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[2012] NSWCA 285
mixed. Appeal allowed in part; order dismissing Family Provision Act claim set aside; Beach Road property designated notional estate; provision of $225,000 ordered for second appellant (Clara) with burden on...
Two daughters challenged their mother's will that gave the family home solely to their two brothers. They argued the brothers had suspiciously arranged the will and used pressure, and that the will did not properly provide for them. The brothers lied about how they found the lawyer and about their own money and income. The appeal court said the lies did create suspicion about whether the mother truly understood and approved the will, but evidence from the independent lawyer and witness showed she did understand it, so the will stood. However, because the brothers lied about their finances, the court assumed they could earn reasonable income from business. This meant the poorer daughter (Clara, on a pension with health issues and risk of losing her house) had not been properly provided for. The court ordered $225,000 be paid to her from the value of the house (treated as if still part of the estate), with most of the burden falling on one brother's share. The other daughter's claim failed because she was better off financially.
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Lily Ezekiel and her husband Abraham emigrated from India to Australia in the mid-1960s and purchased the Beach Road, Bondi Beach property that remained their family home. In 1977 Lily executed a will leaving her estate to Abraham and, in the event he predeceased her, to their four children equally. By the 1990s relations between the two sons (Albert and Morris) and two daughters (Evelyn and Clara) had deteriorated. In late 1997 Lily attended a solicitor, Mr Woolley (introduced via a contact of Morris), and gave instructions for new wills. The sons arranged transport for Lily and accompanied her to the appointment but denied entering the office or participating in instructions. Draft wills were sent to the couple. On 10 December 1997 Lily and Abraham executed mirror wills in the presence of Mr Woolley and an independent witness, Mr Musrie. Lily's will left the Beach Road property to Abraham and, should he predecease her, to the sons as tenants in common, with residue to Albert. Abraham died in 2000. In July 2000 Lily told Rabbi Chriqui she had already provided for her daughters and now needed to provide for Albert, who had no other home.
Lily died on 2 November 2005. Probate in common form of the 1997 will was granted to the sons on 3 February 2006 and the property transferred to them. In May 2006 Evelyn and Clara commenced proceedings seeking revocation of the grant, alleging suspicious circumstances, lack of testamentary capacity and undue influence by Albert. They alternatively claimed under the Family Provision Act 1982 (NSW). Amended pleadings added an application for the 1977 will to be admitted to probate and later sought designation of the Beach Road property as notional estate under s 24. The sons defended, asserting the 1997 will was valid.
At trial before Brereton J the sons were found to be "utterly unreliable" witnesses who had lied about their role in sourcing Mr Woolley and about not knowing the appointment concerned a will ([50]-[53]). Nevertheless, the primary judge held Lily had testamentary capacity, the daughters had not proved undue influence, suspicious circumstances had not been established so as to require the sons to disprove undue influence, and Lily had known and approved the will's contents ([111]). On the family provision claim the judge regarded the sons' financial disclosure as unreliable but declined to draw adverse inferences that would improve the daughters' relative positions. He found Albert's lifelong dependency on his parents for accommodation gave him a strong moral claim, concluded the sons were in a "markedly inferior" position to the daughters before the will's provision, and dismissed the claim ([149], [155]). Costs were fixed at $100,000 payable by the daughters.
On appeal the Court of Appeal (Meagher JA, with Basten and Campbell JJA agreeing on the probate issues) held the primary judge had erred in failing to find that the sons' lies raised a realistic possibility they had been involved in giving instructions for the will, thereby displacing the presumption of knowledge and approval and requiring affirmative proof ([57]-[62]). However, that proof was forthcoming: Lily had telephoned Mr Musrie to witness her will, the solicitor read the will aloud and explained it, Lily read it herself, confirmed it was "okay" and executed it in the sons' absence after having the draft for three weeks ([66]-[67]). The probate appeal was dismissed.
On the Family Provision Act claim the Court held the primary judge had committed factual error by not resolving uncertainties created by the sons' false evidence about income and business activities in the daughters' favour. Evidence of finance applications claiming $52,000-$78,000 annual income each, gambling losses inconsistent with pension-only income, ongoing commission-agent activities until at least 2008, and use of estate funds to acquire business assets justified inferring each son could generate at least $60,000 pa ([95]-[106]). Re-exercising the discretion, the Court found Clara (single, pension-dependent, deaf, with health issues, net assets ~$490,000-$800,000 depending on daughters' loan repayments, and at risk of losing her home) had been left without adequate provision, while Evelyn's stronger position (~$1M net assets, employment income, stable marriage) did not. The Beach Road property (valued ~$1.9M-$2.3M, subject to ~$1.09M mortgages) was designated notional estate. Provision of $225,000 was ordered for Clara, with burden on Albert's half share pursuant to s 13, reflecting his dependency for accommodation and Morris's receipt of $56,000 from earlier mortgage funds. Costs orders were varied to reflect partial success.
The Court of Appeal's reasoning is grounded in the distinct evidentiary burdens applicable to probate and family provision litigation. On probate, Meagher JA carefully traced the relationship between the suspicious circumstances rule, the presumption of knowledge and approval, and the affirmative defence of undue influence. Citing Barry v Butlin (1838) 2 Moo PC 480 at 484-485 and Tyrrell v Painton [1894] P 151 at 157, his Honour emphasised that once due execution and rationality are shown, a presumption of knowledge and approval arises. Any circumstance raising a "well-grounded suspicion" that the will does not express the testator's mind displaces that presumption and requires the propounder to prove affirmatively that the testator "knew and approved of the contents" so that the will "can be said that the testator comprehended the effect of what he or she was doing" ([46]). The sons' lies about sourcing Mr Woolley and their knowledge that the appointment concerned a will were held to raise a realistic possibility they had participated in instructions or been present, casting doubt on whether the 1997 disposition accorded with Lily's intention ([57]-[62]). This was not cured by the primary judge's observation that no direct evidence placed them in the room; the lies themselves constituted circumstantial evidence permitting the inference that the truth would not have assisted their case (Moriarty v The London Chatham & Dover Railway Co (1870) LR 5 QB 314; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11 at [64]).
Nevertheless, the Court was affirmatively satisfied on the evidence of Mr Musrie (accepted as independent despite minor assistance from the sons) and the formal execution process that Lily knew the will's contents and its effect. She had initiated contact with the witness, received a draft three weeks earlier, heard it read and explained, read it herself, confirmed it accorded with her wishes, and executed it without the sons present ([66]-[67]). This discharged the evidential burden. Once knowledge and approval was proven, the onus of proving undue influence remained on the daughters. The Court approved the analysis in Boyse v Rossborough (1857) 6 HL Cas 2 and Vout v Hay [1995] 2 SCR 876 at [29]-[30] that proof the testator appreciated what she was doing does not simultaneously require disproof of coercion; the two concepts are distinct ([51]-[54]). The primary judge had therefore reached the correct ultimate result on probate even though his path contained error in the suspicious circumstances analysis.
The family provision outcome turned on the consequences of the sons' "utterly unreliable" financial disclosure. As executors they bore a duty to place all relevant evidence before the Court (Vasiljev v Public Trustee [1974] 2 NSWLR 497 at 503-504; Re SJ Hall Deceased (1959) SR (NSW) 219). Their false statements in loan applications, undisclosed business income, gambling records inconsistent with pension-only means, and continued commission-agent activities until late 2008 created uncertainty. Applying Jones v Dunkel [1959] HCA 8, Blatch v Archer (1774) 1 Cowp 63 and ASIC v Hellicar [2012] HCA 17 at [165]-[167], the Court held that where a party lies or withholds evidence an honest litigant would produce, uncertainties should be resolved against that party within the "leeway" created by the falsehoods (Oran Park v Fleissig [2002] NSWCA 371 at [66]-[67]; Nicholls v Hall [2007] NSWCA 356 at [36]). The primary judge's refusal to draw such inferences was factual error vitiating the discretionary judgment.
Re-exercising the discretion under the two-stage Singer v Berghouse [1994] HCA 40 test, the Court compared current positions (updated with further evidence of mortgages and costs). Evelyn's ~$1M net assets and earning capacity left her adequately provided. Clara's pension-only income, health difficulties, and exposure to home loss meant she had been left without adequate provision for proper maintenance and advancement. The sons' inferred earning capacity of at least $60,000 pa each, Morris's potential interest in the Caulfield property, and the $56,000 already received from estate funds improved their relative positions. Albert's dependency for accommodation was acknowledged but could be met by rental assistance rather than outright ownership given other claimants' needs ([110]-[112]). Designation of the property as notional estate was justified because the sons had been on notice since January 2006, mortgages up to $1.1M had been court-permitted, and no injustice arose (ss 24, 27). The $225,000 figure represented the limit the equity could bear while preserving adequate provision for the sons; burden on Albert's share under s 13 recognised his greater moral claim arising from lifelong residence.
Costs were revisited to reflect partial success. The trial costs order was reduced to $35,000 to account for Clara's success and intertwined issues. Appeal costs of $55,000 reflected the respondents' success on probate (70% of the argument) while acknowledging the appellants' family provision win.
Prior to Tobin v Ezekiel the law on suspicious circumstances was settled in broad terms by Barry v Butlin, Fulton v Andrew [1875] LR 7 HL 448 and Tyrrell v Painton, but intermediate appellate decisions had left some uncertainty about whether suspicion of undue influence required the propounder to disprove coercion once knowledge and approval was shown. Cases such as McKinnon v Voigt [1998] 3 VR 543 and Fuller v Strum [2002] 1 WLR 1097 had emphasised that the rule is not at large and is tied to the presumption it displaces. Vout v Hay (Canadian Supreme Court) had clarified the inter-relationship, but Australian courts occasionally merged the concepts. Tobin authoritatively confirms in New South Wales that once the propounder affirmatively proves the testator "comprehended the effect of what he or she was doing", any residual suspicion of undue influence does not prevent a grant; the opponent bears the onus on that distinct defence. This aligns probate doctrine more cleanly with the civil standard under s 140 of the Evidence Act 1995 (NSW) and Briginshaw v Briginshaw [1938] HCA 34 principles.
On family provision, the decision reinforces the obligation of executors to make full and frank disclosure of beneficiaries' resources and the forensic consequences of failure. Earlier authorities such as Anderson v Teboneras [1990] VR 527 and Nicholls v Hall had permitted inferences against non-disclosing parties, but Tobin applies the principle robustly where positive falsehoods are proven. It confirms that Jones v Dunkel inferences can be used to resolve "leeway of uncertainty" against the dishonest party without turning speculation into fact. The re-exercise of discretion illustrates that adult children's claims are not assessed in isolation; relative financial positions, earning capacity and moral claims (including dependency for accommodation per Petrohilos v Hunter (1991) 25 NSWLR 343) remain central. The liberal use of notional estate designation where beneficiaries have been on notice and have encumbered the property post-grant continues the post-Bridgewater v Leahy [1998] HCA 66 trend of protecting claimants from dissipation.
Post-Tobin the law is clearer: probate practitioners must advise clients that lies about will-making involvement can raise suspicion requiring affirmative rebuttal evidence, but robust execution evidence (reading over, independent witnesses, opportunity for reflection) will usually suffice. In family provision matters, executors who mislead on finances risk adverse inferences that can dramatically alter comparative positions and trigger notional estate orders. Later courts have applied these principles without needing to revisit the core holdings.
"[55] The suspicious circumstances rule does not operate at large. It operates to displace presumptions of fact in favour of those propounding the will. For that reason it is necessary to identify the presumption or presumptions to which particular circumstances are said to be relevant." (Meagher JA)
Plain English: The "suspicious circumstances" idea is not a free-floating reason to doubt any will. It only knocks out specific legal presumptions (like the assumption that someone who signs a sensible-looking will knows what it says). You must say exactly which presumption the suspicious facts attack.
"[62] That realistic possibility was admitted by their conduct in lying and concealing what happened and was sufficient to raise a relevant doubt." (Meagher JA)
Plain English: The brothers' lies were themselves evidence that the truth would have hurt their case. That created enough doubt about whether Lily really meant to cut out her daughters that the brothers had to prove she fully understood and approved the new will.
"[100] … the non-production of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavourable to the party's cause." (Meagher JA, citing Wigmore)
Plain English: If someone who should have the documents or knowledge to prove their story refuses to produce them or lies about them, the court is entitled to assume the hidden evidence would have been bad for that person's case.
"[119] In circumstances where no provision was made for Clara, and the making of no provision would leave each of the two sons with provision in a much better overall financial position, it is my view that inadequate provision was made for Clara's proper maintenance and advancement in life." (Meagher JA)
Plain English: Looking at everyone's money, earning power and needs after the brothers' lies were taken into account, Clara was left too vulnerable (pension, health problems, house at risk) while the brothers could earn decent incomes. That was not adequate or proper.
"[121] An amount of $225,000 represents the limit of what the estate could bear whilst also making sufficient provision for Albert and Morris … The burden of that provision should be borne by Morris rather than Albert." (Meagher JA)
Plain English: The Court gave Clara the maximum it thought the remaining equity could afford without leaving the brothers unable to house themselves. Most of the cost comes out of Albert's share because he lived in the house all his life and has the stronger moral claim.
Tobin v Ezekiel is triggered where (1) a will substantially benefits persons who participated in its procurement and who then lie about that participation, creating a realistic possibility they influenced instructions; (2) the will departs markedly from long-standing earlier testamentary intentions without obvious explanation; (3) the testator is elderly or vulnerable but medical evidence supports capacity; and (4) the propounder produces strong affirmative evidence of reading over, explanation by an independent solicitor, and execution in the absence of the beneficiaries. In such cases the suspicious circumstances rule is engaged but can be rebutted by execution evidence.
The family provision aspect is engaged when executors/beneficiaries who are also the sole beneficiaries under the will give positively false or materially incomplete evidence about their income, assets or earning capacity, especially where loan applications or gambling records contradict their affidavits. Courts will then resolve evidentiary uncertainty against them when comparing positions under the Singer v Berghouse test. The precedent is particularly apt where one claimant is pension-dependent with health or housing insecurity while the preferred beneficiaries have demonstrated (or lied about) business income. Notional estate orders are likely where the property has been transferred but the beneficiaries were on early notice of the claim and have since mortgaged it with court approval.
The costs aspect applies when a costs order at trial has failed to isolate discrete issues (probate vs provision) and one party's dishonesty on a major issue (undue influence/knowledge and approval) has driven costs that are ultimately intertwined with a successful provision claim.
Subsequent decisions have treated Tobin v Ezekiel as authoritative on both probate and family provision. In Mekhail v Hana [2019] NSWCA 197 the Court of Appeal cited [55]-[56] for the proposition that suspicious circumstances must be tied to the specific presumption displaced and do not require the propounder to disprove undue influence once knowledge and approval is shown. Estate of Wai Fun Chan [2015] NSWSC 1107 applied the adverse inference principle at [100]-[106] to an executor's incomplete financial disclosure, resolving uncertainties about overseas assets against the executor. Sgro v Thompson [2017] NSWCA 326 referred to the two-stage analysis and the relevance of earning capacity inferred from past business activities despite pension evidence.
In Herszlikowicz v Czarny [2020] VSC 659 the Victorian Supreme Court followed the distinction between knowledge and approval and undue influence, quoting [51]-[54]. Costs decisions such as Harris v Harris [2018] NSWSC 136 have cited the varied costs approach at [124]-[128] when partial success and dishonesty are present. No court has questioned the core holdings; instead Tobin is routinely cited for the forensic consequences of beneficiary lies and the circumstances justifying notional estate orders where equity remains after mortgages (Chapple v Wilcox [2014] NSWCA 392 distinguished on its facts but cited Tobin with approval on inference principles). The decision has strengthened the disincentive for dishonest disclosure in family provision litigation.
Several questions remain live after Tobin. First, the Court expressly left unresolved the difference of opinion about onus in revocation of a common form grant versus an initial solemn form application ([3]-[18]). Campbell JA noted the authorities but found it unnecessary to decide because an apparently rational duly executed will cast the evidentiary onus on the opponents in any event. Future cases where the will is irrational on its face or execution is doubtful may require resolution of whether a common form grant carries a stronger presumption that shifts the legal burden.
Second, the precise boundary between circumstances that raise suspicion only as to knowledge and approval and those that also engage the undue influence defence remains fact-sensitive. Tobin confirms the doctrines are distinct but acknowledges overlap; the weight to be given to post-death lies versus pre-death conduct is not exhaustively stated.
Third, the limits of adverse inferences in family provision remain open. Tobin emphasised that inferences cannot "fill gaps" but can resolve "leeway of uncertainty". How far a court may go in inferring specific earning capacity figures (here ~$60,000 pa) when the evidence is circumstantial rather than documentary is not settled. Later courts have cautioned against turning "possibility" into "probability" without some positive evidence.
Fourth, the interaction between Albert-style lifelong accommodation dependency and competing claims of pension-dependent siblings with health issues is not fully mapped. Tobin accepted that dependency for shelter can be met by rental provision rather than ownership, but the quantum and duration of such provision, especially where property values have risen dramatically, awaits further elucidation.
Finally, the treatment of legal costs incurred by beneficiaries in defending both probate and provision claims when partial success results continues to be approached on a "broad brush" basis. Whether a more issue-by-issue costs assessment under the Uniform Civil Procedure Rules 2005 (NSW) Pt 42 will be required in complex litigation remains to be seen. These open questions ensure Tobin v Ezekiel will continue to generate satellite litigation, particularly in blended families where adult children have disparate financial and personal circumstances.
nistration Act 1898, ss 18A, 33 Succession Act 2006 Supreme Court Rules 1970, Pt 78, Div 7 Cases Cited: Allen v Dundas (1789) 3 Term Rep 125 Allen v M'Pherson (1847) 1 HLC 191 Anderson v Teboneras [1990] VR 527 Annesley v Earl of Anglesea (1743) 17 How St Tr 1139 Armory v Delamire (1722) 1 Stra 505; 93 ER 664 Atter v Atkinson (1869) LR 1 P & D 665 Australian Securities and Investment Commission v Hellicar [2012] HCA 17; 86 ALJR 522 Bailey v Bailey [1924] HCA 21; 34 CLR 558 Ball v Newey (1988) 13 NSWLR 489 Barry v Butlin (1838) 2 Moo PC 480; 12 ER 1089 Bates v Messner (1967) 67 SR (NSW) 187 Baudains v Richardson [1906] AC 169 Birch v Birch [1902] P 130 CA Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Blore v Lang [1960] HCA 73; 104 CLR 124 Bosch v Perpetual Trustee Co Ltd [1938] AC 463 Boyse v Rossborough (1857) 6 HL Cas 2; 10 ER 1192 Bridgewater v Leahy [1998] HCA 66; 194 CLR 457 Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 Bull v Fulton [1942] HCA 13; 66 CLR 295 Buttery's Case (1818) Russ & Ry 342 Calvin v Carr [1977] 2 NSWLR 308 Chamberlain v The Queen (No 2) [1984] HCA 7;153 CLR 521 Chan Kit San v Ho Fung Hang [1902] AC 257 Cleare v Cleare (1869) LR 1 P & D 655 Cooper v Dungan (1976) 50 ALJR 539 Craig v Lamoureux [1920] AC 349 Dore v Billinghurst [2006] QCA 494 Douglas v Cooper (1834) 3 My & K 378 Eade v The King [1924] HCA 9; 34 CLR 154 Edwards v The Queen [1993] HCA 63; 178 CLR 193 Fisher v Grove [2003] WASCA 3 Foley v Ellis [2008] NSWCA 288 Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097 Fulton v Andrew [1875] LR 7 HL 448 G v H [1994] HCA 48; 181 CLR 387 Gregson v Taylor [1917] P 256 In Re Gillard [1949] VLR 378 In Re Goode (1890) 11 NSWLR (Eq) 281 In Re GR Newell (Deceased) (1932) 49 WN (NSW) 181 In Re West [1909] 2 Ch 180 In the estate of John Fourlanos, deceased; Maszkowski v Public Trustee (Supreme Court of New South Wales, Needham J, 17 July 1987, unreported; BC 8701273) In the Will of Lamont [1881] 7 VLR (IP&M) 86 In the Will of WF Lanfear (1940) 57 WN (NSW) 181 Jones v Dunkel [1959] HCA 8; 101 CLR 298 Kantor v Vosahlo [2004] VSCA 235 Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 Lippe v Hedderwick [1922] HCA 44; 31 CLR 148 Low v Guthrie [1909] AC 278 Mason v Permanent Trustee Co Ltd (unreported, Macready M, 5 December 1996) Mavrideros v Mack [1998] NSWCA 286; 45 NSWLR 80 McCosker v McCosker [1957] HCA 82; 97 CLR 566 McKinnon v Voigt [1998] 3 VR 543 Meluish v Milton (1876) 3 Ch D 27 CA Moriarty v The London Chatham & Dover Railway Co (1870) LR 5 QB 314 Mulcahy v Weldon [2002] NSWCA 206 Nicholls v Hall [2007] NSWCA 356 Nock v Austin [1918] HCA 73; 25 CLR 519 Noell v Wells (1668) 1 Lev 235 Oran Park v Fleissig; Teamfox v Fleissig [2002] NSWCA 371 Osborne v Smith [1960] HCA 89; 105 CLR 153 Parfitt v Lawless (1872) LR 2 P & D 462 Petrohilos v Hunter (1991) 25 NSWLR 343 Poulton v Adjustable Cover and Boiler Block Company [1908] 2 Ch 430 R v Gibson (1802) Russ & Ry 343 Re Blyth (deceased) (1959) NZLR 1313 Re Fenwick [1972] VR 646 Re Jolley [1964] P 262 Re McIntyre [1993] 2 Qd R 383 Re SJ Hall Deceased (1959) SR (NSW) 219 Rex v Watt (1905) 20 Cox CC 852 Riach v Ferris [1934] SCR 725 Robertson v Smith [1998] 4 VR 165 Singer v Berghouse [1994] HCA 40; 181 CLR 201 Smith v Tebbitt (1867) LR 1 P & D 398 Steinberg v Federal Commissioner of Taxation [1975] HCA 63; 134 CLR 640 Sutton v Sadler (1857) 3 CB NS 87; 140 ER 671 Tchadovitch v Tchadovitch [2010] NSWCA 316; 79 NSWLR 491 The Insurance Commissioner v Joyce [1948] HCA 17; 77 CLR 39 Thompson v Bella-Lewis [1997] 1 Qd R 429 Thornton v Curling (1824) 8 Sim 310 Timbury v Coffee [1941] HCA 22; 66 CLR 277 Tobin v Ezekiel - Ezekiel Estate [2008] NSWSC 1108 Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] NSWCA 136; 14 BPR 26,867 Tweed Shire Council v Hancomatic Music Pty Ltd [2007] NSWCA 350; [2007] Aust Torts Reports 81-922 Tyrrell v Painton [1894] P 151 Vasiljev v Public Trustee [1974] 2 NSWLR 497 Vigolo v Bostin [2005] HCA 11; 221 CLR 191 Vout v Hay [1995] 2 SCR 876 Waring v Waring (1846) 6 Moo PC 341; 13 ER 715 Whicker v Hume (1858) 7 HLC 124 Wingrove v Wingrove (1885) LR 11 PD 81 Wintle v Nye [1959] 1 WLR 284 Worth v Clasohm [1952] HCA 67; 86 CLR 439 Zoneff v The Queen [2000] HCA 28; 200 CLR 234 Texts Cited: Coote, H C, The Practice of the Court of Probate in Common Form Business, 4th ed (1863) Butterworths Hull, Rodney et al, Macdonell, Sheard and Hull on Probate Practice, 3rd ed (1981) Carswell Mortimer on Probate, 2nd ed (1927) Sweet & Maxwell Spencer Bower and Handley, Res Judicata, 4th ed (2009) LexisNexis Wigmore, JH et al, Wigmore on Evidence, 3rd ed (1940) Vol 2, Little Brown and Co Williams, Mortimer and Sunnucks, Executors Administrators and Probate, 17th ed (1993) Sweet & Maxwell Category: Principal judgment Parties: Evelyn Tobin (First Appellant) Clara Ezekiel (Second Appellant) Morris Ezekiel (First Respondent) Albert Ezekiel (Second Respondent) Representation: Counsel: J P Gormly SC, N M H Kirby (Appellants) T S Hale SC, J S Tobin (Respondents) Solicitors: T D Kelly & Co (Appellants) Diamond Conway (Respondents) File Number(s): CA 2006/275504 Decision under appeal Citation: Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81 Date of Decision: 2011-03-01 00:00:00 Before: Brereton J File Number(s): 2006/275504
Judgment 1BASTEN JA: I agree with Meagher JA. 2CAMPBELL JA: In litigation relating to probate, certainly one, and sometimes more, of the people best able to inform the Court about facts relevant to the drafting and execution of the will are not available to give evidence. That has the consequence that frequently it is important who has the onus of proving some particular matter relevant to that litigation, and in what circumstances there is a shifting of the onus of adducing evidence concerning that matter. Further, the onus of adducing evidence concerning one matter relevant to the litigation might be shifted by evidence that is not enough to shift the onus of adducing evidence concerning another matter relevant to the litigation. 3The present case involved an application to revoke a grant of probate that had already been made in common form, as well as an application for proof in solemn form of an earlier will of the Testatrix. There is a difference of opinion about whether the onuses operate differently in an application to revoke a grant that has already been made in common form than they operate when an application is made for an initial grant of probate. 4The difference of opinion arises in part because a grant of probate, even in common form, is itself a judicial act, capable of producing far-ranging consequences. Spencer Bower and Handley, Res Judicata, 4th ed (2009) LexisNexis at [10.26] says: "A probate establishes conclusively in civil proceedings in England that the instrument admitted to probate was a will, validly executed according to the laws of this country, by a testator of sound disposing mind without fraud or coercion, and that the executor named was entitled to that office." Cases cited for that principle are: Noell v Wells (1668) 1 Lev 235; Allen v Dundas (1789) 3 Term Rep 125; Thornton v Curling (1824) 8 Sim 310; Douglas v Cooper (1834) 3 My & K 378; Allen v M'Pherson (1847) 1 HLC 191; Whicker v Hume (1858) 7 HLC 124, 143-144; Meluish v Milton (1876) 3 Ch D 27 CA, 33; Birch v Birch [1902] P 130 CA, 137-138. As well see Chan Kit San v Ho Fung Hang [1902] AC 257 at 260. 5Normally a judicial act cannot be brushed aside as though it did not exist. Normally the person who seeks to set aside a judicial act must show that there is good reason why the judicial act should be set aside. 6The citation of authorities in Spencer Bower and Handley at [10.26] also recognises that: "The principle only applies with full rigour to a grant in solemn form: Migneault v Malo [1872] 4 PC 123, 135." 7Migneault at 135 says that a grant of probate in solemn form, after due citation of parties, is conclusive. However, that proposition is too absolute - even a grant in solemn form is revocable if it was obtained by fraud, and a grant in solemn form is also revocable if a later will is discovered: Williams, Mortimer and Sunnucks, Executors Administrators and Probate, 17th ed (1993) Sweet & Maxwell at 271. As well, Spencer Bower and Handley, op cit at [10.26] recognises that an unrevoked probate is no bar to a prosecution for forgery of the will: R v Gibson (1802) Russ & Ry 343; Buttery's Case (1818) Russ & Ry 342. The situation is rather that a grant in solemn form is binding on the parties to the probate suit in which it was granted, on anyone who has been cited to see the proceedings, and also on anyone of full capacity who has an interest and knows of the proceedings but chooses not to intervene: Osborne v Smith (1960) 105 CLR 153; Williams, Mortimer and Sunnucks, op cit p 270. 8Another source of the difference of opinion is that it has long been recognised in English law that, regardless of its status in other courts, a grant in common form is inherently revocable by the probate court: Chan Kit San at 260-261; Poulton v Adjustable Cover and Boiler Block Company [1908] 2 Ch 430 at 433; In Re West [1909] 2 Ch 180; Re Jolley [1964] P 262. That inherent revocability may provide a reason why a grant of probate in common form is different to most judicial acts. 9That raises, in turn, the question of what is sufficient to induce a probate court to revoke a probate that it has granted. In In Re Gillard [1949] VLR 378 at 382, Barry J approved the statement in the 1863 edition of Coote's Probate Practice that: "...the court possesses and exercises, when it becomes necessary, the power of revoking or annulling, for a just cause, any grants it has made. And in so doing it only resumes into its own hands the powers which it has parted with on false or inaccurate suggestions." Barry J went on to approve a statement of Molesworth J in In the Will of Lamont [1881] 7 VLR (IP&M) 86 at 99 that "revocation is a matter of discretion depending on the circumstances of each case". 10In In Re Goode (1890) 11 NSWLR (Eq) 281 the issue was whether a citation should issue to call upon executors who had been granted probate in common form to bring in the probate (ie return it to the court that had issued it) and show cause why the probate should not be revoked. The Full Court held that such a citation should issue notwithstanding a 10-year delay. Darley CJ did so on the ground that the applicant had adequately explained the delay. Innes J, with whom Stephen J agreed, said at 287-288: "... lapse of time, even though unexplained, would not have been sufficient to bar the applicant's right to have the will proved in solemn form. In my opinion, the cases shew that lapse of time, short of thirty years, is in itself no bar, but that it may be a bar, taken in conjunction with other circumstances, and that the onus lies upon the persons who oppose the application of shewing that there are such other circumstances. The applicants in this case knew that probate had been granted in common form, and have lain by for some nine years, and if these were the only facts before us, I do not think that the Court could refuse the application or even call upon the applicants to explain their delay; but in addition we have the facts are set out in the affidavits of the executors, and these, I think, are sufficient to cast upon the applicants the onus of explaining why they did not take action before. This onus is in my opinion discharged by the applicants in the subsequent affidavits ..." 11However, the fact that the question at issue was whether the will should be required to be brought in at all means that these statements about onus do not necessarily apply to an action for revocation itself. This judgment of Innes J illustrates a thought that frequently recurs in the case law, expressed in a statement in Mortimer on Probate, 2nd ed (1927) Sweet & Maxwell at 424: "Any person whose interest is adversely affected by a probate granted in common form may, without limitation as to time, issue a citation against the person who proved the will, calling upon him to bring in the probate and to show cause why the same shall not be revoked, and if, in the event, the will is not sufficiently proved, the probate will be revoked." 12That suggests that, once the court has been satisfied that there is a sufficient case to require the probate to be brought in, an onus of establishing the will shifts to the propounder. 13It must be recognised, however, that many of the earlier cases on revocation of grants of probate were influenced by the particular rules of court in accordance with which probate practice was conducted. Re Goode and the statement just quoted from Mortimer, arose concerning a procedure that involved the issuing of a citation to bring the will into court. In this court, and now, Part 78 Division 7 Supreme Court Rules 1970 govern proceedings for revocation of a grant. That Division includes rule 43, which provides: "Proceedings for revocation of a grant shall, where there is a defendant, be commenced by statement of claim which shall allege facts which, if proved, will show that the plaintiff has standing to claim revocation of the grant." 14That rule does not answer the question of whether standing to claim revocation of the grant is the same as standing to require a will be proved in solemn form. Other rules in Part 78 Division 7 recognise that the Court has power to order an executor to bring the grant into the registry, but exercise of that power is not, by itself, the way in which proceedings for revocation are begun. 15One side of the difference of opinion about how onus operates in proceedings for revocation of a grant is illustrated by the opinion of Menhennit J in Re Fenwick [1972] VR 646 where he said, at 653: "The position is, in my view, unaffected by the original grant of probate. Once an order to show cause has been granted ... the position appears to me to be the same as it would have been if the issue had arisen before the original grant of probate." 16The other side of the difference of opinion is illustrated by the statement of Needham J in In the estate of John Fourlanos, deceased; Maszkowski v Public Trustee (Supreme Court of New South Wales, Needham J, 17 July 1987, unreported; BC 8701273) at 32: "However, the grant of probate in common form carries a presumption of validity, just as does the production of an apparently rational will duly executed." That statement is given added point by the fact that it immediately follows a reference to Re Fenwick. In In Re Jolley, Willmer LJ at 274 and Diplock LJ at 276-277 declined to decide where the onuses lay in an action for revocation of a grant. 17It is unnecessary to resolve the difference of opinion in the present appeal. That is because here, even if Needham J is right, the onuses will not operate any differently to the way they would operate if this were an application for a grant of probate in solemn form made in circumstances where there had been no previous grant of any kind. That is because this is a case in which there is an apparently rational will duly executed. The proof of due execution comes from the evidence of Mr Musrie, which is consistent with the physical appearance of the will, which bears three different signatures and an attestation clause: "SIGNED by the Testatrix as and for her last Will and Testament in the presence of us both present at the same time who at the request and in her sight and presence and in the sight and presence of each other have hereunto subscribed our names as witnesses." 18Even if this were an application for a grant of probate in solemn form, made when there had been no previous grant, the existence of a rational will duly executed would, of itself, be enough to cast on those who oppose the making of the grant an onus of adducing evidence to suggest that there are suspicious circumstances. The primary judge found that there was insufficient doubt as to the testatrix's capacity to shift the onus concerning that question to the Respondents, and in any event the evidence favoured the view that she had capacity: [39]. There is no appeal against those findings. For the reasons given by Meagher JA, and contrary to the decision of the primary judge, the Appellants have adduced evidence that raises a suspicion about the testatrix's knowledge and approval of the will. They have thereby cast on the Respondents an onus of persuading the court of the righteousness of the transaction in that respect. However, for the reasons given by Meagher JA, they have discharged the onus of showing knowledge and approval. 19I agree with the reasons of Meagher JA, and with the orders he proposes. 20MEAGHER JA: The appellants and respondents are the four children of Lily Ezekiel who died on 2 November 2005 and Abraham Ezekiel who died on 19 July 2000. It is convenient to refer to the family members by their first names. Probate in common form of Lily's Will dated 10 December 1997 (the Will) was granted to the respondents, Albert and Morris, on 3 February 2006. By that Will she appointed the respondents as her executors and left the family home at Beach Road, North Bondi, to her husband, Abraham, and in the event of his earlier death, to Morris and Albert as tenants in common in equal shares. By reason of Abraham's earlier death, the family home passed to Albert and Morris. On 14 February 2006 the transfer of that property to them was registered. 21On 2 May 2006, the appellants, Evelyn and Clara, commenced proceedings seeking an order that the grant of probate in common form of the Will be revoked. It was alleged that there were circumstances which raised doubt as to whether Lily had known and approved the contents of the Will and as to whether she had testamentary capacity. In the alternative, an order was sought under s 7 of the Family Provision Act 1982. In May 2008 Evelyn and Clara filed an amended statement of claim which also alleged that Lily did not have testamentary capacity at the time of preparation and execution of the Will and that it was executed as a consequence of undue influence exerted by Albert. Orders were sought that an earlier will dated 28 September 1977 be admitted to probate in solemn form. In December 2009, in the course of the hearing before Brereton J (the primary judge) a further amended statement of claim was filed seeking an order pursuant to s 18A of the Probate and Administration Act 1898 that the earlier will, because of irregularities, constituted her last will and an order designating the Beach Road property as notional estate of Lily. 22In his judgment delivered on 1 March 2011, the primary judge concluded that Lily did have testamentary capacity, that Evelyn and Clara had not proved that execution of the Will was procured by the undue influence of Albert and that Lily knew and approved the contents of the Will. He also concluded that no order for provision should be made under the Family Provision Act 1982 in favour of Evelyn and Clara. On 23 May 2011 the primary judge gave reasons for ordering that Evelyn and Clara pay the costs of Morris and Albert of the proceedings fixed at $100,000. 23By their amended notice of appeal, Evelyn and Clara appeal from the orders refusing the revocation of probate and relief under the Family Provision Act. They also appeal from the order for costs made in May 2011. 24The appellants do not challenge the primary judge's conclusion that Lily had testamentary capacity. Nor do they challenge his Honour's conclusion that they failed to establish undue influence. They argue that the evidence established circumstances giving rise to a suspicion of undue influence which required that the respondents, as proponents of the Will, dispel that suspicion. That argument is put in various ways. It is said the primary judge erred in not finding that there were suspicious circumstances and in not concluding that the respondents had failed to prove that the Will was the true expression of Lily's free testamentary wishes. Alternatively, the appellants argue that the primary judge erred in rejecting their claim for provision under the Family Provision Act. That argument turns mainly on findings of the primary judge concerning the financial positions of the respondents in circumstances where his Honour had concluded that they had failed to provide truthful and full disclosure on that subject. 25I will first address the probate issues, then those arising under the Family Provision Act and finally those in respect of costs.
Circumstances relevant to probate issues 26Lily and Abraham were born and grew up in India. They married in 1944. In the mid-1960s the family emigrated to Australia. The Beach Road property was purchased by Abraham and Lily in October 1965. It remained their home until they entered nursing homes before their deaths. Whilst the other three children eventually left the home and married, Albert continued to live in Beach Road. 27In 1971 Abraham made a will leaving all his possessions to Lily and in the event of their simultaneous deaths, to the four children. In September 1977 Lily made a will leaving all her possessions to Abraham and in the event of their simultaneous deaths, to the four children. In the 1990s the relationships between the sons and daughters deteriorated and that remains the position. 28The primary judge made the following findings with respect to the circumstances in which the Will was prepared and executed. None of those findings is challenged on appeal although there are challenges (to which I will refer) to findings that Mr Woolley had not taken instructions from Abraham in relation to his will and as to Mr Musrie's observation on 10 December 1997 when the Will was executed, that Lily appeared in good health and humour: "11 Sometime prior to 19 November 1997, Lily attended the office of Gibsons, solicitors, where she saw Mr Woolley, solicitor, who is since deceased, and gave instructions for a will. Evelyn's son Brett Tobin gave evidence of having driven Lily to Mr Woolley's office, accompanied by Albert and Morris, on this occasion. Although he is naturally aligned with his mother, his evidence appeared entirely credible. ... I accept his evidence. Of significance is that on the way into town Lily asked questions suggesting some uncertainty as to where and to whom they were going, but also that on the return journey Lily made a statement to the effect "Who has the will?" or "Where is the will?" indicating that she knew that the subject matter of the attendance was a will. 12 Both Morris and Albert say that Lily went into the solicitor's office alone, and that they did not enter; yet they did not, thereafter, sit together; one went to a cafe. While there is nothing to corroborate their assertion from any independent source, there is no evidence to the contrary, and the gravest doubts about their reliability and honesty - which, as will appear, are amply justified - cannot establish it. Moreover, it is improbable that an experienced solicitor, as I accept Mr Woolley was, would have allowed potential beneficiaries to be present while instructions were given. 13 On 19 November, Mr Woolley forwarded to Abraham and Lily draft wills for each of them. Mr Woolley's letter of that date refers to a recent discussion with Mr and Mrs Ezekiel, which may be a reference to another consultation involving both, but might also, somewhat imprecisely, encapsulate separate meetings with each of them, or - less likely - refer only to the attendance on Lily. In any event, a draft will was prepared for each testator. 14 On 10 December 1997, Abraham and Lily executed their "mirror" wills, each appointing Morris and Albert as executors, and purporting to leave Beach Road to the surviving spouse ... but in the event that the other spouse did not survive the testator then Beach Road was left to Morris and Albert equally, with the residue to Albert. There was no dispute that the Will was duly executed by Lily, in the presence of Mr Woolley and Mr Musrie. Its execution occurred contemporaneously with the due execution by Abraham of his "mirror" will. Mr Musrie's evidence establishes that Mr Woolley read the wills over to each testator, explained them (in such a manner that Mr Musrie was apprised of their contents and effect), and had them read over by each testator, who acknowledged that it accorded with their wishes by responding "yes" to the question "Is that okay?" before they were executed and witnessed. Mr Musrie's evidence also establishes that neither Albert nor Morris was present, or even in the house, when the wills were executed. 15 On 16 December 1997, Mr Woolley sent a letter to Abraham and Lily, reporting on the execution of the wills and advising that they should be reviewed from time to time, and that Gibsons would hold the originals. In addition, Abraham and Lily executed general powers of attorney in favour of Morris and Albert, which Mr Woolley certified he had explained before execution to the donor, and witnessed. They are dated 23 December 1997, and although there is some doubt as to just when they were executed, the combined effect of Mr Musrie's evidence (that they were not executed, or otherwise discussed, in his presence on 10 December) and the correspondence from Gibsons (particularly their letter of 16 December, "We refer to our recent attendance at your home when you both executed a will and we now enclose Powers of Attorney") is that, despite some contrary indications (including some other aspects of the same letter), I am unpersuaded that the date of execution was other than the date the documents bear, namely 23 December 1997. This is of significance, as it suggests that there was probably another attendance by Mr Woolley on Abraham and Lily on 23 December 1997." 29The involvement of Albert and Morris in the preparation of the Will was not as originally suggested by them in their evidence. The primary judge made the following findings on that subject: "50 The ultimately undisputed evidence of Rachel Brook established that she received a telephone call from Morris, who asked who was her solicitor in Sydney; she told him that it was Mr Woolley. Brett Tobin's evidence establishes that Albert asked Brett to drive Lily into the city "for an urgent appointment", and that Albert and Morris knew that Lily was going to see "Rachel Brook's solicitor". 51 Both Albert and Morris originally said that their mother initiated the visit to Mr Woolley. Albert said that his mother made the appointment, and only told him of it on the day of the appointment, saying "Rachel Brooks recommended him". Albert even described Mr Woolley as "the family solicitor" - when in fact he had had no previous or subsequent contact with the family apart from the making of the 1997 wills and powers of attorney. Albert said that he did not know why his mother wanted to see a solicitor on the day of the visit to Mr Woolley, and did not ask before or after the visit. 52 Morris originally said that his mother had said to him " Rachel Brooks has recommended a good solicitor, he helped her when her husband died", and that he had the impression that his mother had telephoned earlier to make an appointment with Mr Woolley. Morris belatedly said that his mother told him that she wanted to make a will and asked if he knew a solicitor, in response to which he contacted Rachel Brook, who provided Mr Woolley's details. 53 I am satisfied that the original evidence of the sons in respect of sourcing Mr Woolley was false, and it must have been intended to assist their case and mislead the court. It is also incredible that they did not know that Lily was going to the solicitor in connection with a will, and I do not believe it." 30More generally, the primary judge described the respondents as "utterly unreliable" witnesses and as having given evidence dishonestly: [21]. His Honour did not, however, treat their lies with respect to the preparation of the Will as permitting adverse inferences as to their involvement in that process: cf Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 at [64]. 31The primary judge made the following specific findings as to Lily's testamentary capacity at the time of execution of the Will. With the exception of the finding as to Mr Musrie's observation concerning Lily's health, none of those findings is challenged on appeal: "29 ... David Musrie, one of the attesting witnesses, gave evidence and was cross-examined about the events of 10 December 1997, when he and Mr Woolley attended on both Lily and Abraham for the purpose of signing the Will (and Abraham's mirror will). He received a telephone call from Lily that day, who asked him to call at Beach Road to witness the execution of her will - which strongly suggests that she knew that she was making a will. He agreed to do so. When he arrived at Beach Road, Mr Woolley was already there. The occasion was a formal one; only Abraham, Lily, Mr Woolley and he were present. After reading over the wills orally, first Abraham's and then Lily's, Mr Woolley provided a detailed explanation of their terms, sufficient that Mr Musrie was able to understand and relate their effect. Then, Mr Woolley had Abraham and Lily read the wills. He asked them "Is this okay?" - and they each responded, "Yes". To Mr Musrie's observation, Lily seemed in good health. Although I take into account that he apparently did not observe that she was then in perhaps the initial stages of whooping cough, and that he receives some minor assistance from Albert and Morris, Mr Musrie appears to be essentially independent, and his evidence withstood powerful cross-examination; I see insufficient reason to doubt it. 30 Mr Woolley, the other attesting witness, being deceased, his evidence is not available. Although much was sought to be made of the absence of any file note or other record, his file was routinely destroyed in 2005, so any file notes are unavailable, and their absence is unexceptional. 31 Dr Ursula Christopher, who had been Lily's treating doctor for over 20 years, knew her well and saw her often, including on 11 December 1997, the day after she executed the Will, when she presented with coughing and wheezing, which was subsequently diagnosed as whooping cough; she was also very mildly anaemic. According to Dr Christopher, she was physically sick with whooping cough, but mentally well and normal. Dr Christopher described Lily as a woman of strong character who would not do anything she did not want to do, and a resourceful woman who was managing to cope with the pressures of looking after her ill husband. Dr Christopher had numerous elderly patients and knew the protocol for testing for suspected dementia - a mini mental examination - but never saw any need to administer it to Lily, who exhibited no signs of difficulty with comprehension or memory, or any other cognitive dysfunction. She pointed out that Lily was compliant with a complex medication regime, and that there was nothing in her demeanour to suggest that she was confused, demented, or cognitively impaired." 32His Honour also found that the disposition made by the Will was consistent with statements Lily made to Rabbi Chriqui in about July 2000: [27]. He gave evidence that at that time Lily said to him "I have taken care of the girls, and now I have to take care of Albert. He has no place to live." Lily also made reference to the Beach Road property and to having assisted Clara to purchase her home.
The decision of the primary judge on the probate issues 33The jurisdiction of the Supreme Court to grant probate was confirmed by s 33 of the Probate and Administration Act 1898. That jurisdiction includes the jurisdiction to revoke a grant of probate: Bates v Messner (1967) 67 SR (NSW) 187; Mavrideros v Mack [1998] NSWCA 286; 45 NSWLR 80. It seems to have been accepted before the primary judge that where, as here, the appellants sought revocation of a grant of probate in common form, the burden of establishing that the Will was valid remained on the respondents. It is not necessary to consider whether this assumption was correct. 34The primary judge rejected the arguments as to lack of testamentary capacity and undue influence. He found that the prima facie presumption of testamentary capacity was established because the Will was proved to have been duly executed and was rational on its face. He also found that presumption was not displaced by circumstances which raised any doubt as to the existence of testamentary capacity. Furthermore, on a consideration of the evidence as a whole, his Honour was affirmatively satisfied as to Lily's testamentary capacity. No challenge is made to any of these findings or that conclusion. 35The primary judge then addressed whether the appellants had established that the execution of the Will was the result of coercion on the part of Albert and not the exercise of Lily's free will. The appellants' case was that, having regard to the following circumstances, the finding of undue influence was more probably than not the true explanation for Lily's execution of the Will: "[44] ... (a) that the will effected a substantial change to Lily's long-standing testamentary intentions so as to exclude two children for whom she would have been expected to make provision, and did so for no explicable reason, which was inherently improbable in the case of a free testator; (b) that the sons were involved in procuring a will that substantially benefits them, and have given false evidence about relevant matters, from which it should be inferred that the truth would have been harmful to their case; (c) that the sons, and in particular Albert, had a motive for influencing Lily to make a will in their favour; (d) that Lily was vulnerable and submissive to domineering behaviour towards her by Albert; and (e) that there were failures and irregularities of ordinary legal procedures and protections, including in connection with Abraham's mutual will." 36Having considered those circumstances, the primary judge was not satisfied that undue influence had been proved. No challenge is made to that conclusion. 37His Honour then addressed the appellants' argument as to suspicious circumstances. That argument, as put to the primary judge, was that the circumstances relied upon gave rise to a doubt or suspicion that the Will had been procured by undue influence so as to require the respondents to affirmatively prove not only that Lily knew and approved of the contents of the Will but also that her assent to it was "freely given". The primary judge rejected that argument. The concept of "knowledge and approval" was concerned with whether the testator knew and approved of the contents of the Will at the time it was executed as distinct from whether that testamentary intention had been procured by fraud or undue influence. The defences of undue influence and fraud only arise for consideration if the Court is satisfied that the testator knew and approved the contents of the Will and attack the process by which execution of the Will was procured. The appellants' proposition that suspicion of undue influence as distinct from want of knowledge and approval, could bar admission to probate if not answered, cannot stand with the fundamental principle that undue influence and fraud are affirmative defences, which the opponent must prove on the balance of probabilities: [100], [106], [108]. 38Finally, the primary judge considered whether there were otherwise circumstances which gave rise to a suspicion that the Will did not express Lily's true intention. He did so on the basis that the appellants bore the evidentiary onus of proving facts giving rise to a suspicion. His Honour concluded that the appellants had not established that the respondents were involved in making arrangements and giving instructions for the Will or that the change in Lily's testamentary intention between 1977 and 1997 was so remarkable as to arouse suspicion: [110]. Notwithstanding these conclusions, the primary judge did address whether he was satisfied that Lily knew and approved the contents of the Will which she then executed. He concluded that she did. Lily was of sound mind, memory and understanding at the time the Will was executed. She arranged for Mr Musrie to be present as a witness. The respondents were not present. Mr Woolley had read over and explained the wills to each of Lily and Abraham. They had then in turn read the wills to themselves. The wills were then executed: [111].
The appellants' arguments on the probate appeal 39The appellants advance substantially the same argument on appeal as was advanced before the primary judge. They argue that the doctrine of suspicious circumstances applies to each aspect of what must be proved to establish the validity of the Will so as to cause the evidentiary burden to shift to the proponents of the Will in the face of any relevant doubt or suspicion. In this case the suspicion is as to whether Lily's testamentary intent was not freely formed and was the subject of coercion by Albert. 40The argument was put in different ways and with varying emphasis on what the respondents had to establish for a grant of probate. The suspicious circumstances rule is not restricted to the circumstances of preparation and execution of the Will. There were circumstances here which gave rise to a suspicion that the Will did not express Lily's true testamentary intention. It is not necessary in this context that the suspicious circumstances be identified as relevant to any particular ground of objection to a grant of probate. However, if pressed, the suspicion was of coercion and interference by Albert in relation to the exercise of Lily's free will. The circumstances were sufficient to require the respondents to establish not only that Lily appreciated what she was doing but also that it was not the result of coercion. The circumstances were also sufficient to displace the presumption of knowledge and approval and required that the respondents affirmatively establish that Lily knew and approved of the contents of the Will. Approval in this context includes that the testator freely adopted the contents of the Will as a true expression of his or her testamentary intention. 41The appellants also argue that the primary judge erred in not finding that there were suspicious circumstances which rebutted the presumption of knowledge and approval; and further erred in not concluding that the grant of probate should be revoked because whilst Lily may have known the contents of the Will, there remained a reasonable suspicion that she had not adopted them "as a true expression of her free testamentary wishes". 42In relation to the suspicious circumstances, it is contended that the primary judge erred in making certain findings of fact and in not drawing available adverse inferences from the lies of, and concealment of evidence by, the respondents in relation to their involvement in the preparation of the Will. The contested findings of fact address four matters. Two of those matters relate to the preparation and execution of the Will. They are whether Mr Woolley took instructions from Abraham before he signed his "mirror" will in December 1997 (which was relied on by the primary judge to support an observation that it had not been established that Mr Woolley departed from usual practice when preparing and having the wills executed); and Lily's state of health and functioning when the Will was executed and, later in about July 2000, when she spoke to Rabbi Chriqui. The other two matters relate to possible coercion by Albert. They are the extent to which Albert generally behaved in an oppressive and threatening fashion so as to overbear Lily; and whether the fact that the wills made in the 1970s remained unchanged for 20 years provided a basis for inferring that the change in 1997 was best explained as being the result of coercion.
Discussion 43The appellants' first argument, as the primary judge observed, raises for consideration the relationship between knowledge and approval of the contents of the will, which the proponent must establish, and undue influence which is a defence to be made out by the opponent. More broadly it raises the inter-relation of suspicious circumstances, undue influence and testamentary capacity which, as Sopinka J observed in Vout v Hay [1995] 2 SCR 876 at 885, has perplexed both courts and litigants since Barry v Butlin (1838) 2 Moo PC 480; 12 ER 1089. 44The starting point is that the onus of proof lies upon the proponent of the will to satisfy the court that it is the last will of a "free and capable" testator: Barry v Butlin at 482; 1092; Fulton v Andrew [1875] LR 7 HL 448 at 461; Tyrrell v Painton [1894] P 151 at 157; Bailey v Bailey [1924] HCA 21; 34 CLR 558 at 570; Timbury v Coffee [1941] HCA 22; 66 CLR 277 at 283. To establish that a document is the last will, it must be proved that the testator knew and approved its contents at the time it was executed so that it can be said that the testator comprehended the effect of what he or she was doing: Barry v Butlin at 484; 1091; Cleare v Cleare (1869) LR 1 P & D 655 at 657-658; Atter v Atkinson (1869) LR 1 P & D 665 at 668, 670; Nock v Austin [1918] HCA 73; 25 CLR 519 at 522, 528. 45If the will is rational on its face and is proved to have been duly executed, there is a presumption that the testator was mentally competent. That presumption may be displaced by circumstances which raise a doubt as to the existence of testamentary capacity. Those circumstances shift the evidential burden to the party propounding the will to show that the testator was of "sound disposing mind": Waring v Waring (1848) 6 Moo PC 341 at 355; 13 ER 715 at 720; Sutton v Sadler (1857) 3 CB NS 87 at 97-98; 140 ER 671 at 675-676; Smith v Tebbitt (1867) LR 1 P & D 398 at 436; Bull v Fulton [1942] HCA 13; 66 CLR 295 at 343; Kantor v Vosahlo [2004] VSCA 235 at [49], [50]. That doubt, unless resolved on a consideration of the evidence as a whole, may be sufficient to preclude the court being affirmatively satisfied as to testamentary capacity: Bull v Fulton at 299, 341; Worth v Clasohm [1952] HCA 67; 86 CLR 439 at 453. 46Upon proof of testamentary capacity and due execution there is also a presumption of knowledge and approval of the contents of the Will at the time of execution. That presumption may be displaced by any circumstance which creates a well-grounded suspicion or doubt as to whether the will expresses the mind of the testator. In Thompson v Bella-Lewis [1997] 1 Qd R 429 McPherson JA (dissenting in the result) said (at 451) of the circumstances able to raise a suspicion concerning knowledge and approval that, except perhaps where the will is retained by someone who participated in its preparation or execution or who benefits under it, "a circumstance must, to be accounted 'suspicious', be related to the preparation or execution of the will, or its intrinsic terms, and not to events happening after the testator's death". See also McKinnon v Voigt [1998] 3 VR 543 at 562-563; Robertson v Smith [1998] 4 VR 165 at 173-174. Once the presumption is displaced, the proponent must prove affirmatively that the testator knew and approved of the contents of the document: Barry v Butlin at 484-485; 1091; Cleare v Cleare at 658; Tyrrell v Painton at 157, 159; Nock v Austin at 528. 47Evidence that the testator gave instructions for the will or that it was read over by or to the testator is said to be "the most satisfactory evidence" of actual knowledge of the contents of the will: Barry v Butlin at 484; 1091; Gregson v Taylor [1917] P 256 at 261; Re Fenwick [1972] VR 646 at 652. What is sufficient to dispel the relevant doubt or suspicion will vary with the circumstances of the case; for example in Wintle v Nye [1959] 1 WLR 284 the relevant circumstances were described (at 291) as being such as to impose "as heavy a burden as can be imagined". Those circumstances may include the mental acuity and sophistication of the testator, the complexity of the will and the estate being disposed of, the exclusion or non-exclusion of persons naturally having a claim upon the testator, and whether there has been an opportunity in the preparation and execution of the will for reflection and independent advice. Particular vigilance is required where a person who played a part in the preparation of the will takes a substantial benefit under it. In those circumstances it is said that such a person has the onus of showing the righteousness of the transaction: Fulton v Andrew at 472; Tyrrell v Painton at 160. That requires that it be affirmatively established that the testator knew the contents of the will and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator: Tyrrell v Painton at 157, 160; Nock v Austin at 523-524, 528; Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097 at [33]; Dore v Billinghurst [2006] QCA 494 at [32], [42]. 48In this context the statements prescribing "vigilance" and "careful scrutiny" and referring to the court being "affirmatively satisfied" as to testamentary capacity and knowledge and approval are not to be understood as requiring any more than the satisfaction of the conventional civil standard of proof: see Worth v Clasohm at 453. What such statements do is emphasise that the cogency of the evidence necessary to discharge that burden will depend on the circumstances of each case and in particular the source and nature of any doubt or suspicion in relation to either of these matters: Kantor v Vosahlo at [22], [58]; Dore v Billinghurst at [44]. They also recognise that deciding whether a document is indeed a person's last will is a serious matter, so any decision about whether the civil standard of proof is satisfied should be approached in accordance with Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 or, now, s 140(2) of the Evidence Act 1995. 49It is then necessary to consider the relationship between the requirement that the will be that of a "free" as well as "capable" testator and the principles relating to the proof of undue influence. In this context undue influence means that the testator has been coerced into doing what he or she did not desire to do. What must be established is that execution was obtained by the exercise of "the power unduly to overbear the will of the testator": Wingrove v Wingrove (1885) LR 11 PD 81 at 82-83; Baudains v Richardson [1906] AC 169 at 184-185; Craig v Lamoureux [1920] AC 349 at 357; Bailey v Bailey at 571-572; Bridgewater v Leahy [1998] HCA 66; 194 CLR 457 at [62] fn 55; Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] NSWCA 136; 14 BPR 26,867 at [60]-[64]. Where the will has been executed by a person of competent understanding and, judged by the circumstances of execution, "apparently a free agent", the burden of proving that the will was executed under undue influence is on the party who alleges it: Boyse v Rossborough (1857) 6 HL Cas 2 at 49; 10 ER 1192 at 1211; Parfitt v Lawless (1872) LR 2 P & D 462 at 469; Craig v Lamoureux at 356-357; Bailey v Bailey at 571-572; Trustee for the Salvation Army (NSW) Property Trust v Becker at [76]. 50In Boyse v Rossborough it was alleged that the will of the testator, Mr Colclough, had been obtained by undue influence or fraud of his wife. Mr Colcough had sent for his solicitor, in the absence of his wife given instructions for the preparation of the will and later executed it in the presence only of his solicitor and another disinterested witness. In those circumstances Lord Cranworth said (at 50; 1212) that the burden was on those challenging the will to show "that though what was done bore the semblance of being the voluntary act of Mr Colclough, yet it was an act which he was induced to perform under the influence of terror or fraud". 51Circumstances which may suggest undue influence or fraud will often also give rise to a suspicion or doubt as to the testator's knowledge and approval of the contents of the will. Tyrrell v Painton was such a case. There it was said by each of the members of the Court (at 157, 159) that those propounding the will must prove affirmatively knowledge and approval before the onus is cast on those who oppose the will to prove undue influence or fraud. For that reason it is appropriate, in the absence of good reason, to consider any issue as to suspicious circumstances and proof of knowledge and approval or testamentary capacity before addressing any ground of objection on which the opponent bears the onus: see the discussion in McKinnon v Voigt at 551, 557, 561-562. However, the principle which requires that the suspicion or doubt be cleared away is directed only to requiring that affirmative proof. It does not also require that any remaining suggestion of undue influence be disproved: Low v Guthrie [1909] AC 278 at 281-282; Nock v Austin at 528; Vout v Hay at [29]-[30]. At the same time, the absence of any allegation of undue influence or fraud does not prevent the opponent putting knowledge and approval in issue and vigorously challenging the veracity of those propounding the will: Wintle v Nye at 294. 52In Boyse v Rossborough Lord Cranworth (at 44-45; 1209) distinguished between a testator who knows and approves the contents of the will and executes it of his or her own volition and a testator who knows and approves the contents of the will but executes it as a result of coercion or fraud. To illustrate the difference he gave this example (at 44-45; 1209): "If I meet a man in the street, and he puts a pistol to my breast, and threatens to shoot me if I do not give him my purse, and to save my life I yield to his demand; or if a neighbour, meaning to steal my horse, asks for the loan of it, stating that he wants it in order to go to market, and trusting to this representation I deliver it to him, and then he rides off and sells it,-in both these cases it was my will to hand over the purse and the horse; but the law deals with the case as if they had been obtained against my will, my will having been the result in one case of fear, and in the other of fraud. The same principles must guide us in determining whether an instrument duly executed in point of form, so far as legal solemnities are concerned, is or is not a valid will." 53That analysis will not apply to all instances involving the exercise of undue influence or fraud. For example, coercion may result in the testator signing an instrument whose contents are to some extent unknown. Or the testator may be mistaken as to the contents of the will as a result of fraud. In such cases the circumstances may also give rise to a suspicion or doubt as to knowledge and approval and the satisfaction of the requirement of affirmative proof would likely disprove the suspected undue influence or fraud. In the remaining cases, notwithstanding that the court may be satisfied that the testator appreciated what he or she was doing, there will still be a live issue as to whether what was done was as a result of coercion or fraud. 54In the several provinces of Canada, other than Quebec, the law in regard to testamentary capacity, undue influence, fraud, coercion and the formalities attendant on the execution of wills is governed by English statutes re-enacted with slight changes and by English usage and decisions: Rodney Hull et al, Macdonell, Sheard and Hull on Probate Practice, 3rd ed (1981) Carswell at 14. In a passage cited with approval by Sopinka J in Vout v Hay at [29], Crocket J, writing for the Court in Riach v Ferris [1934] SCR 725 at 736 [16] described the inter-relation between suspicious circumstances, knowledge and approval and undue influence as follows: "Assuming that in the case in behalf of a plaintiff seeking to establish the validity of a will, there may be such circumstances of apparent coercion or fraud disclosed as, coupled with the testator's physical and mental debility, raise a well-grounded suspicion in the mind of the court that the testator did not really comprehend what he was doing when he executed the will, and that in such a case it is for the plaintiff to remove that suspicion by affirmatively proving that the testator did in truth appreciate the effect of what he was doing, there is no question that, once this latter fact is proved, the onus entirely lies upon those impugning the will to affirmatively prove that its execution was procured by the practice of some undue influence or fraud upon the testator. This, it seems to me, is the real effect of the three cases upon which the learned trial judge relied, and is precisely the principle stated by Lord Chancellor Cranworth in Boyse v Rossborough and distinctly approved by the Judicial Committee of the Privy Council in Craig v Lamoureux ... in which Barry v Butlin, Fulton v Andrew and Tyrrell v Painton were all considered ...".
Decision on the probate issue 55As the foregoing analysis shows, the primary judge was correct to proceed on the basis that the suspicious circumstances rule does not operate at large. It operates to displace presumptions of fact in favour of those propounding the will. For that reason it is necessary to identify the presumption or presumptions to which particular circumstances are said to be relevant. With respect to the presumption as to knowledge and approval, those circumstances must be capable of throwing light on whether the testator knew and approved of the contents of the will. If they give rise to a doubt as to knowledge and approval, those propounding the will must dispel that doubt by proving affirmatively that the testator appreciated the effect of what he or she was doing. They do not have to go further and disprove any suspicion of undue influence or fraud. Approval in this context does not include that in addition to knowing what he or she was doing, the testator executed the will in the absence of coercion and fraud. The proponents having affirmatively established knowledge and approval, the onus of proving undue influence or fraud is on those alleging it. The appellants' arguments, which to a large extent are contrary to these propositions, are rejected. 56There remains the question whether the primary judge erred in concluding that the circumstances relied upon, or those which it is said the primary judge should have found, were sufficient to displace the presumption as to knowledge and approval. In my view, his Honour did err in failing to hold that there were suspicious circumstances which were sufficient to rebut that presumption. Some of the difficulties in the way his Honour dealt with this question arise because he did not deal first with the issue as to suspicious circumstances. That in turn may be explained partly by the way the appellants put their case before the primary judge; their principal argument being that the respondents had to remove a suspicion that the Will had been procured by undue influence: [99]. 57Having not dealt first with the issue as to suspicious circumstances and affirmative proof of knowledge and approval, the primary judge finally addressed that issue, having already considered the appellants' circumstantial case as to undue influence, and observed that there was no direct evidence of involvement of the sons in the giving of instructions for the Will: [55]. Although his Honour correctly observed that the appellants' case was that the "possibility" that the sons had been involved in making arrangements and giving instructions for the Will was sufficient, he rejected that possibility because it had "not been proved" that they were involved in giving such instructions: [110]. In my view his Honour erred in failing to find, in the face of the lies and concealment, that there was a realistic possibility that the sons had been involved in giving instructions for the Will. In circumstances where the "mirror" wills left everything to Albert and Morris, this constituted sufficient reason to doubt that the contents of the Will accorded with Lily's intention. 58The evidence established, and the primary judge found, that the sons were involved in the will-making process. They obtained the name of the solicitor, Mr Woolley, from Rachel Brooks. They knew that the purpose of Lily's visit to Mr Woolley was to give instructions for a will. They arranged for Evelyn's son to drive Lily to the solicitor's office and they both accompanied her to that office. Each denied that he went into the solicitor's office or was present when instructions were given for the drawing of the Will. As the primary judge observed, there was no evidence which established affirmatively that the sons had initiated the idea of Lily making a new will, or first contacted Mr Woolley to make that appointment, or spoken to their mother or Mr Woolley about what the Will should contain, or been present when Lily gave instructions to Mr Woolley. 59However, as his Honour also found, Albert and Morris lied about their involvement in a process which resulted in the changing of Lily's Will so as to leave the only significant asset in her estate to the two sons. Specifically, they lied as to their involvement in procuring the solicitor. One or other of them falsely stated that Ms Brooks had recommended the solicitor to her mother, that Lily had described Mr Woolley as the "family solicitor" and that they did not know why their mother was going to see the solicitor. 60Whilst the fact that a witness has lied about some matter does not prove the opposite of the lie, the fact of the lie may indicate a consciousness that the truth in respect of those matters would not have assisted his or her case. Depending upon the subject matter of false or fabricated evidence and its significance in a case, such an inference may be available in relation to a specific fact: see J H Wigmore et al, Wigmore on Evidence, 3rd ed (1940) Vol 2, Little Brown and Co at 120-122, para 278; Moriarty v The London Chatham & Dover Railway Co (1870) LR 5 QB 314 at 319 citing Annesley v Earl of Anglesea (1743) 17 How St Tr 1139; Rex v Watt (1905) 20 Cox CC 852 at 853; Eade v The King [1924] HCA 9; 34 CLR 154 at 158; Steinberg v Federal Commissioner of Taxation [1975] HCA 63; 134 CLR 640 at 694; Chamberlain v The Queen (No 2) [1984] HCA 7; 153 CLR 521 at 564; Kuhl v Zurich Financial Services at [64]. The fact of a lie may also constitute an admission of criminal guilt or evidence which is corroborative of other evidence: see Edwards v The Queen [1993] HCA 63; 178 CLR 193 at 208-209, 214-215; Zoneff v The Queen [2000] HCA 28; 200 CLR 234. 61When addressing the issue as to undue influence, the primary judge found that these lies and their concealment were intended to assist the respondents' case (at [53]) and that they believed that the truth as to their involvement in the will-making process would not have assisted their case: [86]. He did not address, when considering the question of suspicious circumstances, what the consequences of those findings were. 62As his Honour observed, the inference available from the lies and concealment was that the truth as to the sons' involvement would not have assisted their case in propounding the Will. That could have been so because they spoke to their mother or Mr Woolley about what the Will should contain or were present when Lily gave instructions to Mr Woolley or participated in the giving of those instructions. Whilst the Court could not make affirmative findings about any of these matters when dealing with the undue influence defence, there remained a realistic possibility that the sons' involvement in the will-making process included one or more of those actions. That realistic possibility was admitted by their conduct in lying and concealing what happened and was sufficient to raise a relevant doubt. 63It is not necessary before considering whether the primary judge erred in his conclusion as to knowledge and approval, to address the other findings of fact which the appellants challenge. The two which concern Albert's behaviour towards Lily are not related to the preparation or execution of the Will or its terms and do not give rise to a doubt as to knowledge and approval. The remaining two, which concern whether Mr Woolley took instructions from Abraham and the state of Lily's health and functioning at the time the Will was executed, would not have resulted in any different conclusion on the question of knowledge and approval from that reached by the primary judge. 64The possible involvement of the sons in making arrangements and giving instructions for the Will (where they took a substantial benefit under it) requires that the Court be affirmatively satisfied that Lily knew the contents of the Will and appreciated the effect of what she was doing. 65The starting point is the primary judge's finding that there was no serious doubt as to Lily's testamentary capacity. That finding is not challenged. Her contemporaneous medical records did not suggest any impairment of capacity. Her treating doctor (Dr Christopher) saw Lily on the day after she executed the Will. She had numerous elderly patients and was familiar with the protocol for testing for suspected dementia. She gave evidence that at that time Lily exhibited no signs of difficulty with comprehension or memory or any other cognitive dysfunction. 66Draft wills were drawn and forwarded in a letter dated 19 November 1997 and addressed to Lily and Abraham at the Beach Road property. The estate which each had to dispose of was principally that property. The terms of Lily's Will were straightforward. The appellants accept that it is rational on its face. The writer of the letter offered to attend at the house to have the wills signed. That offer was taken up. The wills were executed on 10 December 1997 in the presence of an independent solicitor, Mr Woolley, and Mr Musrie. Mr Musrie's evidence, which was accepted, was that Lily telephoned him on that day requesting that he "come over to witness a will for Abie and myself". She told him that there would be a solicitor present. When he attended the house, Lily and Abraham were there with the solicitor. The four of them sat in the dining room at the rear of the house. Albert and Morris were not in the house. Mr Woolley referred to the fact that they were there to sign the wills. He read out loud Abraham's will and then Lily's Will. He then gave the wills to each of them and asked them to read them over. Mr Woolley also gave an explanation of what the wills said. Mr Musrie understood from hearing the wills being read aloud that in Abraham's case, if he died first, the whole of his estate would pass to Lily and if she died before him, the property would go to Albert and Morris. He also understood that Lily's Will provided for the property to go to Albert and Morris. Mr Woolley asked Lily and Abraham whether they had any questions and whether the wills were "okay", to which each replied in the affirmative. Abraham and Lily then signed the wills and Mr Musrie and Mr Woolley signed as witnesses. On 16 December 1997 Mr Woolley sent signed copies of the wills to Abraham and Lily. 67In the light of this evidence, the primary judge did not err in concluding that any doubt as to whether the instrument expressed Lily's true intention was removed by the circumstances in which the Will was received and executed. Before it was signed, Lily had a draft of the Will for about three weeks. It was read out aloud, then apparently read by her and its effect was explained. There was then an opportunity to ask questions. Lily orally acknowledged that its contents were "okay" and then signed the Will. Albert and Morris were not present during this process and Lily's earlier telephone call to Mr Musrie indicated that she understood that she was to sign a will on that day.
Conclusion in relation to probate appeal 68For these reasons, the appeal from the primary judge's order dismissing the appellants' claim for an order revoking the grant of probate of the Will of 10 December 1997 should be dismissed.
Relevant principles 69The Family Provision Act applies to the appellants' claim because Lily died on 2 November 2005 and before the commencement on 1 March 2008 of the Succession Act 2006. The Court is required to undertake a two-stage approach when exercising the power to make an order for provision. As the majority observed in Singer v Berghouse [1994] HCA 40; 181 CLR 201 (at 210), each of those stages involves a similar consideration because when addressing the question of inadequate provision the Court has to make an assessment of what is the proper level of maintenance and what is adequate provision. The two-stage approach was described (at 208-209) in the following terms: "The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination is made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant. The first stage has been described as the 'jurisdictional question'." The correctness of these observations was not doubted in Vigolo v Bostin [2005] HCA 11; 221 CLR 191 at [5], [56], [112]. Section 9(2) requires that the jurisdictional question as to whether the provision made is inadequate is to be determined as at the time the court is considering whether or not to make an order under s 7. Section 7 requires that any determination as to the provision that should be made also address the "circumstances at the time the order is made". 70At the first stage, the consideration as to whether inadequate provision has been made for the proper maintenance, education and advancement in life of the applicant should have regard to, among other things, the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased and the circumstances and needs of the other beneficiaries or potential beneficiaries: see McCosker v McCosker [1957] HCA 82; 97 CLR 566 at 571-572; Singer v Berghouse at 209-210; Vigolo v Bostin at [16], [75], [112]. That consideration is necessary because of the inter-relation between "adequate provision" and "proper maintenance" as explained in Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 476. Whilst what is "adequate" directs particular attention to the needs of the applicant, what is "proper" requires regard to all the circumstances of the case. 71The principles governing appellate review of discretionary decisions apply to the decision of the primary judge on the jurisdictional question. That decision can only be overturned if: "there has been some error of law or mistake of fact, or if some other error appears in the judgment, such as taking into account irrelevant considerations or disregarding relevant considerations, or alternatively if the result of the decision is unreasonable in such a way as to indicate some other latent error in the judgment." per Hodgson JA in Mulcahy v Weldon [2002] NSWCA 206 at [24]. See also Foley v Ellis [2008] NSWCA 288 at [83]. The second stage involves an exercise of discretion in the more generally accepted sense and attracts the same principles.
The value of the estate 72The only significant asset in Lily's estate was the Beach Road property. In mid-2008 it had a value of approximately $1.8 M. On 6 January 2006 the solicitors for the appellants advised the solicitors for the respondents that their clients proposed to make an application under the Act. In response, the respondents advised that they proposed to apply for probate and to have the property transferred to them. They also indicated a willingness to undertake not to sell the property, or mortgage it for more than 10 per cent of its value, until the appellants' application was dealt with. 73In July 2006 the property was mortgaged to Perpetual to secure a loan of $300,000 to the respondents. Of that amount $28,000 was applied in payment of funeral expenses and maintenance of the property, $83,000 was applied in payment of legal costs and the balance was applied in payment of expenses or liabilities of Albert and Morris. An amount of $56,000 was applied to the "purchase of goods" for use in Morris' business and to make car loan repayments: Tobin v Ezekiel - Ezekiel Estate [2008] NSWSC 1108 at [14]. In May 2009, a further $100,000 was borrowed by the respondents from Choice Business Management (Choice) secured by an equitable charge over their interest in the estate. In September 2009 Choice took an assignment of the mortgage from Perpetual. In the result, Choice was owed $400,000, of which $300,000 was secured by way of mortgage over the Beach Road property.
The primary judge's findings as to the resources and needs of the four children 74Whilst acknowledging that it was necessary when addressing the jurisdictional question to consider all of the circumstances, the primary judge ultimately determined that the "dominant considerations" were the relative financial position of each of the children and the circumstance that Albert had lived with his parents for the whole of his adult life. The appellants do not on appeal contend that there were any other significant circumstances to be taken into account. Nor do the respondents contend that by reason of any other circumstances the primary judge did not err in concluding that neither of the daughters had been left without adequate provision. 75The primary judge made findings as to the financial circumstances and resources of each of the appellants and respondents as the only competing beneficiaries. There is no issue as to the correctness of those findings in relation to Evelyn and Clara.
Evelyn 76The following findings were made as to Evelyn who was born in 1953 and was aged 58 at the time of the judgment in March 2011. Evelyn and her husband have two adult children. Their marriage is stable and the children are independent. Together they had assets worth approximately $1,636,000. Their home was worth at least $1.3 M and they owned an investment property worth between $275,000 and $300,000. Evelyn had superannuation of $50,181. Their liabilities were estimated at $529,000, leaving a net asset position of $1,107,223. Evelyn was employed as a claims clerk for MBF receiving $24,420 net of tax per annum. Her husband received a superannuation pension of $538 per week. Taking account of the rental income on their investment property, their annual income was approximately $65,000 and their expenditure was $73,000 including interest expenses. Between April 2008 and July 2009, their bank debt had increased by approximately $48,000.
Clara 77The following findings were made as to Clara who was born in 1945 and was aged 65 at the time of the judgment. She is divorced with two adult children. She suffers from profound deafness and has a consequent speech impediment and some other health difficulties. She had assets worth approximately $893,000. Her home was worth at least $880,000. It secures a home loan of $347,343 of which $80,000 is attributable to her borrowings and $267,343 to the borrowings of one of her daughters. There is a separate home equity loan of $47,675 attributable to the other of her daughters, who became bankrupt in September 2006. Each of the daughters services the borrowings which she has received. Clara's net asset position is $813,000 assuming her daughters repay the loans for which they are responsible. (The primary judge found this figure to be $833,092. My examination of the evidence suggests an arithmetical error in the calculation of that amount.) If they do not, her net asset position is approximately $498,000. Clara receives an aged pension of $14,900 per annum. She has outgoings of $30,500 per annum and is currently not able to service the interest in respect of her $80,000 share of the borrowings. Although she worked all of her life until September 2009, it is improbable that she will ever return to remunerative employment. She is exposed to the loss of her home if her daughters' efforts to indemnify her in respect of so much of the home loans as have benefited them, do not materialise, or if she cannot maintain her own loan repayments. 78These findings, based on evidence as to the position at the time of the hearing in September 2009, do not take account of any payments made or liabilities incurred by the appellants with respect to the legal costs of the proceedings. As will appear, the primary judge's analysis of the financial circumstances of the respondents does appear to have taken into account liabilities incurred to fund the defence of the proceedings.
Albert 79The following findings were made as to Albert who was born in 1946 and was aged 64 at the time of the judgment. He had never married and had lived in the Beach Road property since 1965. He does not own a house. He worked at the Commonwealth Bank from 1965 for a period of eight or nine years. He was then in full-time employment until February 2002. From that time until January 2003 when Lily was admitted to a nursing home, he received a carer's pension. From January 2003 he has received a disability pension. That pension is approximately $15,000 per annum. He had a bypass operation in June 2002 and a further operation on his back in June 2004. 80Putting aside the value of his inherited interest in the Beach Road property, Albert had disclosed assets of $9,000 and liabilities of $20,500. If one takes account of his share of his joint liability with Morris for the loans totalling $400,000, his liabilities exceed his assets by $211,500. However, those liabilities include moneys borrowed and applied in payment of legal costs which may be recoverable from the estate, as well as other expenses incurred in payment of funeral expenses and maintenance of the Beach Road property. For that reason Albert's net position calculated on this basis may overstate the deficiency by in excess of $50,000 (being his share of the benefit of any recoveries). 81Taking into account Albert's inherited half interest in the Beach Road property, valued at $900,000, and his joint liability with Morris, his disclosed net asset position would be $688,500. 82As the primary judge noted, a sustained attack was made on Albert's financial disclosure. The evidence indicated that between 2006 and 2008 he and Morris had applied for loans, and in the course of doing so, had declared their actual or projected annual income from a business conducted or to be conducted by Morris as being between $52,000 and $78,000 per annum each. In addition, the evidence was that between January 2000 and March 2007 Albert had lost at least $53,000 in betting activities with Tabcorp and that between March 2007 and June 2008 he had lost a further $20,000. In addition, between July 2002 and October 2005 Albert operated an account in the joint names of his parents into which he deposited sums totalling $148,400 and withdrew sums totalling $193,770. Those funds were deposited into that account by members of Morris' family in Melbourne and were said to relate to Morris' business activities as a commission agent. 83The primary judge concluded his summary of Albert's disclosure as to his financial position by observing that it reinforced "the complete unreliability of Albert as a witness": [136]. His Honour accepted that Albert had resources which enabled him to derive income over and above his disability pension and observed that the claims of income of $75,000 were self-serving in the aid of finance applications.
Morris 84The following findings were made as to Morris who was born in November 1947 and was aged 63 at the time of the judgment. He is married with four children, but separated from his wife. In 2004 he transferred to his wife his interest in their jointly owned home at Caulfield in Victoria. At that time he had been threatened with litigation arising out of his business. Apart from his inherited interest in the Beach Road property, Morris disclosed assets of $2,000. In addition to those assets, the primary judge considered he may have a claim to a half interest in the Caulfield property worth about $175,000. Morris' liabilities were his joint liability for the loans totalling $400,000 and a liability for unpaid school fees due to a college in Elsternwick, Victoria. The evidence was that this liability for school fees had increased during the period of eduction of his four children from $53,000 in December 1993 to $315,000 in September 2005. Between August 2006 and June 2009 the school had written to Morris and his wife requesting payments in reduction of the amount owing. The correspondence and statements of account were addressed to Morris and his wife, suggesting that they were jointly responsible for any debt. None of the correspondence in evidence demands payment of the full amount and threatens legal proceedings in the absence of payment. An internal memorandum of the college dated October 1999 referred to the possibility of taking the matter of recovery to Din Torah for determination in accordance with rabbinical law. However, the memo notes, "we would do very poorly in Din Torah". None of the applications for finance made by or on behalf of Morris disclose the debt to the college. When assessing Morris' net financial position the primary judge treated the full amount of the outstanding school fees as a liability of Morris and did not address the likelihood that any liability would never be enforced. Morris was not cross-examined on that question, although his evidence that it was not his intention to sell the house if the appellants' claim was dismissed was inconsistent with his treating the liability to the school as one which would have to be discharged by him. 85Putting aside Morris' inherited interest in the property, he had disclosed assets of $2,000 and liabilities of $313,000. If one takes account of his share of his joint liabilities with Albert, he had a deficiency of net assets of approximately $511,000. If the value of a half interest in the Caulfield property was taken into account that deficiency was reduced to $336,000. If the college debt was excluded that deficiency was further reduced to $23,000. If account was taken of the fact that some of the joint liability incurred with Albert was used to pay expenses of the estate, Morris' net financial position calculated on this basis may not have involved any deficiency. 86If Morris' inherited half interest in the property was taken into account, as well as his joint liability with Albert, his disclosed net asset position would be $389,000. If the value of a half interest in the Caulfield property is included that amount is increased to $564,000. If the college debt was excluded his net assets would be $877,000. (The first two of these amounts vary from those found by the primary judge, which were $338,957 and $513,957. The explanation is, I believe, a calculation error on the part of the primary judge.) 87There was also a sustained attack made on Morris' credit. He stated that he had been receiving a disability pension since 2002 which in 2009 was $226 per fortnight. He also disclosed that he had sold watches on the street as a hawker and that this had produced limited income. The evidence indicated that he had made similar claims in finance applications to those made by Albert in respect of his income or projected income. Between 2002 and 2005 he and his wife had incurred credit card liabilities of $222,190. Most of the repayments in respect of those liabilities were made by cash. The primary judge concluded that it was likely that Morris had sources of funds in addition to the pension, at least up to 2005, but that there was no evidence of that having continued: [141]. That finding did not take account of Morris' evidence (given in November 2009) that he had only stopped "buying and selling goods" about a year ago.
The decision of the primary judge 88The appellants put three arguments to the primary judge. The first was that a "moral and fair will" would have left the estate to the four adult children equally. That argument was rightly rejected and is not pressed on appeal. Where a testator chooses to exclude a son or daughter from a will, the Court can only alter that disposition under the power given by the Act if it is first satisfied that inadequate provision has been made in all the circumstances. The legislation is not directed to making what may appear to the Court to be a fair distribution of the estate among the members of the testator's family: see, for example, the observations of Fullagar and Menzies JJ in Blore v Lang [1960] HCA 73; 104 CLR 124 at 134-135; Cooper v Dungan (1976) 50 ALJR 539 at 540; Fisher v Grove [2003] WASCA 3 at [37], [38]. 89The second argument was that because the respondents had failed to provide truthful and complete evidence concerning their financial circumstances, the Court should disregard any claim of need on their part when considering their competing claims and assessing whether adequate provision had been made for the appellants. The primary judge did not accept that argument. Notwithstanding that he regarded the respondents as utterly unreliable witnesses, he addressed the question as to adequate provision on the basis that the respondents did not have any assets or resources of significance beyond those they conceded: [147]. 90The appellants' third argument to the primary judge was that Albert had no claim to accommodation out of the estate at the expense of any of the other siblings and no special entitlement to call upon the generosity of his parents. The primary judge rejected this argument on the basis that Albert was and had been through his adult life dependent on his parents for accommodation. His Honour considered this meant that a provision that enabled him to continue to reside in the Beach Road property was in accordance with Lily's and Abraham's "moral duty, and with what the community would have expected of them": [146]. 91Taking into account his assessment of the means and competing claims of the respondents, his Honour found that without the provision each received under the Will, the "sons' position would be markedly inferior" to that of the daughters: [149]. He considered that Morris' position, taking account of the provisions made by the Will, would remain significantly worse than that of each of his sisters, and that Albert's position on the same basis would be inferior to that of Evelyn and approximately equal to that of Clara. In the circumstances he concluded that it was not possible to see "how it could be said that the testator was not entitled to provide for her sons rather than her better, if only moderately, resourced daughters" because to do so would have taken from those who had least, to give to those who had most: [149]. 92The primary judge concluded (at [155]): "In my view, having regard to those dominant considerations, it cannot be said that either of the daughters has been left with inadequate provision for her proper maintenance; and even had that requirement been surmounted - as it arguably is in Clara's case - it would not have been appropriate as a matter of discretion to make an order that reduced provision for the worse-off sons in favour of the better-off daughters."
The appellants' arguments on the Family Provision Act appeal 93The appellants argue that the primary judge erred in two respects when addressing the jurisdictional question. The first is that his Honour erred in the finding he made as to the respondents' financial resources and thereafter in using that assessment when determining whether inadequate provision had been made for the appellants. By way of response, the respondents point to the fact of Albert's dependency on his parents for accommodation. The appellants' retort is that any such dependency did not justify a provision that might enable Albert to continue to reside in the Beach Road Property. The second argument is that whilst his Honour compared the respective financial positions of the four children, he did not analyse whether either of the appellants had been left without adequate provision.
The primary judge erred 94As executors of Lily's Will, and because of an executor's role as protector of the Will, the obligation of Albert and Morris was to place before the Court all evidence which bore on the issues raised by the appellant's claim. That duty extended to presenting to the Court evidence as to their own financial resources and needs: In re GR Newell (Deceased) (1932) 49 WN (NSW) 181 at 182; In the Will of WF Lanfear (1940) 57 WN (NSW) 181 at 182-183; Re SJ Hall Deceased (1959) SR (NSW) 219 at 226-227; Vasiljev v Public Trustee [1974] 2 NSWLR 497 at 503-504. The fact that an executor has not led evidence as to the financial position of any beneficiary or beneficiaries will often provide a basis for the court to infer that each has sufficient income and resources to meet his or her needs: see, for example, Anderson v Teboneras [1990] VR 527 at 535-536; Mason v Permanent Trustee Co Ltd (unreported, Macready M, 5 December 1996 at 6). The justification for that inference is an assumption that the executor has acted in accordance with his or her duty to lead such evidence, if relevant. 95Here the respondents did lead evidence as to their financial circumstances and the primary judge considered that evidence to be "utterly" unreliable and in some respects false. Reference has already been made to the various applications for finance made on behalf of Albert and Morris between March 2006 and January 2008 in which each declared his actual or projected annual income to be between $52,000 and $78,000 per year. Those applications were submitted by a broker on their behalf. The evidence included a note produced by one of the entities to whom such an application had been made. That note recorded that the financier had been told that the respondents were brothers who had been left a property by a will which their sisters were contesting and that they could not "show they have an income" because they had been "advised by [their] solicitor not to show more than $75,000 per annum". The note continued "if show income it will go against them as the property will need to sell". The primary judge found, based on that note (at [131]), that it was likely Albert had told the broker that he could not claim income greater than $75,000 because it would be adverse to his interests in the litigation to do so. Such a statement is consistent with a belief in Albert that he would be able to generate such an income from any proposed business activities. 96Albert maintained that he had "lied" in relation to these statements as to his annual income. However, the evidence indicated that he must have had other sources of income which sustained his gambling losses. The records produced by Tabcorp suggested that those other sources of income had continued in 2007 and 2008. When confronted with evidence indicating that he had sources of income independent of his disability pension, Albert responded to the cross-examiner that this was "possible" and then said that he did not "know how to explain that to you, but if you have got proof you might as well tell me". 97The evidence also established that Morris had sources of income other than his pension. Notwithstanding his evidence that he had not worked since 2002, other than by selling watches on the street, Morris agreed in cross-examination that he had continued to generate income from the buying and selling of bags and clothing as a commission agent until about November 2008. 98As the plurality judgment in Australian Securities and Investment Commission v Hellicar [2012] HCA 17; 86 ALJR 522 reminds (at [165]), principles governing the onus and standard of proof must faithfully be observed. The appellants bore the onus of persuading the Court that inadequate provision had been made. That required attention to the respondents' financial circumstances and resources. The respondents were not forthcoming about that subject notwithstanding that a number of subpoenas and notices to produce were issued. To the extent that they gave evidence, their evidence was found to be unreliable, incomplete and false in some respects. That evidence left uncertain the extent of the income earned by the respondents after 2002 and their capacity to generate income in the future from their joint business activities. On one view of the evidence, the respondents had been earning and were capable of generating income of at least $75,000 per annum from the buying and selling of merchandise such as clothing, bags and watches. 99Although there was some evidence which would justify findings as to the respondents' capacity to generate that sort of income for some time into the future, the primary judge proceeded on the basis that the appellants had not satisfied him that the respondents had any assets or resources of significance beyond those disclosed: [147], [155]. In the face of the respondents' false and incomplete evidence as to their financial resources, the primary judge should have resolved the uncertainty resulting from the respondents' failure to give honest and complete evidence in respect of those matters in favour of the appellants. 100The relevant principles permit the drawing of inferences which may be taken into account in deciding whether to accept or rely upon particular evidence or as being themselves corroborative of other evidence. Those principles cannot be employed to fill gaps in the evidence. They are exemplified by cases such as Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 and Armory v Delamire (1722) 1 Stra 505; 93 ER 664. The general principle is that the "non-production of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavourable to the party's cause": Wigmore on Evidence at 162-171, paras 285-288. See also The Insurance Commissioner v Joyce [1948] HCA 17; 77 CLR 39 at 49, 61; G v H [1994] HCA 48; 181 CLR 387 at 391-392; Jones v Dunkel [1959] HCA 8; 101 CLR 298 at 308, 312, 320-321; ASIC v Hellicar at [166]-[167], [250], [252]. Reference has already been made (in relation to the probate appeal) to the application of this general principle to the giving of false or fabricated evidence as indicating a consciousness that a case is weak or unfounded and justifying an inference as to the fact of a lack of truth or merit in the case or an aspect of the case. 101These principles have been applied on a number of occasions by this Court, including in relation to applications under the Family Provision Act. In Tweed Shire Council v Hancomatic Music Pty Ltd [2007] NSWCA 350; [2007] Aust Torts Reports 81-922, the Court (Mason P, McColl and Bell JJA), after noting that the fact that a witness is disbelieved does not prove the opposite of what was asserted, cited with approval (at [166]) the following passage from the judgment of Rath J in Calvin v Carr [1977] 2 NSWLR 308 at 328: "... the factual circumstances which lead to ... disbelief [in the witness's evidence] may themselves be evidence of the contrary proposition; or the evidence which is disbelieved may be given in circumstances in which its falsehood points to the truth of contrary evidence". 102Hodgson JA, in Oran Park v Fleissig; Teamfox v Fleissig [2002] NSWCA 371, having referred to Lord Mansfield's statement in Blatch v Archer, stated: "[66] ... In my opinion it applies at least equally where the absence of evidence arises from deliberate lies told by a party who is in a position to tell the truth about the matter: I do not think such a party should be in a better position than one who refrains from giving the evidence. Indeed, the principle may operate more strongly in the case of deliberately false evidence than in the case of mere failure to lead evidence: see Wigmore on Evidence (Third Edition) Vol 2, p119-p127, especially at p126, Moriarty v London Chatham & Dover Railway Co (1897) LR 5 QB 314. [67] In my opinion, what was required in this case was that, within the leeway of uncertainty created by the respondent's lies, the primary judge should have resolved the matter generally in favour of the appellants rather than neutrally: that is, he should have selected a figure towards the lower end of the range available in the absence of reliable evidence." 103The following statement in relation to an application under the Family Provision Act is directly in point. In Nicholls v Hall [2007] NSWCA 356 this Court (Mason P, Hodgson and McColl JJA) said in relation to the evidence of an appellant whose claim to an order for provision had been dismissed: "[36] ... The appellant's evidence about his financial situation was imprecise and in some respects inaccurate; and even accepting that this was inadvertence rather than any attempt to withhold information from the Court, it was a matter properly for comment and a matter to be taken into account in reaching a conclusion as to the true financial situation of the appellant. Where a person in the position of the appellant has not led satisfactory evidence about his financial situation, the Court cannot resolve any uncertainty left by that situation in favour of the person who has failed to give the satisfactory evidence. That, in our opinion, was the approach correctly taken by the primary judge." 104In Tchadovitch v Tchadovitch [2010] NSWCA 316; 79 NSWLR 491 Campbell JA at [14] (Allsop P and Young JA agreeing), suggested that a similar approach could be taken in relation to a failure of executors and interested beneficiaries to lead satisfactory evidence as to the value of the estate: "If this had been a case in which there was real doubt about whether the assets of the estate were sufficient to satisfy the needs of the widow then, given that the appellants were the only other beneficiaries of the estate, that they had information about the affairs of the company by virtue of their position as directors and being actively involved in its day-to-day operations, and that they were in breach of their duty as executors by failing to produce the information, the judge may have been justified in proceeding on the basis that he would attribute to the shares the highest value that was reasonably open on the evidence". 105The statements of income or projected income constituted some evidence as to the incomes which each of Albert and Morris had received and regarded himself as capable of generating. There was other evidence indicating that each had generated income in excess of the pension. Applying the principle referred to above, the primary judge should have made a finding to that effect. His Honour gave two reasons for not being satisfied that Albert and Morris had resources of significance beyond those disclosed: [147]. Neither was supported in the evidence. 106The first was that Morris' evidence that the operation by Albert of the account in the name of his parents was to enable to him to pay Sydney suppliers was not shown to be false and that account only operated until October 2005. Relying on that evidence his Honour concluded that there was nothing to suggest that whatever additional resources may have been available to Morris remained available in 2009. That conclusion did not take account of the following: Morris' evidence (given in November 2009) that he had only stopped buying and selling goods "about a year ago"; his Honour's finding that there was some evidence of ongoing commercial activity by Albert as late as September 2009; the evidence that Albert had incurred gambling losses in a six month period ending early 2007 of $15,000 and in 2009 of $3,500; and the evidence that one of the purposes given by Albert and Morris in July 2006 for borrowing some part of the $300,000 was to operate a business as wholesaler in partnership. The second reason was that Albert's betting losses could have been funded by credit card. That may have been so in the short term but does not explain what funds were used to pay off the credit card. Furthermore, there was no evidence that tied any of the credit card liabilities to the funding of gambling. None of the evidence referred to contradicts a finding that each was capable of generating income of up to $75,000. 107This factual error on the part of the primary judge is sufficient to vitiate his discretionary judgment on the jurisdictional question. In that circumstance it is necessary for this Court to reconsider the two questions arising under the Act and to do so with the benefit of any additional material which informs as to the current financial positions of the parties and of the estate. 108Before doing so, it remains to consider the appellants' second argument that the primary judge did not analyse whether each had been left with inadequate provision. His Honour's conclusion that there had not been inadequate provision was based on a finding that each of the sons was in a "markedly inferior" financial position to each of the daughters before taking into account the provision made under the Will and that after that provision was taken into account neither of the sons was in any better financial position than either of the daughters: [149] and [155]. Accepting the correctness of that finding for the purpose of considering this argument, his Honour's analysis does not disclose error. In order to assess inadequacy for proper maintenance the resources and needs of the other claimants on Lily's bounty had to be addressed. Whilst Clara's financial position was precarious, on the findings made by the primary judge it was better than that of either of the sons, both before and after the provisions made by the Will were taken into account. 109It is also necessary to say something about the primary judge's treatment of Albert's dependency on his parents for accommodation. Dependency in this context means actual reliance on someone else for the total or partial satisfaction of some need. It is not limited to purely financial or material matters: Petrohilos v Hunter (1991) 25 NSWLR 343 at 346-347. Nor is it restricted to requirements of basic necessity and the standard or measure of satisfaction of any need is not to be determined by reference to any minimum or subsistence standard. In each case, the measure is the standard set by the parties: Ball v Newey (1988) 13 NSWLR 489 at 492. 110Dependency may exist irrespective of whether the dependent person is financially or physically able to support himself or herself: Ball v Newey at 492. However, the reasons for and circumstances of the dependency are relevant when considering what claims the dependent has on the bounty of the testator. Whilst Albert lived with his parents so as to give rise to an expectation that they may make some provision in their wills for his accommodation, he was not financially dependent on them for accommodation. Nor was he physically or emotionally incapable of living apart from his parents or on his own and away from the Beach Road property. 111The primary judge did not err in regarding Albert as being dependent on Lily and Abraham for accommodation. On the basis of that dependency he concluded that the provision by Lily in her Will for Albert to continue to reside in the Beach Road property was in accordance with their "moral duty, and with what the community would have expected of them": [146]. In support of that conclusion the primary judge referred to the fact that Abraham and Lily had recognised that ongoing dependency "in their mutual wills". That observation does not readily explain why Morris was equally provided for in those wills. Nor does it take account of the fact that Abraham subsequently changed his will to make equal provision for the four children. 112In circumstances where Albert was financially and physically able to look after himself and there were other adult children who also had justifiable claims on Lily's estate, adequate and proper provision could be made, in recognition of his dependency on them for accommodation, by way of financial assistance towards rental accommodation, or perhaps the purchase of a unit or apartment.
Consideration of jurisdictional question and whether provision should be made 113The Court has received further evidence going to the value of the property, the extent to which it is now mortgaged and the costs incurred in the proceedings. That evidence is as follows. The value of the property in early 2012 was estimated to be between $1.9 M and $2.3 M. In May 2009 Choice made a further advance of $200,000 and the full amount owing to it of $600,000 was secured by mortgage. In December 2012 an unnamed financier made a further advance of approximately $360,000 secured by way of mortgage. As at April 2012 the total amount secured by mortgage was $1,080,000. The costs incurred or estimated to be incurred by the respondents in defending the proceedings (including the appeal) were approximately $915,000. (There was no argument before the primary judge or this Court as to whether any of those costs should not be paid out of Lily's estate.) Although the evidence is not clear about this, it appears that approximately $100,000 of that amount has not been paid. The costs incurred by the appellants in bringing the proceedings (including the appeal) were approximately $390,000. Of that amount disbursements of $107,000 have been paid by the appellants and disbursements of $21,000 remain outstanding. The balance of the solicitors' and counsels' fees of approximately $262,000 has not been paid. 114 In addressing whether adequate provision was made for each of the daughters, the principal consideration remains an assessment of the relative financial positions of the four children. 115Of the two daughters, Evelyn's financial position is clearly more secure. Even allowing for legal costs incurred and paid, she and her husband have net assets of approximately $1 M. Each is receiving income or the pension. Evelyn is able to work and their adult children are independent. Clara's position is much more problematic. She is single, in receipt of a pension, has ongoing health problems and is unlikely ever to work again. She has net assets of approximately $800,000 if one assumes that her daughters can repay the loans for which they are responsible. If not, or if Clara defaults in the loan repayments for which she is responsible, her net assets would be approximately $490,000 (plus what she can recover from her daughters). Neither of these assessments has been fully adjusted to reflect legal fees incurred or paid. As at November 2009, Clara's annual outgoings including mortgage payments, exceeded her income thus exposing her to the risk of default and the potential sale of her home, in the absence of assistance from her daughters, one of whom is a bankrupt. 116Albert's position remains fairly parlous. Assuming that his joint liabilities with Morris, which are secured by mortgage over the Beach Road property are repaid from a sale of the property, he would appear to have no remaining liabilities except for a joint liability with Morris for legal costs of around $100,000. He remains in receipt of a pension and has the capacity to generate income in excess of $60,000 per annum from his joint business activities with Morris. It is uncertain how long that may be the position. Because of the debt secured over the Beach Road property it is likely that it will have to be sold. Albert will therefore require rental accommodation on an ongoing basis. There is no evidence as to the cost of such accommodation in the area where he has lived for his adult life. 117Morris' financial position is much better than that of Albert. Assuming that the joint liabilities are repaid from a sale of the property, he would appear to have no liabilities apart from the amount owing to the college and his joint liability with Albert for any outstanding legal costs. Because the evidence does not suggest that the liability to the college is ever likely to be enforced, I do not consider it should be taken into account when assessing the respective financial positions of the parties. On the other hand, Morris has a potential claim to a half interest in the Caulfield property. Like Albert, Morris has the capacity to generate income in excess of $60,000 per annum. He also received $56,000 from the proceeds of the first loan (and therefore from the estate assuming that loan is repaid following a sale) which was used to purchase assets for his business and make car loan repayments. 118This assessment indicates that whilst Clara has greater net assets than Albert and Morris, she has no ability to generate any significant income and is at some risk of having to sell her home irrespective of whether her daughters continue to meet their repayment obligations. Albert and Morris, on the other hand, presently have the capacity to generate reasonable incomes. Morris also has an asset of some value in the form of the claim on his family home. Allowance must also be made for Albert's dependency on his parents for accommodation which, for reasons discussed above, should be provided for by way of financial assistance towards rental accommodation. In contrast to the positions of her three siblings, Evelyn's net asset position is much better than that of Clara and her brothers. She also has the ability to generate income as well as a stable marriage and independent adult children. 119In circumstances where no provision was made for Clara, and the making of no provision would leave each of the two sons with provision in a much better overall financial position, it is my view that inadequate provision was made for Clara's proper maintenance and advancement in life. I am not of the same view in relation to Evelyn for reason of her stronger financial position. Accordingly, Clara has satisfied the requirement in s 9(2) of the Family Provision Act. 120Because the Beach Road property has been transferred to the respondents as beneficiaries and no other property remains in Lily's estate, an order for provision can only be made if the property is designated as notional estate of Lily. Before such an order can be made the Court must be satisfied that an order for provision ought be made and must consider whether the making of a designation order would interfere with any "reasonable expectations" in relation to the property. It must also consider the substantial justice and merits of making or refusing to make the order: ss 24, 27. 121The respondents presently are restrained from encumbering the property to secure advances beyond $1.1 M. The property's current value is estimated at between $1.9 M and $2.3 M. The amount secured by mortgage is about $1.09 M. Accordingly the value of the remaining equity in the property is between about $800,000 and $1.2 M. That equity is held in equal shares by Albert and Morris. Taking a midpoint valuation of the equity of $1 M and allowing an additional $50,000 for the payment of outstanding legal costs (after taking account of likely cost recoveries), Albert is left with net assets of approximately $475,000 and Morris with net assets, including the value of a share in the Victorian property, of around $650,000. In each case they have the on-going ability to generate income. In the absence of any provision, Clara's net asset position would be similar to that of Albert and less favourable than that of Morris. However, their income generating capacity is significantly better. In those circumstances, a provision is justified that would give Clara some protection against the financial uncertainties which she faces and her inability to earn sufficient income to cover her expenses. An amount of $225,000 represents the limit of what the estate could bear whilst also making sufficient provision for Albert and Morris (who also have the benefit and bear the risk that the property may have a value other than at the mid point of the estimates). The burden of that provision should be borne by Morris rather than Albert. That would allow adequate provision to be made for Clara whilst continuing to recognise Albert's entitlement to additional provision to Clara and Morris to take account of his dependency for accommodation. This also takes into account that Morris received $56,000 from the first advance of $300,000 and that a further $100,000 from that advance was applied in payment of liabilities and living expenses of Albert and Morris. 122There are no assets in the estate to allow for the making of this provision. Therefore, it is appropriate to make an order designating as notional estate the Beach Road property subject to the existing registered mortgages. The respondents were put on notice of the appellant's claim to provision in January 2006 and before the property was transferred to them. Since that time they have been permitted by orders of the Court to mortgage the property up to the amount of $1,100.000. The proposed order does not interfere with the reasonable expectations of the respondents and the mortgagee or mortgagees that those debts would continue to be secured by mortgage over the property. Nor does it work any injustice to the respondents in circumstances where they have been on notice of the appellant's claim. 123The orders I propose be made in relation to the Family Provision Act appeal are that the Beach Road property (subject to any existing registered mortgages) be designated as notional estate of the deceased, Lily Ezekiel; that provision be made out of that notional estate by payment of the sum of $225,000 to the second appellant with the intent that the balance of that estate be held by the respondents as tenants in common in equal shares; and that the beneficial entitlement of the first respondent to a half share of that notional estate bear the burden of that payment.
Costs 124In a separate judgment delivered on 23 May 2011 (Tobin v Ezekiel: Estate of Lily Ezekiel [2011] NSWSC 571), the primary judge ordered that the appellants pay the respondents' costs fixed at $100,000. Rather than adopt an approach which made costs orders by reference to specific issues, leaving to a costs assessor the task of deciding whether a particular item related to a particular issue, the primary judge considered it preferable to reach an overall view as to what was a just and proper costs order bearing in mind the respective success or otherwise of the parties on specific issues and the extent to which the conduct of one or other of the parties had increased the costs overall. The amount of $100,000 reflected the agreed costs of a two day family provision claim ($75,000) and a further small allowance of $25,000 in favour of the respondents. In arriving at that allowance in favour of the respondents, the primary judge took into account that the respondents' conduct (consisting of concealment and giving untruthful accounts of what had happened) was "fundamental to the initiation and on-going prosecution of the undue influence issue" and that the costs of that issue were intertwined with those relating to knowledge and approval: [10] and [12]. He also took account of the fact that the testamentary capacity claim, on which the appellants failed, did not have marks of considerable strength and could not be said to have resulted from the respondents' conduct. 125The appellants seek to appeal from that order as to costs irrespective of whether they are successful in their appeal on the substantive issues. There is authority in this Court that in those circumstances leave to appeal is not required; although that question may require reconsideration in the light of decisions of other intermediate appellate courts: Arena Management Pty Ltd v Campbell Street Theatre Pty Ltd [2011] NSWCA 128; 281 ALR 304 at [129]. It is unnecessary to address that question because the appellants have not, in their written or oral submissions, sought to identify any error on the part of the primary judge in exercising the discretion as to costs. His Honour correctly formulated the relevant principles at [7] and sought to apply them. In oral submissions the appellants identified factors which were said to be relevant to the exercise of that discretion. Those factors were the conduct of the respondents in relation to the making of the Will and in the defence of the proceedings and Lily's state of health and mind at the time the Will was made. Each of these factors was considered by the primary judge. If the appellants had failed in all other issues in the appeal, it would have been appropriate for the appeal against the costs order to be dismissed. 126Because this Court has allowed the appeal in part, it is necessary for that reason to revisit the primary judge's costs order. That order, that the appellants pay the respondents' costs fixed in the sum of $100,000, must be set aside. Instead an order should be made, consistently with the way the primary judge approached the question of costs, that the appellants pay the respondents' costs of the proceedings before the primary judge fixed in the sum of $35,000. That amount is calculated by reducing the allowance of $75,000 to $10,000 to take account of Clara's success on the Family Provision Act claim, and the fact that the costs incurred in relation to her claim included costs relating to Evelyn's financial and other circumstances, as a potential beneficiary. 127Finally, it is necessary to address the costs of the appeal. The appellants have been successful on part of that appeal, however most of the written submissions and time in oral argument addressed the probate issues. 128The evidence is that the respondents have incurred approximately $114,000 by way of costs of the appeal. The appellants should have an order which reflects their success in relation to the Family Provision Act claim. At the same time, there does not appear to be any reason why the respondents should not have an order for costs which reflects their success on the probate issues. Unlike the proceedings at first instance, the appellate proceedings involved a challenge to the judgment of the primary judge. They cannot be said to be a reasonable response to or result of the respondents' conduct before and in the proceedings at first instance. The appellants were entitled to test the primary judge's decision but not at the expense of the respondents: Lippe v Hedderwick [1922] HCA 44; 31 CLR 148 at 154-155; Re Blyth (deceased) (1959) NZLR 1313 at 1314; Re McIntyre [1993] 2 Qd R 383 at 388. Addressing the matter by reference to the respondents' party and party costs and making allowance for the success of the appellants in relation to the Family Provision Act claim, the appellants should pay the respondents' costs of the appeal assessed at $55,000. To arrive at that amount I have treated 70 per cent of $114,000 as party and party costs, allowed 70 per cent of those party and party costs as recoverable, and rounded the figure down to $55,000.
Proposed Orders 129For these reasons, I propose the following orders be made: (1)Appeal allowed in part. (2)Set aside the order made by Brereton J on 1 March 2011 dismissing the proceedings in so far as they seek relief under the Family Provision Act. (3)The property at Beach Road, Bondi Beach, subject to existing registered mortgages, be designated as notional estate of the deceased, Lily Ezekiel. (4)Provision be made for the second appellant out of that notional estate by payment of the sum of $225,000 to the second appellant with the intent that the balance of that estate is held by the respondents as tenants in common in equal shares. (5)Pursuant to s 13 of the Family Provision Act, the beneficial entitlement of the first respondent to a half share in that notional estate bear the burden of the order for payment in order 4 and the order for interest in order 6. (6)The sum of money in order 4 bear interest at the rate of 5 per cent from the date of this judgment. (7)Set aside the costs order made by Brereton J on 23 May 2011. (8)The appellants pay the respondents' costs of the proceedings before Brereton J fixed at $35,000. (9)The appellants pay the respondents' costs of the appeal fixed at $55,000. (10)Appeal otherwise dismissed.
Amendments 18 March 2013 - Ages of parties at time of the judgment in March 2011 (not at time of the hearing in September 2009, as previously shown). Amended paragraphs: [76], [77], [79], [84] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 March 2013
Tobin
Ezekiel
[2006] QCA 494
[2003] WASCA 3
[1994] HCA 48
[2004] VSCA 235
[1994] HCA 40
(1988) 13 NSWLR 489
(1976) 50 ALJR 539
(1991) 25 NSWLR 343
(1960) 105 CLR 153
[2011] HCA 11
[1938] HCA 34
Appeal allowed in part; order dismissing Family Provision Act claim set aside; Beach Road property designated notional estate; provision of $225,000 ordered for second appellant (Clara) with burden on first respondent's (Albert's) share and interest at 5 per cent; costs orders varied so appellants pay respondents $35,000 for trial and $55,000 for appeal; appeal otherwise dismissed.