Wheatley v Lakshmanan

[2022] NSWSC 583

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Wheatley v Lakshmanan [2022] NSWSC 583

Hearing dates:

3-5, 10 November 2021

Date of orders:

16 May 2022

Decision date:

16 May 2022

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   In lieu of the provision made for the plaintiff under the Will of the late Dianne Victoria Lakshmanan, order that there be provision out of the deceased’s estate of a legacy in the sum of $820,000.

2.   Direct that any brief submissions on costs be filed within 14 days with a view to costs being determined on the papers if possible.

Catchwords:

SUCCESSION — Construction — Gifts — Where gift of real property made under Will — Where testatrix did not have title to the property but company of which testatrix was the sole shareholder was registered proprietor — Validity of gift

SUCCESSION — Probate and administration — Rectification of wills

SUCCESSION — Family provision — Claim by adult child

TAXES AND DUTIES — Income tax

Legislation Cited:

Companies Act 1936 (NSW)

Conveyancing Act 1919 (NSW), s 36B

Corporations Act 2001 (Cth)

Evidence Act 2005 (NSW), s 64

Income Tax Assessment Act 1936 (Cth), ss 6(1), 44, 99A, Div 7A

Land Tax Management Act 1956 (NSW), s 47

Local Government Act 1993 (NSW), s 550

Succession Act 2006 (NSW), ss 27, 32, 34, 57, 59, 60, 66, 76, 80

Trustee Act 1925 (NSW), s 81

Water Management Act 2000 (NSW), ss 173, 232, 355

Wills, Probate and Administration Act 1898 (NSW), s 29A

Cases Cited:

Anderson v Hill [2017] NSWSC 1149

Angas Law Services Pty Ltd (in liq) v Carabelas (2005) 226 CLR 507; [2005] HCA 23

Annason v Phillips (Supreme Court (NSW), Young J, 4 March 1988, unrep)

Armitage v Fraser [2020] NSWSC 979

BE Australia WD Pty Limited v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414

Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286

Cisera v Cisera Holdings Pty Ltd [2017] NSWSC 960

Coorey v George (Supreme Court (NSW), Powell J, 27 February 1986, unrep)

Fittler v Fittler [2009] NSWSC 291

Garbett v Bear [2015] NSWSC 1524

Hastings v Hastings [2010] NSWCA 197

Hendry v Perpetual Executors and Trustees Association of Australia (1961) 106 CLR 256; [1961] HCA 44

Herrman v Simon (1990) 4 ACSR 81

In re De Sommery; Colenenbier v De Sommery [1912] 2 Ch 622

In the Estate of the Late Patrick Ambrose Tunchon [2019] NSWSC 802

Ireland v Retallack (2011) 6 ASTLR 585; [2011] NSWSC 846

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

Ledgerwood v Perpetual Trustee Co Ltd (No 2) (Supreme Court (NSW), Young J, 25 August 1997, unrep)

Lemon v Mead (2017) 53 WAR 76; [2017] WASCA 215

Limberger v Limberger; Oakman v Limberger [2021] NSWSC 474

Lockrey v Ferris (2011) 8 ASTLR 529; [2011] NSWSC 179

McCosker v McCosker (1957) 97 CLR 566; [1957] HCA 82

Murdocca v Murdocca (No 2) [2002] NSWSC 505

Nicol v Chant (1909) 7 CLR 569; [1909] HCA 4

O’Brien v McCormick [2005] NSWSC 619

O’Leary v O’Leary and Eccles [2010] NSWSC 1347

Phillips v McCabe [2016] SASC 27

Poche v Poche [2020] NSWSC 835

Pontifical Society for the Propagation of Faith v Scales (1962) 107 CLR 9; [1962] HCA 19

Rawack v Spicer [2002] NSWSC 849

Re Bowcock [1968] 2 NSWR 697

Re Cobcroft [2015] NSWSC 346

Re Country Road Services Pty Limited (2019) 18 ASTLR 44; [2019] NSWSC 779

Re Duomatic [1969] 2 Ch 365

Re Estate of Dippert [2001] NSWSC 167

Re O’Callaghan [1972] VR 248

Re William MacPherson [1913] SALR 207

Riddle v Riddle (1952) 85 CLR 202; [1952] HCA 12

Salier v Watson [2014] NSWSC 237

Scott v Scott [1912] P 241, CA

Sgro v Thompson [2017] NSWCA 326

Singh v Singh (2018) 17 ASTLR 317; [2018] NSWCA 30

Squire v Squire [2019] NSWCA 90

Steiner v Strang (2019) 19 ASTLR 330; [2019] NSWCA 143

Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114

Stern v Sekers; Sekers v Sekers [2010] NSWSC 59

Taylor v Farrugia [2009] NSWSC 801

Verzar v Verzar [2013] NSWCA 170

Vescio v Bannister (2010) 3 ASTLR 619; [2010] NSWSC 1274

Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11

Walker v Walker (Supreme Court (NSW), Young J, 17 May 1996, unrep)

Watson v Foxman (1995) 49 NSWLR 315

Wilson v Porada (No 2) [2017] NSWSC 1362

Young v Outrim [2011] NSWSC 391

Texts Cited:

Bridges MJ, Hayes & Jarman’s Concise Forms of Wills with Practical Notes (13th ed, 1910, Sweet and Maxwell)

Category:

Principal judgment

Parties:

Vittoria Alexis Lakshmanan Wheatley (Plaintiff)
Regina Erin Lakshmanan (First Defendant)
Wheatley Investments Pty Ltd (Second Defendant)
Yonan Pty Ltd (Third Defendant)

Representation:

Counsel:
C Birch SC with C Hodgson (Plaintiff)
M Condon SC (Defendants)

Solicitors:
MJM Lawyers (Plaintiff)
Bridges Lawyers (Defendants)

File Number(s):

2018/0056411

Publication restriction:

Nil

Judgment

1. HER HONOUR: This is an application brought by one of the two daughters of the late Dianne Victoria Lakshmanan for construction, or in the alternative rectification, of the deceased’s last Will dated 25 August 2008 and for provision or further provision out of the estate or notional estate of the deceased (the claim for provision being maintained even if the plaintiff’s construction of the Will is found to be correct or if the Will is rectified to the same effect, though it is accepted that the amount of any such provision will necessarily be affected by the outcome of the issues as to construction and rectification of the Will).

2. By way of introduction, the plaintiff (Vittoria Alexis Lakshmanan Wheatley, known as Alexis) is the elder daughter of the deceased and the late Tirunelveli Sivagnanam Lakshmanan. The first defendant (Regina Erin Lakshmanan, known as Erin) is the younger daughter of the couple (and the executor of the deceased’s Will). Without intending any disrespect, I will generally refer to the family members by their given (or preferred) first names.

3. The issue of construction in relation to the deceased’s Will has arisen because, by cl 4 of the Will, the deceased bequeathed to Alexis a unencumbered commercial property at The Entrance, New South Wales (The Entrance Road Property). The deceased did not, however, own The Entrance Road Property. Rather, it was owned by the second defendant (Wheatley Investments Pty Ltd, to which I will refer as Wheatley Investments) of which company the deceased was from 1 November 2004 and at all material times (i.e., both at the date of the making of her Will and at the date of her death) the sole shareholder. Prior to the deceased’s death, the deceased was a director of Wheatley Investments, together with Erin. Since the deceased’s death there is a second director, one Ms Saba (see at T 15.15-19).

4. In addition to its ownership of The Entrance Road Property, Wheatley Investments has, since about 1998, owned all of the shares in Yonan Pty Limited (Yonan), the third defendant, which is the registered proprietor of another commercial property at The Entrance which features in this proceeding (the Torrens Avenue Property).

5. In the event that the gift in cl 4 fails, then it is not disputed that Alexis will not receive any provision under the Will of the deceased. There is a dispute as to whether the gift in cl 4 of the Will therefore fails but, in any event, as adverted to above, Alexis maintains that this gift alone is not sufficient provision for her. By further amended summons filed on 16 April 2019, Alexis seeks relief in relation to the Will and makes a claim for provision pursuant to s 59 of the Succession Act 2006 (NSW) (Succession Act).

6. The Entrance Road Property was sold at auction by agreement between the parties at the end of 2019. The net proceeds of sale (the sum of $1,494,652) have been retained in an account pending the resolution of this litigation. (In circumstances where The Entrance Road Property has been sold, it appears to be accepted that there is not presently a need to address the relief sought in prayers 6(c) and 6A of the further amended summons.)

7. The tax consequences flowing from the manner in which the relevant commercial properties were held before the deceased’s death have loomed large in this litigation (and have been a major cause of increased cost and delay in the litigation, as I explain in due course). Those consequences include the tax payable on the sale of The Entrance Road Property. The defendants deny that cl 4 of the Will validly operated to devise The Entrance Road Property to Alexis but they say that, if it did, there would be tax consequences to both Alexis and Wheatley Investments.

8. A joint expert retained by the parties (being a report of one Mr Greg Vale, an experienced taxation solicitor) initially concluded that a transfer of The Entrance Road Property would enliven a capital gains tax liability. At the time Mr Vale prepared his three reports (respectively dated 23 November 2018, and two reports dated 16 January 2019) (when The Entrance Road Property had not yet been sold), the current market value of The Entrance Road Property was thought to be $2.1 million. On that basis, it was said that Wheatley Investments would be liable to pay capital gains tax in the order of $262,441 (see Mr Vale’s first report at p 6). However, it was subsequently appreciated that, on the sale of the property, not only would there be a capital gain which would attract tax but also the retained profits of Wheatley Investments would be increased and, on distribution of those profits (whether to the estate or to Alexis), a further tax burden would arise.

9. The defendants say that Wheatley Investments has never had funds readily available to it to meet any such liabilities. Other than The Entrance Road Property, its only other assets of note are a debt owed to it by Yonan and the value of the shares in Yonan. Wheatley Investments is indebted to the estate in the sum of $328,918. In turn, Yonan has no assets other than the Torrens Avenue Property available to discharge any claim by Wheatley Investments to repay the debt Yonan owes to that company; and Yonan also owes money to the estate (in the order of $370,853). The defendants say that, if sold, the Torrens Avenue Property would generate a capital gains tax liability of $408,664.

10. If there is a transfer to Alexis from Wheatley Investments of the proceeds of sale of The Entrance Road Property, the advice that Alexis has now received is that a sum of $646,959 will be payable by Alexis in tax and Medicare levies (thus meaning that, of the net proceeds of sale, Alexis would receive something in the order of $820,000).

11. Pausing here, it thus appears that the total tax liability arising on the sale and distribution of the proceeds of both investment properties would be in the order of $1 million (depending on the ability to offset those amounts or to distribute part or all of the proceeds in a more tax effective way) and hence the vexed issued as between Alexis and Erin as to who should bear those liabilities.

12. Alexis’ primary position is that she seeks an order for provision in her favour as a legacy from the estate (rather than seeking to give effect to the gift in cl 4 of the Will), which would leave the tax liability on distribution of the proceeds of sale of The Entrance Road Property with the estate; but that in any event she ought not receive a sum less than that representing the proceeds of sale of The Entrance Road Property. Alexis argues that the estate is in a better position than her to ameliorate the consequences of the tax liability that arise from the fact that The Entrance Road Property was a corporate asset and not one that was owned beneficially by the deceased (see, for example, at T 9.9-23).

13. The defendants accept that, in general terms, the deceased by her Will expressed the testamentary intention that Alexis should receive The Entrance Road Property (I would add here “unencumbered” – which it was as at the date of the deceased’s death) and that Erin should receive the balance of the estate (including the deceased’s residence at Dover Heights and, through the deceased’s shareholding in Yonan, the Torrens Avenue Property). The defendants point to a draft email found on the deceased’s computer after her death in which the rationale for such testamentary dispositions was expressed, namely that the Dover Heights Property should be Erin’s home (having regard, among other things, to Erin’s fondness for that property) and that the Torrens Avenue Property should generate (through rental income) sufficient funds to defray the cost to Erin of maintaining the Dover Heights Property and to pay down the debts previously secured over the commercial properties owned by Wheatley Investments and Yonan (which together amount to around $1 million). The email is in the following terms:

…

1) house and contents to Erin (Regina Erin Lakshmanan)

Shares in Yonan to Erin

2) shares in Wheatley to Alexis (Vittoria Alexis Wheatley)

All debts – personal and properties to be taken over by Erin’s share

Personal monies in bank after funeral/death costs/personal debts are paid -to be divided equally

Erin is executor – in event of her predeceasing me then joint executors Alexis and Kelly Zambelli

If either Alexis or Erin deceased then their respective shares go to their children in in trust until age of 25 yrs or accessible for education/health/living expenses

…

It is my wish that Erin has this home in Australia always

…

14. However, notwithstanding that the defendants accept that it was the deceased’s intention that The Entrance Road Property pass to Alexis, they maintain that cl 4 of the Will is ineffective to do so (since it was not within the deceased’s power to bequeathe something that she did not own). The defendants say that there is no evidence capable of giving rise to rectification of the Will as the plaintiff contends (as there is nothing to suggest that the deceased intended to augment the powers of her executor); and that, in all the circumstances, adequate provision was made for Alexis during the deceased’s lifetime (by the provision of substantial gifts including money for share trading that it is said constituted the provision to Alexis of an early inheritance) or at most there should be modest provision for Alexis.

15. Further, the defendants note that in March 2019 Erin offered to pay Alexis a sum which represents (after tax) the net proceeds of sale of The Entrance Road Property, which offer (made on an open basis) was rejected by Alexis. It is said that Alexis’ claim in this proceeding has been motivated by an inappropriate desire to achieve parity in relation to the distribution of the deceased’s assets. I address the evidentiary basis for this submission in due course. However, I note at this point that Alexis made clear both in her Counsel’s opening submissions and in her oral evidence that she does not now make a claim to receive half of the estate (though candidly conceding her disappointment at the deceased’s Will); rather, Alexis seeks an amount which she says would represent the gift the deceased intended her to receive and a “top-up”, in the order in total of around $1.8 million to $2.1 million (see T 10.45-50; T 11.1-27; T 42.37-50; T 43.1-10). As adverted to above, Alexis seeks this as a legacy, which would place the relevant tax burden in relation to the sale of The Entrance Road Property largely (if not wholly) on the estate. (I say, if not wholly, because it is contended for Alexis that if she receives the net proceeds of sale of The Entrance Road Property she will in effect have borne the capital gains tax that was paid by Wheatley Investments out of the proceeds of sale – see T 275.29-36.)

16. The defendants, for their part, in opening oral submissions through their Counsel made clear that they does not say that Alexis was not entitled to anything (see T 17.36-39) but the defendants have complained that the costs that have been incurred are disproportionate to the issues in dispute (a complaint which has no little force in my view) and that those should be taken into account.

Background

17. The deceased died in February 2017 aged 65. The deceased was survived by her two children, Alexis (who was born in 1977) and Erin (who was born in 1980). Alexis is married to Frank Maurizi who was born in 1970. Alexis and Frank have no children but wish to do so (Alexis believes that to do so it will probably involve in vitro fertilisation) or to adopt or foster a child. Erin is married to Jesse Boyle. They presently live in the United States of America and have one child who was born in 2020.

18. The deceased’s husband died on 1 January 2010. There is evidence that the marriage between the deceased and her husband (the father of Alexis and Erin) was troubled. Erin has described the marriage as “physically, emotionally and financially abusive” (see Erin’s affidavit sworn 8 May 2018 at [8]); and in 2011, in proceedings involving the estate of their late father (brought by their stepmother) both Alexis and Erin gave evidence to that effect (as indeed did the deceased). In that earlier proceeding (the 2010 proceeding), Erin deposed that it took around 15 years for her father to “admit fault for the psychological trauma he caused my sister [Alexis] in childhood, and for which she still undergoes counselling. … she suffers terribly as a result of this” (see Erin’s affidavit in the 2010 proceeding sworn 3 May 2011 at [24], being a document contained in Ex A). Erin also gave evidence in the 2010 proceeding that she suffered from chronic fatigue syndrome which was substantially worsened by the breakdown of the parents’ marriage (see Erin’s affidavit sworn 3 May 2011 at [25]) and in this proceeding gave evidence of an abusive domestic relationship between her parents (see at [80] of Erin’s affidavit sworn 8 May 2019).

19. The deceased and her husband separated in 1988 and were divorced not long after that. The deceased never remarried and was not in a de facto relationship at the time of her death.

Dover Heights Property

20. Prior to the deceased’s marriage, the deceased had acquired (with financial assistance from her parents who made a gift of the deposit to the Wheatley Family Trust and lent the whole of the remaining balance (see Ex 4, p 1-2)) a property at Dover Heights (the Dover Heights Property) where she lived until her marriage. After their marriage, the deceased and her husband lived first at Lugarno and then at what became their family home at Strathfield (the Dover Heights Property being rented out during that period).

21. After the separation and divorce in 1988 of their parents, Alexis and Erin lived with the deceased at the family home in Strathfield until about 1998 when they moved to the Dover Heights Property (the daughters both by then being at university). The deceased remained living at, and was the sole registered proprietor of, the Dover Heights Property until her death.

22. The Strathfield Property was sold at some stage for about $1 million.

23. The deceased and her two daughters lived at the Dover Heights Property until Alexis left home, at the age of 27, at or around the time of her marriage to her husband, Frank Maurizi, which took place in May 2007. Erin lived at the Dover Heights Property until she moved to the United States of America for work in about 2008.

Properties at The Entrance and Torrens Avenue

24. The Entrance Road Property and the Torrens Avenue Property, to which I have referred above, were commercial properties purchased during the life of the deceased’s parents (together with a property at Newport that does not relevantly feature in this proceeding). It was said in submissions that the acquisitions of the respective properties were funded from the two shoe shop businesses that had been operated by the deceased’s parents. At some stage there were separate loans secured over each of those properties. The Entrance Road Property was held in the name of Wheatley Investments; the Torrens Avenue Property in the name of Yonan.

The 1988 Will

25. In 1988, the deceased made a Will leaving her estate equally to her two daughters. (The next Will that is in evidence is one that was made in 2005 – see below.)

Discussions regarding the deceased’s testamentary intentions in 1998

26. Both parties give evidence of conversations with the deceased at or about the time of the move to the Dover Heights Property (in 1998) as to the deceased’s testamentary intentions.

27. Alexis deposes that, in a conversation with the deceased shortly after the move to the Dover Heights Property in 1998, her mother asked whether she (Alexis) would prefer to receive as her inheritance the Dover Heights Property or the investment properties (i.e., The Entrance Road Property and the Torrens Avenue Property). Alexis has deposed that she said she was content if the Dover Heights Property went to her sister (Erin) and she received the investment properties (see at [24] of Alexis’ affidavit sworn 24 January 2018). Alexis has further deposed that the deceased repeated that representation on other occasions over the years (see at [73], [79] and [86] of Alexis’ affidavit sworn 25 January 2018).

28. Erin, on the other hand, gives evidence of a conversation in mid-1998 at the Strathfield house (i.e., before the move to the Dover Heights Property) in which she says that the deceased promised the Dover Heights Property to her, together with the Torrens Ave Property, and said that she would leave Alexis The Entrance Road Property (see at [27] of Erin’s affidavit sworn 8 May 2018). Erin says that the issue was again raised in a conversation after the sale of the Strathfield property (see at [30]) and on other occasions (see at [34]).

29. Pausing here, Alexis emphasises that (on Erin’s account of the conversation with the deceased as to this testamentary distribution) the deceased “justified” the distribution of assets on the ground that Alexis had asked for and was to be given an advance on her inheritance, which Alexis submits indicates a recognition that the proposed testamentary distribution was not an equal distribution and called for some justification. Alexis notes that her (i.e., Alexis’) account of the conversation in 1998 is corroborated by Ms Josephine Sattler, the deceased’s cousin (see at [6] of Ms Sattler’s affidavit affirmed 14 May 2018). Ms Sattler was cross-examined on that conversation and was confident of her recollection (see below). Ms Sattler recalled the conversation as occurring on the back balcony of the Dover Heights Property on Boxing Day one year, shortly after the yacht race (T 149.19-31).

Share trading moneys

30. Erin’s evidence is that the deceased told her in about 1998 that she had given Alexis some of her inheritance at that time so that Alexis could trade shares full-time. Erin has deposed (in her affidavit sworn 8 May 2018 at [30]) that, later that year or in early 1999, the deceased had a conversation with Alexis and her, in which words to the following effect were said:

Dianne:    Erin, now that the house has been sold, I’m going to give Alexis part of her inheritance now like we discussed. As you know, you’ll get more financial benefit later on.

…

Dianne:    Alexi, as we discussed I want to be clear that you have the choice between a large deposit on a home now or the money for trading shares. I’d like to see you have a house, but you’re twenty-one and it’s your decision. You can use the rental income from the home to pay for the mortgage and get a job, while still living with us. Or, I can give you the money for trading shares and you can be self-employed. Either way, you understand that you’re receiving this part of your inheritance now and you’ll have Westpac [i.e., The Entrance Road Property] when I’m gone. Erin will have Dover Heights and [the] DOCS [property]. [i.e., the Torrens Avenue Property]

Alexis:   Thanks Mum. I’ve wanted to invest more shares but didn’t have savings. I know I can grow the value over time much quicker than a house would appreciate in value. So I really do want the money now. I understand then Erin and I will each have one commercial property, even if you need to sell Newport.

Dianne:    Ok, then I’ll give you the money for trading shares. You can trade through the [Wheatley Family] Trust since I know you don’t want anything in your name directly. I don’t want you to trade anything risky, please just start with blue chip stocks. If you lose the money, it won’t be replaced from Erin’s inheritance share.

Alexis:    I know. I have a few companies including BHP and TAB that I’m ready to invest in now. Can I set up an account at Hartley Poynton so I can get started?

31. There are bank records of one of the deceased’s companies, Doiho Pty Ltd (Doiho), which record that amounts totalling $145,061.47 were paid to stockbrokers in February 1999. Erin says that it is likely that (contrary to Alexis’ evidence) none of that money represented the re-investment of proceeds of sale of earlier transactions (noting that the first three cheques were drawn in quick succession on 1 February, 3 February and 6 February 1999; and it being said that, no doubt, the cheques had to clear before the trades could begin).

32. The above is relevant as it is the defendants’ contention that this amounted to an early share of Alexis’ inheritance (which Alexis denies).

33. Alexis says that the deceased asked her (since Alexis was trading in shares at the time) if Alexis would look after the deceased’s share trading for her and said that she (Alexis) could trade through the Wheatley Family Trust (a request to which Alexis said she acceded but which she now greatly regrets; as it is a source of much guilt on her part that the deceased lost money through the share trading carried on by Alexis at the time of the “tech wreck” in about March 2000 – see T 113.5-18). As to the share trading, Alexis said she was struggling with her memory (T 114.4-5) but insisted she felt guilty to this day at the share losses (T 113.5-10).

34. Alexis submits that it is highly improbable that the deceased said to Alexis that she was advancing to her part of her inheritance in or about 1998, or at any later date. In this regard, Alexis notes that the accounts for the trustee of the Wheatley Family Trust (Wheatley Investments) are in evidence from 2001 onwards. It is said that there is no dispute that Alexis traded shares on behalf of that trustee in the years immediately preceding the 2000 market crash (the “tech wreck”), and traded on for some while afterwards. It is noted that the accounts of Wheatley Investments show share trading losses as having been incurred on the account of the company itself; and that they were brought to account on the company’s profit and loss account, thereby reducing any potential tax liabilities of the trustee.

35. Alexis submits that the obvious way (if the moneys being share traded had been advanced to her personally without a transfer to her in specie) that any share trading moneys would have been advanced to her personally would have been without them actually being paid i.e., that there would have been an unpaid present entitlement or “UPE” and that this would be recorded as a beneficiary loan; whereas the only beneficiary loan in favour of Alexis shown in the accounts was a beneficiary loan account in the sum of $4,900.00 which remained unaltered throughout all the accounts in evidence from 2001 to 2006.

36. Alexis further says that, if the deceased had intended to advance a portion of her inheritance to her (Alexis), then the deceased presumably would have informed her accountant that she had made such a gift through the Wheatley Family Trust and the accounts would have been prepared in a quite different fashion.

37. It is noted that there is no Will in evidence in the period from 1998 to 2001 that reflects a decision by the deceased to advance a part of Alexis’ inheritance; and no document, either from the deceased or from any solicitors or lawyers that she instructed, that makes any reference to an early advancement to Alexis of part of her inheritance.

38. Alexis says that the only basis for the contention as to an advancement of inheritance lies in the testimony of Erin and Erin’s former boyfriend (Mr Dimitris Nikolopoulos) who says he recalls a conversation in around 1999 in which the deceased referred to Alexis getting an advancement (see Mr Nikolopoulos’ affidavit sworn 27 September 2018 at [5], and see below). Alexis points out that later in that affidavit Mr Nikolopoulos refers to further conversations about the deceased’s testamentary intentions, in which the other reasons given for the dispositions in the Will (see [9] and [14] of Mr Nikolopoulos’ affidavit sworn 27 September 2018) do not refer to an advance of inheritance.

39. Alexis also refers to the consultation by the deceased with solicitors, Kells, in 2011 (see below) and the absence of any reference to this advancement in the draft will then prepared by Kells or Kells’ letter of advice at the time; or in the 23 January 2015 emails (also see below), which Alexis says point against the contention that there was such an advance.

40. Pausing here, it logically follows that, if the moneys for share trading were not advanced to Alexis as an early inheritance, then the loss of those moneys would be relevant when considering Alexis’ contribution to the deceased’s estate that being one of the factors relevant to be taken into account when considering the family provision claim (see below), since it is not disputed that large losses were made on the share trading (for which Alexis has expressed a feeling of guilt albeit that Alexis also says that some of those losses were recouped during continued trading).

Companies controlled by the deceased

41. From 23 January 1998 to 23 July 2007, Alexis was a director and secretary of various companies which were owned or indirectly controlled by the deceased (Wheatley Investments, Yonan and Doiho). Alexis was removed as a director of those companies in 2007 at around the time of her marriage to Frank. There was a suggestion in Erin’s affidavit evidence that this was because Alexis had commenced business as a financial planner but in cross-examination (see T 195.45-50) Erin was not sure of any such causal connection. There is also some doubt as to when Alexis commenced full-time employment (Erin contending that this was in 2006 and relying on unsigned tax returns found in the deceased’s papers at the Dover Heights Property after her death) which do not disclose any significant taxable income for Alexis in the period 2001 to 2006; Alexis contenting it was in around 2009. Pausing here, Alexis objected to the admission into evidence of these unsigned tax records and I do not here rely upon them. I simply note Alexis’ concession that, for the period prior to commencement of full-time employment, the only person to whom she would have looked for financial support was the deceased (see T 120.7-49, 121.1-49, 128.47-50).

The 2005 Will

42. In 2005, the deceased executed a Will which, in substance, provided for: Erin to receive the Dover Heights Property and the deceased’s interest in Yonan “including but not limited to” the Torrens Avenue Property “to do with as she sees fit”; Alexis to receive the deceased’s interest in Wheatley Investments, including The Entrance Road Property; and for the two daughters to share the residue. Alexis was to receive the deceased’s interest in Doiho under this Will.

43. Alexis says that the likely catalyst for the making of the 2005 Will was her engagement in that year to Frank, noting that Erin gives evidence of conversations in which Erin was critical of Frank and that the deceased was critical of both Frank and Alexis, accusing them of being untrustworthy and simply after her money (see Erin’s affidavit sworn 8 May 2018 at [47]). Alexis says that, whether or not the deceased was as critical of Frank and herself as the conversations deposed to by Erin would suggest, there is no suggestion that Frank (or Alexis herself) did anything that was dishonest, unfair, unreasonable or would otherwise have given any reasonable person a basis for concluding that he (or she) was not to be trusted; that there is a factual dispute as to the suggestion that Alexis treated the deceased as a “piggy bank”; and that the emails exchanged between Alexis and the deceased suggest a less critical attitude on the deceased’s part than the conversations to which Erin deposes suggest (referring, by way of example, to the emails at exhibited at Ex AW1, AW2, AW3 and AW4 to Alexis’ affidavit sworn 17 August 2018). Further, Alexis refers to the guarantees that she gave to assist the deceased and to her making the deceased the beneficiary of a life insurance policy, as matters pointing to her financial assistance to the deceased (see below).

44. Alexis points out that the Will executed by the deceased in March 2005 suffered from a number of drafting defects -– seeking to leave the deceased’s interest in Yonan (which was in fact held by Wheatley Investments) to Erin and purporting to leave to Alexis the deceased’s interest in Wheatley Investments (not apparently recognising that this carried with it the interest in Yonan and, through Yonan, the Torrens Avenue Property).

Guarantees provided by Alexis

45. Alexis gives evidence of her assistance to the deceased over the years in relation to the deceased’s business interests, referring in particular to a guarantee given by Alexis of a line of credit provided by the Commonwealth Bank of Australia (CBA) to Yonan in the sum of $120,000 in 2004 and a loan from Challenger Managed Investments Pty Ltd to Wheatley Investments in 2006 in the sum of $500,000 (see at [26]-[29] of Alexis’ affidavit sworn 24 January 2018). Alexis also guaranteed a loan to Yonan and Doiho from about 1998 until late November 2013 (see at [30] of Alexis’ affidavit sworn 24 January 2018).

46. In cross-examination, Alexis said that, had she known that the deceased was not going to leave her the Torrens Avenue Property, she would not have provided a guarantee in respect of that commercial property (see T 109.29-48) and that the risk of that guarantee (discharged when the loan was refinanced in 2013) was a great stress to her.

The March 2007 Will

47. The deceased executed a Will on 9 March 2007 which was in materially the same terms concerning the gifts to Erin and Alexis as was the 2005 Will.

48. The copy of the 9 March 2007 Will in evidence contains handwritten amendments, including the word “unencumbered” in cl 4 and adding reference to cl 5 to the deceased’s estate, as opposed simply to the Torrens Avenue Property, in the clause by which the deceased “instruct[s] [her] executor to take out a mortgage over any real property in [her] estate for the purpose of discharging any mortgage at the date of [her] death over the real property situate at […] The Entrance Road”.

49. Alexis says that the 2007 Will only cured the defects of the 2005 Will by creating fresh ones (purporting to be a direct gift of The Entrance Road Property, while in effect giving the balance of the estate to Erin). It is noted that the March 2007 Will was made shortly before Alexis’ marriage in May 2007.

Alexis’ marriage in 2007

50. As noted above, Alexis was married in May 2007. It is not disputed that there was some tension between Alexis and the deceased at around the time of Alexis’ marriage. Alexis accepts that her relationship with the deceased was fractured from then until 2008. The cause of this is a matter of some dispute as between Alexis and Erin.

51. Alexis says that the tension arose from her father being permitted to attend her wedding, perhaps together with a friend of his in relation to whom there was an allegation of some sexual assault upon Erin. However, Alexis says that she did not know the name of the person alleged to have assaulted Erin (see [41]-[50] of Alexis’ affidavit sworn 24 January 2018) and says that this was conveyed to her only by the deceased. (Alexis, somewhat tellingly, says that she and Erin were not on speaking terms at the time – see T 56.26-30.)

52. Erin, on the other hand, gives evidence as to additional reasons for the deceased being upset with Alexis at this time (those being as to the deceased not being involved in the wedding preparations; the deceased being asked to pay for the honeymoon; the deceased not being acknowledged in the speeches at the wedding; and as to issues as to the gifts provided to Alexis and Frank by the deceased and the daughters’ father respectively (see at [58]-[59] of Erin’s affidavit sworn 8 May 2018 and T 198.7-43)).

The deceased’s last Will dated 25 August 2008

53. The deceased’s last Will (probate of which was granted to Erin on 29 August 2017) was dated 25 August 2008.

54. The 2008 Will repeated the structure of the 2007 Will, but provided an alternative executor should Erin not have survived the deceased. It provided that the gift of The Entrance Road Property was to be unencumbered (and made some other minor changes that are not here relevant).

55. The Will was prepared by a solicitor, Mr Joe Ryan (whose file in regard to the preparation of the Will was obtained and made available to both parties and relevant extracts from which, including Mr Ryan’s notes, are annexed to the affidavit of Alexis’ solicitor – see Ms Money’s affidavit sworn 23 October 2019 at [2]-[3]). Erin’s evidence is that she accompanied the deceased to Mr Ryan’s office although she was present only for part of the discussion on that occasion.

56. Clause 4 of the Will, which is the subject of the application for construction, provides:

4.   I GIVE DEVISE AND BEQUEATH the property situate at …The Entrance Road, The Entrance in the State aforesaid, unencumbered, to my daughter VITTORIA ALEXIS WHEATLEY for her sole benefit absolutely, to be placed into a trust or superannuation fund of her choice.

57. Clause 5 of the Will provides:

5.    I INSTRUCT my executor to take out a mortgage over any real property in my estate for the purposes of discharging any mortgage at the date of my death over the real property situate at … The Entrance Road, The Entrance in the State aforesaid.

58. The deceased gave the rest and residue of her estate to Erin (see cl 6).

59. Clause 9 of the Will provides that:

I DECLARE that my trustee shall have the following powers:

(a)    To apply for the maintenance education advancement or benefit of any beneficiary under the age of twenty-three years as she shall think fit the whole or any part of the capital or income of that part of my estate to which that beneficiary is entitled or may in future be entitled and on becoming absolutely entitled my trustee shall bring into account any payments received under this clause and to pay same to the guardian or guardians of such beneficiary without being responsible to see to its application.

(b)    To sell lease exchange or otherwise dispose of assets in my estate on such terms as my trustee considers expedient as though she was the absolute beneficial owner and to retain any investment made by me prior to my death in the same form for any period without being responsible for loss.

60. Alexis points out that there is nothing in Mr Ryan’s file that adverts to the fact that The Entrance Road Property was held by Wheatley Investments. (Alexis’ solicitor has attempted to locate the witnesses to the Will but searches have failed to locate them – see affidavit of Mr Andrew Gill affirmed 23 October 2019 at [2]-[8].) Mr Ryan has ceased practice as a solicitor and attempts to obtain information from him as to the instructions for the drafting of the Will have proved unsuccessful.

61. The defendants contend that in consequence of the events around Alexis’ wedding, the deceased remained angry and distant from Alexis for some years (see at [60] and [66] of Erin’s affidavit sworn 8 May 2018) and that the deceased resolved in August 2008 to disinherit Alexis (see at [70] of Erin’s affidavit sworn 8 May 2018). Erin deposes (at [71] of that affidavit) that, during the interview with Mr Ryan in August 2008, the deceased said that she did not want Alexis to inherit anything, that she had been ungrateful and that enough provision had been made already for her over the course of her life. When questioned about this in re-examination, Erin said that what was there being referred to was the payment of school fees, university expenses and support while Alexis was living at home (see T 234.1-13). (Alexis points out that this was precisely the nature of the provision that the deceased had also made for Erin (reference being made to [51] of the deceased’s affidavit in the 2010 proceeding to which I refer below).)

60. Erin’s account of the deceased being angry with Alexis and threatening to disinherit her is corroborated by the account of the deceased’s cousin, Ms Sattler. Ms Sattler, in cross-examination, gave evidence of conversations with the deceased not long before her death in which she said the deceased had spoken of changing her Will “to have everything fair” and referred to having been angry with Alexis after she had got married when she had made the 2008 Will (T 149.45ff).

61. Alexis’ evidence is that at the beginning of 2009 Alexis commenced her own business as a financial planner. In addition to that, more recently Alexis has taught as a casual part-time teacher at TAFE NSW (teaching a course in financial planning). Alexis says that her ability to work has been affected over the years by anxiety and occasional bouts of depression (as I explain in due course).

Insurance policy

64. On 16 April 2010, Alexis took out a life insurance policy over herself in the sum of $600,000 making the deceased the beneficiary for the purpose she says that there would be a financial benefit to her mother which would enable her to pay out at least one of the company loans should Alexis predecease her (see at [39] of Alexis’ affidavit sworn 24 January 2018).

2010 proceedings in relation to late father’s estate

65. As noted above, the deceased’s ex-husband died on 1 January 2010. His second wife brought proceedings in this Court in 2010 (2010/368014) (the 2010 proceeding) claiming further provision out of the estate. Those proceedings are relevant for at least two reasons: first, having regard to various of the matters to which Alexis and Erin deposed in affidavits read in those proceedings; and second, because this provides some context to statements later made by the deceased foreshadowing potential challenges to her own Will (in that the deceased had obviously by then had the experience of seeing her late husband’s testamentary dispositions having been the subject of challenge by way of his widow’s claim for provision).

2011 instructions to Kells for draft will

66. In 2011, as adverted to above, the deceased approached a firm of solicitors (Kells) for advice in relation to her Will. A draft will was prepared (which the defendants say can be assumed to record the deceased’s instructions at that time), which provided for Erin to receive the Dover Heights Property and the Torrens Avenue Property.

67. Kells’ letter of advice dated 11 July 2011 foreshadowed the possibility of a contest over the Will, including if Erin was a surviving joint tenant in respect of the Dover Heights Property. For Alexis, it is said that it is reasonable to infer from that letter that specific advice had been sought as to the manner in which the deceased’s estate might be made immune from challenge. (That may or may not be the case. It is conceivable that this was simply advice proffered by experienced estate lawyers. In any event, little turns on this.)

68. Alexis emphasises that neither in that draft will nor in the Kells’ letter of advice is there any mention that she (Alexis) had been advanced a portion of her inheritance. It is submitted (and there is some force to this) that, had there been instructions given of an advancement, it would be probable that Kells would have either included a provision or statement in the draft will recording the advance, or advised the deceased that she was entitled to make a s 100 statement explaining the provisions of her Will. Alexis submits that the likelihood is that the absence of such reference is because the deceased never advised Kells that she had made such an advancement (and it is submitted that this is because the deceased never considered that the share trading losses incurred by Alexis trading on the account of Wheatley Investments were an advance).

Refinancing of loans secured over investment properties

69. On 12 September 2013, Alexis made arrangements for the investment loans to both Wheatley Investments and Yonan (totalling $1,118,000) to be refinanced. Alexis says that the restructuring provided a financial benefit to the deceased for which the deceased expressed gratitude to Alexis (see Alexis’ affidavit sworn 24 January 2018 at [32]-[34]).

70. By letter dated 28 July 2013, (see at Ex 10 p 265ff) Alexis wrote to the deceased on the letterhead of Alexis’ financial planning company, Wheatley Management Pty Ltd (Wheatley Management) in relation to the investment loans, including that:

As the loan term extends until you are 92, we have discussed the sale of the properties over time in order to discharge the loans.

71. Pausing here, the defendants submit that the suggestion that the investment properties might be sold over time to discharge the loans is inconsistent with the deceased having promised to leave both those properties to Alexis. In cross-examination, when asked what properties were there being referred to, Alexis’ position was that there were only three properties to which this could have referred (the Dover Heights Property and the two investment properties).

72. Alexis accepted that she understood it was the deceased’s wish to remain in the Dover Heights Property for the rest of her life – T 54.42-44; but insisted that Alexis would have discussed with the deceased the possibility that the bank might force the sale of the Dover Heights Property if the loan was not repaid, saying that it was a requirement of the bank that she provide such an explanation (see at T 53.46-50, 54.23-43). Alexis seemed to cavil with the proposition that this was financial planning advice. However, as noted, the letter was on Wheatley Management letterhead.

73. The effect of the refinancing was that the investment properties were then no longer encumbered by the mortgage and, instead, the Dover Heights Property was security for those loans.

Emails recording the deceased’s testamentary intentions

74. In a series of emails to Erin with the subject line “keep this”, the deceased expressed her testamentary intentions to Erin.

75. By email on 23 January 2015, the deceased wrote to Erin that:

My home and the situ of it holds special value to you and me – Alexis does not share this value and would prefer harbour Side – the value of assets bequeathed to her would enable sizeable deposit with income …

…

Alexis and her husband have paid off their unit yrs ago and since then have not saved or invested for their future (in property) – with no children to support and no mortgage to maintain

Alexis’ inheritance will be more than sufficient to enhance her life style [sic] and provide a “stepping stone” to go further

…

76. The 23 January 2015 email also included the following:

Again I will try to separate the two companies so that Alexis will inherit the Wheatley Investments with holdings of property at 173-175 The Entrance Rd only and you will inherit Yonan company with holdings at 26 Torrens ave- as in previous wills you will also inherit my home at 26 Wentworth St Dover Heights – I will be endeavouring to put shares of this into your name – at present I am unable to do this as all properties/companies held under this mortgage

…

Your inheritance would enable you to have a home in aust that you love and income for support.

77. The defendants submit that this reiterates the deceased’s long held intention to bequeath to Erin both the Torrens Avenue Property and the Dover Heights Property, and significance is attached to the fact that the deceased had evidently told four other persons of her wishes (being “Bid/Kelly/Trevor/Marg”) and that she requested Erin to keep the email “for future – if problems arise”.

78. It is submitted for the defendants that those concluding words indicate that the deceased had given considerable thought to her testamentary wishes, including the possibility that Alexis would challenge her Will (and that caution is hence justified before disturbing the deceased’s views, particularly when they have been consistently held over an extended period).

79. Further, in an email of 24 January 2015 at 12.39am, the deceased expressed to Erin that she would “also be putting a clause (will) that anyone contesting shall be disinherited” and that “[a]ny lawyer contesting [her] wishes [were] not to receive any monies from [her] estate”. At 12.47am, the deceased sent a further email clarifying that she intended to insert a clause in her will that “ALL costs incurred shall be borne by the person contesting”.

80. The deceased’s first email of 23 January 2015 was followed by two others that night; the first of which, sent at 10.53pm, expressed the deceased’s thanks for Erin’s loyalty, which the deceased wrote meant “more to [the deceased] than [Erin would] ever know”.

81. Alexis accepts that the first email from the deceased to Erin on 23 January 2015 appears to have been sent with the purpose of recording the reasons for the dispositions in the deceased’s Will. Alexis says that this email suggests that the then existing Will was based upon the deceased’s perception that Alexis had lesser need than Erin because she did not have children, that Erin deserved to be rewarded for having worked hard to get ahead, and that, from the further email sent several minutes later, it is also clear that the deceased highly valued the loyalty she believed had been shown to her by Erin in contrast with the conduct of Alexis. Alexis points out that nowhere in those two emails is there any reference to there having been an advancement to Alexis of an inheritance, although she says this would have been highly pertinent if it was the real reason for the distribution. Alexis argues that, if this issue was being repeatedly raised by the deceased orally, then one would expect also to see it raised in one or more of the emails.

Proposed change to shareholding in Yonan and the separation of the companies

82. On 18 November 2015, the deceased sent an email to Erin noting efforts to change the shareholding in Yonan “so that it will be one share each for us”. (Thus, Erin says, the deceased here reiterated her testamentary scheme.)

83. On 15 May 2016, the deceased sent an email noting that her accountant (Mr George Koletti) had still not “transferred shares” and foreshadowed seeing him to ascertain the problem.

84. On 17 February 2017, the deceased sent an email to Erin that she was shortly to “hear back from [a] specialist lawyer as to the separating of companies”.

Draft (unsent) email dated 17 February 2017 on deceased’s computer

85. As noted above, on the deceased’s computer was a draft (unsent) email dated 17 February 2017 to a solicitor, Ms Penelope Robinson, which stated:

Assets – 3

House

Shares in Yonan Pty Ltd

Shares in Wheatley Investments Pty Ltd

1) house and contents to Erin (Regina Erin Lakshmanan)

Shares in Yonan to Erin

2) shares in Wheatley to Alexis (Vittoria Alexis Wheatley)

All debts – personal and properties to be taken over by Erin’s share

Personal monies in bank after funeral/ death costs / personal debts are paid – to be divided equally

Erin is executor – in event of her predeceasing me then joint executors Alexis and Kelly Zambelli

If either Alexis or Erin deceased then their respective shares to go to their children in trust until age of 25 yrs or accessible for education/ health / living expenses

Property at [the Dover Heights Property] be kept intact.

In event that either predecease me without having children then all holdings go to survivor.

Added notes for 2nd page of will – to be used in the event of dispute

It is my wish that Erin has this home in Australia always

Both will have sufficient income from properties debt free

It may take a number of yrs for Erin to be debt free and will need (Yonan) ownership shares to pay for this whereas Alexis would have no debt immediately and can enjoy her inheritance.

Further, if she chooses – can use inheritance to cover ongoing mortgage costs of another home in an area of preference and still maintain an asset.

86. The defendants place no little emphasis on this email. It is said that not only does this email reiterate the deceased’s consistent view but it also records part of the deceased’s reasoning for it. It is said that the concluding paragraphs of the email disclose that the deceased had given careful thought (free of rancour) about her daughters’ respective positions.

87. The defendants further say that this email corroborates Jesse’s evidence of what the deceased told him in September 2016 (see at [7] of Mr Boyle’s affidavit sworn 10 January 2019), namely that:

I want your family and Erin to hold on to its Australian roots. I want to give Erin my home [at Dover Heights] so that she has a base in Australia and can keep coming back.

88. Jesse has deposed (at [7] of his 10 January 2019 affidavit) that the deceased also said:

I know that maintaining an older house of that nature will be expensive, so I want to leave one of the commercial properties to provide income to support that effort. I want the house to be a place for Erin and your family to call home, and to not have to worry about the financial aspects around it. The other investment property would go to Alexis.

89. The defendants also refer to the evidence of Ms Margaret Cole (a close friend of the deceased for more than a decade prior to her death) that the deceased told her in the year or two preceding her death that she wanted to sort out her will “to ensure that Erin is looked after, and there is no interference from Lexi” (see at [5] of Ms Cole’s affidavit sworn 17 August 2018); and to the evidence of Mr Nikolopoulos, which it is said corroborates that Alexis had received an advancement of her inheritance “to play the stock market” and that the deceased’s long held desire was that Erin receive both the Dover Heights Property and the Torrens Avenue Property (see at [5] of Mr Nikolopoulos’ affidavit sworn 27 September 2018).

90. The defendants say that the evidence of the witnesses called by Alexis on this topic is insubstantial. It is noted that Frank never heard the deceased speak directly about her testamentary intentions and, to the extent that Alexis spoke about the issue, it was in the context of the investment properties being her “superannuation” (though in cross-examination Alexis denied that she had ever viewed these properties in that way). The defendants refer to the following exchange in Alexis’ cross-examination (at T 119.28-37):

Q.     You have never seen ‑ can I suggest ‑ the properties at the Torrens Avenue and The Entrance as any form of superannuation; you’ve never described it in those terms, have you?

A.     No.  I didn’t expect my mother to die until well after I was retired, so why would I?

Q.     All I’m saying to you, and I think I understand your answer:  you have never regarded or described these properties as a form of superannuation; is that right?

A.     No.

91. Alexis’ contention, however, is that the deceased wished her to have both the Torrens Avenue Property and The Entrance Road Property; whereas the defendants contend that the deceased intended that Alexis receive only The Entrance Road Property.

Commencement of the proceeding

92. As noted above, the deceased died in late February 2017.

93. By letter dated 5 September 2017, Alexis’ solicitors communicated their position that, on the proper construction of the Will, the executor (Erin) was obliged to use her powers to give effect to the gift of The Entrance Road Property held by Wheatley Investments, referring to the decision of Pembroke J in Ireland v Retallack (2011) 6 ASTLR 585; [2011] NSWSC 846 (Ireland v Retallack). The defendants’ solicitor responded the same day, contending that Ireland v Retallack was distinguishable on the basis that it involved a will containing an express clause conveying to the executors directions to reduce into possession an asset not owned by the testator; and, as such a clause did not exist in the deceased’s Will, the gift accordingly failed.

94. The defendants’ solicitors in that communication advised that their client (Erin) did not intend to transfer The Entrance Road Property into Alexis’ name “particularly having regard to what you say about her intention to make a family provision claim”.

95. The present proceeding was commenced by summons filed 20 February 2018. Pursuant to a direction by Hallen J made on 14 September 2018, Alexis’ lawyers confirmed that she would be pursuing a claim for provision even if the Will was rectified.

96. In an email dated 5 December 2018 to her accountant, Mr John Dymond, Alexis stated:

My sister has clearly been left the house in Mum’s will. It’s my objective to secure the remainder (and hopefully force her to take the company loans which are secured on the houses).

In cross-examination, Alexis disputed that this statement reflected her thinking at the time (see at T 43.12-44); but, if so, it leaves unexplained why Alexis would have expressed that view.

97. I note that Mr Nikolopoulos has deposed that Alexis said to him words to the effect that “I’m not going to rest until I get half of everything of mum’s estate” (see at [18] of Mr Nikolopoulos’ affidavit sworn 27 September 2018). Alexis in cross-examination said she did not remember saying this and did not think she would have (T 108.19-30) even though I note that a very similar intention was expressed in her own email to Mr Dymond. Mr Nikolopoulos also said that Alexis said that she did not care about her mother’s wishes and that she desired half the estate (see again at [18] of Mr Nikolopoulos’ affidavit sworn 27 September 2018). (Tellingly, Alexis said she is not on good terms with Mr Nikolopoulos “because of what he said. I don’t think is true” – T 107.45-46.)

Subsequent events

98. On about 16 August 2019, Alexis received a notice of termination of her corporate and individual authorised representative status with her licensee, AMP Financial Planning Pty Ltd (which it is said has significantly changed her business).

99. On 17 June 2021, both Wheatley Wealth Management Pty Ltd (of which Alexis is the sole director and shareholder) (Wheatley Wealth Management) and Alexis were terminated as authorised representatives of AMP Financial Planning.

100. Wheatley Wealth Management was approved by ASIC for an Australian Financial Services licence (AFSL) on 12 August 2021 and a credit licence on 29 September 2021. At the time of the hearing, Alexis was still in the process of setting up the new business; her evidence being that agreements with financial broker providers were then currently being established and could take two months or more to finalise.

101. In relation to her teaching work, Alexis has been advised that she is required now to complete a Masters of Financial Planning, or to be studying it, in order to continue with her TAFE teaching. As at October 2019, Alexis estimated that it would take four to five years to complete that course. Over the past three years she had only completed four subjects out of the sixteen required to complete the degree. Based on current fee levels the estimated total cost in completing another twelve units to obtain the Master’s degree is $53,040.

Issue as to authenticity of emails

102. I note that there has been an issue raised in Alexis’ affidavit evidence as to the authenticity of the email communications that Erin has put into evidence (to which I refer in due course) but no evidence was adduced to support Alexis’ contention that the emails found on the deceased’s computer (or, indeed, those sent by the deceased) were not authentic.

Procedural history of the litigation

103. As adverted to above, a joint opinion was obtained from a tax expert, Mr Vale, as to the consequences of a transfer of the real estate from Wheatley Investments to the executor or directly to Alexis; or of the sale and disposal of the proceeds of sale of The Entrance Road Property. Advice was sought from Mr Vale as to a number of potential options.

104. As also referred to above, there were some offers made to settle this proceeding (reference being made by Alexis’ Counsel to offers put on behalf of the defendants on 26 March 2019 and 21 May 2019 – see, for example, at T 10.13-20).

403. As to the defendants’ submissions in regard to the conduct of the litigation at large and to the effect that there should be a capping order made, Alexis says that there is significant comparability in regard to the parties’ costs which are almost identical with respect to solicitors’ fees and disbursements. Alexis says that the criticisms made of Alexis’ conduct are misplaced.

Determination of the family provision claim

407. As to the family provision claim made by Alexis, I have referred above to the principles relevant to claims of the kind. It is not disputed that adequacy of provision is determined at time of application. Given the failure of the cl 4 gift, there has been no provision made for Alexis under the Will. In all the circumstances, I consider that there has not been adequate and proper provision (even taking into account the provision made for Alexis during her lifetime). The deceased clearly intended to make a gift to Alexis, under the Will, of The Entrance Road Property (unencumbered) and that gift failed. (Had the gift not failed I would have concluded that there was adequate provision even though tax liabilities would follow from that gift. As it is, I consider that it is not adequate or proper provision for Alexis to receive nothing at all out of the deceased’s large estate – and I do not understand Erin to suggest otherwise.)

408. As to what provision is adequate, this is not a question of parity of distribution or family fairness, as such (as the authorities to which reference was made in the submissions make clear). Moreover, the deceased in her emails to Erin (and the unsent email on her computer) made clear that there was a considered basis for the testamentary provisions that were made by the deceased. Statements to others by the deceased that she wanted to make things fair must be understood in this context.

409. Alexis and Frank have not insubstantial assets, professional qualifications and the ability to earn income in the future. As to Alexis, I accept that she has health conditions that may well impact on her ability to earn income in the future but the extent of this is unclear. I do not consider that much weight should be placed on the fact that the deceased permitted Alexis to trade in shares with moneys from the estate. The evidence does not permit me confidently to conclude that this was an early inheritance (particularly given that the deceased did not refer to it as such in any of her successive draft wills nor in the relevant emails in January 2015 and on her computer in February 2017); though the losses would then count as a factor against Alexis’ contribution to the deceased’s estate during her lifetime.

410. Highly relevant, in my opinion, are the consistently expressed testamentary intentions of the deceased. It is very clear that the deceased was very concerned that Erin be able to return to Australia and to live in the Dover Heights Property. I am troubled that costs of such magnitude have been incurred in these proceeding, which may jeopardise the possibility that effect may be given to those testamentary intentions. It seems likely that tax issues have overtaken common sense in that regard. That said, though I have taken into account the high level of costs (and the rejection of the open offer that was made to Alexis) I consider that those issues are better dealt with in the context of the costs overall after any further submissions on that issue.

411. What I am left with, therefore, is the difficulty of determining what adequate and proper provision for Alexis should be in light of the deceased’s wish that Erin be able to live in the Dover Heights Property, and in light of the complex tax consequences of any such order for the making of provision. Any provision for Alexis by way of a legacy would leave the tax burden (as well as the existing debt secured over the Dover Heights Property) and would, I accept, likely require the sale of the Torrens Avenue Property with a consequential tax bundle there arising.

412. Having regard to the factors enumerated in s 60 of the Succession Act, set out above, I have concluded that the appropriate and proper provision for Alexis is a legacy in the sum of $820,000. As I understand the tax advice, that would leave the estate with a tax burden of somewhere in the order of $600,000 (which it may be able to offset against other amounts or structure in a more tax effective way) when the proceeds of sale in respect of The Entrance Road Property are disbursed (as a dividend). Assuming the same tax treatment for the Torrens Avenue Property that would mean a further tax liability of around $410,000 when that property is sold.

413. Thus, the tax burden for the estate would be in the order of $1 million. Erin would bear the burden of the debt owed by Wheatley Investments to Yonan, and the debt of Wheatley Investments to the estate which may or may not be enforced. The Dover Heights Property is, and would be, burdened by the mortgage currently in the sum of $900,978 (see T 299.4-5).

414. Therefore, Erin will obtain a very valuable property (and ownership of the companies with the benefit of the real estate in the case of the Torrens Avenue Property) but will need to use the funds available out of the estate representing the value of the commercial investment properties to fund the legacy to Alexis and the tax liabilities arising therefrom, and meet the mortgage repayments vis-à-vis the Dover Heights Property. The legacy to Alexis thus comes at a very real cost to the estate (and hence to Erin). In those circumstances, I cannot see that any greater sum for provision would be proper, in all the circumstances.

415. As to costs, I will hear submissions in this regard but I am inclined to think that it is appropriate to place a significant cap on such costs, albeit that it seems to me that there is a reasonable basis on which it might be thought that Alexis should bear her own costs of seeking the tax advice (since it seems to have been for her personal interests that this was sought).

Orders

416. For the above reasons therefore, I make the following orders:

1. In lieu of the provision made for the plaintiff under the Will of the late Dianne Victoria Lakshmanan, order that there be provision out of the deceased’s estate of a legacy in the sum of $820,000.

2. Direct that any brief submissions on costs be filed within 14 days with a view to costs being determined on the papers if possible.

**********

Amendments

17 May 2022 - Amendment to Representation on coversheet

Decision last updated: 29 June 2022