Manning v Matsen

Supreme Court of NSW|2014-11-28|Before: Slattery J

Solicitors: Plaintiff: Annamaria Bernadette Marano, McBride Harle & Martin Defendant: Stephen Churches, Armstrongs Solicitors Pty Limited File Number(s): 2013/363737 Publication restriction: No

JUDGMENT

Sharon Manning and her brother Wayne Matsen were born in the early 1950s and grew up in the township of Kingscliff in northern New South Wales with their parents, William and Joan Matsen. William died in May 2009. Joan died in April 2013.
By the time of Joan's death she had transferred all but a life interest in her residence in Carey Bay on Lake Macquarie to Wayne and to his wife Maureen as joint tenants. She left only a small amount of cash in her estate.
Sharon now brings a claim under Succession Act 2006, Part 3.2 for an order for family provision out of Joan's estate. To enable such an order to be made she seeks designation of the Carey Bay property, now held in Wayne and Maureen's names, as notional estate under Succession Act, Part 3.3. As the executor under Joan's last will of November 2009, Wayne resists these claims. Maureen is not a party to the proceedings. But the quantum of any notional estate order that the Court might make could be satisfied out of Wayne's half share in the Carey Bay property.
This defines the issues for decision. But the issues require a more detailed examination of the family background and the transactions before Joan's death.

The Matsen Family - From Kingscliff to Carey Bay

It is difficult to reconcile many aspects of Wayne and Sharon's differing accounts of their upbringing, their childhood and early adulthood. But a reasonable degree of common ground nevertheless emerges.
Wayne is older than his sister Sharon. Wayne Robert Matsen was born on the 4 April 1951 and at the time of trial was aged 63. Sharon Lee Masten, now Sharon Manning, was born on 13 February 1955 and at the time of trial was aged 59. Both Wayne and Sharon are married, he without children and she with four.
Sharon's account of her early childhood, which I mostly accept, commences with the family growing up in Kingscliff, a pretty coastal town in the Tweed Shire in far northern New South Wales. Sharon says, and I accept, that until she was about 16 years of age she had a close and loving relationship with the deceased, her mother Joan.
But from Sharon's perspective her relationship with her mother permanently altered when in 1971, at the age of 16 and before she was married, she became pregnant. Joan and her father William decided to leave Kingscliff, in part to avoid others in their small local community in Kingscliff discovering that Sharon was pregnant. They travelled to Sydney in 1971, where Sharon gave birth to her eldest daughter, Jodie. Joan was insistent after the birth that Sharon offer Jodie up for adoption. Sharon gave her consent to Jodie's adoption.
But Sharon's daughter Jodie returned into Sharon's life in 1991 and indirectly assisted Sharon to reconcile herself with Joan. Adoption law reforms in the early 1990s (the Adoption Information Act 1990) permitted birth parents and adopted children to get in touch with one another for the first time through an organised contact register. Sharon found Jodie in 1991 and welcomed her into the family. I accept Sharon's evidence that Joan developed a close relationship with Jodie's children in later years.
Wayne and Sharon have quite different perceptions of the family dynamic arising from Sharon's pregnancy and the family's move from Kingscliff to Sydney. Sharon remembers that the whole time she was pregnant Joan engaged in an unsubtle form of ostracism of her from the family and only spoke to her indirectly in the third person, through Sharon's father William. Sharon also recalls that the family could not find housing readily in Sydney when they moved there and had to live in a caravan for a period.
Wayne did not perceive much tension between his mother Joan and his sister, Sharon at the time. But to glean an accurate account of this early period in Matsen family life I generally accept Sharon's account of events. At the age she was, Sharon would have been acutely conscious of the quality of her relationship with her mother and her mother's apparent disapproval of her pregnancy. Older by four years and leading his own life by then, Wayne had little reason to be directly involved in the minutiae of that relationship. He did not notice the worst of the turmoil between mother and daughter.
After Jodie's birth Sharon travelled overseas. She returned to Australia in December 1975. But upon her return there was still tension between her and her mother. I accept Sharon's account that she and her father William were close but that her relationship with her mother always remained difficult. After her return from overseas Sharon stayed at home for less than 12 months. In September 1976 she decided to flat with a friend. Sharon says, and I accept, that once she had indicated her intention to leave home Joan encouraged her to "move out straight away", thereby implying to Sharon that she really was less than fully welcome in the household.
After Sharon left home the mother-daughter relationship remained frosty. I accept Sharon's evidence that she attempted to telephone her mother each week when she was living away from home. But Joan would not talk to her. The relationship between them only really improved in May 1977, when Sharon married her first husband Ian Moore. Joan did little to help Sharon prepare for her wedding. Sharon's perception of this, which is in my view on the available evidence an accurate one, was that the deceased never forgave her for becoming pregnant before marriage when she was a teenager.
Wayne did not notice much of this continuing tension. But this is understandable and not just because of the four year age gap to Sharon. He was not in the middle of the emotional crossfire between mother and daughter. Even much later in life he came across in the witness box as a very phlegmatic individual who had little intrinsic interest in the niceties or rights and wrongs of the relationship between his sister and his mother.
Sharon and her husband Ian Moore had three children. Travis was born in July 1981, Erin in January 1984 and Trent in January 1987. Sharon suffered postnatal depression after the birth of Travis after the birth of the other children. But I accept that Joan did not support her well at this time. Small differences kept arising in the brittle mother-daughter relationship about visiting, Christmas and other matters.
By the early 1980s Joan and William moved to live at Carey Bay, near the township of Toronto on Lake Macquarie. They purchased the property the subject of the claimed notional estate order as vacant land. William and Joan then constructed a 3 bedroom cottage on the land, which by 1981 was completed to lock up stage. They moved in during 1981. Wayne and Maureen moved into the same cottage in January 1984.
I accept Sharon's evidence that her father built for Wayne and his wife Maureen what some called "a granny flat" at the back of the house at the Carney Bay property. Wayne disputed it could be so described and he is probably right. I accept Wayne's evidence that the building when renovated was really two separate houses within the same building. Both were separated internally and both had separate access to and from the outside. But I accept that William said to Sharon at the time it was being built, "Sharon even though I am building a granny flat for your brother you will get a third of the house when I and your mother die".
I accept Wayne's evidence that after he and Maureen moved in they either did or paid for substantial improvements to the house just as they depose, including expending approximately $105,000 between 1984 to 1997 together with additional wages to William for his work.
Sharon divorced Ian Moore in 2004. In 2008 she married Wayne Manning , whose full name I shall refer to in order to distinguish him from the defendant, Wayne Matsen. William died in May 2009. From then on Joan and Sharon seemed to develop a better mother-daughter relationship. Sharon's perception, especially from this time, is that Joan was always a close part of the family. But after the birth of Sharon's children, she and Joan did exchange birthday and Mothers Day presents. William and Joan came to visit Sharon's house, sometimes for extended visits for weeks.
It was more difficult for Joan and William to visit Sharon than Wayne. Sharon lived in the Hills District of Sydney. Wayne and Maureen lived next door, in the other half of the house on the Carey Bay property.
Despite occasional disagreements, Sharon and Joan had what in the last few years of Joan's life Sharon perceived as a fairly normal mother-daughter relationship. An important part of this relationship was Sharon supporting Joan having contact with her children, Joan's grandchildren. Sharon encouraged her children to maintain regular contact with their grandparents William and Joan. Sharon especially points to the role of her daughter Erin in Joan's life. I accept that from an early age Erin would make presents and cards for Joan and would telephone, email and visit William, and later Joan, with Sharon's encouragement. Although I also accept Wayne's evidence that at times Sharon could deny Joan involvement in Erin's life in a way that was hurtful to Joan. But these were only a few occasions.
I accept that Sharon also visited and telephoned the deceased and kept communications with her open. Sharon visited the deceased in November/December 2011 when she was diagnosed with lung cancer and spent Christmas that year with her.

Sharon's Education and Employment History

Sharon was educated to the school certificate level. She attended Kingscliff Public School from 1960 to 1966 and Tweed Heads High School from 1967 to 1970, which she left at the age of 15, after achieving her Higher School Certificate. In 1971 she attended Murwillumbah Tech School, taking a secretarial course to learn typing and short hand, the year she turned 16.
Sharon has undertaken clerical work throughout most of her life. She worked as a punch card operator in Sydney from the time of her return to Australia in late 1975 and until the birth of her first child, Travis in 1991. After that she worked at home as a mother to raise her three children. Then she helped with the raising of her two grandchildren (Jodie's children), Mitchell McKinnon, born in July 1996 and Ethan McKinnon born in November 2001.
Upon returning into the workforce in 2004 Sharon took a number of jobs commencing in motor vehicle spare parts delivery. But she began to work only four days a week because her parents-in-law, Keith and Joyce Manning, were becoming very frail. In April 2010 she was forced to leave her spare parts delivery job, because her parents-in-law's health required them to go into a nursing home. She became involved closely in their daily care, arranging medical appointments and other personal support for them.
Finally in 2012 she commenced work as a casual teacher's aide at Mt Pritchard Public School two days a week for 40 weeks of the year. I accept her evidence that public funding for the continuation of this job is uncertain in 2015.
Sharon faces grave employment uncertainty. At 58 she has no trade or other qualifications. The original clerical work as a punch code operator for which she was trained has long ago become technologically obsolete. She has never undertaken any sophisticated clerical work. Her prospects for future employment, in the event her casual teacher's aide work at Mt Pritchard Public School is not continued, must be considered to be very low. Her age and lack of vocational training mean that she should be assessed as highly likely to become and to remain unemployed in the near future.

Joan's Transactions with Wayne and Maureen in 2009

Joan, Wayne and Maureen undertook transactions in relation to the Carey Bay property in mid-2009. Sharon took no part in these transactions. She had not become aware of them until late 2011, in circumstances that will be explained.
Overview of the 2009 Transactions. William and Joan owned the Carey Bay property for many years as joint tenants. When William died on 11 May 2009, Joan became the owner of the property in fee simple, after notice of death was given to Land and Property Information New South Wales ("LPI NSW") on 4 June 2009. But within weeks of gaining the fee simple in the Carey Bay property Joan had acknowledged that due to their direct and indirect financial contributions to the improvement of the Carey Bay property she held half the property in equity for the benefit of Wayne and Maureen and then transferred an estate in remainder to Wayne and Maureen. Joan had received advice from Centrelink which precipitated this transaction. She engaged a solicitor, a Mr Ken MacDougall, of Armstrong Solicitors of Toronto, to organise the transfer of the estate in remainder from herself to Wayne and Maureen and to record the transaction in a deed of the same date, 24 July 2009 between the three of them. The advice Mr MacDougall gave, the information from Centrelink and related matters are dealt with later in this section of these reasons.
The June 2009 Advice. Mr MacDougall says he first discussed with Wayne and Joan advice that they had apparently received from Centrelink on 4 June 2009. I accept Mr MacDougall's recollection that he discussed on 4 June with Joan and Wayne an information sheet Centrelink had published referring to the effect on existing pension arrangements of the ownership of what are colloquially called "granny flats" and the desirability of entering transactions conferring life estates to protect pension rights. The detail of this Centrelink advice need not be considered in these reasons.
Having perused the document from Centrelink Mr MacDougall said that he advised Joan in the following terms, "Mrs Matsen I recommend you should consult with an accountant or financial adviser as I am unsure if, when title to the property is transferred as is being proposed, its value will not be 'deemed' by Centrelink to be your asset and taken into account in assessing your eligibility for Centrelink benefits".
Having seen and advised Joan and Wayne on 4 June 2009 Mr MacDougall confirmed his advice by mail the following day. His letter was addressed to Joan. In his 5 June 2009 letter to Joan he confirmed that he had forwarded to LPI NSW a notice of death in respect of her late husband signed by her. He said that the title to the Carey Bay property would soon be recorded in her sole name as surviving joint tenant and that a new title deed would issue. He promised to write again when the new Certificate of Title was received. Mr MacDougall also enclosed a draft will and invited her to make another appointment with him concerning it. Mr MacDougall also referred to drawing up the documents necessary for the appointment of Wayne as Joan's attorney and enduring guardian and suggesting she call in to sign those documents at the same time as her will.
Mr MacDougall was concerned about the lack of financial advice available to Joan at the time of this proposed transaction. To reinforce this concern he confirmed the substance of his oral advice to Joan in writing in his 5 June 2009 letter, in the following terms: "We confirm our recommendation that you discuss with a qualified Financial Adviser the consequences as to your continuing receipt of Centrelink benefits should you elect or be required to take up residence in a Nursing Home or other Aged Care facility whilst owning your house property at 28 Wyera Crescent, Carey Bay. Should the advice you receive be to the effect that you should transfer an interest in the property to Wayne and Maureen, then we will need to obtain a valuation from a licensed valuer of the value of the interest being transferred. Stamp Duty will be payable by Wayne and Maureen before the Transfer may be registered. We confirm that should you elect to transfer a one half (1/2) interest in the property, and should the value of the property be assessed at $500,000.00, the duty will be $7,200.00"
Despite this recommendation Joan did not obtain advice from a qualified financial adviser about this transaction before she came to execute the 24 July 2009 deed.
The 24 July 2009 Deed and Transfer. The 24 July 2009 deed recites that Joan is the registered proprietor of the Carey Bay property. It further recites (in Recital B) that Wayne and Maureen have made significant contributions of a direct and indirect financial nature to the improvement of the property: "B. During Joan's ownership of the property Wayne and Maureen have made significant contributions of an direct and indirect financial nature to the extension and improvement thereof."
The parties then recite (in Recitals C and D) as follows: "C. The parties agree that the property is valued as at the date hereof at approximately $500,000 of which value a sum of approximately $250,000.00 is attributable to the improvements effected to the property through the contributions made by Wayne and Maureen. D. As an alternative to the Transfer of a one half (1/2) interest in the property by Joan in favour of Wayne and Maureen, Joan has proposed and Wayne and Maureen have agreed to accept a legal interest in remainder in the title to the property on certain terms and conditions hereinafter appearing".
The July 2009 deed then provided for Wayne and Maureen to pay Joan the sum of $1 for Joan "granting an interest in remainder over the property" (clause 1). Joan acknowledged that from the date of execution of the deed she "will retain a legal life interest only in the property". And that "such interest will cease upon her death or upon her ceasing to reside permanently in the property" (clause 2). The parties agreed that during Joan's tenure as a holder of a life estate the parties "will contribute equally to the outgoings on the property" (clause 3) but that any structural alterations or additions to the property will be carried out at Wayne and Maureen's expense (clause 4). These provisions are set out in full as follows: "1. In consideration of the payment by Wayne and Maureen to Joan of the sum of $1.00 (receipt of whereof is hereby acknowledged) Joan covenants with Wayne and Maureen to execute in their favour a Transfer under the Real Property Act 1900 granting an interest in remainder over the property. 2. Joan acknowledges that as and from the date of her execution of this Deed she will retain a legal life interest only in the property and that such interest will cease upon her death or upon her ceasing to reside permanently in the property. 3. The parties further agree that during Joan's tenure as the holder of a life estate in the property the parties will contribute equally to the outgoings on the property including land rates, water rates and charges, insurance premiums and maintenance. 4. The parties further agree that the costs of any structural alterations or additions to the property are to be carried out at the expense of Wayne and Maureen."
The parties then agreed upon a provision which held a number of financial and security risks for Joan, a provision in the following terms (clause 5): "5. In the event that Joan ceases to reside permanently in the property, she covenants with Wayne and Maureen to execute in favour of Wayne and Maureen a conveyance to them of her life estate in the property which life estate will then be extinguished in the fee simple of the property to the intent that Wayne and Maureen will thenceforth hold title to the property in the form of an estate in fee simple in possession."
The same day the parties signed a Real Property Act transfer, recording the transfer of an estate in remainder to Wayne and Maureen as joint tenants for a consideration of $1. The consideration given and estate transferred are more specifically described in this Transfer as follows: "The transferor acknowledges receipt of the consideration of $1.00 and as regards the land specified above grants to the transferee AN ESTATE IN REMAINDER."
The form of Transfer has the printed word "transfers" crossed out and the word "grants" is written in by hand. Mr MacDougall is recorded below as signing [the transfer] in the capacity of the "Solicitor for the transferee".
It is clear from the analysis of Mr MacDougall's evidence below that he acted for both parties in relation to both the execution of the 24 July 2009 deed and the July 2009 Transfer.
Mr MacDougall advised Joan as to the effect of the deed of 24 July 2009 and the transfer. I accept his evidence that on 24 July 2009 he conferred with Joan in the absence of both Wayne and Maureen and said to Joan: "You must realise Mrs Matsen that if you sign the deed and later leave the property to go into a nursing home you cannot legally require Wayne and Maureen to contribute to any entry contribution or purchase money for your entry into a nursing home."
He says, and I accept, that Joan then said back to him "I understand that but I do not want to retain ownership of the property if it means that Centrelink can force me to sell it if I go into a nursing home".
Mr MacDougall said that during the same conference he said to Joan, "Wayne and Maureen should be taking independent legal advice in relation to the effect of this Deed, as should you". He recalls and I accept that Joan then said to him, "I understand that, I don't need to".

The November 2009 Will

Joan's last will was made on 23 November 2009. The will appointed Wayne as the deceased's executor (clause 2) and gave her household furniture and her effects to him (clause 3).
In clause 4 of her will Joan made what seems at first sight to be a curious bequest. But it is one which makes as little more sense in light of the evidence about her mid-2009 estate planning. Clause 4 of her will provided: "4. IN THE EVENT that at the time of my death I own the real property situated at and known as [the Carey Bay property] then I DIRECT my Trustee to sell that property and after payment of Agent's commission and legal costs on the sale that the net proceeds of the sale be divided into two (2) equal shares and pair or applied as follows:- (a) as to one (1) such share for such of them as survive me for a period of thirty (30) days my daughter the said SHARON LEE MANNING and her children TRAVIS, ERIN and TRENT (full names not published) and if more than one as tenants in common in equal shares; and (b) as to the other half share for such of them as survive me for a period of thirty (30) days my step-grandchildren BRONWYN and her children SARAH, BROOKE and KADE (full names not published) and if more than one as tenants in common in equal shares".
The curious words at the commencement of this clause "in the event that at the time of my death I own the real property situate at and known as [the Carey Bay property] are perhaps to be explained by the advice (considered above) that Joan had received to divest herself of the remainder in the Carey Bay property. She had acted upon this advice five months earlier in July 2009. But clause 4 seems to assume that the 24 July deed was ineffective and that Wayne and Maureen are not in a position to take the Carey Bay property.
Joan gave the residue of her estate in two equal shares: (1) a half share was given to Sharon; and, (2) the other half share was given to Sharon's children, Travis, Erin and Trent. But if the Carey Bay property was not in Joan's estate at her death the residue would not be very valuable, as indeed turned out to be the case.

Events in 2011

Sharon found out about the 2009 transactions in 2011. The circumstances in which the discovery occurred are contested.
Sharon's version may be shortly stated. Sharon says that at celebrations for Christmas 2011 her family were relaxed and drinking at a barbecue at the home of her daughter Erin and her husband Trent. Also present were Joan and Wayne and Maureen. Intuiting that something had occurred (as indeed it had), Sharon says that she asked her brother Wayne about Joan's will. Sharon says that Wayne said to her in response to this inquiry "the house has been left to me and Maureen, as Maureen accused you that you would throw us out in the street". Joan went on to say to Sharon, "I wanted to sign the house over to Wayne because he would help me pay the bills. I did not do this because it would cancel my pension and they would have to look after me financially. So I didn't".
But Sharon had signed the house over in July 2009. Sharon was greatly embittered by the fact that Joan, Wayne and Maureen had kept the transaction from her and indeed even at Christmas 2011 they had not correctly represented its effect to her. There was undoubtedly a bitter dispute that night and Wayne and Sharon made hurtful accusations against one another. These do not need to be reproduced in these reasons as it is not necessary for the Court to decide between the competing versions for the purposes of resolving the issues in these proceedings.

Joan's Estate

Joan died in April 2013. At probate Joan's estate comprised money on deposit of $42,000, a motor vehicle valued at $20,000, household furniture and effects of $1,000, and a toy car collection worth $1,000, together totalling $64,769.14. The motor vehicle was distributed to Wayne and the toy car collection was given to Joan's granddaughter Erin, who had always shown a strong interest in it.
The gross distributable estate at the time of trial, omitting Wayne's costs of the hearing, was $65,572.11. This relatively modest figure is to be explained because the deceased had transferred the remainder in the Carey Bay property to Wayne and Maureen in July 2009.
The parties contested the value of the Carey Bay property. Sharon contended it had an appraisal value of $559,000 to $601,000. The defendant contended that its value was $500,000. The Court has no basis to choose between these figures and takes the midway point (of $550,000) between the extremes of the ranges or points given by each party (namely $500,000 and $601,000).
Wayne's estimated costs and disbursements calculated on the indemnity basis up to the conclusion of the hearing were projected before trial at $59,190. Without the Carey Bay property, after the deduction of the defendant's legal costs there will be virtually no money remaining in the estate, were Sharon to be successful in her claim for an order for a family provision order. Her own costs and disbursements up to the conclusion of the hearing were estimated at the beginning of the hearing at $66,038 on the indemnity basis, inclusive of GST. And they were estimated at $42,924 on the party-party basis.

"Eligible Person" Succession Act, s 57

The applicable legal principles are not in contest. For an order for provision to be made under Succession Act, s 59 in favour of an applicant, the Court must be satisfied that the applicant is an "eligible person" within Succession Act, s 57. As she is a daughter of the deceased, it is not in contest that Sharon is an eligible person under Succession Act, s 57.

Adequate Provision

The next question is whether an order for provision should be made in Sharon's favour. The test of whether provision should be made in any case is set out in Succession Act s 59(1)(c): "(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: … (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."
There are many judicial statements summarising the operation of what is said to be a two-step test for provision. For example in Singer v Berghouse (No. 2) (1994) 181 CLR 201 at 209, the High Court of Australia said of the test under the previous legislation: "The first question is, was the provision (if any) made for the applicant "inadequate for [his or her] proper maintenance, education and advancement in life"? The difference between "adequate" and "proper" and the interrelationship which exists between "adequate provision" and "proper maintenance" etc. were explained in Bosch v Perpetual Trustee Co. The determination of the first stage in the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder, where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."
Whether the two-step test operated with the same full vigour in the current legislation has been discussed in the Court of Appeal: Evans v Levy [2011] NSWCA 125. But such considerations are not an issue in this case, which is a very clear one on the question of whether or not adequate provision has been made for Sharon.
Other authorities have explained in more detail the meaning of the words in the legislation "adequate", "proper", and "advancement in life". Some of these authorities have been conveniently collected in Hallen AsJ's decision (as his Honour then was) in Drury v Smith [2012] NSWSC 1067 at [153], [154], [155], [158] and [160], which relevantly provides:- "[153] Master Macready (as his Honour then was) in Stiles v Joseph (NSWSC, 16 December 1996, unreported) said, at 14-16: "Apart from the High Court's statement that the words 'advancement in life' have a wide meaning and application ... there is little (if any) case law on the meaning of 'advancement' in the context of family provision applications. Zelling J in In The Estate of Wardle (1979) 22 SASR 139 at 144, had the same problem. However, commonly in decisions in which the Applicant's 'advancement in life' has been in issue, the Court has looked only at the material or financial situation of the Applicant, and there is nothing to suggest that provision for the Applicant's 'advancement in life' means anything more than material or financial advancement. For example, in Kleinig v Neal (No 2) [1981] 2 NSWLR 532, Holland J, discusses the financial assistance which an applicant may need for his or her maintenance and advancement in life in the following terms:- If the court is to make a judgment as to what a wise and just testator ought to have done in all the circumstances of the case, it could not be right to ignore that the particular testator was a wealthy man in considering what he ought to have done for his widow or children in making provision for their maintenance, education or advancement in life. There are different levels of need for such things. In the case of maintenance and advancement in life they can range from bare subsistence up to anything short of sheer luxury. A desire to improve one's standard of living or a desire to fulfil one's ambition for a career or to make the fullest use of one's skills and abilities in a trade or business, if hindered or frustrated by the lack of financial means required for the fulfilment of such desire or ambition, presents a need for such assistance and it would seem to me that it is open to a court to say, in the case of a wealthy spouse or parent who could have but has failed to provide such financial assistance, that ... [the deceased] has failed to make adequate provision for the proper maintenance and advancement in life of the spouse or children who had such need. (at 541) In Pilkington v Inland Revenue Commissioners [1964] AC 612, Viscount Radcliffe defined 'advancement', in the context of a trustee's powers, as 'any use of ... money which will improve the material situation of the beneficiary' (at 635), and this definition was cited with approval by Pennycuick J in Re Clore's Settlement Trust; Sainer v Clore [1966] 2 All ER 272 at 274... In Certoma, The Law of Succession In New South Wales (2nd Ed) at 208, it is said: 'Although 'maintenance' does not mean mere subsistence, in the context of the New South Wales Act, it probably does not extend to substantial capital investments such as the purchase of a business, an income-producing property or a home for the Applicant because these forms of provision are more likely to be within the power of the Court under 'advancement in life'. Maintenance is rather concerned with the discharge of the recurrent costs of daily living and not generally with substantial capital benefit.' The Queensland Law Reform Commission, in its Working Paper on Uniform Succession Laws: Family Provision (Working Paper 47, 1995) ... notes ... that: 'Whereas support, maintenance and education are words traditionally associated with the expenditure of income, advancement has been associated with the expenditure of capital, such as setting a person up in business or upon marriage.'" [154] In Mayfield v Lloyd-Williams [2004] NSWSC 419, White J at [114] noted: "In the context of the Act the expression "advancement in life" is not confined to an advancement of an applicant in his or her younger years. It is phrase of wide import. (McCosker v McCosker (1957) 97 CLR 566 at 575) The phrase "advancement in life" has expanded the concept used in the Victorian legislation which was considered in Re Buckland permitting provision to be made for the "maintenance and support" of an eligible applicant. However Adam J emphasised that in a large estate a more extravagant allowance for contingencies could be made than would be permissible in a small estate and still fall within the conception of maintenance and support." [155] In Bartlett v Coomber [2008] NSWCA 100, at [50], Mason P said: "The concept of advancement in life goes beyond the need for education and maintenance. In a proper case it will extend to a capital payment designed to set a person up in business or upon marriage (McCosker v McCosker (1957) 97 CLR 566 at 575; Stiles v Joseph, (NSW Supreme Court, Macready M, 16 December 1996); Mayfield v Lloyd-Williams [2004] NSWSC 419)." … [158] Dixon CJ and Williams J, in McCosker v McCosker (1957) 97 CLR 566 at 571-572, after citing Bosch v Perpetual Trustee Co Ltd, went on to say, of the word 'proper', that: "It means "proper" in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement if life must be considered in the light of the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent." … [160] In Vigolo v Bostin [2005] 221 CLR 191, at 228, Callinan and Heydon JJ said: "[T]he use of the word "proper" ... implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what use to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future.""
The Court was referred by counsel in closing submissions to the principles the Court should take into account in respect of family provision claims by adult children such as Sharon, principles that have been comprehensively summarised by Hallen J in Hogan v Hogan [2013] NSWSC 1405 at [130].
Sharon's and her husband Wayne Manning's current financial position and health issues are relevant to the assessment of their family provision claims. The Court also sets out Wayne and Maureen's current financial position, their respective heath issues and their present need for capital. But Wayne does not have to justify his bequest under Joan's will. The material is set out because it is a relevant matter when the Court is asked to consider the making of an order for family provision in Sharon's favour.

Sharon's Financial Position

Sharon and Wayne Manning own their own home at Baulkham Hills. They purchased it in 2012 with an inheritance from Wayne Manning's parents. Sharon and Wayne Manning purchased an apartment in Penshurst when she separated from her first husband, Ian Moore. They acquired the Penshurst property for $520,000 and lived there together for about 9 years before the inheritance became available that allowed them to purchase the Baulkham Hills property. They retained the Penshurst property after moving to Baulkham Hills. But the Penshurst property is heavily mortgaged: $419,898 was owing on it as at 27 September 2013. The rental income of the Penshurst property ($550 per week) just covers the mortgage repayments ($1700 per month) and other expenses, rates and taxes.
At the time of hearing Sharon had only about $2,000 in a bank account in her own name. She and her husband have $51,626.78 as of October 2013 in a joint account, which is the balance of his inheritance. At the time of trial Wayne Manning was 61 and had accumulated superannuation of $54,213.72. She has few other assets of value. She jointly owns with her husband an interest in a horse syndicate valued at $5,000 and a Toyota motor vehicle valued at $15,000.
I accept that Sharon and Wayne Manning have monthly expenditure of $470 per month on the family car and a further $2,580.30 in outgoings per month for food, utilities, insurance, entertainment, household maintenance, health insurance, and general repairs and maintenance. Thus, their total monthly outgoings are $3,050.30 (or $36,603.60 per year).
Sharon's income even combined with her husband's income barely covers these outgoings. In her current occupation as a casual teacher's aide Sharon earned $20,560 for the financial year ending 30 June 2013 (FY13). Wayne Manning had a taxable income of $28,243 for FY 13 derived from his occupation as a courier owner/driver through his company Manning Couriers Pty Ltd ("Manning Couriers").
Wayne Manning has little property of value apart from his share in Manning Couriers, the principal asset of which is the courier vehicle that he uses to run his business. His net interest in this business has a market value of $5,248.
These figures present a picture of vulnerability over many years to unexpected financial adversity. Sharon's present marginal financial position has been partly occasioned by the necessity for her to support her own children in the face of financial adversity. For example Sharon and her husband Wayne have paid accumulated debts of Sharon's son Trent to a value of $32,000.
Sharon has a strong need for capital. She would for example be significantly better off if she and her husband were able to earn some income from their investment property by reducing the mortgage over it.
But Sharon is also facing a foreseeable future of increasing medical expenses, due to her present ill health.

Sharon's Health

Both Sharon and Wayne Manning have had significant health challenges in the last 15 years. In 2001 Sharon was diagnosed with advanced cervical cancer. She was operated on and as part of her surgical treatment had a hysterectomy. She has been advised by the medical professionals treating her that in the next five years she will probably require further extensive medical procedures to eliminate the threat of ovarian cancer, to which with her medical history she is said to be at risk.
In addition to this surgery Sharon has been hospitalised many times over the years for asthma. She still experiences 4 to 6 asthma attacks a year. She finds that as she ages it takes her longer and longer to recover from her asthma attacks.
Wayne Manning has had his own health challenges. He has suffered kidney damage as a side effect of the anti-inflammatory tablets he has taken over the years for his arthritis. He is suffering from depression and anxiety and is treated by a psychiatrist. He has high blood pressure, suffers sleep apnoea and diabetes. He suffered a heart attack after which stents were inserted in his coronary arteries.
With some justification Sharon expresses concern as to how long her husband will be able to continue working as a courier driver in his one man business. The sole income earning asset of Manning Courier was at the time of the trial now a 12 year old van, which has travelled 400,000 kilometres. Sharon says, and I accept, it will cost them $43,490 to replace.

The Position of Wayne and his Wife, Maureen

The financial and medical position of the defendant Wayne and his wife, Maureen, may be shortly summarised. At the time of trial Wayne was 63 years of age and his wife Maureen 76 years of age. They were married in April 1979 and at the time of trial had been married for 35 years.
Wayne and Maureen have lived at the Carey Bay property for a long time. They moved into the property in January 1984 to live with William and Joan and have lived there ever since. They now have to meet the outgoings on that property. Wayne says that he has expended money and labour in improving the Carey Bay property. This claim was contested and is analysed later in these reasons.
Wayne retired from his profession as a teacher in December 2009. He now receives a superannuation pension in the sum of $920 per week and undertakes contract teaching, earning approximately an additional $1050 per week. He does this work when it is available to him. At the time of trial his contract teaching work was due to cease in December 2014 and it must be regarded as quite uncertain that he would get further regular work of this kind in the future. There is no evidence that William's wife, Maureen is in receipt of any income at present or that she is expected to earn an income at any time in the future.
The defendant and his wife are the registered proprietors of the Carey Bay property. In addition to that Wayne had at the time of trial savings in a Teachers Credit Union account of $13,000 and in the Newcastle Permanent Building Society of $1500.
Wayne and Maureen have listed their joint monthly expenditure on their ordinary day-to-day expenses, which expenditure amounts to $2883 per month. Assuming that Wayne's contract teaching work does not continue and that his pension continues, then his and Maureen's monthly budget is only slightly positive, at $797 (being the difference between Wayne's monthly pension of $3680 ($920 per week multiple 4), less $2883) but would not allow them to save much in the short term.
Wayne and Maureen have an obvious need for continuing secure accommodation. The logical place for that need to be fulfilled in the future is at the Carey Bay property.
Both Wayne and Maureen have their own health problems. Wayne suffers from diabetes and has done so over the past 12 years. He is an insulin dependent diabetic and requires twice daily injections. He also suffers from hypertension and has high cholesterol readings, both of which require regular medication. He has suffered an hiatus hernia which also requires medication.
Maureen's health problems are also significant. She suffers from blockage of an artery at the base of her skull, which has caused her to suffer strokes over the years, the last of which occurred in October 2014. As a consequence she currently has impairment of both vision and mobility and requires physiotherapy. She also suffers from Padgett's disease, Bowen's disease, hypertension and arthritis both in her spine and her limbs. She too has high cholesterol.

Consideration of an Order for Family Provision

Considering whether an order for provision should be made in Sharon's favour is difficult. She has the substantial health challenges that have been identified. She and her husband Wayne Manning have an undoubted need for capital. The most obvious manifestation of that need for capital is the benefits which would arise from reducing the mortgage over their investment property. Providing a financial cushion which would reduce the impact of Sharon's future medical expenses would be a clear advantage to her.
But a real limiting factor in this case is that the making of any such provision should not be so large that it would place a financial burden upon Wayne and Maureen such that they would have to sell the Carey Bay property. Wayne and Maureen have little spare capital set aside, so that any designation of Wayne's interest in the Carey Bay property as notional estate will only be able to be satisfied by the taking out of a mortgage over that interest.
Doing the best the Court can in these circumstances the Court would be prepared to make an order for provision for Sharon by way of a legacy in the amount of $75,000. That is a figure which gives Sharon and Wayne Manning some financial relief but is not so large that it would mean the immediate, or inevitable, sale of the Carey Bay property by Wayne and Maureen.
But not even this legacy can be satisfied out of the estate as well as paying the defendant's costs on the indemnity basis. So the Court must turn to the notional estate claim.

The Notional Estate Claim

Sharon claims that should the Court consider the making of an order for provision in her favour, it should designate Wayne and Maureen's interest in remainder in the Carey Bay property as notional estate under Succession Act, Part 3.3. Wayne resists this claim on several grounds. He submits that the transfer of an estate in remainder to Wayne and Maureen took effect on 24 July 2009 and that as Joan died more than three years later, on 12 March 2013, any "relevant property transaction" threshold for making a notional estate order took place outside the three year limitation period, for which Succession Act, s 80(2)(a) stipulates.
Succession Act Part 3.3. Notional estate orders may be made where as a result of certain property transactions, property is not included in the estate of a deceased person, or where property has been distributed from the estate of the deceased person. The Court is empowered in limited circumstances to make an order designating property not included in the estate, or which has been distributed from the estate, as "notional estate" for the purposes of making a family provision order under Succession Act, Part 3.2 in respect of the estate of the deceased person: see Succession Act s 80(1).
Notional estate orders cover a wide variety of circumstances. It is not necessary to set out in these reasons all the legislation as it might apply to all those other circumstances. But in broad canvas the structure of decision-making in Succession Act Part 3.3 is as follows. First, the Court must be able to identify a "relevant property transaction", something which means either "a transaction or a circumstance affecting property" as described in Succession Act, ss 75 or 76: see Succession Act s 74. Secondly, a notional estate order may only be made for the purposes of making a family provision order under Succession Act, Part 3.2, and the estate must otherwise be insufficient for the making of the family provision order or any order as to costs: Succession Act, ss78 and 88. Thirdly, the Court may on the making of an application for a family provision order "make a notional estate order designating property specified in the order as notional estate of the deceased person", only if the deceased entered into the relevant property transaction before his or her death and the transaction is one to which Succession Act, s 80 applies, a provision which contains qualifications relevant to this case, including as to the time at which the transaction in question takes effect. Apart from Succession Act, s 80, notional estate orders may be made in other circumstances covered by Succession Act, ss 81 and 82, neither of which are applicable here. Fourthly, the relevant property transaction must result in disadvantage to the estate or in a failure to benefit the estate of a specified kind: Succession Act, s 83. Finally, the legislation commands the Court not to make a notional estate order unless it has considered a number of overarching restrictions and protections: see Succession Act, ss 87 and 89.
Each of these five steps is engaged here. So the relevant legislation is set out below in more detail. It follows the structure of the summary above. Steps two and four are not controversial in this case.
First, Succession Act, s 75 allows that entry into a "relevant property transaction" may arise from both actions and omissions to act, in circumstances where full valuable consideration is not given. Succession Act, s 75 provides: "75 Transactions that are relevant property transactions (1) A person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being: (a) held by another person (whether or not as trustee), or (b) subject to a trust, and full valuable consideration is not given to the person for doing or not doing the act. (2) The fact that a person has entered into a relevant property transaction affecting property does not prevent the person from being taken to have entered into another relevant property transaction if the person subsequently does, or does not do, an act affecting the same property the subject of the first transaction. (3) The making of a will by a person, or the omission of a person to make a will, does not constitute an act or omission for the purposes of subsection (1), except in so far as it constitutes a failure to exercise a power of appointment or disposition in relation to property that is not in the person's estate."
Succession Act, s 76 provides what the heading to the section describes as "Examples of relevant property transactions". This is a correct description. Although s 76(1) says that the "circumstances set out in subsection (2)…constitute the basis of a relevant property transaction for the purposes of section 75" [emphasis added], s 76(3) makes clear that a "relevant property transaction" is not limited to subsection (2) circumstances. Many of the s 76(2) circumstances are of marginal relevance to the present case. But Succession Act, s 76 provides: "76 Examples of relevant property transactions (1) The circumstances set out in subsection (2), subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of section 75. (2) The circumstances are as follows: (a) if a person is entitled to exercise a power to appoint, or dispose of, property that is not in the person's estate and does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that the property becomes held by another person (whether or not as trustee) or subject to a trust or another person (immediately or at some later time) becomes, or continues to be, entitled to exercise the power, (b) if a person holds an interest in property as a joint tenant and the person does not sever that interest before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that, on the person's death, the property becomes, by operation of the right of survivorship, held by another person (whether or not as trustee) or subject to a trust, (c) if a person holds an interest in property in which another interest is held by another person (whether or not as trustee) or is subject to a trust, and the person is entitled to exercise a power to extinguish the other interest in the property and the power is not exercised before the person ceases (because of death or the occurrence of any other event) to be so entitled with the result that the other interest in the property continues to be so held or subject to the trust, (d) if a person is entitled, in relation to a life assurance policy on the person's life under which money is payable on the person's death or if some other event occurs to a person other than the legal representative of the person's estate, to exercise a power: (i) to substitute a person or a trust for the person to whom, or trust subject to which, money is payable under the policy, or (ii) to surrender or otherwise deal with the policy, and the person does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, (e) if a person who is a member of, or a participant in, a body (corporate or unincorporate), association, scheme, fund or plan, dies and property (immediately or at some later time) becomes held by another person (whether or not as trustee) or subject to a trust because of the person's membership or participation and the person's death or the occurrence of any other event, (f) if a person enters into a contract disposing of property out of the person's estate, whether or not the disposition is to take effect before, on or after the person's death or under the person's will or otherwise. (3) Nothing in this section prevents any other act or omission from constituting the basis of a relevant property transaction for the purposes of section 75. (4) For the purposes of this Chapter, in the circumstances described in subsection (2) (b), a person is not given full or any valuable consideration for not severing an interest in property held as a joint tenant merely because, by not severing that interest, the person retains, until his or her death, the benefit of the right of survivorship in respect of that property."
Secondly, Succession Act, s 78 requires that a notional estate order may only be made for the purposes of making a family provision order under Succession Act, Part 3.2 or for the purposes of an order for the costs of proceedings. And Succession Act, s 88 prohibits the making of a notional estate order "unless the deceased's estate is insufficient for the making of the family provision order, or any order as to costs" that should otherwise be made. It is not in contest in these proceedings that but for the making of a notional estate order there would be nothing available in the deceased's estate to satisfy a family provision order. So the requirements of Succession Act, ss 78 and 88 are met in this case.
Thirdly, Succession Act, s 80 limits the range of transactions that may qualify as "relevant property transactions" and provides: "80 Notional estate order may be made where estate affected by relevant property transaction (1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which this section applies. (2) This section applies to the following relevant property transactions: (a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order, (b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction, (c) a transaction that took effect or is to take effect on or after the deceased person's death. (3) Property may be designated as notional estate by a notional estate order under this section if it is property that is held by, or on trust for: (a) a person by whom property became held (whether or not as trustee) as the result of a relevant property transaction, or (b) the object of a trust for which property became held on trust as the result of a relevant property transaction, whether or not the property was the subject of the relevant property transaction."
Each of the relevant property transactions described in subparagraphs (2)(a),(b) and (c) is potentially relevant here. The time of taking effect of a relevant property transaction for the purpose of calculating the times in s 80(2) is defined by Succession Act, s 77. It provides: "77 When relevant property transactions take effect (1) For the purposes of this Chapter, a relevant property transaction is taken to have effect when the property concerned becomes held by another person or subject to a trust or as otherwise provided by this section. (2) A relevant property transaction consisting of circumstances described in section 76 (2) (a), (c) or (d) is taken to have been entered into immediately before, and to take effect on, the person's death or the occurrence of the other event resulting in the person no longer being entitled to exercise the relevant power. (3) A relevant property transaction consisting of circumstances described in section 76 (2) (b) or (e) is taken to have been entered into immediately before, and to take effect on, the person's death or the occurrence of the other event referred to in those paragraphs. (4) A relevant property transaction that involves any kind of contract for which valuable consideration, though not full valuable consideration, is given for the person to enter into the transaction is taken to be entered into and take effect when the contract is entered into."
Fourthly, Succession Act, s 83 provides that a relevant property transaction must either disadvantage or fail to advantage the estate in identifiable ways. The provisions of s 83 are reproduced below: "83 Disadvantage and other matters required before order can be made (1) The Court must not, merely because a relevant property transaction has been entered into, make an order under section 80, 81 or 82 unless the Court is satisfied that the relevant property transaction or the holding of property resulting from the relevant property transaction: (a) directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or (b) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that, if not exercised, could have resulted in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or (c) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or (d) involved an omission to exercise a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death). (2) In this section: "principal party to the transaction", in relation to a relevant property transaction, means the person who, under section 75 or 76, enters into the relevant property transaction."
There was little contest between the parties about whether this requirement had been satisfied in this case.
Finally, both parties advanced submissions about the general policy considerations that restrict the Court in making notional estate orders. The considerations of principal relevance are provided for in Succession Act, s 87, as follows: "87 General matters that must be considered by Court The Court must not make a notional estate order unless it has considered the following: (a) the importance of not interfering with reasonable expectations in relation to property, (b) the substantial justice and merits involved in making or refusing to make the order, (c) any other matter it considers relevant in the circumstances."
Wayne submits that if the present circumstances would otherwise qualify for the making of a notional estate order that once the Court takes into account the mandatory considerations in Succession Act s 87, it should decline to make the orders Sharon seeks.
Sharon responds to each stage of Wayne's argument and Wayne in turn proffers a rejoinder to many of Sharon's arguments. It is convenient to deal with these contentions together in the section below entitled "Analysis of the Notional Estate Issue".
The parties' respective contentions may now be summarised in greater detail. But one important consideration in determining the notional estate issue is evaluating the nature of the exchange of value that took place in the 24 July 2009 deed, when Joan swapped what was said in Recitals B and C of the deed to be her half interest in equity the Carey Bay property, (being the net interest remaining to her in equity after she acknowledged Wayne and Maureen's half interest due to their contributions) for a life interest in the property. Whether or not Joan received "full valuable consideration" in this exchange is one important threshold step in Sharon's notional estate claim. If Joan received full valuable consideration then the 24 July 2009 deed would not qualify as a "relevant property transaction" within Succession Act, s 75 which may found a notional estate claim.

Valuing Joan's Life interest

Both Sharon and Wayne adduced expert actuarial evidence about the value of Joan's life interest in the Carey Bay property as at July 2009. Sharon adduced expert evidence from Mr David Heath, a fellow of the Institute of Actuaries of Australia in a report from the firm of consulting actuaries, Cumpston Sarjeant and dated 11 December 2014. Wayne adduced evidence from Dr Tamara Lindsay of Forensis Accounting, in a report dated 5 December 2014. The Court was much assisted by both these expert reports, which are analysed below.
Both experts input the same basic assumptions into their actuarial calculations. These core assumptions are not in issue in the proceedings. But the parties disputed the relevance of other broader assumptions that Dr Lindsay used in her report. Both experts undertook their calculations as at 24 July 2009, the date of the deed by which Joan transferred a remainder interest in the Carey Bay property to Wayne and Maureen. The value of Joan's life interest is in part a function of her life expectancy as at that date. The information supplied to both experts for the purposes of their calculations was: (1) the date of Joan's birth, 8 June 1931, (2) the date of the deed by which Joan transferred a remainder interest to Wayne and Maureen, namely 24 July 2009, (3) the date of the deceased's execution of her last will on 23 November 2009, and finally (4) Joan was assumed to have a normal life expectancy but the experts were told that her date of death was 7 April 2013.
Neither expert was cross-examined. Their actuarial approaches to the respective valuations of Joan's life estate and remained interest were slightly different. Despite the lack of cross-examination, the Court was required to choose between their respective opinions.
Mr David Heath's Report. Upon the assumption that the Carey Bay property was worth $500,000 in July 2009, Mr David Heath's report valued Joan's life interest at $102,800 and Wayne and Maureen's remainder interest at $397,000 (based upon an assumption for the purposes of actuarial calculation of a 2% net investment yield). If the actuarial calculation assumption were increased to a 3% net investment yield, then the figures would vary slightly: upon that assumption, Joan's life interest would be valued at $143,200 and Wayne and Maureen would have a remainder interest of $356,800.
Mr David Heath's report did not base itself upon the actual rent that could be obtained from the Carey Bay property. He indicated in his reasoning that if the gross rent were available then, together with details of outgoings, the net rent and yield could be obtained. The life interest would then be calculated as the value of future rent after expenses discounted at the net yield on the property. But in the absence of actual gross rent, he calculated the value of the respective financial interests in the property on the basis of implied gross rent of 2.57% and 3.57%. Mr Heath indicated that it was beyond his expertise either to know, or to be able to infer, the market rental for the Carey Bay property. But based upon other similar life interest calculations he used a yield range of 2.57% to 3.57%, a range that he regarded as reasonable in the circumstances. But he did base the annual expenses upon the outgoings provided to him with his instructions in order to produce a net yield per annum of $9901 (upon the assumption of a 2% gross rental yield) and $14,779 (upon the assumption of a 3% gross rental yield).
Mr Heath was of the view that in order to reasonably apportion the value of the whole estate, that he should consider the value of the life interest, calculated as the potential net income of the property discounted at the implied yield and allowing for the beneficiary's mortality. In his opinion the principle he adopted was in conformity with the views expressed in N. Benz and H.J. Tappenden: "Valuation of reversions and life interests" (1951 Cambridge University Press). Mr Heath stated that the valuation principles that he applied were intended to be fair to all parties concerned, the life and remainder beneficiaries. Mr Heath's reasoning was that if the same principles were used to estimate the present value of the interest of the remainder beneficiaries, then that result, together with the value of the life beneficiary's interest, should equal the assumed present market value of the estate.
Mr Heath did not consider the effect of taxation. He deliberately omitted taxation considerations when performing his valuation, partly because of the complexity of applying these considerations and partly because in his view, such considerations would affect both the life interest holder (via income tax) and the remaindermen (via capital gains tax). His view was that any attempt to incorporate taxation explicitly would result in a deficit in the total present value of the life and remainder interests that he assumed would be borne by both parties equitably.
Dr Tamara Lindsay's Report. The expert called on behalf of the estate, Dr Tamara Lindsay approached the valuation of Joan's life estate somewhat differently. That said, the outcome of Dr Lindsay's valuation of $118,627 was within the valuation range of $102,800-$143,200 that Mr Heath had identified that arises from the use of 2% or 3% net investment yield.
Three questions were posed to Dr Lindsay: (1) her opinion as to the value received by Joan when she transferred her half share in the Carey Bay property to Wayne and Maureen in return for a life interest in the property; (2) her opinion as to the impact on Joan's age pension had she gifted a half share in the Carey Bay property to Wayne and Maureen in July 2009; and (3) her opinion as to the impact on Joan's age pension had she gifted her share in the Carey Bay property to Wayne and Maureen in July 2009 but upon the further assumption that the Commonwealth did not accept that Wayne and Maureen had an equitable claim to a 50% interest in the Carey Bay property and ruled that the deceased had a 100% interest in the property in July 2009.
Dr Lindsay assumed the same four common items of information that Mr Heath was given and which were identified earlier in these reasons. She also assumed that prior to the 24 July 2009 transaction Joan only held beneficially 50 per cent of the Carey Bay property. Using the common assumption that the property had a market value of $500,000, Dr Lindsay assumed that Joan's beneficial half interest was worth $250,000. Dr Lindsay assumed that Joan received the full Age Pension in July 2009 - and that as at 24 July 2009 Joan had no material assets other than for the 50 per cent interest in the Carey Bay property.
Dr Lindsay's task in valuing Joan's life interest is described more fully in Section V of paragraphs [20], [21] and [22] of her report as follows: "20. I have been requested to quantify the value of the life interest obtained by the Deceased by reference to the present value, as at 24 July 2009, of the home related costs / outgoings that the Deceased would no longer incur, or notionally incur, under the life interest arrangement. The formula I have used is: Weekly cost x weekly 3% multiplier for the duration of the Deceased's life expectancy from 24 July 2009 21. I have been requested to prepare calculations based on two alternatives as to the extent of the Deceased's share of the home related costs: (i) 50% (on the basis that the Deed between the Deceased and the Defendant and the Wife dated 24 July 2009 states that "the parties will contribute equally to the outgoings on the property" (clause 3); and (ii) 100%. 22. I have also been requested to prepare calculations based on two alternatives of the Deceased's life expectancy: (i) normal life expectancy; and (ii) a life expectancy to her actual date of death."
Dr Lindsay received no factual information about the actual home related costs/outgoings that Joan, Wayne and Maureen incurred on the property in July 2009. So she used data from the Australian Bureau of Statistics ("ABS"), the Household Expenditure Survey 2009/2010 data (Catalogue No. 6530.C). Based on Joan's circumstances she used average expenditure for the following categories of households: "(i) 1st income quintile; (ii) source of income from Age Pension; (iii) composition being an 'Other One Family Household'; (iv) location - New South Wales (not capital city)."
Some judgment is required as to which cost categories should be selected from the ABS data. Dr Lindsay selected the following categories for the following reasons: "(i) current housing costs (this includes mortgage interest, rent, council rates, water rates, home and contents insurance, repairs and maintenance) - I have included average mortgage interest / rent costs as notional costs in order to include in the value of the life interest an element which takes account of the cost of equity in the Property; (ii) domestic fuel and power; and (iii) household services and operation (this includes cleaning products, gardening, telephone, internet, pest control, rubbish removal, repairs and maintenance of household appliances, etc)."
Dr Lindsay's instructions required her to use Commonwealth of Australia legislative materials and the above factual assumptions to consider the following questions (with short answers given in parentheses): 1. Whether Joan's Age Pension would have decreased as a result of the transfer of Joan's half interest in the property in exchange for the life interest, and 2. Whether Joan's Age Pension would have decreased if she had gifted her half interest in the Carey Bay property to Wayne and Maureen, (answer: a pension loss of $47.50 per fortnight up to 19 September 2009 and $59.38 per fortnight thereafter for the rest of her life) and 3. What would have been the impact on Joan's Age Pension had she gifted her share in the property to Wayne and Maureen but distinguishing this assumption from that in (b) the Commonwealth Department Social Services did not accept that Wayne and Maureen had an equitable claim of a 50 per cent interest in the property and ruled that Joan's interest was 100 per cent (answer: a pension reduction of $168.89 per fortnight up to 19 September 2009 and $203.62 per fortnight thereafter for the rest of her life).
Dr Lindsay concluded that based on her costs based calculation Joan's life interest had the following values: "Description Amount 100% of costs for normal life expectancy $118,627 100% of costs to actual date of death $40,706 50% of costs for normal life expectancy $59,313 50% of costs to actual date of death $20,353"
Dr Lindsay concluded that had Joan's share in the property been gifted to Wayne and Maureen from 24 July 2009 her fortnightly Age Pension would have decreased by the following amounts: "Description Amount Gift of 50% share - from 24 July 2009 to 19 September 2009 $47.50 Gift of 50% share - from to 20 September 2009 to 23 July 2014 $59.38 Gift of 100% share - from 24 July 2009 to 23 July 2014 $274.50"
Contrasting Dr Lindsay's Reports. Mr Heath's approach differed from that of Dr Tamara Lindsay in a number of respects that explain the different conclusions that they each reached about the respective values of Joan's life estate and about the remainder interest.
Mr Heath takes issue with the following aspects of Dr Lindsay's report: 1. Mr Heath prefers his calculation of the life interest because it effectively apportions the whole value of the property between the life beneficiary and the remainder, so that the two interests sum to the value of the property over Dr Lindsay's approach, valuing a stream of assumed payments for a fixed life expectancy term, such that the life and remainder interests will not necessarily sum to the market value of the property. 2. Dr Lindsay has adopted a 3 per cent per annum discount rate, which Mr Heath says does not necessarily capture the actual yield on the property. 3. Dr Lindsay includes ABS Household Expenditure survey statistics, including mortgage interest and rent, domestic fuel and power, household services and operation, but Mr Heath says that this would take expenditure related to fuel and power and household services and operation, as a benefit to the life beneficiary from holding the life interest, which he says would only be appropriate if the estate paid for items such as fuel and power costs on behalf of the life beneficiary. 4. Dr Lindsay uses life expectancy as a certain term, which Mr Heath says is likely to overvalue the life interest, compared with the application of annual mortality rates, assuming the life beneficiary had a normal life expectancy. 5. Dr Lindsay takes life expectancy for Joan from a Cumpston Sergeant publication but she has adopted the life expectancy of a 78 year old female in 2015. Mr Heath says she should have used the 2009 tables and says if they were used that would result in a slightly lower life expectancy. 6. In relation to vicissitudes, Mr Heath says he has allowed for Joan's mortality on the basis of average life expectancy and has not commented on other vicissitudes, as he understands these are taken into account by the Court to allow for individual circumstances. 7. Mr Heath is of the view that the net yield on the property in question represents a significant uncertainty in the calculation. 8. Mr Heath confirmed that he had been asked to assume that the life beneficiary meets half the outgoings on the property. If the life beneficiary were assumed to meet all the outgoings on the property he says that the value of the life interest may reduce by approximately $25,000.
The Court did not have the benefit of seeing Mr Heath and Dr Lindsay cross-examined. But the Court prefers Mr Heath's evidence in relation to the task that confronts the Court. First the Court must, among other things, determine whether or not Joan received "full valuable consideration" at the time of the 24 July 2009 transaction. That involves an assessment of what she gave away and what she received in that transaction. Thus the Court's primary task is to look at that transaction at the date of that transaction and to evaluate the exchange of value it represented. Whatever benefits that Joan might have received indirectly by way of savings on a pension are not part of the exchange of value that occurs between the parties to the July 2009 deed. They are collateral matters. The Court must consider what was given and received under that transaction, looked at at the time of that transaction. Thus it is appropriate to assess the value of Joan's life estate by reference to life tables because at the time of the transaction it was not known how long Joan would live. That is the task that Mr Heath undertook.
Secondly, Mr Heath's analysis has the advantage that both the life estate and the remainder sum to the assumed market value of the property. As Joan on the one side and Wayne and Maureen on the other were subdividing interests in the one property this in my view is the preferable approach.
Mr Heath's range of values for Joan's life estate are $102,800 to $143,200. The mid way point in that range of $123,000 is not very far from Dr Lindsay's $118,627. I infer that the value of the life estate was about $120,000.
The Court accepts Wayne's evidence that from 1984 onwards he and Maureen undertook works on the Carey Bay property through their own exertions and by paying third parties and that those works included paying the late William Matsen a wage to perform works. The Court will not go behind the part of the deed in which valued Wayne's contribution by agreement at $250,000. He did make a substantial contribution. That means that Joan's half share in the property was also worth $250,000. That means that by giving up her half share in the property Joan gave away $250,000 but she received a life estate worth $120,000. In my view she did not get back the full value that she gave up with her half share. She lost the difference of $130,000 ($250,000 minus $120,000).
But she did get other intangible benefits in this transaction. If there were a falling out between her and Wayne it would be more difficult for the property to be sold under Conveyancing Act, s 66G. Another advantage to Joan was that Wayne and Maureen would bear the costs of any structural alterations or additions to the property: clause 4. But on the other hand, her life estate was probably worth barely $120,000, because of the provisions of the 29 July 2009 deed which meant that the life estate would cease in certain circumstances even before she died: see clause 5.
Now that the analysis of the respective values of Joan's life estate and her half interest in the Carey Bay property have been examined, the broader aspects of Sharon's notional estate claim fall for analysis.

Analysis of the Notional Estate Issue

In this section the Court considers Sharon's argument and evaluates Wayne's response under each of the steps set out above formulated as questions below. 1. Is there a "relevant property transaction" to found a notional estate claim? 2. Is a notional estate order required to make an order for family provision? 3. Is any posited relevant property transaction one to which s 80 applies? 4. Did any posited relevant property transaction disadvantage the estate or fail to benefit the estate in a specified way? 5. Do any of the restrictions or protections in s 87 prevent the making of a notional estate order?
(1) A Relevant Property Transaction? Wayne argues that any potential "relevant property transaction" here occurred on 24 July 2009, when Joan transferred an interest in remainder in the Carey Bay property to Maureen and to himself. He says that was the doing of "any act" that "results in property" being "held by another person", within s 75. But he says this is the only "relevant property transaction" here and that, for reasons that appear in step (3), it is too long before Joan's death to qualify as a "relevant property transaction". Finally, he contends that full valuable consideration was given for the doing of that act, principally because of Wayne's prior contributions to the renovation of the house.
Sharon's reply accepts the first part of Wayne's argument. She accepts that the 24 July 2009 transaction can qualify as a "relevant property transaction", but she says that Succession Act, Part 3.3 permits more than one "relevant property transaction" with respect to the same property and that there is at least one other after 24 July 2009. She further submits that full valuable consideration was not given to Joan for the doing of any of the relevant acts constituting the alleged "relevant property transactions", so they each do qualify as a "relevant property transaction". Thus the sub-questions for consideration become the following: (a) is the 24 July 2009 transaction a relevant property transaction; (b) are there any others; and, (c) was full valuable consideration given for any relevant property transactions?
As to sub-question (a), the first part of Wayne's argument can be accepted. The 24 July 2009 deed qualifies as an act that results in "property being held by another person". By a combination of the 24 July 2009 deed and the Transfer of the same date Joan transferred part of her existing fee simple, namely an interest in remainder to Wayne and Maureen as joint tenants.
As to sub-question (b), Sharon argues that there is more than one "relevant property transaction" here. She submits that in addition to the 24 July 2009 transaction that another "relevant property transaction" occurs at Joan's death when her life interest ends and the Carey Bay property fell into Wayne and Maureen's possession. Sharon adopts an argument that was advanced, though not decided, in Ramsay v Schiller [2012] NSWSC 596, a case also involving a claim to designate property as notional estate in connection with a life interest and a case in many ways factually similar to the present case. In Ramsay v Schiller (at [29]) Hallen J recorded that argument as follows: "The Plaintiffs submit: '3.2 [The submission at 20] misconceives the nature of the inquiry as to whether property should be designated as notional estate. That inquiry involves not just the question whether the deceased entered into a relevant property transaction... 3.5 ... In essence the plaintiffs submit that, while Ms. Schiller upon registration held a vested interest, such had not fallen into possession. It was not until the deceased's death that her interest fell into possession at which time she had the right, and only then, to apply to the Registrar-General pursuant to s. 101 of the Real Property Act for issue of a Certificate of Title. Since her interest in the remainder fell into possession upon, and as a consequence of the death of the deceased, this means that the Transfer was 'a transaction that took effect or is to take effect on the deceased's death' - see s 80(2). 3.6 ... the Transfer dated 2 June 2006 constituted a relevant property transaction for the purposes of the Act. Further submissions detailing this argument will be presented at the appropriate time.'"
But Wayne argues there is only one "relevant property transaction" which took place on 24 July 2009. He submits that the ending of Joan's life estate is not a separate transaction. To support that submission he relies upon two passages from PJ Butt, Land law (6th ed 2010, Thomson Reuters), descriptive of the nature of life estate in Chapter 6, the Doctrine of Estates: Reversions and Remainders, paragraphs [6.06] - [6.11]. Professor Butt advances an example in which a person (A) has a fee simple and grants to a second person (B) a life interest and then (A) sells his reversion to a third person (X), so that when (B) dies then (X), the then owner of the remainder, (A's) reversion, can enter into possession. Professor Butt then analyses this situation, examining the language of "seisin" applied by medieval property lawyers (namely, the fact of holding of land by a feudal owner in the feudal land system- see C Harpum, S Bridge and M Dixon, Megarry and Wade, The Law of Real Property (8th ed 2012, London, Sweet & Maxwell) at [3-019]): "This, though, raises another problem. X will not obtain the right to possession of the land until B dies. Moreover, unlike A in our example of a reversion, X has never been seised. Has X, then, during the existence of B's life estate, any immediate interest in the land? After considerable hesitation, the medieval lawyers answered this question in the affirmative. It is true that X is not yet entitled to seisin, for B is seised by virtue of the life estate. But X has an immediate estate in fee simple by virtue of the grant, even during B's lifetime. That estate X can dispose of, and on B's death that estate will entitle X (or whoever then owns the estate) to seisin of the land. X's estate cannot be classed as a reversion, for a reversion implies tenure. And so it is called instead a 'remainder', because on B's death the land 'remains away' from A instead of reverting to A."
Based on such analysis, Wayne says that when Joan died he and Maureen already had an estate which they could dispose of and there is at that time no separate "relevant property transaction" that "results in property being…held by another person" so as to satisfy Succession Act, s 75.
Succession Act, s 75(2) makes clear that merely because a person "has entered into a relevant property transaction affecting property" does not prevent the person from "being taken to have entered into another property transaction" as a result of an act or omission "affecting the same property the subject of the first transaction". In this respect the statute leaves open the possibility that the ending of Joan's life estate might perhaps be "another relevant property transaction" and in my view it goes some way towards qualifying as another relevant property transaction. As the plaintiff's argument pointed out in Ramsay v Schiller [2012] NSW 596 and as is clear from Professor Butt's analysis, Wayne and Maureen's interest in remainder only falls into possession at the time of Joan's death and not before, and only then do they obtain the right to apply pursuant to Real Property Act 1900, s 101 to the Registrar General for registration of an estate or interest in fee simple and the consequential issue of a new certificate of title. Sharon argues that an estate falling into possession of a remaindermen would qualify as Joan at least indirectly doing an "act that results in property being…held by another person". Prior to the end of the life estate the remainder was not held in possession, whereas after the end of the life estate it was.
But this argument fails for two reasons. The first reason for its failure is that Succession Act, Division 3.2 prohibits the ending of the life estate qualifying in these circumstances as a "another relevant property transaction". In this case the 24 July 2009 transaction, though effected by deed, involved a contract for valuable consideration. Succession Act, s 77(4) raises special rules for when relevant property transactions take effect with respect to different classes of transaction. Where a relevant property transaction "involves any kind of contract for which valuable consideration, though not full valuable consideration, is given for the person to enter into the transaction" if that qualification is met then the "relevant property transaction" is "taken to be entered into and take effect when the contract is entered into". One purpose of this provision seems to be to simplify the ascertaining of the date that a contract takes effect in a common situation where a contract for valuable consideration involves a later conveyance or conveyances of property, thereby setting up potentially competing dates at which the contract might take effect: the date of contract and the date of the conveyances. Section 77(4) merges the date of entry into the contract and the date of taking effect of that contract as the time "when the contract is entered into".
Section 77(4) also serves the public policy reflected in the mandatory consideration raised by s 87(a), that is, the importance of not interfering with reasonable expectations in relation to property. Immediately upon the execution of a valid contract conveying an interest in property, the parties to the contract are likely each to acquire reasonable expectations as to how that interest will be conveyed. That is so whether the disposition of property is to take place forthwith or in the future. Section 80(2) provides that only relevant property transactions taking place within three years before a deceased's death are open to scrutiny under the notional estate regime. By setting the effective date of a contractual relevant property transaction as the date of contract, s 77(4) provides that parties with contractual rights to property predating the death of the deceased by over three years are less likely to have their reasonable expectations in relation to that property disappointed by the notional estate regime.
The 24 July 2009 deed was a contract for valuable consideration. Wayne and Maureen agreed to pay Joan $1 for the interest in remainder. The parties exchanged promises about the making of equal contribution to outgoings on the property. Joan arguably obtained some security (namely the freedom from the threat of a Conveyancing Act, s 66G application) from the conversion of Wayne and Maureen's half interest in the property into an interest in remainder which could only be enjoyed by them after Joan's death. Although the Court has found that consideration was not "full valuable consideration" within s 75(1) it nevertheless qualified as "valuable" consideration within s 77(4).
In my view s 77(4) precludes Sharon's argument that the ending of the life estate is another relevant property transaction. All acts which are in the nature of the performance of the contract by which the contract would take effect are taken to "take effect" when the contract is entered into. Section 77(4) would nevertheless permit the treatment of other acts or omissions otherwise than in performance of the contract as another "relevant property transaction" but any act in performance of the contract for valuable consideration would take effect when the contract is entered into.
There is a second reason that Sharon's submission that the transfer of an estate in remainder to Wayne and Maureen was a relevant property transaction under s 75 must fail. That section prescribes what actions constitute 'relevant property transactions'. That prescription has two limbs: the first relating to the disposition of property, and the second relating to whether full valuable consideration is paid. The first limb of the test is that such a transaction is only entered if a person "does, directly or indirectly, or does not do, any act that … results in property being … held by another person". It is difficult to conceive of what 'act' Joan performed or did not perform at the point her life interest ceased, thereby transferring the estate in remainder to Wayne and Maureen. Certainly executing the 24 July 2009 deed was an 'act'. But it is doubtful whether to die, or not to live, can sensibly be seen as an 'act' for the purposes of s 75. Certainly it does not fit a common sense understanding of the wider term 'transaction' said to be constituted by the 'act', which 'term' is defined as "the act of transacting", transacting meaning: "to carry through (affairs, business, negotiations, etc.) to a conclusion or settlement"; "to perform" or "to carry through affairs or negotiations" (Macquarie Dictionary (online edition, 2015)). Moreover, the second limb of the s 75 definition of 'relevant property transaction' could not apply to death as an act. That limb requires "full valuable consideration" not to have been given to the person for doing or not doing the act. That requirement is nonsensical in relation to the 'act' of dying.
As to sub-question (c), the Succession Act does not define "full valuable consideration". But its meaning in s 75 has received judicial interpretation. In Wade v Hardy (1997) 11 NSWLR 551 at 554-5 Young J (as his Honour then was) assessed the meaning of the words in what was then s 22 of the Family Provision Act 1982. His Honour pointed out that older authorities such as Attorney General v Boden [1912] 1 KB 359 at 561 per Hamilton J and Attorney General v Earl of Sandwich [1922] 2 KB 500 per Lord Sterndale MR had created a line of authority followed by the Court of Appeal in Perpetual Trustee Co Limited v Commissioner of Stamp Duties ("Hordern's case") (1970) 72 SR (NSW) 453; 92 WN 163 where Jacobs JA held (at 458; 168): "…There must be full consideration for the disposition, but this is to be distinguished from a requirement that there be an exact equivalent in value between the property disposed of and the property received. Consideration is the price paid for a bargain. Full consideration is a full price. For a disposition to be characterised as consideration there must be present the element of bargain, but provided that this element is present then the best bargain, the best price, will be a full consideration; and when a disposition of property is the consideration, as in the present case, there will be money's worth."
Hordern's case is binding upon me. Different expressions have been used such as in Re Marriott, deceased [1968] VR 260 at 269 where Gillard J said the expression "connotes some elasticity" and in Aubrey v Kain [2014] NSWSC 15 where Hallen J noted at [137] that "full valuable consideration" means such valuable consideration as "amounts to, approximates or is broadly commensurate with, or is a fair equivalent of the value of that for which it is given". There may be differences between Aubrey v Kain and Re Marriott, deceased on the one hand and Hordern's case on the other. It is sufficient for me to simply apply the formula set out above in Hordern's case.
The 24 July 2009 deed was a transaction in which "full valuable consideration" was not given to Joan for the acts involved in her part of the transaction. For the reasons elaborated earlier in this judgment under the heading "Valuing Joan's Life Interest". There was not, in my view, a "full price" given to her conformably with the statements of principle in Hordern's case. Thus this element of Succession Act, s 75(1) is satisfied.
(2) Is a notional estate order required? There is no issue here about proving that a notional estate order is necessary for the purposes of Succession Act, ss 78 and 88. There is only about $65,000 in the estate, approximately $50,000 of which will be consumed in Wayne's costs of these proceedings. The making of an order designating the Carey Bay property as notional estate is necessary for the purposes of making a family provision order under Succession Act, Part 3.2, thereby satisfying Succession Act, s 78. For similar reasons Joan's estate is "insufficient for the making of the family provision order, or any order as to costs that the Court is of the opinion should be made" in this case: Succession Act, s 88. It is not necessary to say anything more about this requirement for the making of notional estate order.
(3) Does section 80 apply? Wayne next argues that even if the disposition on 24 July 2009 were otherwise to qualify as a "relevant property transaction", the transaction in question took effect "when the property concerned becomes held by another person" within Succession Act, s 77(1), which in this case was when the 24 July 2009 deed and the Real Property Act transfer to Wayne and Maureen were both executed on 24 July 2009. He further argues that the three year time limitation in Succession Act, s 80(2)(a) is fatal to Sharon's present application, because the transaction did not "take effect" within three years before the date of Joan's death in April 2013. The three years had expired on 24 July 2012. Moreover, Wayne submits that it cannot be established that the 24 July 2009 transaction was entered into "with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person [Joan]… for any person [such as Sharon] who is entitled to apply for a family provision order". And Wayne submits that Succession Act, s 80(c) does not apply here, because no part of the relevant property transaction is to take effect at or after Joan's death, as Wayne and Maureen already had their interest in remainder by 24 July 2009.
In reply Sharon submits that Wayne's argument that s 80 is not satisfied fails to give sufficient attention to the possibility that at the ending of Joan's life estate Wayne and Maureen thereby attained a full fee simple in possession and that the ending of Joan's life estate was "a transaction that took effect or is to take effect on or after the deceased person's death", and so qualifies as a transaction to which s 80 applies: Succession Act, s 80(2)(c).
In my view Succession Act, s 80 does not apply to any relevant property transaction that Joan entered into before her death. First, s 80(2)(a) does not apply. The only relevant property transaction occurred on 24 July 2009 and took effect as at that date, which was not within 3 years before Joan's death. And for the reasons set out in relation to Step (1) above "A Relevant Property Transaction", Succession Act, ss 75 and 77(4) preclude Sharon from arguing that the ending of Joan's life estate in 2013 is another relevant property transaction.
But Sharon also fails to establish the relevant intent within s 80(2)(a) and associated with the transaction to deny or limit the making of provision out of the estate. The overwhelming evidence from Mr MacDougall, which the Court accepts, was that the 24 July 2009 deed and associated conveyance were entered into for estate planning purposes to preserve Joan's pension. Mr MacDougall's evidence did not support the inference that Joan instructed him that she had any intention to deprive or limit Sharon's provision out of her estate. Indeed clause 4 of the will indicates that in some circumstances that might arise at her death, Joan was prepared to benefit Sharon.
Section 80(2)(b) does not apply. The 24 July 2009 deed and associated conveyance did not take effect within 1 year before Joan's death. It is therefore not necessary for the Court to consider whether the transaction was entered into when Joan had a moral obligation to make adequate provision for Sharon which was "substantially greater" than any moral obligation to enter into the transaction in question.
And section 80(2)(c) does not apply. The Court's reasoning above indicates that no relevant property transaction took effect on or after Joan's death, because the transaction in this case was pursuant to a contract in which there was an exchange of valuable consideration. In any event, but for the effect of s 77(4) it is doubtful, for the reasons already given in relation to Step (1) (namely there is no act or omission apart from Joan's death itself), that the ending of Joan's life estate could be a relevant property transaction that took effect "on or after the deceased person's [Joan's] death" attracting the application of s 80(2)(c).
The non-application of Succession Act, s 80 means that the Court cannot make an order designating Wayne's interest in the Carey Bay property as notional estate. That is sufficient to resolve the proceedings in a practical sense against the plaintiff, as there are insufficient funds in the estate to satisfy any order for family provision that the Court would have made. But it is nevertheless convenient for the Court to consider how the other relevant steps in the Succession Act, Part 3.2 logic would have been determined.
(4) Disadvantage to the Estate. Sharon must also satisfy Succession Act, s 83 and establish a disadvantage to the estate by reason of "the relevant property transaction" or "the holding of property resulting from the relevant property transaction".
That is not difficult if the relevant property transaction is seen as the 24 July 2009 deed or the contemporaneous conveyance of a remainder to Wayne and Sharon for $1.00. There was a direct disadvantage here to the estate, or to Sharon who is a person entitled to apply for a family provision order from the estate. Prior to the transaction Joan had a half interest in the Carey Bay property. After the transaction she had a life interest in the property, which the valuation evidence shows was less valuable than her half interest for the reasons analysed above.
Even if the relevant property transaction is seen as the ending of the life estate at the time of Joan's death, there is relevant s 83(a) disadvantage to the estate (or consequently to Sharon as a potential claimant for family provision), because at Joan's death what had previously been a half interest in the Carey Bay property as a tenant-in-common that would have been available for distribution through her estate, instead became a life interest which disappeared at her death.
(5) Do s 87 restrictions or protections prevent a notional estate order? Were an order designating notional estate going to be made, then s 87 considerations would also be significant in this case. But Sharon's case fails at Step (3) above so it is not strictly necessary to consider this issue. Wayne contends that he and Maureen had "reasonable expectations" that the Carey Bay property would be left to them and that the "substantial justice and merits" of the case infer that the Court should refuse to make an order designating the Carey Bay property as notional estate. Sharon says that s 87 does not inhibit the making of an order designating the property as notional estate.
Authority considers what may amount to s 87 "reasonable expectations". The statutory phrase does not itself identify the person by whom those "reasonable expectations" are held. But authority suggests that the Court must consider the reasonable expectations of the defendant whose property is sought to be designated as notional estate, those of the deceased, and also those of the plaintiff, the claimant for family provision relief: Phillips v James [2014] NSWCA 4; 85 NSWLR 619 at [105] (per Beazley P, Meagher JA agreeing) citing John v John [2010] NSWSC 937 at [117] and [118] (Ward J, as her Honour then was) and in turn citing Petschelt v Petschelt [2002] NSWSC 706 at [68]. Section 87(a) was also considered similarly in Kastrounis v Foundouradakis [2012] NSWSC 264 at [126], [127] and [128] per Hallen AsJ (as his Honour then was).
Common situations in which the "importance of not interfering with reasonable expectations in relation to property" may be raised are when a beneficiary who received the property in question has spent money or worked on the property, or where a promise has been made in relation to property and the beneficiary has acted on the fact of the promise: Kastrounis v Foundouradakis [2012] NSWSC 264 at [126]. A person may for example have reasonable expectations of remaining in possession of property if the property is obtained otherwise than by gift and a person in possession of the property has given up something of an equivalent value in order to obtain it: Wentworth v Wentworth [1992] NSWCA 268 (per Priestley JA, Samuels AP and Handley JA agreeing).
Wayne and Maureen's contention that they had "reasonable expectations" that the Carey Bay property was to be left to them really amounts to a double submission: that not only did they have "reasonable expectations" of an entitlement to the property upon Joan's death; but also that they had "reasonable expectations" that the whole of the property would thereafter remain theirs free from any claim from Sharon.
The context of the s 87(a) mandatory consideration of "the importance of not interfering with reasonable expectations" will usually require the Court to assess whether a person resisting a notional estate order has reasonable expectations to assume that an order designating property as notional estate will not be made against the property in question.
In the present case Wayne's submission is that those "reasonable expectations" derive from two main classes of fact: (1) things that the deceased is alleged to have said or done that entitled him and Maureen to assume they would in due course inherit the half of the Carey Bay property to which they were not already entitled; and (2) things that entitled them to assume Sharon would not successfully pursue a claim over the Carey Bay property.
Wayne and Maureen have a strong argument in relation to the first of these two classes but a weak one in respect of the second. Joan's statements to Wayne and Maureen in 2009, followed as they were by the 24 July 2009 deed are certainly a reasonable basis for Wayne and Maureen to assume they would inherit the half of the Carey Bay property that they did not already own. In particular, the 24 July 2009 deed transformed Wayne and Maureen's position from one in which they held a half interest in the Carey Bay property earned by their own financial and non-financial contributions, to a position in which they had an expectation through their interest in remainder of obtaining the whole of the property on Joan's death. The 24 July 2009 deed created a reasonable expectation in them that they would inherit the whole of the Carey Bay property and they were entitled to act upon that expectation thereafter.
But that was not the whole picture. Wayne and Maureen were not reasonably entitled to assume that they would take the Carey Bay property free of Sharon's claims. Sharon was unaware that the 24 July 2009 transaction had occurred. She was not informed until Christmas 2011 that anything like that transaction had been constructed. Even then, she was not apprised of the full details of the 24 July 2009 transaction. Wayne and Maureen knew that she took no part in the negotiation of the 24 July 2009 deed and was not fully informed about it subsequently. They also knew that whatever she was told in Christmas 2011 did not give her a complete picture of the earlier transaction. Thus, their knowledge of her ignorance of the transaction could only have raised the prospect that upon Joan's death, or upon otherwise finding out about the 24 July 2009 transaction, there was a risk that Sharon may decide to seek an order that part of the Carey Bay property be designated as notional estate. This is not a case where with full knowledge of the underlying transaction Sharon had assured Wayne and Maureen that she was not interested in making a claim for what had formerly been Joan's half of the Carey Bay property. This case illustrates that the less information persons holding property that may potentially be designated as notional estate give to potential claimants the more difficult it will be for those property holders to later contend that they had a reasonable expectation of retaining that property, especially where the property holders knew that the person left in ignorance was a person who may make a claim in respect of that property.
If the deceased's own "reasonable expectations" are considered, her failure to bestow any knowledge on Sharon of the 2009 transaction makes it difficult to conclude that Joan had "reasonable expectations" in relation to the Carey Bay property with which it was important that the Court should not interfere. Moreover, if Sharon's own "reasonable expectations" are to be considered, her exclusion from knowledge of the 24 July 2009 transaction makes it more reasonable for her to expect that her claims concerning that property would be considered when she ultimately came into possession of the full facts.
The Succession Act, s 87(b) mandatory consideration of "substantial justice and merits" involved in making or refusing to make the order raise similar issues. The substantial justice and merits bring into focus the fact the defendant Wayne and his wife only contributed to obtaining a half share in the Carey Bay property as the 24 July 2009 deed declares. That does not entitle them, without more, to expect to inherit the other half of the property free of competition from Sharon.
For these reasons Step (5) would not have been an obstacle to the making of an order designating Wayne's half of the Carey Bay property as notional estate.

An Alternative Argument - Setting Aside the Deed

It was also considered in the course of argument that Wayne's contention that the 24 July 2009 deed is the only potentially qualifying property transaction for making a notional estate order, may fail sufficiently to deal with the negative side of the definition of "relevant property transaction", namely possible conduct by omission. Sharon also submitted that failing to set aside the 24 July 2009 deed before her death is just such an omission. Analysis of this argument requires re-examination of part of the applicable legislation.
This argument may be elaborated. Succession Act, s 75(1) contemplates that a person "enters into a relevant property transaction", even if the person "does not do any act". Thus doing nothing could, somewhat counter-intuitively, nevertheless be an entry into a "relevant property transaction". But that failure to act must be a failure that "results in property being…held by another person". The other necessary ingredient of a "relevant property transaction" is that "full valuable consideration is not given to the person for…not doing the act". Thus, if the person leaves the property which has been the subject of a previous transaction with a third party and omits to set the transaction aside, and is not paid or compensated for not setting the transaction aside, that may be sufficient Sharon submits to qualify that circumstance as a "relevant property transaction" within the words of the statute.
Such an omission to act might not infrequently be a circumstance subsequent to the act of transferring property into the name of another person. But that would not disqualify a circumstance from being a "relevant property transaction". Succession Act, s 75(2) makes clear that a person may be "taken to have entered into another relevant property transaction" if a person "does not do" an act affecting the same property as was the subject of an earlier "relevant property transaction affecting [the same] property". Thus in this case, the subsequent failure of Joan to set aside the 24 July 2009 transfer to Wayne and Maureen may qualify as a "relevant property transaction", notwithstanding that the July 2009 deed earlier effected a transfer of the same property.
Succession Act, s 77(2) and (3) deal with the timing of a relevant property transactions occurring by omission. Certain kinds of failure to act may result in a relevant property transaction occurring at the last possible moment when the failure to act could have been rectified, namely at death of the deceased (or other identifiable event before then). Sharon submits here that a failure to act affecting the Carey Bay property occurred at the last moment when the deceased, Joan, could have decided to reverse her earlier transfer and sought to recover the interest in remainder, namely upon her death.
If the "relevant property transaction" is analysed as Joan's failure to set aside the 24 July 2009 transfer, then it may be argued that that transaction "took effect…on or after the deceased person's death" within Succession Act, s 80(2)(c), because the failure may perhaps be said to have final effect upon Joan's death.
Both the failure to set aside the transfer and Maureen and Wayne's continued holding of the property resulting from the failure to set that transaction aside, disadvantage the estate, and Sharon, by diminishing the quantum of the estate. Had the transaction not occurred, as the Court has found, the estate would have been augmented at the time of the deceased's death by something like one half of the value of the Carey Bay property, an additional $250,000. This flows at least from the application of Succession Act, s 83(1)(a).
The same conclusion as to disadvantage to the estate and to Sharon flows from the application of Succession Act, s 83(1)(d) to this alternative argument. The failure to bring proceedings to set aside the 24 July 2009 transaction perhaps "involves an omission to exercise a right", namely a right to bring proceedings that could "…at a later time have been exercised by the principal party to the transaction [Joan] so as to result in a benefit to the estate…or [Sharon] a person entitled to apply for a family provision order from the estate". It is an appropriate use of language to describe the failure to commence proceedings as "an omission to exercise a right" in this context.
But this alternative argument must fail for at least three reasons. First, it is difficult to see how s 80(2)(c) is attracted by Joan's failure to set aside this transaction before her death. Even if the omission can be characterised as a "transaction" it is not one which will "take effect on or after the deceased person's death". This is because Joan's right in equity to set aside the transaction survives her death and is available to the estate, unlike Joan's failure to exercise (say) a power of appointment. The right to apply to avoid a transaction in equity, in most circumstances including this one, will not be determined by death.
Secondly, although Mr MacDougall acted for both parties in the transaction and Joan appears not to have obtained independent legal advice, it is far from clear that she would have had any right to set this transaction aside. Given the security of tenure which she obtained under the 24 July 2009 deed ensuring that she was no longer at risk of an application under Conveyancing Act, s 66G, it cannot be said that the entry into the deed was improvident on her part. This case is a long way from cases such as Ryan v Aboody; Aboody v Ryan [2012] NSWSC 136; [2012] NSWCA 395; 17 BPR 32,359.
Thirdly, this case was not really conducted as a proceeding to set aside the 24 July 2009 deed. For that reason it is simply not possible for the Court to make any kind of assessment of whether "full valuable consideration" was not given to Joan for not bringing proceedings to set aside the deed. It may be that proceedings to set aside the deed would have been hopeless, so Joan did get full valuable consideration for doing nothing and getting nothing in exchange.
Accordingly, this alternative argument does not assist Sharon's case.

Conclusions and orders

In the result the Court has found that the plaintiff Sharon Manning is an eligible person who may apply for a family provision order in respect of the estate of the late Joan Matsen and that were an order to be made she would receive a legacy in the sum of $75,000. But as the estate has insufficient funds to allow this order to be made, the Court would have to designate the defendant Wayne Matsen's half share in the Carey Bay property as notional estate. For the reasons given in this judgment the Court is not prepared to take that step. Therefore no notional estate will be designated. In the circumstances there is no utility in making a family provision order. This means the plaintiff has been unsuccessful in the proceedings.
Costs would normally follow the event. But it may be that one or either party seeks a special costs order. So the Court will adjourn the proceedings until 10 February 2016 at 9.30am for further directions to allow the parties to consider these reasons and exchange draft short minutes of order to dispose of the proceedings and if necessary exchange submissions in relation to costs.
The Court therefore orders: 1. Direct the parties to bring in short minutes of order to give effect to these reasons. 2. Adjourn the proceedings for the bringing in of short minutes of order and any argument about costs, to 9.30am 10 February 2016.

Amendments 15 December 2015 - Paragraph [86], change "is notional estate" to "as notional estate". Paragraph [89], delete "Overview of the Notional Estate Claim". Paragraph [94] italicize "Act" Paragraph [101] - [103] minor amendments, which has affected the rest of judgment paragraph numbering. Paragraphs [103] and [129], change "the Sharon's" to "Sharon's".

Paragraph [141], fifth sentence, change 'act to 'act' (i.e close the quote).

Paragraph [143], change [136] to [137], change "of which it is given" to "of that for which it is given".

Paragraph [144], change Success Act to Succession Act.

Paragraph [145], change "the Wayne's" to "Wayne's".

Paragraph [151], change "that took effect" to "took effect".

Paragraph [153], change "resulting from relevant property transaction" to "resulting from the relevant property transaction". 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: 15 December 2015

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