SUCCESSION - Contested probate - Lack of knowledge and approval
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SUCCESSION - Contested probate - Lack of knowledge and approval
Judgment (30 paragraphs)
[1]
Summary
These proceedings concern the estate of the late Ken Kui Yuen Lau ("Mr Lau"). Mr Lau died in March 2018 at the age of 81. For convenience and without any disrespect, in these reasons the Court will refer to the parties and other witnesses by their given names where convenient.
The plaintiff is Man Ling Ng ("Mary"). She is 74 years old and is Mr Lau's widow from his second marriage. In addition to Mary, Mr Lau was survived by his only child from his first marriage, Gary Pui Kuen Lau ("Gary"), the defendant in these proceedings. He is 45 years old and the only other beneficiary of Mr Lau's estate (the "Estate").
There were two issues in this case:
1. A determination as to probate between two wills executed by Mr Lau, one on 10 December 2001 (the "2001 Will") and another on 29 November 2016 (the "2016 Will"); and
2. A family provision claim pursuant to s 59 of the Succession Act 2006 (NSW) (the "Act"), with alternate claims brought by both Mary and Gary depending on which will the Court admitted to probate.
At the conclusion of the hearing, the Court determined that the 2016 Will should be admitted to probate and this much was indicated to the parties. There were no demonstrated suspicious circumstances to suggest Mr Lau did not know and approve the contents of the 2016 Will, or that the 2016 Will did not truly reflect his testamentary intentions. These conclusions were primarily based on the clear and uncontradicted evidence of the solicitor who prepared and witnessed the 2016 Will, that Mr Lau made the arrangements for the 2016 Will himself and that the terms of that will were logical, albeit not as favourable to Mary as the 2001 Will. Mr Lau's testamentary capacity was not put in issue, nor was there any suggestion that the 2016 Will had not been properly executed and witnessed.
Given the Court's finding on probate, Mary seeks additional provision out of the Estate, which primarily comprised two properties, one at Peakhurst (the "Peakhurst Property") and the matrimonial home at Bexley (the "Bexley Property"). The 2016 Will left the Peakhurst Property to Gary and gave Mary a life estate in the Bexley Property with the remainder to Gary. The residue of the Estate was divided equally between them.
Having regard to all the circumstances of the case at the time of the hearing, the Court has found that the 2016 Will does not make adequate provision for Mary's proper maintenance and advancement in life insofar as it gave her only a life estate in the Bexley Property. This is because it fails to address the reality that Mary will need to move from the Bexley Property within a few years to more suitable accommodation due to her age. The life estate does not give her that flexibility of choice as to her accommodation.
The Court has determined additional provision is to be made for Mary in two ways:
1. An order of the kind made by Holland J in Crisp v Burns Philp Trustee Company Ltd (Supreme Court (NSW), Holland J, 18 December 1979, unreported) ("Crisp v Burns Philp Trustee") (a "Crisp order"), giving Mary what might be termed a "portable" life interest in the Bexley Property ensuring her ability to move to other accommodation as her circumstances require and as she thinks fit. To assure her independence in this regard, the Court's orders are to be subject to a condition - volunteered by Gary - that Gary renounce probate of the 2016 Will so that Mary will continue as the sole executor.
2. Mary is further entitled to additional provision of $45,000 from the Estate. That amount is intended to cover the necessary costs of improvements to the Bexley Property and other minor expenditure.
Mr M Willmott of Senior Counsel appeared with Ms M Fraser of Counsel for Mary. Dr S Chapple of Counsel appeared for Gary.
[2]
The facts
The essential facts were not in dispute. What follows is largely derived from the parties' agreed Statement of Facts handed up by Dr Chapple on the final day of the hearing.
Where any reference is made to findings on contentious matters, they are cross-referenced to that part of the judgment where reasons for the finding are given. To the extent that any other facts set out below were not agreed by the parties, I am satisfied that the evidence clearly establishes them.
[3]
Background to the parties
Mr Lau was born in 1936 and was aged 81 at the time of his death in March 2018.
Mr Lau married his first wife, Grace, in 1972. Their only child, Gary, was born in April 1974. Grace died in 1998.
Mr Lau married Mary in September 2001 and they remained married at the time of his death.
Mary was born on 12 January 1946. She came to Australia in 1994. Her marriage to Mr Lau was her first. She has no children.
Gary lived with Mr Lau until 2000. He then married and bought his own home with financial assistance from Mr Lau.
Neither Mary nor Gary knows of any other eligible claimants for provision out of the Estate.
[4]
The Estate
The Estate has a present gross value of about $2,468,776, comprising:
Asset Value
The Bexley Property $1,000,000
The Peakhurst Property $900,000
Shares $40,927
Rental income $33,700
Bank account at 16 July 2018 $491,411
[5]
As at the date of the hearing, Mary's costs of the proceedings were $143,300 or $100,310 on a party party basis.
Gary's costs of the proceedings are $109,613.
The net distributable estate is approximately $2,215,863.
[6]
The 2001 Will
The 2001 Will was made 6 weeks after Mr Lau married Mary. Mr Lau executed the 2001 Will on 10 December 2001 at the Hurstville office of B Hayward & Co Solicitors. At the same time, Mary made a will.
Mr Lau and Mary each left the bulk of their respective estates to the other and gave property to other relatives. In Mr Lau's case, the gift was to his son, Gary.
Under the key provisions of the 2001 Will, Mr Lau:
1. appointed Mary as his executor and trustee;
2. devised the Peakhurst Property to Gary; and
3. gave the residue of his estate to Mary.
[7]
Mr Lau's relationship with Gary
Mr Lau provided substantial benefits to Gary during his lifetime. These may be summarised as:
1. Gary lived with his parents and, after the death of his mother in 1998, continued to live with Mr Lau until about 2000 when Gary married his wife, Michelle;
2. Mr Lau gave Gary $150,000 towards the cost of a home at Mortdale from the proceeds of sale of a block of units in Liverpool. However, not all of this amount was a gift - Gary had contributed to the deposit of the Liverpool units and had been a joint tenant in that property;
3. In 2009 Mr Lau contributed to the costs of building a new home at Oyster Bay for Gary and his family (the "Oyster Bay Property");
4. Mr Lau made other substantial contributions to Gary, including toward his superannuation. According to Mr Lau, he provided $172,000 in superannuation contributions to Gary between 24 August 2015 and 20 June 2017; and
5. Mr Lau provided investments of about $30,000 for the costs of education for Gary's two children.
[8]
Mr Lau's relationship with Mary
Shortly after they married, Mr Lau purchased the Bexley Property and the couple moved in together. Mary continued to work as a registered nurse, however she reduced her hours over the years at the request of Mr Lau. In 2012, Mary gave up work and cared for Mr Lau.
Mr Lau was diagnosed with bladder cancer in 2010 and subsequently prostate cancer in 2014. Mr Lau underwent extensive treatment and was in and out of hospital for the last few years of his life. By late 2017 Mr Lau was bedridden. Mary cared for him at home in the Bexley Property until his last hospital admission in March 2018.
During their time together, Mary contributed to their costs of food, entertainment and holidays. However, from the evidence it appears that Mary and Mr Lau also maintained largely separate finances and assets, with Mary being largely financially independent (see paragraph [57] and following below). Over the space of four months in the last months of his life, Mr Lau transferred a total of $110,000 to Mary.
[9]
Mr Lau's testamentary intentions since 2001
In March 2005, Mr Lau attended upon his solicitor, Mr Bernard Hayward, from B Hayward & Co Solicitors. Mr Hayward was one of the attesting witnesses to the 2001 Will (see paragraph [21] above). Mr Lau discussed changing his will to give Mary a life interest in their home (i.e. the Bexley Property) instead of full ownership.
There is no evidence about what prompted this enquiry in 2005 but it was common ground that Mr Lau did not then subsequently change his will.
In November 2016, Mr Lau was too unwell to accompany Mary on a holiday they had planned to Hong Kong to attend a family reunion on Mr Lau's side. As noted in paragraph [26] above, by this point in time Mr Lau had been diagnosed with both bladder and pancreatic cancers. He had problems with mobility and needed to use a walking stick.
On or about 22 November 2016, Mr Lau made an appointment to see a solicitor, Mr George Anagnostellis of Sydney Wide Legal. Mr Anagnostellis had acted for Mr Lau on a conveyancing matter in 2013.
On 23 November 2016, Mary went to Hong Kong alone for 10 days to attend the reunion.
Mr Lau attended Mr Anagnostellis' Mortdale office on 29 November 2016. On that occasion, Mr Anagnostellis drew up the 2016 Will and a Power of Attorney based on instructions from Mr Lau (see paragraphs [47] to [54] below). Both were then executed by Mr Lau at the Mortdale office in the presence of Mr Anagnostellis and Mr Anagnostellis' wife, Ms Stephanie Antipas.
By the 2016 Will, Mr Lau:
1. appointed Mary and Gary jointly to be his executors and trustees;
2. devised the Peakhurst Property to Gary;
3. gave a life estate in the Bexley Property to Mary, with the remainder interest to Gary; and
4. gave the residue of his Estate to Mary and Gary in equal parts.
At some time on 2 or 3 September 2017, Mr Lau showed Gary files said to contain documents relating to the Peakhurst Property and a will. Mr Lau subsequently told Gary that he had changed his will. Gary took a photograph of the file purportedly containing the will, which had the address of Mr Anagnostellis' firm Sydney Wide Legal on the cover. Gary sent himself an email with the subject "Will Details" at 11.26am on 3 September 2017 attaching the photograph. Gary's evidence was that he sent the email on or close to the day of taking the photograph. Gary did not open the file. However, the Court accepts that the file shown to Gary by Mr Lau on this occasion contained the 2016 Will because the file had Mr Anagnostellis' firm's name on it.
Mr Lau did not tell Mary about the 2016 Will or any subsequent will.
In September 2017, Mr Lau was admitted to hospital for a few weeks. Upon his discharge back home, Mr Lau asked Mary to get him his will. Mary gave the 2001 Will to Mr Lau, which Mr Lau kept thereafter in a drawer by his bed. The Court accepts that Mr Lau did not alert Mary to the existence of the 2016 Will.
On 9 October 2017, Mr Lau was admitted to hospital. He was discharged to Calvary Hospital for palliative care on 24 October 2017 and remained there until 20 November 2017. On 27 November 2017 a solicitor from B Hayward & Co Lawyers, Ms Jenny Lam, attended Mr Lau at the Bexley Property to prepare a Power of Attorney and an enduring guardianship instrument in favour of Mary. During that attendance, Mr Lau asked Ms Lam about transferring the Bexley Property to Mary. Ms Lam read the 2001 Will to him and advised him that a transfer was not necessary because Mary would receive the Bexley Property under that will. Mr Lau gave no instructions to make a new will to Ms Lam and he did not alert Ms Lam to the 2016 Will.
The parties accepted that Mr Lau had discussed his testamentary intentions with those close to him. On one such occasion, Mr Lau asked Mabel Lee, the wife of his brother-in-law from his first marriage to Grace, about putting the Bexley Property in Mary's name. The date of this conversation is unknown, although appears to have been sometime in or from 2009. On another occasion, in January 2018, Mr Lau told his brother-in-law from his first marriage and Mabel's husband, Simon Lee, that he had made a will and said words to the effect of "I have given Gary enough already".
Mr Lau was admitted to hospital on 6 March 2018 and died on 10 March 2018.
[10]
Contentious matters
It is convenient next to set out the Court's resolution of some contentious matters raised by the parties.
On the question of probate, Mary put in issue Mr Lau's understanding as to what was meant by the "life estate" in the Bexley Property he devised to her in the 2016 Will and whether he understood the implications of doing so.
On the issue of family provision, Mary and Gary each disagreed on the financial circumstances put forward by the other (and so their entitlement to family provision, should an order be made).
I shall deal with each of these in turn.
[11]
Mr Lau's understanding of the "life estate"
The parties accepted (as does the Court) that Mr Lau only discussed the contents of the 2016 Will with Mr Anagnostellis. Mr Anagnostellis swore an affidavit as to his recollection of the preparation and execution of the 2016 Will, and was cross-examined.
Mr Willmott SC's cross-examination of Mr Anagnostellis focused on:
1. Whether Mr Anagnostellis' file note of his meeting with Mr Lau on 29 November 2016 regarding the 2016 Will could be considered an accurate, contemporaneous record;
2. Whether Mr Anagnostellis made appropriate inquiries of Mr Lau regarding Mary's financial circumstances; and
3. Whether Mr Lau understood the implications of giving a "life estate" to Mary.
Mr Anagnostellis' file note referred to in paragraph [46(1)] above was a single-sided, A4 page entitled "File Note", with the description "Conference with Mr Ken Kui Yuen Lau". It was handwritten and dated 29 November 2016, and marked with the times 11.03am and 11.49am. The Court accepts the evidence of Mr Anagnostellis that these times marked the duration of his meeting with Mr Lau, which lasted for approximately 45 minutes.
During cross-examination, Mr Anagnostellis gave evidence that the file note reflected the sequence of discussion with Mr Lau. Of particular importance, Mr Anagnostellis' file note included:
Property: X XXX, Peakhurst → Gary then to Gary's children (if applicable)
XXX XXX, Bexley → to Gary but subject to giving Man a life estate
[12]
The file note referred to Mary by her non-Anglicised name, "Man Ling" or "Man".
A line then connected the description of the life estate set out in paragraph [48] above to the following explanation:
reason?
Man already owns a property in which she is receiving rent.
income from property she can collect & pay no rent for [Bexley Property]. In client's opinion sufficient & fair.
During cross-examination, Mr Anagnostellis gave evidence that the above text reflected the information provided by Mr Lau as to why he was giving the life estate in the Bexley Property to Mary [T88:24-40]. Mr Anagnostellis also deposed that he had discussed with Mr Lau what he understood to be a life estate and the implications of giving Mary a life estate before acting on those instructions [see T90:6-32].
Mr Anagnostellis conceded that not all his discussions with Mr Lau regarding the potential implications of a life estate were set out in his affidavit or file note (T90:27-37). Mr Anagnostellis also acknowledged that he was unable to comment on how he knew that Mr Lau was apprised of the comparative values of the Peakhurst and Bexley Properties (and so be in a position to advise Mr Lau on whether the life estate was adequate and proper provision) [T90:39-91:16].
However, Mr Anagnostellis was resolute in his recollection that Mr Lau gave him instructions setting out his desire to give a life estate in the Bexley Property to Mary without suggestion or prompting by Mr Anagnostellis, that they had discussed the implications of so doing, and that on ascertaining Mr Lau's reasoning, he (Mr Anagnostellis) had then acted on those instructions in drafting the terms of the 2016 Will [T89:45-90:37].
The Court accepts Mr Anagnostellis as a reliable and truthful witness. Mr Anagnostellis was clear and concise in his evidence and, notwithstanding that the events in question happened four years ago, his recollection struck me as reliable.
The Court finds that the file note Mr Anagnostellis prepared during his meeting with Mr Lau on 29 November 2016 was consistent with his usual practice of preparing file notes. Mr Anagnostellis has practiced as a solicitor since 2005 and in sole practice since 2010. There was no reason to doubt that the file note was anything other than an accurate, contemporaneous record of Mr Lau's testamentary intentions, as communicated by Mr Lau to Mr Anagnostellis and subsequently discussed between the two.
Mr Anagnostellis ' evidence, and in particular his contemporaneous file note is the primary basis on which the Court finds that Mr Lau was clearly cognisant of his actions and their potential impact on his surviving family members. I am fortified in this conclusion by the fact that notwithstanding his physical ailments, Mr Lau's capacity in executing the 2016 Will was never put in issue. It is also of significance that this was not the first occasion on which Mr Lau demonstrated an awareness of a life estate, having raised it previously with Mr Hayward in 2005 (see paragraph [28] above).
[13]
Mary's current financial circumstances and future needs
Mary put in evidence (by way of a number of affidavits as well as oral submissions) that her present financial circumstances and needs warranted further provision out of the Estate. It is convenient first to identify what the parties were agreed on.
Since retiring in 2012, Mary has relied on a super fund pension and rental income from a property she purchased in 1999 in Eastwood, NSW (the "Eastwood Property"). Mary holds the Eastwood Property unencumbered and in her name alone. Upon Mr Lau's death, Mary commenced receiving Mr Lau's Comsuper pension, receiving additional payments of $743 per fortnight (approximately $19,319 per annum).
It was agreed that Mary's combined assets and income have a current gross value of about $1,210,000, comprising:
Asset Value
Eastwood Property $900,000.00
Income (comprising payments from super fund, Mr Lau's Comsuper pension, rental income and dividends) $54,000
Shares and savings $247,000
[14]
It was further accepted between the parties that it was likely that Mary, who is 74 and in good health, will need to leave the Bexley Property within a few years to move to more suitable accommodation due to her age.
Turning now to contentious matters, in challenging the financial circumstances and needs asserted by Mary, Dr Chapple raised two primary issues in cross-examination:
1. Whether there were alternative housing options available to Mary, including retirement accommodation; and
2. Whether Mary's current expenses were in fact less than disclosed in her affidavit evidence (thereby increasing her net financial position and reducing her need for additional provision out of the Estate).
On the matter of accommodation, it was Mary's evidence that subject to her health, she wishes to move into a two-bedroom unit closer to Hurstville station. Mr Willmott SC submitted on her behalf that such accommodation would require an outlay of around $800,000.
Although accepting the reality that Mary will need to leave the Bexley Property within a few years, Dr Chapple contended that an outlay of around $800,000 was unnecessary and at the highest end of what would be required. Dr Chapple put to Mary the suitability of examples of two-bedroom apartments ranging in price from $330,000 to $570,000 and also suggested the possibility of retirement accommodation.
The Court finds that alternative (and cheaper) accommodation is available to Mary if she has to move from the Bexley Property. I acknowledge the difficulties raised by Mary in considering whether the hypothetical alternatives put forward by Dr Chapple were "suitable", however there was no evidence in reply that objectively contradicted their suitability or, more broadly, that disputed that a unit in the price range of $330,000 to $570,000 could adequately accommodate Mary's needs. The Court accepts that $800,000 is at the higher range of what would be required if and when Mary does move from the Bexley Property.
The Court also accepts that Mary's current expenses (as at the time of the hearing) were less than disclosed in her affidavit evidence. During cross-examination by Dr Chapple, Mary accepted that her expenses incurred in 2018 and 2019 were less than what was disclosed in her affidavit (see T24:7-18). Mary also accepted, albeit in a "theoretical sense", that absent the legal fees incurred in these proceedings the amount of money in her bank account would have gone up (see T20:45-21:5, T21:17-19). The Court finds this to be the case in fact.
In accepting that the nature of Mary's interest in the Bexley Property will bear upon her future financial needs (for example, a life interest as opposed to full ownership), the Court is not precluded from also finding (which it does) that the evidence of Mary's current financial circumstances demonstrates that she maintains a level of financial independence unconnected to any gifts devised pursuant to the 2016 Will. As set out in paragraph [59] above, Mary's combined assets and income have a current gross value of about $1.21 million, which includes the unencumbered title to the Eastwood Property and her ongoing receipt of Mr Lau's Comsuper pension.
However, it is important to note that this finding does not conclusively militate against Mary's claim to further provision.
[15]
Gary's current financial circumstances and future needs
Although Gary's claim for family provision fell away as a consequence of the Court finding in favour of the 2016 Will (as set out in paragraphs [94] and following below), Gary's financial circumstances remain relevant to a consideration of both the adequacy of the provision for Mary under the 2016 Will and of any additional provision to be made for Mary. In support of Mary's claim for additional provision out of the Estate, Mr Willmot SC sought to demonstrate Gary's present financial circumstances as sufficient, putting in question the extent of his need for provision out of the Estate.
Again turning first to agreed facts, Gary is self-employed as an IT consultant, working on a contract basis through his company "G & M Lau Consulting Pty Ltd" (the "Company"). Gary's wife, Michelle, works as a part time Teacher's Aide.
Gary and Michelle are joint owners of the Oyster Bay Property for which Mr Lau contributed towards the building costs in 2009 (see paragraph [24(3)] above). The agreed value of the Oyster Bay Property for the purposes of these proceedings is $1.25 million, subject to a mortgage of $500,000. The mortgage was refinanced in November 2019.
Gary and Michelle have two daughters aged 15 and 14, who attend school in the Sutherland Shire area close by to where they live.
Turning to the contentious matters, although not going so far as to put Gary's credibility in issue, Mr Willmot SC's cross-examination appeared to suggest that certain discrepancies in the income and assets disclosed by Gary raised broader concerns as to whether Gary's financial circumstances may be different from that asserted in his affidavit evidence.
In his affidavit evidence, Gary's net income in the 2019 financial year was reported as $97,019.61. Michelle's net income was reported as $41,213.50, taking Gary and Michelle's combined net income to $138,233.11 in the 2019 financial year.
Mr Willmott SC raised four main issues in cross-examination -
1. The circumstances surrounding Gary's re-financing of his existing home loan with Westpac, and whether misleading information was disclosed in the 2019 Westpac Loan application documentation (being Gary's income only) in order to have the loan processed more quickly;
2. The amount of Gary and Michelle's taxable income and expenditure generally, including particular reference to the amount of $21,912 for "Church/charities donations";
3. The fact that Gary had missed two payments from his calculations when he had asserted in his affidavit that he had received a total of $90,000 in financial contributions from his father since 24 August 2015, and that Mary had "forced [his] hand" to disclose a revised total of $172,000 (because Mary had referred to this sum in her affidavit in her evidence in reply); and
4. Whether certain deductions claimed by the Company were legitimate, in circumstances where contributions Mr Lau made towards Gary's superannuation (referred to in paragraph [75] below) were claimed as deductions in his Company's tax returns, notwithstanding the Company did not have a separate superannuation account.
Mr Willmot SC further emphasised the significant level of financial support Gary had received from Mr Lau during his lifetime. Particular reference was made to an email from Mr Lau to Gary on 20 June 2017, which stated that Mr Lau had provided $172,000 in superannuation contributions to Gary since 24 August 2015.
Although accepting that there were inaccuracies in reported income for the 2019 financial year, the Court accepts the broader financial circumstances put forward by Gary as accurate. My overall impression was that Gary's cross-examination revealed innocent errors rather than deliberate concealment. Gary rightly made the concession in paragraph [74(3)] above that he had missed two payments from his calculation, although at no point has he tried to deny the financial support he received from his father or to conceal how much he in fact received. Gary was candid about what he received from his father, both in advice and financial support.
[16]
The legal issues and principles
Before setting out the parties' submissions, I will briefly set out the relevant legal principles in relation to knowledge and approval and family provision. None of these principles were in dispute.
[17]
Probate
In matters where there is no question as to the testator's capacity or to the legitimacy of the will, the presumption arises that the testator also knew and approved of the contents of their will: Ridge v Rowdan (NSWSC, Santow J, 10 April 1996, unreported).
However, in some cases the circumstances surrounding the giving of instructions for a will and its subsequent execution may be such to "excite the suspicion" of the Court that the provisions of the will may not have been fully known to, and approved by, the testator. Where such circumstances exist, the presumption as to the testator's knowledge and approval does not arise and the person seeking to propound the will has the burden of removing the suspicion: Tyrrell v Painton [1894] P 151, per Lindsay LJ at 156-159.
Hallen AsJ (as his Honour then was) set out in Romascu v Manolache [2011] NSWSC 1362 at paragraph [205] the factors the Court may look at when considering whether circumstances that excite suspicion exist, including:
"…the circumstances surrounding the preparation of the propounded will; whether a beneficiary was instrumental in the preparation of the propounded will; the extent of the physical and mental impairment, if any, of the deceased; whether the will in question constitutes a significant change from a prior will; and whether the propounded will, generally, seems to make testamentary sense."
The relevant circumstances are only those that relate to the preparation of the will in question, its intrinsic terms and the circumstances surrounding its preparation and execution: Alan John Hyland v Laura Healy [2013] NSWSC 1513 at [25]. Circumstances both antecedent and subsequent do not have bearing on the determination of whether or not the suspicion is made out.
[18]
Family provision
Family provision orders are dealt with by Part 3.2 of the Act. Division 1 of that part identifies, in s 57, who are the "eligible persons" who may apply to the Court for a family provision order in respect of the estate of a deceased person. Section 58(2) requires an application for a family provision order to be made not later than 12 months after the date of the death of the deceased, unless the Court otherwise orders on sufficient cause being shown.
Division 2 of Part 3.2 of the Act deals with the determination of applications for family provision. For the purposes of these proceedings, the relevant provisions are:
"59 When family provision order may be made
(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:
(a) the person in whose favour the order is to be made is an eligible person, and…
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of Mr Lau person, or by the operation of the intestacy rules in relation to the estate of Mr Lau person, or both.
(2) The Court may make such order for provision out of the estate of Mr Lau person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made. …
60 Matters to be considered by Court
(1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining:
(a) whether the person in whose favour the order is sought to be made (the applicant) is an eligible person, and
(b) whether to make a family provision order and the nature of any such order.
(2) The following matters may be considered by the Court:
(a) any family or other relationship between the applicant and Mr Lau person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by Mr Lau person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of Mr Lau person's estate, …
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of Mr Lau person's estate, …
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of Mr Lau person or to the welfare of Mr Lau person or Mr Lau person's family, whether made before or after Mr Lau person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
(i) any provision made for the applicant by Mr Lau person, either during Mr Lau person's lifetime or made from Mr Lau person's estate,
(j) any evidence of the testamentary intentions of Mr Lau person, including evidence of statements made by Mr Lau person,
(k) whether the applicant was being maintained, either wholly or partly, by Mr Lau person before Mr Lau person's death and, if the Court considers it relevant, the extent to which and the basis on which Mr Lau person did so,
(l) whether any other person is liable to support the applicant, …
(p) any other matter the Court considers relevant, including matters in existence at the time of Mr Lau person's death or at the time the application is being considered."
[19]
The parties' submissions on probate
As noted above at paragraph [4], at the conclusion of the hearing I indicated to the parties that I had come to a firm view that the 2016 Will was to be admitted to probate.
[20]
Mary's submissions
In advocating that the 2016 Will should be passed over and the 2001 Will admitted to probate, it was submitted for Mary that various suspicious circumstances gave rise to an apprehension that Mr Lau did not know and approve the contents of the 2016 Will and that it did not reflect Mr Lau's testamentary intentions.
The "suspicious circumstances" advanced by Mr Willmott SC can be summarised as:
1. The secretive way in which Mr Lau made the 2016 Will;
2. There being no reason provided for why Mr Lau undertook to execute the 2016 Will.
Turning first to the issue of secrecy, it was said this was apparent when one took into consideration Mr Lau's age, physical health and the fact there was no communication with Mary or Gary. Emphasis was also placed on the fact Mr Lau used a different lawyer to that of his 2001 Will and that he waited until Mary was overseas before going to see Mr Anagnostellis (see paragraph [33] above).
Mr Willmott SC submitted that the relevant authorities require the Court to be satisfied not only of what the will said, but that the will reflected the testator's true intentions: Tobin v Ezekiel [2012] NSWCA 285; (2012) 83 NSWLR 757 at [47]; Hobhouse v Macarthur-Onslow [2016] NSWSC 1831 at [441].
This tied to the second "suspicious circumstance", being the absence of reason for why Mr Lau departed from the 2001 Will by making the 2016 Will. Mr Willmott SC argued it was necessary to consider this '…in the context in the making of the 2001 will' and the assertions made at that time by Mr Lau about the disposition of the Bexley Property. More specifically, Mr Willmott SC submitted the evidence demonstrated a 'view expressed by the testator which was uninterrupted until 2016' that Mary was to get an absolute interest in the Bexley Property and there was no evidence as to why Mr Lau should have had this change of heart.
In support of the position that such a change of heart had not occurred, Mr Willmot SC relied on unchallenged affidavit evidence:
1. The evidence of Mabel Lee, the wife of Mr Lau's brother-in-law, who attested to conversations between Mr Lau and herself in which Mr Lau told her he had left the Bexley Property to Mary;
2. The evidence of the solicitor, Ms Lam, who attended Mr Lau's home in November 2017. Mr Willmott SC emphasised that Mr Lau had requested a home visit because he was too sick and could not leave his home. During the visit, Mr Lau had also made inquiries about transferring the Bexley Property to Mary, with references being made to the 2001 Will.
[21]
Gary's submissions
In submitting there was little in the circumstances surrounding the preparation of the 2016 Will or its intrinsic terms that raised a suspicion the 2016 Will did not express the mind of Mr Lau, Dr Chapple relied on:
1. Mr Lau personally engaged Mr Anagnostellis, a solicitor who had previously acted for Mr Lau;
2. Mr Lau attended the appointment with Mr Anagnostellis by himself; and
3. Mr Lau's conduct in neither involving nor advising the two beneficiaries (Mary or Gary) of the will-making process for the 2016 Will was conduct consistent with Mr Lau's earlier behaviour in 2005 (see paragraph [28] above).
Dr Chapple submitted that these matters demonstrated that the 2016 Will did in fact reflect Mr Lau's testamentary intentions:
1. Mr Lau's instructions regarding his intentions for the 2016 Will were clearly expressed, simple to understand and the instruction to include the life estate to Mary originated from Mr Lau himself (see paragraphs [47] to [53] above);
2. Although suffering from physical ailments, there is no evidence to suggest that Mr Lau was suffering from a failing mind; and
3. In September 2017 Mr Lau demonstrated an awareness of his 2016 Will by showing the will file to Gary and allowing him to take a photograph of it (see paragraph [35] above).
In light of the above, Dr Chapple submitted that the 2016 Will is rational on its face, is considered and does not exclude either of the two beneficiaries for whom Mr Lau might be expected to provide. While the 2016 Will is objectively a change from the 2001 Will, it was submitted that the change was neither significant nor inexplicable.
[22]
Consideration - probate
The Court has no difficulty concluding that the 2016 Will should be admitted to probate. This conclusion is fortified by the fact that neither Mr Lau's capacity nor any other aspects of the 2016 Will were put in issue by the parties.
The one question for determination was whether suspicious circumstances gave rise to an apprehension that Mr Lau did not know and approve the contents of the 2016 Will and that the 2016 Will did not reflect Mr Lau's testamentary intentions. The Court is well satisfied that Mr Lau did know and approve the contents of the 2016 Will and that it did reflect his testamentary intentions.
The primary reason for this is Mr Anagnostellis' evidence and contemporaneous file note (see paragraphs [47] to [53] above).
The Court is not persuaded that the allegedly "secretive" way in which Mr Lau executed the 2016 Will raises suspicion. The fact that a person does not discuss their testamentary affairs with their spouse is not necessarily a cause for suspicion, especially when they are making a change that might excite disagreement, and cannot be decisive in the current proceedings when Mr Lau had previously acted in this manner in 2005 (see paragraph [28]). Mr Lau had himself previously engaged the services of Mr Anagnostellis and the contact in 2016 was of Mr Lau's own volition. There is no suggestion that Gary or anyone else "put up" Mr Lau to make the change that he did and Mr Lau attended Mr Anagnostellis' office by himself.
The Court also takes into account that Mr Lau had previously discussed changing his will to give Mary a life interest in the Bexley Property with Mr Hayward in 2005 (see paragraph [28] above). Although Mr Lau's capacity was never put in issue, the Court notes that the 2005 discussion with Mr Hayward took place prior to Mr Lau's cancer diagnoses.
Nor is the Court persuaded that the 2016 Will represents an unexplained or irrational change of heart on the part of Mr Lau. There can be no doubt that Mr Lau had a strong interest in his only son's wellbeing. The Court accepts the evidence (led by both parties) that demonstrates Mr Lau took an active interest in all aspects of Gary's life, including his employment, financial circumstances and personal relationships. This is perhaps best reflected in Gary's affidavit evidence that "[o]ver the years … Dad was a sacrificial father and I felt that he would do anything for me".
It follows from the findings in the preceding paragraph that it is entirely reasonable that Mr Lau should have wished to protect Gary's financial wellbeing into the future, by providing him with the Bexley Property on Mary's death, especially in circumstances where Mary had her own income from her Eastwood Property and no children of her own who would have a claim on her testamentary bounty.
Mr Willmott SC accepted that if Dr Chapple persuaded the Court on the balance of probabilities - after assessing the evidence in a manner consistent with the principles in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 - that Mr Lau did know and approve the true nature and effect of the 2016 Will, then the Court must find the 2016 Will as having been proved.
The Court accepts the submissions advanced by Dr Chapple and finds no circumstances exciting suspicion that would otherwise rebut the presumption that Mr Lau knew and approved of the contents of the 2016 Will. The 2016 Will will be admitted to probate.
[23]
The parties' submissions on family provision
Mary and Gary brought alternate claims seeking further provision out of the Estate depending on which will was admitted to probate. Because the Court has found in favour of the 2016 Will, Gary did not press his claim. The outstanding question therefore is limited to whether an order for further provision should be made for Mary pursuant to s 59 of the Act. This requires, first, an assessment of whether, at the time of the hearing, the 2016 Will does not make adequate provision for Mary's proper maintenance or advancement in life. If it does not, then the Court may exercise its discretion to make such order as it thinks ought be made for her maintenance or advancement in life.
[24]
Mary's submissions
It was Mary's submission that the life interest given to her in the Bexley Property, whereby she remained liable to maintain and keep the property in good order, was inadequate in the circumstances and not proper provision. Mary contended that the life interest was inadequate given her age and the agreed fact (see paragraph [60] above) that she will likely need to move within a few years to more suitable accommodation.
In support of Mary's position, Mr Willmott SC emphasised the need to take into account the whole of the circumstances when assessing a claim for family provision, citing McLelland J (as his Honour then was) in Re Fulop Deceased (1987) 8 NSWLR 679 at 680:
"In making these determinations, the following principles apply: first, the Court should not interfere with the dispositions in the will… except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education, and advancement in life, secondly, the expression "proper" in this context connotes a standard appropriate to all the circumstances in the case, and thirdly, the Court may take into consideration any matter (whether existing or occurring before or after the death of the deceased) which it considers relevant in the circumstances…"
In advocating that the 2016 Will does not provide for "proper" maintenance, Mr Willmot SC cautioned against characterising Mary's marriage to Mr Lau as 'a second short marriage' and urged against reading too much into the fact Mary and Mr Lau maintained separate finances.
At the time of Mr Lau's death, Mary and Mr Lau had been married for 17 years. It was said that Mary's contribution to Mr Lau's welfare was exceptional by any standard, reference being made to Mary reducing her hours of work at Mr Lau's request and to the care she provided from the time Mr Lau was diagnosed with bladder cancer (2010) and prostate cancer (2014). As a result of reducing her hours of work and, ultimately, giving up work, Mary contended that she lost not only the benefit of the income she would have received but also the accrual of her superannuation benefits.
Mr Willmott SC submitted that in not providing Mary with an absolute interest in the Bexley Property, Mr Lau failed to give proper consideration to the claim of his widow on his estate, referring to Brereton JA in Steinmetz v Shannon [2019] NSWCA 114; (2019) 99 NSWLR 687 ("Steinmetz") at [101] citing Powell J in Elliott v Elliott (SC NSW, Powell J, 18 May 1984, unreported):
"A testator's duty to his widow of a long and harmonious marriage requires 'at a minimum, provision of security in her home for the rest of her life and the capacity to change it; an income sufficient for her to live in a reasonable degree of comfort; and a fund for luxuries…'
It was submitted that the life estate in the Bexley Property was inadequate provision precisely because while it may give Mary a home for life, it did not give her capacity to change it. Proper provision for Mary would be an order for further provision by which Mary received a transfer of the Bexley Property in specie unencumbered, in addition to a capital sum of $45,000 to effect repairs and refurbishment of that property for:
Replace computer $1,306
House repair $40,672
Replace air conditioning $3,000
Mr Willmott SC argued that a Crisp order as proposed by Dr Chapple (see paragraphs [115] below) was not appropriate, even where Gary had renounced probate, because:
1. Crisp orders are usually given to elderly widows, whereas Mary has a life expectancy of 15 years; and
2. Consequently, the Crisp order failed to give Mary adequate control in how she dealt with the Bexley Property.
Nor was a charging order (see paragraph [117] below) an appropriate alternative. This type of order did not take into account the increasing needs Mary might have in the future due to age and potential ill health, and her need to relocate to another property. It was submitted that if the 2016 Will prevailed and she did not receive additional provision, Mary would need to sell her Eastwood Property to discharge the order, in which case Mary would be liable for a substantial capital gains tax on the sale, as well as commission and other transaction costs. This was estimated at $100,233 (based on a hypothetical sale of the Eastwood Property for $900,000).
[25]
Gary's submissions
Gary accepted that Mary, as the wife of Mr Lau, was an eligible person under the Act to apply for a family provision order. Further, Gary agreed that since Mr Lau's death, the maintenance of the Bexley Property has been wholly undertaken by Mary and that he had only been involved in the payment of outgoings for the property.
Gary submitted that the provision for Mary in the 2016 Will was adequate because:
1. Mr Lau and Mary's relationship had commenced later in their lives, when each had acquired their own assets;
2. They had kept their finances separate; and
3. Their financial independence was demonstrated by Mr Lau transferring $110,000 to Mary between November 2017 and March 2018 for "expenses".
Mary had the benefit of Mr Lau's Comsuper pension. If she had not commenced these proceedings she would have received a life estate in the Bexley Property and cash of $220,000. This was adequate and proper when viewed with her own financial resources.
In the event the Court was satisfied further provision should be made for Mary, the primary submission advanced by Dr Chapple on behalf of Gary was that adequate and proper provision can be made for Mary by providing her with a 'portable' life interest in the Bexley Property in the form of a Crisp order, as made by Holland J in Crisp v Burns Philp Trustee. The Crisp order would, Dr Chapple submitted, give Mary the right to sell the Bexley Property (should the need arise) and use the proceeds of sale for the purpose of securing, for her benefit, more appropriate accommodation - such as a unit closer to Hurstville station.
The benefit of a Crisp order would be that it would do a 'minimum of violence to the will', as the balance of the interest would be distributed back to Gary when Mary died. Furthermore, Dr Chapple submitted it would not require Mary to apply any of her own assets towards alternative accommodation, which would allow her to continue to derive income from them (in addition to Mr Lau's Comsuper).
Dr Chapple then put the alternative option of a charging order rather than a Crisp order - that is, adequate and proper provision could be made for Mary by way of a loan charged on the Bexley Property. Another variation of this, which I raised in argument, was simply to give Mary the whole of the residue, and thereby reduce the amount that would have to be taken out on the Bexley Property.
Two final issues in respect of Gary's submissions should be noted.
First, in response to my observation that a Crisp order would require Mary and Gary, as joint executors of the Estate, to agree on subsequent matters and that this could be a problem, Dr Chapple was instructed that Gary was prepared to renounce probate in favour of Mary having the ongoing control of the Estate if a Crisp order were made.
Second, on the question of whether any additional provision should be made to cover Mary's continuing obligations to pay the rent, rates, outgoings and maintenance of the Bexley Property in the event a Crisp order were made, Dr Chapple submitted that this should continue to be funded out of her own cash reserves and share of the residue (rather than any additional provision out of the Estate, as was contended by Mary).
[26]
Consideration - family provision
No issue was raised (and in any event the Court accepts) that Mary is an eligible person under s 57 of the Act and has brought her application for family provision in time (ss 58(2) and (3)). The Court is satisfied that Mary is an eligible person pursuant to s 59(1)(a) of the Act.
Under the 2016 Will, Mr Lau gave to Mary:
1. A life estate in the Bexley Property, and
2. The residue of his Estate (in equal shares with Gary).
The Court is satisfied for the reasons advanced by Mr Willmott SC that provision set out in the preceding paragraph is not adequate for the proper maintenance or advancement in life of Mary, and that the discretion conferred by s 59(1) of the Act to make a family provision order in favour of Mary is enlivened. In particular, Mary and Mr Lau were happily married for 17 years and Mary cared for Mr Lau to the end of his life. In those circumstances, and notwithstanding her own financial resources, the Court accepts that not having control over the Bexley Property is not proper provision for Mary.
The outstanding issues for determination by the Court therefore become:
1. Should Mary receive the Bexley Property absolutely or should a Crisp order be made in relation to Mary's interest in the Bexley Property?
2. Should an order for additional provision be made in favour of Mary, to cover the costs of maintaining the Bexley Property?
[27]
Should a Crisp order be made?
As set out in paragraph [115] above, the name "Crisp order" comes from Crisp v Burns Philp Trustee. In Prior v Kerrison [2017] NSWSC 1295 ("Prior") at [29], Rein J provided a concise overview of the nature of this order and referred to more recent examples, citing the following from Ipp JA (with whom Macfarlan JA and Sackville AJA concurred) in Milillo v Konnecke [2009] NSWCA 109 at [47]-[48]:
[47] A Crisp order is an order of the kind made by Holland J in Crisp v Burns Philp Trustee Co Ltd (NSWSC, 18 December 1979, unreported). Generally speaking such an order gives a plaintiff an interest for life in real property or in an interest in the property, with the right to it (should the need arise) for the purposes of securing, for the plaintiff's benefit, more appropriate accommodation. In Court v Hunt (NSWSC, 14 September 1987, unreported) Young J (as he then was) said that a Crisp order was intended to provide flexibility, by way of a life estate, the terms of which could be changed to "cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital".
[48] Thus, for example, a Crisp order may entitle a plaintiff, from time to time, to require the executor of a will to sell a home devised by the will, or otherwise owned by the estate, and to use the proceeds for purposes that may include purchasing another home for the plaintiff's use and occupation, or providing accommodation for the plaintiff in a retirement village or similar institution, or in like accommodation providing hospitalisation and nursing care. The flexibility provided by such an order underlies the notion that a Crisp order confers a "portable life interest".
The Court is satisfied that further provision ought to be made for Mary and is properly achieved by way of a Crisp order, made in favour of Mary in relation to the Bexley Property. The flexibility provided by such an order enables Mary to continue the status quo (residing in the Bexley Property) for as long as she desires or is able, with the security to deal with her accommodation as she ages. I accept the submission made on behalf of Gary that in this case a Crisp order is to be preferred because it works the least alteration to the testamentary intentions of Mr Lau. On Mary's death, Gary will obtain the remaining capital benefit of what is currently the Bexley Property.
In adopting this approach I acknowledge that Mr Lau's testamentary intentions are but one factor which the Court is entitled to take into account (see paragraph [83] above) and that those intentions are not of themselves determinative. In this case I nevertheless give considerable weight to Mr Lau's testamentary wishes because, as appears from Mr Anagnostellis' evidence (see paragraph [50] above), Mr Lau had given real consideration to the fairness of what he was doing as between Mary and Gary: see Steinmetz at [50]-[51] per White JA.
I have taken into account that Gary is Mr Lau's only son and that Mary has no children of her own. Mary has an undoubted moral claim on Mr Lau's testamentary bounty. So, too, does Gary, including on all of the assets built up by his father provided that proper provision can be made for Mary for the rest of her life. The nature of that provision must take into account Mary's own assets and income, which I have also done (see paragraph [123] above).
I have also taken into account Mary's submissions as to why a Crisp order is not appropriate. There can be circumstances which weigh against such an order being made. In Prior, Rein J declined to make a Crisp order citing these factors relevant to that case (at [40]):
1. The acrimonious relationship between the widow plaintiff and the deceased's children;
2. The fact the widow would be a tenant of the property for a very long period, during which time the deceased's children would have responsibility for the upkeep of the premises and payment of rates and insurance (in circumstances of the hostile relationship between the parties);
3. The fact the Crisp order would not provide funds to pay the rates, insurance or maintenance (all of which were required by the deceased's will to be paid by the plaintiff); and
4. The sale of the property would not provide the plaintiff with sufficient funds to secure alternative accommodation in a nursing home or retirement village.
Such contraindications are not to be found in the case at bar. Although accepting that the relationship between Mary and Gary may have its difficulties, that is sufficiently addressed in practice by Gary's concession that he will resign as co-executor of the 2016 Will if a Crisp order is made.
The Court is also mindful that Gary has not lived at the Bexley Property at any stage, either independently or with his family. No evidence was led in these proceedings to suggest that Gary wishes to reside at the Bexley Property or has any meaningful connection to that property, apart from the fact it was bought by his father without contribution to the purchase price by Mary. In making this observation I have not overlooked that Mary would have contributed to the physical maintenance of the Bexley Property.
The agreed value of the Bexley Property at the time of the hearing was $1,000,000. Bearing in mind Mary's submission that alternate accommodation would require an outlay of $800,000 (which the Court has found to be at the higher level, see paragraph [64]), I am satisfied the sale of the Bexley Property will provide sufficient funds in the event Mary must move to a unit of the kind she has in mind.
[28]
Should additional provision be made to cover maintenance and any other costs of the Bexley Property?
The Court is also satisfied that additional provision for $45,000 out of the Estate residue should be made, including to effect repairs and refurbishment of the Bexley Property so that it is in optimal condition for Mary to reside in as life tenant.
The Court finds that the Crisp order over the Bexley Property - on condition Gary resigns as co-executor - and additional provision of $45,000 ought to be made for Mary's maintenance or advancement in life. However, I do not accept that any further provision is required for rates, insurance and any subsequent maintenance for the Bexley Property which will otherwise have to be met by Mary. Mary has adequate income including from the Eastwood Property and Mr Lau's Comsuper pension, and she would have had to meet rates, insurance and subsequent maintenance costs even if the Bexley Property were given to her absolutely. She has already demonstrated she can meet those expenses without difficulty (see paragraph [65] above). Her contribution in that regard will nevertheless be to her benefit in the price achieved for the Bexley Property if it has to be sold for her to move elsewhere pursuant to the Crisp order.
[29]
Conclusion
The parties will be given an opportunity to bring in short minutes to give effect to these reasons, including as to costs. Subject to any further submissions, my indicative view is that Mary should have her costs of the proceedings out of the Estate on the ordinary basis and Gary on the indemnity basis.
[30]
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Decision last updated: 09 June 2020