Webster v Strang; Steiner v Strang

[2018] NSWSC 495

Supreme Court

New South Wales

Medium Neutral Citation:	Webster v Strang; Steiner v Strang [2018] NSWSC 495
Hearing dates:	22–26 May 2017, 29 May 2017
Decision date:	23 April 2018
Jurisdiction:	Equity
Before:	Kunc J
Decision:	Additional provision to be ordered; Cross-claim for debt on account stated upheld
Catchwords:	SUCCESSION – family provision and maintenance – principles upon which relief granted – claim by adult children against large estate  CONTRACT – Account – Money due on account stated – Whether “Acknowledgement of Loan” signed by parties was account stated
Legislation Cited:	Civil Procedure Act 2005 (NSW) Family Provision Act 1982 (NSW) Evidence Act 1995 (Cth) Limitation Act 1969 (NSW) Probate and Administration Act 1898 (NSW) Succession Act 2006 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Ak-Tankiz v Ak [2014] NSWSC 1044 Alexander v Jansson [2010] NSWCA 176; (2010) 6 ASTLR 432 Amalgamated Property Co v Texas Bank [1982] QB 84 Anasson v Phillips (Supreme Court (NSW), Young J, 4 March 1988, unrep) Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308 Bank of New South Wales v Brown (1983) 151 CLR 514; [1983] HCA 1 Bates v Cooke [2015] NSWCA 278; (2015) 14 ASTLR 221 Bowditch v NSW Trustee and Guardian [2012] NSWSC 275 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Burke v Burke [2015] NSWCA 195; (2015) 13 ASTLR 313 Burmester v Hogarth (1843) 11 M & W 97; 152 ER 730 Camernik v Reholc [2012] NSWSC 1537 Camillo Tank Steamship Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134 Carpenter v Buller (1841) 8 M & W 209; 151 ER 1013 Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 Chan v Chan [2016] NSWCA 222 Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 Chidiac v Maatouk [2010] NSWSC 386 Collins v McGain [2003] NSWCA 190 Commonwealth Dairy Produce Equalisation Committee Ltd v McCabe (1938) 38 SR (NSW) 397 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226; [1986] HCA 14 Cooper v Dungan (1976) 9 ALR 93; 50 ALJR 539 Coshott v Sakic (1998) 44 NSWLR 667 Cubillo v Commonwealth of Australia (No 2) (2000) 103 FCR 1; [2000] FCA 1084 Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70 Darveniza v Darveniza [2014] QSC 37 Diver v Neal [2009] NSWCA 54; (2009) 2 ASTLR 89 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 Executor Trustee & Agency Co of South Australia Ltd v Thompson (1919) 27 CLR 162; [1919] HCA 51 Ex parte Morgan; In re Simpson (1876) 2 Ch D 72 Foley v Ellis [2008] NSWCA 288 Friend v Brien [2014] NSWSC 613 Goldsmith v Goldsmith [2012] NSWSC 1486 Goodman v Windeyer (1980) 144 CLR 490; [1980] HCA 31 Gorton v Parks (1989) 17 NSWLR 1 Gove Sport Fishing and Diving Charter Pty Ltd v Yeend [2017] QSC 148 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58 Heydon v Perpetual Executors, Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111; [1930] HCA 26 Hughes v National Trustees, Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134; [1979] HCA 2 Hunter v Hunter (1987) 8 NSWLR 573 Indyk v Wiernik [2006] NSWSC 868 Jodell v Woods [2017] NSWSC 143 Johnston v Brightstars Holding Co Pty Ltd [2014] NSWCA 150 Jones v Padavatton [1969] 1 WLR 328; 2 All ER 616 Katelis v Adalia Pty Ltd [2002] VSC 497 Keep v Bourke [2012] NSWCA 64 Kleinig v Neal (No 2) [1981] 2 NSWLR 532 Labracon Pty Ltd v Cuturich [2013] NSWSC 97; (2013) BPR 32,497 Lewis v Lamb [2011] NSWSC 873 Lewis v Wilson (1997) 42 NSWLR 228 Lloyd-Williams v Mayfield (2005) 63 NSWLR 1; [2005] NSWCA 189 Lockyer v Macready [1965] NSWR 801; (1965) 66 SR (NSW) 369 Lym International Pty Ltd v Marcolongo [2011] NSWCA 303; (2011) 15 BPR 29,465 McCathie v McCathie [1971] NZLR 58 McCosker v McCosker (1957) 97 CLR 566; [1957] HCA 82 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713 Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676 Oldereid v Chan [2013] NSWSC 434 Optus Administration Pty Ltd v Wright bht Wright (2017) 94 NSWLR 229; [2017] NSWCA 21 Perpetual Ltd v Myer Pty Ltd [2018] VSC 2 Peters v Salmon [2013] NSWSC 953 Phillips v James (2014) 85 NSWLR 619; [2014] NSWCA 4 Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9; [1962] HCA 19 Popovski v Kenjar [2011] NSWSC 731 R (M) v Slough Borough Council [2008] UKHL 52; [2008] 1 WLR 1808 Revenue and Customs Commissioners v Benchdollar Ltd [2010] 1 All ER 174 Romano v Romano [2004] NSWSC 775 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Salmon v Osmond [2015] NSWCA 42; (2015) 14 ASTLR 442 Sammut v Kleemann [2012] NSWSC 1030 Sangha v Baxter [2009] NSWCA 78; (2009) 52 MVR 492 Saravinovska v Saravinovski (No 6) [2016] NSWSC 964 Singer v Berghouse (No 2) (1994) 181 CLR 201; [1994] HCA 40 Slack v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 Smith v Johnson [2015] NSWCA 297; (2015) 14 ASTLR 175 Steiner v Strang [2012] NSWSC 919 Steiner v Strang [2014] NSWSC 1250 Steiner v Strang [2015] NSWSC 14 Steiner v Strang [2015] NSWCA 203 Steiner v Strang [2016] NSWSC 9 Steiner v Strang (No 2) [2016] NSWSC 394 Steiner v Strang [2016] NSWSC 395 Steiner v Strang [2017] NSWSC 132 Steiner v Strang (No 2) [2017] NSWSC 891 Stern v Sekers [2010] NSWSC 59 Taylor v Farrugia [2009] NSWSC 801 Underwood v Gaudron [2015] NSWCA 269; (2015) 324 ALR 641 Verzar v Verzar [2012] NSWSC 1380 Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 Walker v Walker (Supreme Court (NSW), Young J, 17 May 1996, unrep) Warner v Hung (No 2) [2011] FCA 1123; (2011) 297 ALR 56 Watson v Foxman (1995) 49 NSWLR 315
Texts Cited:	Bailey, “Lewis v Wilson: Account stated rears its ugly head” (1997) 12 JCL 160 Handley, Estoppel by Conduct and Election (2nd ed, 2016) Heydon, Cross on Evidence (9th ed, 2013) Mason, Carter and Tolhurst, Mason and Carter’s Restitution Law in Australia (3rd ed, 2016) Spencer Bower, Reliance-Based Estoppel (5th ed, 2017) Young, Croft and Smith, On Equity (2009)
Category:	Principal judgment
Parties:	Ms Robyn Gai Webster (Plaintiff, 2012/129833) Mr John Steiner (Plaintiff, 2012/185566) Mr Kenneth Ross Strang (First defendant, 2012/129833 and 2012/185566) Mr Jason Tang (Second defendant, 2012/129833 and 2012/185566)
Representation:	Counsel: Mr N Bilinsky (Plaintiff, 2012/129833) Mr M K Condon SC (Plaintiff, 2012/185566) Mr L Ellison SC with Mr R Potter (Defendants, 2012/129833 and 2012/185566)   Solicitors: GHS Legal Lawyers (Plaintiff, 2012/129833) Gells Lawyers (Plaintiff, 2012/185566) Glass Goodwin Solicitors (Defendants, 2012/129833 and 2012/185566)
File Number(s):	2012/129833; 2012/185566
Publication restriction:	No

Judgment

1. This judgment resolves two sets of associated proceedings in relation to the estate of the late Dorothy Margaret Steiner (“Dorothy”). I will refer to those proceedings as “Robyn’s case” (proceedings no. 2012/129833) and “John’s case” (proceedings no. 2012/185566) respectively.

2. Dorothy died on 12 October 2011 at the age of 88 years, leaving three adult children, John Raymond Steiner, Lesley Margaret Webster, and Robyn Gai Webster. The eldest, John, and the youngest, Robyn, are the plaintiffs in the two proceedings. Given that many of the relevant persons are family members, in what follows I will refer to them by their first names (intending thereby no disrespect).

3. Robyn and John both seek further provision from Dorothy’s estate, pursuant to Chapter 3 of the Succession Act 2006 (NSW) (the “Act”).

4. Dorothy left a will dated 7 June 2011 (the “Will”). On 14 December 2011, probate was granted to Kenneth Ross Strang and Jason Tang, who are the first and second defendants respectively in both proceedings.

5. Robyn’s case turns on one issue, namely, whether an order should be made pursuant to Chapter 3 of the Act for further provision for Robyn’s maintenance and advancement in life out of Dorothy’s estate (and if so, what order should be made).

6. John’s case raises the same question in relation to further provision out of the estate for his maintenance and advancement in life. However, matters with respect to John are complicated by a cross-claim by the defendants, on the basis of an alleged loan by Dorothy to John in around 2007. In these reasons I shall refer to them as the “defendants”, including their capacity as cross-claimants. John accepts that he received the money – some $881,000 – but says that it was by way of gift (or alternatively, a loan to be forgiven upon Dorothy’s death).

7. These reasons take the following form:

1. Paragraphs [9]-[13]: Introduction;

2. Paragraphs [14]-[17]: Summary;

3. Paragraphs [18]-[60]: Factual background (being the background common to both Robyn and John’s cases);

4. Paragraphs [61]-[80]: Procedural background;

5. Paragraphs [81]-281]: The cross-claim in John’s case’

6. Paragraphs [282]-[595]: The family provision applications; and

7. Paragraph [596]: Conclusion.

8. Robyn was represented in these proceedings by Mr N Bilinsky of Counsel, and John by Mr M K Condon of Senior Counsel. The defendants were represented by Mr L Ellison of Senior Counsel with Mr R Potter of Counsel.

Introduction

9. Dorothy was the matriarch of an extended and once close-knit family which operated enormously successful bridal wear businesses headquartered in Australia and Utah. She was, on all accounts, an indomitable woman who, surrounded by her family, worked hard for her entire life.

10. The bitter divisions and ill-feeling within the family today, which have no doubt only deepened during extensive litigation in Australia and Utah since Dorothy’s death, are particularly unfortunate in circumstances where it is beyond any doubt that Dorothy loved all three of her children (and her grandchildren and great-grandchildren) very much, cared for their wellbeing, and was extremely generous and supportive to all three and their descendants.

11. Dorothy left an estate of approximately $14 million. Pursuant to her Will, John and Robyn each receive a pecuniary legacy of $2 million and an equal share of the residue. The parties agree that there will be no residue. John has already received $788,872 of his $2 million legacy, by way of interim distribution, and Robyn has received $1,335,000 in interim distribution of her $2 million legacy.

12. Under the Will, Lesley (either directly, along with her husband Wayne, or through a trust established for her benefit) receives in excess of $8.5 million. Dorothy’s grandchildren and great-grandchildren are also beneficiaries under the Will, with the pecuniary legacies to them collectively amounting to $3.8 million.

13. In the family provision proceedings, Robyn and John seek further provision for their maintenance and advancement in life. The size of the estate available in those proceedings is dependent upon the resolution of the defendants’ cross-claim, for orders that John repay the amount of $881,000 to the estate.

Summary

14. The Court has concluded that the defendants have succeeded in their cross-claim, and that John is liable to the estate on the basis of debt on an account stated. The critical document, entitled “Acknowledgement of Loan” and executed by John and Dorothy in December 2007 (the “Acknowledgement”), constitutes an admission or acknowledgement by John of his indebtedness to Dorothy and now to her estate.

15. John failed to rebut, as a matter of fact, the inference of indebtedness arising from the Acknowledgement. The Court finds that both John and Dorothy’s understanding of their arrangement was embodied in the Acknowledgement, and that the sums advanced by Dorothy to John in November and December 2007 (amounting in total to $881,000) were intended and understood by the parties as a loan rather than as a gift.

16. Were it necessary to decide, I would have held that the defendants’ alternative claims on the cross-claim (a claim for moneys had and received and a claim based on an estoppel by convention said to arise from the Acknowledgement) both failed. It is fatal to the claim for moneys had and received that the defendants can provide no particularisation of the original arrangement between Dorothy and John. The claim that John is now estopped from denying the conventional basis of the parties’ relationship, being the mutual assumption embodied in the terms of the Acknowledgement, suffers from insufficient evidence that Dorothy and John conducted their relationship on the basis of that mutual assumption – in effect, there was neither evidence that Dorothy would have acted any differently absent the mutual assumption, nor that departure from the mutual assumption now would occasion detriment to her (or to her estate).

17. However, the Court finds that John and Robyn have successfully established their claims in relation to family provision. As considered at the time of the hearing, Dorothy’s Will does not make adequate provision for John and Robyn’s proper maintenance and advancement in life, and further provision ought to be made. In this regard, the Court places weight on factors including the acute needs of both John and Robyn, their limited capacity to meet those needs, their relationship with Dorothy, their legitimate claims upon Dorothy’s testamentary bounty, and the considerable resources available to the estate.

Factual background

18. Dorothy was born on 6 July 1923 and died in Salt Lake City, Utah on 12 October 2011, aged 88 years. On 9 December 1942, Dorothy married Raymond Leonard Steiner. Raymond was the only son of Cecil Steiner, and had a sister, Doreen Steiner.

19. Dorothy and Raymond had three children, the eldest being John Raymond Steiner born in 1945. The second child, Lesley Margaret Webster, was born in 1949. The youngest child, Robyn Gai Webster, was born in 1951.

20. Raymond predeceased his wife, being diagnosed with pancreatic cancer in April 1981 and dying in about September 1982. It appears that Raymond left his whole estate to Dorothy, including the couple’s waterfront unit at Abbotsford, subject to a mortgage. Dorothy sold the Abbotsford unit and went to live with her daughter Lesley and Lesley’s husband Wayne.

John’s family

21. John married his first wife, Davina Kathleen Jones, in about February 1967. John and Davina had two children: Anthony John Steiner (whose name is now Anthony John Martin) (born in 1967) and Donna Gay Lovell (born in 1968). John and Davina were divorced in about 1972 in the United Kingdom.

22. In February 1982, John married his second wife, Lynne Janine Barlow. John and Lynne do not have any children together.

23. John’s son Anthony is not married and does not have any children. John’s daughter Donna married Alan Lovell, with whom she has four children: Brett Alan, Adam, Jacob, and Matt Lovell.

Lesley’s family

24. Lesley married Peter Roderick Jackson in 1967, with whom she had one daughter, Kelly Lee Midgley, born in 1969. Lesley and Peter divorced in about late 1971.

25. In October 1978, Lesley married Wayne Porter Webster Junior, the brother of Robyn’s then husband Larry Bruce Webster. Wayne had a daughter, Katrina Peterson, from a previous marriage.

26. Lesley’s daughter Kelly married Michael Midgley, with whom she has five children: Steven, Ryan, Michael Joel, Sienna, and Jaidyn Midgley.

Robyn’s family

27. Robyn married Jeff Watts on 6 February 1970. Robyn and Jeff were divorced in about August 1973.

28. In about March 1975, Robyn married her second husband, Larry Bruce Webster.

29. Robyn and Larry have three biological children, Wayne Bruce Webster, Scott Raymond Webster, and Lance Taylor Webster, and two adopted children, Elizabeth and Rhodora.

30. Robyn and Larry’s eldest son, Wayne Bruce, married Elizabeth Anne Vincent, with whom he has a daughter, Madison Joey Webster.

The family bridal wear businesses

31. Dorothy was involved in a series of fashion businesses – specifically, in the wedding fashion or bridal wear industry. Other family members and their spouses were also involved, to varying degrees, in these businesses.

32. The two most significant business operations, for present purposes, were Steiner Wilson Webster Pty Ltd (“SWW”), trading as Abbey Bridal (“Abbey Bridal”), and Maggie Sottero Designs LLC (“Maggie Sottero”).

33. Many of the Steiner/Webster family members, and their descendants – including Dorothy – have lived in both Australia and the United States (in Utah) at different times. Dorothy, for example, moved frequently between Australia and Utah, and for a considerable period spent approximately six months of each year in each place. Lesley and Robyn, and their respective spouses and children, also moved between Australia and Utah.

34. This pattern of residence is reflected in the geographic operation of the businesses, Abbey Bridal and Maggie Sottero. For the sake of simplicity, Abbey Bridal could be considered the Australian arm of the family bridal wear business, and Maggie Sottero the Utah arm.

35. There are also references in the evidence to another family business incorporated in Australia, Maggie Designs Pty Ltd (to which I will refer as “Maggie Designs”).

The Will

36. Dorothy left the Will dated 7 June 2011.

37. By clause 3(a) of the Will, Robyn and John each receive pecuniary legacies of $2 million. In addition, by clause 9, they each receive one-half of the residue of the estate.

38. By clauses 3(b), (c), and (d), Dorothy’s grandchildren and some of her great-grandchildren receive pecuniary legacies in varying amounts, amounting in total to $3.8 million.

39. Clause 5 relates to a Sydney property in Cunliffe Road, East Killara (the “East Killara Property”) in which Dorothy had a one-third interest as tenant in common with Lesley and Wayne (the Will incorrectly refers to Dorothy having a “one half share” in the East Killara Property). By clause 5, Dorothy’s interest in the East Killara Property is left to Lesley and Wayne. The valuation evidence obtained by the defendants estimates that the East Killara Property is worth approximately $1.3 million.

40. Pursuant to Clause 6, Dorothy bequeaths all of her interest and/or shares in SWW (trading as Abbey Bridal) and Maggie Designs absolutely to an irrevocable trust for the benefit of Lesley (the L.M. Webster Irrevocable Trust). Those shares have an estimated value of approximately $5.9 million (Abbey Bridal) and $1.09 million (Maggie Designs) respectively.

41. Clause 7 concerns, relevantly, two accounts referred to collectively as the “Sottero Accounts”, with a balance of approximately $1.4 million – those moneys are left equally to Lesley (via the L.M. Webster Irrevocable Trust) and Lesley’s daughter Kelly (via the K L Midgley Irrevocable Trust). The same division (equally between Lesley and Kelly) is made in clause 8 in relation to the “Zion Accounts” (Utah bank accounts jointly owned by Dorothy, Lesley and Kelly and with a balance of approximately $19,000 recorded as at 14 December 2011).

42. The Will includes:

“1. I REVOKE all former Wills and other testamentary dispositions documents and acts made signed or done by me before this Will.

2. I APPOINT KENNETH ROSS STRANG and JASON TANG my Executors and Trustees (hereinafter called “my Trustees”)

3. I GIVE DEVISE AND BEQUEATH:

(a) to my daughter ROBYN ($2,000,000), and to my son JOHN ($2,000,000);

(b) to my daughter ROBYN’S five (5) children, WAYNE BRUCE WEBSTER ($400,000), SCOTT WEBSTER ($400,000), LANCE WEBSTER ($400,000), ELIZABETH FUGGLE ($100,000), and RHADORA ROSE ($100,000), and to WAYNE BRUCE WEBSTER’S daughter, MADISON WEBSTER ($150,000);

(c) to my daughter LESLEY’S daughters KATRINA PETERSON ($100,000), KELLY MIDGLEY ($400,000), and to KELLY MIDGLEY’S five children, STEVEN MIDGLEY ($250,000), RYAN MIDGLEY ($250,000), MICHAEL JOEL MIDGLEY ($250,000), SIENNA MIDGLEY ($150,000), AND JAIDYN MIDGLEY ($150,000); and

(d) to my son JOHN’S two (2) children DONNA LOVELL ($400,000) and ANTHONY STEINER ($100,000), and to DONNA LOVELL’S four children, BRETT LOVELL ($50,000), ADAM LOVELL ($50,000), JACOB LOVELL ($50,000) and MATT LOVELL ($50,000).

…

5. I GIVE DEVISE AND BEQUEATH my one half share in the house property known as XXX, East Killara NSW 2071 to my daughter LESLEY and her husband WAYNE P. WEBSTER, JR.

6. I GIVE DEVISE AND BEQUEATH all of my interest and/or shares in the following businesses and/or companies absolutely to an irrevocable trust for the benefit of my daughter LESLEY, known as Lesley M. Webster and Harlan P. Schmitt, as Trustees of the L.M. WEBSTER IRREVOCABLE TRUST dated July 25, 2008 United States Identification Number XXX:

(a) Steiner Wilson Webster Pty Limited trading as Abbey Bridal;

(b) Maggie Designs Pty Limited.

7. I GIVE DEVISE AND BEQUEATH all of my interest and/or shares, if any, in the business company Maggie Sottero Designs LLC and any moneys deposited as at the date of my death in the following Bank Accounts in my name with the Westpac Bank Corporation – XXX and XXX (the “Sottero Accounts”) as follows:

(a) as to one half to an irrevocable trust for the benefit of my daughter LESLEY known as Lesley M. Webster and Harlan P. Schmitt as trustees of the L M WEBSTER IRREVOCABLE TRUST dated 25 July 2008 United States Identification Number XXX; and

(b) as to the remaining one half to an irrevocable trust for the benefit of my granddaughter KELLY known as Kelly L. Midgley and Harlan P. Schmitt as trustees of the K L MIDGLEY IRREVOCABLE TRUST dated 25 July 2008 United States Identification Number XXX.

8. I GIVE DEVISE AND BEQUEATH all of my interest in the following Bank Accounts in my name with Zions Bank Corporation – XXX and XXX (the “Zions Accounts”) to LESLEY AND KELLY, one half each.

9. I GIVE DEVISE AND BEQUEATH the residue of my estate, after the payment of all of my final expenses, debts and taxes, of whatever nature and kind including moneys in bank accounts (other than the Sottero Accounts and the Zion Accounts) to my son JOHN and daughter ROBYN in equal shares as tenants in common.

10. I DRAW my Executors’ attention to Acknowledgement between myself and my son JOHN dated 18 December 2007 and request that the provisions of that Acknowledgement be implemented and observed.”

Value of the estate

43. The defendants have sworn an updating executors’ affidavit estimating the size of the gross distributable estate (omitting the costs of the proceedings) to be approximately $14.8 million.

44. The executors concede that there is unlikely to be any residuary estate.

Dorothy’s prior wills, transactions, and health

45. All of the parties to these proceedings have, to varying degrees, put in evidence conversations about Dorothy’s multiple wills and about her state of health (particularly in the period from 2004 to 2011).

46. As to Dorothy’s wills and conversations relating to them, insofar as this background is relevant to both John and Robyn’s cases, it is addressed here. The more specific evidence relating to John’s conversations with his mother about the loan or gift which is the subject of the cross-claim is addressed in the cross-claim section below (from [139]).

47. As to Dorothy’s health, John and Robyn’s evidence in this regard was quite extensive, and overall portrayed Dorothy as suffering from rapidly deteriorating health from about 2004 onwards. This evidence was the subject of detailed evidence in reply in Lesley and Wayne’s multiple affidavits. I do not consider it necessary to delve into eight years of Dorothy’s medical history here, because it has little, if any, relevance to John and Robyn’s cases. No submissions were advanced which suggested that Dorothy was in anything other than good health up until about September 2011. On the contrary, all parties agreed (and in fact John and Robyn positively submitted) that Dorothy remained, up to her death, of good health, sound mind, astute, and more than capable of managing her affairs.

48. Dorothy made a will dated 30 November 1990, which (according to the wills in evidence) appears to have remained her operative will until 15 April 2003. In that will she appointed Robyn and Lesley as executors and trustees, and gave:

1. her shareholding in SWW to Lesley;

2. one-third of the residue to each of John and Lesley; and

3. the remaining third of the residue: by payment of $3,000 to each of Dorothy’s grandchildren and the balance remaining to Kelly.

49. Between 2003 and 2011 Dorothy changed her will on at least eleven occasions:

1. 15 April 2003;

2. 27 May 2005;

3. 14 March 2006;

4. 2 June 2008;

5. 23 July 2009;

6. 21 September 2009 (addition of a codicil to the 23 July 2009 will);

7. 5 May 2010;

8. 25 August 2010;

9. 9 November 2010;

10. 28 April 2011; and

11. 7 June 2011 (the operative will at the date of Dorothy’s death).

50. In her will executed 15 April 2003, Dorothy appointed Robyn and Lesley as executors and trustees, and gave:

1. to Robyn’s five children, Lesley’s daughter Katrina, and John’s two children, each the sum of $10,000;

2. her 20% interest/shareholding in Maggie Sottero to Lesley (as to 11%) and to specific named grandchildren (as to the remaining 9%);

3. her interest/shareholding in Abbey Bridal to John, Lesley, Robyn, and Kelly in equal shares; and

4. the residue equally to John, Lesley, Robyn, and Kelly.

51. In the will dated 27 May 2005, Dorothy appointed Kenneth Ross Strang and Norbert Ryker as executors and trustees, and made the same gifts as in the 2003 will, with the exception of her interest/shareholding in Maggie Sottero, which was now omitted from specific mention (and thus, presumably, would have formed part of the residue equally divided between John, Lesley, Robyn, and Kelly).

52. On 14 March 2006, Dorothy made a new will, in which Mr Strang and Mr Ryker remained her executors. She gave:

1. to Robyn’s five children, Lesley’s daughter Katrina, and John’s two children, each the sum of $10,000 (this bequest remaining unchanged from the 15 April 2003 will);

2. all of her interest and/or shares in SWW trading as Abbey Bridal and in Maggie Designs Pty Ltd, to Lesley absolutely;

3. all of her interest and/or shares in Maggie Sottero, as to one-half to Lesley and the remaining one-half to Kelly; and

4. the residue to John and Robyn in equal shares.

53. The key change in the 14 March 2006 will, it should be noted, is that Lesley now receives all of Dorothy’s interest in Abbey Bridal and one-half of her interest in Maggie Sottero, with Kelly receiving the remaining half of the latter.

54. On 2 June 2008, Dorothy made another new will, in which she left her executors unchanged and gave:

1. to Robyn’s five children, Lesley’s daughter Katrina, and John’s two children, each the sum of $40,000;

2. her one-half share in the East Killara Property to John and Robyn in equal shares as tenants in common;

3. all of her interest (howsoever held) in the businesses known as Maggie Sottero Designs and Abbey Bridal to Lesley and Kelly in equal shares as tenants in common; and

4. the residue to John and Robyn in equal shares.

55. This will is similar to the 2006 will, the main changes being that the pecuniary bequests to the named grandchildren are increased and her interest in the East Killara Property is specifically devised – otherwise, the Abbey Bridal and Maggie Sottero interests are still left to Lesley and Kelly (albeit in a different division), and the residue to John and Robyn. The other addition to the 2 June 2008 will is a provision relating to the “ Acknowledgement” between Dorothy and John (clause 8), which is addressed further in relation to the cross-claim below (see at [136]).

56. Also in 2008, before executing any further wills, Dorothy was involved in a transaction which worked a significant change in her assets and is relevant to submissions made in both John and Robyn’s cases in relation to the family provision claims. On 25 July 2008, Dorothy concluded sale agreements with trusts controlled by Lesley and Lesley’s daughter Kelly (“the 2008 Agreements”). In effect, by the 2008 Agreements Dorothy transferred her interests in Maggie Sottero to Lesley and Kelly in equal proportions. The 2008 Agreements note that Maggie Sottero had engaged an independent appraiser to value the interests, with those interests valued as of 31 December 2006 at $7,591,000 in total. The 2008 Agreements contemplate an updated valuation by the same valuer to occur not more than 45 days prior to closing.

57. The parties to the 2008 Agreements agreed that the fair market value as of 31 December 2006 of the interest being acquired by Lesley and Kelly respectively was $3,795,500 (one-half of $7,591,000). However, the parties negotiated a purchase arrangement whereby the purchasers (trusts controlled by Lesley and Kelly respectively) would make instalment payments, with interest, to the seller (Dorothy) for a term of seven years and six months with the condition that the seller be alive on the scheduled payment date. If the seller died before any scheduled payment, the purchasers’ obligations to make those further payments would not come into existence. The 2008 Agreements go on to note that because, under such an arrangement, the seller bears some risk, the parties agreed that the purchase price should be greater than the appraised fair market value of the interests, and set the purchase price at $4,175,000 to be paid by each of the purchasers. The 2008 Agreements are accompanied by “Self-Cancelling Installment Notes” which, in effect, implement the terms of what is referred to as a “contingent payment sale” (that is, contingent on Dorothy remaining alive when the time for payment falls due). Significantly for the purposes of the family provision claims, the effect of Dorothy’s death is that approximately $2.9 million which was owing to her under the 2008 Agreements will not be paid to her estate.

58. On 23 July 2009 Dorothy made a new will, to which she added a codicil on 21 September 2009. The most significant features of that will for present purposes are:

1. Kelly is now named among the grandchildren who receive specific pecuniary legacies, now each in the sum of $100,000;

2. the Abbey Bridal interests are, in effect, left to Lesley absolutely and the Maggie Sottero interests to Lesley and Kelly equally;

3. several bank accounts are designated as the “Sottero Accounts” and any moneys deposited therein are left to Lesley and Kelly equally; and

4. by the codicil, $200,000 is left to Kelly’s son, Steven Raymond Midgley.

59. In 2010 alone Dorothy made a further three wills, in May, August, and November. In the will executed 5 May 2010, Lesley and Wayne are given additional rights in respect of the East Killara Property (Dorothy’s interest in which is, at this stage, still left to John and Robyn), and the will remains otherwise substantively unchanged (although the codicil of 21 September 2009 would appear to have been revoked by clause 1, and its effect is not otherwise captured in the May 2010 will). The only substantive change in the will executed 25 August 2010 is that Jason Tang replaces Mr Ryker as executor (alongside Mr Strang). The will executed 9 November 2010 for the first time differentiates between the grandchildren in respect of the pecuniary legacies, with Robyn’s three sons, Lesley’s daughter Kelly, and John’s daughter Donna receiving $200,000 each and Robyn’s two daughters, Lesley’s daughter Katrina, and John’s son Anthony, receiving $100,000 each. It remains otherwise substantively unchanged.

60. The will executed 28 April 2011 is, unsurprisingly, similar in form to the Will executed 7 June 2011, the latter being Dorothy’s last will. Now, Robyn and John each receive pecuniary legacies of $2 million, the pecuniary legacies to the grandchildren are increased, and pecuniary legacies to some of the great-grandchildren are introduced. Notably, the one-half share in the East Killara Property is now left to Lesley and Wayne. Moreover, a further set of bank accounts are exempted from the residue of the estate (alongside the Sottero Accounts), those accounts being labelled the “Zions Accounts” and left to Lesley and Kelly in equal shares.

Procedural background

61. Since 2012, there have been a multitude of related interlocutory, trial, and appellate proceedings in relation to Dorothy’s estate, which I set out in some detail below (given that, ultimately, the costs of many of these proceedings will need to be taken into account in the process of determining what in fact remains in the estate). This litigation, in its various guises (in Australia and Utah), has been enormously costly and time-consuming for all involved. It was in the interests of pursuing a final resolution of what may be fairly described as a long-running saga that I ultimately ordered in 2017 that all matters – John’s family provision claim, Robyn’s family provision claim, and the estate’s cross-claim – be heard together, before me, and that evidence in one proceedings be evidence in the other.

62. Robyn commenced her proceedings (no. 2012/129833) by Summons filed on 24 April 2012, applying for an order under Chapter 3 of the Act that further provision be made for her maintenance and advancement in life out of Dorothy’s estate.

63. John commenced his proceedings (no. 2012/185566) by Summons filed on 13 June 2012, likewise applying for a family provision order under Chapter 3 of the Act.

64. Then, by Summons filed on 11 July 2012, John and Robyn jointly commenced a new set of proceedings (no. 2012/215729), as first and second plaintiff respectively. That Summons sought urgent relief – principally, that John and Robyn be appointed Administrators of a part of the estate, being:

“The inchoate right of action of action [sic] at law of the Estate of the Late Dorothy Margaret Steiner in respect of or arising out of two contracts entered into in Utah, USA on or about 24 July 2008 with Kelly Midgley and others each entitled ‘Maggie Sottero Designs Limited LLC Membership Interest Purchase Agreement’ (‘the Sale Agreement’).”

65. In effect, John and Robyn were seeking appointment so that they could act on behalf of the estate and commence legal proceedings in Utah in respect of the 2008 Agreements (the contracts by which Dorothy sold some of her business interests to her daughter Lesley and granddaughter Kelly referred to in paragraph [56] above). In substance, John and Robyn sought to allege in Utah that the same attorney, accountant and financial adviser had acted for both Dorothy and the purchasers (Lesley and Kelly) in the relevant transactions, in circumstances where the transactions were said to have been severely disadvantageous to Dorothy.

The 2012 Judgment (White J)

66. By judgment delivered on 14 August 2012 in Steiner v Strang [2012] NSWSC 919 (the “2012 Judgment”), White J (as his Honour then was) addressed notices of motion filed by each of Robyn and John (in 2012/129833 and 2012/185566) seeking distributions from the estate pursuant to s 84 of the Probate and Administration Act 1898 (NSW) (the “Probate Act”) or, in the alternative, interim provision from the estate pursuant to s 62 of the Act.

67. His Honour made orders for the interim distribution to Robyn of $500,000 and to John of $300,000, pursuant to s 84 of the Probate Act (or r 54.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)) and in accordance with the principles set out in Romano v Romano [2004] NSWSC 775 (at [16], [18] per Barrett J, as his Honour then was) and Indyk v Wiernik [2006] NSWSC 868 (at [23] per Young CJ in Eq): see 2012 Judgment at [27], [31]. White J differentiated between Robyn and John on the basis that John was prima facie liable to repay to the estate an amount of $881,000 (at [28]).

68. In the 2012 Judgment, White J also dealt with – and dismissed – proceedings No. 2012/215729. Without the determining the merits of claims proposed to be advanced in Utah, his Honour held that the legal bases for John and Robyn’s application to be appointed as administrators were misconceived (see 2012 Judgment at [10]).

The cross-claim

69. The procedural history of the cross-claim (filed 30 November 2012) is set out in detail below (from [81]). Suffice it to say here that it came before Sackar J for separate determination in 2014, where the defendants succeeded, and was then the subject of a successful appeal by John to the Court of Appeal in 2015. The cross-claim was consequently remitted to the Equity Division for retrial.

Procedural and other rulings in 2015 (Ball J)

70. In the intervening period between the filing of the notice of appeal from Sackar J’s 2014 orders and the hearing of that appeal by the Court of Appeal, John brought an application in the Equity Division seeking that the defendants make further distributions of his pecuniary legacy (in such amount as the Court thought proper), pursuant to s 84 of the Probate Act. That application was heard by Ball J on 28 January 2015, and in a judgment delivered on 3 February 2015, his Honour dismissed the application with costs: Steiner v Strang [2015] NSWSC 14.

71. Ball J noted that, approaching the matter conservatively, it was possible that there would be no residuary estate and conceivable that there would be a shortfall which would reduce the pecuniary legacy to which John was entitled. In circumstances where the amount of that shortfall, if any, was not known, his Honour concluded that it would be prudent (as matters then stood) for the executors to retain the balance of the pecuniary legacy payable to John until the remaining court proceedings were resolved and the precise liabilities of the estate could be determined.

The 2016 Judgment (Slattery J)

72. With proceedings no. 2012/185566 continuing to take their course, Robyn’s proceedings (2012/128933) effectively awaited the resolution of the cross-claim in John’s proceedings. In the meantime, however, on 13 January 2014, John brought another, separate set of proceedings, no. 2014/10747, against seven defendants (the executors Mr Strang and Mr Tang, the company SWW, Wayne, Lesley, Kelly, and Robyn). Those proceedings were heard by Slattery J over seven days in late 2014 and early 2015, and were the subject of judgment delivered on 12 April 2016 in Steiner v Strang [2016] NSWSC 395 (the “2016 Judgment”).

73. The 2016 Judgment resolved three discrete disputes related to Dorothy’s estate. The first concerned a cheque Dorothy wrote two and a half years before her death, in the sum of $1,227,941, made out to Lesley’s husband Wayne. Wayne and Lesley contended before Slattery J that this was a gift. John contended that it was a loan which should now be repaid to the estate. Slattery J concluded that John had failed to prove that this cheque was a loan and accordingly declared that the cheque was a gift from Dorothy to Wayne and Lesley.

74. The second issue concerned Dorothy’s entitlements to long service leave for 25 years of employment with SWW, as to which Slattery J found that SWW did not owe any amounts to the estate arising out of long service leave entitlements.

75. The third issue concerned whether the estate should reimburse Wayne in the sum of $15,000 for his expenditure allegedly incurred at Dorothy’s request; Slattery J found that the estate was liable to Wayne in that amount (together with interest).

76. In essence, therefore, these proceedings were unsuccessful from John’s perspective. Slattery J ordered that John pay the costs of the proceedings incurred by the defendants who had contested the proceedings, being Wayne, Lesley, Kelly, and SWW (the “2016 Judgment Creditors”).

Procedural and other rulings in 2017 (Kunc J)

77. Whilst continuing (by notices of motion heard by Lindsay J – see from [117] below) to contest the form of the defendants’ statement of cross-claim, John filed further notices of motion on 10 March 2016 and 28 November 2016. In the first, John moved the Court for further distributions from the estate of his pecuniary legacy (or an order for interim provision). That motion came before me on 5 December 2016, and was dismissed by judgment delivered 24 February 2017 in Steiner v Strang [2017] NSWSC 132.

77. The hearing of John’s case, Robyn’s case, and the cross-claim before me took place in May 2017. After the conclusion of the hearing, by Notice of Motion filed on 21 June 2017, John applied to the Court seeking orders restraining the 2016 Judgment Creditors from taking any further steps or enforcement proceedings against John in relation to:

“a. the bankruptcy notice dated 7 June 2017 addressed to him [John] and served on 14 June 2017 including filing any creditors petition or taking any other step to cause his estate to be sequestrated.

b. The Judgment in the District Court of NSW made on 17 May 2017;

c. The certificate of Determination of Costs No 2016/00232534 issued on 24 April 2017.”

79. John also sought orders that the creditors withdraw the bankruptcy notice dated 7 June 2017.

80. By judgment delivered 3 July 2017 in Steiner v Strang (No 2) [2017] NSWSC 891, I dismissed the 21 June 2017 Notice of Motion, with costs.

The cross-claim in John’s Case

Procedural history

81. On 30 November 2012, the defendants filed a cross-claim in John’s Case, seeking certain orders and declarations as to whether John was indebted to the estate in the sum of $881,000 as at Dorothy’s death on 12 October 2011.

82. An amended cross-claim was filed in Court on 6 March 2014, and was the subject of orders for separate determination (pursuant to UCPR r 28.2) and expedition by Rein J on 20 June 2014 and 5 July 2014. The cross-claim was brought forward for separate determination of the status of the purported loan, as that question would obviously impact both the size of the estate and John’s assets and liabilities.

83. The defendants sought an order that John pay to the estate the loan amount (of $881,000) and interest, or a declaration that they were entitled to offset the loan amount and interest against any entitlement of John under the Will, including his entitlements as both a residuary beneficiary and specific legatee.

The 2014 Judgment (Sackar J)

84. The cross-claim came before Sackar J for hearing on 5 September 2014. As of that date, no defence to the cross-claim had been filed.

85. Sackar J delivered judgment on the cross-claim on 12 September 2014, in Steiner v Strang [2014] NSWSC 1250 (the “2014 Judgment”). It is necessary to set out his Honour’s reasoning and conclusions in some detail, in order to understand the later decision of the Court of Appeal and, ultimately, in order to address the parties’ submissions in respect of the cross-claim in these proceedings.

86. His Honour first noted that on 16 November 2007, Dorothy transferred $100,000 into John’s bank account “for the purpose of placing a deposit on a unit in Townsville”, and that on 17 November 2007, John was the successful bidder at auction for $881,500 and exchanged contracts.

87. Mr Leslie Ward (solicitor) gave evidence before Sackar J that on 20 November 2007, his firm was retained to act for John on his purchase of the Townsville unit (the “Strand Property”). Annexed to an affidavit of Mr Ward (which, I note, was in evidence before Sackar J but was not read in the proceedings before me) was a file note dated 22 November 2007 particularising a conversation between John and “Meagan” of Mr Ward’s office. That note relevantly provided:

“This is a cash contract … please note that the funds are coming from Sydney (his mother) and she is elderly, this may be hard to organise, so please do in enough time :)”

88. Also annexed to Mr Ward’s affidavit was an unsigned, handwritten document, received from John on or about 6 December 2007 and dated that day (this document was in evidence before me (the “6 December document”). That document included:

“RE LOAN TO PURCHASE 1/120 THE STRAND

IT IS AGREED BETWEEN JOHN R STEINER AND DOROTHY M. STEINER THAT:

1. $881,500.00 IS GIVEN TO JOHN R STEINER BY WAY OF A LOAN TO PURCHASE 1/120 THE STRAND NTH WARD TOWNSVILLE.

2. THE FULL LOAN IS TO BE FORGIVEN UPON THE DEATH OF DOROTHY M. STEINER.”

89. Sackar J noted that on 7 December 2007, Dorothy transferred $781,000 to John’s bank account. His Honour held (at [13]) that “no weight” could be attached to John’s evidence that, on 7 December 2007 (which was his birthday), he had a conversation with Dorothy in which she said words to the effect of:

“I will wire you the remaining balance of the purchase price to your bank account. Consider it as a birthday present.”

90. Sackar J referred to John’s evidence, in his affidavit sworn 12 August 2014, of “various conversations in which his mother purported to indicate that the Townsville property would be purchased for him as a gift” and to John’s assertion, in that affidavit, that he prepared the handwritten document referred to at [88] above and provided it to Mr Ward, but did not send it to anyone else.

91. The sale of the Strand Property settled on 13 December 2007.

92. At [16]-[23], Sackar J discusses the circumstances surrounding the document which is critical to the determination of the cross-claim: the Acknowledgement. Mr Ward gave evidence before Sackar J that this document was prepared by him (but did not specify a date). It is typed, with the exception of the amount of the loan (“881,000.00”) and the date in December (“18th”), which are both handwritten. It provides:

“I, JOHN RAYMOND STEINER, the person named below as the borrower ACKNOWLEDGE-

1. DOROTHY M. STEINER (“my mother”) has loaned to me the sum of money particularised below (“the loan”),

2. I will repay the loan to my mother -

2.1 upon demand in writing by her or her lawful attorney, or

2.2 if my mother has not made demand for payment prior to her death, then to her estate upon her death.

I, DOROTHY M. STEINER, agree in the event I have not made demand for repayment of the loan prior to my death and the borrower is named in my last Will as a residual beneficiary of my estate, it shall be sufficient that providing the debts owed by me at my death (including testamentary expenses) are paid and discharged without the necessity of my personal representatives having to make demand for the repayment of the loan, the loan can be repaid by the borrower by offsetting the amount of the loan as part of the borrower’s entitlement as a residual beneficiary of my estate.

‘The borrower’ - JOHN RAYMOND STEINER

address of the borrower - 64 Kings Road, Hyde Park, Townsville, Queensland

amount of the loan - $881,000.00

EXECUTED this 18th day of December, 2007.”

93. Sackar J observed that it was “immediately apparent” that the Acknowledgement differed from the handwritten document provided by John to Mr Ward, there being no mention of forgiveness of the loan. At this point, Sackar J noted that there was “no suggestion of error or a failure to follow instructions on the part of Mr Ward” (at [17]). His Honour referred to a concession, apparently made by Counsel for John in the course of the proceedings before his Honour, that the Court “would have to infer that the document in its ultimate form was as a result of instructions from Mr Steiner to Mr Ward”. Accordingly, Sackar J found as follows (at [18]):

“It is reasonable to draw an inference that Mr Steiner proposed or hoped for an arrangement which would provide for forgiveness of the amount upon his mother’s death. However, either as a result of his own change of mind or the discovery that his mother would not agree, he instructed his solicitors to prepare the document he ultimately signed which maintained the transaction as a loan not to be forgiven upon her death. It is not clear whether those instructions were given prior to or after settlement.”

94. Sackar J notes that the document was signed by each of John and Dorothy, whose signatures were witnessed respectively by Mr Ward and Mr Strang, their solicitors. Sackar J accepted Mr Ward’s evidence that the document was signed by John in his presence, and that he (Mr Ward) did not speak to Mr Strang or Dorothy about the document.

95. Sackar J noted John’s assertion that on about 19 December 2007 he posted the Acknowledgement to Dorothy in Sydney (an assertion which was not challenged before Sackar J). Mr Strang gave evidence, which Sackar J accepted, that in about December 2007, Dorothy asked him to witness her signature on the Acknowledgement, he attended upon her for that purpose, and did not explain the document to her or give her any advice in relation to it.

96. Sackar J held that Dorothy’s prior wills (tendered by the defendants) provided “little if any assistance” to the determination of the dispute before the Court, and reached a similar assessment with respect to an affidavit of Robyn sworn 14 September 2012.

97. Sackar J identified the issues for determination by the Court as the construction of the Acknowledgement; whether a debt was owed to the estate; and whether John was obliged to pay interest.

98. His Honour noted that it was not disputed that the $881,000 had not been repaid, nor that the two conditions set out in the Acknowledgement (that Dorothy did not make demand for the repayment of the loan during her life and that John was named as a residual beneficiary) had been met. At [29], his Honour remarked that there was “no evidence as to any terms or conditions to be attached to the provision of moneys prior to the execution of the Acknowledgement (other than, of course, its characterisation as a loan or a gift)”.

99. Ultimately, Sackar J held that John was “clearly satisfied that the terms in the [Acknowledgement] were terms upon which he agreed to be bound, not only because he executed it but more importantly because he was the party that took the initiative and instructed his solicitor to prepare it”. Sackar J rejected John’s submission that the consideration for signing the Acknowledgement was past consideration (because the document was brought into existence after the whole of the moneys was advanced), saying that this “fundamentally misconceives the nature of the Acknowledgement” which was “objectively not intended to be the contract between the parties, but an acknowledgement already entered into”. His Honour took the view that the Acknowledgement was “properly regarded as an admission or as admissible post-contractual conduct” (at [32]), referring to J D Heydon, Cross on Evidence (9th ed) at [39290]; Lym International Pty Ltd v Marcolongo [2011] NSWCA 303; (2011) 15 BPR 29,465 at [139]-[143] per Campbell JA; Johnston v Brightstars Holding Co Pty Ltd [2014] NSWCA 150 at [120]-[121] per Basten JA (Gleeson JA agreeing).

100. As an alternative possibility, Sackar J suggested that the parties “may well have come to an agreement before the provision of the remaining sum which was to be the subject of formal documentation” (that documentation being the Acknowledgement).

101. Therefore, his Honour concluded that the issue of whether sufficient consideration had passed between the parties did not arise; that the Acknowledgement was a clear indication that a debt was owed to the estate; and that the amount of $881,000 could only be sensibly viewed as a loan, and hence now was a debt owed to the estate.

102. On the question of whether the executors could set off the debt owed by John to the estate, Sackar J held that the Acknowledgement clearly contained “no mechanism or suggestion of forgiveness of the loan amount” and certainly did not suggest that the loan amount would be discharged in any circumstances, merely that it would be ultimately offset. His Honour concluded that the estate could set off the loan amount owing against not only John’s residuary entitlement but also against the pecuniary legacy he otherwise receives.

103. His Honour dealt briefly with the question of interest and held that interest should only be calculated on the amount remaining after the offset has been calculated (in other words, John would be ordered “to pay interest only on the loan amount less any amount he is entitled to as a residuary beneficiary”).

104. On 19 September 2014, for the reasons published in the 2014 Judgment, Sackar J made orders as follows (the “2014 Orders”):

“(1) Declare that Mr Steiner is indebted to the estate of Dorothy as at 12 October 2011 in the sum of $881,000 and that that amount may be offset against any entitlement of Mr Steiner under the will of Dorothy;

(2) Order that interest under s 101 of the Civil Procedure Act 2005 (NSW) is payable on so much of the sum of $881,000 as exceeds the entitlement of Mr Steiner under the will, such interest to be calculated from the date on which that excess, if any, is ascertained.”

The Appeal Judgment

105. On 11 December 2014, John filed a notice of appeal from the 2014 Orders. John subsequently filed, with leave, an amended notice of appeal (on 26 June 2015), which raised additional questions of admissibility of evidence rejected by Sackar J.

106. The appeal came before the Court of Appeal on 24 June 2015 and, by judgment handed down on 16 July 2015 (Steiner v Strang [2015] NSWCA 203) (the “Appeal Judgment”), the Court of Appeal made these orders:

“1 Appeal allowed.

2 Orders made on 19 September 2014 be set aside.

3 Remit the matters raised in the amended cross-summons dated 6 March 2014 to the Equity Division for retrial.

4 Respondents pay the appellant’s costs of the appeal.

5 Costs of the first trial be determined by the judge hearing the retrial.”

107. The leading judgment in the Court of Appeal was delivered by Emmett JA, with whom Leeming and Simpson JJA agreed.

108. The Court of Appeal summarised John’s grounds of appeal into three grounds, relating to: the rejected evidence; whether the amount was a loan or a gift; and whether John’s liability (if any) is limited to a residuary bequest.

Ground 1: rejected evidence

109. The Court of Appeal noted at the outset of its determination of this ground that on appeal the executors (i.e. the defendants in the current proceedings) did not dissent from Sackar J’s conclusion that the Acknowledgement was no more than an admission or acknowledgement of a pre-existing obligation. That is, the defendants did not contend on appeal that the Acknowledgement itself gave rise to or created an obligation on the part of John, but merely submitted that it evidenced a pre-existing obligation.

110. At [48]-[50], the Court of Appeal held:

“[48] For the Executors to succeed in obtaining an order that Mr Steiner pay the sum of $881,000 to the estate of Dorothy, it was incumbent upon them to demonstrate that there was a pre-existing obligation as at the time when the Acknowledgement was signed. However, they accepted that they could provide no particularisation of the circumstances in which any pre-existing obligation was created or came into existence. There was no evidence of any such obligation, save as may be inferred from the 6 December document and the Acknowledgement.

[49] In circumstances where the Acknowledgement had no juridical effect in creating or giving rise to an obligation, it could only be admissible as evidence of an admission by Mr Steiner. Therefore, evidence as to the circumstances in which the Acknowledgement was brought into existence and signed was admissible in order to enable an assessment to be made as to the weight that should be attributed to it as an admission or as an acknowledgement [citing by way of example Lustre Hosiery Ltd v York (1935) 54 CLR 134 at 143-4]. Indeed, even if there were a contract that pre-dated the Acknowledgement, then, on the assumption that such a contract was wholly oral (since there was no evidence of anything in writing), evidence of an admission would be admissible to assist in ascertaining the content of any such agreement [citing Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [143]].

[50] The primary judge erred in rejecting those parts of Mr Steiner’s affidavit that were rejected. They were admissible to explain what weight, if any, should be given to the Acknowledgement. It follows that the appeal should be allowed.”

Ground 2: loan or gift?

111. The Court of Appeal held at [52] that the evidence given by John, Robyn (in her 14 September 2012 affidavit) and Mr Ward as to the circumstances in which the Acknowledgement was brought into existence, and the evidence as to the communications between John and Dorothy concerning the advances, together with the 6 December document, should have been weighed against the evidence consisting of the Acknowledgement “in order to determine whether an obligation on the part of Mr Steiner had come into existence prior to the Acknowledgement and what the terms of any such obligation were”.

112. As to the concession made by counsel for John (see [93] above) and the weight accorded to it by Sackar J, the Court of Appeal noted that the terms of the Acknowledgement are inconsistent with those of the 6 December document (which John sent to Mr Ward) and that there was no evidence of any communication between John and Mr Ward concerning the preparation of the Acknowledgement document, other than the evidence of John (which Sackar J refused to admit) that, when he queried the absence of anything about loan forgiveness in the Acknowledgement, Mr Ward said that, if Dorothy did not ask for the money back in her lifetime, the loan would be forgiven. The Court of Appeal concluded on this ground (at [55]-[56]):

“[55] … Having regard to the other evidence of Mr Steiner, both admitted and rejected, to the effect that the payments from Dorothy were gifts, it is difficult to see why an inference should be drawn that the Acknowledgement represented specific instructions given to Mr Ward by Mr Steiner.

[56] There was minimal cross-examination of Mr Steiner and no cross-examination was directed to the conversations with Dorothy to which he deposed, irrespective of whether or not they were admitted or rejected. It would be unfortunate for the cross-summons to be remitted for a further trial. Nevertheless, that course appears to be unavoidable. It would not be appropriate for this Court to make findings of fact that appear to be inconsistent with the implied findings made by the primary judge. A finding by this Court that Mr Steiner should be believed, in the absence of an opportunity for the Executors to cross-examine him on the rejected evidence, could involve a miscarriage of justice [citing UCPR, r 51.53(1)]. Equally, a finding that Mr Steiner’s evidence should be rejected in favour of the Acknowledgement could also involve a miscarriage of justice. In the circumstances, unfortunate though it will be, there will need to be a new trial of the matters raised by the cross-summons.”

Ground 3: whether John’s liability is limited to a residuary bequest

113. In the Court of Appeal, John contended that, if he does owe a debt to the estate, he is only obliged to repay it to the extent of the residuary gift to him under the Will and that, if that residuary gift is insufficient to repay the sum of $881,000, he will be discharged from any liability to pay the shortfall, relying upon the terms of the Acknowledgement for that contention. In effect, John relied on the Acknowledgement as constituting an acceptance by Dorothy that, if any part of the “loan” had not been repaid prior to her death, John’s liability to repay the loan was to be limited to his entitlement as a residuary beneficiary under the Will.

114. The defendants contended that they are entitled to set off the sum of $881,000 (if it is owed to the estate) against John’s entitlement as a beneficiary under the Will, whether that entitlement is as a residuary beneficiary or as a legatee.

115. Again it is necessary to set out the Court of Appeal’s reasoning at some length. At [58]-[62], Emmett JA said:

“[58] … in the light of the conclusion that the Acknowledgement is no more than an admission and does not create or give rise to any obligation, it is difficult to see any basis upon which Mr Steiner could rely upon it as discharging any part of a pre-existing obligation that he might have had. In any event, the Acknowledgement does not, on its proper construction, say what Mr Steiner contends that it says. In its terms, it does no more than defer the obligation of Mr Steiner to repay the “loan”.

[59] To repeat the relevant words of the Acknowledgement, with the addition of parentheses for readability, the “agreement” was that:

574. There are certain overarching conclusions which have informed the Court’s approach to both the jurisdictional question and the related determination of what (if any) further provision ought to be made.

575. The Court does not accept the defendants’ approach of “enough and no more”, as if Dorothy’s generosity both in life and death were to be viewed in isolation and by reference to a subjective reaction to the large amount of money John (especially) and Robyn received. This does not reflect the statutory task under the Act and ignores the necessity to look at all the circumstances that might be relevant at the time of the hearing.

576. Both Dorothy’s generosity in life (especially to John) and in death clearly indicate (and the Court finds) that Dorothy wanted to make proper provision for John and Robyn. I accept that she would not have wanted to see either of them destitute and would have wished for them to have a home of their own. I have found that the totality of the relationship between Dorothy and each of John and Robyn was close, loving and abiding. It is clear from the evidence that Dorothy cared deeply for all of her children and was concerned for their wellbeing – a concern manifest not only in the distribution of her largesse amongst them, but also in the regular contact she maintained with them.

577. Moreover, Dorothy’s generosity in life is not a factor which militates against John and Robyn’s claims. Rather, it demonstrates that Dorothy was well-disposed towards the recipients of her beneficence. She was generous because she wanted to be and could be. In John’s case, particularly by the time of the “dependency” payments in 2010 and 2011, the evidence indicates that Dorothy understood that he could not get by without her support.

578. In addition, the Court is satisfied that Dorothy expected there to be a material sum left in her residuary estate, which would go to John and Robyn, notwithstanding the possibility of prorating downwards referred to in clause 13 of the Will. There are two reasons for this conclusion, both based on the recognition that Dorothy was an astute businesswoman and someone who gave careful and frequent attention to her testamentary arrangements:

1. First, there is no suggestion that in the last years of Dorothy’s life there were any particular health issues that would have made her feel in imminent danger of death. I accept John and Robyn’s submissions that Dorothy would have assumed at the time of making the Will that she would receive the remaining payments still due under the so-called “self cancelling instalment contracts” (amounting in total to some $2.9 million).

2. Secondly, the terms of the Acknowledgement contemplated that John’s liability for the loan could be satisfied from his interest in the residuary estate. I am satisfied that Dorothy would have been aware, not least because of the additional funds she gave John at the end of her life, that both for some time before and at the time she made the Will, John could not pay back the Loan out of his own resources. The Court infers that Dorothy had an expectation that the repayment obligation could have been satisfied out of John’s residuary entitlement – that is, that she expected there to be sufficient residue that John would receive at least $881,000 by way of residuary bequest. That inference is based on Dorothy’s advertence in each of her later wills to the Acknowledgement. In my view, her reminder “that the provisions of that Acknowledgement be implemented and observed” was an expression of her expectation that John’s obligation to repay the Loan would be met out of his share of the residuary estate. The inference is also based on the allocation between the family groups referred to at [581] below.

580. In conducting the statutory inquiry, the Court gives considerable weight to respecting Dorothy’s freedom of testation and what appears to be a carefully thought-out testamentary scheme. That scheme is first that Lesley (and to a lesser extent Kelly) are to receive the bridal business assets (or the fruits of those businesses). The Court accepts that reflects the reality presented by the totality of the evidence that Lesley and Wayne were instrumental in developing and maintaining those wealth-creating assets. The Court finds that Robyn was also instrumental in creating and developing the bridal businesses, particularly in the earlier period (from 1974 to 1997), but that Robyn has had a less significant role in the continuing growth of Maggie Sottero and was in any event bought out of her shares. Secondly, the Will provides for John and Robyn to receive $2 million each and equal shares of the residue. Both subjectively, and objectively in the circumstances of this case, that is generous provision. However, as the Court finds below, it is nevertheless not adequate in the face of the significant needs of each of John and Robyn.

581. A further significant feature of Dorothy’s testamentary scheme is how she has treated her grandchildren and great-grandchildren. In this regard, Dorothy appears to have made a deliberate allocation of her testamentary bounty between the three family groups of her children. Robyn’s five children and one of her grandchildren (six people) share in a pool of $1,550,000. Lesley’s two children and five grandchildren (seven people) also share in a pool of $1,550,000. However, John’s two children and four grandchildren (six people) share in a pool of only $700,000. In my view it is significant, and beyond coincidence, that the apparent disparity disappears if the repayment of the $881,000 Loan out of a share of the residue is factored in. This brings the amount allocated to John’s family group to $1,581,000, and is a further reason supporting the Court’s conclusion that Dorothy expected the Loan to be repaid out of John’s share of the residue.

582. Turning then to the statutory requirements, both John and Robyn are evidently eligible persons (see s 57(1)(c) of the Act) and there is no question that their applications were made within time (s 58(2)).

583. As to whether adequate provision has been made for John’s proper maintenance and advancement in life, it is clear that John’s financial and personal circumstances are very poor. The same conclusion applies to those with whom John is cohabiting, and for whom he is responsible, Lynne and Anthony. The evidence shows that Dorothy recognised this during her life. John was being partly maintained by Dorothy before her death, and was, in financial terms, extremely dependent on her – as she recognised by the “dependency payments”. John is aptly described as an adult dependent child who has “fallen on hard times”, for whom the community would expect – especially in the case of a large estate – provision to be made to secure accommodation and offer a buffer against contingencies (see [520] above). Nothing in John’s conduct exposed in these proceedings is, in my view, sufficient to displace that conclusion. As events have transpired, the provision for John in the Will, although significant, is not adequate for his proper maintenance and advancement in life.

584. While not in such dire straits as John, Robyn, at the age of 66, finds herself heavily indebted, with negligible resources and very poor health. Her apparently large excess of liabilities over assets is significantly reduced when it is accepted that her $2 million liability to her former husband Larry will not be called upon while she resides at Lot 276 Noosa. However, that property is subject to a significant mortgage, which she has limited capacity to repay. Dorothy recognised in life that Robyn needed her (Dorothy’s) financial help and Robyn was in a limited relationship of dependence on her mother (although far less so than John). Notwithstanding some evidence of Robyn’s hostile or discourteous conduct towards other family members, the Court is satisfied that community standards would suggest that the current provision for Robyn in the Will is not adequate provision for her proper maintenance and advancement in life. This is particularly the case given the size of the estate and the fact that for whatever reason, Robyn did not have the same opportunity as Lesley to participate in the wealth of the family businesses to which she undoubtedly contributed.

585. The conclusions I have reached above mean that the essential precondition set out in s 59(1)(c) of the Act is satisfied in both John and Robyn’s cases. Particularly in circumstances where the provision already made for John and Robyn in the Will is significant, it is worth emphasising again that what is “adequate” and “proper” is not decided in a vacuum, but depends (among other things) on the interrelation between the claimants’ needs, their capacity and resources for meeting those needs, and the available resources of the estate. Here, John and Robyn’s needs are dire, their capacity is extremely limited, and there are resources available to provide them with a degree of security and comfort which they currently lack and which the Court considers is necessary for their maintenance and advancement in life.

586. The Court is satisfied that Dorothy’s testamentary intentions were to treat John and Robyn equally so as to ensure that each be properly provided for, in terms of secure accommodation and possession of resources to guard against contingencies. The current provisions in the Will would not, on the facts as they now stand, achieve those ends (being unencumbered accommodation and some further resources).

587. Because Robyn’s case is slightly more straightforward, I will immediately deal with the question of the amount of additional provision for her. The Court accepts the submission put for Robyn that $1.2 million (in addition to receipt of the full amount of her $2 million legacy) would be adequate provision. It will enable her to pay off the mortgage over Lot 276 Noosa and her other debts. She has some independent earning capacity and her situation will be considerably improved if she is relieved from paying interest on the Lot 276 Noosa mortgage and on her credit card debt. Even if only as a matter coincidence, the Court also accepts that given the evidence shows Dorothy did try to treat her children equally, that figure is appropriately reflective of benefits given to John, and also to Lesley and Wayne.

588. The question remains as to how the balance of Robyn’s legacy and the additional provision are to be paid. At this point of the analysis two considerations have informed the Court’s proposed approach. First, proper weight should be given to Dorothy’s intentions as evidenced by the Will. This means that her broad scheme of distribution should be disturbed as little as possible (including by noting what appears to be her allocation of specific sums to each of the family groups for grandchildren and great-grandchildren). Secondly, and noting the authorities set out above (from [521]), in my view community standards would expect the resources of even a large estate to be directed to the children of Dorothy who needed help, rather than to more remote descendants. In the circumstances of this case, I am satisfied that the needs of John and Robyn must displace Dorothy’s laudable intention to benefit her grandchildren and great-grandchildren.

589. The result of those two considerations is that the resolution which is least disruptive to the overall scheme of the Will, but also recognises Dorothy’s specific allocations between family groups, is for the balance of Robyn’s legacy and the additional provision first to fall rateably on the specific gifts to Robyn’s children and grandchildren. To the extent that is inadequate, there should be a charge over half of the one-third interest in the Killara property. This was to go to Robyn and John under earlier wills. If that is still insufficient, then the balance should be paid from the Sottero account (in priority to John’s entitlement to that account as set out at [593] below). Any remaining balance should be charged against the gifts under the Will to Lesley (including the gifts to the LM Webster Irrevocable Trust).

590. In relation to John, the same considerations which informed the Court’s conclusion that inadequate provision had been made for him lead to the result that additional provision should be made for John to ensure he is debt-free, has a three bedroom apartment to live in (given, as noted in the evidence and submissions, that John and Lynne sleep in separate bedrooms and that Anthony also needs a bedroom), and has an amount for contingencies. Given John’s age and health and doing the best it can, the Court assesses $200,000 as an appropriate figure for contingencies. I do not accept the defendants’ submission that, as a matter of discretion, an order for provision should not be made where it is the creditors who will benefit. Providing funds to reduce or eliminate debt can be a very effective way to maintain and advance a person who might otherwise be close to or in bankruptcy.

591. Before coming to his other debts, the starting point must be the $881,000 amount for which the Court has found John is liable to the estate. However, the Court is also satisfied that Dorothy never intended John’s liability to “come out of his own pocket”, but rather, intended that it would be met out of John’s share of the residue. Taking that into account, and given the absence of any residue, the Court’s orders will include an order to the effect that John’s obligation to repay the debt is forgiven.

592. However, determining an actual figure for additional provision for John after the $881,000 Loan is removed from consideration is not straightforward. The evidence at trial was that his liabilities (excluding the Loan) are $2,375,640.95. However, at the conclusion of the trial there was uncertainty about what action BoQ would take in relation to the Strand Property. If John is still resident at that property, then the additional provision should include a sum to repay the Loan to BoQ so that John owns that property unencumbered. If BoQ has repossessed the Strand Property then John’s provision should include a sum for him to acquire a modest three-bedroom unit in Townsville and otherwise discharge his debts and be left with $200,000 for contingencies. If these matters cannot be agreed there may be a need for short further evidence and submissions.

593. For the same reasons as applied in relation to Robyn, the Court is of the view that the additional provision for John should be drawn first from the specific legacies to John’s children and grandchildren, then the other half of the one-third interest in the Killara Property, then any balance from the Sottero account remaining after any payment to Robyn in accordance with [589] above and, finally, to the extent necessary, be charged against the gifts under the Will to Lesley (including to the LM Webster Irrevocable Trust).

594. In directing that additional provision first come from the legacies to Dorothy’s grandchildren and great-grandchildren, the Court has not overlooked that it received evidence from some of them about their circumstances. That evidence is summarised above (from [481]). However, as I have already said, in this case their interests must yield to those of Robyn and John as Dorothy’s children. None of her grandchildren or their children claims a special relationship with Dorothy or is in need that is more acute than John and, to a slightly lesser extent, Robyn. It is also least disruptive to Dorothy’s testamentary intentions if, in the first instance, the funds she allocated to Robyn’s and John’s families are redirected to Robyn and John themselves.

595. Finally, the parties were content for the Court to make its decision on the basis of ignoring various costs liabilities between the parties and to consider all questions of costs (including of the proceedings before Sackar J) after this decision was handed down. This was a sensible recognition of the fact that the variables were too numerous to contemplate in what was already a very complex and long-running family dispute.

Conclusion and orders

596. The Court will give the parties an opportunity to consider, mindful of the need to be just, quick and cheap, what the next steps should be to finalise orders to give effect to these reasons and to resolve all questions of costs.

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Decision last updated: 23 April 2018