Blendell v Blendell; Blendell v Blendell

Court of Appeal (NSW)|2019-12-04|Before: Meagher JA, Gleeson JA, Leeming JA, Hallen J

Before: Hallen J File Number(s): 2017/182524; 2017/182545

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

MEAGHER JA: The appellant, Michael Blendell, is the husband of Noeline Blendell, who died on 20 June 2016, aged 73. There are four adult children of their fifty-year marriage - Denise, aged 51 at the time of the proceedings before the primary judge in early 2019, Julian, then aged 49, Dominic, aged 43, and Nicholas, who was 41. It is convenient to refer to each of those parties to the underlying proceedings by their first name.
Under her last will, made on 22 July 2015, the deceased appointed Michael as executor and sole beneficiary of her estate. The previous will made on 13 June 2007, after making a number of number of relatively small gifts and a specific bequest of furniture, clothes and personal effects, left the residue of the deceased's estate to the four children as tenants in common in equal shares.
The adult children challenged the validity of the 2015 will and claimed, in the alternative, that Michael held the residuary estate "as sole beneficiary... on constructive trust" for their benefit, he having procured the execution of that will by the exercise of undue influence. In the event those claims were unsuccessful, each of Denise, Julian, Dominic and Nicholas applied for family provision orders under the Succession Act 2006 (NSW). Each was an eligible person within s 57 of that Act and brought his or her application within 12 months of their mother's death.
The primary judge dismissed the undue influence claim and made a grant of probate in solemn form of the 2015 will: Blendell v Byrne & Ors; the Estate of Noeline Joan Blendell [2019] NSWSC 583. During the course of the hearing the family provision claims of Denise and Nicholas were resolved, it being agreed that provision would be made to them in the amounts of $420,000 and $300,000, respectively. In relation to those claims, the primary judge was required to be and was satisfied that adequate provision had not been made and that the order proposed was one which ought to be made: see Bartlett v Coomber [2008] NSWCA 100 at [39]-[42] (Mason P), [72] (Hodgson JA), [85] (Bryson AJA); Azar v Kathirgamalingan [2012] NSWCA 429 at [195] (Campbell JA).
The primary judge held that inadequate provision had been made by the 2015 will for the proper maintenance and advancement in life of Julian and Dominic, and ordered provision be made for Julian in the amount of $240,000 and Dominic in the amount of $140,000. Michael appeals from each of those orders.

The relevant statutory provisions

Succession Act, ss 59(1) and (2) provide: (1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that: (a) the person in whose favour the order is to be made is an eligible person, and ... (c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. (2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.
As appears, before an order under s 59 may be made the Court must be satisfied that "adequate provision for the proper maintenance, education or advancement in life" of the claimant "has not been made by the will of the deceased person". If so satisfied, the Court may "make such order for provision... as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person". Here the relevant objects are maintenance and advancement in life, in circumstances where no provision was made for either claimant.
As the majority (Mason CJ, Deane and McHugh JJ) observed in Singer v Berghouse (1994) 181 CLR 201 at 210; [1994] HCA 40, each of these "twin tasks" involves similar considerations, because in each the Court has to assess what is the "proper" level of maintenance and what is "adequate" provision. As has been observed, these terms are relative and require that regard be had, among other things, to the matters set forth in s 60(2), including the claimant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the claimant and the deceased, and the circumstances and needs of other claimants, beneficiaries and potential beneficiaries.
The making of the evaluative decisions called for by ss 59(1)(c) and (2) may only be disturbed on appeal if there has been an error of principle or a material error of fact, if account was taken of irrelevant considerations or relevant considerations disregarded, or alternatively if the result of the decision is unreasonable in such a way as to indicate some latent error: Phillips v James (2014) 85 NSWLR 619; [2014] NSWCA 4 at [54]-[55]. To the extent that the second task also involves an exercise of discretion in the more accepted sense, the same principles govern the appellate review of that decision.

The grounds of appeal

Each appeal is brought in a separate proceeding. The grounds are similar, although directed to the different circumstances of Julian and Dominic. First, it is said the primary judge erred in finding that each had been left without adequate provision where there was no reliable evidence (in the case of Julian), or in circumstances where material evidence had been withheld (in the case of Dominic), as to their financial circumstances (Julian and Dominic, ground 1). Secondly, it is said that if it was open to the primary judge to make findings based on Julian's evidence, his Honour made specific errors as to his financial resources and circumstances when concluding that he had been left without adequate provision (Julian, ground 2).
Thirdly, it is said that if it was open to the primary judge to make findings of fact based on the evidence of each of them, his Honour erred in finding that they had been left without adequate provision in circumstances where the deceased's decision to leave the whole of her estate to Michael "did not place her in breach of any moral duty" owed to them (Julian, ground 3, and Dominic, ground 2). Finally, it is said that the primary judge's discretion in making provisions in the amounts ordered "miscarried in a way not apparent but such as to justify appellate intervention" (Julian, ground 5, and Dominic, ground 4). Ground 4 in relation to Julian and ground 3 in relation to Dominic merely contend that there was error in the making of the order for provision. Neither ground was elaborated on in the written or oral argument. Each is to be regarded as not pressed.

The deceased and her estate

The net value of the deceased's estate, which included a property in Malaysia, not taking account of any costs of the proceedings (other than an amount of $46,300 applied to pay Michael's costs), is $3,650,607 (J [101]). That estate included a property at Cremorne ($1,700,000), cash in different bank accounts ($1,583,887) and shares in listed public companies ($96,720).
Following their marriage in 1966, the deceased and Michael moved to New Zealand, where they lived until a move to Sydney in the early 1970s. At the end of 1982 Michael relocated to Hong Kong to take up an employment opportunity. The family followed shortly after. From about 1992 the deceased, Denise, Julian and Nicholas lived in Australia, where the boys finished their schooling. Those children and their mother remained in Australia, where Michael visited them often, for the most part from Hong Kong. In November 2014 the deceased was diagnosed with cancer and Michael returned to Australia in December 2014, taking the role of her primary carer.
Prior to 1999, the deceased and Michael had jointly purchased and sold residential properties in Sydney. In June 1999, they agreed to separate their personal affairs, in Michael's words "by removing me from any Australian owned assets and the deceased from our international assets, which included my closing her offshore bank accounts" (J [84]). The deceased continued to buy and sell property in Australia in her name. Initially that property was, at least in part, paid for from joint funds. Thereafter the deceased appears to have engaged in further significant property transactions using funds that she controlled. The Cremorne property, where the deceased lived for the remainder of her life, was purchased in 2010 and without reference to Michael.
The primary judge rejected an assertion made in the probate suit that the deceased and Michael had separated at any time, concluding that the "conduct of each towards the other reflects a mutual commitment to the continuation of a shared married life despite their physical, and geographical, separation" (J [417]). In doing so his Honour recognised that on Michael's part there were extra-marital relationships of which the deceased was aware and voiced criticism from time to time (J [386]).
In relation to the making of the 2015 will, the primary judge accepted Michael's evidence that the deceased had told him that she wanted "everything" to go to him so as to "shift the burden" to him in deciding to whom of the children he would make provision (J [338], [347], [474]). That accorded with the deceased having told Nicholas in August 2015 that she had "left it all to Michael to sort it out", as his Honour found (J [229], [240]).
His Honour also noted that Michael did not lead any evidence as to his financial resources and needs (J [113]), the evidence indicating that he had significant assets outside Australia. Thus, as the primary judge observed, the deceased's estate was "of reasonably large value" (J [624]), apart from Michael the four adult children were the only persons with claims upon her bounty, and it was to be inferred that the sole beneficiary, Michael, had sufficient financial resources to meet his own needs. It was not contested that each of the children had a close and loving relationship with the deceased (J [80]).
It is convenient first to deal with the appeal against the provision made in favour of Dominic.

Order for provision made in favour of Dominic

Dominic separated from his wife in 2016. He has no dependents and since 2002 has lived in Malaysia. He has a three bedroom apartment in Kuala Lumpur and claimed that his net asset position was about $82,000. After payment of living expenses he estimated his surplus monthly income to be $388. There was a suggestion in his evidence that he suffered from a colitis condition which might affect his health in the future, but no medical evidence indicating that the condition was worsening.
Dominic also has a 10% shareholding in a Malaysian company called Newfound Success Sdn Bhd which conducts a restaurant in Kuala Lumpur. Before he gave evidence he was served with two notices to produce the financial statements of that company for the years ending 30 June 2016 and 30 June 2017. With the exception of two pages from the 30 June 2017 accounts, he did not produce those records. Otherwise, Dominic apparently produced the bank statements, superannuation statements and policies of insurance called for by one or other of those notices.
The primary judge dealt with Dominic's claim at J [654]-[659], having earlier made findings as to Dominic's financial position, life circumstances and relationship with the deceased at J [528]-[545]. It will be necessary to return to the primary judge's treatment of Dominic's failure to produce these financial records, which is addressed at J [546]-[560].
Dominic assisted his mother in relation to the purchase of the property in Malaysia which formed part of her estate. In that respect the primary judge was satisfied he had made an indirect but meaningful contribution to her purchase of that property (J [536], [538]). Dominic also gave evidence of many conversations with his mother in which she said that her intention was to provide funds to her children so that they could purchase a property, or pay off their mortgages of an existing property, or, if that had been achieved, to provide a sum to be invested in superannuation and accessed on retirement (J [543]). The significance of that evidence was to some extent tempered by the deceased's decision to leave to Michael the task of determining when and how provision should be made for their adult children.
Having referred at the outset (J [654]) to Dominic's decision to "not disclose, completely, the current value of his shareholding", the primary judge continued: [655] Against that, I have borne in mind that he did, at least, disclose the existence of his shares in the company, and his financial position otherwise; his close and loving relationship with the deceased; the reasonably significant, direct, non-financial contribution made by him in assisting the deceased in relation to the purchase, and retention of the Malaysian property, which contribution was acknowledged by her; his direct contribution to the welfare of the deceased; and the competing claim of all of the other family members. [656] On balance, although the case is a borderline one, I have concluded that the provision made for Dominic is neither adequate, nor proper, in all the circumstances. [657] The calculation of the lump sum that I propose to order takes into account, amongst other things, the value of the estate, the respective financial circumstances of each of the other claimants on the bounty of the deceased, that [Dominic] did not disclose, fully, his financial circumstances at the date of hearing, and that Michael did not disclose [any of] his financial circumstances.
Stopping there, something has gone wrong in the latter part of this single sentence paragraph. The words in square brackets are substituted or added to indicate how I think it is to be understood. There was no suggestion in the evidence that Nicholas, for whose name I have substituted Dominic, had not made full disclosure; and it was not controversial that Michael had not led any evidence as to his financial circumstances. His Honour continued: [658] Weighing all in the balance, considering wisdom, justice and current community values, the provision for the proper maintenance and advancement in life of Dominic that ought to be made, in my view, is by way of a lump sum of $140,000. This amount will enable him to reduce his mortgage debt, if he chooses to, with the consequence that he could have additional available monthly income. Alternatively, it will provide him with a lump sum for exigencies of life. [659] I do not accept that the deceased owed to him, in all the circumstances of this case, the type of provision upon which submissions were made by his counsel.
This last reference is to the submissions at J [566]-[568], which suggested a provision of $1,300,000, later reduced during final address to $1,000,000, on the basis that Dominic should be provided with sufficient funds to purchase a one bedroom apartment on the lower north shore of Sydney and to supplement his superannuation, as well as repaying a loan of $166,000.

Error in finding Dominic left without adequate provision where he deliberately chose to withhold material evidence regarding financial circumstances (ground 1)

Two arguments were made in support of this ground. The first is founded on well-accepted principles. The second is not.
As to the first argument, Dominic bore the onus of persuading the Court that adequate provision had not been made, relevantly for his proper maintenance or advancement in life. Thus it was incumbent on him to lead evidence as to his financial and material circumstances, and ordinarily he could be expected to be in the best position to produce that evidence.
As a general proposition, the fact of incomplete or unsatisfactory evidence may permit inferences unfavourable to the applicant for provision to be drawn. For instance, uncertainty left by imprecise or inaccurate evidence is not ordinarily to be resolved in favour of the person who was able to give the satisfactory evidence: Nicholls v Hall [2007] NSWCA 356 at [36] (Mason P, Hodgson and McColl JJA). And if the absence of such evidence is a consequence of deliberate falsehoods, or the deliberate withholding of evidence, the Court may be justified in proceeding on the basis that the evidence of the true position would have been unfavourable to that person's case: In re the Will of FB Gilbert (1946) 46 SR (NSW) 318 at 321-322, 324 (Jordan CJ); Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 at [100]-[104] (Meagher JA, Basten and Campbell JJA agreeing).
Ultimately, depending on the state of the evidence, it may not be possible to conclude that an applicant has been left without adequate provision, as was the case in Collings v Vakas [2006] NSWSC 393 at [67] (Campbell J). There the applicant's income and expenditure were "not satisfactorily proved", with the result that the Court did not even have a "broad outline" of her financial position on which to make an assessment as to the adequacy of provision.
Michael contends that Dominic's failure to produce the financial statements of the company Newfound Success was deliberate and meant that the Court did not have, even in "broad outline", an accurate picture of his financial position and resources. It is suggested that the company was "quite obviously, an important asset, or financial resource" and that without any evidence as to its value, it was not possible for the Court to conclude that he had been left without adequate provision. I will return to this argument shortly.
The second argument was put more faintly, and in the course of oral submissions. It was contended that Dominic's deliberate failure to produce the company's financial statements in answer to the notices to produce was a matter to be taken into account under s 60(2)(m), as relevant to the "character and conduct of the applicant". It was also submitted that having regard to Dominic's failure to comply with his obligation to produce those records (Uniform Civil Procedure Rules, r 34.2(1)), there was a contravention of his duty under Civil Procedure Act 2005 (NSW), s 56(3). Reference was then made to Hammerschlag J's decision in Stone v Stone [2019] NSWSC 233 at [163] as perhaps having decided that a family provision claim may be dismissed where the applicant has failed to "make full disclosure and provide documents" in contravention of that duty.
This last proposition is not supported by that decision or justified by reference to either of the statutory provisions relied on. In Stone v Stone, the applicant had failed to comply with directions as to the filing of affidavit evidence and for the production of documents, as well as the requirements of Practice Note SC Eq 7, which applies to such applications and is directed to securing proper disclosure of the financial resources of the applicant and any person with whom he or she is cohabiting. On the first day of a two day hearing, Hammerschlag J rejected the applicant's hearsay evidence of her de facto partner's financial position. At the close of the defendant's case, towards the end of the second day, the applicant sought leave to reopen her case to lead additional evidence from her de facto partner. Hammerschlag J's reasons for rejecting that application are at [130]-[165]. Having done so, his Honour said in relation to the merits of her case, at [166]: The consequences of Gail's failure to make full and frank disclosure are that the Court cannot properly discharge its function to make the evaluative judgment required by s 59(1)(c) and the claim must be dismissed.
In so concluding, his Honour did not accept the applicant's submission that the absence of evidence from her de facto partner did not prevent the Court determining whether she had been left without adequate provision (at [168]). That outcome is wholly consistent with the decision in Collings v Vakas. And in exercising the discretion to refuse the application for leave to reopen, Hammerschlag J was obeying the command in s 56(2) that the Court seek to give effect to the overriding purpose of the Act - to facilitate the just, quick and cheap resolution of proceedings - when exercising any power given by the Civil Procedure Act or the rules of court.
Finally, in relation to this second argument, the matters contained in s 60(2) may be considered for the purpose of determining whether to make a family provision order and the nature of any such order. In that context the reference in para (m) to "the character and conduct of the applicant" echoes the language of s 3(2) of the Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW), which permitted the Court to refuse to make an order in favour of any person whose "character or conduct" was such as to disentitle him or her to the benefits of such an order. In Re the Will of FB Gilbert, Jordan CJ (at 321) and Maxwell J (at 326) rejected a submission that perjury committed by the applicant in giving evidence in support of her application amounted to such disentitling conduct. The Chief Justice proffered that the character or conduct with which the Act was concerned was "for example, misconduct towards the testator, or character or conduct which shows that any need which an applicant may have for maintenance is due to his or her own default". However, as his Honour then emphasised, that did not mean that the applicant's conduct as a witness may not be taken into account in assessing her evidence and whether her case has been established on the facts. That leaves Michael's first argument.
Returning to that argument, the primary judge's finding at J [654] describes Dominic as not having disclosed "completely the current value" of his shareholding in Newfound Success. Earlier, at J [558], his Honour had noted that in his second affidavit, Dominic had said that he owned 10% of the issued shares in the company, which owned and operated a restaurant managed by him with 8 other shareholders; that the restaurant had opened in September 2015; that, to date, the business had not made a profit; and that he was not drawing any "wage or salary" from managing it.
The two pages produced (pp 3 and 10) were from the 30 June 2017 financial statements which include figures for the earlier period ended 30 June 2016, the year in which according to Dominic's evidence the restaurant commenced trading. Page 10 is the balance sheet or statement of financial position. It shows that as at 30 June 2017 the liabilities of the company exceeded its assets by 665,611 Malaysian ringgits, at the time of the hearing about A$220,000. That deficiency was due to losses incurred in the period from September 2015 to 30 June 2017, being 390,091 ringgits in the period to 30 June 2016 and 285,520 ringgits in the financial year ended 30 June 2017. Page 3 contains details in relation to the directors of the company and their benefits and shareholding interests. It shows that Dominic was a director and that he received no remuneration or fee in the period ended 30 June 2017.
This evidence is wholly consistent with Dominic's statements in his second affidavit, as to which he was not challenged. It is also consistent with his interest in Newfound Success having little or no value; and contradicts the appellant's suggestion that the company was "quite obviously, an important asset or financial resource, of Dominic".
Although the primary judge does not in terms find that this shareholding interest did not have any significant value, that conclusion is implicit in his Honour's observation that Dominic did not disclose "completely" the value of that shareholding. Having cited Collings v Vakas at J [561], his Honour's preparedness nevertheless to be satisfied that Dominic had been left without adequate provision, where the evidence otherwise sufficiently enabled that question to be addressed, confirms that he had a sufficiently clear view of Dominic's overall financial position to be so satisfied. For these reasons ground 1 is not made out.

Error in finding Dominic left without adequate provision having regard to deceased's decision to leave whole of her estate to her husband (ground 2)

This ground is directed to the strictly factual assessment called for by s 59(1)(c). That evaluative judgment should be "guided and assisted by considering what provision, in accordance with perceived prevailing community standards of what is right and appropriate, ought be made"; and is to be undertaken assuming full knowledge and appreciation of all the relevant circumstances of the case: per Allsop P in Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308 at [16].
It is contended on Michael's behalf that in undertaking this evaluation the primary judge erred in failing to have regard to his contributions to the deceased's estate, and generally as her husband of fifty years, when considering the relationships between the deceased and those, including Dominic, who had legitimate claims upon her bounty: see Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [64] (Barrett JA). Whilst Michael accepts that the primary judge considered his contribution to the deceased's estate when considering the quantum of the provision to be made for Julian (J [651]), it is said that his Honour erred in not having regard to that contribution when considering the threshold question whether the nil provision made for each of Dominic and Julian was inadequate by reference to those standards.
His Honour's consideration of the family provision claims commences with a summary of factual matters relating to each of the four claimants (J [509]-[592]). The reasons then identify the relevant statutory provisions and extract a number of statements in leading and other cases concerning the nature of the evaluative assessment called for under Succession Act, ss 59(1)(c) and (2), and the similar provisions in earlier legislation (J [593]-[638]). In doing so his Honour noted that "as previously stated", Michael had not sought to advance his interests as sole beneficiary of the residuary estate on the basis of financial considerations (J [634]).
His Honour noted that the absence of evidence as to Michael's financial resources and needs justified the inference that he had sufficient resources to meet those needs, whatever they might be (J [115], [118]). His Honour then observed that it did not follow that Michael's "competing" claim as sole beneficiary should not be evaluated when assessing whether adequate provision had been made for the "proper" maintenance and advancement in life of the adult children. That required regard also be had to Michael's position as the deceased's surviving spouse and the chosen object of her bounty (J [118]).
The former is an aspect of the consideration of the relationship between the deceased and a beneficiary, in Michael's case having regard to their marriage of 50 years and his contribution to her estate (ss 60(2)(a),(d)). The latter acknowledges the need to give due regard to "what the testator regarded as superior claims or preferable dispositions" (Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19 (Dixon CJ); [1962] HCA 19). Here the deceased did not leave her estate to Michael for the purpose of benefitting him financially, but rather because she trusted him to decide how and when her wealth should be divided between their adult children. Although not emphasised by the primary judge, a relevant consideration was whether in this context the deceased had given appropriate consideration to whether some provision ought be made on her death for each of those children.
The primary judge then considered the four claims, including those of Denise and Nicholas which had been resolved by agreement. In doing so he recorded, albeit briefly, that having taken account of matters including "the competing claim of the others and of Michael" (J [645], [643]) an order giving effect to those settlements should be made. His Honour then considered Julian's claim, recording that in evaluating what was "adequate" by reference to what was "proper" in all the circumstances he had taken into account the competing claims of the other children and "of Michael, as other persons who have a legitimate claim upon the bounty of the deceased" (J [647]). In assessing what was adequate and proper provision and concluding that provision should be made for Julian, the primary judge recorded that he had taken into account Michael's "very substantial contribution, as the spouse of the deceased of a very long marriage and his claim upon" the deceased" (J [651]).
His Honour's reasons in relation to the determination of Dominic's claim are even more abbreviated. Nevertheless, they also make tolerably clear that the competing claim of Michael, in its aspects as described when addressing the claims of Denise, Nicholas and Julian, had been taken into account. Although J [655] does not in terms refer to Michael's contribution to the deceased's estate and claim as her spouse, it does refer to the "competing claim (sic) of all the other family members". And his Honour's reference in J [656] to "all the circumstances" is to be read as being to the circumstances earlier identified, including those relating to Michael, who is referred to in J [657].
In oral argument, senior counsel for Michael was critical of the absence of detailed reasons explaining more specifically the evaluative assessment undertaken by the primary judge. At the same time he expressly acknowledged that his Honour's conclusions that there was inadequate provision made and as to what constituted adequate provision were not challenged on the basis that there was a failure to give adequate reasons. Nevertheless, there remains substance in that criticism of the reasons, which leave to be spelt out matters which are implicit in those conclusions.
Returning to the written argument in support of this ground, it is submitted that the primary judge erred in determining that adequate provision had not been made for the following reasons: (1) that the deceased was in a better position "to assess her relationship with her son" than was the Court; (2) that the value of the estate was not such as to render "erroneous" her decision to leave it to her husband; (3) that Michael's financial contributions to the deceased's estate were substantial; and (4) that at the end of her life his relationship with the deceased remained a close and caring one.
Each of these matters was, in broad terms, taken into account by the primary judge. He concluded that in all the circumstances adequate provision for Dominic and Julian's proper maintenance at this stage of their lives required that each receive an amount which would pay off or reduce his mortgage debt, thereby providing some protection against the uncertainties of life. That accorded with the deceased's earlier statements as to her intention being to provide funds for her adult children. And making some provision for them on her death was consistent with her overall intention that her wealth be available for their benefit, but not necessarily equally. At the same time, the provisions made by his Honour permitted Michael to determine when and how the balance of that wealth should be dealt with over time. None of that detrimentally affected Michael's position or expectations in relation to financial resources for which he had no need.
For these reasons, ground 2 in Dominic's appeal should be dismissed.

Manifestly unreasonable outcome indicating latent error (ground 4)

Ground 4 should also be dismissed. It is not supported by written or oral argument which would justify the conclusion from the fact that provision was ordered, or from the amount of that provision, that the primary judge erred in some way which is not discoverable.

Conclusion in Dominic's appeal

It follows that Michael's appeal against the order for provision to Dominic should be dismissed with costs.

Order for provision made in favour of Julian

Julian lives with his wife Joanne in her unit in Cremorne. They commenced living together in 2003, married in 2006, and have a prenuptial financial agreement. Under that agreement, they keep separate finances and have no joint assets, but share household expenses. Julian pays Joanne a monthly rent to live in her property. He has a daughter by a previous relationship and at the time of the hearing paid child support.
Julian has a one-bedroom apartment in Neutral Bay, which is mortgaged. He also has superannuation. At the time of the hearing in February 2019, his estimated net financial position was $550,300, valuing the apartment at $650,000 and his superannuation at $136,000. At that time the mortgage debt was $247,500. In an earlier affidavit, sworn June 2017, Julian estimated his net financial position to be $653,000, valuing the apartment at $750,000, superannuation at $120,000, and the bank debt at $264,000.
In February 2019, Julian said his gross monthly income was $4,500 as a self-employed handyman, supplemented by part-time work as a barista. The monthly rent from the Neutral Bay apartment was $2,080. At the same time, his monthly expenditure was $6,854, including at that time $2,500 per month for legal fees. Excluding that extraordinary expense, before income tax and deductible expenses, Julian's monthly income exceeded expenditure by $2,226. Taking it into account there was a monthly shortfall of $274 (J [575]).
At the time of his June 2017 affidavit, Julian's gross monthly income, including rental income, was $7,880 and his estimated monthly expenditure $4,100, leaving a surplus, again before taking into account income tax and deductible expenses, of $3,780. His gross monthly income was reduced from April 2018 when his permanent part-time employment as a barista terminated.
The primary judge dealt with Julian's claim at J [646]-[653], having made findings as to Julian's relationship with the deceased, his general health and his financial position at J [570]-[589]. Earlier, at J [359]-[369], his Honour made adverse findings as to aspects of Julian's evidence relevant to the probate suit, as well as to his claim for a family provision order. Julian gave evidence not only as to his financial position, but also as to Joanne's. That evidence was not objected to. Relevantly, in his February 2019 affidavit, he reduced the estimated value of his Neutral Bay property from $750,000 to $650,000, the estimate of the value of Joanne's unit in Cremorne from $1,200,000 to $950,000, and the estimate of the value of its contents from $20,000 to $15,000. The primary judge described those estimates of value as "really a guess on his part" (J [363]-[366]).

Error in finding Julian left without adequate provision where no reliable evidence as to his material and financial circumstances (ground 1)

It is submitted that in the light of the primary judge's findings at J [363]-[366], there was no reliable evidence on which his Honour could be satisfied that no adequate provision had been made for Julian's proper maintenance or advancement in life. As appears above, the observations in those earlier paragraphs were directed to Julian's estimates of the value of the Neutral Bay and Cremorne properties, and of the contents of the latter.
The primary judge's assessment of Julian's claim commences at J [646] with his conclusion that inadequate provision had been made. The "assessment of Julian's financial position" to which his Honour then refers at J [647] starts at J [577]. There his Honour finds that Julian owns an apartment and records the estimates of its value, which his Honour had described as guesses or guestimates. Having made findings about his monthly income and expenditure and Julian's arrangements with his wife with respect to their keeping entirely separate finances and sharing of household expenses, his Honour continued at J [582]: Julian's evidence suggests his assets include his Neutral Bay property, discussed above, a motor vehicle, contents of an ANZ bank account, and superannuation, totalling $803,500. Julian asserts his liabilities include an ANZ mortgage secured over the Neutral Bay property, and a credit card debt, totalling $253,200, leaving a "net financial position" of $550,300.
There is not at this point in the reasons a finding as to the likely or estimated value of the Neutral Bay property, or for that matter as to the amount secured by the mortgage over that property. Nor is there a finding as to Joanne's net financial position being $1,301,100, as Julian's evidence asserted (J [583]). One then returns to J [647], where the primary judge states that he has "made an assessment of Julian's financial position", and later, when addressing the specific amount of the provision to be made, that receipt of an amount of $240,000 would enable him to reduce "almost completely, his mortgage debt".
The question arises as to how the earlier observations and language of J [582] are to be understood in the context of his Honour's conclusions, especially at J [647], [652] and [653], as to what constituted adequate provision. His Honour's reasoning includes that Julian has an apartment mortgaged for an amount slightly in excess of $240,000, the value of which has not been established, but which by a process involving guesswork was said to be worth around $650,000-750,000.
Accepting that to be the extent of the primary judge's findings about Julian's property and its value, the question remains whether his Honour was able to make the finding at J [646]. That finding as to the absence of adequate provision did not depend on a precise calculation or estimation of the value of Julian's net assets. His assets and means of producing income, as well as the amount of that income and his expenses, were the subject of the findings made between J [577] and [581]. Those findings sufficiently identified Julian's financial resources and circumstances for an assessment to be made, in the light of his Honour's other findings, as to what adequate provision for his proper maintenance and advancement in life required.
His Honour's dispositive conclusions were that at the date of the hearing Julian had an earning capacity that could not be regarded as entirely secure; that whilst he did have an apartment which provided him with income, it was mortgaged (J [652]); and that a lump sum provision of $240,000 "ought" to be made, as it would enable him almost to pay his mortgage debt or would provide a capital sum for the exigencies of life (J [653]).
For these reasons ground 1 is not made out.

Error in finding Julian was left without adequate provision in six enumerated circumstances (ground 2(a)-(f))

His Honour's finding that no adequate provision was made is said to have involved error in circumstances where certain findings were not made or were made but not taken into account. Six matters, identified by the letters (a)-(f), are relied on.
As to para (a), it is said his Honour did not make a finding as to Julian's material and financial circumstances. That is not so, for the reasons given in addressing ground 1 above. It is sufficient, as was observed by Campbell J in Collings v Vakas, that the Court has, at least in broad outline, the whole picture concerning the claimant's financial situation. Here, the particular adverse findings relied on were as to the assessment of the value of the claimant's Neutral Bay property and of his wife's property in Cremorne, as well as the contents of that property, in circumstances where the Cremorne property and its contents were owned by his wife and were agreed to remain her property in the event that they separated.
As to para (b), it is said the primary judge erred in failing to take account of the financial resources of Julian's wife. Having found that they had entered into a binding financial arrangement which kept their finances entirely separate and provided that they should share household expenses equally, the primary judge was justified in assessing Julian's material and financial circumstances and resources as not including the resources of his wife. Joanne had two young adult children, whom she supported. Subject to what immediately follows, it is not contended that the primary judge's findings at J [580] and [581] as to their acting in accordance with this agreement were wrong.
As to para (c), it is said the primary judge erred in failing to take into account that Julian and his wife were able to pool their resources in assisting to fund the proceedings. The evidence disclosed that Julian borrowed about $33,440 from Joanne, which together with further funds of Julian of approximately $18,000 was advanced to Denise and Dominic to enable them to pay their shares of the costs of the probate proceedings and equity claim (J [122]-[124]). Separately Julian had paid $45,442 as his own share of those costs. It does not follow from Joanne's preparedness to advance some funds to Julian to enable his siblings to contest the grant of probate that Joanne's resources should be taken into account in assessing Julian's likely capacity to meet his ongoing needs. The arrangements concerning this funding, which was treated as a loan, were consistent with their continuing to keep their finances separate.
As to para (d), it is said the primary judge did not take into account that Julian was owed $51,565 by two of his siblings for the moneys advanced to pay costs. The primary judge made a finding as to those advances at J [124]. There is no specific statement of the primary judge that he later took this particular amount into account as one of Julian's assets. However, his Honour had regard to Julian's monthly expenditure, which included an ongoing allowance for payment of his own legal fees of $2,500 per month (J [579]). Ultimately, the fact that such an amount was outstanding was not material to his Honour's determination that adequate provision ought to have been made by payment of a relatively modest lump sum.
As to para (e), it is contended that the primary judge erred in disregarding Julian's failure to explain how he met his stated monthly shortfall of $274 (J [579]). It is suggested that in the absence of such an explanation, the primary judge "was not in a position to be satisfied as to his household financial position". That shortfall was due to the inclusion of the legal fees, an extraordinary expense, and the primary judge was justified in treating them as such when assessing whether adequate provision had been made.
As to para (f), it is suggested that the primary judge should have taken into account Julian's "own (unreliable) evidence" that he had net household assets of $2.28 million. That amount includes the estimate of the value of Joanne's assets, which the primary judge did not err in not taking into account (the subject of para (b)), as well as Julian's assets, including the Neutral Bay property with an estimated value of $750,000. The primary judge had regard to his ownership of that asset and Julian's assertions as to its value, and did not err in doing so for the reasons given in relation to ground 1.
Ground 2 should be dismissed.

Error in finding Julian left without adequate provision where deceased's intention to leave whole estate to her husband (ground 3)

This ground is the same as ground 2 in Dominic's appeal and has been dealt with above.

Manifestly unreasonable outcome indicating latent error (ground 5)

This ground should be rejected for the same reasons as ground 4 in Dominic's appeal.

Conclusion in Julian's appeal

Michael's appeal against the order for provision to Julian should be dismissed with costs.

Orders

The following orders should be made: 1. In proceeding 2019/207900, appeal dismissed with costs. 2. In proceeding 2019/207924, appeal dismissed with costs.
GLEESON JA: I agree with Meagher JA.
LEEMING JA: I agree with the reasons of Meagher JA. I wish to add to one aspect of his Honour's reasons, addressing the appellant's submission that by reason of the unsatisfactory evidence adduced by both Julian and Dominic and, in the case of Dominic, the non-compliance with notices to produce and the obligations imposed by s 56 of the Civil Procedure Act 2005 (NSW), the primary judge erred in not dismissing both claims.
The issue posed by the appellant is, to my mind, quite nuanced. There are a number of distinct ways in which unsatisfactory conduct by applicants may manifest itself. One, as in In re the Will of F B Gilbert (1946) 46 SR NSW 318, is by perjury in support of their application. A second is non-compliance with the obligations imposed by s 56 and applicable practice notes. A third, which was raised in relation to Dominic, is the disregard for a court order, leaving a party in contempt. I shall deal with each in turn.
The appellant invited this Court to depart from the approach adopted by In re the Will of F B Gilbert: "We didn't have s 56 or anything back in the 1940s. I'm asking the Court to read down the effect of the Will of Gilbert 80 or 70 years later, but, anyway, we now have subs 60, subs 2, and we have the Civil Procedure Act and we have the Practice Note and courts are more brutal these days in what they expect of all parties ..."
The applicant In re the Will of F B Gilbert was Mrs Annie Elizabeth Gilbert, the deceased's second wife, who was found to have perjured herself in understating her assets. The judgment of Roper J at first instance, and her evidence in March 1946, on the same day as his ex tempore reasons, may be found in Volume 1 of the bound volume of judgments of Roper J for the period November 1945 - May 1946, pp 493-502, in the Law Courts Library. Roper J said her evidence was "very unsatisfactory". Jordan CJ said that even after some of her false evidence had been disclosed, "I do not feel wholly satisfied that even now all the facts, the onus of proving which is upon the applicant, are before the Court": at 324-325. Nonetheless, the Court confirmed that some further provision should be made in her favour, and rejected the proposition that her perjury was per se disentitling.
Three matters may be noted about the Full Court's decision. 1. The discretion in the Testators Family Maintenance and Guardianship of Infants Act 1916 (NSW) to refuse to make an order in favour of "any person whose character or conduct is such as to disentitle him to the benefit of such an order" was construed to exclude perjured testimony in support of a claim, on the basis that the Act was directed to a different purpose - misconduct towards the testator or misconduct showing that the applicant's need for maintenance was due to his or her own default. Similar words are now found in s 60(2)(m) ("the character and conduct of the applicant before and after the date of the death of the deceased person"), but the context is quite different. The words in paragraph (m) are matters to which the Court may have regard in determining whether the applicant is an eligible person, whether to make an order, and the nature of such an order: s 60(1). Paragraph (m) is one of 16 classes of matter to which consideration may be given. The current form of the statute amounts to a dilution of the former express power to refuse to make an order for disentitling conduct. It follows that there is no support in the legislative text to reinterpret what was held of the former regime in Gilbert's Will as applicable to the current regime. 2. The Full Court ruled that an applicant's perjury was not per se disentitling. The form of the legislation has changed in the intervening decades, but not so as to sanction a construction contrary to that stated in Gilbert's Will. It would be a "strong thing" to decline to apply a construction which is to be regarded as not having been overturned by the Legislature: cf Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [52]. 3. Although perjury is not disentitling, there is no doubt that a Court's adverse assessment of the credibility and reliability of an applicant's evidence will bear upon the prospects of an application in respect of which he or she bears the onus. As Jordan CJ said at 321-322: "As to any matter the burden of establishing which lies upon an applicant, the fact that he or she has attempted to bolster up the claim by perjury would naturally and properly disincline the Court to accept as proved any fact which is sought to be established by the applicant's uncorroborated testimony, and would entitle the Court to treat it as unproved unless satisfied, for example, that it was inherently probable."
I do not accept the appellant's submission that mere non-compliance with s 56 and cognate provisions entitles a Court to dismiss a claim under statute. The provisions are directed to "Case management and interlocutory matters", and it is significant that ss 57, 58 and 59 are expressed in terms of management and procedure. That is not to understate their importance, or the duties imposed on litigants and their lawyers in furthering the overriding purpose, as confirmed in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [51]-[57].
Nor do I accept that the contravention of those provisions caused the dismissal of the claim in Stone v Stone [2019] NSWSC 233. On a fair reading of the reasons, the non-compliance with s 56 was relied upon in order to reject a procedural application - an application to reopen at the conclusion of a hearing: see especially [129] and [165]. The rejection of the application to reopen left the applicant's case as one where he failed to satisfy s 59(1)(c).
Concerning contempt, argument proceeded on the basis (the correctness of which need not be examined) that the non-compliance with the notices to produce issued pursuant to UCPR Pt 34 was capable of being a contempt. The consequences of a prima facie contempt appear to give rise to a discretion, rather than an inflexible rule: Hwang v Lawrie [2014] 1 Qd R 562; [2013] QCA 204 at [18]-[24] (cf Young v Jackman (1986) 7 NSWLR 97) and see PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2020] FCA 685 at [55], but once again it is not necessary to examine the correctness of the point. The appellant did not rely on any contempt, but rather tendered without limitation the partial production which had belatedly been given by Dominic. There would have been force in a submission that the self-selective compliance with the notices to produce adopted by Dominic precluded a tender of any of the documents, but the trial took a different course.
The deficiencies attending both Julian's and Dominic's applications were essentially evidentiary. The primary judge made no error in proceeding on the basis that (a) the executor pointed to no hardship, and (b) even what was left from the estate after deducting agreed amounts of provision to Denise and Nicholas, and large legal costs, the estate was sufficiently large that a relatively broad brush approach was sufficient. I agree with the orders proposed by Meagher JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2020

Testator's Family Maintenance and Guardianship of Infants Act 1916(NSW)

Testators Family Maintenance and Guardianship of Infants Act 1916(NSW)

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