Re Estate Buxton; Knoll v Buxton

Supreme Court of NSW|2023-05-05|Before: Lindsay J

Plaintiff (Christine Gay Knoll): Brendan Burke Defendant (Suzanne Lee Buxton): Giles Stapleton and Ruaan Wathukarage Second Cross Claimant (Corey Duncan): Philip Wallis

Solicitors: Plaintiff: Baker Love Lawyers Defendant: Umbrella Legal Second Cross Claimant: Pryor Tzannes & Wallis File Number(s): 2021/00153395

INTRODUCTION

These proceedings concern: 1. competing claims to beneficial ownership of three properties (separate parcels of land at Bishops Bridge, Kurri Kurri and Westbrook) in the State of New South Wales; and 2. a contested claim for family provision relief under Chapter 3 of the Succession Act 2006 NSW by the plaintiff (Christine Gay Knoll) a former de facto spouse of a deceased person, Graeme Ashley Kenneth Buxton ("the deceased").

THE DECEASED, HIS WILL AND AN INVENTORY OF PROPERTY

At the age of 60 years (having been born in July 1959) the deceased died on 31 May 2020, by suicide, leaving a will dated 16 December 2019 probate of which was granted by this Court on 4 November 2021 to a sister of the deceased (Suzanne Lee Buxton), the defendant, the executrix named in the will.
The deceased's will left the whole of his estate to his four siblings: the defendant (Suzanne), born in February 1954; Greg, born in October 1955; Robynne, born in December 1960; and Cindy, born in June 1965. He made no provision in the will for Christine.
The Inventory of Property annexed to the grant of probate relating to the deceased's will recorded him as the sole owner of very little property (a car, farm equipment, cattle and shares) having a total estimated value of $27,600. Three accounts in financial institutions were each recorded as having a "nil" balance.
The Inventory recorded that, at the time of his death, the deceased owned as a tenant-in-common with Christine, a legal entitlement to the Bishops Bridge property and an equitable interest in each of the Kurri Kurri property and the Westbrook property.

The Bishops Bridge Property

At the time of the deceased's death, Christine and the deceased were registered as proprietors of the Bishops Bridge property, holding the legal title in co-ownership as tenants-in-common in equal shares. Christine remains on the title in her personal capacity. Subject to any orders made by the Court in these proceedings, the estate of the deceased holds his interest in the property.
A rural property, the Bishops Bridge property was first acquired by the deceased in his own name in 1994, about eight years before he and Christine commenced their de facto relationship in 2002. Its purchase was funded by a bank loan secured by a mortgage and a loan of $40,000 from the parents of the deceased.
A one half share of the property was transferred by the deceased to Christine in September 2005 at the time when they jointly borrowed funds against the security of the property.
The property has a present estimated value of about $1,904,000, subject to a mortgage debt of approximately $80,000.

The Kurri Kurri Property

The Kurri Kurri property was purchased in the name of Christine for $285,000 in February 2012. The Bishops Bridge property provided collateral security for the purchase. The property has a present estimated value of $620,000, subject to a mortgage debt of about $240,000.

The Westbrook Property

A 40 acre rural property, the Westbrook property was purchased in the name of Christine for $360,000 in June 2016. The Bishops Bridge and Kurri Kurri properties were provided as security for the purchase. The Westbrook property has a present estimated value of approximately $875,000 subject to a mortgage debt of about $350,000.

A Connection Between the Three Properties

Although the Bishops Bridge property was used as collateral security for loans taken out for the purchase of each of the Kurri Kurri and Westbrook properties, as between Christine and the deceased Christine organised the purchase and management of the Kurri Kurri and Westbrook properties with minimal involvement on the part of the deceased. His principal area of concern was the Bishops Bridge property. In combination with Christine he was there active in decision-making about the development of infrastructure (including buildings) on the property and the care of animals kept there. He had about 20 head of cattle, a bull and sundry smaller animals.

The Character of the Properties

The Bishops Bridge property was the site of the "matrimonial home" of Christine and the deceased (between late 2006 and September 2019) during most of the years (between 2002 and September 2019) when they were, uncontroversially, in a de facto relationship.
The Kurri Kurri property was purchased as an investment, Christine says, as a form of "superannuation" for herself. It has been rented out since its purchase. During the lifetime of the deceased rent was credited to a bank account in the joint names of Christine and the deceased.
The Westbrook property was purchased as a means of providing assistance for Chelsea and Corey.

Christine's Summons: A Family Provision Claim

By her summons (filed on 28 May 2021) Christine claims family provision relief from the estate or notional estate of the deceased under Chapter 3 of the Succession Act 2006.
In the conduct of her claim, she has not sought an order for the designation of property as notional estate.
A determination of the claim requires identification of the estate of the deceased.
Identification of the estate of the deceased does not necessarily require a precise determination of competing claims to ownership of the Bishops Bridge, Kurri Kurri and Westbrook properties but, at least, a determination of the nature and scope of the competing claims of Christine and the deceased's estate sufficient to inform a proper determination of Christine's application for family provision relief. (In my opinion, the competing claims of Christine and the estate have been subsumed in the family provision orders which, in all the circumstances of the case, ought to be made in favour of Christine.)
Christine's summons was filed within the time limited by section 58(2) of the Succession Act.
In final submissions Suzanne, on behalf of the estate of the deceased, conceded that: 1. Christine has standing to apply for a family provision order (under sections 57(1)(e) and 59(1)(a) of the Succession Act) as a person who was, at a particular time, wholly or partly dependent on the deceased and a member of the same household as the deceased. 2. having regard to all the circumstances of the case there are (within the meaning of section 59(1)(b) of the Succession Act) factors which warrant the making of Christine's application for a family provision order.
In my opinion, these concessions were correctly made. Christine and the deceased lived together (for the most part at the Bishops Bridge property) in a de facto relationship of about 17 years' duration, throughout which time Christine was emotionally dependent on the deceased and, through the intermingling of their finances, they were financially interdependent. Their de facto relationship came to an end between 19 April and 20 September 2019 or thereabouts through no fault of Christine in circumstances in which, in retrospect, the deceased's mental health sharply declined and, by reason of that, he became physically violent towards both a neighbour and Christine, violence which led to a succession of apprehended violence orders against him between March and September 2019 or thereabouts.
The deceased's will was made after he had, in part by reason of the apprehended violence orders against him, left the Bishops Bridge property and was taken in, first, by a friend, then by his sister Robynne and finally by his sister, Cindy.
The deceased committed suicide four days before he was due to appear in Court in relation to an apprehended violence order provisionally granted to Christine by the NSW Police on 20 September 2019.
On the hearing of her summons Christine formally claimed the status of an "eligible person" by reference to section 57(1)(b) of the Succession Act as "a person with whom the deceased … was living in a de facto relationship at the time of the [deceased's] death".
That Christine and the deceased lived in a de facto relationship (within the meaning of section 57(1)(b) of the Succession Act as informed by section 21C of the Interpretation Act 1987 NSW) between 2002-2019 was uncontroversial but their separation in 2019 and their subsequent unsuccessful negotiations for a property settlement under the Family Law Act 1975 were of an order that could not sustain a finding that they were "living in a de facto relationship at the time of the [deceased's] death".
It is not necessary to elaborate upon this because of Suzanne's concession, properly made, that Christine has standing to apply for a family provision order as a dependent member of the deceased's household.
The questions for determination on Christine's family provision application focus upon sections 59(1)(c), 59(2) and 60 of the Succession Act.
Section 59(1)(c) directs attention to whether, at the time when the Court is considering Christine's application for a family provision order, adequate provision has been made for her proper maintenance, education or advancement in life in the will of the deceased, noting that no provision has been made for her in the will.
Upon an assumption that the Court is satisfied that adequate provision has not been made for Christine, section 59(2) empowers the Court to "make such order for provision out of the estate of the deceased … as the Court thinks ought to be made for [her] maintenance, education or advancement in life, having regard to the facts known to the Court at the time the order is made".
Section 60 sets out a checklist of matters that may be considered by the Court for the purpose of determining whether to make a family provision order and the nature of any such order. The parties have addressed those matters.
Whether Christine has been left without adequate provision, and, if so, a family provision order should be made in her favour depends in part upon a consideration of the claim made by Suzanne (on behalf of the estate of the deceased) to beneficial entitlements to the Bishops Bridge, Kurri Kurri and Westbrook properties and the claim of Corey to a beneficial entitlement to the Westbrook property.
The estate's opposition to Christine's family provision application was largely directed, in final submissions, to a case that invites the Court to make orders for the division (and sale) of the Bishops Bridge, Kurri Kurri and Westbrook properties between Christine and the estate (subject to such entitlements Corey may have) "for the purpose of doing justice between the parties", taking into account what might have been a property settlement under section 90SM of the Family Law Act had proceedings under that Act been instituted before the deceased's death.

The Estate's (First) Cross Claim and Response to Corey's (Second) Cross-Claim: Trust Claims

By a statement of cross claim Suzanne, as executrix of the will of the deceased, claimed that: 1. Christine holds her share in the Bishops Bridge property on trust for the estate of the deceased, either on a resulting trust or a constructive trust. 2. Christine holds "at least half of her interest" in each of the Kurri Kurri property and the Westbrook property on trust for the deceased's estate, either on a resulting trust or a constructive trust.
Suzanne's case evolved during the course of the final hearing.
Her change of direction was perhaps most notable in concessions made on her behalf as to Christine's "eligibility" to apply for family provision relief and the existence of "factors warranting" the making of her application for family provision relief.
However, Suzanne's "trust case" also evolved in a way which, it might be thought, invited the Court to make discretionary orders designed to achieve what, in the abstract, might be regarded as a "just" outcome, balancing the claimed entitlements of the parties.
There is justification in Christine's complaint that the case presented in Suzanne's closing submissions represented a departure from the case pleaded in her statement of cross-claim; but, on reflection, the "new" case was primarily a shift in the legal analysis of pleaded facts (some of which might be taken to have been abandoned), coupled with an important concession in favour of Christine.
That concession is implicit in Suzanne's submission that the Court should find that beneficial ownership of the Bishops Bridge property is reflected in the legal title to the property. That represents an abandonment by Suzanne of her allegation that Christine holds her interest in Bishops Bridge on trust for the estate of the deceased; an abandonment of the allegation that the estate is beneficially entitled to the whole of the property; and an acceptance that, subject to any orders that might be made on Christine's family provision application, the property is owned at law and in equity by Christine and the deceased as tenants-in-common in equal shares.
In her closing submissions, Suzanne submitted that the evidence before the Court revealed the existence of two inter-related and mutually inclusive "joint endeavours" within the meaning of Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137.
The first "joint endeavour" is said by Suzanne to have been between the deceased and Christine, the result of which is said to be that the three disputed properties (Bishops Bridge, Kurri Kurri and Westbrook) are beneficially owned by Christine and the deceased as tenants-in-common in equal shares.
The real dispute here, between the estate of the deceased and Christine, may relate to the Kurri Kurri property, which Christine strongly contends is her own because it was purchased for her "retirement superannuation fund later on down the track".
Even that dispute is qualified by an offer made by Christine in closing submissions that, if she is awarded full title to the Bishops Bridge property on her application for family provision relief and the Court is minded to impose a condition on a grant of that relief that rights to other property be adjusted as between herself and the estate of the deceased, it would be open to the Court to adjust the rights of the parties (by orders made under sections 66 and 92 of the Succession Act) providing for the estate of the deceased to receive her interest, or part of her interest, in either or both of the Kurri Kurri and Westbrook properties or the net proceeds of sale of those properties.
Further attention will need to be given to Christine's offer in the context of analysis of her family provision application; but, in the meantime, I proceed on the basis that beneficial co-ownership of the Bishops Bridge property accords with the legal title to the property. Christine and Suzanne may now be taken to accept that, when Christine acquired a one half share in the property, the intention of both Christine and the deceased was that the property was to be held by the two of them beneficially on a 50:50 basis. Nothing turns on the fact that they held their title as tenants-in-common rather than as joint tenants save that the property did not pass to Christine by survivorship.
When the Westbrook property was purchased in the name of Christine the purchase was effected for the purpose of giving effect to an arrangement between her and the deceased (on the one hand) and Corey and Chelsea (on the other hand). Christine did not turn her mind at that time to what might happen with the property apart from the arrangement with Corey and Chelsea because her sole intention was that the property be purchased for Corey and Chelsea.
When Christine was asked what she says was the beneficial ownership of the Westbrook property upon an assumption that the arrangement with Corey and Chelsea fell through, she gave the following evidence: "If their arrangement fell through, I would probably say that if the property was to be sold, that Graeme [the deceased] and I would share in those [proceeds] 50:50."
It is a (but not inevitable) small step from this evidence to a finding that, as between Christine and the deceased, there was a "joint endeavour" for the purchase of the Westbrook property for the benefit of Corey and Chelsea and, residually, for Christine and the deceased in equal shares.
Any difference between Christine and the estate of the deceased regarding their respective beneficial entitlements to the Westbrook property is, as in the case of the Kurri Kurri property, diminished by Christine's offer to submit to orders under sections 66 and 92 of the Succession Act adjusting their rights to provide for the estate to receive an interest in the Westbrook property, or the net proceeds of a sale of that property, in lieu of its interest in the Bishops Bridge property.
Christine and the estate of the deceased are at issue in their debate about beneficial entitlements to the Kurri Kurri and Westbrook properties, and about what family provision orders might be made affecting those properties and the Bishops Bridge property, in part because of contentions by Suzanne to the effect that all three properties should be sold and orders should be made for a fair distribution of sale proceeds between the estate of the deceased, Christine and Corey so as to do "justice between the parties". Christine, for her part, is anxious to remain in occupation of the Bishops Bridge property, still her family home, where she and her father live.
In closing submissions Suzanne submitted that, if orders were to be made providing for Christine to have a residence, she could take up residence on the Kurri Kurri property so as to facilitate a sale of the Bishops Bridge property. Through her counsel, Christine objected to any embrace of such a proposition in circumstances in which (as is the case) she was not cross-examined about the suitability of the Kurri Kurri property is a place of residence for her.
The second "joint endeavour" is said by Suzanne to have been between the deceased and Christine on the one part and Corey and Chelsea on the other part.
It is said by Suzanne to have been a joint venture, formed at the time of the purchase of the Westbrook property, which came to a premature end, without attributable blame, with the separation of each of the two couples in mid 2019 or, alternatively, with the death of the deceased on 31 May 2020.
In the broader scheme of the proceedings, the real dispute here appears to be: 1. between the estate of the deceased (upon an assumption that it has an interest in the Westbrook property) and Corey, in circumstances in which Christine largely accepts that Corey has made out his case for a transfer of the property to him and Suzanne seeks to limit any grant of equitable relief to him; and 2. whether Corey has an entitlement, in equity, to enforce an arrangement for him (and Chelsea) to acquire title to the Westbrook property or he is to be left to an equitable charge for monies paid by him (and Chelsea) in reduction of the mortgage over the property and for improvements effected by him to the property or something else less than full ownership of the property.
Suzanne submits that, in consequence of the second joint venture coming to a premature end, the Court can, and should, craft relief, by way of a remedial trust, incorporating financial adjustments that would give Corey (and Chelsea), against Christine and the deceased (as beneficial co-owners of the Westbrook property) an 18% interest in the property and an equitable charge for a net small amount.
An assessment of the correctness or otherwise of Suzanne's submissions about the Westbrook property requires an appreciation of the case sought to be made by Corey. That is because it is common ground between all parties that there was some arrangement favouring Corey and Chelsea at the time the property was purchased. The focus of disputation is upon identification of the terms of that arrangement, consideration of its operation and analysis of the consequences of its making and operation.

Corey's (Second) Cross Claim

In essence, Corey contends that, by operation of principles governing estoppel (relying principally upon Giumelli v Giumelli (1999) 196 CLR 101 and Sidhu v Van Dyke (2014) 251 CLR 505, amongst other cases), he is entitled, as against Christine and the estate of the deceased, to a declaration (with consequential relief in support of the declaration) that Christine holds the Westbrook property on trust for him, subject to a payment by him to Christine (and, should the Court so find, the estate of the deceased) of a sum of money designed to give effect to the parties' arrangement.
In final submissions Corey invited the Court to make orders that: 1. allow Corey to arrange finance to repay debt secured on the Westbook property; 2. require Christine to transfer title of the property to Corey; 3. require Corey to repay to Chelsea her contributions to the mortgage repayments on the Westbrook property loan; and 4. require Corey to indemnify Christine against any capital gains tax imposed on her as a result of the transfer of the Westbrook property to Corey.
The main opposition to Corey's case comes from Suzanne, representing the estate of the deceased. Christine's opposition was essentially formal.
Upon settlement of the purchase of the Westbrook property, Chelsea and Corey occupied it as their place of residence pursuant to an arrangement between them (on the one hand) and (on the other hand) Christine and the deceased.
In broad terms, the arrangement was that the title to the property would be transferred to Chelsea and Corey when they were able to borrow funds to refinance the purchase, perhaps after saving for that purpose for three years or thereabouts and in the meantime servicing the mortgage debt secured against the property. They relied upon that arrangement in purchasing the property through Christine on the basis that they would be responsible for repayment of the mortgage debt and in servicing the debt, making improvements to the property and desisting from making other property arrangements.
Counsel for Corey submits that the nature of the arrangement was such that it could have been structured as a purchase in the names of Corey and Chelsea with funds borrowed for the purchase secured by a mortgage over the property and guarantees given by Christine and the deceased, secured over the Bishops Bridge and Kurri Kurri properties.
Christine was not prepared to contemplate such a structure because, while she was prepared to assist Chelsea and Corey, she did not want the transaction to be presented as a gift to them as she perceived it would be seen if they were on the title to the property upon purchase.
When Corey and Chelsea separated in June 2019 Chelsea left the property, Corey remained living there, as he still does; and they agreed that Corey would continue servicing the mortgage debt and would pay back the contributions Chelsea had made to servicing the debt during their period of co-habitation. Ostensibly on behalf of herself and the deceased, Christine acquiesced in that arrangement.
These proceedings have been conducted on the basis that at the time of their separation Chelsea assigned to Corey any interest she had in the Westbrook property, entitling him to sue to vindicate their common interest without her joinder as a party in the proceedings. She gave evidence in support of his claim of entitlement to the property by operation of an estoppel said to be binding on Christine and the estate of the deceased by reason of a detrimental reliance upon the arrangement pursuant to which Corey and Christine occupied the property.
During the course of the hearing of the proceedings all parties agreed that it was not necessary for Chelsea to be joined in the proceedings in circumstances in which the Court: 1. noted an undertaking to the Court given by Corey that, should the Court find that he and Chelsea have a beneficial interest in the Westbrook property, he will submit to an order that he pay back to Chelsea her contributions to repayment of any debt secured over the property; and 2. reserved to Chelsea liberty to apply, should she be so advised, for such, if any, orders as may be necessary to enforce that undertaking.
It is agreed between all parties that Corey and Chelsea have made payments on the Westbrook mortgage (representing payments of principal and interest) in the total sum of $141,001, of which Corey has paid $116,646 and Chelsea has paid $24,355. (As Corey continues to make payments on the mortgage, quantification of payments made by him may need to be updated before judgment is entered).

Property Ownership as Between Christine and the Deceased

Christine acquired co-ownership of the Bishops Bridge property and legal title to the Kurri Kurri and Westbrook properties in circumstances in which she had what appeared to all intents and purposes to be a stable de facto relationship with the deceased (which began in 2002 and lasted until about mid-2019) in support of which they co-mingled their resources and subjected themselves to joint liability on mortgages securing borrowings which funded the construction of their home on the Bishops Bridge property and the acquisition of the Kurri Kurri and Westbrook properties.
Although the deceased transferred a one-half share in the Bishops Bridge property to Christine for "nil" consideration as recorded in the memorandum of transfer, she subsequently (in 2009) brought to the relationship the net proceeds of sale of the residence in which she lived (in Camden South) before, at the invitation of the deceased, she moved to Bishops Bridge.
In economic terms, the deceased brought to the relationship, inter alia, the one half share in the Bishops Bridge property that he transferred to Christine (less the mortgage debt that was refinanced at the time of the transfer); $91,000 of an inheritance of about $129,760 he received from the estate of his late mother in May 2018 or thereabouts (part of which inheritance was used to repay the $40,000 loan made to the deceased by his parents when he purchased the Bishops Bridge property in 1994); no less than about $100,000 of $130,660 he received from his employer Ausgrid when he retired in January 2018; joint liability on the mortgage debt incurred in constructing their "matrimonial home" on the Bishops Bridge property; contributions to servicing the parties' mortgage debt and payment of household expenses; and acquiescence in allowing the Bishops Bridge property to be used as collateral security for loans taken out by Christine in the purchase of the Kurri Kurri and Westbrook properties.
Between 2 August 2019 and 2 January 2020 the deceased withdrew $435,000 from his superannuation plan. What became of that money is unclear. A letter dated 2 April 2020 addressed to the deceased by the Commonwealth Bank of Australia suggests that between 10-23 February 2020 he lost a total of $86,140 to scammers in 11 transactions in which he had been asked for money. Suzanne could take the story no further. The deceased did not confide in her the fact or nature of any extraordinary expenditure on his part which would have been necessary if an application of the superannuation money is to be explained.
Christine moved from her home in Camden South (where she was settled with Chelsea) to the Bishops Bridge property to accommodate the deceased. That move necessitated construction of a residence on the Bishops Bridge property because, at the commencement of the couple's relationship, the only accommodation on the property was a shack.
In economic terms, Christine brought to the relationship, inter alia, acceptance of liability on the mortgage debt incurred in refinancing the loan of the deceased secured against the Bishops Bridge property (involving a borrowing of $135,000) and a separate loan (of $345,000) to finance construction of the parties' residence on the property; in 2009, the net proceeds of sale of her Camden South property of about $130,000; contributions to servicing their joint mortgage debt and payment of household expenses; and whatever benefits flowed to her, as a member of the same household as the deceased, from her purchase of the Kurri Kurri and Westbrook properties. In 2007 her parents funded the construction of a garage on the Bishops Bridge property which was converted into a granny flat for them to live in. Following the death of her mother in November 2012, her father continues to reside there.
The respective financial contributions of Christine and the deceased to their relationship are not readily able to be quantified with precision although Christine made arrangements for the purchase of the Kurri Kurri and Westbrook properties, and managed them after purchase, servicing the mortgage debt secured over the Kurri Kurri property and managing the mortgage debt over the Westbrook property, funded by payments received from Corey and Chelsea on account of that debt.
In the case of each of the three properties (Bishops Bridge, Kurri Kurri and Westbrook) decisions made about the state of the legal title were made deliberately and by agreement between the parties. The deceased deliberately transferred one half share in the Bishops Bridge property to Christine as a means of facilitating borrowings to construct the residence the building of which was an inducement for Christine to move to the property. The Kurri Kurri property was purchased in Christine's name, with the agreement of the deceased, because she regarded it as her "superannuation" and, objectively one might infer, because it provided an opportunity for her to obtain the benefit of negative gearing. The Westbrook property was purchased in the name of Christine because, although the deceased engaged with Corey and Chelsea in their move to the property, the purchase of the property and arrangements for funding the purchase were organised by Christine with the primary intention of serving the interests of Chelsea and Corey rather than those of the deceased and herself and (on Christine's evidence, which I accept) the deceased did not want his name to be on the title.
The deceased did not during his lifetime lay claim to ownership of the Kurri Kurri property or the Westbrook property. As Christine acknowledges, both properties were in the pool of assets that might have been the subject of an adjustment of property rights in the event of a formal property settlement, but the only property to which the deceased laid claim as his was the Bishops Bridge property.
Throughout their relationship until early 2018 they both worked. The deceased was qualified as an electrical fitter. Christine worked as a member of staff in a solicitor's office until she herself qualified as a solicitor and worked as an employed solicitor until December 2019 after which (in February 2020) she went out on her own as a sole practitioner. In January 2018 (after he had suffered strokes in 2008 and 2017) the deceased was medically retired from his employment with Ausgrid. He preferred retirement to Ausgrid's offer of continuing employment on light duties.
That was perhaps a turning point in the deterioration of both his health and his relationship with Christine. In his retirement he became inactive and reclusive. He suffered from depression and diabetes. He turned to marijuana and alcohol for relief. By mid-2018 Christine noticed a change for the worse in his behaviour as he became less motivated to attend to the affairs of daily living and prone to bouts of anger.
At the beginning of their relationship Christine and the deceased earned incomes which were substantially in parity. However, as Christine qualified and then (from December 2008) practised as a solicitor her income began routinely to exceed that earned by the deceased. There is no suggestion that that fact was a factor in deterioration of their relationship. What is said by Suzanne is that it was a factor in decisions made for the acquisition of the Kurri Kurri and Westbrook properties in Christine's name alone because, for tax purposes "only", the purchase of those properties could be "negatively geared".
An opportunity for negative gearing might have presented itself upon the purchase of the Kurri Kurri property (as an investment, rental property), and possibly but less so the Westbrook property, acquired as a means of assisting Corey and Chelsea on the basis that they pay off the mortgage rather than pay rent. However that may be, opportunities for negative gearing are but one factor in the "surrounding circumstances" bearing upon the intention of the parties upon acquisition of the Kurri Kurri and Westbrook properties.
Whether Christine in management of her own affairs brought to account as income, for the purpose of claiming interest payments as tax deductions, is beside the critical point in these proceedings that, as between Christine, Corey and Chelsea, the payments made by Corey and Chelsea were payments (of principal and interest) off the mortgage debt secured on the Westbrook property, not rent for occupation of the property.
Christine's evidence is that it was with the deceased's agreement that she purchased the Kurri Kurri property in her name alone because she intended, and he accepted, that it would provide her with an element of economic security upon her retirement as a solicitor in sole practice.
Suzanne submits that that evidence should not be accepted, essentially because it should be regarded as self-serving and treated with caution because of the absence of evidence from the deceased to test its veracity.
I accept Christine's evidence as that of a witness of truth and because, objectively, her version of events is inherently plausible. She held a common belief in a perceived need to make provision, via an investment property, for retirement. The property was purchased with borrowed funds, providing an opportunity for negative gearing: rental income and tax deductions. There was, at that time, no breakdown in the relationship between the parties although I recognise that, after his separation from Christine in 2019, the deceased represented to his sisters (including Suzanne) that the relationship was on the rocks well before separation.
I am not dissuaded from acceptance of the evidence of Christine by cross examination of her on records of her mortgage broker that suggest that, in negotiations with the Commonwealth Bank for loan funds, both the Kurri Kurri property and the Westbrook property were purchased in the name of Christine alone for "tax purposes" but were in reality joint investments of Christine and the deceased. In the absence of evidence from the broker, I accept Christine's account of her dealings with the deceased, Chelsea and Corey without intending criticism of the broker's attempts to characterise transactions in a manner acceptable to the bank.
In my assessment, the fact that the Bishops Bridge property and personal guarantees of the deceased were offered as collateral security for funds borrowed on the primary security of the Kurri Kurri property is not, of itself, a reason for a determination that the Kurri Kurri property was purchased by Christine on trust for herself and the deceased. The state of the title to each of the three properties was agreed by the parties for a particular reason. The Bishops Bridge property was a "matrimonial home". The Kurri Kurri property was an investment property for the benefit of Christine, albeit that rental income was banked in a joint account. The Westbrook property was a property purchased for the benefit of Chelsea and Corey.
There is no need to make a formal determination of competing equitable entitlements to any or all of the three properties because: 1. each of the three properties is within the reach of orders able to be made under Chapter 3 of the Succession Act; 2. I am satisfied that Christine has been left without adequate provision within the meaning of section 59(1)(c) of the Succession Act and that an order for provision should be made in her favour under section 59(2) of the Act; 3. each of the properties is amenable to adjustment orders made under sections 66 and 92 of the Succession Act; and 4. orders for the transfer or sale of the properties can be made on an exercise of jurisdiction under the Succession Act.
For reasons to be explained, I propose to make an order under Chapter 3 of the Succession Act on terms that involve adjustment orders affecting the Kurri Kurri and Westbrook properties. That will involve an order, on terms, that the estate of the deceased transfer its interest in the Bishops Bridge property to Christine and, on terms, orders for disposition of the Kurri Kurri and Westbrook properties, accommodating the interests of Corey and Chelsea in relation to the Westbrook properties. Any declaration that the properties, or any of them, are held on trust for the estate of the deceased or are the subject of an equitable charge in favour of the estate will be subsumed in the Court's family provision orders.

Corey's Claim to the Westbrook Property

Although he refined his claims for relief in final submissions (as has been noted previously), in his cross claim Corey claimed: 1. a declaration that Christine holds the whole of her interest in the Westbrook property on trust for Corey. 2. a declaration that any interest that Suzanne, as the executrix of the deceased, holds in the Westbrook property is held on trust for Corey. 3. an order that Christine (and Suzanne as executrix of the deceased's estate) transfer the legal title to the Westbrook property to Corey subject to all existing encumbrances noted on the title.
In essence, Corey seeks an order that the legal title to the Westbrook property be transferred to him subject to the mortgage in favour of the Commonwealth Bank of Australia, which secures an advance by the Bank to fund the purchase of the property.
The factual substratum of Corey's claim is pleaded in his cross claim in terms that, in large measure, are admitted by Christine (but disputed by Suzanne) and, in my assessment, conform to the evidence.
In or about 2010 Corey met and entered into a relationship with Chelsea. That relationship lasted approximately nine years.
Corey and Chelsea intended to marry and have children and had discussed between them purchasing a property for them to live in. This was confirmed by both Corey and Chelsea in their evidence.
They became engaged in late 2015 at or about the time of Chelsea's 21st birthday.
At about the same time Corey and Chelsea asked Christine and the deceased if they could assist them to purchase a property for them to own in the future. Recollections differ as to the precise timing of conversations but nothing turns on those differences.
At this time Corey was self-employed and Chelsea was only working part time. Neither of them had significant savings, so they did not consider that they had capacity to obtain finance to purchase a property on their own account.
Around a week or so after the request of Corey and Chelsea for assistance, Christine and the deceased agreed to assist them by obtaining a loan to purchase a property using as security for the loan "another property" owned by Christine and the deceased (as it happened, the Bishops Bridge and Kurri Kurri properties), in addition to the property that Corey and Chelsea purchased. They agreed to help Chelsea and Corey to finance their first property, in part as it was difficult for Chelsea and Corey to obtain finance on their own at that stage.
Following this, Christine and the deceased told Corey and Chelsea that, based on discussions with their mortgage broker, the maximum loan that could be obtained to purchase a property would be about $350,000.
Around December 2015, Corey and Chelsea expressly agreed with Christine and the deceased that: 1. a property would be purchased in the name of Christine (with funds borrowed on the security of the property and other security provided by Christine and the deceased) to be held for Corey and Chelsea until such time as Corey and Chelsea were able to obtain finance on their own account, at which time Christine would transfer the title to the Westbrook property to them; and 2. Corey and Chelsea would make all mortgage payments required by the Commonwealth Bank to meet amounts due for the Westbrook loan.
The parties' agreement did not include a requirement that any loan taken out to purchase the property be refinanced by Corey and Chelsea within a particular time frame. The arrangement was open ended, although a common, unarticulated expectation was that Corey and Chelsea might be able to arrange their own finance within three years or so. Not long after the expiration of three years from the time of purchase of the Westbrook property family relationships began to unravel but, by agreement with Chelsea and Christine, Corey continued in performance of, and in reliance upon, the original agreement between the parties.
In or around March or April 2016, relying upon the parties' agreement, Corey located the Westbrook property. Thereafter, Corey negotiated with the vendor's agent a purchase price of $360,000 for the Westbrook property.
The purchase of the property was completed on or about 24 January 2016.
The total amount required to complete the purchase, including stamp duty, was about $380,000 which was provided wholly by monies advanced by the Commonwealth Bank.
On account of the agreement between the parties, Christine borrowed the whole of the purchase price ($360,000) and an additional $65,000 to cover stamp duty on the purchase and payment of personal debts of Corey. It is agreed between the parties for the purpose of these proceedings that both "the purchase loan" and "Corey's personal loan" are secured over the Westbrook property.
After completion of the purchase of the Westbrook property, Corey and Chelsea lived there as their home.
Via Christine, they paid all mortgage payments due to the Commonwealth Bank for the Westbrook loan until 2019.
In or about 2019 the relationship between Corey and Chelsea ended by mutual agreement and on amicable terms, and Chelsea left the Westbrook property.
At or about the time that Corey and Chelsea separated, Chelsea, with the knowledge and consent of Christine, agreed to transfer her beneficial right, title and interest in the Westbrook property to Corey. This was confirmed by both Corey and Chelsea in their evidence and by procedural orders made at the final hearing to formalise Chelsea's role in the proceedings.
Since the separation of Corey and Chelsea, Corey has continued (via Christine) to make all mortgage payments due to the Commonwealth Bank for the Westbrook loan.
The current balance outstanding on the Westbrook mortgage is of the order of $350,000, including (on my understanding of the case) about $17,000 referable to the $65,000 "personal loan" to Corey.
In addition to funding the mortgage payments, Corey has incurred expenses in purchasing items and materials for the Westbrook property and has personally carried out capital works and improvements at the property in reliance upon the arrangement made with Christine and the deceased at the time the property was purchased.
Those capital works and improvements have included: 1. Installation of a fireplace and flue-kit. 2. Purchase and installation of a split system air conditioning unit. 3. Purchase of materials and installation of fencing to create three internal paddocks within a large paddock adjacent to the house on the property. 4. Construction of cattle yards within the paddocks on the property. 5. Construction of a timber rear deck for the house. 6. Using earthmoving equipment to dig out four springs to supply water for cattle on the property. 7. Using earthmoving equipment to construct a new driveway. 8. The pulling down and reconstruction of a boundary fence approximately 400 metres long, which required five-barbed split timber posts plus strainer posts and stays.
The evidence before the Court includes that of a local real estate agent (Mr Scott Bailey) long familiar with the Westbrook property before, and since, its purchase in the name of Christine. He confirmed, by personal observation, Corey's improvements to the property and estimated that, without those improvements, the property would be worth in the vicinity of $700,000 rather than the current (agreed) value of $875,000 - a difference of $175,000. I accept that evidence.
Corey contends that, in the premises: 1. until his separation from Chelsea, Christine held the title to the Westbrook property on trust for him and Chelsea; and 2. since his separation from Chelsea, Christine has held (and continues to hold) the title to the Westbrook property on trust for him.
In her defence to Corey's statement of cross-claim Suzanne maintains that the Westbrook property was purchased by the deceased and Christine and registered only in Christine's name for the sole purpose of using her income to take advantage of income tax benefits of negatively gearing the property; that the deceased gave a personal guarantee in support of the Commonwealth Bank loan obtained as funding for purchase of the property and agreed that the Bank's mortgage over the Bishop Bridge property be held as collateral security for the Westbrook loan; and that, after the purchase of the property, Corey and Chelsea occupied the property pursuant to an obligation to pay rent to Christine, which rent funded Christine's payment of interest or principal towards the Westbrook loan.
That the deceased provided security for the loan is not disputed. Nor is it disputed that Corey and Chelsea made payments to Christine referable to their occupation of the property. Essentially, what is denied by Suzanne is the evidence of Corey, Chelsea and Christine that the property was purchased in the name of Christine for Corey and Chelsea to acquire title to the property and to service the mortgage (albeit through arrangements made by Christine for transmission of payments to the Bank) in the meantime.
Confirmation that the property was bought for the benefit of Chelsea and Corey is found in the fact that, although the deceased helped Corey with some of the physical work required to be done on the property (reflecting their shared interest in rural activities), he left to Christine management of the legal and financial arrangements attending the purchase and administration of the "purchase loan" and Corey's "personal loan". Christine, for her part, covered for Chelsea and Corey when they needed assistance in servicing their indebtedness in a timely manner and in payment of rates. At no time was the relationship between the parties one of landlord and tenant. The payments made by Chelsea and Corey were never characterised by the parties as "rent".
I do not accept that Corey has in any material sense been guilty of delay in the performance of the obligations of Chelsea and himself in acquisition of the Westbrook property. He has substantially complied with all his obligations. In the fallout of the family breakups of 2019, Christine (to whom Corey looked in management of debts secured over the Westbrook properties) counselled him simply to continue making payments in the ordinary course, which, in substance, he did. After the deceased died, Suzanne (as is illustrated by the course of these proceedings) denied the existence of any entitlement in Corey or Chelsea to an interest in the property. He cannot be criticised by Suzanne for non-performance of an obligation the performance of which, put bluntly, she obstructed: Mahoney v Lindsay (1980) 55 ALJR 118; 33 ALR 601. Corey's evidence is that both last year (2022) and this year (2023) he has confirmed with a broker the availability to him of finance to pay out the debts owed by him on the security of the property. I accept that evidence . I accept that he was at all material times, and is, ready, willing and able to "refinance" the property as agreed at the time it was acquired in the name of Christine.
In my opinion, Corey has established an entitlement to equitable relief on the basis that: 1. The Westbrook property was acquired in the name of Christine for the benefit of Chelsea and Corey (to whom Chelsea has assigned her entitlements) in accordance with an agreement between Christine and the deceased (on the one hand) and Chelsea and Corey (on the other hand), upon which Corey and Chelsea relied, that: 1. Christine would purchase the property and be registered as its proprietor. 2. Christine would borrow from a bank the money necessary to fund the purchase. 3. Upon its purchase, the property would be the principal security for the borrowed funds. 4. Christine and the deceased would provide collateral security (including the Bishops Bridge property) for repayment of the borrowed funds. 5. As they promised to do, Corey and Chelsea would service the mortgage over the property, making payments of principal and interest via Christine. 6. As she promised to do, Christine would transfer title to the property to Corey and Chelsea when they were able to refinance the property, enabling the mortgage over it to be discharged and the security provided by Christine and the deceased released. 1. In reliance upon that agreement, and the promise of Christine that she would transfer the property to them, Corey and Chelsea duly performed what was required of them in servicing the mortgage over the property and they effected improvements to the property and forewent opportunities to acquire other property. 2. With the acquiescence of Christine (acting on behalf of the deceased and herself), Chelsea assigned her entitlements to the property to Corey. 3. Corey is ready, willing and able, on reasonable notice, to repay all monies borrowed on the security of the property and to take title to the property in his own name. 4. Corey (and Chelsea) will suffer detriment if, conditionally upon repayment by Corey of all monies owed on the security of the property, title to the property is not transferred into his name. 5. That detriment is of a significant kind and extent, not reasonably to be discounted as disproportionate to the dictates of good conscience in performance of the parties' agreement, having regard to Corey's commitment to, and development of, the property. 6. It would be unconscionable on the part of Christine and the estate of the deceased if they were to resile from the agreement pursuant to which the property was purchased in the name of Christine. 7. Christine and the deceased's estate are accordingly estopped from departing from the agreement pursuant to which the property was purchased in the name of Christine and the property is held upon a constructive trust for Corey (and Chelsea) subject to Corey's performance of his obligations under the parties' agreement: Clayton v Clayton [2023] NSWSC 399 at [534]-[543]; Galati v Deans [2023] NSWCA 13 at [53]-[60]. The relief to be granted to Corey is consistent with analysis of his entitlements in equity by reference to principles governing proprietary estoppel and a common intention trust. 8. Christine and the estate should be held to their promise to transfer title to Corey (and Chelsea) and orders should be made, in effect, for the agreement to be specifically performed: Giumelli v Giumelli (1999) 196 CLR 101 at [6] and [40]-[48]; Sidhu v Van Dyke (2014) 251 CLR 505 at [83]-[86]. 9. The fact that the property has appreciated in value since it was acquired in the name of Christine provides no justification for her or the estate of the deceased to be relieved of their promise to transfer the property to Corey (and Chelsea), upon which promise Corey and Chelsea both relied. To hold otherwise would be to confer upon Christine and the estate a windfall benefit for breaching their promise, an outcome not consistent with the dictates of good conscience (as illustrated by Zhu v Treasurer of NSW (2004) 218 CLR 530 at [128] and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at [13], which recognise that equitable remedies operate as a constraint on those who might elect to breach a promise).
In my opinion, Corey has made out his claim as refined in final submissions and is entitled in equity (as against both Christine and the estate of the deceased) to an order that the Westbrook property be transferred to him on condition that, within a reasonable time (to be appointed in final orders to be settled by the Court after publication of these reasons for judgment), he repay the debt presently secured on the Westbrook property (including the outstanding balance of the $65,000 personal loan), confirm arrangements for repayment of Chelsea's contributions, and give an undertaking to the Court to indemnify Christine against any capital gains tax liability she may have as a result of the transfer of the Westbrook property to him.
Should Corey not comply with the conditions attached to the relief granted to him, I propose that, via family provision orders to be made in favour of Christine, the Westbrook property be sold and that the net proceeds of sale be divided equally between Christine and the estate of the deceased subject to an equitable charge in favour of Corey (and Chelsea) for payment of compensation to be assessed.

Christine's Family Provision Claim

After a de facto relationship of about 17 years duration, during which she became settled in the "matrimonial home" at Bishops Bridge (the development of which to which she contributed, both financially and otherwise), Christine had a reasonable expectation that, should anything untoward happen to the deceased, she would inherit the property subject, perhaps, to an obligation to pay out loans specifically borrowed on security of the property.
That expectation ought not to be regarded as having been displaced by the circumstances in which the relationship between Christine and the deceased came to an end. The tragedy of the deceased's decline and death cannot reasonably be attributed to her. Its sufficient explanation can be found in the conduct of the deceased, explained by his deterioration in mental health.
The deceased's will made no provision at all for Christine. Viewed through the prism of the deceased's personal circumstances at the time the will was made, that is not altogether surprising. He was unwell, aggressive and resentful. He was the immediate cause of his estrangement from Christine.
Viewed through the prism of what is known today (as section 59(1)(c) of the Succession Act mandates), the question is: has adequate provision been made for Christine's proper maintenance, education or advancement in life?
In my opinion, the answer to that question is "No".
What is "adequate" and "proper" in a particular case depends on the circumstances of the case; the concepts they embody are relative to those circumstances, not governed by an abstract absolute: Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19. The words "adequate" and "proper" connote something different. "Adequate" is concerned with quantum whereas "proper" is concerned with the standard of maintenance, education and advancement in life of the applicant for relief: Devereaux-Warnes v Hall (No 3) (2007) 35 WAR 127 at [72]-[77].
Until the Court has identified what is "proper" for an applicant, it cannot assess whether provision, if any, is adequate; and what is "proper" requires an evaluative judgment that has regard to all relevant circumstances, not merely the parties' financial circumstances: Sgro v Thompson [2017] NSWCA 326 at [86].
Christine is a 59 year old self-employed woman largely dependent for income (estimated at about $9,440 per month) on her practice as a solicitor, a sole practitioner. Her principal assets (subject to the orders of the Court in these proceedings) comprise whatever interest she has in the three properties (Bishops Bridge, Kurri Kurri and Westbrook), subject to mortgage obligations secured over those properties. Her financial resources are largely tied up in her legal practice. She has superannuation entitlements of the order of $200,000.
In the context of a lengthy de facto relationship in which she made a substantial contribution to the relationship and became settled in the "matrimonial home", she is well justified in inviting the Court to regard as proper (as observed in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69) that she be treated as the widow of the deceased and that he be regarded as having been under a "duty" to ensure, to the extent to which his assets permitted him to do so, that she remained secure in her home, that she have an income sufficient to permit her to live in the style to which she had been accustomed, and that she have available to her a fund to which she might resort in order to meet any unforeseen contingencies.
Although there is force in Christine's submission it cannot be accepted without qualifications. First, care needs to be taken not to gloss the terms of section 59 of the Succession Act by the convenient terminology of "duty". Decisions made by reference to the section must always be made by reference to the language of the statute. Secondly, due respect must be given to the testamentary intentions of the deceased: Sgro v Thompson [2017] NSWCA 326; Bassett v Bassett [2021] NSWCA 320. They cannot lightly be discounted. Informing the evaluative judgements required by section 59, the Court must be mindful of a deceased person's own assessment of duties owed to persons who might reasonably be expected to have a call on his or her bounty. Thirdly, the criteria for which section 59 provides must be applied in the context of the particular deceased estate under consideration, having regard to both its nature and value.
I am satisfied that the precondition for the making of a family provision order in favour of Christine for which section 59(1)(c) provides has been established. No provision was made for her in the will of the deceased, as it should have been if she were to be left adequate provision for her proper maintenance, education and advancement in life. Accordingly, attention turns to the discretionary judgement required to be made by reference to section 59(2) of the Succession Act: what, if any, provision ought to be made for the maintenance, education or advancement in life of Christine having regard to the circumstances at the time the order is made?
In approaching this question, the Court must endeavour to place itself in the position of the deceased, and to consider what he ought to have done in all the circumstances of the case, in light of facts now known, treating him as wise and just, rather than fond and foolish (In Re Allen [1922] NZLR 218 at 220-221; 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), making due allowance for current social conditions and standards (Goodman v Windeyer (1980) 144 CLR 490 at 502; Andrew v Andrew (2012) 81 NSWLR 656) and, generally, consulting the criteria set out in section 60(2) of the Succession Act: Bassett v Bassett [2021] NSWCA 320.
In my opinion, a wise and just testator in the position of the deceased, viewing all the circumstances of the case in the current light and having regard to community standards, would favour provision being made for Christine that enables her to acquire an unencumbered fee simple in the whole of the Bishops Bridge property, accepting that adjustments should be made to her interests in the Kurri Kurri and Westbrook properties to enable that to be done in a manner that disengages all interested parties.
Subject to allowing the parties an opportunity to be heard as to the form of the Court's orders I propose to make orders to the following effect in disposition of Christine's family provision application, taking into account the state of the title to the Bishops Bridge property (and the respective contributions of Christine and the deceased to the acquisition and development of that property) and the nature and scope of the respective entitlements of the parties to the Kurri Kurri and Westbrook properties: 1. ORDER that Suzanne, as executor of the estate of the deceased, transfer to Christine the estate's interest in the Bishops Bridge property with the intent that, by operation of the Court's orders, Christine become the registered proprietor of the whole property unencumbered by the mortgage presently on the title. 2. ORDER that the Kurri Kurri property be sold and that the proceeds of sale, net of ordinary selling expenses, be applied: 1. First, in discharge of the mortgage over the Kurri Kurri property. 2. Secondly, in discharge of the Bishops Bridge property. 3. Thirdly, in payment of, or allowance for, any capital gains tax payable on the transfer of the Bishops Bridge property to Christine or the sale of the Kurri Kurri property. 4. Fourthly, in an equal division between Christine and the estate of the deceased, subject to any orders made as to the costs of these proceedings. 1. ORDER, in the event that Corey does not take title to the Westbrook property pursuant to orders made in these proceedings on his cross claim, that the Westbrook property be sold and that the proceeds of sale, net of ordinary selling expenses, be applied: 1. First, in discharge of the mortgage on the Westbrook property. 2. Secondly, in payment of any capital gains tax payable on the sale of the Westbrook property. 3. Thirdly, in payment of, or allowance for, any entitlement Corey and Chelsea may have to an equitable charge over the Westbrook property. 4. Fourthly, in an equal division between Christine and the estate of the deceased, subject to any costs orders made in these proceedings.

CONCLUSION

Upon publication of these reasons for judgment I will allow the parties an opportunity to bring in short minutes of order to give effect to the reasons.
In formal terms, although the proceedings must be viewed as a whole, it is dispositive orders might most conveniently be made on Christine's summons and Corey's cross claim, with an order for dismissal of Suzanne's cross claim.
I will hear the parties on the question of costs.

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: 17 July 2023

At a glance

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Judgment (17 paragraphs)

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Cases Cited (16)

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