Panagopoulos v Panagopoulos

Supreme Court of NSW|2021-03-08|Before: Robb J

Solicitors: AJB Stevens (Plaintiff) Kardos Scanlan (Defendant) File Number(s): 2018/233240

Judgment

These proceedings concern the estate of Theodoros Panagopoulos who died on 22 October 2000.
The plaintiff, Jim Panagopoulos, a son of the deceased, brings a family provision application under s 7 of the Family Provision Act 1982 (NSW). The defendant, George Panagopoulos, is the deceased's other son.
As was done at the hearing, and without meaning any disrespect, I will refer to the parties by their first names.
The deceased executed a will on 16 December 1997 but the original will, which was left in the safekeeping of the solicitor who prepared it, was lost. The solicitor gave to the deceased an unsigned and undated copy of the will. George found this copy of the will after the deceased's death.
George was named as the deceased's executor in the copy will. This Court granted probate of the copy of the will to George on 15 May 2002. I will simply refer to the "will".
At the date of the deceased's death, he owned a residential property in Marrickville (which I will call the Marrickville property as it is still occupied by Jim). The Marrickville property was valued at $400,000 in the deceased's inventory of property. The deceased also left two bank accounts containing the estimated total sum of $25,000.

Deceased's 16 December 1997 will

The will contained the following material provisions: 3. I GIVE to my son JIM PANAGOPOULOS all of my interest (sic) the [Marrickville property] for life and I DIRECT that in the event that he does not survive me then I give the said [Marrickville property] to such of his children as survive him in equal shares the share which he would otherwise have taken under this my Will. 4. I GIVE DEVISE AND BEQUEATH to my Trustee the rest and residue of my real and personal estate of whatsoever kind and wheresoever situate UPON TRUST after payment thereout of the whole of my just debts funeral and testamentary expenses … for such child or children of mine as shall survive me for the space of one calendar month PROVIDED HOWEVER that if any child or children of mine shall not survive me for the space of one calendar month as aforesaid but should leave a child or children who survives him and attains the age of twenty one (21) years such child or children shall take and if more than one in equal shares the share which his her or their parent would have taken under this my Will had such parent survived me for the space of one calendar month and attained a vested interest herein. … 6. IN this my Will I have made no provision for my son GEORGE PANAGOPOULOS, as I have more than adequately provided for him throughout the course of my life.
There are a number of apparent problems with the wording of the will. First, clause 3 purports to give Jim's children the same interest that he would have received if he had not predeceased the deceased, but that interest was only a life interest. As this aspect of clause 3 assumes that Jim has died before the deceased, there will be no life interest that Jim's children could enjoy. Alternatively, clause 3 may have been intended to give life interests to the children of Jim who survived him. The possible grant of concurrent life interests in a residential property to more than one person is at least an unusual gift.
Secondly, clause 4 on its face gives the residue of the deceased's estate equally to the deceased's children that survive him. Both Jim and George survived the deceased. That would have the effect that Jim would first enjoy a life estate in the Marrickville property under clause 3 and then upon his death his estate would share the residue (which would include the remainder interest in the Marrickville property) equally with George.
Thirdly, as clause 4 was capable of giving George a half interest in the residue if he survived the deceased, as happened, the explanation in clause 6 as to why the deceased had made no provision for George is inexplicable.

George's application to rectify the 16 December 1997 will

George made an application to this Court for an order rectifying the will. The application was made by summons filed on or about 19 December 2003. In addition to his own evidence and evidence given by the solicitor who prepared the will, George relied upon an affidavit and a consent executed by Jim on 17 or 18 December 2003. On about 8 March 2004, the Court made the rectification order sought by George. As Jim had executed a consent and supported the application, the rectification order was made by consent.
The rectification order provided as follows: The Court declares that: 1. The Will of [the deceased] dated 16 December 1997 and admitted to probate on 15 May 2002 fails to carry out the testamentary intentions of the deceased. The Court orders that: 1. The time for making an application under Section 29A of the Wills Probate and Administration Act 1898 be extended until 19 December 2003. 2. Clause 3 of the Will of [the deceased] dated 16 December 1997 and admitted to probate on 15 May 2002 be rectified pursuant to s.29A(3) Wills Probate and Administration Act 1898, as amended, by amended (sic) clause 3 of the said Will so as to read: "I GIVE to my son JIM PANAGOPOULOS all my interest in the [Marrickville property] for life and upon the death of JIM PANAGOPOULOS to such of his natural children as shall survive him in equal shares PROVIDED THAT if my son JIM PANAGOPOULOS should die without leaving natural children then such interest shall pass to the children of GEORGE PANAGOPOULOS in equal shares absolutely."
The new clause 3 made it clear that only natural children of Jim would inherit the Marrickville property absolutely at the end of Jim's life estate. In the absence of Jim having natural children, the title to the Marrickville property would go to George's children on Jim's death. Apparently, clause 4 of the will was not rectified because, by the date the rectification order was made, the Marrickville property was the only asset in the deceased's estate, so that there was no significant residue.

Effect of the parties' initial pleadings

Jim commenced these proceedings by statement of claim filed on 30 July 2018. That was almost 18 years after the death of the deceased.
Paraphrasing the prayers for relief in the statement of claim, Jim sought the following orders:

An order setting aside the rectification order pursuant to Uniform Civil Procedure Rules 2005 (NSW) rr 36.15 and 36.16: prayers 1 to 4.
A declaration that, on the true construction of the will, the deceased's entire interest in the Marrickville property was given to Jim: prayer 5.
Alternatively, an order that the will be rectified to reflect the true intention of the deceased by the removal of the words "for life" from clause 3: prayer 6.
A declaration that the Marrickville property is held on a constructive trust for Jim in such portion and amount as the Court deems fit: prayer 7.
An order that George give restitution to Jim in respect of Jim's contribution to the Marrickville property: prayer 8.
An order that the Marrickville property be declared as part of the notional estate of the deceased: prayer 9.
An order that provision be made for Jim out of the estate of the deceased in such amount as the Court deems fit: prayer 10.

Although the prayers for relief do not include an order extending the time for the making of the family provision application, being 18 months after the death of the deceased, par 51 of the statement of claim pleaded a request that time be extended pursuant to s 16 of the Family Provision Act.
George filed his defence on 4 July 2019. Relevantly for present purposes, George pleaded in par 15 that the time for the making of the family provision application should not be extended in circumstances where the deceased died in 2000 and no facts had been pleaded supporting any such extension and no facts had been pleaded to support a claim for family provision.
George also filed a cross claim on 4 July 2019. In essence, George sought the following relief:

Against the possibility that Jim would succeed in his application for an order to set aside the rectification order, George made a new application for the same rectification order, and an order extending the time for that application to be made.
A declaration that, on the proper construction of the will, clauses 4 and 6 have the effect that the latter does not prevent George being entitled to receive half of the residue under clause 4.
Declarations and orders that George is entitled to a charge over the assets of the deceased's estate to indemnify him for the debts and expenses he has paid or incurred as executor and trustee of the estate.

Jim apparently filed his defence to the cross claim on about 8 August 2019.
Jim filed an amended statement of claim on 9 December 2019. In the events that have happened, it is not necessary to consider the amendments in any detail. Jim did not plead the basis of his application for an extension of time to commence his family provision application. George's defence to the amended statement of claim was filed on 13 January 2020.

Jim's abandoned application to amend

Shortly before the commencement of the hearing, on 17 February 2021 Jim served a draft further amended statement of claim on George, and on 22 February 2021 a revised version of that draft pleading. Jim's application for leave to amend his statement of claim was made on the first day of the hearing. Paragraph 26A(i)-(vi), which was provisionally allowed, pleaded the basis of Jim's claim that the rectification order was made irregularly and against good faith in that George had failed to inform Jim that the intended effect of the rectification order was to disentitle Jim to property that he may have inherited under the will.
On the third day of the hearing, I noted that Jim had withdrawn his application to make this amendment. Following argument, Jim's counsel advised the Court that Jim did not press his application for leave to amend to include par 26A(vii)-(xiii) (which alleged a claim of breach of fiduciary duty by George) and par 26B (which alleged a claim of undue influence against George). I made a note of the withdrawal of the application on the third day of the hearing. I gave leave to Jim to make other amendments that were not contested. I indicated that in due course an order would be made that Jim pay George's costs thrown away as a result of the application.
The claims in the draft further amended statement of claim that were ultimately not pressed therefore ceased to be relevant to the proceedings. However, George had already incurred costs in responding to the proposed amendments, given that the issue was raised by Jim close to the commencement of the hearing. The only remaining significance of the application is the costs order that was ultimately made against Jim.

First phase of the hearing

The proceedings were set down for hearing on the five days commencing on 1 March 2021. The hearing proceeded on those days and the Court was able to continue the hearing on 8 and 11 March 2021.
The focus during the first phase of the hearing was Jim's claim for an order setting aside the rectification order and his claim that, on the proper construction of the will in its original form, the Marrickville property was intended to be given to Jim absolutely. As Jim's outline of submissions recorded at par 91, the family provision claim only arose if Jim was unsuccessful in his primary contention that the entire interest in the Marrickville property had been given to him.
Significantly, in relation to Jim's application for an extension of time to commence his family provision claim under s 16 of the Family Provision Act, Jim said at par 95 of his opening written outline: The sufficient cause is constituted by the Plaintiff's factual case in respect of the set-aside issue and restitution issue, namely that the Plaintiff believed that he had been gifted the entirety of [the Marrickville property] by the will until mid-2016 whereupon he began to make the enquiries and take the steps outlined in his affidavit of 28 August 2019 from paragraph 132.

Jim's bankruptcy and its effect

Jim became bankrupt on 18 January 2006 as a result of his presentation of a debtor's petition. Jim was discharged from bankruptcy on 19 January 2009. There was no issue between the parties concerning the effect of Jim's bankruptcy on the claims that he has brought in these proceedings and the effect on those claims if Jim's bankruptcy is annulled. It will therefore be sufficient if that effect is explained in the following outline.
Where a debtor becomes a bankrupt, s 58 of the Bankruptcy Act 1966 (Cth) provides for the vesting of the bankrupt's property in the Official Trustee or a registered trustee. Property that is acquired by, or devolves upon, the bankrupt before the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt, vests in the Official Trustee or registered trustee forthwith: Bankruptcy Act, s 58(1)(a), (6). Conversely, property that is acquired by, or devolves on, the bankrupt on or after the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt, vests in the Official Trustee or registered trustee as soon as that property is acquired by, or devolves on, the bankrupt: Bankruptcy Act, s 58(1)(b), (6).
Under family provision legislation, the nature of an order for further provision has been to take effect as if it were a codicil to the testator's will: Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW), s 4(1); Family Provision Act, s 14(1)(a); Succession Act, s 72(1)(a). However, the provision made by a family provision order takes effect only as if it were a testamentary disposition, and the result of such an order is imposed only as from the date of the order: McLeod v Johns [1981] 1 NSWLR 347 at 349 (Kearney J). In other words, as Mason CJ, Brennan, Deane, Dawson and Gaudron JJ stated in Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 316; [1990] HCA 45: … the person to whom a benefit flows following the making of such an order receives that benefit as the result of the creation of rights pursuant to the making of the order and not by way of variation to any pre-existing rights which that person may have possessed pursuant to the will.
Citing the decisions of this Court in Union-Fidelity Trustee Co of Australia Ltd v Montgomery [1976] 1 NSWLR 134 at 141 (Helsham J) and McLeod v Johns at 349 (Kearney J), the majority of the High Court noted at 316-7 (citations omitted): "It should be observed that the same result has been reached in relation to legislation providing that the order should take effect as if it had been made by codicil."
Given that Jim is a discharged bankrupt, the foregoing propositions reveal that any order for further provision made by this Court will not vest in the Official Trustee and the impact of any such vesting is not a concern for the Court in determining whether adequate provision has been made or whether to make an order for further provision.
Jim's life estate vested in the Official Trustee at the time Jim's bankruptcy commenced on 18 January 2006. If as a result of the setting aside of the rectification order that may have been made in these proceedings as originally constituted, or the making of any new rectification order, or as a result of a favourable construction of the original 17 December 1997 will in Jim's favour, it was found that Jim was entitled to a greater interest in the deceased's estate, that greater interest would also have vested in the Official Trustee on 18 January 2006. The same is true for Jim's right to claim the original relief in these proceedings insofar as its purpose was to establish that Jim was entitled to a greater share than the life estate.
Jim filed the debtor's petition on his own accord and without seeking legal advice concerning the full effect of his bankruptcy and the extent of his duties as a bankrupt to the Official Trustee. Jim did not disclose in his statement of affairs that he had any interest in the Marrickville property. Consequently, the Official Trustee, in ignorance of the existence of Jim's life estate, was unable to move to realise the value of the life estate to pay any of Jim's creditors who lodged proofs of debt in his bankruptcy. Moreover, Jim has lived in the Marrickville property with his family since shortly after the death of the deceased, without paying any rent or occupation fee to the Official Trustee since 18 January 2006.
As Jim is unemployed and impecunious it may be that the Official Trustee will not sue Jim for mesne profits as compensation for Jim's trespass on the Marrickville property, following the Official Trustee's learning recently of the existence of Jim's life estate. However, if the Court were to make a family provision order in Jim's favour that gave Jim a greater interest in the Marrickville property than the life estate, then that additional interest might be the subject of execution by the Official Trustee of a successful claim for mesne profits. The Court has no information about whether the Official Trustee would make such a claim against Jim. The potential claim complicates the Court's consideration of whether any particular family provision order will improve the provision for Jim's maintenance, education or advancement in life.
Section 153A of the Bankruptcy Act relevantly provides for the annulment of a debtor's bankruptcy in the following terms: (1) If the trustee is satisfied that all the bankrupt's debts have been paid in full, the bankruptcy is annulled, by force of this subsection, on the date on which the last such payment was made. (1A) In determining whether there has been full payment of a debt that bears interest, the interest must be reckoned up to and including the date on which the debt (including interest) is paid. … (6) In this section: bankrupt's debts means all debts that have been proved in the bankruptcy and includes interest payable on such of those debts as bear interest, and the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee.
Where the bankrupt is able to pay all of the bankrupt's debts in accordance with s 153A, s 154 of the Bankruptcy Act has the following relevant effect: (1) If the bankruptcy of a person (in this section called the former bankrupt) is annulled under this Division: (a) all sales and dispositions of property and payments duly made, and all acts done, by the trustee or any person acting under the authority of the trustee or the Court before the annulment are taken to have been validly made or done; and (b) the trustee may apply the property of the former bankrupt still vested in the trustee in payment of the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee; and (c) subject to subsections (3), (6) and (7), the remainder (if any) of the property of the former bankrupt still vested in the trustee reverts to the bankrupt.
Consequently, if, by reason of these proceedings or any step taken by the Official Trustee to realise the value of Jim's life estate in the Marrickville property, or as a result of the sale of that property by George as executor of the deceased's estate, Jim's bankrupt's debts within the meaning of s 153A of the Bankruptcy Act are paid in full, s 154 of that Act will have the effect that any of Jim's property that remains vested in the Official Trustee and which has not been realised for the purpose of paying the bankrupt's debts will revert to Jim. That reversion could extend to any balance in the value of the life estate that was not required to pay the bankrupt's debts, and any other proprietary right that Jim may have had in relation to the deceased's will. In principle, those rights would include all of the rights that formed the basis of Jim's claims in these proceedings as originally constituted.

Discovery of Jim's bankruptcy

On 9 March 2021, George's solicitors carried out a bankruptcy search in respect of Jim and discovered that Jim had become bankrupt on 18 January 2006 as a result of his presentation of a debtor's petition, and the possibility emerged that Jim's interest in the Marrickville property and some of the claims made by Jim in the proceedings may have vested in the Official Trustee.
On 11 March 2021, the proceedings were stood over to 19 March 2021 after the result of the bankruptcy search was disclosed to the Court by George on that day.
It is not necessary to set out in detail the immediate history of the proceedings following the discovery of Jim's bankruptcy. The Official Trustee appeared before the Court by its solicitor on several occasions, but on 14 July 2021 it was excused from further attendance.
Jim unsuccessfully pursued attempts to raise the funds necessary to obtain an annulment of his bankruptcy or to compromise the claim of the only creditor who had lodged a proof of debt in his bankruptcy.
Significantly, on 18 May 2021, Jim's counsel conceded to the Court that all the claims he had made in the proceedings, except the family provision claim, had vested in the Official Trustee and Jim only had standing to bring the family provision claim.
Jim filed a further amended statement of claim on 28 April 2021 and George filed his defence to that statement of claim on 18 May 2021. The amendments made by Jim did not involve the abandonment by him of all his claims that had vested in the Official Trustee. The amendments included, however, the deletion of prayers 2 and 3, which related to the order to set aside the rectification order.
On 26 July 2021, George filed a notice of motion seeking the summary dismissal of the remaining claims for relief in prayers 1 to 8 of the original statement of claim on the basis that Jim did not have title to those claims or standing to make them.
George's counsel provided written submissions in support of George's notice of motion on 11 August 2021, and Jim's counsel replied by written submissions dated 12 August 2021. By those submissions, Jim acknowledged that he had not been successful in raising the funds necessary to obtain an annulment of his bankruptcy, which Jim had been advised required payment of $111,511. Jim conceded that the only claim that he continued to have standing to make was his family provision claim.
Jim did not formally consent to the orders sought in George's notice of motion because he wished to keep alive the possibility that he could reinstitute those claims if circumstances permitted him to regain standing to pursue them. Jim accepted that he could not resist an order that he pay the costs of George's notice of motion. Jim opposed an order that he pay George's costs of the claims that would be dismissed, based on what he claimed to be the interrelationship between the claims that had become vested in the Official Trustee and Jim's remaining family provision claim.

Procedural orders made on 17 August 2021

On 17 August 2021, I made the following orders: 1 The defendant is granted leave to file an amended notice of motion in the form annexed to these orders. 2 The claims for relief in prayers 1 and 4 to 8 of the plaintiff's further amended statement of claim filed 28 April 2021 are summarily dismissed. 3 Paragraphs 28-29, 34-35A, 41-42 and 47-49 of the plaintiff's further amended statement of claim filed 28 April 2021 are struck out. 4 The plaintiff is to pay the defendant's costs of the amended notice of motion. 5 The plaintiff is granted leave to file and serve a second further amended statement of claim containing amendments consequential on orders 2 and 3 above by 20 August 2021. 6 The plaintiff is to pay the defendant's costs thrown away by reason of orders 2, 3 and 5 above. 7 The costs of the claims referred to in orders 2 and 3 above are otherwise reserved. 8 The defendant is to file and serve a defence to the second further amended statement of claim by 30 August 2021 9 The plaintiff is to file and serve any further evidence by 7 September 2021. 10 The defendant is to file and serve any further evidence by 28 September 2021. 11 The Plaintiff is to file and serve any evidence in reply by 12 October 2021. 12 Stands the proceedings before Robb J on 19 October 2021 at 9.15am for directions. 13 Liberty to apply to the Associate to Robb J on 3 days' notice.
Order 2 only referred to the dismissal of prayers 1 and 4 to 8 of the further amended statement of claim because prayers 2 and 3 had been deleted from the original statement of claim by that pleading.

Jim's second further amended statement of claim

Jim filed a second further amended statement of claim on 6 September 2021. The principal effect of that pleading was that the only claim that remained was Jim's family provision claim, which was made in the following terms: 9. Order that the [Marrickville property] be declared as part of the notional estate of the Deceased. 10. Order that provision be made for the Plaintiff from the estate of [the deceased] by providing that the entirety of the legal and equitable interest in the Property be transferred to the Plaintiff or alternatively fifty percent of the legal and equitable interest in the Property or such other proportion as the Honourable Court deems fit be transferred to the Plaintiff or alternatively provision be provided for the Plaintiff in such amount as this Honourable Court deems fit.
The second further amended statement of claim deleted a number of allegations of fact but retained the allegations concerning the making by George of the application for the rectification of the will and the manner in which George procured Jim's consent to the application. The second further amended statement of claim also maintained Jim's pleadings concerning the construction of the will in its original form and as rectified. Jim also maintained his pleading of his claim for reimbursement in respect of improvements made by Jim to the Marrickville property.
In the second further amended statement of claim, Jim added the following allegations of fact concerning his bankruptcy and its consequences (Jim's new claims): BANKRUPTCY OF THE PLAINTIFF 35B. At all material times from 15 May 2002 being the date of the grant of probate of the 1997 Will the Defendant was obliged as executor and trustee in respect of the Deceased's estate to effect a transfer to the Plaintiff an interest in the Property being at the least a life interest and at most the entire legal and equitable interest in the Property. 35C. At all material times from 15 May 2002 to 18 January 2006, the Plaintiff owned no assets aside from his right to require due administration of the deceased's estate. 35D. On 18 January 2006, the Plaintiff became bankrupt by presenting a debtors petition by reason that he had acquired debts and had no means by which to pay them. 35E. At the time of presenting the debtors petition the Plaintiff owed debts in the following amounts to the following persons: (i) Esanda Finance in the sum of $7,700. (ii) Alliance Factoring in the sum of $2,228. (iii) ANZ (Lion Finance) in the sum of $18,080. 35F. At the time of the Plaintiff presenting the debtors petition the Defendant: (i) Had told the Plaintiff that he lost the Deceased's Will; (ii) Had not told the Plaintiff that he had subsequently found the found the (sic) Deceased's Will; (iii) Had not informed the Plaintiff that he had applied for probate of the 1997 Will; (iv) Had not sent the Plaintiff a copy of the 1997 Will; (v) Had not sent the Plaintiff a copy of the grant of probate obtained by him in respect of the 1997 Will; (vi) Had not sent the Plaintiff a copy of the Rectification Order or informed the Plaintiff that the Rectification Order had been made; (vii) Had failed to transfer any interest in the Property to the Plaintiff; 35G. In the premises, the insolvent status of the Plaintiff and/or his subsequent bankruptcy was caused or materially contributed to by the Defendant's acts and omissions referred to in the previous paragraph herein. 35H. The bankruptcy of the Plaintiff has caused the Plaintiff to incur the following losses and expenses; (i) Interest (estimated) on the debt to ANZ (Lion Finance) at 9% per annum in the sum of $48,500. (ii) Legal costs for the Official Trustee to date $10,000. (iii) Realisation Charge of the Official Trustee to date $7,241.01. (iv) Official Trustee's remuneration to date $19,367.00. (v) Potential claim by the Official Trustee of rental charges for living in the property from the date of bankruptcy to date. LOSS OF RIGHTS 35I. By reason of the Plaintiff's bankruptcy, his entitlement to seek relief in these proceedings in the form of prayers 1, 4-8 and to press claims in the form of paragraphs 28-29, 34-35A, 41-42 and 47-49 of the Plaintiff's Further Amended Statement of Claim filed 28 April 2021 ('Vested Claims') was vested in the Official Trustee ('Vesting'). 35J. The Plaintiff was not aware of the Vesting until about March 2021. 35K. Subsequent to the Plaintiff becoming aware of the Vesting the Plaintiff sought to reclaim title to the Vested Claims from the Official Trustee. 35L. On or about 17 May 2021 the Official Trustee informed the Plaintiff that an estimated sum of $111,511 would be required to be paid by the Plaintiff in order to annul his bankruptcy and to reobtain title to the Vested Claims. Particulars (i) Letter from Harris Carlson Lawyers dated 17 May 2021 35M. As at March 2021 and at all times thereafter the Plaintiff: (i) owned no assets aside from the rights being pressed by him in these proceedings; (ii) was unemployed. 35N. The Plaintiff was unable to obtain funding in the sum of $111,511 for the purpose of annulling his bankruptcy and/or otherwise obtaining title to the Vested Claims. 350. In the premises, the Plaintiff's financial circumstances were not sufficient for him to reobtain the Vested Claims. 35P. In the premises by reason of the matters pleaded in paragraphs 35D - 35G above the Plaintiff lost his right to press the Vested Claims by reason of the Defendant's conduct.
In par 51A of the second further amended statement of claim, Jim pleaded that the facts alleged about George's rectification application, the circumstances in which Jim's consent to the rectification order was procured, Jim's allegations concerning the proper construction of the will, the contributions made by Jim to the improvement of the Marrickville property, the circumstances alleged concerning Jim's bankruptcy, and his loss of standing to bring the claims that had been dismissed should be taken into account pursuant to s 16(3)(b) of the Family Provision Act in respect of Jim's application to extend time for the making of his family provision claim.
Finally, Jim pleaded in par 53 that the same matters should be taken into account pursuant to s 9(3) of the Family Provision Act for an order for further provision out of the estate of the deceased.

George's defence to second further amended statement of claim

George filed his defence to the second further amended statement of claim on 7 September 2021. George's response to Jim's family provision claim included the following: 51. In answer to paragraph 51 of the Statement of Claim, the defendant: … (b) in any event, denies time should be extended for the plaintiff to make a claim for family provision in circumstances where the Deceased died in 2000; (c) denies the plaintiff has established sufficient cause for an extension and further says that his failure to disclose his interest in the Deceased's estate or the Property to his trustee in bankruptcy in his statement of affairs significantly contributed to the delay; (d) says that the plaintiff's failure to disclose his interest in the Deceased's estate or the Property to his trustee in bankruptcy in his statement of affairs caused prejudice to his creditors; and (e) says the plaintiff's delay in seeking to make this claim caused prejudice to the other beneficiaries of the Deceased's estate because, if a claim had been made before his bankruptcy, the claim would have been much weaker as none of the plaintiff's rights and interests in the Deceased's estate or the Property would have been vested in his trustee in bankruptcy and the plaintiff and his spouse would have been much younger and his and his spouse's financial position and employment prospects would have been much better.
The hearing of these proceedings concluded over the period of 14, 16 and 17 March 2022.
It follows from my history of these proceedings that Jim's original claim for an order setting aside the rectification order and for the construction of the will for which Jim contended, with a family provision claim as a fallback, has been recast as a claim based upon the proper construction of the rectified 16 December 1997 will and a conventional family provision claim that cannot be maintained by Jim unless the Court extends the time for Jim to have commenced the claim.

Proper construction of rectified 16 December 1997 will

As Jim's application for an order setting aside the order of this Court rectifying the will has been dismissed, these proceedings must be decided on the basis that the will takes effect as rectified. The issue of whether the rectified will should be construed in the manner claimed by Jim must be decided before the Court deals with Jim's family provision claim.
The terms of the original will are set out above at [7] and the rectification order at [12]. That order replaced clause 3 of the original will, but left clauses 4 and 6 in their original terms. The rectified clause 3 appears reasonably clearly to give a life estate in the Marrickville property to Jim and upon his death, the remainder to any of Jim's natural children who survive him, then, failing survival by natural children, equally to the children of George.
I take Jim's submissions concerning the proper construction of the rectified will from pars 82 to 87 of Jim's outline of final submissions dated 28 February 2022. Jim suggested two possible constructions of the will, the latter of which had two different alternatives.
Jim's first construction was that clause 3 is a gift of the freehold of the Marrickville property to Jim, clause 4 only deals with the balance of the estate (the $25,000 as it turned out), and clause 6 explained why there was no gift to George.
The second construction recognised that clause 3 only gives a life estate to Jim, but offered that clause 4, in dealing with the residue after the life estate in the Marrickville property, deals with the remainder after the end of Jim's life estate and has the effect of giving the remainder equally to Jim's estate and to George. Jim submitted then that either: (i) clause 6 has the effect of reading down clause 4 so that the entirety of the remainder is given to Jim; or (ii) clause 6 is meaningless and of no effect, so that clause 4 gives the remainder equally to Jim and George.
The difficulty with both constructions is that clause 3 deals exhaustively with the remainder interest after the end of Jim's life estate. The remainder interest does not fall into the residue of the deceased's estate and is not dealt with by clause 4. The remainder interest passes either to Jim's natural children or, Jim not having natural children, to George's children.
It is in any event improbable that the rectified will was intended to have the consequence that Jim obtained the whole or half of the freehold, given that clause 3 specifically gives him a life estate and the remainder to persons other than Jim.
The proper construction, and effect in the circumstances as they are, of the rectified will is that, by clause 3, Jim received a life estate in the Marrickville property and, Jim not having had natural children, George's children are to receive the remainder interest in the Marrickville property. Clause 4 refers only to the balance of the estate, and clause 6 is superfluous.

Jim's discovery of life interest in Marrickville property

The issue of when Jim learned that he was only entitled to a life estate in the Marrickville property, rather than that he was entitled to full ownership, is crucial to the determination of a number of issues in the proceedings. The significance of Jim's new claims is dependent on when Jim found out that he was entitled to a life estate. Jim's explanation for his delay in commencing his family provision application is dependent on the Court's conclusion on his claim as to when he learned that he only had a life estate in the Marrickville property. It will therefore be convenient to deal with this issue now, in advance of the other remaining issues in the proceedings.
Jim's case was that, at all times after the death of the deceased, Jim believed that he was the owner of the fee simple of the Marrickville property and that he only learned that George remained the owner and that Jim was only entitled to a life estate, which had not been placed in his name on the title to the property, in about August 2016 when Jim received in the letterbox of the Marrickville property a letter containing a Valuer General's valuation of the property. Jim claimed that he opened the letter only to discover to his shock that George was described as the owner of the property. Jim engaged the services of a conveyancer, who carried out a title search and confirmed that George was the registered proprietor.
George's response was that he had always believed, as a result of his discussions with the deceased before his death and George's participation in conferences with the solicitor that led to the preparation and execution of the will, that the deceased's testamentary intention was that Jim would only receive a life estate in the Marrickville property under the deceased's will. That was because the deceased recognised a need to provide accommodation to Jim but did not trust his prudence to be able to retain the property. George's evidence was that he informed Jim shortly after the death of the deceased that Jim had been given a life estate in the Marrickville property, and explained the nature of that interest to Jim.
I have not been able to accept Jim as a reliable witness of fact. Jim explained his failure to tell his solicitor about his bankruptcy in par 32 of his 2 September 2021 affidavit on the basis that he "had completely forgotten about it, the bankruptcy having occurred 18 years prior." Jim said in par 33 that even if he had remembered the bankruptcy, he would not have understood that it was relevant to these proceedings as the bankruptcy finalised in January 2009. While it is true that Jim was discharged from bankruptcy on 19 January 2009, that did not reverse the vesting of Jim's property in the Official Trustee that has been discussed above.
It may be that Jim genuinely did not understand the proprietary effect of his bankruptcy, but his explanation is still not compelling given that the preparation of an application for further family provision necessarily requires a detailed examination of the applicant's financial history. A witness whose memory does not extend to remembering his bankruptcy is unlikely to be a reliable witness when it comes to the recollection of much less significant events.
George's written submissions dated 9 March 2022 detail a significant number of instances when Jim reversed his earlier evidence or appeared to mould his evidence to the requirements of his case. It is not necessary to set out all those instances, but I record that, in the aggregate, they caused me to lose faith in the reliability of the evidence that Jim gave. I did not gain the impression that Jim consciously falsified his evidence, but it appeared to me that Jim often did not sufficiently understand the underlying concepts that were the subject of his evidence, so that he was prone to giving inconsistent evidence or changing the effect of his evidence, without fully appreciating that that was what he was doing.
Jim's cross-examination included a number of positive instances that establish that Jim must have known historically that he had received a life estate in the Marrickville property under the deceased's will.
The following cross-examination took place concerning Jim's knowledge of the gift made to him by the deceased in his will [T 54.25-55.20]: Q. The [Marrickville property] was, you understood, the main asset in your father's estate? A. Correct. Q. Overwhelmingly the largest asset, is that right? A. Yes. Q. In fact it was the only piece of property he owned? A. Correct. Q. You knew that apart from that he had a small amount of cash? A. Yes. Q. And nothing else? A. That's right. Q. You understood when you were discussing the will with George that George knew what was in the will? A. I believed so. Q. You asked him, didn't you, what was in it? A. Yes. Q. He told you, didn't he, that what you got was the life estate? A. Yeah. Q. What do you say that he told you about the will? A. He didn't tell me anything about the contents of the will. Q. Sir, you just said a moment ago that you asked him about the will. Are you saying that he did not respond to you about what was in the will? A. Correct. Q. Jim, I suggest to you that that's a completely incredible answer? A. It's the truth. Q. You understood that the will was the thing that decided where your father - who ended up with your father's house? A. Yes. Q. So I suggest to you that you were very keen to know what it said? A. Yes. Q. I suggest to you that you would not have let George refuse to tell you what was in the will? A. George didn't tell me what was in the will.
Jim's acceptance that he was told by George that he had a life estate in the Marrickville property, followed immediately by a retraction of that evidence, did not instil confidence that Jim's evidence was reliable.
The cross-examination continued as follows [T 57.13-57.32]: Q. I suggest to you at the time shortly before you moved in, George said to you "Jim, you know you are a life tenant of the property. That means that you do not own the property and cannot sell the property or take any money out against it. You can live in the property for the rest of your life though, that is what is in father's will."? A. Yeah. Q. Jim, what you're suggesting to the Court is that apart from some comments that you say that your father made, that's in your affidavit that I showed you, that you had no idea what was in the will? A. Correct. Q. I suggest to you that that's incredible and what happened was George told you what was in the will and he told you had a life - you were a life tenant? A. He did not. Q. That when he told you that you were a life tenant and you couldn't sell or take money out against the property but could live there for the rest of your life, and that was what was in your father's will, you said, "I understand."? A. That's incorrect.
Again, Jim admitted that George informed him that he had a life estate, before claiming that he was not informed what was in the will.
Jim was cross-examined concerning his knowledge that the title to the Marrickville property was not in his name, but George nonetheless required Jim to pay the rates [73.1-73.48]: Q. And what you have said in here is that in 2002 you thought it had been put in your name because of the rates notices? A. Yes. Yes. Q. You now accept that the rate notices in 2002, 2003, 2004, 2005 did not show that they were in your name. A. Yes. Q. So my question to you is: do you accept that your evidence that you thought in 2002 the property had been transferred into your name is incorrect? A. Yes. Q. Right. So as of 2002 you did not think the property was in your name? A. I don't know how to answer that. Q. Well, in 2002 did you think it was in your name or not? A. No. Q. So when you say in paragraph 99, "I've received the land rate notice" - and this is something you say - sorry, firstly, what you say in 99 is you set out a conversation with George which you say happened in 2002; is that right? A. If memory serves me correct. Q. And what you say happened is you said to George, "I've received the land rate notice. Thanks for sorting the house out in my name." Right? Now, you accept that that evidence is false, you did not say that to George in 2002? A. In 2002, correct. Q. And nor did you say to him, "Now I can lodge the DA with council for the renovations." A. I can't - I can't remember, but yes. Q. Well, you did lodge an application- A. Yes, I did. Q. --for a DA in 2002. A. Yes. Yes. Q. And it wasn't dependent on the house being in your name, was it? A. My belief was yes. Q. Your belief was that it had to be in your name? A. That it was in my name. Well, the belief was that I could - I could do the DA because the house was mine. Q. Well, what you say in your affidavit is that you could do the DA because the house was in your name. A. I don't know. I can't remember. I can't remember why I said that.
Further [T 81.34-82.50]: Q. And it's true, isn't it, that what used to happen in that period 2002 through to the end of 2005 was that George would bring the rate notices over and say you had to pay them; is that right? A. I can't remember but I would assume so, yes. Q. And you had a conversation with him in around mid 2003 where he said to you, "Jim, you need to pay the rates for this house. As a life tenant, it's your responsibility, not my responsibility." A. I never remember George having a discussion with me about life tenancy. Q. But he did tell you that it was your responsibility to pay the rates. A. I can't remember but I - yeah, I would agree to that, yes. I will have to agree to that. Q. And he did complain to you when the rates fell behind and you weren't paying them. A. Well, he may have, yes. Q. Did he or not? A. I can't remember. Q. Jim, are you suggesting that you don't - firstly, as you suggesting that George did not complain to you about the rates being late? A. He possibly would have, yes. Q. And you understood that if he was doing that, he was doing that because he was telling you it was your responsibility to pay them. A. Yes. Q. And you understood that the rate notices were not in your name? A. Yes. Q. So you understood the property wasn't in your name. A. Yes. Q. But you also understood that you had to pay the rates. A. Yes. Q. Because you did pay them. A. Yes. Q. And the reason why you were paying them, even though the property wasn't in your name, was because you were a life tenant-- A. No. Q. --and George told you-- A. No. Q. --as a life tenant you had to pay them? A. No. Q. And when he told you that you needed to pay the rates - after he told you that - you said to him, "George, as a life tenant, what happens to the property after I die?" You asked him that? A. No. Q. And he told you, "It will go to your natural children if you have any, and if you do not, it will go to my children." A. No, definitely not. Q. Well, you understood that that was what your father had intended? A. No. Q. And you deny he said that to you; is that right? A. Yes. Q. I suggest that that evidence is false? A. It's not.
George's wife Vicki gave affidavit evidence that, in around June 2012, Jim said to her on numerous occasions: "You know Dad left me only a life tenancy. This way George can kick Alexandra and James out of the house straight away something happens to me", and that an equivalent conversation took place in around 2015. Vicki's evidence was not challenged in cross-examination.
Nick Karahalios is an architectural draughtsman who assisted Jim in mid-2002 to prepare plans for a development application for repairs and improvements to the Marrickville property that Jim wanted to carry out. Mr Karahalios gave evidence of a conversation with Jim during one of their first meetings in which Jim made the following reply to a question as to who owned the property: "My brother George is the Executor of my father's estate but I have the right to live there for my life." This evidence was not challenged in cross-examination.
Jim's 'Customer Declaration Form - Newstart Allowance' dated 13 April 2016 states against "Home ownership": "Bequeathed Life Interest". The form was completed before the time when Jim claimed to have learned that George was the sole owner of the Marrickville property when Jim received the valuation from the Valuer General. Jim was cross-examined on this document [T 118.1-119.49]: Q. So Jim, you see this document says, "customer declaration form Newstart Allowance". A. Yeah. Q. Now, this type of form of document is familiar to you, isn't it? A. Yeah. Q. This is the Centrelink forms; that's right? A. Yep. Q. And these are the forms in which they record your information. A. Yeah. … Q. And then it says, "accommodation". A. Yes. Q. And it says, "bequeathed life interest". Now, Jim, I suggest to you that you told Centrelink in April 2016 that you had a bequeathed life interest in the [Marrickville property]. A. Every time we went to Centrelink we would explain the situation to them regarding probate, the fact that my brother would say that he couldn't do probate and because of the fact that probate hadn't been completed, they - they could not put down that we owned the house. Now, why he put that, I can't say. Q. Why who put that? A. The Centrelink person. Q. But Jim, you say that in 2016 you had no knowledge of a life estate. A. That's right. Q. And so is it your evidence that the words "bequeathed life estate" are there because that's something that the Centrelink person made up. A. Well, I assume so because of what we told him about probate not being able to get done because of the will being lost. We explained the situation to them and that's all we could do. Q. Jim, I suggest to you that it says, "bequeathed life interest" there because that's what you told the Centrelink person? A. Honestly, your Honour, I don't even know what "bequeath" means let alone use it in a phrase. Q. You told them that you got a life estate or a life tenancy from your father's will. A. No, no, I did not tell them that. We-- Q. So your explanation for "bequeathed life estate" is that that's something that the Centrelink officer wrote. A. Yes. Q. And not something that you told him? A. Correct. Q. And do you say that what you told the Centrelink officer is that you own the house - you're supposed to get the house under the will-- A. Yes. Q. ---but there's been a problem with probate. A. Correct. Q. Is that what you say? A. Yes. Q. Well, I suggest to you if you had said that to the Centrelink officer, it wouldn't say, "bequeathed life estate"; what do you say to that? A. I don't know why he wrote that. I didn't see him write it. I didn't see the document. Q. I suggest to you that your explanation for "bequeathed life estate" being on that document is incredible. What do you say to that, Jim? A. I don't know what to say to it. I can't answer the question. I don't know. Q. Do you say that you told Centrelink the same thing each time? A. Absolutely.
I do not consider that the evidence Jim gave in response to the record in the Centrelink form that Jim was entitled to a life estate in the Marrickville property is at all credible. There is no reason to think that any Centrelink officer would insert the response in the form unless Jim had provided a description of his interest in the property that was consistent with him having a life estate.
While the Court cannot be sure precisely when Jim learned that he had a life estate in the Marrickville property, I am satisfied that he became aware of the fact relatively shortly after the death of the deceased. On the balance of probabilities, I find on the basis of Mr Karahalios' evidence that Jim became aware of the fact by at least mid-2002.

Reserved costs and Jim's new claims

It is necessary for the Court to determine what orders should be made in relation to the costs reserved by order 7 made on 17 August 2021. They are the costs incurred by the parties in relation to the claims made by Jim that were dismissed on that date. They are the claims to set aside the order rectifying the will, a claim for a declaration as to the proper construction of the will in its original form, Jim's claim that the will should be further rectified, an order that George holds the Marrickville property on a constructive trust for Jim, and Jim's claim for restitution in respect of Jim's improvements to the Marrickville property. It is appropriate to deal with the reserved costs now, as it is possible that Jim's application for further family provision will be influenced by any costs liability that is imposed upon him.
Ordinarily, the determination of the reserved costs would be straightforward, and Jim would be ordered to pay George's costs of the claims that have been dismissed on the basis that the costs should follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. However, Jim has resisted that outcome on the basis that substantially all of the costs of the claims that have been dismissed would have been incurred by the parties in any event, because the evidence relevant to those claims is also relevant to the issues that remain to be decided in respect of Jim's family provision application: see pars 51A and 53 of the second further amended statement of claim as explained above.
Jim elaborated upon the basis of the alleged evidentiary correspondence between the dismissed claims and his family provision application by reference to the manner in which Jim's new claims were articulated in pars 35B to 35P of the second further amended statement of claim that are set out above. The allegations in pars 35B to 35F provide a factual basis for Jim's claim in par 35G that George's conduct caused Jim's insolvency and the consequences of his bankruptcy. The allegations in pars 35I to 35O support Jim's claim in par 35P that George's conduct caused Jim to lose his entitlement to pursue the claims that were dismissed on 17 August 2021, because those claims became vested in the Official Trustee as a consequence of Jim's bankruptcy.
Jim has not sought any separate relief based upon the alleged wrongful conduct of George. Jim has raised the allegations defensively to deflect George's case that Jim should not be given leave to commence his family provision application out of time. Jim has also made his new claims to support his claim that his present circumstances justify the making of an order for further family provision in his favour. Jim also appears to claim that, if the other beneficiaries have been prejudiced by the consequences of Jim's bankruptcy during the period of his delay in commencing his family provision application, that prejudice was caused by George and not by Jim.
The effect of Jim's new claims is that the Court cannot determine the costs reserved by order 7 until these allegations have been dealt with. It is necessary to set out the logic behind Jim's new claims in order to deal with them. That logic is:

Jim incurred debts after the death of the deceased that Jim was unable to pay.
As at the time of Jim's bankruptcy, George had not administered the will by transferring any interest in the Marrickville property to Jim, whether that be a life estate or the fee simple.
As at the time of Jim's bankruptcy, George had told Jim that he had lost the deceased's will, he had not told Jim that he had subsequently found the will, he did not inform Jim that he had applied for probate, he had not sent to Jim a copy of the will, he had not sent to Jim a copy of the grant of probate, and he had not sent Jim a copy of the rectification order or informed Jim that the rectification order had been made.
This conduct on George's part caused Jim's bankruptcy and Jim to suffer the losses that Jim alleged were caused by his bankruptcy.
Further, the bankruptcy caused Jim to lose his right to press the dismissed claims, because Jim did not have the means to obtain an annulment of his bankruptcy.

Significance of George's failure to transfer a legal interest to Jim

I will deal first with Jim's new claim based upon the failure of George to transfer a legal interest in the Marrickville property to Jim. The implication in the second further amended statement of claim is that, if George had transferred a legal life interest or the fee simple in the Marrickville property into Jim's name, that fact would have averted his bankruptcy.
I find that this argument by Jim is fatally flawed as a matter of logic, and that it cannot succeed, whatever the correct finding is as to when Jim learned that he had only been given a life estate in the Marrickville property.
As I have recorded above, it was Jim's case that he believed at all times from the date of the deceased's death until about August 2016 that he had become the legal owner of the fee simple under the deceased's will. If Jim had believed that, when he got into financial difficulty, he would have sought to raise funds to repay his debts, either by mortgage or sale of the Marrickville property. Had Jim sought to mortgage or sell that property, he would quickly have learned that he did not have legal title to any interest in the property. That would naturally have caused Jim to confront George, so that George could cause all outstanding steps to be taken to enable Jim to deal with the property in a way that would enable him to pay his debts.
Jim did not provide any evidence that he took any step to raise money using the rights of the owner of the fee simple of the Marrickville property. There was in fact no evidence that Jim advised George that he had become insolvent or that Jim proposed to file a debtor's petition. I accept George's evidence that he was not aware of these matters, and that he did not learn of Jim's bankruptcy until George's solicitors carried out the bankruptcy search on 9 March 2021.
Jim's failure to act as if he understood that he was the legal owner of the freehold of the Marrickville property is incidentally powerful evidence that Jim did not have that belief at any time before he filed his debtor's petition.
Alternatively, if I am correct in my finding that Jim learned relatively soon after the death of the deceased that he had been given a life estate in the Marrickville property, on the evidence Jim did not make any attempt to raise money to pay his debts on the security of his life estate in the Marrickville property. As Jim did not do so, he cannot claim that George's failure to cause Jim's life estate to be registered on the title to the property was a cause of Jim's bankruptcy and the consequences of that bankruptcy.
Not only did Jim not provide evidence that he tried to raise money to pay his debts on the security of the life estate that I have found he believed he had in the Marrickville property, Jim did not lead any evidence that would support a finding that some lender would have lent Jim the money he needed on the security of a life estate in the Marrickville property.
Further, the evidence established that George took steps necessary to cause Jim's life estate to be registered on the title to the Marrickville property, but the Registrar General rejected the transfer lodged by George on the ground that the transfer required the names of the remaindermen to be stated in the transfer, and the relevant part of the transfer prepared by George's solicitor was blank. The reason why the names of the remaindermen were not inserted was that they could not be identified at the time the transfer was prepared. As a matter of legal theory, it remained possible for Jim to have natural children who might survive him, but if there were no such survivors the Marrickville property would pass to George's children.
The evidence did not establish that there was some way that accorded with the Registrar General's practice that George could have caused Jim's life estate in the Marrickville property to be registered on its title. As Jim has at all times since shortly after the death of the deceased enjoyed possession of the Marrickville property in fact, as if he had a legal life estate in it, and as Jim did not inform George that Jim would suffer some prejudice if his legal life estate was not registered, George cannot be blamed for not taking some effective step to have Jim's life estate registered.
I therefore find that Jim has failed to establish that George's failure to cause a legal interest to be registered in Jim's name on the title to the Marrickville property caused or contributed to Jim's insolvency or his bankruptcy and the consequences of the bankruptcy.

Significance of Jim's ignorance of probate issues

It remains necessary to consider Jim's new claim based upon the allegations in par 35F(i)-(vi) of the second further amended statement of claim. Jim has not articulated in the second further amended statement of claim, or in his submissions, why any of the actions that Jim alleged George took or failed to take in respect of dealing with the deceased's will could have caused or contributed to Jim's insolvency or his bankruptcy and the effects of the bankruptcy.
Whether Jim understood that he had been given a life estate in the Marrickville property as I have found, or whether he believed that he was entitled to the fee simple, Jim's interest in the property was only relevant to the consequences of his insolvency and bankruptcy to the extent that he may have attempted to use his interest in the property to raise funds to repay his debts. As I have explained, Jim did not do so.
Jim's state of knowledge concerning the will, the grant of probate, and the making of the rectification order could only have been material to Jim's ability to take proceedings relevant to the effect of the will. Those proceedings may have been for a declaration as to the proper construction of the original will, or a resistance to the rectification application. Even if it be assumed that additional knowledge on these issues may have caused Jim to take some course in relation to the meaning or effect of the will, the only outcome could have been that his entitlement to a life interest in the Marrickville property would have been confirmed, or he would have acquired some additional interest in that property.
Those outcomes would not have made any relevant difference because, as I have explained above, at all material times Jim correctly believed that he did have an interest in the Marrickville property (whatever that interest may have been), and Jim made no attempt to raise funds on the basis of his interest in order to repay his debts and to avoid bankruptcy.

Determination of the dismissed claims not now possible

Finally, the outcome of Jim's family provision claim cannot be affected by Jim's claim that a consequence of George being responsible for Jim's bankruptcy was that Jim has been deprived of his right to pursue the claims that were dismissed on 17 August 2021. The reason is that, even if, contrary to the conclusions that I have reached above, George was responsible for Jim's bankruptcy and Jim's loss of the capacity to pursue the dismissed claims, the Court has no basis for making any finding as to what the value of the dismissed claims would have been to Jim. Following upon the dismissal of the claims, the parties naturally ceased to contest them, and the Court has not received any submissions from the parties concerning how the dismissed claims ought to have been determined. Consequently, the Court cannot make any findings concerning the probable outcome of those claims had they not been dismissed.

Determination of costs reserved by order 7

Now that I have dealt with Jim's attempt to establish an evidentiary overlap between the dismissed claims and Jim's new claims, it is necessary that I deal with Jim's more general claim that he should not be ordered to pay the reserved costs, because the evidence that has been led in the first phase of the hearing is substantially relevant in any event to the issues that have arisen in respect of Jim's family provision claim.
This is a difficult argument to deal with in a simple and efficient manner, because its determination requires an understanding in some detail of all of the evidence led in respect of the dismissed claims, and the evidence that is relevant to Jim's family provision claim, so that a sound judgment can be made as to the extent to which the evidence on the dismissed claims was material in a sufficient way to the family provision claim.
As it happened, in the time between the end of the first phase of the hearing on 11 March 2021 and the hearing on 19 March 2021, when I was advised of the results of the bankruptcy search carried out on 9 March 2021, I had substantially prepared a draft judgment setting out and examining the significance of the evidence led by the parties on the claims that were ultimately dismissed on 17 August 2021. It would not be appropriate for the Court to include those draft reasons in this judgment for the purpose of demonstrating whether or not there was a substantial evidentiary overlap between the dismissed claims and the family provision claim, as the level of detail would tend to obscure the point, and it would not be appropriate for me to publish my preliminary views concerning the evidence that was led on the claims that have now been dismissed.
I am satisfied, however, upon a detailed consideration of the evidence led on the dismissed claims, and the evidence relevant to Jim's family provision claim, that Jim has not established that there is a real or substantial overlap, at least one that is sufficient to justify treating the costs of the dismissed claims as being costs incurred in respect of the family provision application.
I consider that it will be sufficient, in the circumstances, to set out the following distillation of the issues traversed by the evidence relevant to the dismissed claims, which I have produced using my now superseded draft judgment:

There was evidence of conversations between George and the deceased as to his testamentary intentions, and as to why he was only prepared to give Jim a life estate in the Marrickville property, and that he only wanted natural children of Jim to inherit the property on Jim's death.
The evidence explored in detail what happened at the first conference that took place on 9 December 1997 between the deceased, George and the solicitor who prepared the will, and the circumstances in which the solicitor prepared a file note of the conference.
There was also evidence of what transpired when the same people were present at the conference on 16 December 1997 when the will was signed.
The solicitor gave evidence of his customary practice in preparing wills and in respect of the presence of George and the probative value of the solicitor's file note. The issue was also explored in some detail as to how the solicitor could have misunderstood the instructions given to him by the deceased in respect of the subject matter of clause 3 of the will.
There was detailed evidence concerning how George came to realise that there had been a mistake in the will. George sought advice as to how the mistake could be corrected. That advice was given to George by the solicitor and a barrister.
There was evidence of conversations between George and Jim in about November 2003 concerning the alleged mistake in the will and whether Jim had agreed that the will contained a mistake.
There was detailed evidence about how the application for an order rectifying the will was prepared, as well as the draft affidavits and consents that were required to be executed by George, Jim and the solicitor.
There was a very detailed contest about the circumstances in which Jim signed his consent to the making of the rectification order and his affidavit in support of the application. There was a substantial dispute as to whether Jim was informed in substance of the effect of what he was doing, or whether he was simply asked by George or the solicitor to sign the relevant documents on the basis that they were necessary to obtain probate of the will in its original form.

Apart from the first subject matter summarised above, being the evidence of the statements made by the deceased as to his testamentary intentions and the reasons for his actions, I consider that the evidence and the forensic contest relevant to the dismissed claims only had peripheral relevance to the issues that arise on Jim's family provision application.
Consequently, I am satisfied that the ordinary costs order should be made in respect of the costs reserved by order 7 made on 17 August 2021, with the result that Jim should be ordered to pay George's costs thrown away by the dismissal of the dismissed claims on the ordinary basis. It will follow that Jim will be required to bear his own costs of the dismissed claims.

Preliminary observations about Jim's family provision claim

The parties have agreed that because the deceased died before 1 March 2009, the effect of clause 11(2) of Schedule 1 of the Succession Act 2006 (NSW) is that the Family Provision Act applies to Jim's family provision claim.
George accepted that, as Jim is a child of the deceased, he is an eligible person to make a family provision claim against the deceased's estate within par (b) of the definition of "eligible person" in s 6 of the Family Provision Act.
Although prayer 9 of the second further amended statement of claim sought an order that the Marrickville property be declared as part of the notional estate of the deceased, it is not necessary to consider that claim, as the Marrickville property was clearly part of the estate of the deceased at the time of his death, as he was the unencumbered registered proprietor of the property. The parties properly made no submissions on the notional estate issue.
The circumstances of Jim's family provision claim are quite unusual. Insofar as Jim's current financial needs are relevant to the outcome of his application, Jim is now living on a pension with no real prospects of being able to earn any significant income in the future from employment. His wife is also ill and unemployed. Jim's stepson suffers from some disability that means he needs assistance.
For the moment, Jim and his family have a home in the Marrickville property, but Jim's life estate in that property vested in the Official Trustee on 18 January 2006. The life estate remains so vested even though Jim was discharged from bankruptcy on 19 January 2009. The life estate, or the balance of its value after funds are realised to repay the creditors in the bankruptcy, will only revest in Jim if and when the bankruptcy is annulled.
Although Jim's initial inquiries led to Jim being advised that a payment of $111,511 would be required for the bankruptcy to be annulled, an email from the Official Trustee's solicitors dated 17 March 2022 explained that the estimated total required to annul Jim's bankruptcy was then $79,757.86, subject to certain contingencies that could increase the payout figure. That figure could increase to $86,870.12 if a certain creditor found the information necessary to lodge a proof of debt in Jim's bankruptcy. Jim does not have the funds to achieve an annulment of his bankruptcy by paying the lesser amount now required.
Jim and his family do not have a continuing right to reside in the Marrickville property. As adverted to above, in principle, Jim is liable to pay mesne profits to the Official Trustee for his unauthorised occupation of the Marrickville property since 18 January 2006. There is no evidence concerning the Official Trustee's intentions as to whether Jim and his family will be ejected from the Marrickville property, or whether a claim will be made against Jim for an occupation fee. Circumstances do not permit the Court to forecast what might happen, as it is not clear that the Official Trustee will see value in ejecting Jim because of the contingent nature of the life estate, and, as matters stand, the Official Trustee may well take the view that Jim is impecunious and unable to meet any judgment against him for an occupation fee.
Jim may now be even worse off than these dolorous circumstances may suggest, because it is possible that the Official Trustee will decide to make a claim against the proceeds of any order that may be made in favour of Jim in these proceedings for further family provision. There is no evidence that permits the Court to judge the likelihood of that occurring, in part because the Official Trustee has only recently been advised of Jim's life estate in the Marrickville property and has not indicated its intentions.
Further uncertainty arises because, as a result of costs orders being made in favour of George in these proceedings, or the Official Trustee's learning of Jim's life estate in the Marrickville property, that property may be sold by choice or necessity. If that happens, the Official Trustee may receive a sufficient share of the proceeds of sale to fund an annulment of Jim's bankruptcy. That may lead to some valuable asset revesting in Jim, but there is no basis for the Court to make any reliable findings concerning this possibility.
Compared to Jim's present circumstances, he was very considerably better off in the period immediately following the death of the deceased, and before Jim incurred debts that he found himself unable to pay. Jim was entitled to a life estate in the Marrickville property that would provide a home for him and his family, at least during the balance of Jim's lifetime. Furthermore, during that period, both Jim and his wife were substantially healthier than they now are and their capacity to earn income from employment was also significantly greater.
As I have explained above, although Jim became insolvent and decided to relieve himself of the consequences of his inability to pay his debts by lodging a debtor's petition, he did not make any attempt to raise money on the basis of whatever interest he had in the Marrickville property. Jim did not raise the issue with George, and so the nature of Jim's issue in the property remained unresolved, and George was prevented from taking any step that may have averted the bankruptcy. Jim apparently did not understand the full consequences of his bankruptcy and appears to have understood that it would cease to have any effect upon his discharge. Either because of his lack of understanding or forgetfulness, he instructed his solicitors to commence the now-dismissed claims on his behalf without informing them that he had been made bankrupt. As a result, Jim has now been ordered to pay George the substantial costs thrown away as a result of the dismissal of the dismissed claims. Jim has also incurred the obligation to pay George's costs under orders 4 and 6 made on 17 August 2021.
The joint expert valuation evidence placed a current value on the freehold of the Marrickville property of $1,650,000, which was divided between the life estate at $535,000 and the remainder at $1,115,000. I accept the evidence of the valuation witnesses that the market value of the freehold is in the order of $1,650,000, as that valuation was undertaken in a conventional and well-understood manner. The reliability of the valuations of the component interests in the freehold is less certain, as there is not a ready market for life estates or remainders in residential properties. The reason is obvious, in that the right to enjoy possession of the property is contingent on the continuation of the life of the life tenant. While the valuation witnesses gave rational explanations as to how they divided the freehold value between the life estate and the remainder, there must be a real possibility that, if the two interests were sold separately, the sum of the prices fetched would be less than the market price of the freehold if sold at the same time. The reason is that potential purchasers would have to factor in risks that do not arise upon the sale of a freehold.
The Official Trustee already has a reason to try to sell the life estate in the Marrickville property in order to realise funds to pay the creditors in the bankruptcy and the Official Trustee's costs. The only way that George will be able to recover the costs that he has incurred, for which he is entitled as the executor and trustee to be indemnified out of the remainder of the estate, is if the remainder in the Marrickville property is sold. The only property available to meet orders for costs made against Jim in favour of George is the balance of the value of the life estate after Jim's bankruptcy has been annulled. The result is that it may be in the interests of both George and the Official Trustee to join in selling the freehold of the Marrickville property for its full market value. I will make some further observations about the possible significance of the Marrickville property being sold when I consider the outcome of Jim's family provision application later in these reasons.
The costs incurred by the parties are of overwhelming significance in the present case. My understanding of the evidence is that Jim's estimated costs are $648,800 (inclusive of GST) and George's costs are $558,898.85 (inclusive of GST). The total is $1,207,698.85. Consequently, the costs incurred by the parties exceeds the value of the property remaining in the deceased's estate, although Jim's legal representatives' entitlement to their fees depends upon the contingency that Jim's claim succeeds.

Application for leave to make claim out of time

Section 16 of the Family Provision Act relevantly provided: 16 Time for application for provision (1) In this section, prescribed period in respect of an application in relation to a deceased person, means: … (b) in any other case - the period of 18 months after the death of the deceased person. (2) An order under section 7 shall not be made unless the application for the order is made within the prescribed period in respect of that application or within such further period as the Court may, having regard to all the circumstances of the case but subject to subsection (3), by order, allow. (3) The Court may not make an order under subsection (2) allowing an application in relation to a deceased person to be made after the end of the prescribed period unless: … (b) sufficient cause is shown for the application not having been made within that period. …
In Haertsch v Whiteway (2020) 102 NSWLR 386; [2020] NSWCA 133 at [53], Meagher JA (with whom Macfarlan and Leeming JJA agreed at [1] and [78] respectively) explained that there are two steps to obtaining an extension of time to apply for provision under the Family Provision Act: first, showing sufficient cause for the application not having been made within the prescribed period and, secondly, the Court exercising its discretion in favour of granting the extension of time: [53] As White J (as his Honour then was) observed in Vasconelos v Bonetig [2011] NSWSC 1029 at [16], an applicant for extension of time must show "sufficient cause" for the application not having been made within the prescribed period. If such cause is shown, the court then has a discretion to extend the time for the making of an application. His Honour continued: "[16] … The expression 'sufficient cause' means sufficient explanation or sufficient justification or excuse for the application not having been made within the prescribed period. If there is such a sufficient explanation then other factors relevant to the exercise of discretion under s 16(2), include any prejudice to the beneficiaries, whether the plaintiff has been guilty of unconscionable conduct by lulling the beneficiaries into a false sense of security, and the strength of the plaintiff's case …" (Citations omitted but see Dare v Furness (1998) 44 NSWLR 493 at 500)
In Stojanovski v Stojanovski [2019] NSWSC 1713 at [459], I accepted that the following observations by Hallen J in Stojanovski v Stojovski [2016] NSWSC 976 concerning the granting of an extension of time to commence proceedings under s 58(2) of the Succession Act apply equally to its predecessor, s 16 of the Family Provision Act: [166] Section 58(2) of the Act provides that an application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown. If sufficient cause is shown, then the Court, having regard to all the circumstances of the case, may extend the time for making an application. [167] In Moore v Randall [2012] NSWSC 184 at [39], White J said that the expression "sufficient cause" means "sufficient explanation or sufficient justification or excuse for the application not having been made within the prescribed period." [168] In Verzar v Verzar [2014] NSWCA 45 at [24], in the Court of Appeal, Meagher JA wrote that "[t]he sufficient cause or reason to which s 58(2) is directed is that for allowing an application to be made out of time". [169] Clearly, permitting the Court to "otherwise order" was included in the Act to avoid the section becoming an instrument of injustice. Yet, "[t]he time constraint imposed by s 58(2) on the making of a family provision application is not a mere formality": Verzar v Verzar [2012] NSWSC 1380 at [98] (Lindsay J). (The equivalent section in similar UK legislation has been described as "a substantive provision laid down in the Act itself, and is not a mere procedural time limit imposed by rules of court which will be treated with the indulgence appropriate to procedural rules": Re Salmon, Deceased [1981] Ch 167 at 175.) [170] In Madden-Smith v Madden (Estate of late Doris Linda Madden) [2012] NSWSC 146 at [23]-[24], Pembroke J put it more strongly: "… Section 58(2) reveals a clear legislative intention to limit applications for family provision orders to those made within a defined, and strictly confined, period. An application is made by filing an originating process commencing proceedings in the registry of the court: Section 58(3). The short time period imposed by Section 58(2) reflects the judgment of parliament that the welfare of society in connection with the administration of deceased estates is best served by imposing a strictly limited time for making applications. This is not unreasonable. In most cases the putative claimant will be well aware of the testator's death and the (allegedly) insufficient provision made for him or her. There will only occasionally be a good excuse for not making a claim within time. In fact, experience indicates that the deceased's relatives usually pay uncommonly close attention to such matters. That is not to say that cases will not arise where, for legitimate reasons, a claimant is quite unaware of the death, or of his or her legal right to make a claim, and is unable to comply with the 12 month time limitation. In those circumstances, the statutory exception requiring 'sufficient cause' may well apply." [171] In Thomas v Pickering; Byrne v Pickering [2011] NSWSC 572 at [84]-[90], I set out the applicable legal principles relating to an application to extend the time, as follows: "The decision of the court to extend time is a discretionary decision. Other than "sufficient cause being shown", there are no statutory criteria that must be taken into account. There are no rigid rules in regard to the exercise of the discretion. The principles governing that exercise of discretion under the Act are clear. Apart from the reason(s) for the lateness of the claim, the factors to which the court must look, include whether beneficiaries under the Will would be unacceptably prejudiced if time were to be extended; whether there has been any unconscionable conduct by either side; and, finally what is the strength of the claim made by the party seeking an extension of time: see, for example, John v John; John v John [2010] NSWSC 937 at [37]-[51] per Ward J; Campbell v Chabert-McKay [2010] NSWSC 859 at [45]- [47] per White J; Durham v Durham [2010] NSWSC 389 at [15] per Ball J; Taylor v Farrugia [2009] NSWSC 801 at [14] per Brereton J; Burton v Moss [2010] NSWSC 163 at [31] ff, per Macready As J, in which the relevant earlier cases are referred to. The onus lies on the applicant to establish sufficient cause. It will be for the court to determine the strength of the applicant's claim. The prejudice to which the section looks is any prejudice occasioned by the delay in lodging the claim rather than any disappointment that might occur consequent upon readjustment of the interests under the will in order to make provision for the applicant: Cetojevic v Cetojevic [2006] NSWSC 431; McCann v Ward & Anor [2010] VSC 452 at [11]. Where there has been a long period since the deceased died, the lapse of time, itself, might create prejudice in any fact-finding exercise: Vasconelos v Bonetig [2011] NSWSC 1029 at [21]. In De Winter v Johnstone (NSWCA, 23 August 1995, unreported), Sheller JA held that the concept of "unconscionable conduct" referred to above was "directed towards a deliberate holding off [in bringing proceedings] designed to lull the beneficiaries into a false sense of security". Cole JA, whilst not expressing a concluded view, said that it must be doubted whether a change of mind (because of some change in the financial and material circumstances of the Plaintiff which has occurred after the expiry of the limitation period) constitutes unconscionable conduct. As to the strength of the claim, in De Winter v Johnstone, Powell JA considered that as an application for extension of time was invariably dealt with at the time of the application for substantive relief, no extension of time ought to be granted unless it was established that the applicant seeking an extension of time would, in the event of the extension being granted, be entitled to an order for substantive relief. By contrast, Sheller JA considered that it was only necessary for the applicant to show that the application was not bound to fail. Where the delay is not unduly long and the estate remains undistributed, ignorance during the period within which proceedings are to be commenced, of the right to claim, followed by a prompt application to extend the time once the right to claim becomes known, will usually be a sufficient explanation: Clark v Burns [2011] VSC 394 at [6]." [172] To refuse to make an order extending the time for the making of an application that is devoid of merit, or otherwise cannot succeed, would not visit an injustice on the applicant. As Keane JA wrote in Hills v Chalk [2008] QCA 159; [2009] 1 Qd R 409, at [31]: "The appellants' submission was that the probability that an application for provision out of the estate will ultimately succeed is a necessary, though not sufficient, condition of the grant of an extension of time. There is support for that view. In Re Terlier, deceased, Townley J said: 'If it is improbable that the substantive application will succeed it seems idle to grant the extension.' This statement was approved by Lush J in Re Walker, Deceased, where his Honour went on to add that the improbability of success 'may stem either from the condition of the estate … or from the facts relevant to the [claimant's] claim, or from both ….'." [173] Also see, Andre v Perpetual Trustees WA Ltd (as Executor of the Will of Barbara Helen Owen Stewart) [2009] WASCA 14 at [42]. [174] Meagher JA noted in Verzar v Verzar [2014] at [33]-[35]: "There are at least two respects in which the strength of the application sought to be made out of time may be relevant to whether there is 'sufficient cause' to extend the time for making it. The first is whether the application as made has sufficient prospects of success to justify an extension. That assessment should be of the application viewed at the time it is or is likely to be heard because of the provisions of s 59(1)(c) and (2)… The second respect in which the strength of the application may be relevant is if allowing the out of time application to proceed would or may have the effect of improving the applicant's position from that which would have obtained had the application been made in a timely manner. That is the consideration referred to by Tobias JA in Durham v Durham at [24], [37] when confirming the correctness of the approach adopted by the judge in that case and by Bryson J in Davison v Staley (unreported, Supreme Court of NSW, 21 August 1996)… Because the assessment of adequacy of provision for proper maintenance, education and advancement in life is to be made at the time the Court is hearing the application (ss 59(1)(c) and (2)), when addressing this question it is necessary first to consider when the application would have been likely to have been heard if made in a timely manner and then to compare the position in that event with the position in fact, namely that the application has been made out of time. Ordinarily, this analysis would assume, as is usually the case and as happened in this proceeding, that the application for an extension of time and the application for substantive relief are made in one proceeding and dealt with in a single hearing. (That was not the case with applications for extensions of time made under the Testator's Family Maintenance and Guardianship of Infants Act 1916: see De Winter v Johnstone [1995] NSWCA 120 at p 17 per Powell JA)." [175] As well as taking into account the reasonableness of the conduct of the applicant, it will also be necessary to have regard to the history of the proceedings, the conduct of the other parties, the nature of the litigation, and the consequences for the parties of the grant, or refusal, of the application for extension of time, "the size and nature of the estate, the position of the individual applicants, the rightful expectations of those already interested under the will, and, to some extent at least, the importance that there be some finality and certainty in the administration of a deceased person's estate": Harrison v Harrison [2011] VSC 459 at [292]. [176] As I said in Butler v Morris; Butler (bht NSW Trustee & Guardian) v Morris [2012] NSWSC 748 at [117]: "Ultimately, justice is the paramount consideration in determining whether to extend the time for making an application…"
As Parker J noted in Choras v Farmakidis [2020] NSWSC 367, there are differences in the wording of s 16 of the Family Provision Act and s 58 of the Succession Act, the latter of which applied in the case before his Honour. Parker J relevantly said: [100] Section 58(2) of the Act provides: An application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown or the parties to the proceedings consent to the application being made out of time. … [109] The predecessor to s 58(2), FPA s 16, had a similar structure. It relevantly provided: Time for application for provision … (2) An order under section 7 shall not be made unless the application for the order is made within the prescribed period in respect of that application or within such further period as the Court may, having regard to all the circumstances of the case but subject to subsection (3), by order, allow. (3) The Court may not make an order under subsection (2) allowing an application in relation to a deceased person to be made after the end of the prescribed period unless: (a) the parties to the proceedings concerned have consented to the application being made after the end of that period, or (b) sufficient cause is shown for the application not having been made within that period. … [110] It has been said that under s 58(2) and its predecessors, there are at least three relevant factors which may need to be taken into account in deciding whether to grant an extension. These are: (1) the explanation for the plaintiff's delay; (2) prejudice to the defendant arising from the delay; and (3) the strength of the plaintiff's claim. [111] In Tanev v Tanevski [2017] NSWSC 1301 I had to consider an application for an extension under FPA s 16. For the purpose of my analysis, I adopted a two-stage approach, equating the adequacy of the defendant's explanation (factor (1) above) with the threshold requirement of "sufficient cause" in s 16(3) and treating other factors as going to a second, discretionary, stage under s 16(2). [112] But the present case arises under s 58(2) and counsel for Mr Choras pointed out that s 58(2) is differently worded. It speaks of "sufficient reason" but does not, in terms, refer to an additional discretion; indeed the word "may" does not appear at all. This led to a question about whether the two-stage approach should be adopted in the present case. [113] In Verzar v Verzar [2014] NSWCA 45, discussed below, the Court of Appeal treated the strength of the plaintiff's claim (factor (3)) as going to whether there was "sufficient cause". I should therefore adopt the same approach. But it seemed to me that this makes little, if any, practical difference. It was not suggested that the factors which I have identified do not remain relevant.
I consider that the difference in wording between the two statutory provisions will not usually make any difference to the Court's decision as to whether or not an application for further family provision should be permitted to be made out of time.
In summary, the issue of whether the Court should allow Jim to prosecute his family provision claim out of time depends upon the following considerations:

An order cannot be made in Jim's favour unless sufficient cause is shown for the application not having been made within the requisite 18-month period after the death of the deceased. This is a jurisdictional requirement.
If sufficient cause is shown for the application not having been made within the prescribed period, the Court has a discretion that should be exercised in all the relevant circumstances as to whether the order allowing an application should be made.
One of the factors relevant to the exercise of the Court's discretion that generally has significance is whether or not the making of the order permitting the application for family provision to be made out of time will significantly prejudice the other beneficiaries. The relevant prejudice is not whether the other beneficiaries will be disappointed by the result of a successful application. Rather, because the requirements of both s 9(2) and s 7 of the Family Provision Act must be decided on the basis of the circumstances at the time that the Court is determining whether or not to make an order for further family provision, a consequence of delay by an applicant in commencing a claim may be that the applicant's prospects of succeeding will be improved by the consequences of effluxion of time. That is because it often happens that an applicant's circumstances may deteriorate over time as the applicant ages. There may, in the circumstances of a particular case, be other causes of prejudice as a result of the applicant's delay.
The consequences of long delay may by themselves be sufficient reason for the Court to exercise its discretion against making an order permitting an applicant to commence family provision proceedings out of time, as delay often affects the availability and cogency of the evidence that may be available to the executor for the purpose of resisting the application.
In the unusual case where the application for an order permitting the commencement of a family provision application out of time is heard before the hearing of the substantive application, the strength of the applicant's case is a material factor in the exercise of the discretion as to whether or not to make the order. In the context of all other material factors, the Court will be less likely to permit the application to proceed if it has limited prospects of success.

Has Jim shown sufficient cause for his delay?

The first question that must be determined therefore is whether Jim has shown sufficient cause for his application not having been made within the period of 18 months from the date of the death of the deceased. As noted above, the deceased died on 22 October 2000, so the 18-month period elapsed on 22 April 2002.
A special feature of this case is that the deceased's original will was lost. At this remove in time, the evidence has not established with any precision when George discovered the copy will that was ultimately admitted to probate. The grant of probate of the copy will was made on 15 May 2002. Although the Court has accepted above that, at some early stage, Jim was informed by George that he had been given a life estate in the Marrickville property, the Court cannot now determine precisely when that information was provided to Jim. There is some evidence that Jim was aware at least that George understood Jim had received a life estate in about mid-2002. Until Jim learned of that fact, he was not in a position to consider and take advice as to whether he should commence a family provision application.
Jim's explanation for why he did not commence his family provision application until 30 July 2018 had two components. Jim sought to explain the elapse of time between the end of the prescribed period and about August 2016 by claiming that up until that time he had always believed that the deceased had left him full ownership, and that he was the proprietor of the fee simple in the Marrickville property.
Jim then sought to justify the further delay of about two years up to 30 July 2018 by relying on the emotional turmoil that he suffered as a result of discovering that he suffered from prostate cancer and the loss of his wife's employment for medical reasons. He also relied upon the difficulty that he experienced in obtaining legal representation because of his impecunious circumstances.
I am prepared to accept that Jim's explanation for the later period provides a sufficient cause, if considered separately from the first period. My acceptance of this aspect of Jim's explanation is supported by my view that no additional prejudice to the other beneficiaries has been shown to have arisen after August 2016.
The vice from which Jim's attempt to show sufficient cause for his delay in making his application suffers arises in relation to the initial 16-year period to August 2016, as the Court has rejected Jim's claim that he was unaware during this period that he had only been given a life estate, and that he thought that he had been given the freehold, so that he had in fact received the lion's share of the deceased's estate. The rejection of Jim's claim means that he has not demonstrated a sufficient cause for his application not having been made in time.
In the circumstances, any attempt by the Court to determine the real causes of Jim's delay in making his application for further family provision would involve unwarranted speculation. However, it may be said, without undue unfairness to Jim, that the evidence has not painted him as a particularly organised person. At all times, Jim has enjoyed the benefit to occupy the Marrickville property in accordance with his life estate. I have noted above that the Marrickville property was valued in the inventory of the deceased's property made in conjunction with the application by George for probate of the will at $400,000. If Jim had made his family provision application within the 18-month period, or with a short delay justified by the consequences of the loss of the will, Jim's right to occupy the Marrickville property would have been jeopardised by the probable need to sell the property to pay the parties' costs of the proceedings. The balance of the estate may not have been sufficient to permit the Court to make any family provision order that was more valuable to Jim than the life estate that he had.
Furthermore, when proceedings were ultimately commenced by Jim, the primary objective was to receive the freehold title to the Marrickville property, by means of the order for rectification of the will being set aside and an argument that, on the proper construction of the original will, Jim was entitled to receive either the freehold or a life estate followed by an equal share of the remainder.
Whatever may have been the real reasons why Jim did not commence his family provision application until 30 July 2018, I cannot accept that the explanation given by Jim has been candid or correct. In these circumstances, I must conclude that Jim has not satisfied the mandatory requirement in s 16(3)(b) that sufficient cause be shown for the application not having been made within the prescribed period, with the result that an order permitting Jim to prosecute his family provision application out of time cannot be made.

Would prosecution of Jim's claim prejudice the other defendants?

I will now explain why I have come to the conclusion that, even if Jim had shown sufficient cause for his application not having been made within the prescribed period, I would in the exercise of my discretion not have made the orders sought by Jim, because I am satisfied that the delay has caused prejudice to the other beneficiaries that is so substantial that it would be unjust for the Court now to make any family provision order in favour of Jim.
In principle, to assess the prejudice of the delayed commencement of proceedings, it is necessary for the Court to estimate when the family provision application would have been heard if it had been commenced before 24 April 2002, or on some later date that could have been justified under s 16(3)(b) of the Family Provision Act in order to compare the relative positions of the parties at that time and at the present.
As I have explained above, it is not now possible for the Court to determine precisely when George found the copy of the original will, and when Jim was informed that he had only been given a life estate in the Marrickville property. However, the copy will must have been found before probate was granted on 15 May 2002, and I have found that Jim was informed that he had been given a life estate in the Marrickville property no later than at or about that date.
The Court is not in a position to estimate with any precision when a family provision application made by Jim some reasonably short time after mid-2002 was likely to be dealt with by the Court.
I consider that 18 January 2006 is a date that is significant to this issue, because that is the time when Jim became bankrupt, as the result of his presentation of a debtor's petition. Because the fact that Jim had only inherited a life estate in the Marrickville property may not have been able to be confirmed as a result of the discovery of the copy of the will until sometime in early 2002, it is likely that the Court would have accepted that Jim had shown sufficient cause for his family provision application not having been made within the 18-month period after the death of the deceased, if Jim had commenced his application within a reasonably short period after the date when the copy will was found. Three- and one-half years elapsed between the 15 May 2002 grant of probate of the will to George and Jim's lodgement of his debtor's petition. It is in my view more probable than not that the Court could have determined Jim's family provision claim before 18 January 2006, if Jim had made his claim within a reasonable period after the grant of probate of the will to George. Even if the Court had not finally determined Jim's claim before 18 January 2006, I consider that it is improbable that Jim would have taken the unilateral course of lodging his debtor's petition if his family provision claim had been in the course of prosecution. At that time, it is probable that payment of Jim's debts could have been deferred by one means or another, pending the determination of that claim, or alternatively some means for raising the money to pay the debts could have been arranged.
As I have explained above, before Jim became bankrupt, he was entitled to a life estate in the Marrickville property and both he and his wife were, in relative terms, in a better state of health and had much better earning capacities than they now have. Jim is now a pensioner, and his state of health has deteriorated markedly. The life estate in the Marrickville property is now vested in the Official Trustee, and in principle, Jim has a liability to the Official Trustee for an occupation fee for the Marrickville property since 18 January 2006. Given the evidence concerning the deceased's reason for only leaving a life estate to Jim in his will, and the difficulty that the Court may have faced in formulating a family provision order that was more favourable to Jim than his entitlement to a life estate, as it would probably have been necessary for the Marrickville property to be sold to meet the costs of the application, I consider that Jim's prospects of success, had he commenced his application within time or within a time in respect of which sufficient cause for delay could have been shown, may have been limited. In my view, the other beneficiaries will be seriously prejudiced if Jim is permitted to commence his family provision application almost 18 years after the death of the deceased, because his present circumstances have deteriorated as a result of his delay in making his claim.
Additionally, it is relevant to the determination of whether the other beneficiaries would be unfairly prejudiced by Jim's delay in commencing his application for further family provision that George has incurred the costs of defending the dismissed claims, as well as the other costs orders made against Jim. A consequence of Jim's life estate vesting in the Official Trustee as a result of Jim's bankruptcy will be that the remainder of the deceased's estate in George's hands will be depleted by the entire amount of George's costs. If the Court were to make an order permitting Jim to commence his claim out of time, and then to make an order for further family provision in favour of Jim, the portion of Jim's costs that are attributable to his family provision claim would also have to be paid out of the remaining part of the deceased's estate. As I will demonstrate when I deal with Jim's family provision claim, the consequences of Jim's bankruptcy have included that the remainder of the estate that would be available to share between Jim and the other beneficiaries has been so greatly depleted by wasted legal costs that the consequences of those costs being incurred would also provide a basis of unfair prejudice, if Jim were given leave to commence his application out of time.

Determination of family provision application

Although I have found that the Court should not make an order under s 16(2) of the Family Provision Act that Jim be permitted to commence his application for further family provision after the expiration of the period of 18 months from the deceased's death, I will deal with the merits of the application on the basis that my refusal to extend the time for the commencement of the proceedings may be found to be in error.
Given that my consideration of the merits of Jim's family provision application is only for the purpose of explaining what would have been the outcome of the application if I had permitted it to proceed, it is not necessary for me to set out a detailed analysis of the legal principles that are accepted as governing family provision claims.
In essence, if the Court had made an order giving Jim leave to commence his application out of time, s 9(2) of the Family Provision Act would first have required Jim to satisfy the Court that the provision made in his favour out of the deceased's estate is, at the present time, inadequate for Jim's proper maintenance, education and advancement in life. If Jim satisfied the Court of that requirement, s 7 would empower the Court to make an order for the provision out of the estate that the Court is of the opinion ought, having regard to the circumstances at the time the order is made, to be made for Jim's maintenance, education or advancement in life. Section 9(3) contains a non-exhaustive list of the factors that may be taken into consideration by the Court. The Court may take into account any matter which it considers relevant in the circumstances, but it is of particular relevance in the present case that s 9(3)(b) specifically authorises the Court to take into account Jim's conduct after the death of the deceased.
As I have recently done in Last v Lewis [2022] NSWSC 791 at [125], I will take the core principles governing the Court's family provision jurisdiction, both generally and in the context of an application by an adult child, as being as recently stated by the Court of Appeal in Bassett v Bassett [2021] NSWCA 320. Although the Court of Appeal was concerned with an application made under the Succession Act, it noted at [84] that the provisions of that Act are "broadly equivalent" to the corresponding provisions under the Family Provision Act. I will, with respect, confine my references to the parts of the Court's reasons that are of particular relevance in the present case: [82] The primary judge's summary of relevant principles, as noted at [59] above, was not challenged. It is convenient to add a reference to McCosker v McCosker (1957) 97 CLR 566 at 571-572; [1957] HCA 82 (McCosker), in which Dixon CJ and Williams J observed that: "The question is whether, in all the circumstances of the case, it can be said that the respondent has been left by the testator without adequate provision for his proper maintenance, education and advancement in life. As the Privy Council said in Bosch v. Perpetual Trustee Co. (Ltd.) [1938] NSW St Rp 3; [1938] AC 463; (1938) 38 SR (NSW) 176 the word 'proper' in this collocation of words is of considerable importance. It means 'proper' in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement in life must be considered in the light of all the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent." [83] Kitto J's observations in the same case at 579 are also of note: "The testator has shown by the terms of his will that he did not fail to consider what he ought to do for the several members of his family and that it was his deliberate judgment that some of them, including the respondent, had been adequately provided for by assistance he had given them. His opinion on the subject is, of course, by no means conclusive. But there is nothing to suggest that he was under any misapprehension, or that he was in any way prejudiced against the respondent; and the case seems to me to be one of those in which the testator is much more likely to have formed a correct conclusion on the subject of the moral obligations he owed to his family than a court can well hope to be." [84] In Singer at 208-209, the majority held, in the context of broadly equivalent provisions under the predecessor Family Provision Act 1982 (NSW), that: "It is clear that, under these provisions, the court is required to carry out a two-stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant. The first stage has been described as the 'jurisdictional question'. That description means no more than that the court's power to make an order in favour of an applicant under s.7 is conditioned upon the court being satisfied of the state of affairs predicated in s.9(2)(a)." [85] More recently, in Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 at [122] (Vigolo), Callinan and Heydon JJ observed, in relation to the corresponding Western Australian legislation, that the questions which the Court has to answer in assessing such a claim do not "necessarily always divide neatly into two" and that: "Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in the arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all of the potential beneficiaries must be taken into account and weighed with all of the other relevant factors." [86] Vigolo is also significant because three of the five justices (Gleeson CJ, Callinan and Heydon JJ) supported the continuing utility in this field of discourse of notions of moral obligation and duty. Thus, Gleeson CJ (at [25]) observed that: "In explaining the purpose of testator's family maintenance legislation, and making the value judgments required by the legislation, courts have found considerations of moral claims and moral duty to be valuable currency. It remains of value, and should not be discarded. Such considerations have a proper place in the exposition of the legislative purpose, and in the understanding and application of the statutory text. They are useful as a guide to the meaning of the statute. They are not meant to be a substitute for the text." See also Callinan and Heydon JJ at [121], cf Gummow and Hayne JJ at [63]-[73]. [87] It is also relevant to note that in Sgro at [83], White JA (with whom McColl and Payne JJA agreed) repeated what he had earlier said in Slack v Rogan; Palffy v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 at [127] as follows: "In my view, respect should be given to a capable testator's judgment as to who should benefit from the estate if it can be seen that the testator has duly considered the claims on the estate. That is not to deny that s 59 of the Succession Act interferes with the freedom of testamentary disposition. Plainly it does, and courts have a duty to interfere with the will if the provision made for an eligible applicant is less than adequate for his or her proper maintenance and advancement in life. But it must be acknowledged that the evidence that can be presented after the testator's death is necessarily inadequate. Typically, as in this case, there can be no or only limited contradiction of the applicant's evidence as to his or her relationship and dealings with the deceased. The deceased will have been in a better position to determine what provision for a claimant's maintenance and advancement in life is proper than will be a court called on to determine that question months or years after the deceased's death when the person best able to give evidence on that question is no longer alive. Accordingly, if the deceased was capable of giving due consideration to that question and did so, considerable weight should be given to the testator's testamentary wishes in recognition of the better position in which the deceased was placed (Stott v Cook (1960) 33 ALJR 447 per Taylor J at 453-454 cited in Nowak v Beska [2013] NSWSC 166 at [136]). This is subject to the qualification that the court's determination under s 59(1)(c) and s 59(2) is to be made having regard to the circumstances at the time the court is considering the application, rather than at the time of the deceased's death or will." … [88] In relation to the approach to be taken to a claim for provision by an adult child, reliance was placed by Merilyn and Bruce upon the following summary of principles by Hallen AsJ (as his Honour then was) in Bowditch v NSW Trustee and Guardian [2012] NSWSC 275 at [111] as follows: "(a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed. (b) It is impossible to describe in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life - such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set his or her children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation: McGrath v Eves [2005] NSWSC 1006; Taylor v Farrugia [2009] NSWSC 801. (c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such as a spouse, who has a primary obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times, and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia. (d) There is no need for an applicant adult child to show some special need or some special claim: McCosker v McCosker; Kleinig v Neal (No 2) [1981] 2 NSWLR 532; Bondelmonte v Blanckensee [1989] WAR 305; and Hawkins v Prestage (1989) 1 WAR 37 per Nicholson J at 45. (e) The applicant has the onus of satisfying the court, on the balance of probabilities, of the justification for the claim: Hughes v National Trustees, Executors and Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134 at 149. …
The Court of Appeal emphasised, at [80] and [81], that s 59(2) of the Succession Act required that the Court make any order that is made, "having regard to the facts known to the Court at the time the order is made". The Court of the Appeal noted, at [90], that if the evidence established that the applicant for family provision relief had an intention as to the applicant's future conduct as at the time the order for further family provision is made, the existence of that intention may be a fact known to the Court at the time. However, where the execution of the intention is contingent upon future events, that execution will not be a fact known to the Court.
There is a difference in wording between s 59(2) of the Succession Act, which requires that the Court have regard "to the facts known to the Court at the time the order is made", and s 7 of the Family Provision Act, which requires that regard be had to "the circumstances at the time the order is made". I doubt that the expressions "facts known to the Court" and "circumstances" have any relevant difference in meaning.
I have raised this issue because the circumstances of Jim's application give rise to a number of possibilities the outcome of which is not predictable by the Court on the balance of probabilities. In the reasons that follow, I will consider those possibilities, although I have concluded that the need for the Court to focus on the circumstances that have actually been established by the evidence has the effect in this case of constraining the capacity of the Court to make a meaningful order for further family provision in favour of Jim. I will now address what I consider to be the most material circumstances. In doing so, I will gather together many of the relevant findings that I have made above. In determining the monetary amounts relevant to this exercise, I will calculate the amounts based upon the evidence, although I acknowledge that that will lead to a false appearance of precision.
Clause 3 of the rectified will gave Jim a life estate in the Marrickville property that would have provided Jim and his family with adequate accommodation for his life but, by reason of Jim's decision to lodge a debtor's petition, the life estate is now vested in the Official Trustee.
Jim is technically liable to pay an occupation fee to the Official Trustee for the period since 18 January 2006, but it is not known whether the Official Trustee will sue Jim to recover the occupation fee. The Official Trustee has not yet acted to do so, but that may be because the Official Trustee has only recently learned of the existence of the life estate.
Equally, the Official Trustee has a right to eject Jim and his family from the Marrickville property, but there is no evidence as to whether or not it will do so. The likelihood that the Official Trustee will move for ejection may depend upon the Official Trustee's view as to whether it is able to sell the life estate for a sufficient price to be able to pay the creditors in the bankruptcy and the Official Trustee's costs in a worthwhile amount. Alternatively, it is possible that the Official Trustee may lease the Marrickville property to Jim.
The evidence is that Jim requires, as matters stand, $79,757.86 to achieve the annulment of his bankruptcy. If the bankruptcy is annulled, either the life estate or any share in the value of the life estate that remains in the hands of the Official Trustee after payment of creditors and costs will vest in Jim. Jim does not have the $79,757.86 within his resources that is necessary to achieve an annulment of his bankruptcy.
As the joint valuation report placed a nominal value of $535,000 on Jim's life estate in the Marrickville property, if either the life estate or the freehold in the Marrickville property is sold in the future, in any circumstances the probability is that Jim's bankruptcy will be annulled, and Jim will become entitled to some presently unknown amount of money.
Moving to the costs incurred by the parties in the proceedings, George's costs on the indemnity basis are estimated to be $558,898.85. George is entitled as the executor and trustee of the deceased's estate to have his costs paid out of the remainder of the estate in his hands. The evidence suggested that George's children, as the remaindermen, have funded George's costs. Jim will be obliged to pay to George the costs ordered to be paid by orders 4 and 6 and the costs reserved by order 7 made on 17 August 2021. As Jim has no assets so long as the life estate in the Marrickville property is vested in the Official Trustee, Jim will be unable to pay these costs to George.
George's solicitor's affidavit made on 8 March 2022 gave separate estimates of the costs incurred by Jim. On the indemnity basis, the orders 4 and 6 costs were $87,096.42, the order 7 costs were $234,647.57, and the family provision application costs were $236,554.86.
As George's solicitor deducted 25% in order to estimate the costs payable on the ordinary basis, but Jim's solicitor deducted 40%, for the purposes of consistency in these reasons I have assumed that the proper deduction is 30%. On that basis, Jim will become liable to pay George $225,220.79 for the orders 4, 6 and 7 costs. As Jim cannot pay those costs, they will have to be borne by the estate.
The Court is generally resistant to making family provision orders that have the effect of compensating applicants for further family provision who have incurred costs liabilities to the executor as a result of the manner in which the proceedings have been conducted. The Court will generally be unwilling to make a family provision order that protects the applicant from his or her liability to pay such costs. In Bassett v Bassett, Bell P (as the Chief Justice then was), Leeming and Payne JJA said: [198] Whether the adverse impact of legal costs or potential costs liabilities should be taken into account in assessing the needs and financial circumstances of particular beneficiaries and/or any applicant for orders under s 59 of the Succession Act is ultimately a discretionary matter; the factors specified in s 60(2) are all matters which the Court may consider. It may be doubted whether a "wise and just testator" (Re Allen [1922] NZLR 218 at 220 -221; [1921] GLR 613; Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 478 -479; Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19 -20; [1962] HCA 19; Goodman v Windeyer (1980) 144 CLR 490 at 499-502; [1980] HCA 31; see [171] above), in whose shoes the Court notionally stands in considering questions of adequate provision for proper maintenance of an eligible applicant, would self-evidently look favourably upon an adult child whose own financial position has been diminished by the unsuccessful pursuit of his or her siblings in expensive legal proceedings in relation to the estate.
In a similar vein, Hallen J said in Page v Hull-Moody [2020] NSWSC 411: [256] Now, as a result of the proceedings that she commenced, subject to further submissions on the question of costs, Julie-Anne may have a significant debt which will relate to the costs that have been incurred in these proceedings. It is difficult to conclude that the Court should make a family provision order out of the estate of the deceased in order to ensure the payment of the costs of the proceedings. One asks rhetorically why a wise and just testatrix, or the application of contemporary community standards, would reasonably require that the deceased's Will should be altered in favour of an adult child for whom she provided, in order to further provide for, amongst other things, the expensive costs consequences of the adult child's decision to bring proceedings to effectively challenge that Will?
I had earlier said myself in Stojanovski v Stojanovski [2019] NSWSC 1713: [590] Furthermore, even allowing for the requirement in both s 7 and s 9 of the Family Provision Act that the Court have regard to the circumstances as they obtain at the date of the determination of the application, I do not consider that Nada's testamentary obligations, whether considered in terms of the actions of a wise and just testator, or the application of contemporary accepted community standards, would reasonably give rise to an expectation, some 13 years after her death, for Nada to change her testamentary dispositions in favour of her adult sons, to make adjustments between them to compensate for the consequences of the decisions made by them in respect of the litigation in which they have engaged. Nada made proper provision for both of her sons, and she would be entitled to maintain the testamentary arrangements that she chose with apparent care; leaving her sons to abide the outcome of the application of the ordinary law of the land concerning the burden of costs in legal proceedings.
Consequently, if the circumstances known to the Court otherwise justified the Court in making an order for further family provision in favour of Jim, that would be done on the basis that Jim would have to satisfy his liability to pay $225,220.79 in costs to George. In practical terms, that would mean that any lump sum payable to Jim out of the part of the deceased's estate remaining in George's hands would be reduced by that amount.
Jim's solicitor only gave evidence that Jim's total costs would be $648,800 and did not break that estimate down into the different categories of costs, as did George's solicitor. For the sake of argument, I will assume that half of Jim's total costs were incurred in relation to his family provision claim. On my calculation, the equivalent percentage of George's costs was about 42%. On that basis, if a family provision order was made in Jim's favour, as well as the usual order that his costs on the ordinary basis be paid out of the estate, then, on the assumption that a 30% deduction is appropriate, Jim would be entitled to payment of $227,080 out of the estate as his costs of his family provision claim.
On that basis, the amount of costs payable out of the part of the estate that remains in George's hands would be $558,898.85 plus $227,080, giving $785,978.85. As mentioned, Jim would be required to bear the orders 4, 6 and 7 costs of $225,220.79 that he is unable to pay to George.
The evidence is that if he succeeds in these proceedings, Jim will be liable to pay his lawyers $648,800. The $227,080 payable by George to Jim will be reduced by the $225,220.79 that Jim owes to George. These two obligations will thus effectively cancel out. Jim will remain liable to his lawyers for the full amount of the costs that he has incurred.
As noted above, the joint valuation report placed a value on the freehold in the Marrickville property of $1,650,000. I have accepted that the freehold of the property will probably sell for that price on the open market. The expert valuers jointly valued the remainder in the Marrickville property at $1,115,000. That is really a notional value, as the Court knows that there is no ready market for remainders in residential properties subject to life estates. The value was determined by the expert valuers on the assumption that it was legitimate to assume that Jim's life expectancy was the median of Jim's age cohort. The absence of a ready market does not mean that the remainder has no value. However, the price that the sale of the remainder might fetch is likely to depend upon idiosyncratic considerations, including Jim's current age and the prognosis for his cancer diagnosis.
If the remainder in the Marrickville property could be sold for $1,115,000, then the amount remaining in the deceased's estate in George's hands available to be the subject of a family provision order would be $556,101.15, on the basis that only George's costs of $558,898.85 would have to be paid out of the price received.
As all that is left in the deceased's estate is the remainder in the Marrickville property, and the Court cannot be sure whether a buyer can be found for that asset, or what price will actually be received, the circumstances known to the Court include that the estate of the deceased has a value that is presently unknown but is subject to meet an indemnity in favour of George of $558,898.85.
Not only can the Court not be sure that the amount in fact available for distribution between the beneficiaries is $556,101.15, but if the Court makes any order that requires the sale of the remainder in the Marrickville property, that may unfairly prejudice the other beneficiaries by some presently unpredictable amount. Under the terms of the rectified will, the other beneficiaries only have to wait until the end of Jim's life estate to become entitled to enjoy the freehold in the Marrickville property. That presently has a value of $1,650,000. If the Court makes an order that forces a sale, depending upon the circumstances, the amount actually available for distribution between all of the beneficiaries may be driven below $556,101.15. If whatever amount is realised by George is that amount, or any significantly lesser amount, an order that requires a substantial lump sum to be paid as further family provision to Jim will plainly significantly reduce the inheritance of the other beneficiaries, when compared to the testamentary intention of the deceased, as stated in the rectified will.
There is actually no evidence that George will, with the consent of the other beneficiaries who have borne his costs of the proceedings, choose to sell the remainder in the Marrickville property, even if that is the only way that the costs can be recovered at this time. They could take the view that the preferable course is to wait until the other beneficiaries are entitled to the freehold and then to recover the costs expended out of the higher value of the freehold. That way they would not subject themselves to the risk that an attempt to sell the remainder would generate an artificially low price. Consequently, the Court could only be sure that the remainder will be sold if it were to make an order to that effect.
As noted above, there is no evidence that the Official Trustee proposes to sell Jim's life estate. As Jim has been diagnosed with cancer, the sale value of the life estate is unpredictable. The Official Trustee may be satisfied if a price of $79,757.86 can be obtained from the sale, but this demonstrates that the amount to which Jim would be entitled cannot be estimated.
Neither George nor the Official Trustee has a right to force the other to join in selling the freehold in the Marrickville property. That is because those owners own separate estates in the one property, and they are not co-owners for the purposes of s 66G of the Conveyancing Act 1919 (NSW).
George and the Official Trustee could nonetheless agree to join in selling the freehold in the Marrickville property. There would be commercial common sense in taking that course on the part of each, as it would permit George to recover his costs of the proceedings and to realise the remainder for the highest price possible. It would also permit the Official Trustee to pay the creditors in the bankruptcy and the Official Trustee's costs, and to fulfil any obligation owed to the bankrupt to recover a proper price for the bankrupt's property. However, there is no evidence that George and the Official Trustee will agree to sell the freehold, and the Court has no power to require them to do so.
Although the outcome of a joint sale of the freehold in the Marrickville property would require a presently unknown agreement between George and the Official Trustee as to how the sale price, after payment of costs, would be divided, it is possible that, if the Official Trustee acted to protect Jim's interests, the division would approximate the ratio 1,115,000 to George and 535,000 to the Official Trustee. There is therefore a possibility that Jim would become entitled to $535,000 less $79,757.86, being $455,242.14, less an allowance for transaction costs.
The circumstances that are presently known to the Court therefore give rise to a number of future possibilities the occurrence of which cannot on the evidence be predicted on the balance of probabilities. Those possibilities are that: (1) no sale occurs of any interests in the Marrickville property; or (2) one or both of the life estate and the remainder in that property are sold; or (3) the freehold in the property is sold, and the proceeds of sale divided.
If there is no sale of any interest in the Marrickville property, then there would be no fund available to make a lump sum order for further family provision in favour of Jim. George would have to bear his costs of the proceedings until the other beneficiaries become entitled to the freehold. In the meantime, Jim would be liable to be ejected from the Marrickville property by the Official Trustee, and will be notionally liable to pay an occupation fee that he will not have the funds to pay.
If interests in the Marrickville property are sold independently, then additional funds will become available in amounts that cannot be determined on the present evidence. Up to about $556,101.15 could be received by George and up to $455,242.14 could be received by Jim.
If George and the Official Trustee agreed to join in selling the freehold, then there would be a greater chance that these additional amounts could become available to the parties.
The only one of these outcomes that the Court can force is the sale of the remainder in the Marrickville property, which entails the high level of uncertainty of outcome and risk of unfair prejudice to the other beneficiaries that has been considered above. If the sale of the remainder led to George receiving a price large enough to fund an order for family provision in favour of Jim that was more than $79,757.86, Jim could use that money to obtain an annulment of his bankruptcy. The life estate in the Marrickville property would then revest in Jim. However, Jim would be liable to pay his legal costs to his lawyers. It seems to be inevitable that it would be necessary for the life estate to be sold. If this result occurred, then the consequence of the Court taking the only course within its power would be to require the remainder and the life estate to be sold separately, which would have an uncertain outcome and subject the deceased's estate to the risk of an unpredictable reduction in value for the reasons discussed above.
The consequence of all of these considerations is that the effect of Jim's conduct in lodging the debtor's petition to cause his own bankruptcy, and then prosecuting proceedings that were ultimately required to be dismissed, is that the Court has been placed in the exceptional position that the circumstances known to it are so uncertain as to make it inherently impossible for the Court to make any useful order for further family provision in favour of Jim which is fair to the other beneficiaries, and predictable in its outcome.
In this case, the Court has evidence of the reasons why the deceased decided to leave only a life estate in the Marrickville property to Jim. On the evidence, the deceased duly considered the claims on his estate. He decided that it was warranted that Jim receive an inheritance which assured that he would have a home for life. The deceased decided that it would be unsafe to leave Jim any interest in the Marrickville property that he could sell or encumber. Events have shown that the deceased's testamentary planning was far-sighted and correct. Unfortunately, the deceased could not predict that Jim would lose his entitlement to the life estate in the Marrickville property by causing his own bankruptcy.
The deceased expressed, by means of the rectified will, his testamentary intention to benefit his grandchildren, either the natural children of Jim or George's children. On the evidence, the deceased did not owe any testamentary duty to Jim's wife or stepson, in accordance with community standards or moral duty.
The depletion of the deceased's estate is entirely attributable to Jim's conduct after the death of the deceased. Given the deceased's effort to provide a home for Jim for his lifetime in a way that was thought to be secure, neither moral duty nor community standards would require the deceased, if he were now alive to do so, to make a substantial lump sum bequest to Jim out of the part of the deceased's estate that remains after Jim's bankruptcy and the prosecution of the dismissed claims, given that the payment of any substantial lump sum to Jim would deprive the other beneficiaries of substantially all of the inheritance that the deceased intended that they should receive.
In the circumstances, it cannot be said that Jim has satisfied the requirement in s 9(2) of the Family Provision Act that, at the present time, the provision made in his favour in the rectified will is inadequate for his proper maintenance, education and advancement in life.
If that conclusion were found to be in error, the foregoing discussion of the status of the deceased's estate would nonetheless precipitate the outcome that the Court decide not to exercise its discretion under s 7 to make an order for further provision for Jim.

Orders

Order (2) will be made by the agreement of the parties.
The orders of the Court are: 1. Order that the plaintiff's claims in his second further amended statement of claim be dismissed. 2. Declare on the cross claimant's cross claim that the cross claimant is entitled to be paid $13,824 out of the estate of the deceased, and that the cross claimant has a charge over the estate to secure that payment. 3. Order the plaintiff to pay the defendant/cross claimant's costs of the proceedings on the ordinary basis. 4. Order that, to the extent that the defendant does not recover from the plaintiff his costs of the proceedings, those costs be paid out of the estate of the deceased on the indemnity basis.

Amendments 02 September 2022 - Correction to catchwords 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: 02 September 2022

Family Provision Act 1982(NSW)

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

(2020) 102 NSWLR 386

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