Sam Wardy v Gordon Salier & Anor; William Wardy v Gordon Salier & Anor; Hassiba Wardy v Estate of late Edmond Wadih Wardy, developer and Ch 3 of the Succession Act 2006 & Anor

Issues of construction of the will 8Pursuant to s 46C of the Probate and Administration Act 1898, subject to any contrary direction in the will, and subject relevantly to s 145 of the Conveyancing Act 1919 (NSW), the burden of funeral, testamentary and administration expenses, debts and liabilities are to be borne in the order mentioned in Pt 2 of the Third Schedule to the Probate and Administration Act. Part 2 of the Third Schedule prescribes the following order for the application of assets to pay funeral, testamentary and administration expenses, debts and liabilities for a solvent estate: "... 2 Assets not specifically disposed of by will but included (either by a specific or general description) in a residuary gift, subject to the retention out of such property of a fund sufficient to meet any pecuniary legacies, so far as not provided for as aforesaid. ... 6 Assets specifically disposed of by will, rateably according to value." 9Section 46C of the Probate and Administration Act does not direct the administrator as to the order in which assets should be sold to raise moneys for the payment of debts and testamentary expenses. Instead it directs how such liabilities are to be borne as between the beneficiaries entitled to the assets described in Pt 2 of the Third Schedule with adjustments to be made between beneficiaries if assets that are not primarily liable to bear the burden of debts and testamentary expenses are applied for that purpose or where some only of assets within a particular class have been applied to bear that burden. As Campbell J said in Joyce v Cam [2004] NSWSC 621; (2004) 12 BPR 22, 231 (at [48]-[49]): "[48] Section 46C is not a provision which deals with the order in which an executor ought sell assets for the purpose of paying debts and other testamentary expenses. It is not a section which, in any final way, interferes with an executor's discretion concerning what property should be sold for the purpose of paying the debts and testamentary expenses which must be discharged in the course of administration. Rather it is a section which provides a default rule ('subject to the provisions of any Act as to charges on property of the deceased and to the provisions, if any, contained in the deceased person's will') for how the burden of debts and testamentary expenses is to be borne amongst different types of beneficiaries. In Re Tong; Hilton v Bradbury [1931] 1 Ch 202 at 212 Romer LJ said, of the corresponding provisions of the Administration of Estates Act 1925 (UK): '... there is nothing in this Act which prevents or is intended to prevent executors from paying expenses, debts and liabilities out of the first assets coming to their hands available for the purpose; and Part II of the First Schedule really only deals with the ultimate adjustment of the burden as between the parties becoming entitled to the testator's estate.' Those remarks were quoted with approval by Lord Hanworth MR in Re Worthington; Nichols v Hart [1933] 1 Ch 771 at 776, and affirmed in that case by Romer LJ at 778. They were quoted in The Roman Catholic Archbishop of Melbourne v Lawlor and Others (1934) 51 CLR 1 at 28-29 by Starke J, and at 43 by Dixon J. [49] An illustration of the way in which the law about the order of application of assets does not affect the power of an executor to sell for purposes of administration whatever asset is most convenient, arises if an executor sells or retains, for purpose of administration, property which has been the subject of a specific legacy or devise. Property subject to a specific legacy or devise is a late class of property to be encroached upon for payment of debts, under the general law concerning administration of assets, when the will did not make that property available for payment of debts. It has long been established that if an executor sold property which was the subject of a specific legacy or devise, or kept such property in case it needed to be sold for payment of debts, then the legatee is entitled, by a process of adjustment of the rights of beneficiaries between one another, to be put into the position he would have been in if the property the subject of the specific legacy had not in fact been sold, or kept in case it needed to be sold. In Ewer v Corbett (1723) 2 P Wms 148; 24 ER 676 Sir Joseph Jekyll MR said (at 149 of P Wms; 676 of ER), of a situation where an executor had sold a specifically devised leasehold term: '... an executor, where there are debts, may sell a term, and the devisee of the term has no other remedy, but against the executor, to recover the value thereof, if there be sufficient assets for the payment of debts.'" 10The application of the Third Schedule is subject not only to any contrary indication in the will, but to the provisions of any Act as to charges on property of the deceased. Section 145(1) of the Conveyancing Act provides: "(1) Where a person ... disposes of: (a) property, which at the time of his or her death is charged with the payment of money ... ... and the deceased has not by will, deed, or other document signified a contrary or other intention, the property so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the charge; and every part of the property, according to its value, shall bear a proportionate part of the charge on the whole thereof." 11Subject to the operation of s 145(1) of the Conveyancing Act on the apportionment of a mortgage debt, the deceased's debts and testamentary expenses are to be borne by those entitled to the residuary gifts of realty and personalty, proportionately to the value of realty and personalty, in accordance with cl 2 of Pt 2 of the Third Schedule to the Probate and Administration Act. Prima facie, the burden of such liabilities is to be borne by Hassiba Wardy in respect of her entitlement to the personal estate under clause 4, and by the deceased's six children in respect of their entitlement to "the residue of my real estate property" under clause 3(v). This would mean that the gifts in clause 3(i), (ii), (iii) and (iv) would not bear the burden of debts, testamentary and administrative expenses and liabilities unless the residuary estate is insufficient. 12Mr Loofs who appeared for Sam Wardy, submitted that the gift in clause 3(v) of the "residue of my real estate property" did not fall within clause 2 of the Third Schedule, but within clause 6. He submitted that clause 3(v) was a specific gift of such other pieces of real property as the deceased might own at his death. If so, according to the argument, the gift of personal estate in clause 4 of the will would bear the primary burden of debts, testamentary and administrative expenses and after it was exhausted, those debts and testamentary expenses would be borne between each of the gifts of real estate in clause 3(i)-(v) rateably according to value. Mr Loofs submitted that the gift in clause 3(v) was a specific gift, although described in general terms. He referred to Stewart v Denton (1785) 4 Doug 219; 99 ER 849 (at 850) where a bequest of "all his stock in trade of wines and spirit as liquors which he shall be possessed of at the time of his death" was held to be a specific bequest, and Springett v Jennings (1871) LR 6 Ch App 333 (at 335) where the gift was of "all the rest" of the deceased's property in a particular parish was held to be a specific gift and not a residuary gift. 13I do not accept this argument. It is true that the use of the word "residue" does not necessarily preclude a gift from being specific. If a willmaker leaves a chair to A, the residue of his furniture to B, and the residue of his estate to C, the gift to B is specific. B is entitled to all of the rest of the deceased's furniture that he owns at death. Such furniture does not pass to C and is within clause 6 and not clause 2 of Pt 2 the Third Schedule. It is the hallmark of a specific gift that it is liable to ademption if the willmaker disposes the property the subject of the gift during his or her lifetime. That is why the gifts in clause 3(i), (ii), (iii) and (iv) are all specific gifts, but the gifts in clause 3(v) and 4 are not. The gift in clause 3(v) is not a specific gift of a particular class of goods or investments or property in specific locations otherwise identified by general words. In such a class of case of which Stewart v Denton and Springett v Jennings are examples, there is a sufficiently specific description of property that it can be seen that if the testator disposed of the property in his lifetime, the gift will fail. By contrast, the gift in clause 3(v) is wholly general. 14Mr Loofs also argued that the testator intended that the recipients of the gift in clause 3(v) should not bear the primary burden of debts and testamentary expenses because the clause provided for those recipients to receive delivery of the residue of the testator's real estate property for their own use and benefit absolutely. This intention would be defeated if the property was primarily liable for the payment of debts and testamentary expenses. 15This was a submission that by his will Edmond Wardy had given a contrary direction as to how the burden of debts and testamentary expenses was to be borne. I do not accept that submission. The phrase that a recipient of a gift would receive it for his or her "own use and benefit absolutely" was used to distinguish between an absolute gift on the one hand, and a gift of a limited estate on the other. Each of the gifts in clauses 3(i), (ii), (iii), (v) and 4 was said to be given to the recipient for his or her own use and benefit absolutely. In contrast, clause 3(iv) made a gift of the Cleveland Street property to Hassiba Wardy for her life with remainder to her sons. The clause then provided that after Hassiba Wardy's death, that property was to be given to Anthony, Roger and Robert Wardy for their own use and benefit absolutely. After Hassiba Wardy's death they become entitled to an estate in fee simple as distinct from an estate in remainder. The words relied on related to the extent of the estate each person was to receive, not to how the burden of debts and testamentary expenses should be borne between beneficiaries. 16To displace the operation of Pt 2 of the Third Schedule it must appear that the willmaker intended to displace the statutory order and the will must indicate in what way the burden of debts and liabilities is to be borne or apportioned (University of Western Australia v WA Trustee Executor and Agency Co Limited (1961) 105 CLR 71 at 95; Re Healey (deceased); Ebert v Healey [1968] 2 NSWR 35 at 37-38; Ebert v Healey [1969] 2 NSWR 68 at 73-74). In this case the will does neither. 17Accordingly, except to the extent that mortgage liabilities are apportioned, debts, liabilities, funeral and testamentary expenses are first to be borne rateably by those entitled to the residuary gift of real estate in clause 3(v) and by the residuary gift of personalty. 18Contracts for the sale of the Cleveland Street, Redfern property and a property at Mitchell Road, Alexandria (which was part of the residuary realty the subject of clause 3(v)) were exchanged on 16 November 2012. Part of the proceeds of sale have been applied in paying a debt owed by the deceased to the ANZ Bank of $504,107.44. This was the amount owed at death. Interest was also paid up to the discharge of the debt. The debt has been described as being owed under an "Equity Management Account". The debt was secured by mortgages over the properties at Milroy Avenue, Kensington; South Dowling Street, Surry Hills; George Street, Redfern; Coogee Bay Road, Coogee; and Stanmore Road, Enmore, but not Cleveland Street, Redfern and Mitchell Road, Alexandria. Pursuant to s 145(1) of the Conveyancing Act the burden of the deceased's liability to the ANZ Bank in respect of this debt is to be borne proportionately by those entitled to the mortgaged properties according to their value. 19Land tax is a charge on the real estate to which it relates and is to be borne by those entitled to the respective properties. Income tax and GST incurred in respect of the renting of real estate is to be borne by those entitled to the properties (or in the case of the Cleveland Street property, by Hassiba Wardy). 20The estate's accountant estimated that capital gains tax of $378,170 was incurred on the sale of the Mitchell Road, Alexandria property and capital gains tax of $854,734 was incurred on the sale of the Cleveland Street property. Clearly the capital gains tax liability on the sale of the Mitchell Road property is to be borne by those entitled to the residue of realty. There is a question whether Hassiba Wardy and her sons should bear the burden of capital gains tax following the sale of the Cleveland Street property. 21The Cleveland Street property was sold to put the administrator in funds to pay debts. The Cleveland Street property and the property in Mitchell Road, Alexandria were sold with the approval of the Court. The reason those properties were sold was that they were the only properties that were unencumbered by a mortgage to the ANZ Bank. The mortgage to the ANZ Bank secured not only the debt under the equity manager account, but also a debt of approximately $3.5 million owed by the deceased and Linevale to the Bank. As between Linevale and the estate, Linevale is primarily liable for that debt. If one or more of the mortgaged properties had been sold, the ANZ Bank would have required the proceeds of sale to be applied in reduction or discharge of its mortgage. Not only would the administrator have needed the consent of the ANZ Bank to the sale of any one property if the proceeds of sale of that property were not sufficient to discharge the entirety of the mortgage debt, but the estate would then have needed to rely upon rights of subrogation to the ANZ Bank's mortgages over properties owned by Linevale which would further have complicated an already complicated administration. 22Because the Cleveland Street property was sold rather than properties falling within residue that come within clause 2 of the Third Schedule being sold, it will be incumbent on the executor to acquire substitute property to be held on the trusts established by clause 3(iv) of the will (Joyce v Cam at [55]). 23Tied up with the question of who should bear the burden of the capital gains tax payable on the sale of the Cleveland Street property is the question of how much need be spent from the sale of residuary assets to provide a substitute property or investments for the benefit of Hassiba Wardy for her life and thereafter for her sons. 24Unless the will makes contrary provision, the capital gains tax payable following the sale of the Cleveland Street property was an administration expense, the burden of which is to be borne rateably by those entitled to the residual gifts of realty and personalty. No charge arises over any property to secure the payment of capital gains tax. Capital gains tax was payable on the disposal of the property by the administrator. It is true that if that asset had not been sold and the property had passed to the beneficiaries (Hassiba Wardy and her sons), capital gains tax would not have been payable until they disposed of the property (or until Hassiba Wardy's sons disposed of the property after her death if it had not been sold beforehand). On such a sale of the property by the beneficiaries the capital gain would be determined having regard to the initial cost incurred by Edmond Wardy when the property was purchased. Hence, the burden of capital gains tax would ultimately have fallen on the beneficiaries under clause 3(iv) when the property was eventually sold. Counsel for John Wardy submitted that for this reason the burden of capital gains tax arising from the sale of a property by the administrator should be borne by the beneficiaries under clause 3(iv). This would mean that instead of the executor's being required to acquire a substitute property or investments to the value of $5,150,000 using proceeds to be obtained from the realisation of property forming part of the residuary estate, only $4,295,266 (or $4,183,977 being the net proceeds of sale of the Cleveland Street property after selling costs less capital gains tax) would need to be applied in that way. 25I do not accept that argument. It does not accord with the requirements of s 46C of the Probate and Administration Act. Capital gains tax is a testamentary or administration expense the burden of which is to be borne in the manner provided for by Pt 2 of the Third Schedule to that Act. The fact that there might be a financial benefit to Hassiba Wardy and her sons arising from the fact that the administrator sold the Cleveland Street property if they would otherwise have sold the property themselves after administration was complete does not alter the operation of s 46C. In any event, that financial benefit might be long delayed. There would never be such a financial benefit to Hassiba Wardy if the property were retained during her lifetime. 26Counsel for John Wardy submitted that the will showed a contrary intention that displaced the operation of Pt 2 of the Third Schedule. Clause 3(iv) provided that Hassiba Wardy should pay from the rents and profits of the Cleveland Street property "all liabilities (such as rates, taxes, charges and other expenses) in connection with the said property". Counsel submitted that capital gains tax payable on the sale of the property by the administrator was a tax "in connection with the said property" and clause 3(iv) showed the testator's intention that the burden of that tax should be borne by Hassiba Wardy. 27I do not agree with that construction of clause 3(iv). The liabilities referred to in that clause were amounts to be paid from rents and profits derived from the property. Read in context, the liabilities referred to were those which would arise from the holding of the property and the deriving of rents and profits from it. This would include income tax payable on the net rents derived from the property and land tax. Clause 3(iv) assumes that the property would remain part of the estate until delivered to the beneficiaries under that clause on the youngest of Anthony, Roger and Robert Wardy attaining the age of 21 years.

Gift in clause 3(i) 28By clause 3(i) of the will Hassiba Wardy inherits the family home in Milroy Avenue, Kensington. Its estimated value is $1,500,000.

Gift in clause 3(ii) 29By clause 3(ii) William, John and Sam Wardy inherit a property at South Dowling Street, Surry Hills. It has been appraised as having a value of between $3 million and $3.5 million. For the purposes of determining the value of the benefits that William and Sam Wardy will receive under the will, I take the midpoint of that appraisal of $3,250,000. 30Rents collected on the South Dowling Street, Surry Hills property up to the time of hearing less expenses including land tax totalled $265,428 (Elwin, 2 August 2013, Annexure A, p 6). The amount of tax paid or payable in respect of this net income was $102,327. Each of John Wardy, William Wardy and Sam Wardy is entitled to approximately $54,367 in respect of the net rents collected after tax. 31If the South Dowling Street property were sold for the mid-point of the range of values attributed to it, the estimated capital gains tax that would be payable on the sale is $649,425. It is unlikely that the property would need to be sold by the executor for purposes of administration. There is more than enough residuary estate to reinstate the gift in clause 3(iv) and pay outstanding debts and expenses. The adjustment of beneficial entitlements by reason of the estate's assets being applied in the payment of debts and expenses differently from the statutory order should not require the sale of the South Dowling Street property. Capital gains tax will not be payable on the transfer of the property by the executor to the beneficiaries. But it is clear that at least William and Sam Wardy will require the property to be sold. The beneficiaries will incur the liability for capital gains tax as well as selling expenses. I take the likely selling expenses (real estate agent's commission and legal fees) to be $80,250 in accordance with the estate accountant's estimate of commission at 2.5 per cent and $1,500 legal costs. 32The gross value of the gift in clause 3(ii) to each of Sam, John and William Wardy is taken to be $894,475, (($3,250,000 + $265,428 - $102,327 - $649,425 - $80,250) ÷ 3 = $894,475). By gross value I mean the value before adjustments to reflect the burden of debts to be borne by this class of gift, i.e. the burden of the mortgage debt.

Gift in clause 3(iii) 33By clause 3(iii) John Wardy inherits the deceased's interest in a property in New Canterbury Road, Dulwich Hill that has an estimated value of $550,000. John Wardy owned the other half interest in that property in co-ownership with his father.

Gift in clause 3(iv) 34By clause 3(iv) the deceased gave Hassiba Wardy a life interest in a property in Cleveland Street, Redfern with the remainder to the sons of his second marriage, Anthony, Roger and Robert. That property was sold by the administrator to provide funds for the payment of debts. The property was sold at auction for $5,150,000. The net proceeds of sale that were received amounted to $5,038,711. Capital gains tax payable as a result of the sale of that property was estimated to be $854,734. 35For the reasons in paras [28]-[34] above the capital gains tax payable in consequence of the sale of the Cleveland Street property is an administration expense to be borne by those entitled to the residuary estate. The expenses of sale are also an administration expense. The executor will be required to apply the residuary estate to acquire substitute property to provide income to Hassiba Wardy for her life with remainder to her sons. (The amount to be so expended would be reduced if the residuary estate were insufficient to meet all debts, funeral, testamentary and administration expenses. In that event the specific gifts in clauses 3(i)-(iv) would bear the burden proportionately. That will not be the case.) 36Between 19 July 2009 and 2 April 2013 the Cleveland Street property generated a total net rental income of approximately $1,055,000. The tax paid or payable in respect of this income was approximately $415,000. The net amount to which Hassiba Wardy is entitled from the rents collected on the property after payment of tax is approximately $640,000. 37In their submissions the parties assumed that the substitute gift should be an income-producing asset or assets to the value of either $5.1 million or that sum less capital gains tax and/or selling expenses incurred on the sale of the Cleveland Street property. On the assumption that the substitute gift should be to the value of the property sold then the residuary estate would bear the burden of a substitute gift of $5.1 million. It will be a matter for the executor to determine what is an appropriate substitute investment having regard to the interests of the life tenant and remaindermen. The pre-tax annual return on the Cleveland Street property over 3.7 years between July 2009 and April 2003 (assuming a stable capital value) was approximately 5.6 per cent, and there is no basis for assuming that a like return could not be had from a substitute investment to the same value.

Gift in clause 3(v) 38By clause 3(v) the debt of the deceased's real estate was left to his six sons in equal shares. The estate included four such properties. One was a property in George and William Street, Redfern. Initially, widely differing estimates of the value of this property were provided. The property comprises a mixed residential retail and industrial building. It has now been valued at $4.5 million exclusive of GST. 39A second property not specifically disposed of is situated in Coogee Bay Road, Coogee. It consists of two retail shops and four two-bedroom units at the rear of the property. It has been appraised as having a value of between $1.5 and 1.7 million. It is common ground that for current purposes, that property should be treated as having a value of $1.6 million. 40A third property not specifically disposed of is in Stanmore Road, Enmore. It also consists of two retail shops with rear bedroom units and has been appraised as having a value of between $1.5 and $1.8 million. It is common ground that for present purposes it should be treated as having a value of $1,650,000. 41A fourth property not specifically disposed of was in Mitchell Road, Alexandria. It was sold by the interim administrator, Mr Salier, for $1.9 million. The net proceeds of sale were $1,867,302. Capital gains tax was incurred on the sale of the Mitchell Road, Alexandria property that is estimated to be $378,170. 42The other three properties included in the gift of residue of the deceased's real estate in clause 3(v) of the will are yet to be sold. The anticipated agent's commission and legal costs on the sale of those properties have been estimated by those parties who proffered estimates of approximately $200,000 to $220,000. I will assume such costs of $210,000. The real estate forming the residue will have to be sold to provide funds to reinstate the gift to Hassiba Wardy and her sons and to meet funeral, testamentary and administration expenses. Taking the estimated mid-point in the range of values attributed to the George Street, Redfern, Coogee Bay Road and Stanmore Road properties, the estimated capital gains tax that would be payable on the sale of those properties is $924,426, $215,549, and $274,794 respectively. Hence, the capital value of the gift of the residue of real estate that can be divided between the deceased's six children (subject to payment of debts and testamentary expenses) is taken to be $7,614,363 ($4,500,000 + $1,600,000 + $1,650,000 + $1,867,302 - $378,170 - $924,426 - $215,549 - $274,794 - $210,000 = $7,614,363). 43The net rentals collected from the George Street, Redfern property, the Coogee Bay Road property, the Stanmore Road property, and the Mitchell Road, Alexandria property up to its sale totalled a little more than $1,239,000 before tax. The rate of tax paid by the estate was between 40 and 41 per cent in the financial years ended 30 June 2010 and 30 June 2011 and 30.23 per cent for the year ended 30 June 2012. The estimated rate of tax for the year ended 30 June 2013 was 44.42 per cent. Taking a rate of 40 per cent, the net rents after tax attributable to those taking the residue of realty would be in the order of approximately $743,000.

Residuary personal estate 44Under clause 4 of the will, Hassiba Wardy is entitled to all of the deceased's personal property. That property includes debts owed to the deceased by Linevale in the amount of $400,000 representing director's remuneration, payment of which had been deferred, and $62,500.57 being moneys that Linevale resolved be distributed to the estate for the financial years ended 30 June 2010 and 30 June 2011. In addition, Linevale owes the estate $634,781.88 in respect of payments made from an account in the name of the deceased towards an indebtedness of Linevale to the ANZ Bank. The total amount owed is $1,097,282.45. 45There is a dispute as to whether the deceased also left a significant amount of cash. John Wardy deposed that it was his father's practice, after collecting rents on a Saturday, to store the cash in his secure lockable cabinet (the buffet). He deposed that in the first week of May 2009, he observed a larger amount of cash than he ordinarily saw. He asked his father how much was there and Edmond Wardy said, "about $305,000". Mrs Cassimatis deposed that Hassiba Wardy said to her that she, Hassiba, had searched and could not find the original will, that she thought that John had stolen her husband's keys and robbed the house, and also stolen her husband's money. Mrs Cassimatis deposed that when she asked what money Hassiba Wardy was talking about, Hassiba said, "There was a couple of hundred thousand dollars of cash and it is now missing." Hassiba Wardy denied making those statements, but I accept Mrs Cassimatis' evidence. 46For the reasons given in my judgment in Wardy v Wardy & Ors; Estate of Edmond Wadih Wardy, I do not accept that Hassiba Wardy is a reliable witness. She had the keys to the buffet. For the reasons I there gave, I was satisfied to the requisite standard that the reason the deceased's original will could not be found was because it had been removed by Hassiba Wardy or by someone on her direction. I concluded there was a substantial amount of cash in the buffet. No such cash was provided to Mr Salier when he was appointed as an interim administrator. I conclude that Hassiba Wardy withdrew whatever was the amount of cash in the buffet. Based on her admission to Mrs Cassimatis, I conclude that she received at least $200,000 of cash. John Wardy's evidence of his father's conversation in the first week of May 2009 does not justify the conclusion that Hassiba Wardy received as much as $305,000. For the purpose of determining the value of the benefits Hassiba Wardy has received and to which she is entitled under the will, I conclude that she received cash of $200,000. 47There was also evidence that the deceased owned some motor vehicles. However, no attempt was made to put any value on those vehicles. 48There was some evidence that the deceased owned a bank account with a credit balance. John Wardy gave evidence that his father had cash in a bank account and that there were deposits in his father's name with the ANZ Bank (T310). Unless these were moneys in a superannuation fund of which Wardy SMSF Pty Ltd ("Wardy SMSF") was the trustee, any such credit balance or deposits would form part of the residuary personal estate. However, no other evidence was given about those assets and I cannot attribute a value to them. 49The deceased owned the shares in Linevale and in Wardy SMSF. There is no evidence that he owned other shares which might form part of the personal estate. The shares in Linevale and Wardy SMSF would have only nominal value as both companies are trustees. 50There is no substantial asset in the superannuation fund that could form part of the estate or be paid to Hassiba Wardy. The superannuation fund was established on 29 June 2007. On the same day Linevale entered into a deed with Wardy SMSF whereby it granted to Wardy SMSF an interest in a property at 461 Harris Street, Ultimo that was owned by Linevale. The interest was granted for the life of Edmund Wardy. Edmund Wardy signed a number of promissory notes promising to pay $1,350,000 on demand to the Wardy Superannuation Fund. The promissory notes were then endorsed back to Edmund Wardy. On Edmund Wardy's death the asset purportedly transferred to the superannuation fund ceased to exist. It seems that the whole structure was established to provide deductions to Edmund Wardy against assessable income. There is no asset of any value held for Edmund Wardy. Nor is the estate liable on any of the promissory notes. I doubt that the documents were ever intended to take effect according to their tenor, but in any event I am satisfied that the promissory notes were endorsed back to Edmund Wardy. 51I think it likely that Hassiba Wardy has received, or is entitled to receive, property under the gift in clause 4 in excess of $1,300,000 (being the debt owed by Linevale and the cash I find she received). However, it is not possible to say how much more Hassiba Wardy received or is entitled to receive pursuant to clause 4 of the will. Accordingly, for the purpose of determining the value of her entitlements under the will and in attempting to ascertain how the burden of the deceased's debts and of funeral, testamentary and administration expenses should be borne, I assume that the value of the gift of personalty in clause 4 of the will is $1,300,000. 52I therefore proceed on the basis that the value of the residuary estate (realty and personalty) is $9,657,363 ($7,614,363 + $743,000 + $1,300,000). Realty forms 86.5 per cent of the total residuary estate and personalty forms 13.5 per cent of the total residuary estate.

Liabilities of the deceased 53The deceased owed a second debt to the ANZ Bank which as at 4 May 2012 amounted to $3,548,357. Whilst the deceased was the principal borrower this debt was used as financial accommodation for Linevale. Linevale acknowledges that as between it and the estate, it is primarily liable for that debt. Because Linevale acknowledges its liability to indemnify the estate in respect of the second debt to the ANZ Bank, and because Linevale is undoubtedly good for its indemnity, the estate's liability to the ANZ Bank in respect of the second loan can be disregarded in assessing the value of the plaintiffs' entitlements under the will. 54John Wardy's solicitors advised Mr Salier that John Wardy claimed to be a creditor of the deceased in respect of a principal debt of $500,000 and interest. The interest that had allegedly accrued to 31 December 2011 was claimed to be $225,724. John Wardy's solicitor contended that he paid the deceased $1,800,000 in May 2006 of which $1,300,000 was applied as the purchase consideration of a property in Addison Road, Marrickville and the balance of $500,000 was retained by the deceased as a loan to maintain an ANZ Equity Manager account of the deceased's under its credit limit of $2 million. He contended that it was a term of the loan that the deceased pay interest at the rate charged to John Wardy by the ANZ Bank on the facility which was used to provide the loan. That claim has not been admitted by the administrator and its validity has not been determined. 55No party, including the administrator and John Wardy, included this alleged debt as a liability of the deceased in their submissions. No evidence (except the tender of the letter) and no submission was addressed to this claimed debt. Although the claim has not been expressly abandoned, I do not think I should include it as a liability. Even if the facts are as contended for by John Wardy, it may well be that the claim is statute-barred in the absence of any written confirmation or payment of the alleged debt. 56In his affidavit of 7 February 2013 Mr Salier deposed to having received notices of assessment from the Australian Taxation Office that indicated that on completion of the sale of the Alexandria and Cleveland Street properties, a total amount of $2,425,034.24 was to be paid to the Australian Taxation Office. This did not include estate returns for the years ended 30 June 2010 to 30 June 2012 (Salier 7 February, para 7, CB 4/1360). In his affidavit of 11 May 2012 Mr Salier deposed to having made a prepayment of tax in the sum of $500,000 on 3 and 16 January 2012. 57Following the sale of the Alexandria property Mr Salier paid a further $1,089,270.70 to the Australian Taxation Office. This did not include any amount with regard to penalties and interest (Salier 11 June 2013, para 7). It does not include capital gains tax on the sale of the Alexandria and Cleveland Street properties. 58The estate's accountant, Mr Elwin, estimated that the taxable income for the estate for the year ended 30 June 2013 would be $3,951,484. This included estimated total net rent of $343,717, capital gains on the sale of the Cleveland Street and Alexandria properties of $1,838,138 and $813,270 respectively, and income of $1,323,990 brought to account by reason of the remission of general interest charges. This last item arose because the Australian Taxation Office had raised a general interest charge as a result of the deceased's not having filed a tax return since the year 2000. The interest charged was included as a tax deduction in the income tax returns for the years ended 30 June 2010, 2011 and 2012, although it was not paid. As a result of representations made by the estate's accountant the ATO remitted general interest charges of $1,323,990.63 which became assessable income in the year ended 30 June 2013. There was a net deductible interest expense of $188,654 incurred in the year. 59The estimated tax payable for the year ended 30 June 2013 of $1,755,147 included an amount of approximately $857,734 for capital gains tax on the sale of the Cleveland Street property and $504,316 in respect of net assessable interest income following the remission of the general interest charge. 60I conclude that the administrator or the executor has paid or is liable to pay income tax in respect of the unpaid tax liability of the deceased of $2,093,587 ($500,000 + $1,089,271 + $504,316). This liability is to be borne by the residuary real and personal estate in the estimated proportions of 86.5 per cent and 13.5 per cent.

Funeral, testamentary and administrative expenses 61As explained at paras [24]-[27] above the capital gains tax liability on the sale of the Cleveland Street property is an administration expense also to be borne by the totality of the residuary estate. The capital gains tax was estimated to be $854,734. (Capital Gains Tax ("CGT") payable on the sale of the Mitchell Street, Alexandria property and the CGT that will be payable on the sale of the balance of the residuary realty is to be classified as an expense of realising the real property and to be borne by those entitled to realty under clause 3(v). It has been allowed for in determining the value of the realty.) 62The tax expense incurred from the collection of rental income has been allowed for in determining the value of the specific gifts of realty. 63John Wardy's solicitors claimed that he had paid funeral expenses of $11,524.85 (GAS1, p 16). I assume this is correct, and that the expense has been paid. 64Testamentary expenses have been incurred for the remuneration of Mr Salier as interim administrator, costs incurred by him and accountant's fees. The remuneration of Mr Salier was provided for by the orders made by Slattery J on 24 June 2010. He was empowered to charge remuneration in the amount of $400 per hour. On 18 February 2013 Mr Salier estimated that his costs in connection with his administration and involvement in the legal proceedings were in an amount of $186,000 plus GST. He estimated the total costs of the estate be $410,000 inclusive of GST. In his affidavit of 11 June 2013 Mr Salier deposed that he did not propose to charge any further administration fees for himself. Expenses in the form of counsel's fees would have been incurred after 18 February 2013, but I do not know their amount. 65Further testamentary expenses will be incurred when the NSW Trustee and Guardian assumes office as executor. The NSW Trustee and Guardian will be entitled to commission on capital, whether the capital is realised by Mr Salier, or by it, or is transferred to a beneficiary in specie, of $9,000 plus one per cent of the capital to the extent it exceeds $300,000. It will also be entitled to commission on gross amounts of income received of 5.25 per cent or 2.5 per cent in the case of rent that is subject to an agency charge for collection (Regulation 19). I adopt the estimate of this expense made on behalf of William Wardy of $172,000. 66Expenses have also been incurred for accountancy fees. On 11 June 2013 Mr Salier deposed to having paid the accountant's current account of $3,267. The accountant has billed the estate for a success fee of $134,561 in respect of the remission of the ATO's general interest charges. I assume that there was an agreement for payment of the success fee and that this is a further expense of the administration. Mr Salier did not give any evidence to provide a basis for disputing the amount claimed. I think a further allowance of $137,828 needs to be made for unpaid accountancy fees. 67I assume there would also have been earlier accountancy expenses that have been paid. I do not have the information as to what those expenses were. 68Slattery J ordered that the costs of the parties to the application for the appointment of an administrator pendente lite be paid out of the estate. Pursuant to that order the administrator has paid $223,897 to Hassiba, John, William and Sam Wardy. This is substantially less than the amount claimed (which totalled $542,215). Some of those parties may seek further payment from the estate by having their costs assessed. I have no means of knowing whether there may be any further payments that have to be made pursuant to the costs order made by Slattery J. The sum of $223,897 is a further administration expense to be borne out of the residuary real and personal estate in proportion to their values. 69Prima facie to calculate the value of the gifts under the will it is sufficient to allocate the burden of reinstating the gift in clause 3(iv) and the burden of unpaid liabilities and expenses to the residuary real and personal estate without regard to what assets were used to pay the deceased's liabilities and to pay the administrator's expenses. It is likely that debts and expenses were paid from the collection of rents. This does not matter because the parties' entitlements to net rental income are calculated without reference to the disbursement of the rents received. All paid debts and expenses can notionally be taken to have been paid from the proceeds of the Cleveland Street property. It is sufficient for residuary estate to reinstate that gift in the proportions realty bears to personalty. In that way the paid liabilities and expenses will be borne by the residuary real and personal estate. 70In deciding how much the residuary realty and personalty may have to contribute, there would be a double counting if there were a deduction for debts and expenses already paid as well as for the cost of reinstating the gift in clause 3(iv). The debts already paid include income tax of $1,589,271, the administrator's costs and expenses of $410,000, legal costs pursuant to the orders of Slattery J of $223,897, and, I assume, funeral expenses of $11,525. 71Approximately $6,796,878 will need to be paid to reinstate the gift under clause 3(iv) ($5,100,000), to pay the outstanding tax liabilities that are to be borne out of the residue of both realty and personalty (viz. income tax on the net assessable income with respect to the remission of the general interest charge ($504,316) and capital gains tax on the sale of the Cleveland Street property ($854,734)), to pay $200,000 for outstanding costs of the administrator and charges that can be made by the NSW Trustee and Guardian, and to pay $137,828 in respect of outstanding accountancy fees. This reduces the available residuary estate (real and personal) to $2,860,485. 72However, this is before the deduction of any further amount for legal costs of the proceedings that may be payable out of the estate. John Wardy assumed the primary burden of defending the claims for family provision orders and was made a defendant to these proceedings. He is be entitled to his costs of defending the proceedings on the indemnity basis as if he were an executor. John Wardy's solicitors estimate costs of approximately $65,000 were incurred in defending the family provision claims. This further reduces the estimated value of the residuary estate to approximately $2,795,485, being approximately $2,418,095 of residual realty and $377,390 of residuary personalty. 73The extent to which other parties will be entitled to costs out of the estate prima facie depends upon whether they are successful in the proceedings.

Mortgage debt 74As noted at para [18] the deceased owed a debt to the ANZ Bank under what was called the Equity Management Account that was secured over the properties at Milroy Avenue, Kensington; South Dowling Street, Surry Hills; George Street, Redfern; Coogee Bay Road, Coogee; and Stanmore Road, Enmore, but not by the properties at Cleveland Street, Redfern and Mitchell Road, Alexandria. The burden of the deceased's liability to the ANZ Bank in respect of that debt is to be borne proportionately, according to their values, by those entitled to the mortgaged properties. That is, by Hassiba Wardy in relation to the Milroy Avenue, Kensington property valued at $1.5 million, William, John and Sam Wardy as to the South Dowling Street property valued at $3,250,000 and by all of the deceased's children in relation to the remaining three properties passing under clause 3(v) of the will, having a value of $7,750,000. The debt was discharged out of the proceeds of sale of the Mitchell Road, Alexandria property. On a final determination of the parties' entitlements it will be necessary for there to be an accounting. This will reduce the value of Hassiba Wardy's gifts under the will by 12 per cent ($1,250,000 ÷ $12,500,000) of the principal and interest of that debt in favour of the beneficiaries under clause 3(v). The debt as at 4 May 2012 was $534,455. This reduces the value of Hassiba Wardy's entitlements by approximately $64,000. I do not know what additional adjustment there might need to be in respect of interest. The value of the entitlements of each of the beneficiaries entitled to the residuary real estate is increased by one-sixth of Hassiba Wardy's contribution to the mortgage debt (i.e. at least $64,000 ÷6 = $10,667). 75Similarly, the value of the gifts under clause 3(ii) will be reduced by 26 per cent ($3,250,000 ÷ $12,500,000) of the mortgage debt and interest. The adjustment will be at least $138,958. Again, the adjustment will be in favour of the beneficiaries under clause 3(v). The calculation of the value of the entitlements under clause 3(ii) of the will should reflect an adjustment of half that sum; being at least $69,480 or $23,160 each. (The adjustment is only an half because the beneficiaries of clause 3(ii) are half of the beneficiaries of clause 3(v) entitled to the benefit of the adjustments. 76It is arguable that the contribution to the mortgage debt by those entitled to the specifically charged properties should enure for the benefit of the whole of the residuary estate on the basis that the mortgage debt can also notionally be taken to have been paid from the proceeds of the Cleveland Street property. The consequential adjustments to the parties' entitlements under the will are immaterial. 77I therefore assess the value of the respective plaintiffs' entitlements under the will as follows: (a) Hassiba Wardy is entitled to the family home valued at $1,500,000. She is entitled to the income for life from a substitute property or investments having a value of $5.1 million. She is entitled to the net rents collected on the Cleveland Street property which after tax amount to approximately $640,000. She is also entitled to personal estate which after bearing the burden of debts, funeral and testamentary expenses and after a further adjustment for her share of the ANZ mortgage debt is estimated to be worth approximately $313,390 ($377,390 - $64,000). (b) William and Sam Wardy is each entitled to a third share of the South Dowling Street property which when realised should provide them each with funds of approximately $894,475. He is each entitled to net rents collected on that property that after tax and up to the hearing amounted to $54,367. He is each entitled to one-sixth of the residuary real estate which after the burden of debts, funeral and testamentary expenses, is estimated to be worth approximately $413,682 (($2,418,095 + $64,000) ÷ 6) = $413,683. There should be a net deduction of $23,160 each for his contribution to the payment of the ANZ mortgage debt. The resulting calculation is that their entitlements are each estimated to be worth $1,339,365 ($894,475+$54,367 + $413,683 - $23,160). 78These estimates are subject to a determination as to what further legal costs if any should be paid from the estate. 79These estimates are only that. There is considerable uncertainty about their reliability. They depend on estimates as to the value of assets. Information as to the deceased's bank accounts at death is lacking. Information required to make accurate determination as to how debt and administration and testamentary expenses should be borne is incomplete. That determination is complex.

Notional estate 80The plaintiffs contend that the assets of the Wardy family trust are liable to be designated as notional estate. At the time of hearing, Linevale in its capacity as trustee of the Wardy family trust, held parcels of land in five suburbs which were valued at approximately $16,580,000. It had liabilities in the order of $5,024,000. The net assets of the trust were in the order of approximately $11.5 million. 81The Wardy family trust was established by a trust deed made on 1 July 1998. As noted earlier, Linevale is the trustee. It had one issued share. The deceased was the sole shareholder. From 1 July 1998 until his death the deceased was a director of Linevale. John Wardy was appointed as a director on 18 December 2007. 82The trust deed has the usual features of a discretionary trust. Prior to the Vesting Day none of the "General and Remainder Beneficiaries" has any right to income or capital. The trustee has a discretion to pay any income of the Trust Fund in an Accounting Period for the benefit of all or such one or more, exclusive of the others, of the General Beneficiaries in such proportions and in such manner as the trustee in its absolute discretion may determine (clause 3.1). It is not required to pay income, but can allow income to accumulate. Any part of the income of the Trust Fund may be effectually applied for the benefit of any beneficiary by a resolution of the trustee that a sum out of, or a portion of, the income of the Trust Fund for the Accounting Period be allocated to that beneficiary (clause 3.3). By clause 5 the trustee may in its absolute discretion at any time and from time to time before the Vesting Day transfer any part of the Trust Fund or pay out of the corpus of the Trust Fund to any beneficiary for the beneficiary's own use and benefit. On the Vesting Day the trustee is to hold the Trust Fund in trust for those of the General and Remainder Beneficiaries or for charitable purposes as the trustee might in its absolute discretion appoint on or before the Vesting Day (clause 4.1). The Vesting Day is 1 July 2078. The trustee may with the consent of the Appointor appoint an earlier Vesting Day (definition of "Vesting Day"). By clause 2.2 the trustee stands possessed of the Trust Fund and the income from it in trust for all or such one or more exclusively of the others or other of the general beneficiaries in such proportions as the trustee in its uncontrolled discretion revocably or irrevocably from time to time before the Vesting Day appoints. There is no requirement in clause 2.2 that the trustee obtain the consent of the Appointor to an appointment of the Trust Fund to any one or more of the General Beneficiaries. Nor is the Appointor's consent required to a payment of income or capital pursuant to clauses 3 and 5. "Trust Fund" includes any property held from time to time by the trustee under the deed. 83Clause 14 of the trust deed provides: "14. POWERS OF APPOINTOR TO REPLACE TRUSTEE The Appointor may at any time and from time to time by deed or by notice in writing delivered to the Trustee remove any Trustee hereof in its absolute and unfettered discretion and the right to remove any Trustee hereof and to appoint new or additional Trustees hereof by deed or notice in writing is hereby vested in the Appointor PROVIDED HOWEVER that the Settlor shall not be eligible to be appointed Trustee. Such removal or appointment shall take effect from the date of such notice. The expression the 'Appointor' shall include: (a) the Appointor's legal personal representatives as from its death; or (b) any other person or company to whom the powers hereby given may be delegated in writing by the Appointor or its legal personal representatives; or (c) in the event of the resignation of the Appointor fro the time being (which shall be ineffectual unless given in writing to the Trustee) the person or company nominated by notice in writing to the Trustee by the Appointor to be the Appointor's successor in that role; or (d) if the resigning Appointor fails to make any such nomination or the position is otherwise vacant, the Trustee." 84The "General Beneficiaries" include: "(a) Edmond Wardy and Hassiba Wardy and the persons related to Edmond Wardy and Hassiba Wardy as follows, namely: (i) spouse; (ii) children; (iii) children and more remote descendants of such children; (iv) brothers, sisters, parents and grandparents; (v) children and more remote descendants of brothers and sisters; and (vi) spouses of any of the foregoing; (b) any corporation of which any one or more of the foregoing beneficiaries is a member." 85On 28 March 2008 Edmund Wardy resigned as appointor of the Edmund Wardy family trust and nominated John Wardy as the appointor of the trust. He appointed John Wardy as managing director of Linevale. Edmund Wardy remained the sole shareholder of Linevale. In my judgment of 22 March 2013 I rejected the challenge by William and Sam Wardy to the validity of the assignment of the office of appointor to the trust. As appointor of the trust John Wardy could remove Linevale as trustee by deed or by notice in writing and could appoint a new trustee by deed or notice in writing. 86The removal of a trustee would not affect a prior appointment of capital or income by the trustee under clause 2.2. Nor would it affect the validity of any resolution of a trustee to pay income or capital under clauses 3 or 5. 87Part 3.3 of the Succession Act 2006 enables the Court to make orders in limited circumstances designating property as notional estate that the deceased disposed of before death, or property that could have formed the deceased's estate had the deceased exercised a power to deal with the property before death, or property that has been distributed from the estate. 88Section 80 provides: "80 Notional estate order may be made where estate affected by relevant property transaction (cf FPA 23) (1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which this section applies. Note. The kinds of transactions that constitute relevant property transactions are set out in sections 75 and 76. (2) This section applies to the following relevant property transactions: (a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order, (b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction, (c) a transaction that took effect or is to take effect on or after the deceased person's death. (3) Property may be designated as notional estate by a notional estate order under this section if it is property that is held by, or on trust for: (a) a person by whom property became held (whether or not as trustee) as the result of a relevant property transaction, or (b) the object of a trust for which property became held on trust as the result of a relevant property transaction, whether or not the property was the subject of the relevant property transaction." 89"Property" is defined by s 21 of the Interpretation Act 1987 (NSW) as meaning any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description, including money, and as including things in action. Section 3 of the Succession Act extends that meaning by providing that property includes "any valuable benefit". 90As reflected in the note to subs 80(1) a "relevant property transaction" means a transaction or circumstance affecting property described in s 75 or s 76. Those sections relevantly provide: "75 Transactions that are relevant property transactions (cf FPA 22 (1), (3) and (7)) (1) A person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being: (a) held by another person (whether or not as trustee), or (b) subject to a trust, and full valuable consideration is not given to the person for doing or not doing the act. ... 76 Examples of relevant property transactions (cf FPA 22 (4)) (1) The circumstances set out in subsection (2), subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of section 75. (2) The circumstances are as follows: (a) if a person is entitled to exercise a power to appoint, or dispose of, property that is not in the person's estate and does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that the property becomes held by another person (whether or not as trustee) or subject to a trust or another person (immediately or at some later time) becomes, or continues to be, entitled to exercise the power, (b) if a person holds an interest in property as a joint tenant and the person does not sever that interest before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that, on the person's death, the property becomes, by operation of the right of survivorship, held by another person (whether or not as trustee) or subject to a trust, (c) if a person holds an interest in property in which another interest is held by another person (whether or not as trustee) or is subject to a trust, and the person is entitled to exercise a power to extinguish the other interest in the property and the power is not exercised before the person ceases (because of death or the occurrence of any other event) to be so entitled with the result that the other interest in the property continues to be so held or subject to the trust, (d) if a person is entitled, in relation to a life assurance policy on the person's life under which money is payable on the person's death or if some other event occurs to a person other than the legal representative of the person's estate, to exercise a power: (i) to substitute a person or a trust for the person to whom, or trust subject to which, money is payable under the policy, or (ii) to surrender or otherwise deal with the policy, and the person does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, (e) if a person who is a member of, or a participant in, a body (corporate or unincorporate), association, scheme, fund or plan, dies and property (immediately or at some later time) becomes held by another person (whether or not as trustee) or subject to a trust because of the person's membership or participation and the person's death or the occurrence of any other event, (f) if a person enters into a contract disposing of property out of the person's estate, whether or not the disposition is to take effect before, on or after the person's death or under the person's will or otherwise. (3) Nothing in this section prevents any other act or omission from constituting the basis of a relevant property transaction for the purposes of section 75." 91Section 55(3) provides: "55 Interpretation ... (3) A reference in this Chapter to a person entitled to exercise a power means a person entitled to exercise a power, whether or not the power: (a) is absolute or conditional, or (b) arises under a trust or in some other manner, or (c) is to be exercised solely by the person or by the person together with one or more other persons (whether jointly or severally)." 92Sections 75 and 76 are found in the same chapter as s 55 (Chapter 3). 93Before making an order under s 80, the matters in ss 83, 87, 88 and 89 must be satisfied or taken into account. I will deal with those matters after deciding whether there is a power to designate any of the assets of the Edmund Wardy Family Trust as notional estate. 94Mr Ellison SC who appeared for Hassiba Wardy contended that the relevant property transaction that enabled the making of an order designating the assets of the trust as notional estate was the appointment by Edmund Wardy of John Wardy as the appointor of the trust on 28 March 2008. I do not accept that argument. The appointment took place more than 12 months before Edmund Wardy's death. Whether or not the appointment was a relevant property transaction within the meaning of s 75 or s 76, s 80 would not entitle the court to make a notional estate order unless the appointment were made with the intention of denying or limiting provision being made out of Edmund Wardy's estate for the maintenance, education or advancement in life of any person entitled to apply for a family provision order. There is no reason to think that that was Edmund Wardy's intention. John Wardy said that his father was concerned that if anything happened to him (that is, his father) and he was incapacitated in some way that the other director (John Wardy) could be removed and power could shift away from the person he had chosen to administer the trust. His father was concerned to ensure that did not happen. I accept that evidence. There is no reason to think that the deceased intended to deny or limit the provision that could be made for any eligible applicant. He considered that he had provided for each of them in his will. 95Mr Loofs who appeared for Sam Wardy, supported by Mr Confos who appeared for William Wardy, submitted that the deceased entered into a relevant property transaction by omission and that omission extended up to the time of death. The omission was Edmund Wardy's failure to exercise his power as director of Linevale to cause Linevale to appoint the assets of the trust to his estate. The exercise of that power would have required the concurrence of John Wardy for so long as John Wardy was a director, but, it was submitted, it was no answer that the power might have to be exercised concurrently with another person (s 55(3)(c)). Alternatively, counsel submitted that John Wardy failed to exercise his power both as a shareholder and director of Linevale to the same end. As the sole shareholder of Linevale he could at any time have passed a resolution removing John Wardy as a director of the company and then as the sole director of Linevale he could have resolved that the trust property be appointed to himself. Mr Loofs relied on the decision of the Court of Appeal in Kavalee v Burbidge (1998) 43 NSWLR 422 and that of Bryson J (as his Honour then was) in The Estate of Webb; Molloy v Webb (28 August 1998, unreported). 96Mr Loofs submitted that John Wardy's power as appointor to remove Linevale as trustee was not an answer to the plaintiffs' claims based on the deceased's failure to exercise his power as a shareholder and director. That was so for two reasons. First, no evidence was led from John Wardy that he would have objected to the exercise of such a power by his father and taken steps to remove Linevale as trustee and to appoint a different trustee whom his father did not control. It should be inferred, so it was submitted, that John Wardy would not have so acted. In any event, Edmund Wardy could have exercised his power as sole shareholder of Linevale to remove John Wardy as a director and then resolved to appoint the trust property without prior notice, so that John Wardy would not have had the opportunity to prepare the necessary notice for the removal of Linevale as trustee and the appointment of a new trustee. 97Mr Loofs submitted that there was another way of engaging s 75(1). By reason of the omission of the deceased to exercise his power as a shareholder and director of Linevale to appoint property of the trust to himself, the other discretionary objects of the trust received a valuable benefit, which is itself property within the extended definition of s 3 for the purposes of ss 75 and 76. That valuable benefit was that there was still the potential for Linevale to appoint the trust property to them which there would not have been had the property been appointed by Linevale acting on the resolution of Edmund Wardy during his lifetime. 98Mr Loofs also submitted that the relevant property transaction came within s 76(2)(a) (being an example of a relevant property transaction under s 75(1)). He submitted that Edmund Wardy was indirectly entitled to exercise a power to appoint (and thereby dispose of) property that was not in his estate; namely the assets of the trust. He did not exercise that power before ceasing because of his death to be entitled to do so. The result was that another person (either Linevale or John Wardy) continued to be entitled to exercise that power. No consideration was given for Edmund Wardy's omission to exercise the power. 99Section 75(1) is engaged only if the omission of the deceased to exercise his power as shareholder and director of Linevale resulted in property being held by another person, or being subject to a trust, and full valuable consideration not having been given to him for not exercising those powers. The ownership of the assets of Linevale remained unchanged. Counsel for John Wardy submitted that the omission of John Wardy to exercise such powers did not result in property being held by Linevale and subject to a trust. Counsel submitted that there was a significant change in the drafting of s 75 of the Succession Act which replaced s 22(1)(3) and (7) of the Family Provision Act 1982 and that a higher standard of causation is required under the Succession Act than was held to be required under s 22 of the Family Provision Act. 100These arguments raise similar issues to those raised in Kavalee v Burbidge. There the deceased, Mr Hyland, had transferred his assets to a Liechtenstein stiftung called the Gartner Foundation. The stiftung was managed by a board of directors, but its effective control rested with the founder of the stiftung. The founder had the power under the articles of the foundation to designate the beneficiaries of the foundation and to determine on the founder's discretion if and when a distribution of income or assets of the foundation was to be made to the beneficiaries. The founder could make such distribution at any time and from time to time to any one or more of the beneficiaries who were to be designated by the founder in a special by-law. The founder's rights were transferable. A by-law was made stipulating a list of beneficiaries that was amended from time to time. The Court of Appeal held that the founder was legally obliged to act in accordance with Mr Hyland's directions (at 440.B) and Mr Hyland had the legal right to give those directions or to remove the founder and appoint a founder of his own choosing (at 440.B, 447.C, 451.F, 452.E, 457.G-458.C). 101On Mr Hyland's direction the founder made a special by-law which designated as beneficiaries of the foundation persons referred to in an earlier document of Mr Hyland's described as a memorandum of wishes. The memorandum of wishes was merely precatory, but the by-law designated those to whom the foundation's assets could be appointed. They were in the same position as objects of a discretionary trust. (See per Handley JA at 461.F). After Mr Hyland's death some moneys were paid from the assets of the Gartner Foundation to persons named in the memorandum of wishes. The issues in the case were whether the moneys so distributed and the remaining assets of the Gartner Foundation were liable to be designated as notional estate. Those questions arose under ss 22 and 23 of the Family Provision Act. Sections 75 and 76 of the Succession Act are modelled on the earlier provisions but contain differences of expression that are said to give rise to substantive differences. Sections 22 and 23 of the Family Provision Act provided: "22 Prescribed transactions (1) A person shall be deemed to enter into a prescribed transaction if: (a) on or after the appointed day the person does, directly or indirectly, or omits to do, any act, as a result of which: (i) property becomes held by another person (whether or not as trustee), or (ii) property becomes subject to a trust, whether or not the property becomes in either case so held immediately, and (b) full valuable consideration in money or money's worth for the firstmentioned person's doing, or omitting to do, that act is not given. ... (4) In particular and without limiting the generality of subsection (1), a person shall, for the purposes of subsection (1) (a), be deemed to do, or omit to do, an act, as a result of which property becomes held by another person or subject to a trust if: (a) the person is entitled, on or after the appointed day, to exercise a power to appoint, or dispose of, property which is not in the person's estate but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled and, as a result of the omission to exercise the power and of the person's death or the occurrence of the other event: (i) the property becomes held by another person (whether or not as trustee) or subject to a trust (whether or not the property becomes in either case so held immediately), or (ii) another person becomes (whether or not immediately) or, if the person was previously entitled, continues to be, entitled to exercise the power, ... (5) Except as provided in subsection (6), a prescribed transaction involving the doing of, or omitting to do, an act as referred to in subsection (4) (paragraph (f) excepted) shall be deemed to be entered into immediately before, and to take effect on, the death or the occurrence of the other event referred to in that subsection in relation to that act or omission. ... 23 Notional estate-prescribed transactions On an application in relation to a deceased person made by or on behalf of an eligible person, if the Court is satisfied: (a) that an order for provision ought to be made on the application, and (b) that, at any time before death, the deceased person entered into a prescribed transaction: (i) which took effect within the period of 3 years before death and was entered into with the intention, wholly or in part, of denying or limiting, wholly or in part, provision for the maintenance, education or advancement in life of that or any other eligible person out of the deceased person's estate or otherwise, (ii) which took effect within the period of 1 year before death, and was entered into at a time when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education and advancement in life of that or any other eligible person which was substantially greater than any moral obligation of the deceased person to enter into the prescribed transaction, or (iii) which took effect or is to take effect on or after the death of the deceased person, the Court may, subject to sections 26, 27 and 28, make an order designating as notional estate of the deceased person such property as it may specify, being property which is held by, or on trust for the disponee or, where there is more than one disponee, any of the disponees, whether or not that property was the subject of the prescribed transaction." 102"Disponee" and "Disponer" were defined in s 21 as follows: "disponee, in relation to a prescribed transaction, means: (a) where, as a result of the prescribed transaction, property becomes held by a person (whether or not as trustee)-the person, or (b) where, as a result of the prescribed transaction, property becomes held subject to a trust-the object of the trust. disponer, in relation to a prescribed transaction, means the person deemed by section 22 to have entered into the prescribed transaction." 103"Property" was defined as widely as under the current legislation. 104In Kavalee v Burbidge three transactions were said to be prescribed transactions within the meaning of s 22. The first was the payment of the "bequests" mentioned in the memorandum of wishes dated 5 March 1987 and the by-law made by the Founder on 15 March 1988. All members of the Court of Appeal held that this alleged prescribed transaction was made out although the reasons of the majority (Mason P and Meagher JA) differed from those of Handley JA. The result was that the sums paid that were designated as "bequests" in the memorandum of wishes and any property capable of being specified pursuant to s 23 of the Family Provision Act in accordance with that prescribed transaction were liable to be designated as notional estate. 105The difference of opinion as to the basis on which the first alleged prescribed transaction was made out arose because of the precatory nature of the memorandum of wishes. Handley JA held that merely expressing a wish to a third party on which the third party acts could not constitute a prescribed transaction under s 22(1)(a). His Honour held that it was the omission of Mr Hyland to exercise his power to cause the founder to cancel the special by-law that caused the bequests to become held by the disponees, not the execution of the memorandum of wishes (at 461, 462). Mason P, with whom Meagher JA agreed, held that because Mr Hyland had the legal capacity to compel the founder to apply the assets of the foundation in accordance with the memorandum of wishes, the making of the requests in the memorandum of wishes had the necessary causative potency notwithstanding the precatory form of the memorandum. In reaching this conclusion his Honour stressed that s 22(1)(a) referred to the doing of an act as "a result of which" property becomes held by another person. His Honour said that the section was not confined to acts or omissions that are the operative cause of property becoming held by the deceased's intended disponee. It was enough if they were an operative cause of that happening. The language used in s 22(1)(a) of the Family Provision Act has been changed in the Succession Act. I deal below with the significance, if any, of the change in wording. 106Mason P also held in relation to the first prescribed transaction that the failure of Mr Hyland to exercise a power to direct the Founder to do his bidding was an operative cause of the by-law remaining in its final form as the result of which the bequests were paid. 107The second alleged prescribed transaction in Kavalee v Burbidge was the conduct of Mr Hyland in executing the memorandum of wishes, the making of the by-law of 15 March 1988 and the deceased's failure to direct the foundation to appoint property to persons other than itself. It was said that those acts and omission resulted in property becoming held by "another person"; that is, the Gartner Foundation, on and after Mr Hyland's death. It was argued that the foundation itself obtained a valuable benefit by reason of the deceased's ceasing to have the power to direct the appointment of the assets. The contention failed. It was in this context that Mason P said (at 450.A) that: "There is a clear distinction between property subject to a power of appointment (and its value), which involves examining the state of accounts; and the nature and extent of the power itself, which involves examining the instrument that creates it." John Wardy relied on this statement in the present case. But the statement was made in relation to an alleged prescribed transaction that has no relevance to the present case and is in terms that do not assist in resolving the present issues. 108The third alleged prescribed transaction is analogous to the present case. It was the omission by Mr Hyland to exercise the power to appoint or dispose of the property of the Gartner Foundation. Handley JA held that that alleged prescribed transaction had not been made out. Like the primary judge, Handley JA said that there was a relevant distinction between Mr Hyland's being entitled to appoint or dispose of the assets of the foundation and his being able to become entitled to do so. The power to dispose or appoint property was vested in the founder and although Mr Hyland had the ability to acquire that power he had not done so. His power against the foundation remained potential (at 464-465). But Handley JA was in dissent. Mason P, with whom Meagher JA agreed, held that this distinction found no support in the legislative scheme (at 451.E). Because Mr Hyland had the legal right to direct the founder as to how the founder should exercise its power, and because Mr Hyland had the legal right to replace the founder with a founder that would do his bidding or could have appointed himself as founder, he had the power to appoint or dispose of the property in the Gartner Foundation within the meaning of s 22(4)(a) (at 451, 452). It did not matter that the founder also had the power of disposition. That reasoning applies to the construction of s 76(2)(a) of the Succession Act insofar as it refers to a person being entitled to exercise a power to appoint or dispose of property that is not in the person's estate. 109Section 22(4)(a)(ii) of the Family Provision Act was enlivened if "as a result of the omission to exercise the power and of the person's death ... another person ... previously entitled [to exercise the power] continues to be entitled to exercise the power". 110By contrast, s 76(2)(a) of the Succession Act is enlivened if a person is entitled to appoint or dispose of property not in the person's estate and does not exercise that power before ceasing because of death to be entitled to do so "with the result that another person continues to be entitled to exercise the power". 111In Kavalee v Burbidge Mason P said (at 454.C-F): "It must also be shown that the continuation of the Founder's power came about 'as a result of' the deceased's omission to exercise his concurrent power and of his death. The respondents submit that it is at this point that the appellant's argument breaks down. They submit that there is no link or connection between the continuation of the Founder's powers under the articles of the Foundation and the deceased's omission to dispose of the Foundation's assets (as he could have, through his power over the Founder that I have found to exist) before his death. And the respondents emphasise (correctly) that the same 'power' is involved wherever it is mentioned in the paragraph. This is the point at which I have the greatest difficulty with this appeal. However, I would reject the respondents' argument for the following reasons. If the deceased had exercised the power which he held yet omitted to exercise, then the assets of the Foundation would have been effectively disposed of. For example, the deceased could have directed the Founder to make a By-Law whereby the corpus of the Founder's assets (after payment of the "bequests") were paid to one or more of the appellants. That By-Law could have been made irrevocable, through an appropriate amendment to the articles procured by the Founder on the deceased's instruction. The deceased did not procure this during his lifetime. It can therefore be said that his omission to do so before his death was a cause of the assets remaining in the Foundation. The Founder's concurrent power of disposition (through making By-Laws) remained as it stood under the articles. It continued after the deceased's death. The provision does not require that the concurrent powers of disposition should be exercisable in identical ways. That continuation was causally linked to the deceased's omission in that the omission contributed to the continuation of the Founder's power of disposition under the (unamended) articles, and left the Founder with assets at its disposition in the Foundation." 112John Wardy contends that because of the change in wording of the legislation the same reasoning cannot be applied in this case as it must be shown that the continuation of Linevale's power to appoint the assets of the trust was the result, not a result, of the deceased's failure to appoint the assets to himself. Earlier in his reasons in dealing with the first alleged prescribed transaction, Mason P had emphasised that s 22(1)(a) used the words "a result of which", not "the result of which" so that the test of causation was established if the act or omission was a cause and did not have to be the sole cause of the events specified in s 22(1)(a)(i) or (ii) (at 446). The same reasoning is apparent in the way with which his Honour dealt with the causation issue raised by s 22(4) where his Honour found that Mr Hyland's omission contributed to the continuation of the founder's power of disposition. In Samsley v Barnes [1990] NSWCA 161 Kirby P warned against the danger of construing a "reformed Act" by reference to the law that had developed about an earlier statute rather than by construing the Act by reference to its own terms. Counsel submitted that in s 75 (and I take it also in s 76(2)) the outcome required for there to be a relevant property transaction must be "the result", not "a result" of the omission to act and Kavalee v Burbidge did not resolve that issue because of the changes to the legislation. 113It is correct that the Succession Act has to be construed by reference to its own terms. Nonetheless, the purpose of the notional estate provisions of the Succession Act is the same as the purpose of notional estate provisions of the Family Provision Act. The purpose of the provisions is to "extend the powers of the Court to the full range of benefits and advantages controlled by testators. Insofar as any question of construction presents a choice, a construction which will promote this purpose is to be preferred: see s 33 of the Interpretation Act 1937" (Wentworth v Wentworth (Bryson J, 14 June 1991); Schaeffer v Schaeffer (1994) 36 NSWLR 315 at 318; Kavalee v Burbidge at 447). 114There is nothing in the report of the New South Wales Law Reform Commission (Report 110, Uniform Succession Laws: Family Provision) to indicate that any substantive change was intended by the change to wording of the provisions. To the contrary, the Law Reform Commission said that it adopted the recommendation of the National Committee on Uniform Succession Laws established by the Standing Committee of the Attorneys-General that the provisions of the Family Provision Act be adopted as the notional estate provisions of the new Act with little change to their substance, although with some change to their style and order to make them easier for practitioners and other users to follow (Report, paras 3.5 and 3.6). 115In my view, the use of the expression "with the result" in s 76(2)(a) does not mean that the omission to exercise a power must be the sole cause of property becoming held by another person or subject to a trust, or to another person's becoming, or continuing to be, entitled to exercise the power. In my view, a contributing cause is sufficient. The use of the definite article rather than the indefinite article in describing the causal relationship does not imply that the omission must be the sole cause of the outcome, be it a change in the holding of property or the continuation of the holding of property. With respect to Mason P in Kavalee v Burbidge I do not think that the words "with the result that" have a different meaning from the words "as a result of which". Both phrases denote a causal relationship. The nature of the required causal relationship is to be discerned from the context and purpose of the provisions rather than the use of the definite or indefinite article. In my view, the conclusions reached by Mason P in Kavalee v Burbidge were primarily drawn from his Honour's analysis of the legislative purpose of the legislation. His Honour's reference to and reliance on the use of the indefinite article was an additional textual reason given for the conclusion, but was not essential to it. Indeed, when referring to s 22(4) in relation to a different argument, his Honour used the language "as the result of which" in describing the operation of s 22(4) (at 455.D). 116The same phrase "with the result that" is used in s 76(2)(b) where it is provided that there is a relevant property transaction if a joint tenant does not sever the joint tenancy before ceasing to be entitled to do so (because of death or the occurrence of any other event) "with the result that" on the person's death the property becomes held by another person by operation of the right of survivorship (subject to full valuable consideration not being given). When looking at causal relationships arising from omissions to act it would always be possible to say that there was another cause of a person's becoming entitled to the property by right of survivorship. Another cause would be the omission of the joint owners to sell the property prior to the person's death. Such a construction would deprive s 76(2)(b) of practical operation. 117During his lifetime Edmund Wardy could have appointed the property of the trust to himself with the concurrence of John Wardy as his co-director. He also could have done so without the concurrence of John Wardy by exercising his power as shareholder to remove John Wardy as director and exercising his power as a director to appoint the property to himself before any step could be taken by John Wardy to remove Linevale as trustee. Because he could have taken those steps the continued holding of the assets by Linevale on the trusts of the Edmund Wardy family trust deed was due to, that is, was the result of, Edmund Wardy's omission to take those steps. 118The plaintiffs' alternative argument is that Edmund Wardy entered into a relevant property transaction because he omitted to exercise his power as a shareholder and director of Linevale to appoint the assets of the trust to himself and his omission resulted in property, being a valuable benefit, being held by the objects of the trust without full valuable consideration being provided to him for not doing the act. 119The rights of the objects of the trust to due administration continued unchanged by the deceased's omission to exercise his powers to appoint the assets of the trust to himself. But the right to compel due administration of the trust was substantially more valuable where the trust assets had a value of in excess of $11 million than they would be if the assets were substantially less, or if they had been all appointed. Counsel for John Wardy submitted that the right to due administration had no value since the discretionary objects had no proprietary interest in any of the trust assets. That does not follow. 120In Molloy v Webb, Bryson J held (at [36]-[37]) that the omission of the deceased to exercise a power to appoint his daughters as discretionary objects and his death constituted a valuable benefit because it ended the possibility that the deceased might revoke the trusts under which his daughters were not beneficiaries and create other trusts under which they could have been discretionary objects. By reason of his not doing any of those things, the trust continued as first constructed for the benefit of eligible beneficiaries (that is, eligible discretionary objects), and this constituted a valuable benefit because it ended the possibility that the deceased might act in those ways. It constituted an enhancement in a way that was clearly recognisable although difficult to measure in the value of the position of the listed discretionary objects. There was no valuable consideration for the omission to nominate his daughters as potential objects of the exercise of the discretionary power of the trustee. 121Counsel for John Wardy submitted that the reasoning of Bryson J was erroneous because the discretionary objects had no beneficial interest in the trust property. Counsel argued that as the discretionary objects had no proprietary interest in the trust assets, they could have derived no valuable benefit from the deceased's omission to appoint additional discretionary objects and to cause trust property to be appointed to such persons. I do not accept that argument. The fact that the discretionary objects do not have a proprietary interest in the trust assets does not mean that they do not receive a benefit from the deceased's omission to appoint property of the trust. They have a chose in action, being their right to compel due administration of the trust. Although that chose in action does not entitle the discretionary objects to receive any part of the trust property, it creates the potentiality for them to receive trust property. That is a benefit, albeit that it might never be crystallised into the receipt of a sum of money. The value of that benefit would be reduced if the trust property that could be applied to the discretionary objects was reduced. Hence, the omission to appoint the trust property confers a valuable benefit on the discretionary objects. Just as in Molloy v Webb, the omission to appoint new discretionary objects and appoint property to them conferred a valuable benefit on the existing discretionary objects. 122Counsel for John Wardy also referred to Hitchcock v Pratt [2010] NSWSC 1508; (2010) 79 NSWLR 687 where Brereton J said (at [28]-[29]): "[28] As to whether company directors have the requisite 'control' of a company's property to fall within s 76(2)(a), the existence of fiduciary duties impacts on the ability or capacity to exercise a power to dispose of a company's property. In The Estate of Thiess; Brinkman v Johnston NSWSC, Hodgson J, 4 February 1994, BC9405349), Hodgson J, as his Honour then was, observed (at 18): 'It might be possible to infer that the deceased had power, as a governing director or perhaps managing director of Drayton Investments Pty Ltd, to dispose of that company's real estate in New South Wales, and that he omitted to do so prior to his death. But that power would have been subject to the fiduciary duties of a director; so that in respect of the real estate in New South Wales, it would not seem that the requirement of s 26, that there be an omission to benefit the deceased or an eligible person, would be satisfied in respect of the New South Wales real estate.' [29] Accordingly, for the purposes of s 76(2)(a), a director's power, with other members of the board, to dispose of property of a company is not 'a power to appoint, or dispose of, property' within s 76(2)(a), because it is constrained by fiduciary obligations. An omission to exercise such a power in favour of the director or an eligible person could not be disadvantageous to the estate or an eligible person for the purposes of s 80, because the power could not lawfully have been exercised in favour of the estate or eligible person. In my view, a director cannot be said to be 'entitled' to exercise a power to dispose of a company's property to himself or to an eligible person other than for valuable consideration." 123That was said in the context of the omission of a director to dispose of property beneficially owned by the company to himself. His Honour's comments were not directed to the exercise by a corporate trustee of a power to appoint property to objects of a trust that included the director. I am prepared to assume, without deciding, that the reference in s 76(2)(a) to a person being entitled to exercise a power of appointment or disposition of property refers only to a proper exercise of the power. There is no reason to think, and the contrary was not submitted, that Edmund Wardy would have been acting improperly had he exercised his power as a shareholder and director of Linevale to appoint trust assets to himself. 124Section 77 relevantly provides: "77 When relevant property transactions take effect (cf FPA 22 (2), (5) and (6)) (1) For the purposes of this Chapter, a relevant property transaction is taken to have effect when the property concerned becomes held by another person or subject to a trust or as otherwise provided by this section. (2) A relevant property transaction consisting of circumstances described in section 76 (2) (a), (c) or (d) is taken to have been entered into immediately before, and to take effect on, the person's death or the occurrence of the other event resulting in the person no longer being entitled to exercise the relevant power." 125Section 75(1) provides that a relevant property transaction includes a person's omitting to do an act that results in property being held by another person or being subject to a trust where full valuable consideration is not given for the omission. In such a case there need not be a change as to how the property is held. A transaction nonetheless comes within s 75(1). Such a transaction would usually fall within ss 76(2)(a), (c) or (d). Section 77(1) provides that the relevant property transaction is taken to have effect when the property concerned becomes held by another person or becomes subject to a trust. That language suggests that there must be a change in the holding of the property, unless the section makes other provision, as s 77(2) does. 126By s 77(2) the relevant property transaction, consisting of Edmund Wardy's omission to exercise his power to appoint or dispose of assets of the trust, is to be taken to have been entered into immediately prior to his death. 127Under s 80(3) property that can be designated as notional estate need not itself be the subject of the relevant property transaction. But it must be property that is held by, or on trust for, a person by whom property became held as the result of a relevant property transaction (s 80(3)(a)), or be property that is held by, or on trust for, the object of a trust for which property became held on trust as the result of a relevant property transaction (s 80(3)(b)). 128The language of s 80(3) is adapted from s 23 of the Family Provision Act and the definition of "disponee" in that Act set out at [101] and [102] above. There is an immediate problem in seeing how s 80(3) works when the relevant property transaction is the omission to do an act resulting in property being held by another or being subject to a trust under s 75(1) which does not necessarily connote a change in the holding of the property, or if the relevant property transaction is one under s 76(2)(a), being an omission to appoint or dispose of property not in the person's estate with the result that another person continues to be entitled to exercise the power, or under s 76(2)(c), being the omission to exercise a power to extinguish another person's interest in property in which the deceased has an interest, with the result that the other person continues to hold that interest. Clearly in such cases there may be no change in the holding of the property. 129A similar question arose in Kavalee v Burbidge (see Mason P at 454-455). Under s 23 of the Family Provision Act the court could make an order designating as notional estate property "held by ... the disponee", but a disponee was a person by whom property became held by virtue of a prescribed transaction (see [101] and [102] above). Mason P held that because s 22(4) deemed a person to have done or omitted to do an act as the result of which property became held by another, where a person continued to exercise a power by reason of his omission, the property thus deemed to have become held by that person was deemed to be held as disponee (at 455). 130There is no equivalent language in the Succession Act whereby property is deemed to have become held by another person or subject to a trust if a person enters into a relevant property transaction, such as by failing to exercise a power of appointment or disposal of property not in the person's estate with the result that another person continues to be entitled to exercise the power, or the person fails to extinguish an interest in property with the result that another person continues to hold that interest. 131Submissions did not focus on s 80(3), but counsel for John Wardy did rely upon the reasoning in Kavalee v Burbidge in relation to the second alleged prescribed transaction. Counsel submitted that nothing had changed in relation to the trust. 132It appears from the report of the New South Wales Law Reform Commission to which I refer at para [114] above that no substantive change was intended by the change in the wording of the legislation. However, that is relevant only if it assists in fixing a meaning to the text of the statute. The inquiry begins and ends with a construction of the text. Where more than one construction is open, a construction which will promote the purpose of extending the powers of the court to the full range of benefits and advantages controlled by testators will be preferred. In Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257, the High Court said (at [39]): "[39] 'This court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text' (Alcan (NT) Alumina Pty Ltd v Cmr of Territory Revenue (2009) 239 CLR 27 at 46 [47]; [2009] HCA 41). So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself." 133In Thiess v Collector of Customs [2014] HCA 12, the High Court also observed (at [23]): "[23] Objective discernment of statutory purpose is integral to contextual construction. The requirement of s 15AA of the Acts Interpretation Act 1901 (Cth) that 'the interpretation that would best achieve the purpose or object of [an] Act (whether or not that purpose or object is expressly stated ...) is to be preferred to each other interpretation' is in that respect a particular statutory reflection of a general systemic principle. For (Cabell v Markham [(1945)] 148 F 2d 737 at 739, quoted in Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 ; [2000] HCA 33 at 644 [27]): 'it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.'" 134Section 33 of the Interpretation Act is to the same effect in requiring the adoption of construction that will promote the purpose or object underlying the Act to one that would not promote that purpose or object. 135The words "became held" in s 80(3)(a) and (b) connote a change or progression. "Become" means to come, or come about. Property becomes held where the person who did not previously hold property comes to hold it. The words require a comparison to be made. But what are the points of comparison? On one view, s 80(3) requires a comparison between the position before the doing of the act, or before the time for considering the omission, and the position after the act was done or the omission occurred. Where the relevant property transaction occurs by reason of omission, the omission will not result in any change to how a property is held unless it is an omission to prevent a change in the holding of the property by reason of some external factor. Thus, an omission to sever a joint tenancy can be said to result in property becoming held by the surviving joint tenant. It is the death of the joint tenant that results in the change in the holding of the property but that is because of the relevant property transaction involving an omission to sever the joint tenancy. Where there is no such external factor, a relevant property transaction occurring by omission could not result in property becoming held by another, if that is the right point of comparison. 136The other way of approaching the question is to compare the position as it actually is with what the position would have been had the act or omission not occurred. For an omission, that requires a comparison between the actual position and what the position would have been had the act been done rather than omitted. In other words, the inquiry is: did the property become held by a person because of the deceased's act? Or, did property become held by a person because of the deceased's omission to act? In answering the second question the comparison would be between the position as it actually is and what the position would have been had the deceased acted, for example by exercising a power to appoint or dispose of property. When looked at this way it can be said that property has become held by a person even though there has been no change in the holding of property because the comparison is with what the position would have been had there not been the omission to act. In other words, had there been an exercise of the power. This construction would fulfil the statutory purpose identified in Wentworth v Wentworth, Schaeffer v Schaeffer and Kavalee v Burbidge, whereas the alternative construction would not. However, it is a strained construction. The natural response to the question "did property become held by a person because of the deceased's omission to act?" is no; there was no change in the holding of the property. This was also the reasoning of the Court of Appeal in Kavalee v Burbidge in rejecting the second alleged prescribed transaction. Mason P said (at 450.C) that Mr Hyland's death (and his failure to appoint property to persons other than the foundation) did not affect the value of the foundation's net assets, nor cause any valuable benefit to become held by it. 137However, a literal reading of s 80(3) emasculates the intended operation of the notional estate provisions evidenced by s 76(2)(a) and (c). It would leave s 76(2)(c) with no work to do. The better approach is to read the words "was or" before the words "became held" in s 80(3)(a) and (b). The introduction of those words would satisfy each of the three conditions stated by Lord Diplock in Wentworth Securities Ltd v Jones [1980] AC 74 (at 105) as reformulated by Lord Nicholls in Inco Europe Ltd v First Choice Distribution (a firm) [2000] 1 WLR 586 (at 592); [2000] 2 All ER 109 (at 115). In the latter case Lord Nicholls said: "... the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed." 138Even if these conditions are satisfied if the insertion is "too big" or "too much at variance with the language used" the court may be inhibited from interpreting the provision to accord with the underlying intention of the statute. In Taylor v The Owners - Strata Plan No. 11564 [2014] HCA 9 French CJ, Crennan and Bell JJ said (at [37]-[39]): "[37] Consistently with this court's rejection of the adoption of rigid rules in statutory construction (Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 401 per Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ; [1996] HCA 36), it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation. ... [38] The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision66. It is answered against a construction that fills 'gaps disclosed in legislation' (Marshall v Watson (1972) 124 CLR 640at 649 per Stephen J, [1972] HCA 27) or makes an insertion which is 'too big, or too much at variance with the language in fact used by the legislature' (Western Bank Ltd v Schindler [1977] Ch 1 at 18 per Scarman LJ cited by Lord Nicholls of Birkenhead in Inco Europe Ltd v First Choice Distribution (a firm) [2000] 1 WLR 586 at 592[2000] 2 All ER 109 at 115). [39] Lord Diplock's three conditions (as reformulated in Inco Europe Ltd v First Choice Distribution (a firm) ([2000] 1 WLR 586 at 592 per Lord Nicholls of Birkenhead [2000] 2 All ER 109 at 115. The reformulation was of the third condition: the court must be abundantly sure of the substance, although not necessarily the precise words, the legislature would have enacted) accord with the statements of principle in Cooper Brookes ((1981) 147 CLR 297) and McColl JA was right to consider that satisfaction of each could be treated as a prerequisite to reading s 12(2) as if it contained additional words before her Honour required satisfaction of a fourth condition of consistency with the wording of the provision. However, it is unnecessary to decide whether Lord Diplock's three conditions are always, or even usually, necessary and sufficient. This is because the task remains the construction of the words the legislature has enacted. In this respect it may not be sufficient that 'the modified construction is reasonably open having regard to the statutory scheme' (Director of Public Prosecutions v Leys (2012) 296 ALR 96 at 126 [96]) because any modified meaning must be consistent with the language in fact used by the legislature. Lord Diplock never suggested otherwise. Sometimes, as McHugh J observed in Newcastle City Council v GIO General Ltd, the language of a provision will not admit of a remedial construction. Relevant for present purposes was his Honour's further observation, '[i]f the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances.' ((1997) 191 CLR 85 at 113; [1997] HCA 53. See also IW v City of Perth (1997) 191 CLR 1 at 12 per Brennan CJ and McHugh J; [1997] HCA 30)." 139The statutory purpose of s 80(3) is no different from the statutory purpose of the notional estate provisions considered as a whole as identified in Wentworth v Wentworth, Schaeffer v Schaeffer and Kavalee v Burbidge. There are constraints on the circumstances in which property can be designated as notional estate; for example in relation to the time at which a relevant property transaction occurs (s 80(2)), in the requirement to show disadvantage to the estate or other matter in s 83, in the requirement to consider the importance of not interfering with reasonable expectations in relation to property and the substantial justice and merits in making or refusing to make an order (s 87), in the insufficiency of the estate for the making of the family provision order that should be made (s 88), and in the matters to which regard is to be had in determining what property should be designated as notional estate (s 89). But within those constraints the purpose of the provisions including s 80(3) is to permit the designating of property as notional estate that can be resorted to for the purpose of making a family provision order if it is property which would have become part of the deceased's estate had it not been dealt with, or which would have become part of the deceased's estate had it been dealt with by the deceased in a particular way and in particular circumstances prior to his or her death (Galt v Compagnon (Einstein J, New South Wales Supreme Court, 24 February 1998, at [21])). 140I think it is clear that those who drafted s 80(3) assumed that the effect of a relevant property transaction would be a change as to how property was held. That would be the case where the relevant property transaction is the doing of some act falling within s 75 or s 76 and it would be the case in respect of some of the omissions specifically dealt with in s 76, such as the non-severance of a joint tenancy (s 76(2)(b)), or the failure to exercise a power to nominate a beneficiary of a life assurance policy under s 76(2)(d). But the draftsman failed to deal with the fact that examples of relevant property transactions in s 75(1) and s 76(2)(a) and (c) include an omission to act, a failure to exercise a power of appointment or disposal of property with the result that property continues to be held by another person, or that a power of appointment and disposal continues to be exercisable by another person, and an omission to extinguish an interest in property with the result that another person continues to hold that interest. I infer that those who drafted the legislation considered that the deeming provision in s 22(4) of the Family Provision Act was clumsy and did not make for easy reading, but did not appreciate that the redrafting of the provision needed to accommodate the fact that relevant property transactions were intended to encompass the omission of a deceased who was entitled to deal with property so that it would become part of his or her estate, but omitted to do so so that there was no change as to how the property was held. 141In Bellfield v Bellfield [2012] NSWSC 416, Campbell JA observed (at [68]) that the notional estate provisions of the Family Provision Act were designed to enable the court to make provision for the dependents of a deceased person in circumstances where the person had transferred assets into a structure over which he or she had a measure of practical control even though he or she lacked actual ownership. The placing of assets in a family discretionary trust with a corporate trustee controlled by the deceased is a paradigm case for the intended application of the notional estate provisions. In most such cases it would be the failure of the deceased to exercise his or her power to cause trust assets to be appointed that will constitute the relevant property transaction, albeit that the assets will continue to be held by the corporate trustee with no change as to how the assets are held. Either the draftsman considered that the words "became held" should be construed in the way indicated at [136] above, or the draftsman inadvertently failed to attend to the full and intended width of the relevant property transaction provisions in ss 75 and 76. 142The words that can be added to cure the problem are straightforward and clear and do not involve a great change to the drafting. By adding the words "was or" before "became held" in paras (a) and (b) of subs (3), the subsection has an harmonious operation with ss 75 and 76 and also with s 77. Section 77(2) recognises that a relevant property transaction can take effect without property becoming held by another person or subject to a trust and makes provision to deal with that. Section 80(3) does not. To add the words in question would be consistent with the other provisions and so satisfy the fourth condition referred to by McColl JA in Taylor v The Owners - Strata Plan No. 11564 [2013] NSWCA 55; (2013) 83 NSWLR 1 at 9, [40]. 143For these reasons I conclude that a notional estate order is capable of being made designating assets of the Edmund Wardy family trust as notional estate. It is clear that s 83(1)(a) is satisfied. That is to say, the omission of Edmund Wardy to appoint the assets of the trust to himself disadvantaged his estate. 144I will deal with the matters in ss 87, 88 and 89 after dealing with the merits of the claims of Hassiba, William and Sam Wardy that the will did not make adequate provision for their proper maintenance and advancement in life. In considering that question, the size of the notional estate is to be taken into account.

Family provision claims: general considerations 145A family provision order may be made if adequate provision were not made for the proper maintenance, education and advancement in life of the eligible applicant. This is to be assessed at the time the court is considering the application (Succession Act, s 59(1)(c)). Section 60 of the Succession Act contains a non-exhaustive list of matters to which the court may have regard in deciding whether to make a family provision order and if so, the nature of such an order. Of considerable significance in this case is the nature and extent of the deceased's estate and of the property that could be designated as notional estate. Both the estate and the notional estate are large. This affects the determination of what maintenance and advancement in life is "proper" for the plaintiffs for which adequate provision should be given. 146It is not the function of the court in determining whether to make a family provision order to make what it considers to be a fair and equitable distribution of the estate or the notional estate (Gorton v Parks (1989) 17 NSWLR 1 at 6). The testator's freedom of testamentary disposition is to be interfered with only insofar as that may be necessary to make adequate provision for an eligible applicant's proper maintenance, education or advancement in life. But that does not mean that the provision that can be made is confined to the necessities of life. Where the estate or available notional estate is large, what provision is adequate for an eligible applicant's maintenance or advancement in life (or education if relevant) can go well beyond the provision of necessities or the amenities of life as might be understood on what Bryson JA called the "ordinary scales of needs as understood in the community generally" (Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1 at [31], 9). At least that is so if the provision that might be ordered will not have any significant adverse effects on others to be provided for out of the estate or the notional estate. 147In Wilcox v Wilcox [2012] NSWSC 1138 Pembroke J said (at [23]): "... The purpose of the discretionary power under s 59(1) is to redress circumstances where 'adequate provision' has not been made for the 'proper maintenance, education or advancement in life' of the claimant. The adjectives 'adequate' and 'proper' are words of circumspection. They imply no more than is necessary. I should ensure that 'adequate provision', rather than generous provision, is made, having regard to the burden on the defendant." If his Honour is taken to be saying adequate provision for proper maintenance and advancement in life implies no more than provision for the necessities of life, irrespective of the size of the estate and the effect, if any, of an order for provision on others, then I respectfully disagree. Such a contention was advanced but rejected in Mayfield v Lloyd-Williams [2004] NSWSC 419 at [101]-[115] and on appeal Lloyd-Williams v Mayfield at [29]-[32], [40]-[41]. (See also Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [115], 229; and Alexander v Jansson [2010] NSWCA 176; (2010) 6 ASTLR 432 at [18].) In Re Buckland deceased [1966] VR 404 Adam J made a similar observation that whatever the size of the estate, the Court's jurisdiction was limited by "the claimant's need for maintenance and support". However, the need a claimant must demonstrate is a need for "proper" maintenance, education and advancement in life. In Re Buckland itself, this went well beyond anything that could be considered necessities of life. (See Mayfield v Lloyd-Williams at [103], [110].) Determining what maintenance or advancement in life is "proper" involves a value judgment on which minds can legitimately differ. There are no definite criteria by which the question is to be answered. It depends on all of the circumstances of the case including the applicant's financial position, the size and nature of the deceased's estate, any available notional estate, the totality of the relationship between the applicant and the deceased, the relationship between the deceased and other persons with legitimate claims upon the deceased's bounty and the effect of a financial provision order on such persons (Singer v Berghouse (1994) 181 CLR 201 at 210). 148In Slack v Rogan; Palffy v Rogan [2013] NSWSC 522 I expressed the view (at [127]) that 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. This is in recognition that the deceased is often in a better position to make a judgment as to what provision for an applicant is proper in all the circumstances than is a court. This is subject to the qualification that the court's determination under s 59(1)(c) and (2) is to be made having regard to the circumstances at the time it is considering the application, rather than at the time of the deceased's death or the time of the will. 149In the present case the deceased's will shows a careful assessment of how the deceased's real property assets should be distributed between Hassiba Wardy and the sons of both marriages. In late June or early July 2009 the deceased told his son William that he had "filled everyone's cup up to what they deserve" (see Wardy v Wardy at [32]). 150The will was made in 1992. The Edmund Wardy Family Trust was established on 1 July 1998. Linevale acquired six commercial properties between 15 October 1998 and 8 May 2006. The deceased saw a solicitor, Ms Kathy Klonis, in about September 2005 in relation to a new will. He was not able to provide sufficient instructions for the preparation of a new will. On 6 September 2005 Ms Klonis wrote to the deceased noting that a property about which instructions were given was owned by Linevale and not the deceased. She asked for further instructions. Notes made by Ms Klonis at the time of her consultation with the deceased in September 2005 do not indicate that any clear instructions were given as to how the deceased then intended to leave his estate. She was unable to say what his instructions were in relation to his residuary estate. It appears that he gave an instruction that Sam Wardy was to receive a legacy of $100,000, but it is not clear from the notes or from her evidence as to whether this was to be the only gift. There are references in his notes to Sam Wardy's having received benefits from the deceased during his lifetime in the form of the transfer of land at an undervalue and the payment of stamp duty, and there were references to the deceased's having told Ms Klonis that Sam Wardy had been charged with drug offences and that the deceased was unhappy with William Wardy's marriage. There was reference also to Hassiba Wardy receiving a legacy plus income of $400 net per week and to the deceased's not wanting any of his properties to be sold. 151These instructions were never finalised. It is not possible to say that they represented the concluded thoughts of the deceased as to the disposition of his estate. It appears that he did not clearly distinguish between Linevale's assets and his own. 152Having regard to the date of the deceased's will, the acquisition of various properties by Linevale rather than by the deceased personally between 1998 and 2006 and by the deceased's intention to change his will but without his bringing that purpose to fruition, I do not think that the respect to be given to the deceased's assessment of the relative merits of those with claims on his estate is a significant factor in the present case, where the adequacy of the provision made is to be assessed having regard to the available notional estate. Other factors lead to the same conclusion. Thus, as discussed below, William Wardy's relations with his father soured after the deceased's marriage to Hassiba and it was only about the end of 2004 that they began to improve. The deceased did not fairly summarise benefits given to Sam Wardy, particularly when weighed against hardship suffered by Sam Wardy and contributions made by him to the deceased.

Adequacy of provision for Hassiba Wardy 153Hassiba Wardy deposed that during his life the deceased gave her housekeeping of $3,500 per week on average to run the home and support their family. Hassiba Wardy was able to save some of the housekeeping money after providing money to her sons (affidavit 19 October 2010 para 37). It is not clear how much she was able to save or how much she gave to her sons. In her affidavit of 14 June 2012 Hassiba Wardy deposed that her family's grocery bills were approximately $500 per week. Costs of telephones, including mobile phones for her three sons, and Foxtel cost approximately $375 per month. She and her sons had four motor vehicles. The running costs were approximately $600 per month for these vehicles. Her medications cost approximately $100 per month. Hassiba Wardy deposed that she had no assets apart from a Holden Barina motor vehicle purchased for her by her son Anthony, and two bank accounts with small credit balances totalling in total less than $10,000. She received interim distributions from the estate which she used to pay bills for outgoings, utilities, groceries and household expenses and for surgery for two of her sons. 154Hassiba Wardy's sons are eligible applicants in their own right for family provision orders. None of them made a claim. Although adults, they are dependent on their mother. The question under s 59 of the Succession Act is what is adequate provision for the proper maintenance and advancement in life of Hassiba Wardy. But where a parent has an obligation to support a dependent child, including an adult child, that is a relevant factor in determining what is an appropriate provision for the maintenance of the applicant (Aubrey v Kain [2014] NSWSC 15 at 190 and cases there cited). 155Anthony Wardy was born in June 1988. Roger Wardy was born in May 1989. Robert Wardy was born in April 1992. Both Roger and Robert Wardy struggled with their weight and had medical procedures to deal with obesity. None of Anthony, Roger or Robert Wardy had employment or was engaged in study. 156Anthony Wardy owned vacant land in Campsie which he must have obtained through his father. He sold the land in about June or July 2010 for $515,000 and gave money to Hassiba Wardy. According to Hassiba Wardy, she is dependent on those moneys together with interim distributions of $380,000 she has received from the estate. Hassiba Wardy deposed that the Milroy Avenue, Kensington property is in need of major repair and renovation. She said that the bathroom, laundry and kitchen were "all old and tired". The tiling was the original tiling and the fixtures and fittings were worn out. She said that the bathroom, laundry and kitchen all needed a "total update", that the garage was dilapidated and needed substantial work and required a new garage door. She said that the laundry and garage were uninhabitable, in an appalling state of repair and infested by rodents. She said that the house needed new flooring, painting, new doors and the property needed a new fence. She estimated that the renovations to make the house and grounds liveable would be around $250,000-$300,000 plus GST. She was not cross-examined on this evidence. 157Hassiba Wardy paid for operations undertaken by two of her sons for obesity and she paid for Roger and Anthony to visit relatives in Lebanon. 158There was no contradiction of Hassiba Wardy's evidence that she had only $7,000 in a bank account. However, I have no confidence in her evidence that she did not have any substantial cash. 159Hassiba Wardy has incurred substantial debts in relation to the litigation. She was ordered to pay the other parties' costs of her claims for relief in the probate proceedings. She has received claims for costs from the other parties that totalled $522,869. Those costs had not been agreed or assessed. She incurred costs of $97,714 in bringing proceedings against her former solicitor to obtain the solicitor's file. She incurred a liability for costs to her former solicitor (Mr Velcic) of $159,000. She incurred further costs of the family provision and probate proceedings of $494,881 up to July 2013. I was not provided with a breakdown of that figure between the probate proceedings on the one hand and the family provision proceeding on the other. Hassiba Wardy's solicitor, Mr Walker, estimates that a sum of $50,000-$55,000 plus GST will be incurred in engaging a third party costs consultant to resolve costs issues. 160Some of the $380,000 distributed by way of interim distribution has been applied towards payment of legal costs. Some has been paid towards living expenses. 161Counsel for Hassiba Wardy submits that when the Linevale debt of $1,097,282 is collected it will be totally offset by the costs payable to Hassiba Wardy's lawyers and the costs payable to other parties. I doubt that that is so because some of the costs have already been paid from the interim distributions Hassiba Wardy has received. But it is correct that a substantial proportion of that distribution will be applied in payment of costs. 162On the other hand, the costs incurred by Hassiba Wardy and the costs she is liable to pay in respect of the probate proceedings were incurred because she chose to bring a case that on the findings of fact I made was entirely without merit. I concluded that the reason the original will of 7 November 1992 was not found was because it had been removed by Hassiba Wardy or by someone on her direction. There is no reason that any of the other beneficiaries of the estate or any other discretionary object of the trust should indirectly bear the consequences of Hassiba Wardy's decision to bring the proceedings claiming that the deceased died intestate. 163Mr Ellison SC who appeared for Hassiba Wardy submitted that Hassiba Wardy's position as a discretionary object of the trust had no real value and should be left out of account. I think that is substantially right. Hassiba Wardy will be entitled to the shares in Linevale and thus be entitled to control the trustee. I infer that relations between her and John Wardy are such that it is very likely that if she were to seek to control the trustee, John Wardy would exercise his power as appointor and remove the trustee and appoint himself or a company he controlled as the trustee of the trust. In taking that course he would be acting in accordance with his father's wishes. Whilst John Wardy has caused Linevale to make some modest distributions of income to the estate from the trust which will pass to Hassiba Wardy as personalty, having regard to this litigation, I doubt that there is any realistic prospect of his causing further distributions to be made to Hassiba Wardy, at least for the foreseeable future. 164Hassiba Wardy is 55. She has a life expectancy of 30 years or more. 165Mr Ellison submitted that adequate provision for Hassiba Wardy's proper maintenance and advancement in life required that, in addition to the family home, she be provided with a substantial capital sum, and not merely the income from a $5.1 million investment. He submitted that Hassiba Wardy should receive the equivalent of the capital sum representing the Cleveland Street property plus an additional capital fund of $2 million. He submitted that Hassiba Wardy should receive a capital sum that would be sufficient to buy out her sons' remainder interest in the substitute investment for the Cleveland Street property together with an additional capital fund of $2 million. 166In her affidavit Hassiba Wardy said that in addition to other claims, a sum of $250,000-$300,000 plus GST was required to be spent on renovations to the Milroy Avenue, Kensington property. She also wanted to receive sufficient funds to purchase an apartment near a beach, to make yearly trips to Lebanon, to have a fund for contingencies, and to have a sufficient sum to help her sons become independent until such times as they were able to establish themselves in their careers. 167Hassiba Wardy has no vocational training and it is not likely that she would seek gainful employment. Having regard to her circumstances, it should not be expected that she should have to seek employment to maintain an appropriate lifestyle. 168Whilst an assessment of the required provision for Hassiba Wardy's maintenance and advancement in life can include provision to enable her to continue to support her adult sons who are dependent on her, the controlling feature of s 59 is that the provision to be made must be for the proper maintenance, education or advancement in life of the applicant, not of third parties. It was open to Hassiba Wardy's sons to have brought their own claim for provision if they considered that the provision made for them under the will was inadequate for their proper maintenance, education and advancement in life. No such claim was brought. I do not accept that adequate provision for Hassiba Wardy's proper maintenance and advancement in life includes a capital sum to enable her sons to establish themselves in independent careers or businesses. 169Were it not for the costs of the litigation, the moneys Hassiba Wardy is entitled to under the will would be sufficient to meet all of her claimed needs other than the cost of renovations of the Kensington property. 170Mr Salier asked the NSW Trustee and Guardian to advise how it anticipated investing the fund arising from the sale of the Cleveland Street property and to advise of the estimated income by way of interest, or otherwise which would be anticipated from such a fund. The response of the NSW Trustee and Guardian was cautious. The NSW Trustee and Guardian said that it would prepare a financial plan. It said that the first $100,000 was typically invested in the NSW Trustee & Guardian's Cash Fund with moneys exceeding $100,000 split between the NSW Trustee & Guardian's Cash Plus and Australian Fixed Interest Funds. Investment in realty or securities could be considered, but this would depend on the views of the remainder beneficiaries and a risk analysis. The Cash Plus Fund is said to be designed for clients requiring a relatively low-risk investment with potentially higher returns obtained by investing in high quality bonds. The Australian Fixed Interest Fund is designed to provide clients with a diversified portfolio of Australian bonds. The five-year annual client return on the Australian Cash Plus Fund was 6.14 per cent and on the Australian Fixed Interest Fund is 7.5 per cent. The returns from inception of the funds are 5.67 per cent and 6.38 per cent respectively. Assuming a return of 6 per cent, Hassiba Wardy could expect an annual income before tax in the order of $300,000. Such an income would be adequate to support Hassiba Wardy in some comfort, even allowing for moneys spent on supporting her sons, who, though not currently in work, are able-bodied and should be capable of finding work. 171The NSW Trustee and Guardian will have to make an investment that balances the interests of both the life tenant and the remaindermen. That may result in a lower return of income than suggested by the above figures. But even allowing for that possibility the will provides Hassiba Wardy with an ample income for her life. But for the incurring of costs and incurring a liability for costs in pursuit of a claim that I have rejected, and in respect of which I was satisfied that Hassiba Wardy acted with serious dishonesty, the personal estate and the income derived from the Cleveland Street property prior to its sale would have provided an ample buffer for contingencies. It is true that this buffer will be largely dissipated by costs. That is largely due to her having propounded a dishonest claim. In any event, Hassiba Wardy is also entitled to the net rents that were collected from the Cleveland Street property which provide an adequate buffer for contingencies. 172I accept however that adequate provision for Hassiba Wardy's proper maintenance and advancement in life includes additional provision for the renovation of the Kensington property. There was no challenge to her estimate of the cost of repairs. Having regard to the size of the estate and the notional estate, and subject to considering the position of competing claimants to the deceased's bounty and to satisfaction of the conditions for designating assets of the trust as notional estate, I consider that further provision of $300,000 is required to provide Hassiba Wardy with adequate provision for her proper maintenance and advancement in life.

Claim of William Wardy 173William Wardy was born in August 1960. He is the eldest of Edmund Wardy's sons. William Wardy and his wife have three adult sons who live with their parents. William Wardy and his wife own a property in Todman Avenue, Kensington. The property includes two one-bedroom flats as separate accommodation which is rented out. The flats have been rented out since the property was acquired in about 1985. William Wardy is a licensed plumber. He started his own business in about 1988. He conducts that business in partnership with his wife. Their joint income is modest. Their combined taxable income for the three years between 30 June 2009 and 30 June 2011 ranged between $25,429 and $34,269. They have a mortgage which, at the date of hearing, was $358,646. Each of William Wardy's sons is employed. They live at home. They do not pay board. 174The only assets of William Wardy and his wife (apart from superannuation) is a house valued at $1,800,000, a car valued at $5,000, a van valued at $3,000, tools and savings of about $1,900. Their combined superannuation is less than $22,000. 175William Wardy is a discretionary object of the trust. I think it unlikely that he would receive any distribution from the trust, at least in the foreseeable future, having regard to his relations with John Wardy and this litigation. 176The deceased provided assistance to William Wardy and his wife when they purchased the Todman Avenue, Kensington property by paying stamp duty. For his part William Wardy assisted his father in relation to the maintenance and repairs on various properties. He carried out plumbing work, renovations and general maintenance without charge. 177William Wardy stopped doing work for his father at the time of the father's second marriage in March 1987. He told his father that he did not approve of the marriage. There was a falling out. He and his family were not invited to the wedding, nor to the christening of Anthony, Roger or Robert. Relations between the deceased and William Wardy improved from about the end of 2004 and eventually returned to a point where it was before he had voiced his disapproval of the deceased's second marriage. In the last five years prior to his father's death William Wardy saw his father about twice a week. 178I accept William Wardy as a reliable witness. His claim for provision was quite modest having regard to the size of the estate and the available notional estate. Counsel submitted that William Wardy had established needs of $1,658,000. 179This assessment was made up as follows. First, counsel submitted that there should be a provision which eliminated the mortgage debt of approximately $359,000. Secondly, William Wardy anticipates that his ability to earn income will be spent within two to three years owing to poor health. He said that his health is deteriorating. He has arthritis in his wrists and knees and suffers from carpal tunnel syndrome. He has lost the partial feeling in a finger and suffers from back pain and aches in his knees which he suspects is due to his years of working as a plumber where he has had to bend over constantly and kneel on the ground. I accept that there is at least significant uncertainty as to William Wardy's ability to continue working as a plumber past his mid to late 50s. He has superannuation benefits of less than $22,000. Apart from his mortgage expense the estimated monthly living and personal expenses for William Wardy and his wife of about $5,665. This includes land tax. Mr and Mrs Wardy were in receipt of gross rental income of $880 per week which if maintained throughout the year would be about $45,760 per year. However, the net rental income shown in their tax returns for the year ended 30 June 2011 was just under $12,000. Presumably, interest on the mortgage was a significant deduction. Counsel submitted that there would be a need to supplement their income by $26,000 per annum. Counsel submitted that a sum of $900,000 would be adequate capital to provide income of $26,000 per annum to make up the deficiency in income after William Wardy has to stop working. 180William Wardy deposed, and counsel submitted, that further sums of $50,000 for a new car, $100,000 for holidays and $250,000 as a contingency for the vicissitudes of life were also required, bringing the total provision sought up to approximately $1,685,000. In addition, I understood counsel also to submit that adequate provision for William Wardy's proper advancement in life would include a sum sufficient to pay one of his sons HECS debt of $31,071. 181The assertion that a capital sum of $900,000 was appropriate to provide an income return of $26,000 per year (presumably adjusted for inflation) commencing in a few years' time and lasting until William Wardy's death was not the subject of any evidence or elaboration. I am not critical of the absence of actuarial evidence (Tchadovitch v Tchadovitch [2010] NSWCA 316; (2010) 79 NSWLR 491 at [3]-[5]). In theory, a calculation that would provide a capital sum which would provide an amount of income for a specified period allowing for the depletion of capital as well as the interest earned on the capital sum would need to make assumptions about future returns on the investment of the capital sum, future rates of inflation to preserve the real value of the income stream, and the impact of taxation. In Todorovic v Waller (1981) 150 CLR 402 the High Court adopted a rule for the calculation of common law damages for personal injury fixing a discount rate of three per cent to assess the present value of future loss subject to any relevant statutory provisions. The rate was intended to make appropriate allowance for inflation, for future changes in rates of wages generally or of prices, and for tax (either actual or notional) upon income from investment from the sum awarded (at 409). In Tchadovitch v Tchadovitch the Court of Appeal rejected a submission that a judge was required to use the three per cent discount rate if arriving at an order for provision that included as a component a sum sufficient to provide a fund to secure an income to the applicant, although there was no error in having regard to the three per cent discount tables as one factor to be taken into account in determining the appropriate provision to be made and the appropriateness of the assessment of a fund to provide future income (at [55]-[56]). 182The three per cent discount rate adopted in Todorovic v Waller was adopted as a compromise to ensure that a uniform approach was taken to the assessment of common law damages in personal injury actions for the calculation of future loss. It was fixed at a time of high inflation. In Rosniak v Government Insurance Office (NSW) (1997) 41 NSWLR 608 the plaintiff unsuccessfully sought to adduce actuarial evidence to establish that the three per cent discount rate was too high and would in all probability result in the sum representing the award of damages being exhausted well before the injured plaintiff's assumed life expectancy. In argument, counsel said that the evidence showed that a zero or negative rate would need to be adopted if the intended income stream were to be provided. The evidence was led with a view to seeking to persuade the High Court to depart from its decision in Todorovic v Waller. In Todorovic v Waller the High Court had said that in an action for damages for personal injuries, evidence as to the likely course of inflation, of possible future changes in rates of wages or of prices was inadmissible. The Court of Appeal, as it was bound to do, upheld the trial judge's ruling that the evidence sought to be adduced was inadmissible. The High Court refused special leave, primarily because subsequent legislative interventions in the area meant that the topic should not be revisited ([1998] HCA Trans 73)). In accordance with Tchadovitch v Tchadovitch I am not required to apply a three per cent or any other discount rate in assessing a component of an order for provision that is to provide a future income stream. 183If one assumed a 30-year life expectancy for William Wardy after he was unable to continue to earn an income as a plumber, a sum of $519,000 would be required to provide an income of $500 per week ($26,000 per year) for a period of 30 years applying the three per cent discount table. On the other hand, if it is assumed that the earnings on the capital sum after allowance for taxation would do no better than match future inflation then the sum required to provide an income of $26,000 per year for 30 years would be $780,000. 184In Tchadovitch v Tchadovitch $1.2 million was a component in the provision ordered, assessed as a lump sum to provide for the plaintiff's maintenance, education and advancement in life over and above a provision of a home and a car and a further $100,000 for contingencies. It was not simply a sum arrived at as necessary to provide an income stream. The trial judge took into account that that amount of capital would provide what he considered to be a sufficient income for the deceased's widow and did not proceed on the basis that the capital required should be adjusted to permit the use of capital as well as the interest earned on the investment of the capital to provide a sufficient income. There was no error in that approach. 185On the assumption that the notional estate is to be taken into account in determining whether adequate provision is made by the will for William Wardy's maintenance and advancement in life, I think the approach adopted by his counsel is conservative. The calculation of $26,000 per year as a shortfall between the monthly expenses and the rental receipts (after excluding the mortgage payments on the assumption that the mortgage debt is discharged) assumes that all of the expenses associated with the rental of the properties are taking into account in the statement of expenses and also assumes that the properties remain let without periods of vacancies. It includes no provisions for repairs and maintenance or for what in the partnership returns were described as "sundry rental expenses", which in 2011 totalled about $1,500. 186In proceedings 2009/321354 William and Sam Wardy filed a cross-claim challenging the validity of the appointment of John Wardy as the appointor of the Edward Wardy family trust. That cross-claim was unsuccessful. I ordered William and Sam Wardy to pay John Wardy's and Linevale's costs of the cross-claim. Claims for costs were made by John Wardy and Linevale in amounts of $105,000 and $115,000 respectively. Those claims included a discount to the costs billed to those parties reflecting what their solicitors consider to be the likely outcome on an assessment. I proceed on the basis that each of William and Sam Wardy is likely to have a liability in the region of $110,000 in respect of such costs. William Wardy has also incurred costs estimated to be in the sum of $150,000 in respect of his cross-claim. A substantial part of those costs would have been incurred in relation to claims for relief that were not pressed. 187The costs that William and Sam Wardy are liable to pay and the costs they incurred in bringing the cross-claim that challenged the validity of John Wardy's appointment as appointor of the trust, stand in a different position from the costs Hassiba Wardy is liable to pay and which she incurred in the probate proceedings. The difference is that their cross-claim challenging John Wardy's appointment as appointor of the trust was brought reasonably, whereas having regard to my findings on Hassiba Wardy's claim, her claim that the deceased died intestate was not brought reasonably. In assessing the financial needs of William and Sam Wardy, I think their liability to pay costs in respect of the earlier proceedings is a matter to be taken into account in assessing their need for provision. It is no different than if they had been unsuccessful parties in unrelated proceedings. 188However, I cannot draw that conclusion in respect of all of the costs incurred by William Wardy in relation to his own cross-claim as substantial parts of that cross-claim were not pursued and could not be said to have been brought reasonably. 189A further matter to be taken into account is that there will be some difference between the costs incurred by William and Sam Wardy in defending Hassiba Wardy's proceedings and the costs which are allowed on assessment, although I do not know what that difference will be. I assume for present purposes that costs on the ordinary basis of the family provision proceedings will be recovered out of the estate or the notional estate. 190For reasons previously given I estimate that so far as can be ascertained on the material available, William Wardy's entitlement from the estate is likely to be in the order of $1.34 million less an approximate one-seventh share of any further costs that are ordered out of the estate. For the reasons below I think that the costs of these applications should be borne by the notional estate and therefore I proceed on the basis that William Wardy will be entitled to receive money or property to the value of approximately $1.34 million. In my view, adequate provision for his proper maintenance and advancement in life requires provision of a sum of $359,000 to discharge the mortgage over his home, a further sum of $200,000 towards expenses and liabilities incurred in the reasonable promulgation of the cross-claim, that is, the promulgation of the cross-claim to the extent it sought to challenge the validity of John Wardy's appointment as appointor of the trust, $750,000 as a lump sum which might be spent as William Wardy sees fit, but which would be sufficient to provide a new car and funds to supplement his income during his lifetime, recognising that he is likely not to be able to continue to work as a plumber after a few years, and a further $250,000 by way of a contingency to meet the vicissitudes of life. This totals $1,559,000 which I would round up to $1,560,000. In my view if such provision were made there would be no need for any separate provision for the costs of holidays or to provide additional funds to pay his son's HECS debt. 191My estimate of the value of William Wardy's entitlement under the will is $1.34 million. The assessment of adequate provision is based on his circumstances at the time of hearing, after he had received interim distributions from the estate. The required provision is additional to those distributions. 192John Wardy contended that Mr Elwin's calculation of capital gains tax was overestimated by incorrectly including a liability to pay the Medicare levy and by failing to include portions of the administrator's legal costs, which could be included as part of the cost base of the estate assets. He also submitted that for this and for other reasons William and Sam Wardy were both likely to receive from the estate an amount of approximately $1,715,000. This assumed that their share of residue would amount to almost $800,000. For the reasons earlier given I do not accept the accuracy of this estimate. However, I think that the financial position of William and Sam Wardy are such that they should not be further exposed to the uncertainties and likely legal costs associated with the completion of the administration of the estate. Whereas I have concluded that Hassiba Wardy should be entitled to further provision of $300,000 in addition to her entitlements under the will, I think that the provision to be made for William and Sam Wardy should be in lieu of their entitlements under the will. They both contended that their entitlements under the will were substantially less than the amount I have estimated. 193Counsel for William Wardy submitted that his entitlements under the will were likely to be of the value of approximately $1,054,000 and that he should receive an additional sum of $630,000 for his future maintenance and advancement in life. In my view, that is not the appropriate order. The order that should be made is that William Wardy be entitled to a legacy of $1,560,000 in addition to the distributions he has received from the estate, but otherwise in lieu of his entitlements under the will. An order in that form was sought by Mr Loofs in respect of Sam Wardy. I think that an order in such a form is appropriate in respect of both William and Sam Wardy having regard to their uncertain financial position. There is an added benefit that this would disentangle the brothers from the administration of the estate and co-ownership of property.

Claim of Sam Wardy 194Sam Wardy is 49. He is married but he and his wife are separated. He has one child in year 12 at school. Sam Wardy is qualified as a carpenter, joiner and builder. 195Sam Wardy deposed to an extremely harsh upbringing at the hands of his father. It is hard not to think that there is some exaggeration in Sam Wardy's evidence of his upbringing. He says that his father beat him every day from the time he was four years old, forced him to wear clothes that were too big and out of fashion, made the children eat rotten fruit, refused to allow the children to have toothpaste or toilet paper and from when he was aged eight, made him spend every weekend and holiday working on his father's properties cleaning bricks, helping painters, plumbers, roofers, carpenters, tilers or removing rubbish. He said he was bashed if he carried only two or three bricks at a time. Of course Edmund Wardy cannot respond to that evidence and I treat it with caution. Sam Wardy was not cross-examined on this evidence and his brothers did not respond to it. I accept that Edmund Wardy was a hard and frugal man and that Sam Wardy had a harsh upbringing. However, the details and extent of that harshness do not have a material effect on what order for provision, if any, is appropriate. I also accept that Sam Wardy as a child and during his apprenticeship (which he started when he left school in Year 11) spent considerable time working on his father's properties. William Wardy did likewise. 196Sam Wardy acknowledges that he stopped working for his father in 1984 after his mother's death. He gave evidence that his father said that he could not live in the house if he did not work. He ceased living in the Kensington family home in 1985 when he was about 20. 197Sam Wardy made a contribution of $35,000 to the purchase of a block of units in Randwick and was registered as a proprietor as to a one-fifth share of the property. The property was later sold. Sam Wardy was repaid $28,000 and was told by the deceased that the rest covered board that he owed from living in the Kensington family home. 198Sam Wardy married in 1993. The deceased did not approve of the marriage. In about 1997 Sam Wardy and his wife separated. They had purchased a property in Rosebery, which they sold. In 1998, notwithstanding their separation, they purchased as joint tenants a property in Frogmore Street, Mascot. Sam Wardy's wife and son moved into that property. Sam Wardy lived in a unit in the George Street, Redfern property which belonged to the deceased for which he paid rent. 199In about 2004 Sam Wardy was convicted of a charge relating to the possession of drugs to which he pleaded guilty. In these proceedings he contends that he was wrongly persuaded to plead guilty and that an application to withdraw the guilty plea had been wrongly refused. He served a period of weekend detention. When Edmund Wardy saw Ms Klonis in 2005 he told her that Sam Wardy had been convicted of a drugs offence. It seems to have influenced the deceased's view about Sam Wardy in the preliminary instructions he gave Ms Klonis. However, counsel for John Wardy who opposed the claim for provision made by Sam Wardy did not suggest that the latter's conviction for a drugs offence was conduct that should affect in any way his claim for provision from the deceased's estate or notional estate. This was correct. 200Sam Wardy worked on a full-time basis until 2010. That work included working as a site manager for major building companies in Sydney. He did not work on a full-time basis after 2010, although he looked for work. From about 2010 he obtained only casual employment as a labourer. 201Sam Wardy has superannuation of approximately $275,000. He and his wife Leanne are joint owners of the property in Frogmore Street, Mascot that was purchased in 2004 for approximately $630,000. Sam Wardy estimated the current value of that property to be about $800,000. It is subject to a mortgage of about $690,000. He owns a car. Otherwise, his assets consisted of cash remaining after the making of interim distributions from the estate. As in the case of William Wardy, it is unlikely that he would receive a distribution from the trust in the foreseeable future. 202Sam Wardy gave evidence that he expected that his wife would bring property settlement proceedings once these proceedings were concluded and that he had been advised that on a property settlement his wife would get their house and an amount of $300,000-$500,000 if his assets permitted such a distribution. His son is now in Year 12 and hopes to study law at university after school. 203Whilst the evidence of the advice provided to Sam Wardy as to the likely outcome of Family Court proceedings was read without objection, it can carry no weight. The expertise of the adviser to predict the likely outcome of the Family Court proceeding was not established and no reasons for the view expressed were provided. Undoubtedly the Family Court would have power to adjust the property interests of Sam Wardy and his wife, including Sam Wardy's interest in property obtained from the estate or pursuant to a family provision order. However, I do not consider that I should speculate on whether such a power would be exercised if proceedings in the Family Court were commenced or, if so, how they would be exercised. 204Under s 59 of the Succession Act provision can only be made for the applicant's maintenance, education or advancement in life. In Lloyd-Williams v Mayfield Bryson JA observed (at [39], 11) that: "There is no explicit limit in the terms of the Family Provision Act 1982 which prevents a provision from being made with the indirect effect of benefiting a third party. Limits arise in the application of the concept of adequate provision for proper maintenance and the interdependence of such provision with available resources and competing claims." 205I do not think that the possibility or even likelihood of a claim being made on Sam Wardy's property by his wife is a factor warranting an increase in the provision otherwise regarded as adequate for Sam Wardy's maintenance and advancement in life. In McGrath v Eves [2005] NSWSC 1006 Gzell J said (at [75]) that a parent's testamentary bounty should not be expected to cover the consequences of an adult child's divorce. Moreover, in this case there is no way of properly assessing the likelihood of such a claim succeeding. For example, there is no evidence of the wife's assets (except that she is a joint owner of the Mascot property), or of their respective financial and non-financial contributions. 206Sam Wardy deposed, and his counsel submitted, that he had a need for new accommodation as well as for a sum of money that would extinguish the mortgage. This was because he is not living in the main house in the Frogmore Street property with his wife and son. He lives in a granny flat. He wants to be able to have a home where he can live with a partner and where his son could come and stay. His wife will expect to continue to live in the Frogmore Street property with her son at least until her son leaves home. In effect, he claims a need for provision which would provide two unencumbered residences: one for his wife from whom he is separated, and one for himself. In addition, Sam Wardy deposed that he regarded his need "as including the need to be free from the need to work". He sought an income of $50,000-$60,000 per year which he said would let him live well. His counsel submitted that a capital sum of $2 million should be provided to provide such a source of income. Counsel submitted that such a sum could be expected to be invested at a conservative rate of three per cent per annum (which would yield $60,000 per year before tax) and that the capital value would substantially erode over time due to inflation. 207I do not consider that adequate provision for Sam Wardy's proper maintenance and advancement in life requires him to be provided with an income which would entirely free him from the need to work. Until 2010 he had well-paid work in responsible positions. Although he deposed to having made serious and repeated attempts to find work, his apparent inability to obtain other than occasional casual work as a labourer may be due to his attitude that since his father's death he should not need to work. However, I do not conclude on the balance of probabilities that that is so. I accept that adequate provision for his future maintenance and advancement in life should include a provision that can provide an adequate sum to provide an income for periods when he is out of work or to supplement a salary as well as to provide a buffer against adverse contingencies. 208Sam Wardy also contended that his needs included provision that would pay off the balance of his debts, that augmented his superannuation by $725,000, that provided him with a new car (for which he sought $50,000), new white goods, television, computer and sound system ($40,000), furniture ($30,000), and furnishings or dinnerware ($10,000), clothes ($10,000), and a sum to pay the cost of his son's living expenses for a further three years ($100,000) and his likely HECS fees ($80,000-$90,000), and to provide his son with a deposit for a house (reduced in submissions to $40,000-$50,000). With this wishlist of items counsel for Sam Wardy submitted that his needs that should be met should be valued at in excess of $5 million. 209I regard these claims as manifestly excessive. I must guard against using the claim as a subconscious anchor against which to assess what is adequate provision for Sam Wardy's proper maintenance and advancement in life. 210In my view, such adequate provision, having regard to the size of the estate and notional estate, requires provision of a sum that would discharge Sam Wardy's debts including the mortgage over his house, provide a capital sum capable of being used to supplement his income or to provide an income for periods when he is unable to obtain work, and to provide a sum as a buffer against adverse contingencies. I do not consider that there was any moral obligation on the deceased to provide Sam Wardy with funds for another house because he is not occupying the house he jointly owns due to marital difficulties. The provision should be sufficiently ample to recognise the moral duty of Sam Wardy to continue to support his son during his university studies. 211Sam Wardy's principal debt is the debt secured by mortgage over the house of about $690,000. His former solicitor claims he owes a debt of about $47,000. Those costs are to be assessed. His current solicitors claim he owes them about $183,000. A substantial portion of the latter claim should be met by an order for costs in these proceedings. Sam Wardy received interim distributions from the estate of $400,000 that were applied towards payment of debts, including legal costs. The debts incurred also included credit card debt and a loan from a friend to meet legal costs and living expenses. 212Sam Wardy has a liability estimated to be approximately $110,000 in respect of the costs he was ordered to pay in respect of his unsuccessful cross-claim. For the reasons I have given I consider that his liability to pay such costs is something to be taken into account in assessing his need for provision as the cross-claim, although unsuccessful, was brought reasonably. 213The order for provision in favour of Sam Wardy should be in lieu of his entitlements under the will. The assessment of his needs is made after the interim distributions he has received. The provision is to be in addition to the interim distributions received. 214In my view a provision of $900,000 is adequate as a sum to be applied towards discharge of his debts. 215It would be artificial, and suggestive of greater precision than can in fact be applied, to seek to calculate separate amounts for a fund to be used to pay income and a fund to provide a buffer against adverse contingencies. When working, Sam Wardy was capable of earning an income of about $160,000 in 2010. I do not know what he could be expected to earn in the future. Therefore, any calculation of a separate capital sum to provide a source of income would be speculative. This is the point at which attempts to reason to a final conclusion break down and the court can do no more than make a value judgment or intuitive assessment of what provision is appropriate. In doing so I take into account Sam Wardy's superannuation. 216In my view further provision of $1 million will be adequate to provide a capital sum which can be invested to earn income that would supplement Sam Wardy's income or provide him with a buffer for periods he is unable to earn an income, and which would also provide him with a sum to meet contingencies and to provide support. 217Accordingly, a sum of $1.9 million in addition to the distributions already received from the estate would be an adequate provision for Sam Wardy's proper maintenance and advancement in life.

Succession Act, ss 87, 88 and 89. 218Section 88(b) and (c) of the Succession Act provides: "88 Estate must not be sufficient for provision or order as to costs (cf FPA 28 (1)) The Court must not make a notional estate order unless it is satisfied that: ... (b) the deceased person's estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or (c) provision should not be made wholly out of the deceased person's estate because there are other persons entitled to apply for family provision orders or because there are special circumstances." 219Before a notional estate order can be made, I need to be satisfied that the estate is insufficient for the making of the family provision order or any order as to costs that I am of the opinion should be made, or there are special circumstances by reason of which provision should not be made wholly out of the deceased's estate (s 88(b) and (c)). For the purpose of s 88(b) the court must assume that the property in respect of which a family provision order can be made includes the notional estate as well as the actual estate. Were it otherwise no notional estate order could ever be made, except perhaps as to costs, because the question of what provision for an eligible applicant's maintenance, education or advancement in life is proper, and whether the provision, if any, made is adequate, can only be assessed having regard to the assets available. 220It is difficult to make an affirmative finding that the deceased's estate is insufficient for the making of the family provision orders that I consider should be made. I do not know how the remainder interests of Hassiba Wardy's sons would be valued. There is considerable uncertainty about the valuations and the debts and the full administration expenses of the estate. It is possible that the additional provision of $300,000 for Hassiba Wardy and the provision I consider that should be made for William and Sam Wardy in lieu of their entitlements under the will could be met out of the shares of John Wardy and Hassiba Wardy's sons. Nonetheless, I am satisfied that there are special circumstances that warrant an order that provision not be made wholly out of the deceased's estate that satisfy the requirement of s 88(c). In Baker v R [2004] HCA 45; (2004) 223 CLR 513, Gleeson CJ said (at [13]): "[13] There is nothing unusual about legislation that requires courts to find 'special reasons' or 'special circumstances' as a condition of the exercise of a power. This is a verbal formula that is commonly used where it is intended that judicial discretion should not be confined by precise definition, or where the circumstances of potential relevance are so various as to defy precise definition. That which makes reasons or circumstances special in a particular case might flow from their weight as well as their quality, and from a combination of factors." (Footnotes omitted.) In other words, a circumstance may be special by reason of degree as well as of kind. 221Circumstances need not be unique to be special, but they will be unusual (Cetojevic v Cetojevic [2006] NSWSC 431 at [77]; and Campbell v Chabert-McKay [2010] NSWSC 859 at [90]-[92]). 222There are "special circumstances" in the present case. In particular, the complexity of the estate, the uncertainty as to the value of the gifts under the will, and the fact that the deceased had built up assets in the Edmund Wardy family trust that could have been used to discharge the debts of the estate, in particular his debts for income tax, are special circumstances enabling the making of notional estate orders. 223Before such orders can be made, the court is required by s 87 of the Succession Act to consider the importance of not interfering with reasonable expectations in relation to property, the substantial justice and merits involved in making or refusing to make an order, and any other relevant matter. 224No discretionary object of the Edmund Wardy family trust has any reasonable expectation that the assets of the trust will not be interfered with by the making of a notional estate order. Whilst the discretionary objects of the trust have a reasonable expectation of being considered in relation to any decision for the appointment of the assets or income of the trust, they do not have a reasonable expectation of receiving any particular distribution of trust income or trust property. After a notional estate order is made and after costs are paid out of the notional estate, there will still be millions of dollars available for distribution to the discretionary objects of the trust. There is substantial justice and merits in making notional estate orders. But for the decision of Edmund Wardy to place some of the commercial properties he acquired in the trust, the properties would have formed part of his estate. It appears from his instructions to Ms Klonis in 2005 that he did not clearly distinguish between properties which he personally owned and properties which were assets of the trust. As a matter of substantial justice and merit, there is every reason to treat the assets of the trust as assets of the deceased. 225Section 89(1) does not require any additional matter to be taken into account that has not already been addressed in the course of these reasons.

Burden of orders for provision 226To the extent it is just to do so, the provision to be made for Hassiba, William and Sam Wardy should be made out of the deceased's actual estate. I do not think it just to require that the burden of the order for provision be borne out of the shares of Anthony, Roger or Robert Wardy. They have not established themselves independently in life. For the moment they remain dependent on their mother. Their interests in the residuary real estate will provide them with funds that will be no more than sufficient for their immediate maintenance and advancement in life. Their interests in remainder in the substitute gift for the Cleveland Street property may not be realised for decades. 227The other beneficiary who could bear the burden of an order for provision is John Wardy. John Wardy adduced no evidence as to his financial position. There is no evidence that he would suffer any hardship if the burden of the orders for provision falls on his share of the estate. As the sole director of Linevale and as the appointor of the Edmund Wardy family trust he is in the position to control the disposition of the trust assets, subject of course to his fiduciary obligations to the beneficiaries of the trust. He was able to purchase the Cleveland Street property. (It was purchased at auction.) 228The burden of the orders for provision so far as they are to be met out of the estate should be borne by John Wardy's share of the estate. That share will be adjusted to accommodate the fact that provision in favour of William Wardy and Sam Wardy is to be made in lieu of their entitlements under the will. There is power under ss 65(2)(f) and 66(2) of the Succession Act to adjust the interests of persons affected by the family provision orders in a means which is just and equitable to all persons affected by the order. Those powers should be exercised to provide for the burden of the family provision orders to be borne in the first instance out of John Wardy's share of the estate adjusted by his being entitled to William and Sam Wardy's shares in the estate. To the extent that John Wardy's share of the estate as so adjusted is insufficient to meet the burden of the family provision orders, assets of the Edmund Wardy family trust are to be designated as notional estate of the deceased. Linevale should nominate an asset or assets of the Edmund Wardy family trust to be designated as notional estate to meet the orders for provision and costs.

Position if no notional estate 229But for my conclusion that the assets of the Edmund Wardy Family Trust are liable to be designated as notional estate, I would not have considered that a family provision order should have been made for any of the plaintiffs.

Costs 230In my view the plaintiffs' costs of the family provision proceedings should be paid out of the notional estate. But the costs of Mr Salier as administrator of the estate and the costs incurred by John Wardy in defending the family provision claims should be paid out of the actual estate. Mr Salier and John Wardy performed the functions that in a usual family provision case would be performed by the named executor, whose proper expenses should be indemnified out of the estate. I have allowed an estimate of such expenses in estimating the value of the residuary estate. 231Counsel for John Wardy submitted that Mr Salier should not receive all of his costs out of the estate. John Wardy submitted that Mr Salier was at fault in not providing timely information about the South Dowling Street rents, in failing to obtain a timely valuation of the property at George Street, Redfern, and in obtaining advice from Morgan Stanley that was unnecessary on the amount that would be required to be set aside to replace the income that Hassiba Wardy would have received had the property been retained. No such advice was tendered. It was submitted for John Wardy that it was inappropriate for the administrator to have been represented by two counsel and that inadequate assistance was provided in relation to the assessment of the estate's value. It was submitted that the administrator should not be entitled to recover his costs out of the estate for the preparation of submissions dated 2 August 2013 for advice sought from Morgan Stanely and for the fees of Morgan Stanley (if any). 232It is a serious thing to deprive an administrator of his right to be indemnified out of the estate in respect of expenses incurred in the administration. I do not think that the administrator was guilty of a dereliction of his duty in his conduct of the administration and the provision of information to the court, albeit that the information was provided in a piecemeal fashion. Due allowance must be made for the complexity of the administration. The foreshadowed report from Morgan Stanley as to what capital sum would be required to reinstate the same income stream as was generated from the Cleveland Street property could have been important information. I did not hear argument as to whether an appropriate substitute gift to the Cleveland Street property should be measured having regard to the required amount of capital to reinvest ($5.1 million) or whatever sum would be required to reinstate the income stream. If it is not possible to find an asset with a similar risk profile that generates similar income, questions may arise as to the selection of the appropriate substitute gift. It is unlikely that any dispute in relation to that can be decided in the abstract. There is no evidence that any party asked Mr Salier to conduct such inquiries. I do not think he can be criticised for not providing such evidence. If he has incurred expense in obtaining such evidence that was not deployed then it will be a matter for a costs assessor in assessing costs on the indemnity basis to determine whether the costs were reasonably and properly incurred. 233Mr Salier did not take any active part in defending the family provision claims other than providing information to the court in relation to the estate. Cross-examination of the plaintiffs as to their financial needs and other matters relevant to their claims was left to counsel for John Wardy. I joined John Wardy as a defendant to the family provision proceedings because he took the running in defending the claims. He carried out the tasks that would otherwise have been carried out by an executor and is entitled to his costs of defending the family provision proceedings on the indemnity basis out of the estate.

Conclusions 234For these reasons I have reached the following conclusions:

1. The assets of the Edmund Wardy family trust are liable to be designated as notional estate and the net assets of the trust are to be taken into account in determining what is adequate provision for the proper maintenance and advancement in life of Hassiba Wardy, William Wardy and Sam Wardy.
2. Provision of a sum of $300,000 in addition to her entitlements under the will is required for there to be adequate provision for Hassiba Wardy's proper maintenance and advancement in life.
3. A legacy of $1,560,000 in addition to the distributions he has received from the estate, but otherwise in lieu of his entitlements under the will, is adequate provision that should be made for William Wardy's proper maintenance and advancement in life.
4. A legacy of $1,900,000 in addition to the distributions he has received from the estate but otherwise in lieu of his entitlements under the will is adequate provision that should be made for Sam Wardy's proper maintenance and advancement in life.
5. The burden of the orders for provision are to be borne out of John Wardy's entitlements under the will so far as it extends and otherwise out of the notional estate. John Wardy's entitlements under the will are to be augmented by the shares that William Wardy and Sam Wardy would otherwise have received under the will, but for the orders for provision in their favour, but without disturbing the interim distributions made.
6. The costs of Mr Salier and of John Wardy in relation to the three family provision proceedings are to be paid out of the estate and assessed on the indemnity basis.
7. The costs of Hassiba Wardy, William Wardy and Sam Wardy of the family provision proceedings are to be paid out of the notional estate and are to be assessed on the ordinary basis.
8. There should be no order as to Linevale's costs to the intent that it bear its own costs, but be indemnified in respect of such costs out of the assets of the Edmund Wardy family trust.
9. Linevale is to designate a particular asset or assets of the Edmund Wardy family trust to be designated as notional estate to bear the burden of the family provision orders that is not met from the estate, and the burden of the costs to be paid out of the notional estate. 235My conclusion as to costs have been arrived at subject to any question that might arise concerning particular costs orders that have not been the subject of submissions, such as might arise from the making of an offer of compromise or a Calderbank offer. If any party seeks any different costs orders I will hear submissions and receive any relevant evidence on such questions. 236I stand over the proceedings to a convenient date for counsel to bring in short minutes of order consistent with these reasons.

Amendments 01 May 2014 - Amendments made to coversheet:Details for parties added: John Wardy as 2nd Defendant; Linevale Pty Ltd; Counsel appearing and solicitors acting for those parties added. Amended paragraphs: 0 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: 01 May 2014