Vasey v Henry

Supreme Court of NSW|2019-04-17|Before: Robb J

Solicitors: Baker Love Lawyers (plaintiffs) Byrnes Lawyers (defendant) File Number(s): 2018/63455

Judgment

The three plaintiffs, Natasha May Vasey, Vanessa Louise Henry and Rachael June Fowler, are the daughters of Stephen James Henry, who died on 28 February 2017.
The defendant is Dianne Barbara Henry. She is the widow of the deceased.
Without meaning any disrespect, to avoid confusion and for consistency I will refer to the parties by their first names.
The plaintiffs' mother is the first wife of the deceased, from whom he was divorced before his death.
By summons filed on 26 February 2018, the plaintiffs each seek orders pursuant to s 59 of the Succession Act 2006 (NSW) (Succession Act) for further provision for their proper maintenance, education or advancement in life out of the estate or notional estate of the deceased.
The issues raised by this application are relatively simple, and there was no substantial dispute about the primary facts.

The deceased's estate

The defendant's evidence, in her capacity as executor of the deceased's estate, was that the estate comprised the following (see par 130 of her affidavit dated 6 July 2018): Assets 50% interest in 12 Murson Crescent (after payment of mortgage) - $232,413 ANZ Access Account 55253546 - $4.48 Funds held with AustralianSuper (member no 2222008244) - $20,908.17 Funds held with AustralianSuper (member no 2222006525) - $310,950.67 Liabilities RJ Walker & Sons Funeral Account - $7,800 Legal fees re Probate - $3,962.78 Total $552,513.54
The defendant's evidence, at par 132 of her 6 July 2018 affidavit, was that she was nominated as the sole beneficiary of the deceased's superannuation accounts with AustralianSuper.
Strictly, there were almost no assets in the deceased's estate at the date of his death. The Murson Crescent property was owned by Dianne and the deceased jointly, so that, upon the deceased's death, it passed directly to Dianne by survivorship. Also, I assume that under the terms of the superannuation trusts, Dianne became directly entitled to the funds in the deceased's superannuation accounts because she was the sole nominated beneficiary. Consequently, the deceased's interests in the Murson Crescent property and the superannuation funds will only be available to be made the subject of family provision orders in favour of the plaintiffs if, to the necessary extent, one or both of those assets are designated as notional estate of the deceased.

Dianne's assets and liabilities

Dianne arranged for the amounts in the deceased's superannuation accounts to be paid into her own superannuation accounts, which was done on 23 June 2017.
The evidence discloses that Dianne has nominated her three children, to the exclusion of the plaintiffs, as the beneficiaries of her superannuation accounts. There is a question about whether that was inconsistent with the terms or the spirit of the agreement that Dianne made with the deceased at the time they made their 'mirror wills'. That is a matter that does not need to be decided in these proceedings.
Dianne owned the Murson Crescent property, jointly with the deceased, so that, after the mortgage on the property was paid, she was also entitled to $232,413.
The property was sold for $520,000, with settlement occurring on 18 September 2017.
Dianne applied part of the proceeds of sale towards the purchase of a unit in a retirement village at Port Macquarie for a price of $350,000. The balance of the price was added to Dianne's superannuation account.
Dianne's evidence, as per par 135 of her 6 July 2018 affidavit, is that her current financial position is as follows: Assets Interest in the retirement village unit - $350,000 Suzuki motor vehicle - $500 Qashqai motor vehicle - $18,000 Furniture - $1,000 Savings - $1,000 Australian Superannuation fund (No. 1) - $371,000 E Australian Superannuation fund (No. 2) - $70,000 E Total value - $811,500
The defendant said that she has no liabilities. She receives a pension of $1,065 per fortnight from her Australian Superannuation Fund (No 2), as well as a "Centrelink Widow's allowance" of $600 per fortnight. Her total income per fortnight is, therefore, $1,665.
At par 139 of her 6 July 2018 affidavit, the defendant provided a list of her fortnightly expenses. They total $1,623. The expenses do not look unreasonable for a person in the defendant's position, and they were not challenged as being excessive by the plaintiffs.

History of the relationship between Dianne and the deceased

The history and nature of the relationship between a widow and her deceased husband is always of significance to the determination of applications for family provision orders by the children of the deceased. However, aspects of that history are of particular significance in the present case, in so far as they have a bearing on the value of the deceased's estate and Dianne's assets.
Dianne was born on 8 August 1954, and is now aged almost 65 years. She left school when she was 16 years of age.
Dianne married her first husband in 1973, and the couple separated in about 2001. They had four children, one of whom sadly passed away when she was about five months' old.
At the time Dianne made a matrimonial property settlement with her first husband, the couple owned a property at Lake Cathie that had an agreed value of about $300,000. Title to that property was transferred to Dianne in return for her agreement to pay her first husband $150,000. Dianne borrowed that amount on mortgage. Dianne did not then have any other liabilities. The only other assets she received as part of the matrimonial property settlement were a Toyota motor vehicle and items of personalty. Dianne then had full-time work with Centrelink.
According to Dianne, she first met the deceased in about 2000. Dianne and the deceased commenced a relationship after Dianne had left her first husband but before the deceased had separated from the plaintiffs' mother. The deceased told Dianne that he considered his marriage to be over. Dianne and the deceased lived apart until towards the end of 2004, when the deceased moved in to live with Dianne in her Lake Cathie property.
The deceased advised Dianne that he was going through a property settlement with his first wife. At one point, the deceased told Dianne that he had come to an agreement with his first wife, and that she was going to get their house and $200,000 of the deceased's superannuation. The plaintiffs tendered evidence that showed that, under the orders made by the Family Court of Australia, their mother became entitled to $126,229 of the deceased's superannuation, where that amount was to be indexed in accordance with a statutory formula up to the time that the deceased became eligible to receive his superannuation. At that time, Dianne understood that the deceased's superannuation entitlements were worth about $600,000. The only other assets that the deceased had at that time were a Suzuki motor vehicle and a small open boat.
Dianne continued, in her 6 July 2018 affidavit, by giving evidence that she and the deceased socialised regularly, including visiting local hotels and clubs. The deceased enjoyed playing poker machines and regularly played them when the couple went out socially. It was not unusual for the deceased to put $500 through a poker machine per visit to a local hotel or club. The deceased would also regularly drink approximately 12 schooners of full strength beer each day. He would sometimes pay cash and at other times use his credit card.
Dianne said that, notwithstanding the deceased's habits, he was kind and considerate to her and that they had a sound and loving marital relationship.
In about 2005, Dianne received an inheritance of $90,000 from her late mother's estate. Dianne applied about $30,000 of her inheritance to improving her Lake Cathie property, and also purchased an Astra motor vehicle and a caravan.
According to Dianne, she paid her mortgage, the rates, insurances and other home-related expenses out of her wage, while the deceased would pay for groceries and electricity from his.
In about 2006, according to Dianne, the deceased disclosed to Dianne that he owed a personal loan of $70,000 and a $20,000 credit card debt. Dianne had known nothing about those debts. The deceased claimed that they related to his divorce as well as visiting Natasha overseas. Dianne said, in her 6 July 2018 affidavit, that she believed that part of the deceased's debts related to his regular use of poker machines and his daily consumption of alcohol.
Dianne and the deceased were married on 27 October 2007. At about that time, the deceased told Dianne that he had decided to stop playing poker machines, which is a statement of intention that Dianne believes the deceased honoured.
In about 2009, Dianne and the deceased sought the advice of a financial advisor. The deceased still had to deal with his debt of about $90,000. The advice given was that the couple would be better off if Dianne retired from her employment, cashed in her superannuation, and used that to pay off the deceased's debt.
Dianne and the deceased agreed that she would retire. She had the option of receiving an ongoing annuity or getting a lump sum payment. Dianne elected to receive a lump sum payment of $147,033.63. She then repaid the deceased's debts amounting to about $90,000.
As a consequence, Dianne's assets were reduced by about $90,000 for the benefit of the deceased, and Dianne forewent the opportunity to receive an ongoing annuity from the capital of her superannuation, or otherwise an opportunity to remain in employment at Centrelink.
On 15 February 2012, Dianne sold her property at Lake Cathie for a price of $457,500. She said, at par 71 of her 6 July 2018 affidavit, that she could not recall how much was owed on the mortgage over the property at that time. Dianne and the deceased then jointly purchased the Murson Crescent property, which they owned jointly at the date of the deceased's death. The purchase price was $404,000, and to the best of Dianne's recollection, the couple borrowed an additional $50,000 to pay for the property.
That meant that, from the sale proceeds of the Lake Cathie property, the defendant contributed about $354,000 to the price of the Murson Crescent property, or about 88% of the price, and 100% of the equity.
The deceased retired in 2012, when he was 59 years of age. On his retirement, the deceased received a lump sum payment for his long service leave and other employee entitlements which, to the best of Dianne's recollection, amounted to about $80,000. The deceased purchased a motor vehicle for $40,000 from that money. The deceased also received his superannuation entitlements, which, according to Dianne, were approximately $400,000.
Thereafter, Dianne and the deceased lived a relatively simple but comfortable life funded by the remainder of Dianne's superannuation and the deceased's superannuation. They enjoyed travelling in the caravan, including visiting the plaintiffs, and socialised regularly - the defendant playing golf and the deceased going to the local hotel and clubs where he would have a drink with his friends.
On 11 November 2015, the deceased was diagnosed with oesophageal cancer, and soon after that he was advised that the cancer had spread to his lungs.
On 9 December 2015, the deceased commenced chemotherapy treatment. That continued periodically until 30 March 2016. Dianne took the deceased to each chemotherapy treatment, and sat next to him for the 3 to 4 hours that each treatment took.
After the chemotherapy finished, the deceased had a few months without treatment before commencing radiation treatment. Again, Dianne accompanied the deceased to each radiation treatment appointment.
In late 2016, at the suggestion of the deceased, Dianne sold the caravan for $30,000 and traded in their Nissan motor vehicle for $11,000. Dianne purchased a new car for $26,000, and applied $15,000 from the sale price of the van towards the purchase of the car. She earmarked the remaining proceeds of sale for future expenses including the deceased's funeral.
At about this time, the deceased disclosed to Dianne that he had two other credit card debts which he had hidden, one for about $20,000 and the other for about $10,000.
The $20,000 debt was paid from the deceased's superannuation account, but, according to Dianne, she paid the other $10,000 from the proceeds of sale of the caravan, which Dianne had bought using the inheritance from her mother.
Thus, Dianne further reduced the deceased's indebtedness by an amount of $10,000 from her own assets.
I have mentioned above that Dianne contributed about $354,000 towards the $404,000 price of the Murson Crescent property that was purchased in the joint names of Dianne and the deceased. They were each jointly liable for the $50,000 that was borrowed to make up the price. The value of the equity in the property at the time it was sold, after payment of relevant fees in respect of the sale, was $464,826. Dianne accepts that the deceased's estate's half-share of that amount is $232,413. However, the evidence shows that Dianne's assets were the source of the whole of the equity in the Murson Crescent property.
Furthermore, the value of the asset represented by the deceased's superannuation funds would have been at least $100,000 less than they were at the time of his death, if Dianne had not repaid that amount of the deceased's debts from her own assets. That underestimates the value of Dianne's contribution, because $90,000 of the deceased's debt was repaid in 2009, and the deceased did not get access to his superannuation funds until he retired in 2012. In the meantime, the value of the deceased's superannuation funds would have continued to increase and the deceased would not have accrued interest obligations in respect of the $90,000. The repayment of the debt by Dianne also preserved the deceased from recovery action by his creditors.
Additionally, Dianne effectively provided a secure home for the deceased from her own assets from the time he commenced to cohabit with her in 2004 until his death in 2017.
It will by now be clear that I have based my findings on the history of the relationship between Dianne and the deceased substantially on Dianne's evidence, which I accept. Dianne was not challenged in this respect in cross-examination. The plaintiffs tendered some evidence of the deceased's credit card statements from times from about 2014. This evidence did not materially contradict the evidence given by Dianne. The plaintiffs each gave evidence of dealings that they had with the deceased over the years and statements that he made to them that in some respects may be contradictory to Dianne's evidence. That has not caused me to materially doubt the evidence given by Dianne.

Dianne's expectations

In her 6 July 2018 affidavit, Dianne also gave evidence that she is conscious of her limited income and budgets accordingly. The moneys in her superannuation accounts, together with any social security benefits for which she is or becomes eligible, will have to provide for her for the remainder of her life. At about 65 years of age, she is in good health, and hopes to live for many more years.
Dianne did not travel overseas while the deceased was alive because he did not want to do so. Dianne tentatively planned going on a trip to Canada and Alaska following the deceased's death, at a cost of about $20,000. That proposal has been deferred pending the outcome of these proceedings.
Dianne said that she would also like to have the opportunity of doing some overseas travel, including to New Zealand and China, and also that she would like to travel around Australia.
Whilst she says she is a good budgeter, Dianne said that there are always additional expenses which her income is not sufficient to meet, and as a result of which she needs to draw down additional funds from her superannuation. At the time she swore her principal affidavit, she needed to purchase a new refrigerator that would cost about $1,000. She also needed new glasses that will cost about $600 and a hearing aid in one of her ears, that will cost approximately $4,000.
Further, Dianne likes visiting her niece in Queensland approximately four times per year, and when she does that there are additional petrol and associated costs. Dianne is plainly close to her niece, who left Queensland and her husband and two sons to help Dianne while she was nursing the deceased at home before he was finally admitted to hospital.
Dianne's evidence concluded by saying that she was certain that the deceased would have wanted her to have been able to have a comfortable retirement.

The plaintiffs' need for further provision

It is in these circumstances that the Court must turn to a consideration of the need for further provision for each of the plaintiffs.
That need must be considered in the light of the fact that Dianne's will provides that, upon her death, her estate will be divided equally between the three plaintiffs and Dianne's own three children. It is not a matter for decision in this case as to whether Dianne and the deceased made mutual wills, with the result that Dianne is not legally entitled to change her will to exclude the gift to the plaintiffs. Dianne's own evidence on this subject provides some support for the conclusion that Dianne and the deceased did each make 'mirror wills' as part of an agreement that each would not change her or his will after the death of the other.
The point is that Dianne's Port Macquarie retirement village property was valued at $350,000 at the time of purchase in about 2017. Even if Dianne leads a long life and expends much of her superannuation funds, upon her death each of the plaintiffs may receive a share of her estate with a value, current at this time, of a little less than $60,000. There is no basis for the Court to consider the question of whether the plaintiffs will also be entitled to any share of Dianne's superannuation funds that then remain.
Another matter that was not explored in the evidence was that a significant reason for the deceased having limited assets at the time of his death, and why much of the deceased's assets was contributed to by Dianne, was the effect of his divorce from the plaintiffs' mother. The evidence suggests that the mother received the matrimonial home and an entitlement to a share of the deceased's superannuation, at the time he became entitled to receive it, in the base amount of $126,229, calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth). I infer that this regulation provides for the indexation of the mother's share. The actual amount to which the mother became entitled was not strictly proved. Dianne claimed in her affidavit that the amount was roughly $200,000. It is probable that, at some time in the future, the plaintiffs will inherit a share in their mother's estate, although there is no means of knowing whether that will happen, or when or what the plaintiffs might inherit.
I accept that these considerations may not be of much joy to the plaintiffs if their circumstances show that they have pressing needs for immediate further provision, but they are matters that must be borne in mind.

Natasha's circumstances

Natasha was born on 7 August 1977. She gave evidence in her 28 March 2018 affidavit of what she described as a wonderful childhood and a close immediate family. The family lived a peripatetic existence because the deceased moved his place of employment relatively frequently.
Natasha left the family home at age 18 to move on campus and attend the University of Newcastle. She completed a Bachelor of Commerce, with a major in management accounting, in 1990. The deceased supported Natasha at university by paying the weekly boarding fee at Edwards Hall at the University of Newcastle. Natasha incurred a HECS debt for course fees, which she has paid off over the following years through her salary.
After graduating from university at the age of 21, Natasha got a full-time job as the financial manager in a software development company, and held this position until age 24, when she left Newcastle to travel the world. Natasha spent the next four years based in London. She was granted a visa to work permanently for a company in the United Kingdom.
Natasha gave evidence of a very close relationship with the deceased, including the circumstances in which his relationship with Dianne was discovered by her mother, and the consequences involving the breakup of the marriage, and the circumstances in which the deceased commenced a new relationship with Dianne. It is not necessary for the Court to relate the detail, but Natasha explained the emotional turmoil that the deceased suffered as a result of his separation and divorce.
Natasha returned to Australia in 2005, and shortly after her return she settled in Newcastle and commenced employment with an American-owned mining machinery company. Natasha initially held the position of financial controller, and then in 2008 she became a company director, and later the director of corporate services for both the Australian and UK operations. Natasha held this position up until September 2016, when she resigned about six months after the birth of her first child. Natasha agreed in cross-examination that her income for the year in which she resigned her employment was $156,966. That suggests that Natasha has a substantial income-earning capacity, which for the present is interrupted. This interruption need not be permanent.
Natasha has also held volunteer directorships including of the Hunter Working Women's Centre, of which she was the vice president, and as international director for the Rotary Club of Lake Macquarie over the past five years.
Natasha met her husband, Robert Vasey, in 2012, and the couple married in 2013. Robert has a son to a previous relationship, so she immediately became a stepmother to Lachlan, who is now 10 years' old and in year five at primary school.
Initially, Lachlan's mother shared custody of Lachlan on an equal basis with Robert. In early 2019, according to Natasha's affidavit sworn 4 April 2019, the mother relocated to Sydney with her new partner and chose to have Lachlan stay with Natasha and her husband permanently on a full-time basis.
Lachlan suffers from dyslexia, anxiety and ADHD (deficit type). Lachlan is currently being reviewed for hearing and auditory processing issues. He has recently begun taking the medication Ritalin under the guidance of a psychiatrist. Further, Lachlan requires special assistance at school. He attends speech pathology every fortnight, a psychologist every 2 to 4 weeks and the psychiatrist every six weeks.
Natasha gave evidence that the financial, emotional and physical effort required to maintain Lachlan's activities and his well-being is very significant. He is very troubled by the absence of his mother, though Natasha said that his mother plans to see him every second weekend.
Lachlan's mother does not work and is not contributing anything to assist with Lachlan's care.
Lachlan attends an Anglican K-12 College which is able to provide the additional educational assistance that he requires. The annual cost of that school is around $7,000. The cost will increase as Lachlan progresses to high school.
Natasha also said that the psychiatrist charges $440 per hour and the psychologist $200 per hour. There are also fees for the speech pathologist, sports, drama club and medication. Natasha expects that these expenses will continue on a long-term basis.
Significantly, Natasha said that looking after Lachlan on a full-time basis is likely to keep her out of the workforce for a significant time.
Natasha and Robert had their first son, Flynn, in February 2016.
Natasha had a second baby boy named Jed on 8 June 2018. Consequently, Natasha and her husband now have three dependent children.
Given the need to look after the three children, two of whom are of preschool age, Natasha does not anticipate being able to return to work until the youngest child starts school, if at all.
Robert has Type 1 Diabetes, and the couple have been undergoing IVF over the past four years, so they have a great deal of medical expenses. The couple would like to have at least one more child.
Natasha and Robert are currently renting the home in which their family lives. They own a block of land valued at $360,000, on which there is a mortgage of $310,000. They would like to build a family home on the land, but they will need to borrow an estimated $600,000 on a mortgage over the land in order to cover the building cost.
According to Natasha's 16 April 2019 affidavit, Robert operated as a sole trader consultant up to 30 June 2016. A company, Vasey Consulting Pty Ltd, was incorporated on 21 June 2016, and commenced trading on 1 July 2017. In practical terms, Robert is self-employed. Natasha acknowledged in cross-examination that she had not given a value for Robert's company. In the absence of positive evidence to the contrary, I would not infer that a company that was little more than the vehicle through which Robert carried on his profession would have a substantial value.
As at 30 June 2017, Robert's taxable income was $40,592, and he had to pay $4,739.40 in tax. In the financial year ending 30 June 2018, Robert drew $70,636 from the company, although, at the end of the year, the company had accounts receivable of approximately $40,000 and liabilities of $36,000. It therefore may be necessary for Robert to repay part of the drawings he has made.
As at 16 April 2019, Natasha estimated that Robert's taxable income would be approximately $70,000 per annum.
As per Natasha's 8 March 2019 affidavit, Natasha and Robert had combined assets of $995,707.50 as at that date. That included the block of land valued at $360,000, Natasha's superannuation of $286,900 and Robert's superannuation of $202,585. The couple owned shares together valued at $98,223.
Natasha and Robert owe the $310,000 mortgage referred to above, and, apart from a number of additional smaller liabilities, Robert owes a debt of $147,018.16 in relation to his business.
The total liabilities of the couple are $475,818.16, giving joint net assets of $519,889.34.
Also, as at 8 March 2019, Natasha gave evidence that the family monthly expenditure was $10,372.48. That included a mortgage payment of $2,165 and rent of $1,050. It appears that the monthly expenditure is therefore considerably more than the couple's monthly income.
In her 28 March 2018 affidavit, Natasha acknowledged that, after the deceased made his will, he told her that he had left his estate to the defendant on the basis that she would leave her estate to the six children equally, and that she had accepted that arrangement.

Vanessa's circumstances

In her 28 March 2018 affidavit, Vanessa described herself as a "Manager Therapy Services", but said in cross-examination that she is now a professional speech pathologist. She is not married and does not have children, but she expressed the hope of having a family in the future. She was born on 11 January 1980 and is currently 39 years of age. She is in good health.
Vanessa described having a normal and happy father and daughter relationship with the deceased.
Vanessa's parents provided for her during her childhood, including food and housing. When she left home, her parents paid for her university accommodation during the first three years when she lived on campus, from 1999 to 2001.
As per her 7 March 2019 affidavit, Vanessa owned two properties as at that date. The first, her home, in Charlestown, New South Wales, has an estimated value of $570,000. Vanessa also has an investment property in Dubbo, in this State, with an estimated value of $380,000. Her total mortgage liabilities on both properties are $652,000. Vanessa has superannuation of $165,000. Her net assets are $513,000.
Vanessa's combined net monthly income of salary and rent is $6,160.05, and her monthly expenses are $5,900. She therefore enjoys a small monthly surplus.
In her 7 March 2019 affidavit, Vanessa admitted that she is presently able to meet her monthly expenses, though she is not able to contribute to savings. Her future financial needs were based on her hope to one day marry and have children, including the possibility of incurring future medical expenses and school fees etc., and having to take time out of the workforce should this occur.
Finally, in her 28 March 2018 affidavit, Vanessa also acknowledged that she was told by Natasha, in about 2008, that Dianne and the deceased had made wills so that, if either were to pass away, after the death of the other, their estate would be split between the six children. She had a discussion with the deceased after his cancer was diagnosed as terminal, in which the deceased told her that his money would go to Dianne. Vanessa said that she understood, but that she would like something of the deceased's to remember him by.

Rachael's circumstances

Rachael is the youngest of the deceased's daughters, having been born on 6 September 1982, so she is now 36 years' old.
In her affidavit sworn 28 March 2018, Rachael gave evidence of having grown up in a very loving and protective home, and that she had a good relationship with the deceased.
Rachael described herself as a psychologist. She is a director of a company known as PsychChoices Pty Ltd. There are three directors of that company, who each hold two shares. Rachael said that the company had little value.
Rachael is married and she and her husband have three dependent children, aged ten, nine and seven as at 28 March 2018.
As per Rachael's 8 March 2019 affidavit, the couple have net assets of $155,000, which includes their home in Charlestown valued at about $650,000 which is subject to a $500,000 mortgage. Separately, Rachael's Nissan vehicle is worth about $50,000, but the loan is equal to the value. Rachael has other personal assets, including superannuation, totalling $31,000. Her shares in PsychChoices Pty Ltd are also estimated at $2,666.
Rachael's estimated yearly income is $39,000 gross, with her net monthly income being $2,800.
As she is self-employed, Rachael experiences variations in her income.
Rachael's husband is a 50% partner in a business in Newcastle that provides electronics technician services for the security and audio-visual industry. The husband's weekly wage is $1,410 net.
The couple's monthly expenditure is $8,870, which includes $2,800 in mortgage payments.
As Rachael's husband's weekly wage is $1,410 net, he receives $6,110 per month, which gives a total family monthly net income of $8,910. Consequently, as Rachael said on 8 March 2019, she and her husband struggle to meet their monthly budget.

Estimated costs and disbursements

It is necessary to have regard to the parties' estimates of the costs that they will incur to the completion of these proceedings. Family Provision Practice Note SC Eq 7 par 17 requires that the parties file affidavits disclosing the costs and disbursements that they will incur. Paragraph 17.1 requires that the plaintiffs' final affidavit as to costs and disbursements should identify the costs and disbursements calculated on the indemnity basis and those costs and disbursements calculated on the ordinary basis. Paragraph 17.2 only requires Dianne's affidavit to identify the costs and disbursements calculated on the indemnity basis. That is because, if a plaintiff is successful on a claim for further provision under a family provision order, the usual order for costs is that the plaintiff's costs be paid out of the estate of the deceased on the ordinary basis. The conventional order is that the defendant executor or administrator is entitled to his or her costs out of the estate on the indemnity basis: see McDonald v O'Connor [2019] NSWSC 261 at [127]. However, as Hallen J said in that case at [127]: "…The size of the deceased's estate, and the conduct of a party, may justify a departure from what is said to be the usual rule."
In this case, the final solicitors' affidavits as to costs made an estimate of costs on the assumption that there would be a two-day hearing, as the matter was set down for two days. In fact, the hearing was completed in a single day.
The plaintiffs' estimate of costs and disbursements was that the total amount incurred would be approximately $67,000, on the assumption of a two-day hearing. Although the total estimate was $67,000, if the individual components of the costs and disbursements set out in the affidavit are added together, the total is closer to $64,000. Unfortunately, it does not appear from the affidavit that the solicitor has given an estimate on the ordinary basis. I infer that the estimate given is on the indemnity basis.
I note that the plaintiffs' costs and disbursements were $32,072 as at 5 March 2019. The balance of the $64,000 was expected to be incurred after that date.
In the absence of better evidence, I will take the $32,000 estimate for the period after 5 March 2019 to allow for one day's preparation and two days' hearing. I will infer that, as the second hearing day was not used, the further costs on an indemnity basis would approximate $21,000. On that basis the plaintiffs' total costs and disbursements would be approximately $53,000.
Again, in the absence of better evidence, I will assume that 85% of that amount represents the costs and disbursements on the ordinary basis, which gives about $45,000.
Dianne's solicitor gave evidence that, as at 28 February 2019, Dianne's solicitors' costs and disbursements were $21,230. The estimated costs and disbursements to the conclusion of a two-day hearing, on the indemnity basis, were $47,500. The total amount expected to be incurred after 28 February 2019 was therefore about $26,000. In order to account for the fact that the second hearing day was not used, proceeding in the same manner as I have in respect of the plaintiffs' costs and disbursements, I will adopt $17,500 as an estimate of the additional costs and disbursements of Dianne.
On that basis, the estimated costs and disbursements of Dianne on the indemnity basis will be about $39,000.
Consequently, if the plaintiffs were to succeed in this matter, and the usual costs orders were made, the amount of the notional estate of the deceased available for distribution would have to be reduced by $84,000 to cover the parties' costs.
As Basten JA said in Chan v Chan [2016] NSWCA 222; (2016) 15 ASTLR 317, at [54]: "In considering an amount by way of provision, it is appropriate also to have regard to the diminution of the estate on account of legal costs…"

Provision sought by the plaintiffs

Counsel for the plaintiffs provided a written outline of submissions to the Court, dated 10 April 2019.
In the course of making his submissions, given the relatively moderate size of the deceased's notional estate and the evidence of the competing claims of the parties, counsel nominated the amounts of specific legacies that he submitted were appropriate to be made in favour of each of the plaintiffs for their further proper maintenance, education and advancement in life. Those amounts were Natasha ($35,000), Vanessa ($25,000) and Rachael ($30,000). If the Court acceded to that submission, the total amount would be $90,000.
As I have set out above at par 14, at the date of his death the deceased's estate had a net value of $552,513.54. The deceased's 50% share in the Murson Crescent property had a value of $232,413. The two superannuation funds had a combined value of $331,858.84.
If family provision orders were made giving $90,000 to the plaintiffs, and the usual costs orders were made, the value of the deceased's estate would be reduced by a total of $174,000 from $552,513.54 to $378,513.54.
But that calculation would not recognise the extent to which Dianne contributed to the deceased's estate from her own assets. As I have discussed above at pars 51 and 52, the deceased's share in the Murson Crescent property was provided by Dianne's equity in earlier properties, and Dianne repaid $100,000 of the deceased's debts. If those amounts are deducted from the apparent value of the deceased's notional estate, then the $552,513.54 would be reduced by $332,413.00 to $220,100.54.
Therefore, if the amount of $90,000 was ordered to be paid out of the remainder of the notional estate of the deceased, together with the costs of $84,000, then the amount that would remain for Dianne out of that part of the deceased's estate that could realistically be traced to his own assets would be $46,100.54.
This is not a definitive calculation, and is only intended to show what the effect of the relief sought by the plaintiffs in this case will be if care is taken to ensure that any amounts ordered to be paid to the plaintiffs, and the costs of securing that relief, come out of that part of the notional estate of the deceased that was brought into the estate by the deceased's own efforts.

Legal principles

The plaintiffs are eligible, as children of the deceased, to make the present claims for family provision orders under s 57(1)(c) of the Succession Act.
The proceedings were commenced within the 12-month period required by s 58(2) of the Succession Act.
Section 59 of the Succession Act governs the circumstances in which the Court is empowered to make a family provision order in favour of the plaintiffs, and is in the following terms: 59 When family provision order may be made (1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that: (a) the person in whose favour the order is to be made is an eligible person, and (b) in the case of a person who is an eligible person by reason only of paragraph (d), (e) or (f) of the definition of eligible person in section 57 - having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application, and (c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. (2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made. …
There has been a long-standing question about whether the application by the Court of s 59(1)(c) and s 59(2) is a single-step process, or whether the Court must be satisfied that the first of these requirements has been established before the Court applies the second, in order to determine what further provision ought to be made out of the estate of the deceased. My own views on the subject have been set out recently in Maynard v Maynard [2018] NSWSC 1961 at [121]-[163], and need not be repeated here. The present is a relatively straightforward case, and I am satisfied that the same result would be achieved whatever approach was adopted to the application of the statutory provisions.
Section 60 of the Succession Act provides a non-exhaustive list of factors that the Court may take into account in applying s 59, as follows: 60 Matters to be considered by Court (1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining: (a) whether the person in whose favour the order is sought to be made (the applicant) is an eligible person, and (b) whether to make a family provision order and the nature of any such order. (2) The following matters may be considered by the Court: (a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship, (b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate, (c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered, (d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate, (e) if the applicant is cohabiting with another person - the financial circumstances of the other person, (f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated, (g) the age of the applicant when the application is being considered, (h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant, (i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate, (j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person, (k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so, (l) whether any other person is liable to support the applicant, (m) the character and conduct of the applicant before and after the date of the death of the deceased person, (n) the conduct of any other person before and after the date of the death of the deceased person, (o) any relevant Aboriginal or Torres Strait Islander customary law, (p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered.
It is sufficient to note that the plaintiffs have the burden of establishing that, as at the present time, adequate provision for their proper maintenance, education or advancement in life has not been made by the will of the deceased, and, if that is established, the Court is required to determine what provision out of the estate ought to be made for those purposes.
The critical question is whether, at the time the application is decided, it appears to the Court, based upon an evaluative judgment, that adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased.
In the present case, the deceased's will made no provision at all for the plaintiffs, because Dianne has survived the deceased. However, it does not follow that the requirement in s 59(1)(c) of the Succession Act is satisfied, as what is adequate and what is proper must be considered at the one time.
The concept of what is proper in this context has already been distilled by Hallen J in McDonald v O'Connor [2019] NSWSC 261 (McDonald v O'Connor) at [240]-[243] in the following terms: [240] Dixon CJ and Williams J, in McCosker v McCosker, at 571-572, after citing Bosch v Perpetual Trustee Co Ltd, went on to say, of the word "proper", that: "It means 'proper' in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement in life must be considered in the light of all the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent." [241] In Pontifical Society for the Propagation of the Faith v Scales, Dixon CJ, at 19, pointed out that the words "adequate" and "proper" are always relative and that what the testator regarded as "superior claims or preferable dispositions" is a relevant consideration: "The 'proper' maintenance and support of a son claiming a statutory provision must be relative to his age, sex, condition and mode of life and situation generally. What is 'adequate' must be relative not only to his needs but to his own capacity and resources for meeting them. There is then a relation to be considered between these matters on the one hand, and on the other, the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferable dispositions. The words 'proper maintenance and support', although they must be treated as elastic, cannot be pressed beyond their fair meaning." … [243] In Vigolo v Bostin, Callinan and Heydon JJ wrote at 114: "…the use of the word 'proper'…implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here…The use of the word 'proper' means that attention may be given, in deciding whether adequate provision has been made, to such matters as what used to be called the 'station in life' of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future."
In evaluating whether or not the deceased's will makes adequate provision for the proper maintenance, education and advancement in life of the applicant, the Court must give due weight to the considered view of the deceased as expressed in the deceased's will. As White J (as he then was) said in Slack v Rogan (2013) 85 NSWLR 253 at 284-285; [2013] NSWSC 522 (a view his Honour reiterated as White JA in Sgro v Thompson [2017] NSWCA 326 at [80]-[88]): …In my view, respect should be given to a capable testator's judgment as to who should benefit from the estate if it can be seen that the testator has duly considered the claims on the estate. That is not to deny that s 59 of the Succession Act interferes with the freedom of testamentary disposition. Plainly it does, and courts have a duty to interfere with the will if the provision made for an eligible applicant is less than adequate for his or her proper maintenance and advancement in life…The deceased will have been in a better position to determine what provision for a claimant's maintenance and advancement in life is proper than will be a court called on to determine that question months or years after the deceased's death when the person best able to give evidence on that question is no longer alive. Accordingly, if the deceased was capable of giving due consideration to that question and did so, considerable weight should be given to the testator's testamentary wishes in recognition of the better position in which the deceased was placed…
In connection with this, in Goodsell v Wellington [2011] NSWSC 1232, at [108], Hallen AsJ (as his Honour then was) observed that: …Freedom of testamentary disposition remains a prominent feature of the Australian legal system. Its significance is both practical and symbolic and should not be underestimated.
In this case, it is important that, although s 60(2)(d) makes "the financial resources (including earning capacity) and financial needs, both present and future, of the applicant…" one of the matters that may be considered by the Court, sub-par (d) also requires the Court to consider the financial resources and needs of any beneficiary of the deceased's estate; and furthermore, this matter is but one of all of the matters listed in the subsection that the Court may consider.
Further, the observation made by Bryson J in Gorton v Parks (1989) 17 NSWLR 1, at 6, that it is not appropriate to endeavour to achieve "an overall fair" division of the deceased's estate, is important. It is not the Court's function to try to achieve what it considers to be a fair distribution of the deceased's estate between the beneficiaries of the will and all eligible claimants who make an application for further provision.
The plaintiffs are adult children of the deceased. Hallen J has, in many cases, set out the principles that are of particular application where the applicant for family provision relief is an adult child. The plaintiffs cited a recent decision of Hallen J in that regard, which I respectfully follow. In McDonald v O'Connor at [283]-[284], his Honour said: [283] In relation to the claim by Margaret, being a claim for provision by an adult child, I have set out the following principles in many other cases, which are also useful to remember: (a) The relationship between parent and child changes when the child attains adulthood. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed. (b) It is impossible to describe, in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child…[i]t can be said that, "ordinarily, the community expects parents to raise and educate their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life, such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set his, or her, child up in a position where she or he can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation": Taylor v Farrugia [2009] NSWSC 801, at [57]; McGrath v Eves [2005] NSWSC 1006; Kohari v Snow [2013] NSWSC 452, at [121]; Salmon v Osmond [2015] NSWCA 42, at [109]. (c) Generally, also, "the community does not expect a parent to look after her, or his, children for the rest of [the child's life] and into retirement, especially when there is someone else, such as a spouse, who has a prime obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect parents to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute": Taylor v Farrugia, at [58]. (d) There is no need for an applicant adult child to show some special need or some special claim: McCosker v McCosker; Kleinig v Neal (No 2) [1981] 2 NSWLR 532, at 545; Bondelmonte v Blanckensee [1989] WAR 305; Hawkins v Prestage (1989) 1 WAR 37, at 45; Taylor v Farrugia, at [58]. (e) The adult child's lack of reserves to meet demands, particularly of ill health, which become more likely with advancing years, is a relevant consideration: MacGregor v MacGregor [2003] WASC 169, at [179]-[182]; Crossman v Riedel [2004] ACTSC 127, at [49]. Likewise, the need for financial security and a fund to protect against the ordinary vicissitudes of life are relevant: Marks v Marks [2003] WASCA 297, at [43]. In addition, if the applicant is unable to earn, or has a limited means of earning, an income, this could give rise to an increased call on the estate of the deceased: Christie v Manera [2006] WASC 287; Butcher v Craig [2009] WASC 164, at [17]. (f) The applicant has the onus of satisfying the Court, on the balance of probabilities, of the justification for the claim: Hughes v National Trustees, Executors and Agency Co of Australasia Ltd at 149. [284] A very similar statement of these principles, which I set out in Bowditch v NSW Trustee and Guardian [2012] NSWSC 275, at [111], was cited with approval in Chapple v Wilcox at [21]; and at [65]-[67]; and was referred to, with no apparent disapproval (although in that appeal there was no challenge to the correctness of those principles), in Smith v Johnson at [62].

Consideration

In all of the circumstances of this case, I am not satisfied that any of the plaintiffs have established that adequate provision was not made by the deceased's will for their proper maintenance, education and advancement in life, with the result that the condition for the making of family provision orders in their favour in s 59(1)(c) of the Succession Act has not been satisfied.
First, the evidence justifies a finding that the deceased gave careful consideration to his testamentary obligations and decided that it was a proper exercise of his testamentary bounty to leave the whole of his estate to Dianne, his wife, as well as to nominate her as the beneficiary of his superannuation funds.
The deceased had already made provision for his first wife, the plaintiffs' mother, by means of the marital property settlement. It was, in my view, in accordance with reasonable community standards and expectations that a husband in the deceased's position in the circumstances of this case, and with the limited remaining assets at his disposal, would leave all of those assets to his wife in his will.
The evidence clearly establishes that Dianne and the deceased had a loving relationship for a period of about 16 or so years, and Dianne provided him with exemplary support and comfort during the course of his final illness.
In the context of distributing his assets upon death, it was reasonable for the deceased to prefer his wife than his children given the limited nature of the couple's collective property and the relatively young age of Dianne at the date of the deceased's death. The deceased apparently recognised a testamentary obligation to do his best to provide for his widow over what he probably hoped would be a number of decades of her remaining life.
Further, the deceased made substantial provision for the plaintiffs during his lifetime, to the extent of providing them material assistance in each gaining a university education.
The arrangement that he made with Dianne for the couple to make 'mirror wills' for the purpose of the remaining assets of the couple at the time of the death of the survivor being shared equally between the couple's six children was a proper arrangement that would, in my view, be regarded by the general community as a proper provision for the children, given the limited nature of the couple's collective assets and the fact that, as Dianne was retired, those assets would be needed to provide a secure home for Dianne and a fund to provide an income and a buffer against contingencies.
While not conclusive, the fact that Natasha and Vanessa told the deceased during his lifetime that they accepted the testamentary arrangements that he had made is not an insignificant factor in deciding that the Court should not disturb the deceased's will, as he would have believed in his lifetime that those daughters accepted that the terms of the will were proper. The evidence does not sufficiently disclose whether or not Rachael also informed the deceased that she accepted the deceased's decision to leave all of his estate to Dianne on the terms of the 'mirror wills'. The daughters' agreement that the terms of the will were proper would not by itself prevent the Court finding, in an appropriate case, that adequate provision for the proper maintenance, education and advancement in life of the daughters had not been made, but I do not think in this case that the evidence justifies such a finding.
It is also significant in this case, as I have explained above at par 124, that although the deceased's notional estate may technically have had a value of $552,513.54, an amount in the order of $332,413 of that value could be attributed to Dianne having placed the Murson Crescent property jointly in the deceased's name with hers, and having paid about $100,000 of the deceased's debts. That does not, in any technical way, affect the value of the deceased's notional estate, but it is a weighty consideration that the deceased's will in substantial part gives back to Dianne that which during the deceased's lifetime she gave to him on the basis of love and affection.
Moreover, if the Court were to make family provision orders in favour of the plaintiffs that they be paid legacies in a total amount of $90,000, and were also to make the usual costs orders, then the assets bequeathed to Dianne by the deceased's will will be depleted by the amount of $175,000. I have already explained, at par 125 above, how that, if that sum is notionally deducted from that part of the deceased's estate that was not effectively given to him by Dianne, then the practical result will be that Dianne would only receive $46,100.54 that could be attributed to the deceased's contribution to the collective matrimonial assets.
As Dianne will need to retain the retirement village unit for her home, the only practical course would be for the Court to require the $175,000 to be paid out of Dianne's superannuation funds. On the evidence, the amount in those superannuation funds is $441,000 in total, so the balance remaining after the payments are made would be $266,000.
I do not consider that $266,000 is a substantial, or sufficient, amount, in the context of the matrimonial history of Dianne and the deceased, to provide Dianne with adequate income and security for the balance of her life.
As is set out above at par 22, Dianne's assets are now valued at $811,500. If that amount is reduced by $90,000, and a further $84,000 to cover the costs of the proceedings, then Dianne would be left with assets of $637,500. The net assets of the plaintiffs, after payment to them of the additional provision sought, would be: Natasha and her husband - $519,889.34 (par 90 above) plus $35,000 equals $554,889.34; Vanessa - $513,000 (par 96 above) plus $25,000 equals $538,000; Rachael and her husband - almost $189,000 (from par 104 above) plus $30,000 equals almost $219,000.
In the case of each of the plaintiffs, the net asset position is substantially reduced by the fact that their properties are encumbered by mortgages. That is commonplace for people of the ages of the plaintiffs. Over time, their net asset position can be expected to improve as the values of their properties increase, and/or they gradually pay off their mortgages. Natasha and Rachael have the benefit of the assistance of their husbands. For the moment, Vanessa does not have to bear the financial burden of a family, although she hopes that that will change.
All of the plaintiffs have reasonably sound employment prospects because of the university degrees that they have been awarded with the substantial assistance of the deceased. Natasha is presently unemployed, the evidence suggesting that this is because of her need to care for three young children, but, notwithstanding Lachlan's disabilities, it would be expected that at some stage Natasha will re-join the workforce. As I have recorded above, Natasha has demonstrated that she is capable of earning a relatively high income.
I accept that, to varying degrees, the plaintiffs are presently experiencing difficult financial circumstances, which, in the case of Natasha and Rachael, might reasonably be said to be shared with many young families. It is not at all clear that Vanessa's financial circumstances are difficult at this time, although I understand that her financial position may change if she is able to start a family.
In terms of the extract from the judgment of Hallen J in McDonald v O'Connor, set out above at par 140, the evidence in this case does not establish that the deceased's funds allowed him to provide the plaintiffs with more of a start in life than the assistance he was able to give them in relation to their education and the arrangement that he made with Dianne that is reflected in their 'mirror wills'.
In these circumstances, and taking into account everything that I have considered above, the plaintiffs have not made out their case for further provision out of the estate or notional estate of the deceased.
I make the following orders: 1. The plaintiffs' summons is dismissed. 2. The plaintiffs are ordered to pay the defendant's costs of the proceedings on the ordinary basis.

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: 08 August 2019

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