased person, as urged upon me by David’s Counsel (see, for example, the caution expressed in Plunkett v Bull (1915) 19 CLR 544 at 548-9, per Isaacs J; [1915] HCA 14 and the authorities referred to in Moore v Aubusson [2020] NSWSC 1466. However, that caution applies equally to both parties’ evidence.

“Secret” meetings

98. Lara’s evidence is that over the next few weeks, Lara continued to visit her mother, including taking her to “Disney on Ice” at Olympic Park. Lara says that, at the deceased’s request, the visits were kept secret from David, for fear that it may cause upset (see Lara’s 26 October 2019 affidavit at [195]). David submits that it is not plausible that any such visits could have taken place secretly (since the deceased was living with him and by then he was home much of the time). I agree that it is difficult to place much weight on the “secret” meetings evidence without independent corroboration.

Execution of August 2016 Will

99. On 31 August 2016, the deceased executed her last Will. There is no file note of her attendance at the solicitors’ office on that occasion (although I note that Mr Michael Giugni (a solicitor) and Ms Janelle Yong (a law clerk) witnessed the Will). As adverted to above, the 2016 Will provided David with a legacy of $1 million more than that left to Lara under the Will. Lara’s position is that this $1 million was the sum that the deceased thought was appropriate recompense for David’s time living with her, David not having his own house, and the financial assistance provided to Lara in the form of the forgiveness of the Physiotherapy and Wallacia loans, in order to provide an overall equal treatment of her children. That is certainly a plausibly explanation for the differential legacies (and consistent with the instructions recorded by the deceased’s solicitor at the time). It is said by Lara (and I accept) that this equality of treatment had been a hallmark of Dr Becker and the deceased’s successive wills and codicils over the years.

The deceased moves out of Glenhaven Property

100. In November 2016, while renovation works were undertaken to the Glenhaven Property, the deceased moved out of the Glenhaven Property and into the residence of Ms Natalia McCarthy, a friend of David and Susan (Susan being the godmother of Ms McCarthy’s child), who described herself in her affidavit as a friend of the deceased (see [1] of her affidavit sworn 28 May 2020). There was no little uncertainty as to when the renovation work that was carried out actually commenced but there is no dispute that the deceased was living at Ms McCarthy’s house for a number of months (from November 2016 until August 2017, apart from a period of hospitalisation in January 2017 during the deceased’s knee surgery). Ms McCarthy gave evidence as to David’s attendance at her house on an almost daily basis to visit his mother during this time ([8] of her affidavit sworn 28 May 2020).

The deceased’s declining health

101. It is Lara’s evidence that the deceased had had a number of falls around the house between 2012-2014 (see Lara’s 26 October 2019 affidavit at [145]-[146]). This is consistent with medical notes that record that the deceased underwent surgery for an “extensive fracture and dislocation” in October 2012, and that the deceased had a number of health conditions which limited her movement, including three spinal fusions, hypertension, wrist and shoulder fractures and dislocations.

102. According to the medical records, the deceased’s conditions required ongoing prescription medication in the form of sleeping tablets “Normison”, pain medication “Panadeine Forte” (1-2 tablets four times a day), and anti-inflammatories. David in his defence did not admit that his mother suffered back pain but in cross-examination while he did admit that she had pain (T 280), and that the deceased was on a variety of medications, David would not accept she was in considerable pain (T 280). Indeed, David’s evidence is that these medications made his mother forgetful, that she often stayed home the entire day in her dressing gown or comfortable clothes as she was finding it difficult to dress herself, and that, by the end of 2015, or early 2016, the deceased could not look after herself (see David’s 17 March 2020 affidavit at [78]-[80]). David also gave evidence that the deceased often had difficulty sleeping and had irregular sleeping hours (see, for example, at T 189) (though fortuitously it appears that David was also awake at such irregular hours, when NetBank transactions and/or log-ins happened to occur almost simultaneously on both his account and that of the deceased – see below).

103. In January 2017, the deceased attended an orthopaedic surgeon (Dr Muderis) for consultation about her knee. The report records that the deceased had been suffering from a significant disability for some time:

Isolde is an 80 year old lady who has been complaining from pain in both knees, worse on the right side. She has had the pain for many many years and she has left it for a long time and she is getting to the stage where she is almost completely disabled and over the last 12 months she has been hardly able to walk.

Isolde’s knee is extremely deformed with significant valgus deformity and looking at the knee there is significant deformity and significant instability. Radiologically she has complete destruction of the joint space in the lateral compartment and in the medial compartment with large bone loss.

Unfortunately Isolde’s condition is very severe and a standard knee replacement is going to fail and with her kind of condition, which is also complicated by the rheumatoid arthritis that she has, she would need a constrained knee.

104. The deceased underwent a total knee replacement on 23 January 2017 at Norwest Private Hospital, and was then a patient at Hills Private Hospital from 29 January 2017 to 16 February 2017. The medical notes of 23 January 2017 (record that the deceased was “very stressed due to selling of home”, which must be a reference to the Glenhaven Property which was placed on the market in May 2017 (see below). This is consistent with the fact that when the deceased was discharged from hospital the deceased moved back into Ms McCarthy’s residence, and David’s evidence is that there would have been no furniture at the Glenhaven Property by then. (The deceased moved out of Ms McCarthy’s residence in April 2017 – see Ms McCarthy’s affidavit sworn 28 May 2020 at [6].)

105. Lara’s evidence is that from about late 2015 she noticed a change in her mother’s demeanour, describing the deceased as appearing depressed, withdrawn, quieter, having less interest in her appearance, and being less engaged with Lara and her children (see Lara’s 26 October 2019 affidavit at [149]). It is Lara’s evidence that, by the time of their “secret” meetings in 2016, her mother was not the same happy woman she had known prior to 2015, as she was guarded, withdrawn, and would go quiet if David’s name was mentioned (see Lara’s 26 October 2019 affidavit at [199]).

106. Pausing here, David emphasises (and I agree) that there is no evidence that the deceased’s cognitive ability was impaired.

Glenhaven Property sold and Beaumont Hills Property acquired

107. The Glenhaven Property was placed on the market in May 2017. By that time the deceased had less than $2,000 in her bank account (the account balance at one point being as low as $2.30 in March 2017). Also by that time it appears that David had already replaced or moved the deceased’s furniture into storage. Lara noted that $47,435 worth of furniture was purchased, using the deceased’s account, between October and December 2017. As noted above, the deceased had been living with Ms McCarthy both before and after her knee replacement (see Ms McCarthy’s 28 May 2020 affidavit at [6]).

108. On 24 June 2017, the deceased exchanged contracts for the sale of the Glenhaven Property for $4.625 million.

109. David has put forward a number of reasons for the sale of the Glenhaven Property. In his 17 March 2020 affidavit (at [96]), David deposes as follows in relation to the sale of the Glenhaven Property: “[a]round that time, my mother and I became concerned as to the amount that was needed to repay Homesafe upon the sale of the Glenhaven property”. (I note that I did not read the words “my mother and”, to which objection was taken (T 143.44), but it is perhaps telling that David had a propensity in his affidavit evidence to attribute intentions and wishes to the deceased in common with his own.)

110. It is difficult to see why the impact of the reverse sale mortgage would have caused such concern on the part of the deceased as was attributed to her by David. The time at which the property was sold would certainly affect the percentage of proceeds to which the mortgagee was entitled to out of the sale, but for practical purposes while that would obviously affect the size of the deceased’s estate, it would not have affected the deceased’s position during her lifetime (unless for some reason she had to sell the property). For someone who might be looking at maximising the value of his or her potential inheritance that would, of course, be a different story.

111. A second reason proffered for the sale, as appears from David’s 28 August 2020 affidavit (at [21]), was in the conversation to which David deposes with the deceased in which he says his mother said to him:

The property is too big and there is too much to do if we continue to live here…. We should renovate the property now with our money to get the best price so we can buy a new house.

112. That is, of course, inconsistent with the position the deceased appears previously to have taken in relation to downsizing (according to Lara), and it attributes to the deceased the suggestion of renovation where there is no independent corroboration of this. What seems to be suggested was that the deceased liked watching home renovation shows on television and that this prompted her suggestion about renovation of either the Glenhaven Property or some other investment property (see below).

113. A third reason proffered for the sale was that the deceased spoke about buying an investment property to renovate and sell (again noting that the deceased was said to be interested in home renovation properties on television) but David said in cross-examination that this idea “went out the window” – T 271).

114. It also seems to be suggested that the sale proceeds were paid to David as repayment of a loan for renovations (T 18). However, Lara points out that there was no independent advice obtained about the renovations (nor any contracts entered into for the renovation works).

115. Lara argues (and I accept the force of this) that the reverse mortgage was no reason (or at least was not necessarily of itself the reason) for the sale of the Glenhaven Property. Lara notes that David was aware that the mortgage need not be paid until after the death of his mother because he had personally received advice on the reverse mortgage from the solicitor who drafted the deceased’s Will.

116. Interposing here, the evidence of the real estate agent (Mr Hampson), that the deceased told him she “had to sell” because of the reverse mortgage, suggests that, if the deceased indeed had such a (mis)apprehension, it was likely to be attributable to something David had said to her since David, on his own evidence, had a concern about the reverse mortgage and had taken his mother to obtain advice about it. As adverted to above, Lara also says that David’s evidence that his mother contemplated selling the Glenhaven Property as early as 2015 is at odds with the deceased’s wish to remain in her own home, when Lara says she suggested that the property be sold and downsized at the time of Dr Becker’s admission to The Poplars.

117. It is noted by Lara that, as at early 2015 (despite the deceased having paid Dr Becker’s Accommodation Bond of $590,000 in 2015), the deceased still had access to $130,000 on term deposit (comprised of #6217 ($50,000) and #6319 ($80,000)); that the deceased received a further $117,000 in March 2015 from the ATO being for unclaimed superannuation; and that, following the death of Dr Becker, the deceased received the proceeds of her late husband’s estate amounting to $531,963.71.

118. Lara also points to the fact that bank documents produced on subpoena reveal that, by early 2015, David had started to receive very substantial sums of money from the deceased’s account via NetBank transfers, including the receipt of $150,000 in June 2015 (which David deposes was used to buy stock for his Tesla after-sale parts business (see David’s 17 March 2020 affidavit at [89])). The payout figure of the reverse mortgage was $2,045,209 as at 3 October 2017 upon the sale of the Glenhaven Property (Susan’s 26 October 2019 affidavit at [222], and David’s 8 November 2019 affidavit at [30]). The initial advance made by the reverse mortgage lender was $853,325 of which the loans in respect of the Wallacia Guarantee and the Physiotherapy Guarantee in the total sum of $338,895.82 represented approximately 40%. David says that, applying this percentage to the payout figures gives a sum of approximately $818,000, although it is noted that Lara also gives evidence that she made some further repayments to her parents in the period to March 2010 (see Lara’s 14 November 2019 affidavit at [82], [90] and [97]).

119. On 4 July 2017, the deposit paid for the purchase was released (prior to completion), following a request that it be available to acquire other accommodation (see T 265). David’s affidavit evidence was that this was in order to pay outstanding costs associated with the renovation of the Glenhaven Property (see David’s 8 November 2019 affidavit at [29]). Lara contends, and David appeared in cross-examination to accept, that in fact the amount went substantially to the acquisition of a Tesla car (see below) – T 271.

Further vehicle purchase

120. Meanwhile, on 3 July 2017, as adverted to above, David purchased a Tesla model X motor vehicle for $187,425.35. David’s evidence is that the deceased was interested in cars and liked the design of the Tesla vehicle. Pausing here, that does not explain why such a purchase was considered necessary or desirable in the deceased’s interests at the time; nor why a deposit released ostensibly for the purpose of acquisition of other accommodation might have been used for the acquisition of a motor vehicle.

Purchase of Beaumont Hills Property

121. On 20 July 2017, David and Susan exchanged contracts for the purchase of a property at Beaumont Hills (the Beaumont Hills Property) for the sum of $1.525 million (the sale completing on 3 October 2017). The proceeds of sale from the Glenhaven Property were used to purchase the Beaumont Hills Property in David and Susan’s name.

122. David asserts that, at the time of the purchase of the Beaumont Hills Property, the deceased said to him words to the effect: “You looked after me so I will look after you”, and “I want you and Susan to be okay, you have done so much for me. I understand how much you have sacrificed so that I can live with you”, and “any money left over from the sale we can share so we both have something but I want you and Susan to have a home of your own” (see David’s 8 November 2019 affidavit at [32]).

123. David says that the deceased was “actively involved” in choosing the Beaumont Hills Property and had the “final say” in the purchase (see David’s 8 November 2019 affidavit at [32]). It is noted that the property included a “granny flat” which was subsequently used by the deceased (see Susan’s 17 March 2020 affidavit at [27]-[29] and affidavit of the real estate agent, Mr Wayne Danckert sworn 18 March 2020 affidavit at [6]). As to Mr William Hampson’s evidence (another real estate agent), in it appears that the deceased’s so-called “active involvement” amounted to little more than that the deceased inspected the property and gave instructions (no doubt when asked) about the reserve price (which Mr Hampson thought she appeared to understand) (see Mr Hampson’s affidavit sworn 21 July 2020 at [6]).

124. Completion of the sale of the Glenhaven Property occurred on 3 October 2017 (Ex 2). On completion, the sum of $1,522,272.03 from the proceeds of sale from the Glenhaven Property was applied to the purchase of the Beaumont Hills Property and the payment of stamp duty (Lara’s 26 October 2019 affidavit at [222], and David’s 8 November 2019 affidavit at [32]). The net proceeds of sale were shortly thereafter transferred to David’s bank account – see below.

125. Pausing here, it is noted by Lara that the effect of this transaction (which can hardly be disputed) was that the deceased was then in the position where she had no real estate in her own name, no or very little money in the bank, and was totally dependent on the support of others.

126. For David, it is put that he always intended to look after his mother (and that he in fact did so); and that his mother was happy with the arrangement and wanted to live with David and his family. Accepting that this was David’s intention (and that his mother was happy to live with David and his family), it does not change the reality of the situation, which was that, had David simply changed his mind or had circumstances changed (such as, for example, a failure of David’s (then in its infancy) “Tesla” business, or a loss on David’s digital currency trading, or a breakdown in David’s marriage) necessitating a sale of the Beaumont Hills Property, the deceased was in an extremely vulnerable position. Pausing here, the improvidence of the transaction in relation to the sale of the Glenhaven Property and the use of a large part of the proceeds of sale for the acquisition of the Beaumont Hills Property in David’s and Susan’s names (at the very least without any binding contractual arrangement to protect the deceased’s future needs for care and accommodation) is to me staggeringly obvious; although this was staunchly resisted by David and denied in his defence – see [36]ff.)

127. Instead, David’s complaint seems to be that the increase in the amount of refinancing in 2007 in the sum of $338,895.82 caused by the two loans to Lara in turn significantly reduced the amount received by the deceased upon the sale of the Glenhaven Property on 3 October 2017 (Ex 2) (and, one might speculate, the amount which otherwise would have been available for use by David in the acquisition of the Beaumont Hills Property, or otherwise for David’s benefit, as the bulk of the proceeds of sale ultimately were used).

Christmas Day 2017

128. Lara was not aware of the sale of the Glenhaven Property until she spoke with her mother on Christmas Day 2017, that being the last time that Lara spoke with her mother (see Lara’s 26 October 2019 affidavit at [225]). Lara’s evidence is that, during that conversation, the deceased either did not know or would not disclose to Lara the location of her new address and said, in answer to an enquiry as to whether the deceased had purchased David a house, “I need to live somewhere Lara” (see Lara’s 26 October 2019 affidavit at [223]). Lara’s evidence is that she continued to write to her mother but never received a response (and that the deceased had previously sent Lara and her family cards up until the end of 2017). David and Susan deny that they received any such cards or letters for the deceased.

329. There are competing versions as to why the deceased’s relationship with Lara did not continue up until the deceased’s death. Lara obviously considers that David poisoned their mother’s mind towards her – and says David made it impossible for her to visit her mother during the last years of her life. David denies this. Suffice it to say that there was obvious antipathy between the siblings and it is likely that the deceased was placed in an invidious position in that regard.

330. I accept that Lara was genuine in her expression of upset at being excluded (as she perceived it) from her mother’s life; and that she genuinely felt that David was responsible for the breakdown in her relationship with her mother. I also accept that David was genuinely caring of his mother and that she was happy living with David and his family.

Section 60(2)(b) – nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person’s estate

332. The deceased’s obligations, as such, to Lara and David did not go beyond the kind of moral obligation to consider the application of her testamentary bounty to her adult children (and I bear in mind in this regard the caution that has been expressed as to expressions of this kind).

Section 60(2)(c) – nature and extent of the deceased person’s estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered

333. When the deceased died, she had no real property in her own name and very little in the way of assets. On the assumption (which as noted above is the assumption on which this alternative claim is predicated) that the transactions challenged by Lara’s primary claims are not set aside, then as noted above there is virtually no estate for distribution, and any order for provision could only be made if there is a designation of notional estate. What Lara seeks to have designated as “notional estate” (see prayers 13 and 14) are the proceeds of sale used to acquire the Beaumont Hills Property (and any assets acquired from the proceeds of sale of that property), and such of the NetBank transfers as were made during the period of three years before the deceased’s death.

334. I have set out above what must be established in order for there to be a notional estate order in the present case. Relevantly, it must be established that the deceased entered into the relevant property transactions with the intention, wholly or in part, of denying or limiting the estate that otherwise would have been available to meet a claim for provision by Lara.

335. It is obvious that, when the proceeds of sale of the Glenhaven Property were used to acquire the Beaumont Hills Property, and again when the balance of the proceeds were transferred electronically out of the deceased’s account and into David’s account, or were used otherwise for his benefit, this had the inevitable effect of depleting the deceased’s estate that otherwise would have been available for distribution to the beneficiaries under her Will. However, I cannot conclude that the deceased understood that in so doing (particularly in relation to the proceeds of sale used to acquire the Beaumont Hills Property), this would have the effect of depleting her estate to the extent that it would exclude Lara from benefiting under the Will (so as to enable me to conclude on the balance of probabilities that the deceased intended to deny or limit a claim by Lara for provision out of the estate).

336. I consider that it is more likely that the gift of proceeds for use in the acquisition of the Beaumont Hills Property was the product of the deceased’s concern that David and his wife had sold their own home (“for no reason”), and were living with and caring for her. The intention to benefit David (and his wife) does not of itself amount to an intention to deny or limit a claim by Lara. As to the balance of the proceeds of sale, then even on the assumption that the impugned NetBank transfers were in fact dispositions by the deceased of her property, although these are more problematic, I am still not persuaded on the balance of probabilities that they were with the intent of denying a claim by Lara (although they certainly had that effect). In that regard, the fact that the NetBank transfers were in incremental amounts, and (on the hypothesis that they were intentional transfers) that some at least were for investment in David’s business which would be consistent with a desire by the deceased to support that business, supports the conclusion that the payments were to benefit David but not intentionally to deprive Lara of an entitlement to share in the estate.

337. Thus I would have had difficulty in concluding that any of those transactions fell within the definition of a relevant property transaction for the purposes of s 80(2)(a) of Succession Act, such that those transactions would not be available to be the subject of an order designating them as notional estate (which would render of no utility Lara’s alternative claim in the present proceedings as there effectively would be nothing from which to make any order for further provision).

Section 60(2)(d) – financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person’s estate

338. The evidence of the financial resources and needs (or claimed needs) of Lara (and the circumstances of David) may be summarised as follows.

339. Lara has disclosed her financial resources and needs in her affidavit affirmed 8 November 2019. She and Adam live with their children in rental accommodation and plan to rent until they can afford to build a residence on land they have purchased at Werombi (after the sale of the Wallacia Property). They carry on a conveyancing practice. They have assets totalling $1,214,844.85 and liabilities of $844,358.01. The business had a trading account balance of $56,445.62 and profits in the years ending 2017 and 2018 of $150,217 and $96,254 respectively. The family’s sole source of income is the amount received from the business. Lara’s needs are said to be the provision of a fund to enable the construction of a dwelling on the Werombi land, to pay off the business loan, and provide a capital sum to provide for exigencies of life, and/or an investment in superannuation for her retirement.

340. David has sworn an affidavit on 14 November 2019 in which he sets out his assets and liabilities. It is said that from the proceeds of sale of the Beaumont Hills Property, he invested $700,000 in digital assets for the purposes of trading. (It appears only $385,068.87 was left by the time they were converted and returned to Australia.) David deposes that neither he nor Susan is employed, and that they receive fortnightly Centrelink benefits. He lists his assets at $1,467,586.89, and his liabilities as $148,756.64.

341. David and his family live in rental accommodation. He estimates the family’s living expenses on a monthly basis as $7,634.84. He has given evidence of the Tesla business investment (paid for out of the proceeds of sale of the Beaumont Hills Property), and the estimated costs of the business.

342. I should note that complaint is made by David as to the level of disclosure by Lara about her financial circumstances; in particular as to the position of the conveyancing business now operated by Adam (Conveyancing Solutions and Legal) which commenced in about 2016. Lara’s evidence was that this was, in effect, a sole solicitor practice with the assistance of a conveyancing or other clerk. For Lara, it is said that the value of the business is comprised in the personal exertions of Adam, and therefore the complaint as to non-disclosure is not sustainable.

343. Complaint is likewise made by Lara as to the reliability of the figures provided by David (which was tested to an extent when the current freezing order regime was debated at the outset of the hearing and again when judgment was reserved). I accept that there is a large element of uncertainty as to what has happened with the moneys that David received from the proceeds of sale of the Glenhaven and Beaumont Hills Properties and from the NetBank transfers. Moreover, it is unclear to me why it is that the Tesla business assets could not be sold or utilised to make a profit (which does not seem to have occurred to date).

344. There has been consideration in various cases as to the requirement for an applicant for a family provision order to disclose as fully and as frankly as possible all details of his or her financial and material circumstances (see Leary v NSW Trustee and Guardian [2017] NSWSC 1113 (Leary) at [53], citing Collings v Vakas [2006] NSWSC 393 at [66]-[67] per Campbell J, as his Honour then was; Foye v Foye [2008] NSWSC 1305 at [14]-[15], per McLaughlin AsJ; In the Estate of the late Anthony Marras [2014] NSWSC 915 at [238], per Bergin CJ in Eq); and Singh v Singh [2015] NSWSC 1457 at [154], per Black J) (and see also what was said in Stone v Stone [2019] NSWSC 233, at [161]ff, per Hammerschlag J).

345. Here, however, I consider that sufficient information has been provided for me to make an informed assessment of Lara’s financial circumstances. Just as I considered to be the case in Watton v MacTaggart [2020] NSWSC 1233, I consider the present case to be distinguishable from those in which false evidence is given throughout the proceedings (see for example Ahmad v Ahmad [2002] NSWSC 579), or where there has been a deliberate expenditure of funds shortly prior to the application without offering any adequate explanation or documentary evidence as to what had been done with that money (see for example Mayfield v Public Trustee [2009] NSWSC 330; and as was the case in Leary).

Section 60(2)(e) – financial circumstances of any person with whom the applicant is cohabiting

346. Adam’s financial circumstances were not disclosed in any detail, save that he is a solicitor operating his own conveyancing practice. It must be assumed that Adam is in a position to help support his wife and children; and that he intends to do so consistent with his responsibilities as a husband and father.

Section 60(2)(f) – any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person’s estate that is in existence when the application is being considered or that may reasonably be anticipated

347. Not applicable.

Section 60(2)(g) – age of the applicant when the application is being considered

348. Lara is nearly 45 years of age. David is currently 43 years of age.

Section 60(2)(h) – any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person’s family, whether made before or after the deceased person’s death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant

349. Lara’s contribution to the deceased’s welfare was mainly in the period prior to her father’s death. I accept that Lara had a strong relationship with her father during his lifetime. After the breakdown in her relationship with David, there is no suggestion that Lara made any contribution to the deceased’s welfare. She does not appear to have made any contribution to the deceased’s estate as such.

Section 60(2)(i) – any provision made for the applicant by the deceased person, either during the deceased person’s lifetime or made from the deceased person’s estate

350. There is no doubt that substantial provision was made for Lara during the deceased’s lifetime (as outlined above) including the payment of Lara’s university fees (see Lara’s 26 October 2019 affidavit at [182(a)] and [25]) and, more significantly in financial terms the forgiving of the debts that were discharged at the time of the reverse mortgage. (This was, however, recognised in effect by the differential pecuniary legacies given to Lara and David under the Will.)

Section 60(2)(j) – any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person

351. Evidence of the deceased’s testamentary intentions can be gleaned to an extent from her prior testamentary documents, but more relevantly from the instructions recorded by the solicitor who drafted her last Will – namely, that she was seeking to “even things up” between Lara and David.

Section 60(2)(k) – whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person’s death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so

352. Not applicable.

Section 60(2)(l) – whether any other person is liable to support the applicant

353. As noted above, Adam would have the usual obligation of a spouse in relation to the maintenance and support of his spouse, Lara.

Section 60(2)(m) – character and conduct of the applicant before and after the date of the death of the deceased person

354. There was no doubt a period (albeit relatively small) of estrangement or distance in the relationship between Lara and the deceased in the last years of the deceased’s life. At best, it appears that Lara had a limited number of phone calls to her mother during the last two years of her life (although she says that she continued to send cards or letters). I have already noted the competing versions as to the cause of the limited contact. Suffice it to note that it does not appear to have led the deceased to change her testamentary intentions. (As to estrangement in the context of family provision cases generally, see what was said by Basten JA in Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308 at [40], [49]; and see also the discussion by Hallen J in Nielsen v Kongspark [2019] NSWSC 1821 at [233]-[237], and Page v Page [2016] NSWSC 1218 at [59]-[60]).

355. I do not consider that this is a disentitling factor in the present case, in circumstances where the deceased clearly was on notice of the tension between Lara and David (and it may be assumed that she was therefore aware of the difficulty that Lara might experience in visiting the home when David was living there).

Section 60(2)(n) – conduct of any other person before and after the date of the death of the deceased person

356. David’s evidence is (and I accept) that, during his life, including in the period from 2014 to the date of the deceased’s death, he and Susan had a very close and loving relationship with the deceased (see for example David’s 8 November 2019 affidavit at [16], and 17 March 2020 at [24] and [26], and Susan’s 17 March 2020 affidavit at [15] and [75]). They say that in the period from 2014 until the deceased’s death, they provided extensive assistance to the deceased, and did the deceased’s laundry, cooked and provided her meals, drove her to appointments and cleaned the house (Susan’s 17 March 2020 affidavit at [16], and David’s 8 November 2019 affidavit at [33). I accept that they provided day to day care and assistance over this period.

Section 60(2)(o) – any relevant Aboriginal or Torres Strait Islander customary law

357. None is here applicable.

Section 60(2)(p) – any other matter the Court considers relevant, including matters in existence at the time of the deceased person’s death or at the time the application is being considered

358. No particular matters were relied upon in relation to this factor.

Determination as to alternative family provision claim

359. Taking into account all the circumstances set out above, I consider that the fact that Lara (on the assumptions on which the alternative claim has been predicated) has been left with no provision at all out of the deceased’s estate means that she has been left without adequate or proper provision. I accept that at the end of the deceased’s life the relationship between the two was distant, and I accept that there was substantial provision made for Lara during the deceased’s life, but it is clear that the deceased still felt that Lara had a claim on her testamentary bounty.

360. While Lara has assets in terms of her home and an interest in what appears to be a profitable business, and has the support of her husband, she has two young children and her home is encumbered, such that to make no provision for her under the Will is not in my opinion proper or adequate.

361. That said, when comparing Lara’s needs with those of David (even accepting that David’s needs are no doubt contributed to by his seemingly poor track record in business investments and his foray into digital currency trading), David is in a position of greater need (and he also has a young family to support); and David provided the day to day care and support for the deceased during the last years of her life. I also consider that Lara’s prospects of advancement in life through her own efforts (and those of her husband) are greater than those of David.

362. In those circumstances, were I to have made an order for provision for Lara out of the estate I would have limited it to a lump sum of $100,000 as a buffer for the vicissitudes and contingencies of life. As it is, I am not persuaded that there are relevant property transactions out of which a notional estate order can be made, and therefore had the matter fallen to be determined on the alternative claim, I would have concluded that it should be dismissed even though I accept that there had not been adequate or proper provision made for Lara by the deceased under the Will, having regard to the extent of the deceased’s assets at the time that the application was determined.

Conclusion

363. For the reasons above, I have concluded that David is liable to account to the estate for the amount of the NetBank transfers (less the sum of $9,531.41 for transactions that, on balance, I accept were most probably solely for the deceased’s benefit – being pharmaceutical disbursements of $8,975.41; Fournez Hair for $61; and OPSM from $495), I have reached that conclusion on the basis that these were effected by David (and not authorised by the deceased) as the deceased’s agent and/or as her fiduciary (he having been entrusted by her, on his own case, to manage his finances). Having not satisfactorily accounted to the estate for those amounts, I have concluded that David should reimburse the estate for the sum of $1,819,513.84.

364. Further, I find that there was a sufficient relationship of dominion and ascendancy of David in respect of the deceased so as to give rise to a presumption of undue influence in relation to: the NetBank transfers; the proceeds of sale of the Glenhaven Property that were applied to the Beaumont Hills Property; and the acquisition of the new furniture for the Glenhaven Property at the time that it was marketed for sale. I have concluded that the presumption of undue influence has not been rebutted and (had it been necessary to determine) I would have concluded that this was a case where actual undue influence and unconscionable conduct were made out. Accordingly, David should account to the estate and is liable for equitable compensation in favour of the estate for those amounts. Taken together, the proceeds of the sale of Glenhaven Property that were applied for the purchase of the Beaumont Hills Property ($1,522,272.03), and the amount of NetBank transfers that I have concluded should be reimbursed to the estate ($1,819,513.84), comes to a total of $3,341,785.87.

365. As to the personal property that appears to have been disposed of by David, it is difficult to put a value on that and I am not persuaded that it is in the interests of the estate for further costs to be expended in proceeding to order an account in respect of that issue.

363. To the extent that David is unable to reimburse the estate for the full amount so ordered, then the shortfall should be treated as an ademption of the legacy provided for him under the Will, since he has in effect had the benefit of that legacy already. I note that as at the final day of the hearing (9 October 2020), there remained only $474,794 in the controlled moneys account, and a further $57,000 in a business account (resulting in the funds available to satisfy any judgment on David’s evidence being a cumulative total of $531,794). Since there seems no basis (having regard to David’s evidence as to his financial circumstances) to believe that he will be in a position to reimburse the estate sufficiently to permit the payment out of both his legacy and that for which provision was made for Lara, there should be an order that the amounts presently held in the controlled moneys account be paid out to Lara in partial satisfaction of her legacy under the Will. Therefore (unless the parties persuade me otherwise in relation to the form of the orders to be made – see below), the sum $531,794 held in the controlled moneys account and the business account should be transferred to Lara, as well as any proceeds from the sale of Tesla parts as may later be made to liquidate stock, up to the amount of $1 million in satisfaction of her legacy under the Will. I consider that David has already had the benefit of the legacy provided for him under the Will, and, accordingly, that any amounts owing to the estate that cannot be repaid should be considered the satisfaction of his share of the estate, in accordance with the principles of ademption.

364. Finally, I accept that David has shown himself unfit to carry out the duties as executor of the deceased’s estate and I consider that it is appropriate that an order should be made for Lara to be appointed as administrator of the deceased’s estate. Lara has sought a general administration order in that regard (see in this regard the discussion by Young J, as his Honour then was, of general administration orders in McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 from p 633ff; his Honour there referring to the position as summarised in Underhill and Hayton, Underhill’s Law of Trusts and Trustees (13th ed, 1979, Butterworths) at 699 as to the three categories of case in which a general administration order would be made, one of which being where a prima facie doubt is thrown on the bona fides or discretion of one or more of the trustees. Young J (at p 635) opined that in such a category of case the court “takes a relatively benign view and might act on relatively weak evidence” because of the heavy potential burden of costs that his Honour considered to have been “a prime weapon for controlling administration suits and keeping them within proper bounds”. His Honour also noted that there were useful passages on administration proceedings in New South Wales in Jordan, Administration of the Estates of Deceased Persons (3rd ed, 1948, Government Printer) at 42-43, and Ford and Lee, Principles of the Law of Trusts (1st ed, 1983, Law Book Co) at 766).

365. In the present case, on David’s evidence, his co-executor (his and Lara’s cousin Melita) has renounced probate and it had not been his intention to apply for a Grant of Probate of the deceased’s estate as there were insufficient funds in the estate to pay the specific legacies set out in the deceased’s last Will (see his 8 November 2019 affidavit at [38], [42]). Moreover, even leaving aside the impugned transactions that have been the subject of my findings as to undue influence and unauthorised transactions, David has not shown a proper understanding of his duties as executor (and I have serious doubts as to his ability or willingness properly to administer the deceased’s estate). I therefore consider that it is in order for the relief sought by Lara in relation to the administration of the deceased’s estate to be made and (mindful of the desirability to minimise further costs that would deplete the estate) that Lara should be appointed as administrator of the estate and should administer the estate on the basis (as indicated above) that David’s legacy is treated as having been adeemed to the extent of the shortfall in the amount for which he is required to account to the estate. (It may be that it is sufficient for the purposes of the administration of the estate for there not to be a general administration order, as such, but simply for Lara to be appointed as administrator of the deceased’s estate – but that is a matter on which Lara may wish to make submissions.)

Orders

369. I therefore propose to make the following orders, but before finalising those orders I will invite the parties to make any (brief) submissions as to the terms of the orders if the parties consider that the orders do not adequately reflect the above reasons, or if there are further orders required in order to implement the above reasons. I will also (as requested by David) give the parties an opportunity to make submissions as to costs with a view to finalising all orders on the papers.

370. The orders I propose to make (leaving aside the question of costs) are as follows:

1. Order that the administration of the estate of the late Isolde Becker be carried out and executed by and under the direction of this Court and that all necessary declarations be made, and enquiries held, and accounts taken to carry the same into effect.

2. Further to Order 1, order that letters of administration of the estate of the late Isolde Becker (the deceased), annexing the last Will and testament of the deceased dated 31 August 2016 be granted to the plaintiff (Lara Caroline Torok).

3. Order that the first defendant do, within 4 business days, pay and deliver up to the plaintiff, as administrator of the estate of the deceased all of the funds, assets, books and records of the estate of the deceased.

4. Declare that the payment in the sum of $1,522,272.03 to the first defendant by or on behalf of the deceased from the sale proceeds of the property referred to in these reasons as the Glenhaven Property was obtained by undue influence.

5. Declare that funds totalling ($1,829,045.25) transferred from the NetBank facility of the deceased Isolde Becker were not authorised by the deceased and were transferred by or for the benefit of the first defendant in breach of his fiduciary and equitable duties as the deceased’s agent (and were obtained by the first defendant by undue influence).

6. Declare that the first defendant holds or held the net sale proceeds of the sale of the property referred to in these reasons as the Beaumont Hills Property, and such assets as he subsequently acquired using the same, on trust for the estate.

7. Order that the first defendant pay and deliver up to the plaintiff as administrator of the estate of the deceased, all funds and other assets, documents of title and things which he has acquired using the said sale proceeds or any part thereof.

8. Order that the first defendant pay to the plaintiff as legal representative of the estate of the deceased, equitable compensation in the sums of $1,522,272.03 and $1,819,513.84 (totalling $3,341,785.87), together with compound interest thereon at the defaulting trustee rate.

9. Order that the interest of the first defendant, as legatee and otherwise as beneficiary of the estate of the deceased, be impounded and held as security for his liabilities as determined under these orders.

10. Order that the funds held in the controlled moneys account pursuant to Interlocutory orders made in these proceedings be paid out to the plaintiffs by way of satisfaction of the legacy provided by the deceased’s Will for the first plaintiff.

371. At this stage, however, the only order I will make is that the parties provide written submissions within seven days as to the form of the orders to be made to reflect these reasons and as to costs.

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Decision last updated: 09 November 2020