O'Brien v Grabowski; Airvest Pty Ltd v O'Brien

Supreme Court of NSW|2024-06-05|Before: Peden J

Proceedings 2024/00165274 S Blount (Plaintiff) D Parish, D Emmerig (First Defendant) N Bilinsky, D Yazdani (Second Defendant)

Solicitors: Proceedings 2023/00099474 Greg Tyler & Associates (Plaintiff) Peter Evans & Associates (Defendant)

Proceedings 2024/00165274 Serong Legal (Plaintiff) Greg Tyler & Associates (First Defendant) Peter Evans & Associates (Second Defendant) File Number(s): 2023/00099474 2024/00165274 Publication restriction: Nil

Loan or gift?

The parties agree that the first issue to be determined is whether Airvest advanced to Elizabeth the funds to purchase the property, in effect as a distribution and gift, or whether by way of a loan. While the trust frames its case in various ways listed below, they all involve a finding that Elizabeth and the trust agreed that the money advanced was not an unconditional gift or distribution to a beneficiary: 1. The money was advanced by way of an interest interest-free loan, in return for providing security in the form of a mortgage, a secure tenancy to Mr O'Brien during his lifetime and preparing a will to protect Mr O'Brien; 2. The administrators of the estate are estopped from denying the money was a loan by reason of the affidavit they swore, and never corrected, that indicated the property was subject to an encumbrance of the loan sum; 3. If there is no loan agreement, then the trust is entitled to a restitutionary remedy for money had and received; or 4. The money was advanced by way of a Quistclose trust for the particular purpose of providing Mr O'Brien with secure accommodation and to provide Elizabeth with the benefit of the property.
Ms Grabowski submits Elizabeth never agreed to a loan and therefore the advance must be treated as a gift or distribution, in circumstances where the trust deed allows for such.

Factual findings

I accept the following evidence, for reasons provided further below.
Mr O'Brien had a conversation with Elizabeth in about 2021, in which she said: Dad, is there any possibility that I could get my inheritance before you die? … I want to buy a house. You can come and live with me. I'll look after you in your old age. …
After this conversation, Mr O'Brien and Mr Downey discussed the possibility of the trust advancing money to Elizabeth for a property purchase. Mr O'Brien explained to Mr Downey that his daughter Emily was going to sell her property, where he was living with Elizabeth, and asked whether the trust would advance money to Elizabeth for her to purchase a property, in which he could also live.
This was in the context of Mr Downey's position that: … one matter that would receive my close attention was whether the Trust was in a position to provide any assistance [Mr O'Brien] may require in terms of meeting his own basic living and accommodation expenses, having regard to both his age and his impaired health.
Mr Downey expresses a conversation with Mr O'Brien in about mid to late 2021 as follows: … I said to Michael that it may be appropriate to consider a loan being provided to Elizabeth on an interest free basis provided it was secured by a mortgage and the rent-free life tenancy was properly documented so that Michael would have some assurances as to his future living circumstances. …
Mr O'Brien had further conversations with Elizabeth, including: O'Brien: … If I could get the trustee director to advance you a loan secured by whatever house you buy, then this overcomes the problem of you getting your inheritance early. The trustee director bought [sic] up another point and that is my living arrangements. You said to me the other night that I could live with you. Did you mean that, because that would need to be formalised. Elizabeth: … Yes, I meant it that I would look after you. … O'Brien: Okay, but the arrangement will need to be legally formalised. I think they call it a lifetime tenancy. I had an old aunt in Sydney many years ago who had one. I was the Executor of her Will. Speaking of wills, you will have to make one. Elizabeth: Yes dad, I know. …
Mr O'Brien then had another conversation with Mr Downey to the effect of: O'Brien: … I've spoken to Liz and said I would talk to you about the house purchase. I told her that I think it will be much better for her to be given a loan from the trust to buy the home up to a value of a third of the trust's worth. We didn't talk about loan interest but thinking since then, if I have a lifetime tenancy and Liz looks after me in old age, then as long as Liz pays the outgoings and cooks for me, then the loan should be interest free. Afterall I will be getting free rent. What do you think? Downey: That's a much better idea but make sure it is done properly through Nic Dan … I'll leave it to you to sort it out with Nic as I'm mindful of my fees, just keep me informed.
Mr Downey's evidence is that on about 19 October 2021, he had another conversation with Mr O'Brien, which may be his version of Mr O'Brien's recalled conversation, both being materially similar: On or about 19 October 2021, I called Michael and said to him that in principle the Trust would advance moneys to Elizabeth as an interest free loan for the purchase of a house provided that she grants a mortgage to the Trust and let Michael live there for the rest of his life. Michael said to me that he would tell Elizabeth …
After that, Mr O'Brien again spoke to Elizabeth to the effect: O'Brien: I've spoken to the trustee director and he has agreed that, subject to the trust solicitor's approval, he will approve a loan up to $750,000 for you to buy a home subject to conditions to be advised by the trust solicitor including formalising my arrangement to live with you. Do you have any problems with this? Elizabeth: No dad, I love you.
On 20 October 2021, Mr Downey had a conversation with Mr O'Brien about the trust also assisting Emily with a short term loan of $17,500, to assist with her moving costs. Mr Downey agreed, and sent Emily a letter to that effect. No interest rate was mentioned, or, it seems, imposed.
Consistent with that evidence of Mr O'Brien and Mr Downey, in a 28 October 2021 text message, Elizabeth said to Emily: Dad said that the house goes on the market in ten days. Does your sales contract say that we have to find somewhere else? I'm literally cashing in my inheritance to make sure he has somewhere to live while you get your dream setup and whatever you want and I have to look after all of your stuff … YOU'RE the one putting us both in a shit position Emily. …
Emily's evidence is that both Elizabeth and Mr O'Brien referred to the money being advanced as variously an "inheritance", "early inheritance" and "gift". Emily did not hear Elizabeth refer to the money as a loan or mention that she owed the trust any obligations. Emily did remember Elizabeth telling her "Dad will be living with me".
Further, Emily's evidence is that Mr O'Brien told her that: Lizzie will have no future claim on the Trust. It will then just be divided 50/50 with you and Vivian …
Mr O'Brien was involved in Elizabeth's purchase. There is no dispute that he visited various properties with Elizabeth, and discussions with Ms Grabowski indicated that the joint intention of Mr O'Brien and Elizabeth was that they would live in the property Elizabeth purchased.
On 11 November 2021, Elizabeth was the successful bidder at the auction. Mr O'Brien immediately notified Mr Downey and asked for the deposit to be paid by the trust for Elizabeth.
Mr Downey gives evidence of another phone call with Mr O'Brien on 12 November 2021: On 12 November 2021, Michael telephoned me to discuss with me the purchase of [the property] … he said to me that Elizabeth had just successfully bid at an auction … Michael also said to me that Elizabeth had agreed to him living in the property as a condition of any interest free loan from the Trust and that the Trust would be given a mortgage, and his accommodation needs would be properly documented as was discussed with me. I said to Michael that I agree on behalf of the trust to provide Elizabeth with an interest free loan of not more than $750,000 but that I would require the mortgage and future accommodation arrangements to be properly documented which I expected would include the life tenancy so that Michael had a secure and permanent right to occupy the house purchased for the remainder of his lifetime. I said to Michael that in the interests of saving costs, he should speak to Mr Dan and ask him to prepare the necessary documentation. …
I accept that Mr Downey always intended the advance of the purchase price to be a loan, rather than a distribution of capital to either Mr O'Brien or Elizabeth. All of the contemporaneous trust financial information of the trust records a loan to Elizabeth, not a distribution. However, Mr Downey never directly communicated his intention to Elizabeth. The consistent evidence of all witnesses was that Mr Downey only dealt directly with Mr O'Brien.
Mr Downey also always expected the loan and security documents to be drafted by Mr Nicholas Dan, the trust's solicitor. He directed Mr O'Brien to organise that process.
Further, while Mr Downey accepted in cross-examination that Mr O'Brien may have said he would organise for Mr Downey's requirements for the advance to "get … done", he was not challenged on his further evidence that: Michael told me that he'd already spoken with his daughter and agreed the arrangements … … there'd been verbal acceptance with Michael and communicated to me.
Before settlement of the property, on 10 December 2021, Mr O'Brien wrote to Elizabeth's conveyancing solicitors, including: Nothing has been heard on the other matters - the lifetime tenancy agreement and the deed between Elizabeth and the Trust.
On the same day, the solicitors responded, including: In relation to the Deed and Trust, I will check this with Nick Dan.
Elizabeth referred to the purchase as an "early inheritance". For example, Deborah Humphries, a friend of Ms Grabowski, also gives very similar evidence, that Elizabeth told her at a time just after the completion of the purchase: I am so excited that I got the house. I just love it. Dad has paid for the property by giving me my inheritance early. He's going to live with me and I'm so grateful because I would never have been able to do this on my own.
On 14 January 2022, Mr O'Brien wrote to Elizabeth's solicitors on the conveyance, stating: The attached receipts state that the funds put into your trust account came from me. This isn't the case as they came from Eirevest Securities Pty Limited.
I accept that Mr O'Brien always expected formal documents with terms to be drafted by Mr Dan. Mr O'Brien's evidence is that after he had spoken with Mr Downey and had his agreement, he told Mr Dan: I have spoken to Jim and he is in agreement that the trust can finance Elizabeth to buy a home as long as I can live there too and whatever extra terms you believe should be in place …the loan can be interest free as long as I can live there for life and Liz honours her promise that she will look after me in old age but she will have to cover maintenance and the outgoings like insurance, rates, power and taxes. …
However, I do not accept that he had any detailed conversation with Mr Dan about the documentation before early 2022. There is no evidence from Mr Dan by way of direct evidence or file note or time entry to support any such conversation. I accept that if Mr Dan had given evidence, it would not have risen higher than his the client file of his which is in evidence.
However, I accept that Mr O'Brien had a conversation with Mr Dan before 18 February 2022. On that day, Mr Dan emailed Mr O'Brien: Subject: Life tenancy It appears the simplest way of creating a life tenancy for you is to register a transfer creating the life tenancy. There may be issues regarding: 1. Stamp duty being payable before the transfer can be registered. 2. There may be capital gains tax issues. 3. How to define which part of the property you have rights over. 4. The fact that it is not an exclusive use of the property. 5. Who is to pay outgoings (e.g. insurance, rates, upkeep etc)/how are they to be shared. 6. What happens if there is any problems between Elizabeth and yourself. 7. What if either of you wish to bring a partner to live in the property. 8. Who is to maintain the property. 9. What is [sic] Elizabeth wants to sell the property. 10. What is [sic] Elizabeth dies. I look forward to discussing the above with you.
On receipt, Mr O'Brien says he had a conversation with Mr Dan, where he complained about the tardiness with the documents, and during which he formed the expectation that they would be progressed for when Mr O'Brien returned to Maitland from Sydney, where he was caring for his daughter.
I do not accept that Mr O'Brien ever discussed with Elizabeth the details of the terms of loan he mentioned to Mr Dan or the detail of a life interest. There is no evidence that Mr Dan had any such conversation with Elizabeth. I do not accept she agreed to giving Mr O'Brien a life interest in the property.
However, on the balance of probabilities, I accept the evidence of Mr O'Brien that he informed Elizabeth that the trust would advance money to her on the basis of a loan arrangement and a mortgage, and she agreed to that proposal. I accept this evidence for the following reasons.
First, Airvest contemporaneously accounted for advances to both Emily and Elizabeth as "loans". No distribution was every declared and the advance was not deducted from any entitlement in the trust, to which Mr O'Brien may have been entitled. I accept that Mr Downey's only intention was to advance the money by way of loan.
Secondly, while no legal document expected by Mr Downey was ever prepared, I do not consider that fatal to the loan claim. Mr Downey candidly accepted in cross-examination that it was "lax" that he did not put something in writing concerning the loan, but assumed that Mr O'Brien was organising documentation with Mr Dan. He also did not expect any problems because Elizabeth was Mr O'Brien's daughter.
I accept Mr Downey's explanation as to why he did not agitate for legal documentation before settlement, namely, that he expected a lawyer to be involved because of the security and loan documentation. I accept that Mr Downey had prepared a letter for Emily's loan of $17,500 and asked her to sign it confirming her agreement. However, there was no documented loan in evidence concerning the increase of that loan to the sum of $230,000, with an interest rate. Further, I consider there was an obvious difference between the trust's simple loan to Emily, which Mr Downey was able to document in a short letter, and the arrangement with Elizabeth, which involved a loan, mortgage and expected tenancy life interest arrangement for Mr O'Brien. Mr Downey also had fewer concerns because Mr O'Brien intended to, and did, live with Elizabeth, which was consistent with Mr Downey's understanding of the arrangement.
While no formal documentation was ever created, I do not accept that either Mr Downey or Mr O'Brien had decided not to have such documentation completed. Mr O'Brien was agitating for a "deed" between Elizabeth and the trust and a "lifetime tenancy" before settlement and again afterwards. Further, I do not accept that it was incumbent on Mr O'Brien in his emails to Mr Downey, seeking the payment of funds from the trust for the property, to set out the terms of the loan. Further, Mr Downey continued to consistently assert after Elizabeth's death and before the proceedings that Mr O'Brien was living in the property "under a life tenancy".
Thirdly, the ordinary way in which money was advanced from the trust was through Mr O'Brien's request. When Mr O'Brien sought money from the trust either for himself or his daughters, then he asked Mr Downey, who had responsibilities as a director of the trustee and also sought to provide the trust's financial assistance to the beneficiaries. Mr Downey, as a chartered accountant, appeared to conscientiously record loans and other dealings with the trust funds.
Emily and Elizabeth appear to have had no contact with Mr Downey concerning the terms of any advance from the trust. Mr O'Brien was the conduit between his daughters and Mr Downey. I accept that Mr O'Brien expressed to Elizabeth the terms, on which money would be advanced and Elizabeth accepted; it was a take it or leave it offer. I note that Emily does not suggest she negotiated the terms of the assistance she requested from the trust.
I accept that Mr O'Brien explained Mr Downey's loan requirement to Elizabeth and she agreed. She appears to have trusted her father with all of the organisation of the funds and many aspects of the conveyance. She was willingly housing her father and promising to look after him. Perhaps by reason of this involvement, the conveyancer wrongly assumed the funds were coming from Mr O'Brien personally. There is no reason to expect that Elizabeth decided to refuse receiving the loan on an interest-free basis, when she was being presented with the opportunity to purchase a house she wanted.
There is no reason to believe that Mr O'Brien did not have the conversations with Elizabeth and or misrepresented that position to Mr Downey. At the time, no one anticipated Elizabeth's untimely death, and therefore it would not have been possible for Mr O'Brien to maintain a deception to that effect, had she lived. Further, had Elizabeth not agreed to the trust's terms, then Mr O'Brien could have sought a different arrangement with the trust concerning accommodation for himself, and possibly also Elizabeth.
Fourthly, while Elizabeth referred to the trust providing her with an "early inheritance" and did not mention a loan, practically, but not legally, that was correct. The trust could not provide her with "early inheritance". However, she was purchasing a property she had chosen, and, consistent with Mr Downey's terms, she was not required to make any repayments to the trust, as with an ordinary bank loan. Instead, the loan would become an "inheritance" on Mr O'Brien's death. The fact that Elizabeth spoke of an "early inheritance" and Mr O'Brien had told Emily that Elizabeth would have no further claim on the trust further supports the finding that Mr O'Brien would have informed Elizabeth of the same thing, and therefore she was aware that documentation with the trust needed to be signed to organise that arrangement legally.
For completeness, I note that I do not accept that Ms Grabowski, who disputes the existence of the loan, made an admission of a loan in her administrator affidavit dated 30 August 2022. By the latest at 2 March 2023 at the latest, and a few weeks after the parents were granted letters of administration, Ms Grabowski's considered that the property should be transferred into the parents' names as beneficiaries. Despite that, on 30 August 2022, Ms Grabowski swore an oath as joint administrator with Mr O'Brien that listed the creditors of the estate including: [Trust] Mortgage over [the property] Secured $749,639.91
The affidavit further stated that the net value of the estate was $354,591.44, which was mostly made up of Elizabeth's superannuation, not the property.
However, Mr Dan, who had witnessed the administrators' affidavit, later wrote to Ms Grabowski's solicitors including: … No mortgage was executed by Elizabeth - the Affidavit should not have referred to a "secured debt". … The monies were paid to enable Elizabeth to purchase the property but were not subject to a mortgage. The advancement however was subject to Michael O'Brien being given a life interest in the property. The documentation creating the life interest had not been finalised as at date of death. I note Michael O'Brien was residing in the property at date of death and is still residing there. …
The letter was sent as above, despite Mr O'Brien complaining "Your email doesn't stress that this was a loan which I believe is critical".
Ms Grabowski's evidence was that while she knew from receipt of that letter that there was no mortgage over Elizabeth's property, she never took any steps to correct her affidavit evidence about the loan. She denied that was because she accepted there was a loan. I accept her evidence that from that time she was relying on her lawyers to advise her.
I also do not accept that the affidavit evidence amounts to an admission that the estate accepted the advance was a loan. It appears clear that Mr Dan prepared that affidavit on the instructions of Mr O'Brien, and Ms Grabowski signed it relying on Mr Dan, as she was not privy to the trust's operations and documents. I do not accept that Ms Grabowski is estopped from resiling from her affidavit evidence in those circumstances, or that it demonstrates an admission about a loan.

Conclusion as to loan

As noted above, I do not accept that Mr O'Brien obtained Elizabeth's consent to a life interest, as part of the arrangement. There is no evidence that Mr O'Brien understood the legal complexities of that concept, nor that it would have been apparent to Elizabeth. While she stated that Mr O'Brien could live with her, the complicated nature of a life interest was not the subject of any communication. While I consider that Mr O'Brien wanted some security for his accommodation, I do not accept that there was a discussion with Elizabeth, let alone agreement, to concerning the various issues raised in Mr Dan's email of 18 February 2022.
However, I accept that Elizabeth agreed to sign formal documentation for a loan and mortgage, for which she was not liable to make any repayments, that Mr Downey intended would become her inheritance "proper" upon Mr O'Brien's death. I accept it can be inferred that Elizabeth understood the loan would be forgiven on Mr O'Brien's death also. Emily knew that Elizabeth would have no further claim on the trust on Mr O'Brien's death. However, because no time for repayment was ever specified by Mr Downey or Mr O'Brien, the loan is repayable on demand and the trust has made a demand.
If that conclusion about Elizabeth's intention and agreement to the loan is incorrect, and she subjectively understood she owed no responsibility to the trust pursuant to the loan, then the basis upon which the trust was advancing the money was not accepted by Elizabeth, and therefore there was no meeting of the minds and there was no contract, and no loan agreement. On that basis, however, the money is still repayable by way of money had and received.

Security?

Airvest also seeks an order for security over the property for the loan. In particular, it seeks an order for specific performance of a term of the oral loan agreement under which Elizabeth was obliged to grant Airvest a mortgage in respect of the property.
Airvest acknowledges that this claim may be precluded by s 54A Conveyancing Act 1919 (NSW). However, it seeks avoid the operation of that section by relying on the doctrine of part performance.
To avail itself of the doctrine of part performance, Airvest must demonstrate that it has engaged in acts "unequivocally, and in their own nature, referable to some such agreement as that alleged": Maddison v Alderson (1883) 8 App Cas 467 at 479; Pipikos v Trayans (2018) 265 CLR 522.
In Li v Tao [2023] NSWCA 310 at [56], the necessary analysis was summarised by Kirk JA as follows (Ward P and Mitchelmore JA agreeing): Where the doctrine is invoked, "the logical order … is first to determine whether the acts performed establish the equity and then, and only then, to refer to the terms of the parol agreement in order to ascertain the terms in which the equity is to be enforced": Pipikos at [55], see also [99]. Thus one does not begin with the contract and then identify acts which are referable to it. Rather, one focuses on the acts to consider if they are "consistent only with partial performance of a transaction of the same nature as that which the plaintiff seeks to have completed": at [54]. Further, "payment of money alone is not a sufficient act of part performance because it is an equivocal act not in itself indicative of a contract concerning land": Pipikos at [89] per Nettle and Gordon JJ.
In its written submissions, Airvest relied on a single act of part performance, being its conduct in paying causing "all but one percent of the payments for the purchase of the property to be made into the trust account of Turnbull Hill for the sole purpose of purchasing the property".
While I accept on the balance of probabilities there was an oral loan agreement between Elizabeth and the trustee, I do not consider that Airvest's conduct is "unequivocally" referable to a loan agreement which included, as a term, that trustee was at some later date to be given a mortgage over the property to secure repayment. As such, Airvest's claim for specific performance must fail.
Airvest also sought an order for an equitable lien over the property in accordance with the principles set out in Giumelli v Giumelli (1999) 196 CLR 101. However, during closing submissions, counsel for Airvest conceded that an equitable lien was only pressed if the Court did not "make a money order". Given my findings concerning the existence of an enforceable loan, it is therefore unnecessary to consider this issue.

Estoppel by encouragement

If no loan ought to have been found, then Mr O'Brien seeks relief in the form of a life interest over the property by reason of an estoppel by encouragement. Mr O'Brien asserts that he assumed that he would obtain a life interest to reside rent-free in the property for the rest of his life if he facilitated Airvest paying for the property and some incidental costs such as stamp duty.
Estoppel by encouragement is founded in an assumption as to the future acquisition of ownership of property, which has been induced by a representation or promise upon which there has been detrimental reliance by the plaintiff: see Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220 (Q v E Co) at [15] (Meagher JA, Leeming and Payne JJA agreeing).
In Horn v GA & RJ Horn Pty Ltd [2022] NSWSC 1519 citing Shymko v Lach [2022] NSWSC 1096 at [550-556], Meek J summarised the principles of estoppel by encouragement at [774]. It is necessary to establish the plaintiff's conduct in relying upon an assumption or expectation that a particular legal relationship did or would exist; the defendant's conduct that induced the plaintiff to adopt the assumption and encouraged the reliant activities; and, in relation to an the interest or property, establishing that the assumption or expectation was one that the defendant could lawfully satisfy.
Generally, inducement is found by way of a representation by words or conduct. In Sullivan v Sullivan [2006] NSWCA 312 at [85] Hodgson JA (Handley and McColl JJA agreeing on this point) said: Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit.
In Reeves v Reeves [2024] NSWSC 134 at [466]-[468], Meek J noted that where there are close family members, it may be difficult to determine whether an alleged promise or statement was intended to create legal relations, and it is important to judge the evidence "objectively according to the impact that whatever is said [or done] may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee": at [468], citing Q v E Co at [15] (Meagher JA, Leeming and Payne JJA agreeing), quoting MCI WorldCom International Inc v Primus Telecommunications Inc [2004] 2 All ER (Comm) 833 at 844 (Mance LJ).

Application

As noted above, there is evidence that Elizabeth herself told others that Mr O'Brien would be living with her. Most telling is the text message Elizabeth sent to Emily set out above at [23], indicating that Elizabeth was obtaining money as "an inheritance" to provide Mr O'Brien somewhere to live, because Emily was selling her property, in which he was living.
While that message does not specify that Elizabeth would be housing Mr O'Brien for his life, the context provides that, at the time of the discussions, Mr O'Brien: 1. had no property, ; 2. had to vacate Emily's property, ; and 3. also wanted to assist Elizabeth with a home.
Further, Ms Grabowski's evidence is that she knew Mr O'Brien would be living in a property with Elizabeth, and they were looking for a property that suited both of them; that would have been unnecessary if the property was solely for Elizabeth. Mr Downey also had also expressed a concern about Mr O'Brien's residential status and how the trust could assist in that regard.
While I accept the evidence of Mr O'Brien that he had the conversations he asserts with Mr Downey about a proposed "life tenancy", they both sought formalisation of documents through lawyers. As noted above, there is no evidence that the lawyers ever had any contact with Elizabeth about her perspective on the situation, including her understanding of what a life interest entails. Neither were any draft documents in evidence. While Mr O'Brien agitated before and after settlement for a "deed" and "lifetime tenancy", I do not accept that Elizabeth can be taken to have agreed to the detail of such an arrangement, that involved some complications, as raised by Mr Dan.
While Elizabeth never resiled from her statements that Mr O'Brien could live with her and she would look after him, and he did move into the property with her on settlement, I do not accept that her statements can be taken as unequivocal representations that she intended to house Mr O'Brien for the remainder of his life.
I consider that Mr O'Brien was content to rely on Elizabeth's oral promises to let him live with her, and for the trust to advance money to her by way of loan. That provided him with sufficient security, but also allowed him to feel he had assisted Elizabeth. Because at the time Elizabeth was offering that he live with her, Mr O'Brien did not need to seek the trust's assistance with accommodation at that time.
Therefore, on balance, I do not accept that Elizabeth induced Mr O'Brien to facilitate the trust's advance of the purchase price, because of Elizabeth's representations that he could live in the property with her. I do not accept she ever represented he could live with her for life.

Further provision for Mr O'Brien?

As noted above, Mr O'Brien seeks additional provision from Elizabeth's estate, should it be found that she did not borrow the purchase monies from the trust and did not encourage a life interest.
In particular, he seeks a further sum of $150,000, above the 50% of the estate, to enable him to purchase an unencumbered 2 to 3 bedroom home in Maitland.

Principles

It is not disputed that because Mr O'Brien did live in Elizabeth's house and therefore was partly dependent on her, he is an "eligible person" for the purposes of s 59(1)(a) Succession Act, : (see s 57(1)(e)), even though a "parent" is not a defined category of eligible person. The Act does not specify a particular length of time during which the applicant must have been a member of the household of which the deceased was a member.
Mr O'Brien's application was brought within time.
The issues in dispute are: 1. Whether factors exist which would give Mr O'Brien the status of one, who, by community standards and expectations, could be regarded as a natural object of testamentary recognition, having regard to the nature and quality of the relationship: see Graziani v Graziani (Supreme Court NSW, Cohen J, 20 February 1987, unreported). 2. Whether the intestacy will result in a finding that Elizabeth failed to make "adequate provision for his proper maintenance, education or advancement in life", assessed at the time the Court is considering the application: s 59(1)(c). If this is made out, the next question is whether the Court should exercise its discretion under s 59(2) to make an order for family provision and, if so, the appropriate provision.
The word "adequacy" in s 59(1)(c) directs the attention of the Court to the form and quantum of the provision made in a will, whereas the word "proper" directs attention to the appropriate standard of maintenance, education and advancement: Tarbes v Taleb [2023] NSWSC 565 at [202]-[203], citing Verzar v Verzar [2012] NSWSC 1380 at [127] (Lindsay J).
In Blendell v Blendell [2020] NSWCA 154 at [8] Meagher JA (Gleeson and Leeming JJA agreeing) observed that these terms are relative, requiring consideration, inter alia, of the matters identified in s 60(2) Succession Act, "including the claimant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the claimant and the deceased, and the circumstances and needs of other claimants, beneficiaries and potential beneficiaries".
Of the relevant considerations, in this, as with many, family provision cases, the question of competing financial needs and competition for their satisfaction out of the estate are particularly prominent, because of the limited scale of the resources available: Lloyd-Williams v Mayfield (2005) 63 NSWLR 1 at [31] (Bryson JA, Giles JA and Stein AJA agreeing).
In Mayfield v Lloyd-Williams [2004] NSWSC 419 at [114], White J 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 a 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.
In Chapple v Wilcox (2014) 87 NSWLR 646,(Chapple v Wilcox) at [13]-[14], Basten JA stated: One way of considering the present matter is to inquire what social, domestic or moral obligation the deceased had to provide for the claimant whilst still alive… There may be circumstances in which widely held community standards might expect a grandfather to make some provision for his grandchildren, for example where they had maintained a strong relationship and where there was reason to doubt the willingness or the ability of the parents to make adequate provision for their children. However, such considerations will always be influenced by the fact that the grandchildren are themselves mature adults. In the present case, relevant community values will be affected by the nature of the estate. Quite particular values might operate with respect to farming properties which are subject to fluctuations in relation to debt and revenue depending on natural events and particularly drought. They may also be affected by the financial viability of an estate and its capacity to support those owning or managing it, if broken up and part disposed of.
Barrett JA, at [64] in Chapple v Wilcox, stated: What Allsop P called 'the feeling and judgment of fair and reasonable members of the community' falls to be ascertained according to the circumstances of the particular case. Matters to be taken into account in making the relevant assessment are the applicant's financial position, the size and nature of the deceased's estate, the relationships between the applicant and the deceased and other persons who have legitimate claims upon his or her bounty and the circumstances and needs of those other persons …
The above principles are not rules of law and do not constrain the Court's evaluative judgment under s 59: Chapple v Wilcox at [18]-[19] (Basten JA). Nevertheless, as Barrett JA noted at [67] in Chapple v Wilcox, they do provide "a useful touchstone that may be applied with circumspection by judges called upon to ascertain and apply 'the feeling and judgment of fair and reasonable members of the community'" in family provision proceedings.
On an intestacy the parents of an intestate leaving no spouse, are entitled to the whole estate. Therefore, it appears that a parent, being a blood relative, is considered a natural object of testamentary recognition.
The question as to whether an applicant has been left with inadequate provision for her proper maintenance, education or advancement in life involves a finding of fact, albeit one that is, in light of the substantive character of the matter to be decided, evaluative. It does not involve an exercise of discretion: see Strang v Steiner [2019] NSWCA 143 at [76] (Macfarlan JA) and [131] (White JA); Georgopoulos v Tsiokanis [2022] NSWSC 563 at [256] (Hallen J).
An applicant must disclose to the Court, as fully and frankly as possible, all details of his or her material and financial circumstances, as they are at or about the time of the hearing: Stone v Stone [2019] NSWSC 233 (Stone v Stone) at [60] (Hammerschlag J), citing DJ Singh v DH Singh [2018] NSWCA 30 at [284]-[291] (Gleeson JA, Leeming and White JJA agreeing). This obligation is also consistent with parties' obligations to facilitate the just, quick and cheap resolution of the real issues in dispute the proceedings.
If the Court does not have all pertinent facts or material information, then it is difficult to make the evaluative judgment sought by the applicant, which s 59(1)(c) Succession Act requires it to make: Stone v Stone at [62]-[64].

Application

I do not accept that Mr O'Brien has demonstrated that there are any factors warranting further provision. While I have had regard to Lodin v Lodin [2017] NSWCA 327 at [126]-[129], referred to by Mr O'Brien, there is nothing in the statement of principles that assists him. Instead, what is indicated is that where a claimant is a former spouse, then it must be demonstrated that he or she was a natural object of testamentary recognition to warrant further provision.
Here, Mr O'Brien only lived with Elizabeth for a few months. I do not accept that because she allowed him to live there, she was obliged to ensure that he was provided with the funds to purchase an unencumbered property to house him for the rest of his life.
Further, in any event, I do not accept that Mr O'Brien has demonstrated he is entitled to further provision for the following reasons.
Mr O'Brien is currently 77 and does not work in paid employment, but is involved in possible investment schemes. Mr O'Brien suffers the kinds of physical ailments often associated with someone of his age, including asthma, and pain from crushed vertebrae. and hHe has also had a minor stroke. He expects to live approximately another 7 years.
As noted above, after 2019 he has lived in his daughters' properties. He does not own any real property. He does own some personal property.
He derives income from the trust by way of distributions of income or loans. He receives about $5,000 per month from the trust, which has assets of over $1.1 million, if the property loan is not repayable, and approximately $1,460 per month part in pension. Mr O'Brien says he has no liabilities.
While Ms Grabowski does not make a competing claim for further provision, she does give evidence that she is also "in need". Because her circumstances are in evidence, they must be considered before any further provision is given to Mr O'Brien. Ms Grabowski has assets of under $15,000 and monthly income of $550, or a small amount more. It appears she is supported in part by her partner, who owns a home and has greater superannuation.

Conclusion

I do not accept that Mr O'Brien is entitled to further provision, beyond the provision he will receive through the intestacy. I consider it possible for Mr O'Brien to purchase another property in the Maitland area using the money from the estate and possibly additional funds from the trust. Alternatively, he has sufficient funds for rent.
Based on Mr Downey's evidence above, currently, the trustee is minded to assist Mr O'Brien for his accommodation and maintenance and the trust has the means to do so.
I also do not consider that Mr O'Brien is in a worse financial position than Ms Grabowski. To make an order of further provision to Mr O'Brien would put an inappropriate burden on Ms Grabowski.

Orders

For the reasons above, the appropriate orders are as follows.
In proceedings 2023/00099474: 1. Statement of claim dismissed. 2. Plaintiff to pay the defendant's costs as agreed or assessed.
In proceedings 2024/00165274: 1. Order the defendants, as administrators of the deceased estate of Elizabeth Maree O'Brien, repay the plaintiff the sum of $749,639.91. 2. Defendants pay the plaintiff's costs as agreed or assessed. 3. Order by consent, that the defendants, as administrators of the deceased estate of Elizabeth Maree O'Brien, repay the plaintiff the sum of $23,976.84.

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: 07 June 2024

Succession Act 2006(NSW)ss 57, 59, 60

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