Wheatley v Lakshmanan - [2022] NSWSC 583 - NSWSC 2021 case summary — Zoe

NSWNSWSC

Wheatley v Lakshmanan

[2022] NSWSC 583

Supreme Court of NSW|2021-11-10|Before: Ward CJ, Young J, Powell J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2021-11-10

Before

Ward CJ, Young J, Powell J

Catchwords

[2011] NSWCA 414 Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747
[1961] HCA 44 Herrman v Simon (1990) 4 ACSR 81 In re De Sommery
Colenenbier v De Sommery [1912] 2 Ch 622 In the Estate of the Late Patrick Ambrose Tunchon [2019] NSWSC 802 Ireland v Retallack (2011) 6 ASTLR 585
[2011] NSWSC 846 Jones v Dunkel (1959) 101 CLR 298

Source

Original judgment source is linked above.

Catchwords

[2011] NSWCA 414 Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747[1961] HCA 44 Herrman v Simon (1990) 4 ACSR 81 In re De SommeryColenenbier v De Sommery [1912] 2 Ch 622 In the Estate of the Late Patrick Ambrose Tunchon [2019] NSWSC 802 Ireland v Retallack (2011) 6 ASTLR 585[2011] NSWSC 846 Jones v Dunkel (1959) 101 CLR 298[1959] HCA 8 Ledgerwood v Perpetual Trustee Co Ltd (No 2) (Supreme Court (NSW), Young J, 25 August 1997, unrep) Lemon v Mead (2017) 53 WAR 76[2017] WASCA 215 Limberger v LimbergerOakman v Limberger [2021] NSWSC 474 Lockrey v Ferris (2011) 8 ASTLR 529[2011] NSWSC 179 McCosker v McCosker (1957) 97 CLR 566[1957] HCA 82 Murdocca v Murdocca (No 2) [2002] NSWSC 505 Nicol v Chant (1909) 7 CLR 569[2018] NSWCA 30 Squire v Squire [2019] NSWCA 90 Steiner v Strang (2019) 19 ASTLR 330[2019] NSWCA 143 Steinmetz v Shannon (2019) 99 NSWLR 687[2019] NSWCA 114 Stern v Sekers[2010] NSWSC 1274 Vigolo v Bostin (2005) 221 CLR 191

Judgment (69 paragraphs)

[5]

Discussions regarding the deceased's testamentary intentions in 1998

Both parties give evidence of conversations with the deceased at or about the time of the move to the Dover Heights Property (in 1998) as to the deceased's testamentary intentions.
Alexis deposes that, in a conversation with the deceased shortly after the move to the Dover Heights Property in 1998, her mother asked whether she (Alexis) would prefer to receive as her inheritance the Dover Heights Property or the investment properties (i.e., The Entrance Road Property and the Torrens Avenue Property). Alexis has deposed that she said she was content if the Dover Heights Property went to her sister (Erin) and she received the investment properties (see at [24] of Alexis' affidavit sworn 24 January 2018). Alexis has further deposed that the deceased repeated that representation on other occasions over the years (see at [73], [79] and [86] of Alexis' affidavit sworn 25 January 2018).
Erin, on the other hand, gives evidence of a conversation in mid-1998 at the Strathfield house (i.e., before the move to the Dover Heights Property) in which she says that the deceased promised the Dover Heights Property to her, together with the Torrens Ave Property, and said that she would leave Alexis The Entrance Road Property (see at [27] of Erin's affidavit sworn 8 May 2018). Erin says that the issue was again raised in a conversation after the sale of the Strathfield property (see at [30]) and on other occasions (see at [34]).
Pausing here, Alexis emphasises that (on Erin's account of the conversation with the deceased as to this testamentary distribution) the deceased "justified" the distribution of assets on the ground that Alexis had asked for and was to be given an advance on her inheritance, which Alexis submits indicates a recognition that the proposed testamentary distribution was not an equal distribution and called for some justification. Alexis notes that her (i.e., Alexis') account of the conversation in 1998 is corroborated by Ms Josephine Sattler, the deceased's cousin (see at [6] of Ms Sattler's affidavit affirmed 14 May 2018). Ms Sattler was cross-examined on that conversation and was confident of her recollection (see below). Ms Sattler recalled the conversation as occurring on the back balcony of the Dover Heights Property on Boxing Day one year, shortly after the yacht race (T 149.19-31).

[6]

Share trading moneys

Erin's evidence is that the deceased told her in about 1998 that she had given Alexis some of her inheritance at that time so that Alexis could trade shares full-time. Erin has deposed (in her affidavit sworn 8 May 2018 at [30]) that, later that year or in early 1999, the deceased had a conversation with Alexis and her, in which words to the following effect were said: Dianne: Erin, now that the house has been sold, I'm going to give Alexis part of her inheritance now like we discussed. As you know, you'll get more financial benefit later on. … Dianne: Alexi, as we discussed I want to be clear that you have the choice between a large deposit on a home now or the money for trading shares. I'd like to see you have a house, but you're twenty-one and it's your decision. You can use the rental income from the home to pay for the mortgage and get a job, while still living with us. Or, I can give you the money for trading shares and you can be self-employed. Either way, you understand that you're receiving this part of your inheritance now and you'll have Westpac [i.e., The Entrance Road Property] when I'm gone. Erin will have Dover Heights and [the] DOCS [property]. [i.e., the Torrens Avenue Property] Alexis: Thanks Mum. I've wanted to invest more shares but didn't have savings. I know I can grow the value over time much quicker than a house would appreciate in value. So I really do want the money now. I understand then Erin and I will each have one commercial property, even if you need to sell Newport. Dianne: Ok, then I'll give you the money for trading shares. You can trade through the [Wheatley Family] Trust since I know you don't want anything in your name directly. I don't want you to trade anything risky, please just start with blue chip stocks. If you lose the money, it won't be replaced from Erin's inheritance share. Alexis: I know. I have a few companies including BHP and TAB that I'm ready to invest in now. Can I set up an account at Hartley Poynton so I can get started?
There are bank records of one of the deceased's companies, Doiho Pty Ltd (Doiho), which record that amounts totalling $145,061.47 were paid to stockbrokers in February 1999. Erin says that it is likely that (contrary to Alexis' evidence) none of that money represented the re-investment of proceeds of sale of earlier transactions (noting that the first three cheques were drawn in quick succession on 1 February, 3 February and 6 February 1999; and it being said that, no doubt, the cheques had to clear before the trades could begin).
The above is relevant as it is the defendants' contention that this amounted to an early share of Alexis' inheritance (which Alexis denies).
Alexis says that the deceased asked her (since Alexis was trading in shares at the time) if Alexis would look after the deceased's share trading for her and said that she (Alexis) could trade through the Wheatley Family Trust (a request to which Alexis said she acceded but which she now greatly regrets; as it is a source of much guilt on her part that the deceased lost money through the share trading carried on by Alexis at the time of the "tech wreck" in about March 2000 - see T 113.5-18). As to the share trading, Alexis said she was struggling with her memory (T 114.4-5) but insisted she felt guilty to this day at the share losses (T 113.5-10).
Alexis submits that it is highly improbable that the deceased said to Alexis that she was advancing to her part of her inheritance in or about 1998, or at any later date. In this regard, Alexis notes that the accounts for the trustee of the Wheatley Family Trust (Wheatley Investments) are in evidence from 2001 onwards. It is said that there is no dispute that Alexis traded shares on behalf of that trustee in the years immediately preceding the 2000 market crash (the "tech wreck"), and traded on for some while afterwards. It is noted that the accounts of Wheatley Investments show share trading losses as having been incurred on the account of the company itself; and that they were brought to account on the company's profit and loss account, thereby reducing any potential tax liabilities of the trustee.
Alexis submits that the obvious way (if the moneys being share traded had been advanced to her personally without a transfer to her in specie) that any share trading moneys would have been advanced to her personally would have been without them actually being paid i.e., that there would have been an unpaid present entitlement or "UPE" and that this would be recorded as a beneficiary loan; whereas the only beneficiary loan in favour of Alexis shown in the accounts was a beneficiary loan account in the sum of $4,900.00 which remained unaltered throughout all the accounts in evidence from 2001 to 2006.
Alexis further says that, if the deceased had intended to advance a portion of her inheritance to her (Alexis), then the deceased presumably would have informed her accountant that she had made such a gift through the Wheatley Family Trust and the accounts would have been prepared in a quite different fashion.
It is noted that there is no Will in evidence in the period from 1998 to 2001 that reflects a decision by the deceased to advance a part of Alexis' inheritance; and no document, either from the deceased or from any solicitors or lawyers that she instructed, that makes any reference to an early advancement to Alexis of part of her inheritance.
Alexis says that the only basis for the contention as to an advancement of inheritance lies in the testimony of Erin and Erin's former boyfriend (Mr Dimitris Nikolopoulos) who says he recalls a conversation in around 1999 in which the deceased referred to Alexis getting an advancement (see Mr Nikolopoulos' affidavit sworn 27 September 2018 at [5], and see below). Alexis points out that later in that affidavit Mr Nikolopoulos refers to further conversations about the deceased's testamentary intentions, in which the other reasons given for the dispositions in the Will (see [9] and [14] of Mr Nikolopoulos' affidavit sworn 27 September 2018) do not refer to an advance of inheritance.
Alexis also refers to the consultation by the deceased with solicitors, Kells, in 2011 (see below) and the absence of any reference to this advancement in the draft will then prepared by Kells or Kells' letter of advice at the time; or in the 23 January 2015 emails (also see below), which Alexis says point against the contention that there was such an advance.
Pausing here, it logically follows that, if the moneys for share trading were not advanced to Alexis as an early inheritance, then the loss of those moneys would be relevant when considering Alexis' contribution to the deceased's estate that being one of the factors relevant to be taken into account when considering the family provision claim (see below), since it is not disputed that large losses were made on the share trading (for which Alexis has expressed a feeling of guilt albeit that Alexis also says that some of those losses were recouped during continued trading).

[8]

The 2005 Will

In 2005, the deceased executed a Will which, in substance, provided for: Erin to receive the Dover Heights Property and the deceased's interest in Yonan "including but not limited to" the Torrens Avenue Property "to do with as she sees fit"; Alexis to receive the deceased's interest in Wheatley Investments, including The Entrance Road Property; and for the two daughters to share the residue. Alexis was to receive the deceased's interest in Doiho under this Will.
Alexis says that the likely catalyst for the making of the 2005 Will was her engagement in that year to Frank, noting that Erin gives evidence of conversations in which Erin was critical of Frank and that the deceased was critical of both Frank and Alexis, accusing them of being untrustworthy and simply after her money (see Erin's affidavit sworn 8 May 2018 at [47]). Alexis says that, whether or not the deceased was as critical of Frank and herself as the conversations deposed to by Erin would suggest, there is no suggestion that Frank (or Alexis herself) did anything that was dishonest, unfair, unreasonable or would otherwise have given any reasonable person a basis for concluding that he (or she) was not to be trusted; that there is a factual dispute as to the suggestion that Alexis treated the deceased as a "piggy bank"; and that the emails exchanged between Alexis and the deceased suggest a less critical attitude on the deceased's part than the conversations to which Erin deposes suggest (referring, by way of example, to the emails at exhibited at Ex AW1, AW2, AW3 and AW4 to Alexis' affidavit sworn 17 August 2018). Further, Alexis refers to the guarantees that she gave to assist the deceased and to her making the deceased the beneficiary of a life insurance policy, as matters pointing to her financial assistance to the deceased (see below).
Alexis points out that the Will executed by the deceased in March 2005 suffered from a number of drafting defects -- seeking to leave the deceased's interest in Yonan (which was in fact held by Wheatley Investments) to Erin and purporting to leave to Alexis the deceased's interest in Wheatley Investments (not apparently recognising that this carried with it the interest in Yonan and, through Yonan, the Torrens Avenue Property).

[12]

The deceased's last Will dated 25 August 2008

The deceased's last Will (probate of which was granted to Erin on 29 August 2017) was dated 25 August 2008.
The 2008 Will repeated the structure of the 2007 Will, but provided an alternative executor should Erin not have survived the deceased. It provided that the gift of The Entrance Road Property was to be unencumbered (and made some other minor changes that are not here relevant).
The Will was prepared by a solicitor, Mr Joe Ryan (whose file in regard to the preparation of the Will was obtained and made available to both parties and relevant extracts from which, including Mr Ryan's notes, are annexed to the affidavit of Alexis' solicitor - see Ms Money's affidavit sworn 23 October 2019 at [2]-[3]). Erin's evidence is that she accompanied the deceased to Mr Ryan's office although she was present only for part of the discussion on that occasion.
Clause 4 of the Will, which is the subject of the application for construction, provides: 4. I GIVE DEVISE AND BEQUEATH the property situate at …The Entrance Road, The Entrance in the State aforesaid, unencumbered, to my daughter VITTORIA ALEXIS WHEATLEY for her sole benefit absolutely, to be placed into a trust or superannuation fund of her choice.
Clause 5 of the Will provides: 5. I INSTRUCT my executor to take out a mortgage over any real property in my estate for the purposes of discharging any mortgage at the date of my death over the real property situate at … The Entrance Road, The Entrance in the State aforesaid.
The deceased gave the rest and residue of her estate to Erin (see cl 6).
Clause 9 of the Will provides that: I DECLARE that my trustee shall have the following powers: (a) To apply for the maintenance education advancement or benefit of any beneficiary under the age of twenty-three years as she shall think fit the whole or any part of the capital or income of that part of my estate to which that beneficiary is entitled or may in future be entitled and on becoming absolutely entitled my trustee shall bring into account any payments received under this clause and to pay same to the guardian or guardians of such beneficiary without being responsible to see to its application. (b) To sell lease exchange or otherwise dispose of assets in my estate on such terms as my trustee considers expedient as though she was the absolute beneficial owner and to retain any investment made by me prior to my death in the same form for any period without being responsible for loss.
Alexis points out that there is nothing in Mr Ryan's file that adverts to the fact that The Entrance Road Property was held by Wheatley Investments. (Alexis' solicitor has attempted to locate the witnesses to the Will but searches have failed to locate them - see affidavit of Mr Andrew Gill affirmed 23 October 2019 at [2]-[8].) Mr Ryan has ceased practice as a solicitor and attempts to obtain information from him as to the instructions for the drafting of the Will have proved unsuccessful.
The defendants contend that in consequence of the events around Alexis' wedding, the deceased remained angry and distant from Alexis for some years (see at [60] and [66] of Erin's affidavit sworn 8 May 2018) and that the deceased resolved in August 2008 to disinherit Alexis (see at [70] of Erin's affidavit sworn 8 May 2018). Erin deposes (at [71] of that affidavit) that, during the interview with Mr Ryan in August 2008, the deceased said that she did not want Alexis to inherit anything, that she had been ungrateful and that enough provision had been made already for her over the course of her life. When questioned about this in re-examination, Erin said that what was there being referred to was the payment of school fees, university expenses and support while Alexis was living at home (see T 234.1-13). (Alexis points out that this was precisely the nature of the provision that the deceased had also made for Erin (reference being made to [51] of the deceased's affidavit in the 2010 proceeding to which I refer below).)
Erin's account of the deceased being angry with Alexis and threatening to disinherit her is corroborated by the account of the deceased's cousin, Ms Sattler. Ms Sattler, in cross-examination, gave evidence of conversations with the deceased not long before her death in which she said the deceased had spoken of changing her Will "to have everything fair" and referred to having been angry with Alexis after she had got married when she had made the 2008 Will (T 149.45ff).
Alexis' evidence is that at the beginning of 2009 Alexis commenced her own business as a financial planner. In addition to that, more recently Alexis has taught as a casual part-time teacher at TAFE NSW (teaching a course in financial planning). Alexis says that her ability to work has been affected over the years by anxiety and occasional bouts of depression (as I explain in due course).

[16]

Refinancing of loans secured over investment properties

On 12 September 2013, Alexis made arrangements for the investment loans to both Wheatley Investments and Yonan (totalling $1,118,000) to be refinanced. Alexis says that the restructuring provided a financial benefit to the deceased for which the deceased expressed gratitude to Alexis (see Alexis' affidavit sworn 24 January 2018 at [32]-[34]).
By letter dated 28 July 2013, (see at Ex 10 p 265ff) Alexis wrote to the deceased on the letterhead of Alexis' financial planning company, Wheatley Management Pty Ltd (Wheatley Management) in relation to the investment loans, including that: As the loan term extends until you are 92, we have discussed the sale of the properties over time in order to discharge the loans.
Pausing here, the defendants submit that the suggestion that the investment properties might be sold over time to discharge the loans is inconsistent with the deceased having promised to leave both those properties to Alexis. In cross-examination, when asked what properties were there being referred to, Alexis' position was that there were only three properties to which this could have referred (the Dover Heights Property and the two investment properties).
Alexis accepted that she understood it was the deceased's wish to remain in the Dover Heights Property for the rest of her life - T 54.42-44; but insisted that Alexis would have discussed with the deceased the possibility that the bank might force the sale of the Dover Heights Property if the loan was not repaid, saying that it was a requirement of the bank that she provide such an explanation (see at T 53.46-50, 54.23-43). Alexis seemed to cavil with the proposition that this was financial planning advice. However, as noted, the letter was on Wheatley Management letterhead.
The effect of the refinancing was that the investment properties were then no longer encumbered by the mortgage and, instead, the Dover Heights Property was security for those loans.

[17]

Emails recording the deceased's testamentary intentions

In a series of emails to Erin with the subject line "keep this", the deceased expressed her testamentary intentions to Erin.
By email on 23 January 2015, the deceased wrote to Erin that: My home and the situ of it holds special value to you and me - Alexis does not share this value and would prefer harbour Side - the value of assets bequeathed to her would enable sizeable deposit with income … … Alexis and her husband have paid off their unit yrs ago and since then have not saved or invested for their future (in property) - with no children to support and no mortgage to maintain Alexis' inheritance will be more than sufficient to enhance her life style [sic] and provide a "stepping stone" to go further …
The 23 January 2015 email also included the following: Again I will try to separate the two companies so that Alexis will inherit the Wheatley Investments with holdings of property at 173-175 The Entrance Rd only and you will inherit Yonan company with holdings at 26 Torrens ave- as in previous wills you will also inherit my home at 26 Wentworth St Dover Heights - I will be endeavouring to put shares of this into your name - at present I am unable to do this as all properties/companies held under this mortgage … Your inheritance would enable you to have a home in aust that you love and income for support.
The defendants submit that this reiterates the deceased's long held intention to bequeath to Erin both the Torrens Avenue Property and the Dover Heights Property, and significance is attached to the fact that the deceased had evidently told four other persons of her wishes (being "Bid/Kelly/Trevor/Marg") and that she requested Erin to keep the email "for future - if problems arise".
It is submitted for the defendants that those concluding words indicate that the deceased had given considerable thought to her testamentary wishes, including the possibility that Alexis would challenge her Will (and that caution is hence justified before disturbing the deceased's views, particularly when they have been consistently held over an extended period).
Further, in an email of 24 January 2015 at 12.39am, the deceased expressed to Erin that she would "also be putting a clause (will) that anyone contesting shall be disinherited" and that "[a]ny lawyer contesting [her] wishes [were] not to receive any monies from [her] estate". At 12.47am, the deceased sent a further email clarifying that she intended to insert a clause in her will that "ALL costs incurred shall be borne by the person contesting".
The deceased's first email of 23 January 2015 was followed by two others that night; the first of which, sent at 10.53pm, expressed the deceased's thanks for Erin's loyalty, which the deceased wrote meant "more to [the deceased] than [Erin would] ever know".
Alexis accepts that the first email from the deceased to Erin on 23 January 2015 appears to have been sent with the purpose of recording the reasons for the dispositions in the deceased's Will. Alexis says that this email suggests that the then existing Will was based upon the deceased's perception that Alexis had lesser need than Erin because she did not have children, that Erin deserved to be rewarded for having worked hard to get ahead, and that, from the further email sent several minutes later, it is also clear that the deceased highly valued the loyalty she believed had been shown to her by Erin in contrast with the conduct of Alexis. Alexis points out that nowhere in those two emails is there any reference to there having been an advancement to Alexis of an inheritance, although she says this would have been highly pertinent if it was the real reason for the distribution. Alexis argues that, if this issue was being repeatedly raised by the deceased orally, then one would expect also to see it raised in one or more of the emails.

[19]

Draft (unsent) email dated 17 February 2017 on deceased's computer

As noted above, on the deceased's computer was a draft (unsent) email dated 17 February 2017 to a solicitor, Ms Penelope Robinson, which stated: Assets - 3 House Shares in Yonan Pty Ltd Shares in Wheatley Investments Pty Ltd 1) house and contents to Erin (Regina Erin Lakshmanan) Shares in Yonan to Erin 2) shares in Wheatley to Alexis (Vittoria Alexis Wheatley) All debts - personal and properties to be taken over by Erin's share Personal monies in bank after funeral/ death costs / personal debts are paid - to be divided equally Erin is executor - in event of her predeceasing me then joint executors Alexis and Kelly Zambelli If either Alexis or Erin deceased then their respective shares to go to their children in trust until age of 25 yrs or accessible for education/ health / living expenses Property at [the Dover Heights Property] be kept intact. In event that either predecease me without having children then all holdings go to survivor. Added notes for 2nd page of will - to be used in the event of dispute It is my wish that Erin has this home in Australia always Both will have sufficient income from properties debt free It may take a number of yrs for Erin to be debt free and will need (Yonan) ownership shares to pay for this whereas Alexis would have no debt immediately and can enjoy her inheritance. Further, if she chooses - can use inheritance to cover ongoing mortgage costs of another home in an area of preference and still maintain an asset.
The defendants place no little emphasis on this email. It is said that not only does this email reiterate the deceased's consistent view but it also records part of the deceased's reasoning for it. It is said that the concluding paragraphs of the email disclose that the deceased had given careful thought (free of rancour) about her daughters' respective positions.
The defendants further say that this email corroborates Jesse's evidence of what the deceased told him in September 2016 (see at [7] of Mr Boyle's affidavit sworn 10 January 2019), namely that: I want your family and Erin to hold on to its Australian roots. I want to give Erin my home [at Dover Heights] so that she has a base in Australia and can keep coming back.
Jesse has deposed (at [7] of his 10 January 2019 affidavit) that the deceased also said: I know that maintaining an older house of that nature will be expensive, so I want to leave one of the commercial properties to provide income to support that effort. I want the house to be a place for Erin and your family to call home, and to not have to worry about the financial aspects around it. The other investment property would go to Alexis.
The defendants also refer to the evidence of Ms Margaret Cole (a close friend of the deceased for more than a decade prior to her death) that the deceased told her in the year or two preceding her death that she wanted to sort out her will "to ensure that Erin is looked after, and there is no interference from Lexi" (see at [5] of Ms Cole's affidavit sworn 17 August 2018); and to the evidence of Mr Nikolopoulos, which it is said corroborates that Alexis had received an advancement of her inheritance "to play the stock market" and that the deceased's long held desire was that Erin receive both the Dover Heights Property and the Torrens Avenue Property (see at [5] of Mr Nikolopoulos' affidavit sworn 27 September 2018).
The defendants say that the evidence of the witnesses called by Alexis on this topic is insubstantial. It is noted that Frank never heard the deceased speak directly about her testamentary intentions and, to the extent that Alexis spoke about the issue, it was in the context of the investment properties being her "superannuation" (though in cross-examination Alexis denied that she had ever viewed these properties in that way). The defendants refer to the following exchange in Alexis' cross-examination (at T 119.28-37): Q. You have never seen ‑ can I suggest ‑ the properties at the Torrens Avenue and The Entrance as any form of superannuation; you've never described it in those terms, have you? A. No. I didn't expect my mother to die until well after I was retired, so why would I? Q. All I'm saying to you, and I think I understand your answer: you have never regarded or described these properties as a form of superannuation; is that right? A. No.
Alexis' contention, however, is that the deceased wished her to have both the Torrens Avenue Property and The Entrance Road Property; whereas the defendants contend that the deceased intended that Alexis receive only The Entrance Road Property.

[20]

Commencement of the proceeding

As noted above, the deceased died in late February 2017.
By letter dated 5 September 2017, Alexis' solicitors communicated their position that, on the proper construction of the Will, the executor (Erin) was obliged to use her powers to give effect to the gift of The Entrance Road Property held by Wheatley Investments, referring to the decision of Pembroke J in Ireland v Retallack (2011) 6 ASTLR 585; [2011] NSWSC 846 (Ireland v Retallack). The defendants' solicitor responded the same day, contending that Ireland v Retallack was distinguishable on the basis that it involved a will containing an express clause conveying to the executors directions to reduce into possession an asset not owned by the testator; and, as such a clause did not exist in the deceased's Will, the gift accordingly failed.
The defendants' solicitors in that communication advised that their client (Erin) did not intend to transfer The Entrance Road Property into Alexis' name "particularly having regard to what you say about her intention to make a family provision claim".
The present proceeding was commenced by summons filed 20 February 2018. Pursuant to a direction by Hallen J made on 14 September 2018, Alexis' lawyers confirmed that she would be pursuing a claim for provision even if the Will was rectified.
In an email dated 5 December 2018 to her accountant, Mr John Dymond, Alexis stated: My sister has clearly been left the house in Mum's will. It's my objective to secure the remainder (and hopefully force her to take the company loans which are secured on the houses). In cross-examination, Alexis disputed that this statement reflected her thinking at the time (see at T 43.12-44); but, if so, it leaves unexplained why Alexis would have expressed that view.
I note that Mr Nikolopoulos has deposed that Alexis said to him words to the effect that "I'm not going to rest until I get half of everything of mum's estate" (see at [18] of Mr Nikolopoulos' affidavit sworn 27 September 2018). Alexis in cross-examination said she did not remember saying this and did not think she would have (T 108.19-30) even though I note that a very similar intention was expressed in her own email to Mr Dymond. Mr Nikolopoulos also said that Alexis said that she did not care about her mother's wishes and that she desired half the estate (see again at [18] of Mr Nikolopoulos' affidavit sworn 27 September 2018). (Tellingly, Alexis said she is not on good terms with Mr Nikolopoulos "because of what he said. I don't think is true" - T 107.45-46.)

[23]

Procedural history of the litigation

As adverted to above, a joint opinion was obtained from a tax expert, Mr Vale, as to the consequences of a transfer of the real estate from Wheatley Investments to the executor or directly to Alexis; or of the sale and disposal of the proceeds of sale of The Entrance Road Property. Advice was sought from Mr Vale as to a number of potential options.
As also referred to above, there were some offers made to settle this proceeding (reference being made by Alexis' Counsel to offers put on behalf of the defendants on 26 March 2019 and 21 May 2019 - see, for example, at T 10.13-20).
The matter was listed for hearing before Robb J to commence in November 2019 (with an estimate of five days). That hearing was vacated in circumstances where, shortly before the hearing was due to commence, the parties reached an agreement (based on certain assumptions as to the tax liabilities and, on Alexis' part, as to the amount she would receive from the settlement - see T 7.14-22). Unfortunately, after the hearing was vacated, the joint expert produced a calculation based on the actual settlement figure, which I am told was very different from the assumptions on which settlement had been agreed (see T 7.26-39), and there was then an application to set aside the settlement agreement (which was ultimately resolved by that agreement being set aside aside). Hence the proceeding was, in effect, revived.
Alexis then retained another expert tax lawyer, Mr Nicholas Gangemi of Sparke Helmore, to give evidence. Mr Gangemi's advice was that, when sold by Wheatley Investments a capital gains tax liability arose (which the company has in fact paid) but that, when money is paid out of Wheatley Investments in respect of the proceeds of sale (whether to the estate or to Alexis), it will be treated as a dividend and taxable in the hands of the recipient at the recipient's marginal rate (see T 7-8). A ruling from the Australian Taxation Office (ATO) which was to that effect was obtained. An objection to that ruling was disallowed.
Hence the delay in the matter proceeding to hearing (and the not inconsiderable costs incurred from the vacation of the first hearing dates).

[24]

Advice regarding income tax in relation to the gift in clause 4

The advice that has now been received is that, in effectuating any gift pursuant to cl 4, whether by transfer of the property in specie from the company to either the estate or Alexis (no longer possible because of the sale) or by the transmission of the proceeds of sale (whether to the estate or directly to Alexis), the approach that will be taken by the ATO is that the moneys received will be treated as income in the year of receipt and subject to income tax at the appropriate marginal rates.
In his report of 3 December 2020 (being annexure F to his affidavit sworn 9 December 2020) Mr Nicholas Gangemi has provided advice to Alexis' solicitor as to the likely treatment of such payment by the ATO. That advice, in summary, is as follows.
First, the estate will be deemed to be a trust by virtue of the definition of trustee in s 6(1) of the Income Tax Assessment Act 1936 (Cth) (Income Tax Assessment Act). Mr Gangemi was of the opinion that the payment of any amount by Wheatley Investments to the executor of the estate would be a dividend assessable under s 44 of the Income Tax Assessment Act, and, if the moneys were paid to the executor in circumstances where Alexis was then entitled to receive those moneys pursuant to the gift in cl 4, Alexis would be subject to income tax.
Second, in the event that the company remitted the moneys to the executor but in circumstances where no particular beneficiary was eligible to receive those moneys then the trustee would be taxed and at the highest marginal rate under s 99A of the Income Tax Assessment Act.
Third, Mr Gangemi identified the circumstances in which the ATO would be likely to treat Alexis as liable to pay the tax as opposed to the estate (see Mr Gangemi's report of 3 December at [3.16]). Mr Gangemi concluded that the payment of the money out of the company, either to the estate or to Alexis directly would be treated as a payment of a dividend, if not under ordinary principles then under division 7A of the Income Tax Assessment Act. (Mr Gangemi had initially expressed the view that there were good arguments to the effect that were the moneys paid to Alexis directly by way of some form of notional estate order they would not constitute a deemed dividend. However, a ruling was sought on this issue and the ATO ruled that the moneys would be treated as a deemed dividend and an appeal against that ruling was dismissed.)
Thus, in the event that there were to be an order in favour of Alexis for a legacy in lieu of the provisions under the Will, Alexis says that such a legacy should not be payable directly from the proceeds of sale of The Entrance Road Property but simply from whatever moneys were in the hands of the executor, in which case it is understood that no income tax would be payable by Alexis on the receipt of that legacy.
Annexed to his affidavit sworn 18 October 2021, Mr Gangemi provided a series of calculations in light of the ATO ruling. The second table (at annexure D to that affidavit) (calculated on the assumption that Alexis receives the sale proceeds with the benefit of the franking credits derived from the sale of the property), sets out the position which appears to be accepted by both parties (there being no dispute that Alexis should receive the franking credits associated with the sale of the property). That calculation reveals that, of the current sum held from the proceeds of sale after the expenses of sale of $1,494,652.00, Alexis would receive $821,499.
However, Alexis says that some qualifications should be made to the calculation. In particular it is said that it does not take into account the receipt of rent, which rent received by Alexis would also be taxed in effect at the highest marginal rate although by Alexis might be able to claim some of the legal costs of the proceedings as a deduction, being expenses incurred in regard to the acquisition of the income represented by the payment of the deemed dividend. In that regard Alexis says that any claim for legal costs would be an expense against income in the relevant year; and that, while it would be open to Alexis to amend her returns for the last two to three years, in each of those years she had little income and would gain little benefit. Were Alexis to receive a payment from the estate in the current income year, the deductions against that payment would be the legal costs incurred in the current income year, but it is said that this would be "nowhere near" the totality of her legal costs.
By contrast, it is said that in the event that Alexis were to be awarded a legacy in lieu of the gifts under the Will, then (while there would then be potential for a tax liability to be incurred by the estate) if the company were simply to pay the whole of the proceeds of sale to the estate there is no evidence of any particular reason why the company would seek to do that in one particular income year and there may be many alternative ways of dealing with the proceeds of sale (given that Erin would have full control of the estate and both of the companies and might act in ways which might significantly ameliorate the potential tax liability). It is noted for Alexis that the defendants have called no evidence on any of those aspects of the claim.

[25]

The deceased's estate

The executor (Erin) has sworn an affidavit dated 3 April 2018 and updating affidavits (sworn 21 October 2019, 28 October 2019 and 18 October 2021) as to the assets of the estate.
In summary, in her affidavit sworn 18 October 2021, Erin has estimated the total value of the deceased's assets as between $10,395,866 and $10,595,866, and the total value of current known liabilities as $1,095,978. Thus, Erin estimates the net distributable estate to be approximately $9,299,888 to $9,499,888, subject to the payment of the future costs of the present proceeding, accounting fees (in respect of which further loans from the estate may be necessary), and other ongoing estate administration expenses.
The estate's principal assets are the Dover Heights Property and the shares in Wheatley Investments, which in turn owns the shares in Yonan (and, as noted, Yonan is the company which continues to own the Torrens Avenue Property). Erin's estimate attributes a value to the Dover Heights Property of approximately $7,250,000 (based on a market appraisal of between $7 million and $7.5 million carried out by Mr Brad Pillinger of Pillinger Real Estate as at 11 October 2021). The value of the Torrens Avenue Property is estimated at between $1.8 million and $2 million (and, as noted, the sale of this property is estimated to result in a capital gains tax liability of around $408,664).
The estate's liabilities include a mortgage secured over the Dover Heights Property securing some $900,978, of which $295,464 is the balance of the loan Wheatley Investments borrowed to fund the acquisition of The Entrance Road Property, and $320,606 is the balance of the loan to fund the acquisition of the Torrens Avenue Property.
The Entrance Road Property was sold, with Alexis' consent, at auction on 31 October 2019 for the sum of $1.56 million. The sale completed on 12 December 2019. After deducting the usual costs of sale, the sum of $1,496,437.46 was paid into a controlled moneys account in the name of the defendants' solicitors. The balance as at 28 October 2021 was $1,473,581.27.
Wheatley Investments has paid the capital gains tax and income tax on the capital gain arising from the sale of The Entrance Road Property (said in oral submissions to be $26,000 (see at T 251.14-16) but elsewhere suggested to be around $260,000, so this may be a typographical error; in any event, this amount has already been paid). As noted above, distribution of the remaining sum to Alexis would require her to pay income tax and the Medicare levy assessed against that sum; and it is accepted by both parties that the net receipt by Alexis would be in the order of $820,000 (see at T 8.20-27) (it is calculated by the defendants that Alexis would receive, approximately, $821,791; but as noted above, Mr Gangemi points out that this figure is slightly lower at $821,499.00) (see at annexure D to Mr Gangemi's affidavit sworn 18 October 2021).
Alexis submits that the net distributable estate is significantly greater than the defendants' estimate. Alexis has obtained market appraisals (see Ex VAW-1 to the Alexis' affidavit sworn 19 October 2021) estimating the value of the Dover Heights Property at between $10 million and $11 million (by Mr Ron Bauer of Ray White Unlimited North Bondi, as at 31 August 2021); between $10 million and $10.5 million (Mr Ric Serrao of Raine & Horne Double Bay, as at 8 September 2021); between $10 million and $11 million (by Mr Steven Zoellner of Laing & Simmons Double Bay, as at 30 August 2021); and between $11 million and $12 million (by Mr Zoellner, as at 13 October 2021). Alexis had attributed a value of between $1.1 million and $1.15 million to the Torrens Avenue Property prior to learning that a tenant had been secured for the property.
It was estimated that the estate's costs to the end of the then anticipated five-day hearing would be in the order of $456,350 (in fact, the hearing was ultimately completed within four days) (see the affidavit of Asheetha Jelliffe sworn 19 October 2021 at [4]). It is said by the defendants that approximately 15 to 20% of the costs have been incurred in relation to the relief sought in prayers 1-6A of the further amended summons (i.e., in relation to the proper construction of cl 4 and issues ancillary thereto). The defendants submit that those costs, at least, should be borne out of the proceeds of sale of The Entrance Road Property.
Alexis' costs and disbursements to the conclusion of the proceeding are estimated to be $626,963 (inclusive of GST) (see the affidavit of Michaela Money sworn 26 October 2021 at [2]).
The defendants say that the transfer or sale of The Entrance Road Property will in all likelihood require Wheatley Investments to call upon its loan to Yonan, with the result that Yonan would have to sell the Torrens Avenue Property. The likelihood of this occurring is said to be increased by three matters: that Erin's financial position would not be strong enough to bring about a different outcome; that the Dover Heights Property requires significant repairs, which would cost in the vicinity of $350,000; and that the estate has an indebtedness, secured over the Dover Heights Property, in the order of $942,846, and does not have cash reserves anywhere near sufficient to discharge that indebtedness. (As noted above, that indebtedness arose because the deceased refinanced loans which were payable by Yonan and Wheatley Investments, and secured over the properties owned by the companies. However, Erin accepted in her oral evidence that it was the deceased's intention that she assume responsibility for those loans.)

[27]

Evidence

Before turning to the issues for determination it is convenient at this point to identify the evidence relied upon and the submissions made as to credit.
Each of Alexis and Erin has made a number of affidavits in the proceeding. In the plaintiff's case, evidence was also adduced from her husband, Frank (being an affidavit sworn 15 October 2019, and two further affidavits sworn 30 October 2019 and 20 October 2021 respectively); Ms Penelope Robinson, the conveyancer who the deceased had apparently consulted prior to her death (being an affidavit sworn 12 February 2018 deposing to a conversation with the deceased regarding the Torrens Avenue Property); Ms Shirley Malcolm, who died shortly before the hearing and whose affidavit was read pursuant to s 64 of the Evidence Act 2005 (NSW) (being an affidavit sworn 12 May 2018 deposing to conversations with the deceased in which the deceased expressed her intention to bequeathe both the Torrens Avenue and Entrance Road properties to Alexis); Ms Josephine Sattler, the deceased's cousin (being an affidavit sworn 14 May 2018 and a further affidavit sworn 11 October 2018), Ms Kelly Sattler, Ms Josephine Sattler's daughter (being an affidavit dated 11 October 2018 in which Ms Kelly Sattler deposed to a conversation in which the deceased expressed that she wanted the will to be "fair to both girls" at [3]); expert evidence from Dr Peter Young, a consultant psychologist (being an affidavit sworn 26 October 2021, annexing a medical report prepared following a Telehealth Assessment of Alexis); and affidavits from the solicitors (Ms Money and Mr Andrew Gill) and from the tax expert (Mr Gangemi).
In the defendants' case, evidence was adduced from Erin's husband, Jesse Boyle (being affidavits sworn on 10 January 2019, 28 October 2019, and 19 October 2021), Ms Margaret Cole, a close friend of the deceased of more than a decade (being an affidavit sworn 17 August 2018 deposing to conversations with the deceased as to her misgivings with respect to Alexis and her husband Frank); Mr Trever Cole, the deceased's cousin (being an affidavit sworn 17 August 2018 deposing to conversations with the deceased in which she expressed her intention to leave Alexis nothing in her Will); Mr Nikolopoulos, Erin's former boyfriend (being an affidavit sworn 27 September 2018 deposing to various conversations with the deceased regarding her testamentary intentions); and the defendants' solicitor (Ms Asheetha Jelliffe).

[28]

Alexis' credit

The defendants contend that Alexis' evidence should not be accepted where there is an evidentiary contest, submitting that the most charitable view of her evidence is that her recollection is unreliable, such that her assertions of long ago events cannot be accepted as sound (reference here being made to the well-recognised fallibility of human memory as articulated by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319). The defendants submit that such considerations are particularly apt where the relationship between the sisters has, for the most part, been characterised by antipathy. In that regard, it is said that Alexis' denial that she dislikes Erin (but thought there "is something very wrong with [her] sister" - see at T 66.44-48 - a view Alexis said she had held for a long time and which was shared by her father and grandmother - T 67.4-7) was untrue; but that, in any event, that Alexis' obvious antipathy to Erin has coloured her evidence.
The defendants submit, further, that Alexis has on occasions deliberately exaggerated matters to assist her claim. In this regard, the defendants point to the following matters.
First, that Alexis' affidavit evidence records in detail the alleged promises the deceased made to her about the deceased's testamentary wishes (see [23], [31]; [72]-[80] of her first affidavit sworn 24 January 2018), and the circumstances in which they occurred (such as during the course of their inspecting the investment properties and their last meal); and that Alexis asserted that Frank overheard some of those conversations (see at [80]). However, it is noted that Alexis' oral evidence was far less precise; that Alexis professed to remember only the first conversation in any detail, and could not remember anything about the other three or four exchanges that had occurred over the last couple of decades; and that Alexis was not certain if the deceased reiterated the promise before she married. The defendants say that, contrary to Alexis' affidavit evidence, Alexis: stated that Frank had never heard the deceased make the promise (see at T 48.10-15); could not remember if the promises were made at the time of inspecting properties, or the context of any of the conversations (other than the topic of children) (see at T 48.17-35); and accepted that she had no independent recollection of the contents of [79], [80] and [86] of her first affidavit (see at T 48.39-41).
The defendants say that there are a number of documents which record the deceased's view; and that there is no reason to think that the deceased was anything but honest when she wrote to Erin and Jesse about her testamentary wishes (see above). Reference is made to the letter Alexis wrote to the deceased on 28 July 2013 in relation to the loan refinance (see above), which it is submitted makes it improbable that the deceased had made and not varied the promise attributed to her by Alexis. It is noted that Alexis accepted (see T 53.50, 54.1-44) at one point that she discussed with the deceased the possible sale of the properties at The Entrance and that the deceased wished to stay at the Dover Heights Property for the rest of her life (T 54.42-44).
The defendants submit that it is improbable that Alexis did not return to the alleged promises if she understood that the deceased might have to sell one or both of the investment properties which constituted their subject matter. They point out that what the deceased had then allegedly promised, would have been overtaken by subsequent events, yet Alexis said that the deceased never varied the terms of the promise attributed to her.
Second, further examples proffered by the defendants of Alexis' unreliability as a witness are her professed inability to recall simple matters such as: the instructions she had given her solicitors in September 2018 about the nature of the relief she was seeking (see at T 42.9-11); whether in late 2018 it was her objective to secure all of the deceased's estate (other than for the Dover Heights Property) and hopefully force Erin to take the "company loans" which were secured on the house (see T 42.37-50, 43.1-44); whether a document promoting her services had appeared was available online and was an accurate representation of the financial planning services that she did, and indeed could lawfully, provide (T 56-60); how frequently she had visited her psychologist in the period of time between the institution of the proceeding and the date of the hearing (T 78.17-50, 79.1-36); and how many hours she had worked in her previous and current employment, which was relevant to her claims that her anxiety interfered with her ability to work(T 104.24-49, 105.1-50). The defendants say that Alexis' evidence was, in certain respects, so implausible that there is justification for concluding that Alexis has deliberately advanced contentions, or concealed matters, to advance her case.
Insofar as Alexis' objectives in this litigation are concerned reference is made to the 5 December 2018 email to her accountant (see above), despite which Alexis denied that this was her thinking in December 2018 (or at least did not think it was her objective (saying at T 43.6 that "I've just been confused about the text" and that "maybe that was my hope at the time but I would have listened to my lawyers about what was realistic in the circumstances" - T 43.39-40; and see T 44). The defendants say that it reflects poorly on Alexis, and her approach to this litigation, that she wished Erin to bear the full amount of the estate's debts referable to the properties when she did not know how she could secure that outcome (which the defendants say the December 2018 email plainly recorded).
Third, it is said that Alexis also exaggerated matters to Dr Young, pointing to the recording by Dr Young in his report of her account to the effect that the deceased had subjected her to emotional coercion and abuse and, specifically, after the stock market losses. The defendants say that Alexis' denial of so doing was false. It is noted that Dr Young's practice (as he explained in cross-examination) was to take notes, draft a report immediately after the consultation, and check his notes against the draft report (see at T 141.42-49, 142.1-14). It is said that this renders unlikely the errors attributed to him by Alexis but in any event it is noted that Alexis checked a draft of the report and, relevantly, found no fault with the passages about the deceased. The defendants say that Alexis' oral evidence to the effect that she did not read the draft report closely enough is not credible (see from T 69-21 evidence as to what Erin says she told Dr Young in relation to her father's alcohol abuse and domestic violence; cf her evidence in the 2010 proceeding).
The defendants say that the true position is that Alexis had a normal, close and loving relationship with her mother (as asserted at [19] of her first affidavit sworn 24 January 2018; and [21] of the submissions served on her behalf on 2 November 2021). It is noted that in none of Alexis' affidavits did she suggest the serious matters she caused Dr Young to report. The defendants say that this does not represent an oversight, as by then Alexis had gained insight from Dr Workman about her family history. Rather, the defendants say that Alexis caused Dr Young to issue the report to improve her forensic position (and, in the process, has tarnished the reputation of the deceased).
The defendants say that another example of exaggeration arises from Alexis' evidence at 142 of her first affidavit, where she deposed that: I was unable to work due to this condition [being anxiety and bouts of depression]… around the time of the death of my father in 2010 and throughout the duration of the family provision claim made by his wife against the estate, a few years after his death. I estimate that I was not able to work for about 12 months (on and off) in total during this period.
The defendants point out that there was no evidence to this effect in her affidavit sworn in opposition to her stepmother's claim on 3 May 2011; rather, [79] of that affidavit recorded that her post traumatic stress disorder had resolved by about May 2010 and that Alexis had taken time off work in early 2007 "for a short period" only. It is noted that Alexis accepted that, when she came to prepare that affidavit in May 2011, she ought to disclose her health to the Court; and the defendants submit that, had Alexis in truth suffered the consequences she allegedly complained of, Alexis would have disclosed this in her affidavit of May 2011.

[29]

My observations

In the witness box, Alexis was quietly spoken; often incapable of remembering or recalling things to which she had deposed; and clearly stressed (being visibly upset on more than one occasion). Alexis explained the differences between her recollection at the hearing and that at the time she had sworn her earlier affidavits as being due to the fact that her anxiety and depression was "just not as bad as it shows".
The starkest difference was in Alexis' evidence as to the nature of her relationship with her parents, as deposed to in her affidavit evidence in this proceeding, and that to which Alexis deposed in the 2010 proceeding involving her stepmother's family provision claim, as well as that which she must have recounted in some fashion to Dr Young (being allegations of emotional abuse). In the witness box, Alexis' description of the emotional abuse she says she suffered at the hands of the deceased amounted to a feeling of abandonment, at the time of and following, her parents' separation and divorce (see T 68.3-13; T 77.9-26, for example).
I accept that there were inconsistencies in Alexis' evidence (such as her account of her inability to work as compared to her explanation in her application for an AFSL with ASIC). However, whether exaggerated or not, there is ample support for the conclusion that Alexis suffers from anxiety and depression.
I considered Alexis to be genuinely trying to give truthful evidence. However, her evidence was not wholly reliable and was, in my opinion, coloured by her perspective of the family dynamics.
One aspect of Alexis' evidence that to my mind illustrates the antipathy between Alexis and Erin (and which I consider has coloured the former's evidence) is the allegation by Alexis that, in effect, Erin forged Alexis' signature as witness on a general power of attorney dated 12 September 2007 (see her second affidavit sworn 17 August 2018 at [70]) based on the assumption that Alexis had not seen it before the deceased's death and would have been "shocked and concerned" if she had known such a document existed. Alexis acknowledged that it looked like her signature but she did not recall signing it (see T 62.1-2). Her shock and concern was to the effect that she queried why the deceased did not tell her this existed when the deceased was alive and (probably more of a complaint than shock or concern as such) why her mother did not make her the attorney under the power of attorney (see at T 62.4-27).
Alexis did not attempt to obtain any forensic handwriting evidence to support this serious accusation but pointed out that her certification was missing the "JP" stamp she usually used (T 63.15-30). The original Power of Attorney was marked as Ex 6 in the hearing. Alexis was taken to other documents she had apparently signed (certifying Erin's passport and a drivers' licence) and could not recall signing those. Alexis agreed that her accusation was a serious one but then said "[i]t's not the first time my sister has forged things, legal documents" (see at T 66.7-11). (There simply is no evidence to support that very broad allegation.)
Further, Alexis also questioned the authenticity of the email (indeed, of all of the emails) attached to Erin's affidavit (see T 65ff); and see her affidavit sworn 17 August 2018 at [37] in which she expressed that "I do not accept that my mother wrote the emails (or any of the other emails referred to in Erin's affidavit that were allegedly written by my mother)". Again, this was a very broad allegation and not supported by any forensic analysis. It is based on no more than Alexis' belief that the emails "didn't sound like things that my mother would say from what I knew with my relationship with her and my sister had access to her email account" (see at T 65.17-19).
Alexis went on to say that "she [Erin] actually set up the email account for my mum so she may have had access the whole time. She definitely had access after my mother passed away" (see T 65.20-21). Alexis confirmed that it remained her view that some of the emails "may have been fabricated" (T 65.44-46) and then said at T 66.34-42 that she believed it was probable that the emails had been altered.
When taken to Erin's affidavit sworn 10 January 2019, which set out the documentary sequence of the events, Alexis said "I mean, things can be altered as well. So I just don't accept that" (see at T 66.34-38). This is an extraordinary allegation to make in the absence of any evidence whatsoever. Erin explained in her affidavit and in the witness box how the emails had been retrieved from the computer. I cannot accept that there is any basis for the allegation that they were altered or fabricated by Erin; and Alexis' adherence to that position makes abundantly clear the antipathy she feels towards her sister.
Somewhat inconsistently with her evidence that she was always of the view that there was something wrong with her sister, Alexis said in cross-examination that she believed she and her sister were "on good terms" and had agreed "to kind of be fair", and Alexis maintained that if she had received more [than Erin] she would have given [Erin] part of her share and that she "didn't think there was a contest" (see T 108.32-38).
In summary, I considered Alexis to be unreliable in her recollection and prone to see things from her own perspective (such as her account of her treatment by her parents) and may exaggerate her account of events, but nevertheless I accept that she suffers from symptoms of anxiety and depression (and has done so for some time).

[34]

Alexis' submissions as to the construction issue

Alexis says (and I have no difficulty accepting) that there can be little doubt that the 2008 Will was poorly drafted as an instrument for effecting the manifest intentions of the deceased. Alexis refers to the evidence of conversations in which the deceased is alleged to have said that she had "problems" or had to do things in regard to her Wills; and to the evidence that the deceased spoke of seeking to "separate" the companies. It is said (and I accept, though it is clear that this did not happen) that this may well have involved transferring the shares in Yonan from Wheatley Investments to the deceased personally. Reference is made to the Kells' draft Will and it is said that it appears that the assumption that the companies had been so separated lay behind that draft Will. It is noted that nothing in the Kells' letter suggests that Kells was shown the 2008 Will, and it is submitted that, had that occurred, Kells would most probably have advised as to the difficulties with it.
Alexis maintains (and I accept) that it was the clear intention of the deceased to leave The Entrance Road Property to herself; and, by reference to it being unencumbered, that the deceased meant at least unencumbered by any mortgage securing loans to Wheatley Investments or other entities. (As noted above, there was no such mortgage encumbering the title at the date of death.)
It is noted for Alexis that the primary duty in construing a Will, as stated by Griffith CJ in Nicol v Chant (1909) 7 CLR 569; [1909] HCA 4 at 577, is to discover the meaning of the language of the testator as applied to the circumstances existing at the date of the Will and to give effect to the intention so discovered unless some authoritative rule of law or construction requires a different conclusion (reference also here being made to the summary of principles in Phillips v McCabe [2016] SASC 27 at [14]-[18] per Gray J and to the observation of Powell J in Coorey v George (Supreme Court (NSW), Powell J, 27 February 1986, unrep) to similar effect, namely that "[o]ne's task is, first, if it be possible, to ascertain, what was the basic scheme which the deceased had conceived for dealing with his estate, and, then, so to construe the will as, if it be possible, to give effect to the scheme so revealed".
Insofar as extrinsic evidence is admissible to assist in the interpretation of a Will if the language of the Will or part of it is meaningless or ambiguous on its face or in light of surrounding circumstances (see s 32 of the Succession Act), Alexis argues that, to the extent that the Will raises a question as to what the executor ought do in regard to the gift of The Entrance Road Property, it is ambiguous and hence evidence of the intention of the testator is both relevant and admissible. (I have some doubt as to whether there is any relevant ambiguity, in that the difficulty is not what the deceased intended to pass to Alexis but, rather, that the deceased did not herself beneficially own the property. However, nothing ultimately turns on whether there is any such ambiguity because it is accepted by Erin that the deceased's intention was to leave The Entrance Road Property to Alexis.)
Alexis says that the extensive affidavit evidence of Erin as to discussions with the deceased in which Erin deposes that it was the deceased's intention that Alexis would receive The Entrance Road Property, coupled with the terms of cl 4 of the Will, leave no doubt that the intention of the deceased was to make a gift of The Entrance Road Property to Alexis. I agree (and, as noted, Erin (and the other defendants) do not dispute that this was the deceased's intention).
Weight is placed by Alexis on cl 5 of the Will as confirming the intention of the deceased to ensure that Alexis received from her estate after her death a transfer of The Entrance Road Property "unencumbered"; and that the cl 5 of the Will conferred upon the executor all necessary powers to bring about rearrangement of the debts of the estate to ensure that The Entrance Road Property was given free of encumbrance (though these powers were not necessary in that the property was free from encumbrance at the date of death).
Alexis says that given that, as at the date of death, the deceased held the whole of the shares in Wheatley Investments (which in turn owned not only The Entrance Road Property but also the whole of the shares in Yonan), during her lifetime, the deceased possessed all the necessary powers to cause Wheatley Investments to transfer The Entrance Road Property to Alexis. While it is accepted that an issue might have arisen (had there been other shareholders in Wheatley Investments) as to whether or not it would be appropriate for the directors of Wheatley Investments to cause it to make a gift of one of its most substantial assets, the deceased (as sole shareholder) was in a position to ratify any conduct of the company that might otherwise have been a breach of the duties of the directors. Further, Alexis maintains that there could have been no question that the transfer of that property (either then or now) would jeopardise the solvency of Wheatley Investments. Alexis says that the liabilities of Wheatley Investments and of Yonan are cumulatively substantially less than the value of the real estate held by Yonan and that at all material terms Wheatley Investments would still be substantially solvent even if it were to part with The Entrance Road Property. (It has, of course, now sold the property but the issue remains as to the proceeds of sale.)
Thus, Alexis argues that there would have been no impediment to the deceased during her lifetime causing Wheatley Investments to transfer The Entrance Road Property to Alexis. That does not appear to be disputed. What is disputed, however, is the proposition that Erin would now properly be able to do so if she were to be appropriately directed or empowered by the Will.
As noted earlier, Alexis relies on the decision of Pembroke J in Ireland v Retallack. There, the testator had purported under his Will to leave to a beneficiary a parcel of land that, as at the date of his death, was owned by a company in which the deceased held 99.9% of the shares. His Honour considered various decisions (see at [12]-[15]) in which Wills had been construed (recognising the intention of a testator to make a gift of property held by the testator only indirectly) as amounting to a direction, coupled with an authorisation, to effect the disposition, including Re O'Callaghan [1972] VR 248 (Re O'Callaghan) where Gowans J at 256 had concluded that "where a testator conveys to his executor a direction to reduce into possession an asset not owned by the testator, and the executor is armed by the testator with the power to get it in, he is bound to do so, and to deal with it by way of a disposition in the way that the testator directs".
Alexis accepts that, in the present case, the Will contains no provision similar to cl 16 of the Will that was considered in Ireland v Retallack (that being a provision declaring that the executors would be entitled to manipulate the assets of the estate in order to transfer real property detailed in a schedule from a company to the beneficiary in question). In light of that provision, Pembroke J held that there was a valid gift and that the executors were obliged to take the necessary steps to bring about a transfer of the property.
However, Alexis says that there are two powers conferred upon the trustee by the deceased's Will in the present case that are relevant: first, cl 9(b) (the power to sell, lease, exchange or otherwise dispose of assets in the estate on such terms as the trustee considers expedient as though the absolute beneficial owner); and, second, cl 5 (the power to mortgage any other real property in the estate to ensure that the gift of The Entrance Road Property was unencumbered).
As to the first, Alexis says that cl 9(b) clearly evinces the intention to grant a wide power to the trustee. Although the clause does not expressly refer to executors, Alexis argues that, in circumstances where the Will itself does not create any special trusts intended to exist beyond the administration of the estate, it is likely that the power granted to trustees was intended to be for the benefit of the executor, executrix and trustee in regard to the administration of the estate. It is said that, although the reference in cl 9(b) is to "assets in my estate" (which might be construed as referring only to the legal forms of property vested in the testator at the date of her death; i.e., the shares in Wheatley Investments and the Dover Heights Property), the power "otherwise [to] dispose" of the assets in the deceased's estate suggests the intention to give the widest power. It is submitted that there is no reason why it should not extend to using the control of Wheatley Investments in order to dispose of assets within Wheatley Investments.
Alexis points out that a gift of residue under a Will is generally construed (absent any contrary intention expressed in the Will) as a gift to be satisfied by a payment in cash. It is said that there could be no doubt that the executor's powers under the Will extend to the conversion into cash of all the shares in Wheatley Investments (and consequently in Yonan as well). It is argued that it would be highly inconvenient if that could only be effected by a sale of the shares in Wheatley Investments. Alexis thus maintains that the executor is entitled to cause each of the companies to sell the parcel of real estate owned by it and then to wind up those companies or cause the companies to pay as dividends the whole of those proceeds to the estate for distribution as residue.
Further, Alexis says that, as the sole registered shareholder of Wheatley Investments, Erin has, under the constitution of Wheatley Investments (and as a matter of general company law) power to sell or transfer any of the assets within Wheatley Investments.
Thus, Alexis submits that Erin, as executor, has the power both by necessary implication as well as by reference to cl 9(b) of the Will, to cause Wheatley Investments and Yonan to dispose of their respective real estate; and that the manner of such disposition was conferred in the widest possible terms by cl 9(b) and the constitutions of the respective companies.
As to the second clause on which Alexis places weight in this context, it is said that cl 5, properly construed, extends to the parcels of real estate held in the names of the companies for they are truly "in my [the deceased's] estate", and that this further confirms the power of the executor to arrange assets so as to ensure that the gift of The Entrance Road Property is unencumbered.
It is noted that the Will being considered in Re O'Callaghan did not contain any express power of manipulation of assets similar to cl 16 in Ireland v Retallack but that in Re O'Callaghan the whole of the estate was given to the executor to hold on trust and thereafter to dispose of in accordance with the directions in the Will; and his Honour found that there was no doubt that the deceased was aware that he held the items of property through a company, and that the most obvious inference was that he simply considered that what was held by his company was his. Gowans J there concluded that, on its proper construction, the gifts in the will where the testator referred to "my flat premises" and to "my shares" meant, properly construed: "my company's flat premises" and "my company's shares". His Honour concluded that the conferral of power upon the executors to deal with the shares as if they were beneficial owners (by giving them the power to secure any change within the company's holdings), coupled with the express gifts, gave rise to an implication that the trustee was required to use the shares of the company to ensure the flat premises were transferred to the testator's widow.
Alexis contends that the present case is almost wholly analogous to that considered in Re O'Callaghan. Emphasis is placed on the manifest intention of the deceased that there be a transfer to Alexis of The Entrance Road Property unencumbered (though I would add for completeness that cl 4 also specifies for the property to be placed into a trust or superannuation fund of Alexis' choice, something which Alexis would seek to be altered if the gift is otherwise effective). As noted above, Alexis emphasises that the deceased clearly intended her executor to have a wide power in regard to the disposition of assets within her estate, even extending to a power of re-mortgaging other assets to ensure that The Entrance Road Property could be transferred unencumbered.
In those circumstances, it is submitted for Alexis that the deceased's Will should be construed as manifesting the intention to effect a gift to Alexis of The Entrance Road Property and as empowering (and directing) the executor to use the powers conferred upon her under the Will (as well as all of those possessed by her under the constitution of Wheatley Investments) to effect that gift; and it is submitted that it is the executor's duty to do so.
As to the decision of In the Estate of the Late Patrick Ambrose Tunchon [2019] NSWSC 802 (Estate of Tunchon), to which the defendants have referred (see below), where (at [109]) I noted that, unlike the position in Ireland v Retallack, there was there no express provision conferring power on the executors to manipulate assets and I declined to provide judicial advice to the effect that the executor could transfer assets in a way calculated to yield what might have been considered as the practical outcome, Alexis says that the decision in Estate of Tunchon is distinguishable in a number of respects from the present case.
First, it is noted that the decision was in regard to an application for judicial advice and made in circumstances where there was no contradictor. Second, that there was no impediment to the executors making the gift in the Will in that case but it appeared that it was possible that it would not carry a beneficial interest in the relevant property (and the executors sought advice that they could proceed to transfer shares and did not need to call in a loan from the company to the estate); in effect the executors there seeking to remake the deceased's testamentary dispositions. Third, that the application in Estate of Tunchon ultimately required the resolution of some factual issues which were not appropriate to be determined on a judicial advice application. Thus, it is submitted that the present case is much closer to the circumstances considered in Ireland v Retallack than was the case in Estate of Tunchon.
In closing submissions it was said that, had the sole asset of Wheatley Investments been The Entrance Road Property, a question may have arisen as to whether the Will properly construed should have been treated as intended to be a gift of the shares in Wheatley Investments. Alexis submits that the best construction of the Will is that the deceased's intention was to make a gift of The Entrance Road Property and that the solicitor drafting the will was either "not awake" to the manner in which the title of the property was held, or did not advise the deceased that anything turned on the issue, given her ownership of all of the shares in Wheatley Investments.
It is noted that construction issues can arise in regard to circumstances where the property interest held by the deceased at the date of death does not match the terminology of the will (reference here being made to Hendry v Perpetual Executors and Trustees Association of Australia (1961) 106 CLR 256; [1961] HCA 44 (Hendry) at 266 per Taylor and Menzies JJ). Reference is also here made to the decision of Else-Mitchell J in Re Bowcock [1968] 2 NSWR 697 (Re Bowcock), the principle in Hendry was applied to find that it was the testator's intention that determined the construction issue.
Alexis also makes reference to the observation in Re Cobcroft [2015] NSWSC 346, on a summons for construction in regard to a number of specific questions, where Young AJA (at [24]) referred to Hendry and Re Bowcock, that "[t]here are a number of cases where a testator has purported to give land in his will whereas in fact he did not own the land but a company which he wholly owned had the title to it and the courts have had no difficulty in holding that the expression, the gift of my real estate, passed the shares in the company". Other authorities to which Alexis refers in this context are Salier v Watson [2014] NSWSC 237 (Salier) per Pembroke J; Fittler v Fittler [2009] NSWSC 291 per Bergin CJ in Eq (Fittler); and Estate of Tunchon (as noted above).
In summary, Alexis contends, by reference to the above, that determining the proper construction and effect of cl 4 ought be approached on the basis that, as a matter of construction, the deceased's intention was to make a gift to Alexis of The Entrance Road Property unencumbered; the fact that the deceased was not the registered proprietor of that property, or did not have a proprietary interest in it at the time of death, does not defeat the gift (see Hendry at 266-267); and that where, at the date of her death, the deceased was possessed of powers that become in turn conferred upon her executor by which the property could be obtained by the estate and transmitted to the intended beneficiary or caused to be transmitted to the intended beneficiary, the executors have a fiduciary obligation to carry out the wishes of the testator to the extent possible (citing Re O'Callaghan; Re Bowcock; Re Cobcroft; Ireland v Retallack; Salier).
It is noted that circumstances in which the executors have been found to be seized of such powers to bring about the perfection of the gift intended by the testator include circumstances where the testator had control of a company possessed of the relevant property and was the sole or near sole shareholder of the company and was thus able to control the company's destiny (reference being made to Re O'Callaghan; Re Bowcock; Re Cobcroft; and Ireland v Retallack).
Alexis argues that, while the obligation of the executor to seek to perfect the intended gift is subject to the rights and entitlements of other parties (for example, directors of a company, or other shareholders of the company), the issue is to be approached as to whether, as a matter of practicality, the executors can, by the exercise of the powers possessed by them, obtain the appropriate result. It is said that the fact alone that the executors need to make demands or calls upon third parties does not immediately defeat the gift in circumstances where they may well succeed in obtaining whatever cooperation is required (citing Hendry; Re O'Callaghan; Fittler; and Salier).
In the present case, it is said that there is no evidence presented by the executor, as sole shareholder of Wheatley Investments, that she is faced with any serious obstacle to bringing about the transmission to Alexis of the proceeds of sale of The Entrance Road Property. It is submitted that the proceeds of sale are not essential for Wheatley Investments to be in a position to pay any of its creditors; and that there is no suggestion that the other director of Wheatley Investments (Ms Saba) would not cooperate with Erin. Further, it is said that, if the other director proved intransigent, Erin has the power to remove that director and to alter the constitution of the company and appoint herself as sole director.
Finally, Alexis says that the open offer made in 2019 by Erin to transfer the proceeds of sale on the basis that each party pay its own costs (relied upon in the defendants' opening submissions), demonstrates that there are no practical impediments to the perfection of the gift.
As to the form of declaration and order sought in respect of the gift under cl 4 of the Will (the third of the issues for determination as noted earlier) and noting that (by agreement) The Entrance Road Property has now been sold for $1.56 million, Alexis refers to the tax ruling that has been obtained as to the taxation consequences of a payment to Alexis of the net sale proceeds of the sale of The Entrance Road Property; and, in particular, as to whether the deemed dividend provisions of Division 7A of the Income Tax Assessment Act apply.
The ruling by the ATO, which it is noted has been maintained through the objection process, to which I have referred above, is that there is no exemption under Division 7A. Upon that basis, as already noted, the net return to Alexis has been calculated by Mr Gangemi (see his affidavit of 18 October 2021) as being in the order of $820,000.
The liability to capital gains tax of the property was a liability that would have attached to the property had it been transferred in specie to Alexis. In the events that occurred the property was sold while still in the ownership of Wheatley Investments and the capital gains tax has now been paid. However, Alexis says that capital gains tax, as a liability that attaches to the property, ought not be borne by the gift but by residue.
It is noted that in the second decision in Ireland v Retallack litigation ([2011] NSWSC 1510), Pembroke J said (at [2]) that the gift of the property there was to have been "free of any mortgage, charge or lien and to be for Mrs Retallack's own use and benefit absolutely". His Honour concluded that in those circumstances the costs of transfer relating to "stamp duty, capital gains tax or other costs that maybe incurred in that process should be paid out of residue" (at [4]).
It is submitted by Alexis that a not dissimilar formula was applied in cl 4 in the present will, the gift being "unencumbered" to Alexis "for her sole benefit absolutely". It is contended that the capital gains tax ought not to be deducted from the proceeds of sale to be transferred to Alexis.
Alexis submits that the description of the gift in cl 4 of the Will as being "unencumbered" favours the construction of the Will as being that the taxation liabilities should be borne by the company (Wheatley Investments) in regard to the capital gains tax and by the estate in regard to the tax on receipt of the proceeds. It is submitted that the deceased clearly intended Alexis to receive the full (or gross) value of the property.
Pausing here, I have no little difficulty with this submission. The concept of an encumbrance over property does not to my mind extend to tax liabilities that might arise on the part of the owner of the property consequent upon a transfer of the property or the proceeds of sale of the property to that owner.
I accept that in certain circumstances taxation liabilities or other amounts might be a charge on property (see, for example, the legislative schemes which provide for the imposition of a charge over land in order to secure obligations to satisfy tax liabilities, being: s 47 of the Land Tax Management Act 1956 (NSW) which prescribes that land taxes will, until payment, be a first charge upon the land taxed in priority over all other encumbrances; see further s 550 of the Local Government Act 1993 (NSW) as to charges over land with respect to council rates and costs awarded in court proceedings, and ss 173, 232 and 355 of the Water Management Act 2000 (NSW) which prescribe the circumstances in which rates and charges under the Act attach as a charge upon the relevant land).
This being so, it might, in some circumstances, be correct to say that the property is "encumbered" in some fashion by those debts but it is not suggested that this is here the case. The Entrance Road Property has been sold; the most significant of the tax liabilities arises only upon the distribution of the proceeds of that sale to an associate of the shareholders of Wheatley Investments (see annexure F to the affidavit of Mr Gangemi, sworn 9 December 2020 at [5.17]). It is the payment of a dividend that attracts the tax liability in question, which cannot amount to an encumbrance on a property that has already been sold, unencumbered, and to which title has already passed. There is, or will simply be, a personal liability on the part of the recipient of the proceeds of sale to make the respective tax payment. Further, the intention of the deceased that The Entrance Road Property be transferred to Alexis (to be held in a trust or superannuation fund of her choice) unencumbered makes sense in circumstances where, as at the time the Will was made the property was in fact encumbered by the investment loan secured over the property and the deceased's intention (see the draft, unsent email) was that Erin take responsibility for such debts. In effect, the encumbrance over The Entrance Road Property was replaced by an encumbrance over the Dover Heights Property (thus encumbering the property that Erin is to receive).
In this case, the liability to pay income tax with respect to the distribution of the proceeds of sale cannot be considered to be an "encumbrance" on The Entrance Road Property as Alexis suggests, particularly in light of the fact that the liability only arises subsequent to the sale of that property, on the distribution of the proceeds of sale.
Alexis submits that, if and to the extent that effect cannot be given to the gift in cl 4, then the Will should be varied pursuant to s 59 of the Succession Act to ensure a gift to Alexis of a sum to the value of the gift under cl 4 (together with the additional amount for rental income - see below) out of the deceased's estate.

[35]

The defendants' submissions as to the construction issue

The defendants acknowledge that there are cases where the strictness of the conclusion that a specific gift of a thing that the testator has never had (or intends to purchase but does not) is void has been avoided by the conclusion that the Will armed the executor with the powers to make the intended disposition effective (referring to Re O'Callaghan (at 254; 256); Re Bowcock; and Ireland v Retallack).
The defendants note that Gowans J found sufficient power in two clauses of the Will before him: first, a power to sell, convert and get in the estate; and second, a direction to manage all of the affairs of the deceased's estate as if his trustees were the absolute beneficial owner thereof. His Honour discerned an implication that the trustee was required to use the shares owned by the deceased to cause the company's property to be transferred to the deceased's widow, as the will contemplated. The defendants say that in the present case the critical question is therefore whether the Will in the present case contained any such direction (here referring to Estate of Tunchon at [109]).
The defendants submit that the Will does not confer on the executor authority to manage the affairs of the estate as if she were the absolute and beneficial owner (cf Re O'Callaghan). Rather, it is said that cl 9 of the deceased's Will is not so broad, conferring powers only on "my trustee", not the executor; and that neither sub-cll 9(a) nor 9(b) authorises Erin to exercise rights or powers qua shareholder. It is noted that sub-cl 9(a) is not engaged where the beneficiaries are all over the age of twenty-three years; and sub-cl 9(b) is concerned only with the disposition of assets rather than the exercise of rights. The defendants say that (contrary to [48] of Alexis' written submissions dated 2 November 2021), the power of disposition can be used only in respect to the deceased's assets, not those of Wheatley Investments.
The defendants argue that none of the subsequent authorities (principally, Ireland v Retallack; Re Cobcroft; and Garbett v Bear [2015] NSWSC 1524 per Rein J) supports the proposition that the limited powers conferred by cl 9 require Erin to convey The Entrance Road Property to Alexis.
Insofar as Young AJA, in Re Cobcroft, considered that the reasoning in Hendry meant that a gift of realty typically passed with it ownership of the shares in the relevant company (at [24]), the defendants say that there are three difficulties with that analysis. First, that the High Court did not so conclude. Second, that the subject matter of the dispute in Hendry was a partnership, not shares in a company. Third, that there is no reason to think that the deceased intended the shares in Wheatley Investments to pass to Alexis.
As to Hendry, it is noted that Taylor and Menzies JJ expressly reasoned that the appeal was not to be determined by any strict legal analysis of the rights of the testator qua partner during his lifetime and "certainly not by considering the rights of his personal representative after his death"; and hence it is said that, to that extent, Taylor and Menzies JJ eschewed any significance on the approach which found favour in Re O'Callaghan. It is noted that their Honours focused on the construction of the Will, in circumstances where they considered that the deceased had an interest in the assets of the dissolved partnership. Thus, the defendants say that Hendry is not authority for any proposition relating to the powers an executor in respect of a company nor any deemed passing of shares (its significance being confined to the construction of the particular Will in question).
As to the deceased's intention, it is said that (contrary to the relief claimed in prayer 6(b) of the further amended summons) the Will did not provide for shares in Wheatley Investments to pass to Alexis. By contrast, it is noted that the 2005 Will expressly bequeathed to Erin all of the deceased's interests in Yonan (including the Torrens Avenue Property) and to Alexis all of the deceased's interests in Wheatley Investments (including The Entrance Road Property). It is said that, for whatever reason, the deceased deliberately amended her Will to ensure that Erin retained ownership of Wheatley Investments and it is noted that cl 6 (the residuary provision) expressly devised "all shares" to Erin. The defendants say that the fact that this change was made in handwriting underscores its significance to the deceased. It is submitted that there is no basis to think, on the true construction of the Will, that the deceased gifted Erin shares in (inter alia) Wheatley Investments if she in fact Intended that they pass to Alexis (as prayer 6(b) assumes). The defendants say that an added complication is that ownership of the shares in Wheatley Investments would also give control over Yonan but there is no evidence to suggest that the deceased ever contemplated that possibility arising pursuant to the 2008 Will.
The defendants also submit that the cases referred to above, commencing with Re Bowcock, have been wrongly decided. Complaint is made that none of those cases identifies how an executor exercising rights as a shareholder can cause the relevant company to divest itself of the assets purportedly bequeathed. The defendants emphasise that the shareholders do not manage the company's affairs; noting that Wheatley Investments adopted the Table A provisions of the Companies Act 1936 (NSW) (Companies Act 1936) (see Ex 1, being a Memorandum and Articles of Association of Wheatley Investments), with amendments thereto identified in its articles; and, relevantly, Article 64 provided that the number of directors shall not be less than two and not more than seven; and Article 67 stipulated that the business of the company shall be managed by the directors. It is submitted that Alexis' submissions (at [50]) incorrectly elide ownership with management. The defendants emphasise that a sole shareholder does not have, by dint of that fact alone, the right to sell the company's assets.
The defendants further point out that the powers vested in the directors of Wheatley Investments are statutory and fiduciary. It is submitted that their exercise cannot be controlled by an expression of wishes by a third party in a document to which the company has not assented. The defendants say that the authorities upon which Alexis relies assume that the relevant company's directors must act regardless of the financial consequences thereof, and despite any prejudice to creditors (and it is noted that Alexis' submissions postulate that the proposed transfer might constitute a breach of the directors' duties, albeit one which the shareholder might ratify). The defendants contend that this misstates the law, referring to what was said in Angas Law Services Pty Ltd (in liq) v Carabelas (2005) 226 CLR 507; [2005] HCA 23 per Gleeson CJ and Heydon J, namely that: 32. … The shareholders of a company cannot release directors from the statutory duties imposed by subs (2) or subs (4) of s 229. In a particular case, their acquiescence in a course of conduct might affect the practical content of those duties. It might, for example, be relevant to a question of impropriety. A company's right to recover under s 229(7) depends upon the existence of a contravention. If such a contravention has occurred, the question whether a company has lost its right of action under s 229(7) because of some binding decision on the part of its shareholders to release the potential defendants is another matter, and one that did not arise in this case.
The defendants say that, to the extent that Alexis founds her contention on the construction of the Will (as [46] of her submissions suggests), a construction should not be countenanced that facilitates a contravention of the Corporations Act 2001 (Cth); a fortiori where Erin is not the only director of Wheatley Investments.
Further, it is said that the principle conventionally traced to Re Duomatic [1969] 2 Ch 365 per Buckley LJ does not alter the position, because that doctrine is concerned with dispensing with the consumptive effect of formalities and not to the variation of substantive rights (citing Herrman v Simon (1990) 4 ACSR 81 at 84 per Meagher JA, Samuels and Priestley JJA agreeing). The defendants say that Alexis' case postulates the alteration of substantive rights; namely the arrogation to the shareholder of the right of management in defiance of Article 67.
Insofar as Alexis claims that, on the true construction of the Will, Wheatley Investments is obliged to bear the tax consequences of the disposition of The Entrance Road Property (see at [66] of her submissions) and account to her for the rent received, the defendants contend that cl 4 does not provide for the former. The defendants say (and I agree) that the word "unencumbered" speaks to a mortgage, not a tax liability (the former being a charge, i.e., encumbrance, on the land; the latter not so). Further, it is said that there is an inconsistency in the argument. Further still, the defendants say that if (contrary to the defendants' principal submission) Alexis is entitled to the rent from the date of the deceased's death, then she should bear the liabilities associated with the asset (referring to O'Brien v McCormick [2005] NSWSC 619 (O'Brien) at [38]-[39] per Campbell J, as his Honour then was). It is noted that the costs of transporting or transferring the property to the specific devisee are payable by the devisee, unless the proper construction of the gift is that the devisee is to receive the gift free of such expenses (see O'Brien at [39]).

[36]

Determination as to the construction issue

The difficulty I have with the construction argument put forward by Alexis is that there is no express provision in the Will directing the executor to exercise powers available to the deceased, as shareholder of Wheatley Investments, to cause the transfer of The Entrance Road Property to Alexis (or to the estate such that it would then be available to satisfy the gift to Alexis); and while the powers conferred by cl 9(b) (albeit on the "trustee" in respect of "assets in the estate") and cl 5 are in broad terms, they nevertheless do not readily contemplate the exercise of powers of management of a company (Wheatley Investments) in which the deceased owned shares.
True it is that, in a (perhaps convoluted) way, the deceased as sole shareholder of Wheatley Investments could have executed control over the company in the sense that the deceased could have caused the removal of the second director (Erin) and replaced her with a director who would accede to the deceased's wish that The Entrance Road Property be transferred (either into the deceased's own name or directly to Alexis) but the deceased did not do so.
Therefore, it is difficult to see that, by reason of the fact that Erin is in the position (as executor) of shareholder of Wheatley Investments, the deceased has relevantly "armed" Erin with the power to get in the asset not owned by the testator (The Entrance Road Property) to be dealt with by way of testamentary disposition as the deceased had intended.
There is force in the submission by the defendants that the Will should not be construed in a fashion that would or might place the directors of Wheatley Investments in a position where their statutory duties as directors are in conflict with the deceased's intentions. Further, there is force to the submission made by the defendants that Alexis' submissions conflate ownership with management or day-to-day conduct of the company.
Thus, I do not consider that cl 4 of the Will constitutes an effective gift of the real property situated at The Entrance Road. It is not necessary in those circumstances to delve into the question of whether the line of authority relied on in Ireland v Retallack was correctly decided.
Nor do I consider that there is a basis to say that the gift can be construed as a gift of shares (by reference to the principle in Hendry). The terminology of cl 4 makes clear that what is intended is a gift of the property named therein. The deceased's earlier Wills make clear that the deceased understood there was a distinction between real property and shares (as did the correspondence in which the deceased, before her death, was contemplating "separating the companies").
Therefore, I have considered that the gift in cl 4 of the Will fails. In one sense, that conclusion has little consequence for Alexis, in that, even if the gift was effective, Alexis seeks an order for provision that would in effect replace that gift - because Alexis seeks not to have the proceeds of sale of the property as such but instead to have a legacy (to avoid liability on her part for the key consequences that would arise were the gift to be valid and to be administered as such by the executor). The only consequence of having an effective gift (as I understand Alexis' position) would be as to the entitlement to rents for the property over the period from the deceased's death (assuming her argument to that effect is accepted). All this could be accommodated in an order for provision depending on the conclusion reached as to adequacy of provision and the like.
Nevertheless, I note my conclusion that the gift under cl 4 fails. As to the third issue, had I found it was effective, I would not have concluded that it operated to place the tax liability on the estate. I read "unencumbered" in its common parlance as referring to mortgages or charges secured on the property - of which there were none as at the date of the deceased's death.

[38]

Alexis' submissions as to rectification

Reference is made to the authorities which set out the relevant principles governing the application of s 27 and its predecessor (s 29A of the Wills, Probate and Administration Act 1898 (NSW)), namely, Singh v Singh (2018) 17 ASTLR 317; [2018] NSWCA 30 per Gleeson JA at [195], (his Honour there referring to the decision of Hallen AsJ, as his Honour then was, in Lockrey v Ferris (2011) 8 ASTLR 529; [2011] NSWSC 179 (Lockrey v Ferris) at [73])). Relevantly, s 27 requires identification as to: the testator's actual intentions in regard to the dispositions in respect of which rectification is sought; whether the Will is expressed so that it fails to carry out those intentions; and whether the Will is expressed as it is in consequence of either a clerical error or a failure on the part of someone to whom the testator gave instructions in connection with the Will, to comply with those instructions (see Singh v Singh at [195]).
For Alexis, it is submitted in effect that those circumstances (clerical error or failure to comply with the testator's instructions by another person) are not exhaustive. It is submitted that in the present case if, as properly construed, the Will does not give effect to the deceased's intentions then this is because of the absence of appropriate directions under the Will to the executor (i.e., Alexis says that, in that event, the gift does not take effect for extraneous reasons). This submission is put on the basis that, whether the deceased referred to The Entrance Road Property as hers when giving instructions to Mr Ryan or whether the deceased told Mr Ryan that it was held within a company, it was the deceased's instruction to make a gift of that property to Alexis. It is contended that if the Will does not give effect to that instruction because of the absence of appropriate directions to the executor, then it can be rectified pursuant to s 27 of the Succession Act.
Alexis accepts that the application for rectification ought to have been brought within 12 months of the date of death (being February 2017) and hence the application is out of time. However, it is noted that in Lockrey v Ferris (at [62]-[63]) Hallen AsJ held that there is no longer an obligation to show sufficient cause for making the application out of time and that it may be extended at any time, if it is considered necessary and the final distribution of the estate has not been made.
Alexis says that, if the gift in cl 4 fails because the Will did not contain words of appropriate direction to make clear the deceased's intention that the executor should seek to perfect the gift of The Entrance Road Property to Alexis, then the Will could be rectified to insert such words to avoid the gift failing. As noted above, Alexis says that there is ample evidence of statements by the deceased of her intention to give The Entrance Road Property to Alexis. It is said that were the gift to fail, this would be for what are fundamentally procedural reasons to do with the appropriate conferral of power on the executor to effect the gift. It is submitted that the words in s 27(1)(b) ought not to be read down to requiring a specific instruction of the testator in regard to any provision sought to be inserted by a rectification order.
Alternatively, in the event that there was found to be an absence of power on the part of the executor to effect the gift, but such power could be conferred upon the executor, it is submitted that there is jurisdiction under s 81 of the Trustee Act 1925 (NSW) (Trustee Act) to confer such power. It is noted that Pembroke J referred to the existence of this jurisdiction in Salier (at [19]) but did not consider it necessary to make any order under s 81 in that case.

[39]

The defendants' submissions as to rectification

The defendants note that rectification cannot be ordered unless there is clear evidence of what the testator's intentions were at the time of making the will (citing Rawack v Spicer [2002] NSWSC 849 (Rawack v Spicer) at [26]-[28] per Campbell J, as his Honour then was; Lockrey v Ferris at [86]-[87] per Hallen AsJ, as his Honour then was); and that the standard of proof required in the rectification of a will is "clear and convincing proof" on the balance of probabilities (Rawack v Spicer at [30]-[31]). Reference is made to the approach identified in Vescio v Bannister (2010) 3 ASTLR 619; [2010] NSWSC 1274 (Vescio v Bannister) by Barrett J, as his Honour then was, where s 27(1)(b) is said to be enlivened (see from [12]-[15]); in effect, that one must first ascertain the testator's intentions, and construe the will as executed and compare its effect, according to its proper construction, with those "instructions" which necessarily involves the making of findings about the "intentions" of the testator.
The defendants say that rectification is not available in the present case because: there is no evidence of any intention on the deceased's part to confer on the executor of her estate the power referred to in prayer 3 of the further amended summons; there is no evidence that the deceased gave instructions to her then solicitor to give effect to any such intention; and there is thus no discrepancy of the kind referred to in Vescio v Bannister at [14]; and no suggestion that the deceased's solicitor made any clerical error.
It is submitted that, where the testator never had an intention relevant to the situation which actually occurred, rectification is not available (reference being made by way of example to Re Estate of Dippert [2001] NSWSC 167 per Young J, as his Honour then was). For that reason, it is said that s 27 of the Succession Act cannot be enlivened.
The defendants filed further submissions on 17 November 2021, opposing relief being granted pursuant to s 81 of the Trustee Act. In summary, they submit that no order should be made where the terms of the order have not been formulated; and, in any event, they say that s 81 is unavailable because Alexis does not seek an order in relation to trust property, for the benefit of the trust, and there is, relevantly, no transaction.
It is noted that s 81 is only enlivened if specific power is sought with respect to a particular dealing, or dealings of a particular kind (citing Riddle v Riddle (1952) 85 CLR 202; [1952] HCA 12 at 220 per Williams J) and reference is made to the principles informing the construction of that section, and the exercise of the discretion conferred thereby as considered by Parker J in Cisera v Cisera Holdings Pty Ltd [2017] NSWSC 960 (Cisera SC) and, on appeal therefrom, Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286 (Cisera CA); and Re Country Road Services Pty Limited (2019) 18 ASTLR 44; [2019] NSWSC 779 (Country Road Services) per Parker J.
It is noted that Alexis' submissions (see at [55]) do not identify the order sought by her and that leave was not sought further to amend the summons. The defendants say that Alexis has, over the course of the case, canvassed in wide terms what Erin qua shareholder of Wheatley Investments could and should do, pointing to T 270.42-48 by way of example, where the following submission was made: … Furthermore, as the owner of all the shares in Wheatley Investments, she can ratify any conduct of the directors that might otherwise be a breach of their duty to the shareholders; she is able to alter the constitution of the company as she sees fit, limited only by the principles of company law and the Corporations Act; she could alter the constitution of the company to make it a one‑director company and fire her co‑director. …
The defendants say that the Court should not be delegated the task of formulating an appropriate order; and that it cannot, in the abstract, determine what order is appropriate, and thereby be seen to be approving it (Cisera SC at [66]). Further, it is submitted that a power should not be approved which has, as its end point, causing or facilitating the directors to breach their duties. The defendants say that this is not a mere hypothetical possibility, noting that Alexis seeks an order that Wheatley Investments divest itself of its only present current asset (the proceeds of sale of The Entrance Road Property), pay all taxes referable to the payment of moneys to Alexis and pay to her the net proceeds of the rent, when Wheatley Investment does not have any asset immediately available to pay these amounts.
The defendants say that s 81 is not enlivened, as it only permits dealings related to the management or administration by the trustees of trust property, quoad property (referring to Country Road Services at [81]), and that the focus must be on the interests of the trust (reference being made to what Parker J said in Cisera SC in this regard).
The defendants note that, here, the relevant trust property comprises the shares in Wheatley Investments and that the only beneficiary of that trust is Erin, as residuary beneficiary. It is said that the proposed s 81 order (whatever be its terms) is not directed to the more expedient administration of that trust property for Erin's benefit, and that, if an order is made, the trust property will remain unaltered. The defendants say that the order is instead directed to benefiting a third party to the trust (Alexis); conversely, it is said that the divesting of the sale proceeds in the relevant company can hardly be seen to be expedient to that trust, and the defendants agree that there is no bilateral exchange of property or rights (see Cisera SC at [56]).

[40]

Submissions in response as to rectification by Alexis

In response to the defendants' submissions of 17 November 2021 in regard to the possibility of an order under s 81 of the Trustee Act, Alexis accepts that an order can only be made in circumstances where it has been properly formulated within the constraints discussed in the authorities in the respondents' submissions (which constraints address in turn the requirements within s 81).
Alexis says that she did not intend in closing submissions to suggest that an order be made at large conferring power upon the executor to take whatever steps were needed in order to effect the gift of The Entrance Road Property. Rather, Alexis' primary position is that Erin as executor has the necessary power as executor of the estate, coupled with the specific powers conferred under the Will, together with those powers as a matter of general law possessed by her as executor to effect a transfer to the plaintiff of the proceeds of sale of The Entrance Road Property. Alexis' submission in that regard is that, if the effectuation of that gift requires the exercise of some power not presently held by the executor, then that gift ought not to fail simply because of the absence of power; rather, it is said that Alexis ought be given the opportunity of formulating an appropriate order that might be made under s 81 so that the gift could be completed.
Alexis confirms that she does not at this stage propound an order. It is said that Alexis' concern is merely to see that the claims for relief, based upon the construction of the Will, are not dismissed simply on the basis that there is an absence of power. It is noted that prayer 8 of the relief claimed sought such further or other orders as the Court deems fit; and it is submitted that claims for further or other orders can be appropriately dealt with by way of the consideration of whether or not an ancillary relief ought be given in order to give effect to the terms of a primary judgment.
Alexis envisages that, if it were to be concluded that there was a defect of power that may be able to be corrected by an order under s 81, Alexis would be given the opportunity of formulating such an order and at that point, of course, the defendant would likewise be given the opportunity of submitting as to whether or not it ought be made.
As to whether s 81 is enlivened, Alexis submits that this question can only be properly answered when the specific context of a proposed order is identified. Insofar as the suggestion is that the only relevant property of the Trust, for the purposes of any such order, would be shares in Wheatley Investments (and that Erin is the only beneficiary of any Trust of those shares as the residuary beneficiary, and that therefore the order would not be directed to the more expedient administration for Erin's benefit), Alexis submits that this over-simplifies the matter. It is noted that the estate is not yet presently fully administered. On the assumption that the executor is obliged to use her powers as shareholder of Wheatley Investments to fulfil the testator's intention in regard to The Entrance Road Property or its proceeds, it is submitted that those shares are not presently held for the sole purpose of transmission to Erin as a residuary beneficiary. Alexis maintains that s 81 can apply in regard to a legal representatives' powers, and in regard to the administration of an estate, to ensure its proper administration in the interests of the beneficiaries as a whole, which she says includes her interests under the Will.

[41]

Determination as to the rectification issue

I am not satisfied that rectification should be ordered of the Will in circumstances where I am not persuaded that there is clear evidence that the deceased's intentions were for the executor to be armed with the power to cause Wheatley Investments to transfer The Entrance Road Property to Alexis (as opposed to the very clear evidence of intention on the part of the deceased that The Entrance Road Property should pass to Erin). I note that clear evidence of the testator's intentions is required in this regard.
I cannot conclude that there was a "clerical error" on the part of the drafter of the Will (seemingly, Mr Ryan or someone from his office) nor is there evidence from which I can conclude that Mr Ryan failed to comply with the deceased's instructions. On the evidence (such as it is) I can only infer that either the deceased did not make clear, or Mr Ryan did not understand, that The Entrance Road Property was held in the name of a company (Wheatley Investments). It seems highly unlikely that the deceased (as a lay person) would have thought to give instructions to Mr Ryan to incorporate in the Will a direction to the effect that it is now contended should have been made in order to enable the deceased's intentions to be carried out. In my opinion, the position is that there is not established to be an intention on the part of the deceased that relates to the situation which has now occurred.
Nor do I consider that s 81 of the Trustee Act is of assistance. Apart from anything else, it is accepted that no order has been formulated and that it is not appropriate to make an order that is, in effect, at large pursuant to s 81 of the Trustee Act. I accept the submission from the defendants that what is here sought is not an order in relation to trust property for the benefit of the relevant trust; rather, it is an order sought in relation to the administration of the estate but for the benefit of a beneficiary other than that to whom the relevant property (the shares) was left.

[43]

Alexis' submissions as to the claim for rent

Alexis says that the gift of The Entrance Road Property must have been intended to carry with it the fruits of that property from the date of death, and that there ought to be a declaration that the gift to Alexis under cl 4 of the Will includes the rent that has been received by Wheatley Investments since the date of the deceased's death. Alexis says that, by virtue of s 34 of the Succession Act, a disposition of property, whether specific or residuary, includes any intermediate income of the property that has not been disposed of by the will.
Alexis points out that, had the deceased owned The Entrance Road Property in her own name at the date of her death, Alexis would have been entitled to the income derived from that property (such as the net rent) from the date of death until transfer of the property to her, or its sale and provision of the net sale proceeds to her.
Alexis submits that, as a matter of construction, the gift in cl 4 is treated as a gift of real estate. By reference to the authorities referred to above (where a gift is not defeated by the fact that the testator did not own the real estate at the date of death in circumstances where the testator or her executor had power to get in and/or dispose of the property) Alexis says that there is no reason to treat the gift in cl 4 as anything other than a disposition of The Entrance Road Property. It is noted that the opening words of s 34 of the Succession Act refer to "a contingent, future or deferred disposition of property" and that this is said to be capable of including a gift such as the gift in cl 4. In consequence, it is submitted that the gift ought be treated as including the intermediate income, being the rents derived from the property from the date of the deceased's death.
Alternatively, even if it were to be held that s 34 did not apply (because cl 4 did not effect a disposition of The Entrance Road Property) Alexis says that it would be presumed that the deceased did not intend to "sever" the rent from the property that was being gifted. It is noted that the property was a commercial property tenanted at the time of death and that the value of the property lay in its capacity to generate an income stream. Alexis submits that there could be little doubt that the deceased's intention, discerned from the terms of the Will, must have been that the deceased intended the gift of the property to include the intermediate income derived from that property.

[44]

The defendants' submissions as to the claim for rent

As to the claim by Alexis to the rent derived from The Entrance Road Property (being prayer 5 of the further amended summons) the defendants make reference to Re William MacPherson [1913] SALR 207 where Way CJ cited with approval the statement of principle from Bridges MJ, Hayes & Jarman's Concise Forms of Wills with Practical Notes (13th ed, 1910, Sweet and Maxwell) that "[a] specific bequest, if vested in possession, and if the subject matter is income bearing, entitles the legatee to the income from the testator's death, and also all accretions which arise after the death".
Reference is also made, by way of example, to O'Brien at [38]-[40] per Campbell J, as his Honour then was, and Verzar v Verzar [2013] NSWCA 170 per Gleeson JA. In O'Brien, Campbell J said (at [38]): 38. Income arising after the date of death on property which is left as an unconditional and immediate gift by a specific legacy or devise goes to the specific legatee or devisee … the right to the intermediate income arises from the fact that, once an executor assents to a specific legacy or devise, the assent relates back to the date of the deceased's death …
As to the reference in the above passage to the assent of the executor, it is noted that in In re De Sommery; Colenenbier v De Sommery [1912] 2 Ch 622, Parker J explained (at 628) that the executors' assent operated to change their status to trustees of the specified property, with the consequence that the costs related to that trust property and not the estate generally and that in Scott v Scott [1912] P 241, CA, Cozens-Hardy MR reasoned that the act of assent operated to pass property from the executor to the legatee, with the result that the legatee thereafter had title to the chattel.
The defendants say that the above principle cannot be enlivened if the gift under cl 4 fails. It is noted that the principle expounded in cases such Re O'Callaghan and Ireland v Retallack proceeds on the proposition that the representative must exercise powers (personal to him or her) to bring about the outcome expressed in the will. It is said that, in the former case, Gowans J reasoned that the gift did not fail not by reference to proprietary rights but because the executor was bound to exercise the (there sufficiently broad) testamentary powers conferred on him (see at 256). It is said that, if cl 4 fails, there is nothing on which those powers can relevantly operate; and, as such, possession (and property) in The Entrance Road Property remained vested throughout in Wheatley Investments.
Further, it is submitted that the principle is also not enlivened even if cl 4 is valid. The defendants submit that title to The Entrance Road Property, and the income derived therefrom, has never vested in the executor's possession; rather, it has remained throughout the property of Wheatley Investments. It is said that nothing which occurred by reference to the grant of probate could affect the rights of an independent legal entity, such as Wheatley Investments.
The defendants accept that a legal personal representative is bound to implement, to the extent he or she is lawfully able, the terms of the Will; and that the shares in Wheatley Investments form part of the deceased's residuary estate. However, it is said that whatever rights Erin had qua executor or beneficiary did not confer on her any right to manage Wheatley Investments. It is noted that its articles of association adopted Table A in the second schedule to the Companies Act 1936, Article 67 of which provided that the business of the company shall be managed by the directors. It is said that where the legal personal representative is also a director of a company, he or she concurrently owes statutory duties to it, some of which cannot be waived or excused even by its members.
The defendants submit that the Re O'Callaghan line of cases does not suggest that the representative has any proprietary interest in the company's land; and submits that there is no principled basis to conclude that the company's conscience is bound by any equity; and the director's duties are altered by a document to which he or she was not a party. In any event, it is said that Erin does not assert in the present proceeding any proprietary interest.
It is submitted that whatever duties and powers Erin had in her capacity as executor could not take precedence over her duties and powers as director, as is said to be illustrated by the fact that, for the period after the deceased's death in February 2017, Wheatley Investments' sole source of income was the rent and rental outgoings derived from The Entrance Road Property and that it had no other source of income to pay its (not inconsiderable) expenses (see its financial statements). Equally, it is said that the company had no other current assets to meet current and non-current financial liabilities, some of which have been incurred by reason of it being joined to the present proceeding.
The defendants say that the consequence of Alexis' clam is that Erin, as director, was bound to exercise a right which would have conflicted with her duties as a director (not least the duty to prevent insolvent trading). In this context, the defendants contend that, even if their contentions concerning prayers 1-6A of the further amended summons are not accepted, Erin has nevertheless acted reasonably in defending the estate's interests. It is submitted that this is a case where what was said by Young J (as his Honour then was) in Ledgerwood v Perpetual Trustee Co Ltd (No 2) (Supreme Court (NSW), Young J, 25 August 1997, unrep) (Ledgerwood) is apt, namely that: Ordinarily when there is a dispute as to the ownership of property and one person succeeds in that dispute and the other fails, there is an order that the winner gets his or her costs and the loser pays them. Where the property is in an estate and the reason for the dispute can be laid at the feet of the testator, then it is often appropriate that the representative of the testator pays everybody's costs and indemnifies itself out of the assets. Where the dispute is over a particular piece of property of the testator's, then often it is appropriate that the indemnity come out of that particular piece of property.
On that premise, the defendants say that such sums as are payable to Alexis referable to The Entrance Road Property should be borne by its sale proceeds.
The defendants thus say that the net rent does not pass to Alexis, that the rent was earned by a stranger to the Will (namely, Wheatley Investments) and was: used to defray the costs of maintaining, inter alia, The Entrance Road Property; and taxable in its hands. Similarly, for those reasons, it is said that cl 9 of the Will did not authorise Erin qua executor to pay the net income to Alexis. It is said that the words of sub-cl 9(b) is not enlivened where the rent represents an asset of Wheatley Investments, not of the estate.

[46]

Alexis' Family Provision Claim

Alexis' family provision claim, as adverted to above, is put on a number of bases.
First, (which is not my conclusion) in the event that the gift under cl 4 of the Will is upheld, Alexis contends that this gift is still insufficient in light of appropriate considerations of what would be proper provision for her from the deceased's estate.
Second, in the event that the gift in cl 4 fails (which I consider it has), then it is submitted that it necessarily follows that there has been in effect an unintentional disinheritance of Alexis. In those circumstances, Alexis makes a claim for a sum that would restore to her the value of the gift under cl 4 (the proceeds of sale of The Entrance Road Property) plus the additional amount for rent income for the period from the deceased's death.
Third, in the event that the gift in cl 4 is upheld in principle but there are impediments to its implementation, then Alexis invokes s 36B(1) of the Conveyancing Act, and seeks orders for the amendment of the Will and further ancillary orders pursuant to s 66 of the Succession Act to implement the gift. It is noted that s 36B provides that: 36B Contingent and future interests to carry the intermediate income Where under an instrument other than a will coming into operation after the commencement of the Conveyancing (Amendment) Act 1930 property stands limited to a person for a contingent or future interest, or stands limited to trustees upon trust for a person whose interest is contingent or executory, such interest shall, subject to the statutory provisions relating to accumulations, carry the intermediate income of that property from the time when the instrument comes into operation, except so far as such income or any part thereof may be otherwise expressly disposed of.
Last, it is noted that the gift in cl 4 was to be payable to a trust or superannuation fund of Alexis' choice. It is submitted that this limitation is an inconvenient limitation that reduces the value of the gift to Alexis and that a proper provision for Alexis would have been a gift to her without those limitations. Alexis seeks amendment of the Will to remove those limitations. (I see no difficulty in that submission.)

[47]

Alexis' submissions as to the family provision claim

In summary, Alexis submits that she should obtain an order for provision pursuant to s 59 of the Succession Act in order to modify the provision which she receives under the last Will of the deceased so that it is a legacy and is payable to Alexis, rather than being payable to a trust or superannuation fund; and says that the amount provided should be between $1.8 million and $2.1 million.
Alexis submits that, in circumstances where there is a large estate, proper and adequate provision would allow Alexis substantially to contribute to the purchase of replacement accommodation, would provide a form of financial independence for her and would provide her with a fund against contingencies and to act as a form of superannuation. It is noted (see below) that Alexis has limited assets of her own and is substantially dependent upon her husband's assets, in particular, his ownership of the one bedroom unit in which they currently reside. It is said that Alexis made substantial contributions to the accumulation of the deceased's estate (including guaranteeing loans and negotiating leases of realty owned by the deceased's companies); that there was a close and loving relationship between Alexis and the deceased (albeit acknowledging that there were difficult times in the relationship during the period between 2007 and 2008 following Alexis' wedding); and that Alexis' financial circumstances are uncertain in relation to her employment and income earning ability, she has minimal superannuation; and suffers from health issues and possible further costs such as costs in relation to IVF.
Alexis submits that, while Erin puts forward her financial circumstances as a competing claimant, given the size of the estate Erin's circumstances are such that she will be very comfortably well off if the provision Alexis seeks is made; and therefore it is submitted that in those circumstances Erin is not effectively a competing claimant and the amount of provision for Alexis should not be diminished due to Erin's circumstances. Alexis says that her circumstances are poor compared to those of Erin, not only in terms of assets owned by each of them, but in terms of their income and future earning capacity. Alexis accepts that her income may increase to a moderate amount due to obtaining tail fees from previous clients (T 93.26-50, 94.1-30) but it is said that she will still have the difficulties in generating income which she has experienced to date due to her mental health issues.
Alexis says that she is entirely dependent upon Frank, and the continuation of their marriage, for her accommodation needs. Similarly, she has no superannuation of any substance. By contrast, it is said that Erin is independently financially secure, in addition to the very substantial benefits she will receive from the estate of the deceased, and that Erin is therefore, in effect, not a competing claimant.
Alexis says that a purchase of a property for $2 million would cost $2,094,567 inclusive of stamp duty and a purchase of a property for $3 million would cost $3,149,567 inclusive of stamp duty; to which would be added legal fees and moving expenses. Assuming a property bought at the mid-point ($2,622,067), allowing approximately $8,000 for legal fees and moving expenses and assuming that Alexis and Frank made equal contributions to the purchase, Alexis would require $1,315,000 to fund her share of the purchase.
It is said that a further allowance of $500,000 to $800,000 should be made to enable Alexis to supplement her income, given the restrictions on her earning capacity; provide a form of superannuation, given she is 44 years of age, her earning capacity and that she has minimal superannuation; and generally provide a hedge against contingencies and to replace Frank's 2005 Mercedes with a similar more current model car. (In cross examination, Alexis emphasised that her concern in relation to cars was as to safety standards - see at T 131.5-20.)
Alexis points out that the concept of "needs" is relative but that s 60(2) of the Succession Act is not limited to needs-based considerations; and that, whilst needs do not equate to wants, a narrow view of the concept of "needs", limited to necessities or essentials of life, is not dictated by the Succession Act.
As noted above, The Entrance Road Property has now sold for $1.56 million from which proceeds substantial costs of sale, including taxation, will be deducted. If, contrary to Alexis' submissions, capital gains tax on that sale and the tax payable on transfer of the proceeds of sale to the estate is not borne by the company and the estate respectively, such that Alexis were only to receive the net proceeds of sale (after payment of those tax imposts) then it is noted that the gift to Alexis would be substantially reduced.
Alexis emphasises that the deceased intended a very substantial gift to her (in the order of some $2 million at the date of death); and Alexis says that this was proper given the nature of the relationship and the financial and personal circumstances of Alexis. It is said that, since the deceased's death, there has been a substantial deterioration in the value of the asset. Further, it is said that the deceased appears either not to have taken into account the complications created by ownership within Wheatley Investments, or not to have been advised by her solicitor of the complications that this matter imposed.
Insofar as weight ought be given to the judgement of the deceased as to the appropriate provision for family members and dependents, it is noted that in the present case, it appears that despite an intention to make a substantial gift in satisfaction of what the deceased undoubtedly thought was proper provision, that intention has been frustrated.
Additionally, it is said that the Dover Heights Property has increased in value significantly, such that the distribution of the relative gifts made by the last Will of the deceased is now much more disproportionate than it was at the time the deceased made those Wills (noting that it is the time of the making of the order at which the position must be considered - see s 59(2) of the Succession Act). Alexis says that although the value of the Dover Heights Property at the date of the making of the last Will is not known, its value (for stamp duty purposes) was thought to be about $1.3 million as at 11 July 2011.
Alexis wishes to purchase a two or three bedroom unit or house in Millers Point (her preference), Barangaroo, Dawes Point and The Rocks area, to which she has significant ties (her attendance at a local Church and her friendships with people in the area on whom she could call on for assistance if needed). Alexis's current home in Millers Point is walking distance from her office and she says that it is important that she be centrally located due to her work at TAFE which requires her to teach at various TAFE campuses.
Alexis and Frank would like to start a family (or, if necessary, adopt or foster a child). Alexis understands that it is likely she will need to undergo in vitro fertilisation given her age and low egg count (the cost of which treatment is about $15,000 per cycle including day surgery). Alexis would still like to have children although she understands that with her current health condition and age that may not be possible through IVF and her mental health issues may restrict their ability to foster a child.
Accordingly, Alexis and Frank would like to purchase a larger home. It is said that if they were to foster a child they would require at least a second bedroom. Alexis has made enquiries regarding the cost of two and three bedroom properties in Millers Point (which encompasses Dawes Point and The Rocks) and believes that the average sale price for a two bedroom property at Millers Point near their current unit is approximately $2.63 million. The range for two bedroom units in Millers Point sold within the last six months prior to the hearing is said to be between $1.85 million and $3.55 million (average $2.74 million and median $2.95 million) and it is said that the average price increases if the property is not one that has the "sunlight blocked out" by the construction at Barangaroo (average price $2.95 million and median price $3.05 million). Sales of three bedroom units in Millers Point within the last six months prior to the hearing ranged between $2.8 million and $5.35 million (average price $3.72 million and median price $3 million).
It is noted that stamp duty payable on a purchase of $2 million is $94,567 and $149,567 on a purchase price of $3 million; that there would also be legal fees and moving expenses; and that there would also be ongoing strata fees following the purchase.
It is said that, assuming Frank sold his unit for approximately $1.2 million, after sale costs for legal fees, agent's commission, marketing and the like, and after repayment of his home loan (currently approximately $284,000) there would be about $847,245 to apply towards the purchase of such new property. Thus, it is said that Alexis would require a contribution.
In closing submissions, Alexis says that the deceased chose to treat her daughters unequally. That inequality has been increased by the changes in the relative values of the assets in her estate, and the substantial tax liability that falls upon The Entrance Road Property but not upon the Dover Heights Property. That unequal treatment, as discussed below, flowed from the beliefs of the deceased regarding the behaviour of her two daughters and her attitudes to them. It is submitted (which I address in greater detail below) that the judgement of the deceased in that regard was unfair to Alexis. The contention that Alexis received an advance on her inheritance seeks to justify a very unequal treatment that is not justifiable on the grounds given by the deceased, nor on the available documents.
Alexis notes that Erin gives evidence of a desire to move to Australia and live in the house. Alexis points out that Erin lived in the house for approximately ten years from the end of high school until she left for the United States where she has resided since 2008. It is submitted that, while having perhaps a greater attachment to the property than Alexis, the determination of the matter should not proceed on the basis that it is necessary to mould any orders such that Erin can reside at the Dover Heights Property. It is submitted that it is speculative as to whether Erin will leave the United States and move to the Dover Heights Property. Alexis says that Erin's desire ultimately to move and live in the Dover Heights Property ought not to be a reason for reducing any order that might otherwise be made in favour of Alexis.

[48]

The defendants' submissions as to the family provision claim

The defendants point to Alexis' qualifications and to the summary of her skills which are summarised in her own published documents (see Ex 10 at p 381 (being a screenshot of Wheatley Wealth Management's website that states that Alexis "draws on 20 years of investment experience and in-depth knowledge of intergenerational wealth challenges" and lists her qualifications) and p 397 (being a screenshot of the same website that outlines Alexis' expertise in estate planning)) as going to Alexis' capacity to earn income in the future. The defendants say that the best evidence of Alexis' intentions is that which was set out in her application dated 28 June 2021 to ASIC for an AFSL, in which Alexis stated that she expected to spend more than three days a week discharging her duties; and that she anticipated that her business would grow. The application stated an expectation that there would be no business growth in the first year as new statements of advice were prepared but that "[i]n the subsequent years there will be an addition of approximately 3 new client groups each year with fees averaging $5,000 per month". The defendants point out that the business already has sixty clients, drawn from 20 families.
The defendants say that Alexis' financial needs are modest, noting that Alexis has the considerable support of her husband, Frank. It is noted that Alexis already has accommodation. In cross-examination, Alexis was taken to the evidence that she had given in the 2010 proceeding (brought by her stepmother) (being the transcript of the second day of those proceedings, on 6 December 2011) to the effect that she required a two-bedroom apartment (even if she were to have a child) (see at T 130.19-50 in which Alexis conceded that she had made representations to that effect in the earlier proceedings). Alexis, however, gave evidence that, with the advent of the COVID-19 pandemic, things had changed and that things were "just a bit more difficult", noting that Frank was working from home (but that it might be a bit easier if he was back at work full-time) (see T 130.37-41).
The defendants submit that, if Alexis receives the proceeds of sale of The Entrance Road Property, then there should be no family provision order in her favour; but that, if she does not, Alexis would be entitled to a family provision order, albeit in a modest amount. It is noted that Alexis and Frank presently have net assets of $1,745,752; and that Frank has significant cash reserves ($550,623) and that both are qualified professionals with significant earning capacity.
The defendants say that, if Alexis is correct about cl 4 of the Will, she is likely to receive well over one million dollars from the sale (though I would add that this does not seem to take account of the tax consequences that are now understood would follow). The defendants say that such a sum would be more than enough to provide for her, and Frank's, proper maintenance, education and advancement in life.
The defendants say that Alexis is well able to purchase a two-bedroom apartment for not much more than the current value of her present home, referring to examples of such apartments sold in the last six months before the hearing (see at Ex 10) and to Alexis' acknowledgement that she can curtail her discretionary expenditure to fund some of the matters which she claims require attention.
The defendants acknowledge that the deceased's wishes are relevant (noting sub-ss 60(2)(j) and (p) of the Succession Act). However, they say that in the present case the deceased's wishes were in part ill-informed (insofar as tax was concerned), or the deceased did not put into effect an arrangement which gave sufficient effect to her desires to benefit Erin, having regard to the tax consequences that have been identified. It is submitted that the deceased would not have wished Erin to be forced to sell the Torrens Avenue Property or the Dover Heights Property.
Further, accepting that cases such as Taylor v Farrugia [2009] NSWSC 801, cannot in this area prescribe inflexible principles of law, the defendants emphasise what Brereton J, as his Honour then was, said at [57]-[58]. They say that a buffer is not the same as the capital cost of an expensive property.
Further, it is said that whether adequate provision has been made for the proper maintenance, education or advancement in life of the applicant for provision is not to be judged against Alexis' desire to secure improved accommodation. The defendants say that in the present case: Alexis and Frank have lived, with no apparent difficulties of substance, in their Millers Point unit since about 2007; neither complains of any significant financial problems, except a desire to buy a larger property; and a characteristic of many of the properties considered by Alexis to be benchmarks is their grand location with expansive harbour views.
The defendants say that the couple's assets are more than sufficient to meet Alexis' future needs. It is noted that in her affidavit sworn on 19 October 2021, Alexis deposes that to have a comfortable retirement, she ought to have $545,000 in superannuation (see at [48]). The defendants say that, given the growth of Frank's superannuation portfolio, it can comfortably be concluded that Frank's portfolio will suffice for both their needs by the time they come to retire.
Thus, the defendants say that, if it is concluded that adequate provision for the proper maintenance, education or advancement in life of Alexis has not been made by the deceased's Will, then the defendants submit that that if Alexis has succeeded in relation to her construction of cl 4, the Court should nonetheless not exercise its discretion to make a family provision order; and, if she has not succeeded, then (as noted above) any such order should be in a modest sum.
As to the financial and personal circumstances of Erin and Jesse (see Erin's affidavit sworn on 21 October 2019), it is noted that the value of their net assets is in the order of $1,665,309, a figure which is a little less than the value of those of Alexis and Frank. Their income is exceeded by their expenses. It is said that that gap is likely to increase as a result of Erin's pregnancy since her income is far greater than Jesse's.
Both suffer from significant medical problems. Erin suffers from an eight millimetre brain tumor; experiences significant pain from a compressed nerve, which radiates into her neck, right shoulder, right arm and right leg; suffers from chronic fatigue syndrome, such that she has difficulty walking for longer than ten minutes; also experiences significant muscle fatigue and restless leg syndrome. Jesse continues to require monthly treatment for his autoimmune disease; and is unable to work to full capacity.
The benefits Erin receives under the Will are adversely affected by some of the costs associated with those gifts. The Dover Heights Property requires significant repairs, in the order $350,000. In addition, the estate is liable to pay the loans which were hitherto owed by Wheatley Investments and Yonan. That liability arose because the deceased refinanced loans which were secured against The Entrance Road Property and the Torrens Avenue Property, which were then owing by the corporations. In the case of Wheatley Investments, that debt was approximately $458,000. It is noted that the refinance involved each of the companies assuming a corresponding debt to the estate; and that if Alexis succeeds in this claim, she would take the proceeds of sale of The Entrance Road Property without having to pay the debt which had been secured against it prior to November 2013.
In addition, tax will need to be paid by the estate consequential upon the disposition of The Entrance Road Property. It is said that on any view it will be significant given that neither Erin nor Jesse has cash reserves sufficient to meet these expenses. It is said that they will have to fund these liabilities from the estate or using the estate's assets as security.
The defendant submits that the deceased was in the best position of anyone to judge the needs of her daughters. Although Alexis has suffered disadvantages since the deceased's death, so, it is said, has Erin. The defendants say that it would be appropriate to conclude that the deceased properly weighed her daughters' needs, taking into account the benefits which both had received during her lifetime; and that it would be wrong to see the estate as being large where, the deceased not having given attention to the tax consequences of her testamentary dispositions, the estate will have to bear significant liabilities.
In this respect, it is said that there is no basis for the court to make an order pursuant to s 80 of the Succession Act declaring The Entrance Road Property or the Torrens Avenue Property to be notional estate. Although the deceased was a director of the relevant companies, and had power to cause (in certain circumstances) them to dispose of their assets, it is said that that power is not embraced by s 76(2)(a) of the Succession Act because it is constrained by fiduciary obligations.
The defendants submit that there should not be any order for provision made which requires the Dover Heights Property to be sold, in circumstances where the deceased intended that it be Erin's home when she returned to Australia and where that reflected a jointly held view that the Dover Heights Property has sentimental value to Erin (see her evidence in cross-examination at T 210.22-37).
It is said by the defendants that Alexis already enjoys adequate accommodation; that the sale of her existing property would provide her with a stepping stone to acquire the two-bedroom apartment she accepts is sufficient; and that Alexis and Frank do not require more substantial accommodation. The defendants say that the income Alexis and Frank earn, and are capable of earning, is sufficient to meet the normal expenses of life, such as the acquisition of a new car and the undertaking of repairs to their home.
The defendants have offered to pay a sum which represents (after tax) the net proceeds of sale of The Entrance Road Property. It is submitted that those proceeds were more than sufficient to provide for the proper maintenance and advancement in life for Alexis; and that Alexis' claim has been actuated by an inappropriate desire to achieve parity in relation to the distribution of the deceased's assets.
The defendants wish to be heard on the issue of costs after final judgment but says that, to the extent that Alexis' financial position has been prejudiced by her incurring costs, this is a consequence of her own making, having regard to her motives. It is submitted that adequate provision will be attained by Alexis upon payment of the net proceeds of sale of The Entrance Road Property, less all tax liabilities.

[49]

General principles

There is no dispute that Alexis is a child of the deceased and thus an "eligible person" by reason of s 57(1)(c) of the Succession Act; and that she commenced her claim within time. In order to enliven the power to make an order for provision there must be a finding that adequate provision for the proper maintenance, education and advancement in life of Alexis was not made by the deceased in her Will (s 59(1)(c) of the Succession Act) (see Steiner v Strang (2019) 19 ASTLR 330; [2019] NSWCA 143 (Steiner v Strang) at [76] per Macfarlan JA). If the provision for Alexis was not adequate for her proper maintenance, education and advancement in life, then it is necessary to consider whether it is appropriate to make a family provision order (s 59(2) of the Succession Act) and if so in what amount.
Section 59(1)(c) of the Succession Act does not prescribe specific circumstances that do, or do not, constitute adequate provision for the proper maintenance, education and advancement in life of a claimant; nor are the words "maintenance", "support" and "advancement" defined in the Succession Act, but it is recognised that the concept of advancement can extend (in appropriate circumstances) to the provision of a sum of money to enable improvement of a person's prospects in life (see Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 at [115] per Callinan and Heydon JJ). The question is not just whether the provision is "adequate" but whether adequate provision for the "proper" maintenance, support and advancement of the plaintiff has been made, which requires consideration of all of the circumstances of the case (see McCosker v McCosker (1957) 97 CLR 566; [1957] HCA 82 at 571-572 per Dixon CJ and Williams J). The word "adequate" is said to connote something different from the word "proper"; the former being concerned with quantum and the latter prescribing a standard; a more subjective criteria (see, for example, Sgro v Thompson [2017] NSWCA 326 at [74] per White JA).
The nature and content of what is adequate provision for the proper maintenance, education and advancement in life of a claimant is assessed on a case-by-case basis by reference to all of the facts. It is a flexible concept with the measure being conformity with what is considered to be right and proper according to what is considered to be the moral duty of the deceased or contemporary accepted community standards (see Pontifical Society for the Propagation of Faith v Scales (1962) 107 CLR 9; [1962] HCA 19 at 19 per Dixon CJ; Walker v Walker (Supreme Court (NSW), Young J, 17 May 1996, unrep); Stern v Sekers; Sekers v Sekers [2010] NSWSC 59). There is some variance as to whether the formulation of "moral duty" is to be preferred to that of community accepted standards (see for example Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 at [44] per White JA and [109] per Brereton JA, which preferred the former; and Squire v Squire [2019] NSWCA 90 (Squire v Squire) at [10] per Meagher JA, which applied the latter). In a number of cases reference is made to the multi-faceted evaluative judgment that is here required.
In Annason v Phillips (Supreme Court (NSW), Young J, 4 March 1988, unrep), Young J (as his Honour then was) observed that whilst the basic principles are the same with a large estate: … where there is a large estate, competition between claimant and claimant, and claimant and beneficiary under the will is much reduced or eliminated. Further, there may be a more liberal assessment of the moral duty owed, to be reflected in what is proper provision for the Plaintiffs. In particular, the lifestyle that has been enjoyed by the Plaintiffs, because they have been associated with a wealthy testatrix, is a relevant factor.
See also Limberger v Limberger; Oakman v Limberger [2021] NSWSC 474 in which Hallen J said the following: 421 The question whether the deceased has made adequate provision for an applicant is a question of objective fact, the determination of which involves an evaluative judgment: Singer v Berghouse at 210; White v Barron (1980) 144 CLR 431 at 434-435, 443; [1980] HCA 14 at [5] (Barwick CJ, albeit in dissent in the result), [8] (Mason J). 422 "Provision" is not defined by the Act, but it was noted in Diver v Neal (2009) 2 ASTLR 89 at 97; [2009] NSWCA 54 at [34] (Basten JA, Allsop P and Ipp JA agreeing), that the term "covers the many forms of support and assistance which one individual can give to another. That support and assistance will vary over the course of the person's lifetime". 423 The word "adequate" connotes something different from the word "proper". "Adequate" is concerned with the quantum, described by Rosalind Atherton in "The Concept of Moral Duty in the Law of Family Provision - A Gloss or Critical Understanding?" (1999) 5(1) Australian Journal of Legal History 5, 10, as reached upon "a purely economic and objective basis", whereas "proper" prescribes the standard of the maintenance, education and advancement in life: Devereaux-Warnes v Hall (No 3) (2007) 35 WAR 127 at 145 [72]; [2007] WASCA 235 at [72], [77] (Buss JA, Pullin JA agreeing), which seems to invite more subjective criteria. … 427 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 applicant, the expectations to which that has given rise, and the fact that the applicant was, throughout his, or her, adult life, respectively, independent upon the deceased for any ongoing financial support. … 434 Whether the disposition of the deceased's estate is not such as to make adequate provision for the proper maintenance, education or advancement in life of the applicant will always, as a practical matter, involve an evaluation of the provision, if any, made for the applicant on the one hand, and the applicant's "needs" that cannot be met from her, or his, own resources on the other: Hunter v Hunter (1987) 8 NSWLR 573 at 575 (Kirby P, Hope JA agreeing). This statement is not intended to suggest that an applicant's "needs", when compared with the provision made for him or her, out of the estate, should be the dominant consideration. The existence, or absence, of "needs" which an applicant cannot meet from her, or his, own resources, will always be highly relevant, and quite often decisive: Singer v Berghouse at 227 (Gaudron J, albeit in dissent in the result); Bkassini v Sarkis [2017] NSWSC 1487 at [296]-[297] (Robb J).
As to the position of claims by adult children, reference is made by both parties to the general principles as summarised by Hallen J (Alexis referring to Anderson v Hill [2017] NSWSC 1149 at [135]-[136]; the defendants referring to earlier statements by his Honour (when his Honour was an associate judge of this Court) to similar effect in Young v Outrim [2011] NSWSC 391 at [108] and in particular to the statement at 108, including that generally "the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such a [sic] spouse, who has a prime obligation to do so". See also what was said in Hastings v Hastings [2010] NSWCA 197 by Basten JA at [7]-[8], namely that: 7 In the case of a child, it is not necessary that the person be a dependant at the time of the deceased's death in order to be an eligible person. It may be accepted that a child will generally have some claim on the estate of the deceased, despite lack of dependency. Where a son or daughter is adult and able-bodied, difficult questions can arise as to whether the person is someone for whom provision "ought" be made from the estate for his or her "maintenance, education or advancement in life": s 7. The court is required not to make provision unless satisfied that such provision as has been made (if any) is "inadequate for the proper maintenance, education and advancement in life of the eligible person": s 9(2). 8 The term "proper" supports an assessment that more may be required than that which is sufficient as a matter of bare necessity to avoid penury: Goodman v Windeyer [1980] HCA 31; 144 CLR 490 at 496-497 (Gibbs J), citing Bosch v Perpetual Trustee Co [1938] AC 463 at 476. Nevertheless, unless an adult child can establish that his or her resources are indeed "inadequate" in the relevant sense, it seems unlikely that he or she will succeed. As explained by Gibbs J in Hughes v National Trustees, Executors and Agency Co of Australasia Ltd [1979] HCA 2; 143 CLR 134 at 147: "It is well settled that these general principles apply to the case of an adult son as well as to other cases. The age of an applicant is however material and if a son is mature, able-bodied and capable of supporting himself he may in those circumstances be in no need of maintenance or support."

[51]

(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship;

The evidence as to the relationship between Alexis and the deceased has been broadly described above. The deceased was responsible for much of Alexis' upbringing (following the deceased's separation and divorce from her husband). Alexis lived with the deceased until shortly before Alexis' marriage and remained in regular contact with the deceased (albeit with a period of some difficulty following Alexis' wedding as noted above).
There is some conflict between Alexis' evidence regarding her relationship with the deceased and the evidence of Erin on that topic. Alexis notes that Erin's evidence is predominantly indirect evidence, recounting a number of conversations which she says that she had with the deceased. Alexis says that her relationship with Erin was a difficult one and that, from before the time that Alexis left home in 2007 and afterwards, the two had very little contact.
Alexis deposes to having ongoing contact with her mother, even during what Alexis describes as the "difficult times" in their relationship between her wedding and about the end of 2008, during which Alexis says that she continued to speak to the deceased on the telephone on at least a weekly basis and also visited her. After this, it is said that they would speak on the phone at least twice a week (sometimes more often) and that Alexis would see the deceased about once every two to three weeks. Alexis says that she and the deceased would also go on holidays together and spend time out together socially.
There is some dispute as to whether or not Alexis sought extra moneys from her mother at the time of her wedding in regard to the honeymoon (Alexis denies so doing) but Alexis says that, even if she had, this is the only incident identified of her asking for money after the share trading matter. Alexis accepts that she received financial support during her school years, and while she was living at home with her mother; and (as noted already) has admitted to causing the deceased's company loss in regard to share trading. Alexis says that she received some gifts from the deceased, including valuable jewellery. However, Alexis maintains that her treatment was no different, and if anything less generous, than that accorded to Erin (referring to Erin's accounts of the generosity of the deceased towards her - see at [38]; [73]-[76]; [95]; [104]; [105]; [114]; [146]-[154] of her affidavit sworn 8 May 2018). Alexis says that no criticism is intended of the generosity extended to Erin but that there is no basis on the evidence to conclude that Alexis was inclined to treat the deceased as a "piggy bank", when indeed Erin had been provided for handsomely by the deceased (which included making Erin a supplementary card holder of the deceased's Platinum and Black American Express Cards, which she was instructed to use "whenever [she] need[ed] to" see at [67] and [90] of Erin's affidavit sworn 8 May 2018).
Alexis says that her (Alexis') account of the difficulties and pressures she felt from her mother in the period before her wedding is persuasive and ought be accepted (see [41]-[50] of Alexis' affidavit sworn 24 January 2018). Further, it is said that even if one assumed (against Alexis) that credence ought to be given to the complaints recorded in Erin's affidavit, while they would involve conduct deserving of criticism, nevertheless little acknowledgement appears to have been given by the deceased that Alexis at the time was suffering high levels of anxiety, was seeing a psychologist, and had been taking medication.
The defendants' submissions in this regards emphasise Alexis' evidence as to having a close and loving relationship with the deceased (and they submit that the reference to the deceased's conduct in Dr Young's report was the product of an attempt by Alexis falsely to portray the relationship in order to bolster her position in this proceeding).
Erin describes her own relationship with the deceased as being very close (and Alexis accepts that this is demonstrated by the substantial provision made for Erin by the deceased in her last Will).

[53]

(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

The nature and extent of the deceased's estate have been set out earlier. It is accepted that it is a large estate. The Dover Heights Property is the most valuable asset in the estate.
Erin annexed to her updating executor's affidavit the appraisal of Mr Pillinger of 11 October 2021, giving an estimated value of $7 million to $7.5 million. Insofar as Mr Pillinger relied upon a sale at Wallangra Road, Alexis says that that property is back from the cliff line, does not have ocean views and is not comparable.
It is noted by Alexis that Erin received, but did not tender, the appraisal of Mr Serrao from Raine & Horne of 28 September 2021 giving an estimate of $8 million to $9 million. Mr Serrao stated that he had recently sold another property in the same street in Dover Heights for $8 million and that the deceased's property was a superior property. Further appraisals have been obtained also suggesting a range closer to $10 million. Alexis contends that it should be found that the value of the property is likely to be within the range of $9 million to $10 million.
Pausing here, there is little material difference between the competing valuations or appraisals in the sense that, on any view of things, the Dover Heights Property is a very valuable property; and on whichever valuation be correct its inclusion in estate assets means that this is a large estate.
That said, the defendants say (and I accept) that the size of the deceased's estate does not permit one to ignore the critical issue of what, if anything, is required to make adequate provision for the applicant's proper maintenance and advancement in life (the defendants invoking as apt, notwithstanding the different wording of the Western Australian legislation, the reasoning of Buss P in Lemon v Mead (2017) 53 WAR 76; [2017] WASCA 215 at [223]-[224]).
Further, the defendants emphasise that the estate has little by way of cash resources; its assets being principally realty (the Dover Heights Property) and (directly and indirectly) an interest in land-rich companies (Wheatley Investments and Yonan). Erin points out that the realisation of the equity in The Entrance Road Property has given rise to, and will incur, significant tax liabilities; and says that the same will be the case with the Torrens Avenue Property if it is required to be sold. The relevance of this is that it is in relation to the evidence that the deceased intended that the Torrens Avenue Property serve as a source of income for Erin, to assist in defraying her expenses; and hence it is submitted for the defendants that the deceased's intention will be defeated if that property has to be sold in order to satisfy a family provision order. (In addition, it is submitted that such a sale has no attraction where much of the value of that property will pass, not to any family member, but to the ATO.)

[54]

(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

As noted above, Alexis is a financial planner. Alexis says that her personal financial circumstances are parlous. It is noted that, excluding her superannuation (which is only $40,831) Alexis' liabilities exceed her assets by $10,459.72. Alexis' annual income (see [79]-[81] of her revised submissions) in 2020 to 2021 from all sources was $49,106.30.
Alexis has deposed to the impact upon her earning capacity and career of her anxiety and depressive condition (see [13]-[28] of her affidavit sworn 15 October 2019) a condition that has afflicted Alexis since adolescence and the breakup of her parents' marriage. It is said that this has been an ongoing affliction for Alexis with intervals in which she was little affected and then substantial periods in which she was. It is submitted that Alexis' evidence is supported by other evidence (including Erin's own testimony in the proceeding before Macready AsJ).
Alexis' evidence is that her anxiety and depression impact significantly on her ability to work; that she finds it a struggle to concentrate for more than 30 minutes at a time and struggles to control her anger at particular times, when she is feeling particularly stressed (at least once or twice a month); that she is very anxious about her work and feels that her memory is affected by her condition (such that she has made some significant errors, which fortunately she has been able to remedy). Alexis says that she struggles to deal with clients in a conference which lasts more than half an hour at a time; that she suffers from headaches which can last for up to one week; and that she needs to take medication so that she can sleep.
It is noted that a significant part of Alexis' income has more recently been from her teaching work; the income from her financial planning business having decreased due to changes imposed by her licensee (AMP Financial Planning Pty Ltd) and her ill-health (such as the requirement to engage a paraplanner to write statements of advice which Alexis had previously written herself, which has caused an increased cost to her business of about $16,500); and her representation status with AMP Financial Planning now having been terminated.
Alexis' total income for the last financial year from her casual teaching at TAFE was $14,961. At the time of the hearing Alexis was working eight hours per week, teaching two classes, for the current semester of 15 weeks at a rate of $83.00 per hour. The previous semester Alexis only taught one class and worked five hours per week. Alexis' employment is on a casual basis so that Alexis covers times when there are insufficient permanent staff to teach all the classes required.
As to her new business, Alexis has estimated that fixed annual costs for the business would be in the order of $41,810 and she was not confident that the business would generate sufficient income to cover much more than those expenses. In the previous financial year, Alexis was paid $10,000 as a salary by Wheatley Wealth Management and the company's profit, after expenses including payment of that salary, was $24,145.30. For the 2019 financial year Wheatley Wealth Management (through which Alexis conducts her financial planning business) operated at a net loss of $9,970.62. (It is said that another alternative would be to find employment; and that, from Alexis' enquiries, assuming she could obtain such employment, her evidence is that a likely salary package would be in the order of $100,000 to $110,000 per annum.)
Alexis estimates that the annual expenses of herself and her husband are $167,847.31. It is noted that their expenses have changed during the COVID-19 lockdowns and Alexis' estimate is calculated on the basis that it is representative of what she and her husband would normally spend when they were not in lockdown or only partially in lockdown. Alexis' evidence is that the couple meet deficiencies in income to pay their expenses by resort to sale of shares by Frank and drawing down on his home loan. Frank's home loan has also been used to pay legal fees in relation to these proceedings.
Alexis and Frank's joint net assets total $1,798,779.93 (including superannuation, the vast bulk of which are Frank's assets including the one bedroom unit in Millers Point (the Millers Point property) (estimated at $1,200,000) and his superannuation ($723,395.28)). Alexis has superannuation of $40,831 and her main assets are funds held in her solicitor's trust account in anticipation of the payment of the costs of these proceedings. Alexis also has debts of $40,227.90 in relation to her American Express and Visa credit cards, leaving her with an excess of personal liabilities and personal assets, excluding allowance for her superannuation. Alexis' evidence is that the Millers Point property requires rewiring (cost estimate between $17,000 and $21,000 plus GST), associated plastering and painting work (no cost estimate available) and repainting (cost estimate between $4,500 and $6,000 plus GST).
Alexis made an unsuccessful application to One Point Financial Services to borrow funds. Frank has a line of credit secured against the Millers Point property which had about $545,000 available to be drawn down as at 15 October 2019 (when the mortgage loan was $175,000) so that the amount available to be drawn down now is approximately $435,000 (as the loan balance as at 18 October 2021 is $284,284.58). Alexis anticipated, as at 15 October 2019, that this facility would be required as a "safety net" during periods when Frank is unable to work and/or if they have additional unusual expenses.
As to Erin's position, Erin is employed on a full-time basis by Aon Benfield as a treaty reinsurance broker and wishes to work on a reduced schedule, if possible. In cross-examination, Erin explained that she had previously worked in a different role at Aon. Erin accepts that she is the significant earner in her marriage.
Erin estimates the annual income of herself and Jesse at US$399,900 (estimated AUS$555,417), including her salary, a discretionary cash bonus, stock dividends, rental income and income for Jesse; and Erin estimates their annual expenditure to be US$377,831 (estimated AUS$524,765). Their annual income generally covers their annual expenditure. Additionally, Erin receives director's fees and management fees from Wheatley Investments and Yonan, although Alexis says it appears those fees have not been physically paid to Erin but instead some credit for those in her favour may have been created in those companies' accounts (see Ex EXREL-2 to Erin's affidavit sworn 19 October 2021, marked as Ex 3 in the proceeding, being the profit and loss statement for Wheatley Investments for the year ended 30 June 2019, see also T 231.50, 232.1-50, 233.1-17).
Erin estimates the couple's joint assets to be US$3,040,974 (estimated AUS$4,223,575) and their liabilities to be US$1,284,659 (AUS$1,784,249). Their assets have increased significantly over the past three years, whilst their liabilities have remained roughly the same over that period.
Erin also has a contingent interest in Aon shares worth approximately US$333,000 (which would be about AUS$460,000), subject to tax, if any. Erin's interest vests, so long as she is still employed by Aon, over the next five years; for example, approximately US$133,412 will vest over the course of 2022.
Jesse is involved in restaurants and bars through various companies in which he and/or he and Erin hold shares. It is noted that there has been litigation in relation to one of those companies in relation to which there was a judgment against Jesse but he has recovered sufficient funds to pay that and to pay his legal fees in a malpractice suit against his lawyer. It is said that those issues appear to have now been finally resolved.
In relation to their Waterside Drive, Chicago property, Erin has deposed that this asset is owned by a company (Badger LLC) of which she is the sole shareholder; that property having been transferred to that company in December 2018. Erin deposes that their property at Burr Ridge was transferred in December 2020 from Jesse and herself, beneficially, to each of them as trustees of the Boyle Family Trust, and that this property is the only asset of that Trust, which has no financial statements prepared.

[55]

(e) if the applicant is cohabiting with another person, the financial circumstances of the other person

Alexis lives with her husband, Frank, who is a project manager (see his qualifications and experience to the end of 2015 as recorded in Ex 8). By reference to Frank's tax returns, it is noted that Frank's income in recent years has been substantial: in the 2019 financial year, $279,821; in the 2020 financial year, $233,137; and in the 2021 financial year, $183,700; and that he has a substantial superannuation portfolio (in the order of $720,000 - see T 161.16-22).
Frank was previously employed by Hallis on a contract basis to perform work for AMP under a contract that had been due to end on 30 August 2019 but was extended up to 31 December 2019. Frank was out of work for four and a half months from 28 February 2021 through to 12 July 2021.
Frank commenced a contract with Manpower Services (Australia) Pty Ltd (Manpower), with whom he was currently employed at the time of the hearing as a casual employee on 13 July 2021. It is noted that Frank does not have security of tenure - the contract with Manpower can be terminated by either party on one hour's notice (cl 3.1) but there is a non-binding indication that the assignment may last for approximately nine months, or until terminated, whichever occurs first. Frank has been told that the contract would be reviewed after about six months with continuation being funding dependent. Alexis notes that it cannot be assumed that he will not have periods of unemployment between contracts. Frank does not receive annual leave, sick leave or any other leave entitlements. Frank's rate of pay under the contract is $1,136.37 per day, exclusive of superannuation, consisting of a base rate of $909.10 per day plus a casual loading of 25% ($227.27) which replaces permanent employee entitlements.
Alexis notes that Frank's income, after tax, for the 30 June 2021 financial year was $110,357, which was lower than his income for the previous financial year which was $137,627 after tax.
Frank owns the one bedroom Millers Point unit in which the couple live. It is worth between $1.2 million and $1.4 million (as per market appraisals of Travis Reeve and Adrian Wilson). Frank's other assets total $135,668.21 including bank accounts ($26,716.41), shares ($62,003.39) and a 2005 Mercedes Benz C200 ($2,500.00). Frank's liabilities total $290,674.84 including a mortgage over his unit, currently $284,284.58. Frank's net assets are accordingly $1,044,993.37-$1,244,993.37, together with his superannuation which is valued at $723,395.28.

[56]

(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

It is noted that Dr Young concluded that Alexis was suffering from a persistent depressive disorder and opined that Alexis required ongoing treatment supervised by a psychiatrist including the use of psychotropic medications and ongoing psychological therapy and that there was a risk of further deterioration in her condition over time affecting capacity for employment and social interaction (see annexure B to Dr Young's affidavit sworn 26 October 2021).
In Alexis' report dated 30 September 2021, Dr Young, consultant psychiatrist, says: [Alexis] has suffered from ongoing psychological symptoms of depression and anxiety and describes ongoing persistence in terms of major depressive disorder present for at least the past two years. This meets diagnostic criteria in DSM5 for Persistent Depressive Disorder. … Given the poor treatment response as well as the continuing perpetual stressors Ms Wheatley's prognosis can be considered at best guarded and she is likely to require ongoing treatment and support in the foreseeable future. … Long term prognosis is generally poor. Ms Wheatley is likely to continue to suffer significant symptoms and associated impairment in the foreseeable future. ... As a result of her symptoms, Ms Wheatley suffers from difficulty concentrating and anxiety impairing decision-making capacity. ... As a result of her ongoing symptoms Ms Wheatley has diminished capacity to work and study, unable to concentrate sufficiently to apply herself to the complexities of her work role and she experiences anxiety which inhibits her ability to give advice and make financial decisions. As a result … Ms Wheatley is partly unfit to work and study. … Ms Wheatley reports depressive symptoms and limiting her capacity to undertake social interaction. She describes having becoming increasingly withdrawn and she experiences irritability in interpersonal interactions. … Ms Wheatley requires ongoing treatment supervised by a psychiatrist including the use of psychotropic medications and to require concurrent ongoing psychological therapy. … There is a significant risk of further deterioration of her condition over time affecting capacity for employment and social interaction.
Alexis has taken prescription medication to treat her anxiety and depression on and off since about the year 2000 and then daily from about 2007 until December 2018, recommencing that in about June 2019 and continuing to date. Her current medication is Lexapro.
The defendants accept that Alexis suffers from a psychiatric condition but submits that its gravity has undoubtedly been influenced by the stresses of this litigation and an exaggerated sense of grievance (as the defendants say is manifested by how Alexis characterises the deceased's treatment of her). For Alexis, it is accepted that the stress of the current litigation may exacerbate her condition, but it is said that its resolution will simply remove one specific stressor from her life.
The defendants say that Alexis' impairment is not such as to diminish severely her earning capacity, pointing to her ASIC application which indicates that Alexis believes that she will be able to work for substantial periods in her practice and that the practice will grow.
The defendants submit that a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference can be drawn from Alexis' failure to adduce evidence from her long-term psychologist, Dr Workman. The defendants place emphasis on the fact that it appears that there have been long periods in which Alexis has not required ongoing consultations, noting that Alexis' resumed consultations have coincided with the pendency of this trial. In particular, it is noted that the records produced by Alexis do not indicate any consultations with Dr Workman between: 15 May 2012 and 23 May 2018 (a period of about 6 years); and 13 June 2018 and 29 July 2020.
It is submitted by the defendants that Alexis' contention that she has lost the documents for the first of those periods is unlikely to be correct, having regard to the fact that Alexis produced invoices for consultations substantially earlier than 2012 (going back to 2006); and it is submitted that Dr Workman would have kept copies of invoices and receipts but Alexis has not tendered any of the doctor's records or otherwise explained why Dr Workman's copies of those records have not been made available.
Erin has health issues in relation to chronic fatigue syndrome and what she understands to be a compressed nerve in her neck. Erin also has a brain tumour which she has been advised is likely to be benign. Consistent with the initial diagnosis, it has recently shown some growth, the implications of which for further treatment are not certain.

[59]

(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

The defendants submit that Alexis has received significant benefits already (not only those referred to by Alexis at [64]-[71] of her first affidavit sworn 24 January 2018 but also benefits in the form of an early inheritance in the provision of moneys for share trading and ongoing support after she left university and until she commenced employment in the 2005/2006 financial year).
As to the provision of moneys for share trading, I have referred above to the conversation to which Erin deposes in that regard and to the timing of the first three transactions in the Doiho bank records. It is noted that Alexis was unable to recall in the witness box some aspects of the conversation which she records at 8 of her second affidavit (being a conversation in which Alexis alleges the deceased had provided Alexis with $70,000 on the basis that she had been "trading shares for several years … [and she had] some spare funds in the Trust that [Alexis] could use … as play money"; but see T 113.12-49, 114.1-27).
The defendants submit that Alexis' position is improbable in this respect. It is noted that, on Alexis' evidence, the sharp market correction in March 2000 caused loss to Doiho and caused her to be devastated with herself, out of guilt for the deceased. It is noted that, although she could not recall what happened Alexis accepted the possibility that, because of that guilt, she stopped trading. However, the defendants point out that Alexis continued to trade shares through Doiho, pointing to the trust's tax returns which record that it continued to trade (and incurred modest losses) thereafter.
The defendants say that, contrary to Alexis' recollection, Doiho was not merely (over a course of years) closing out shares (itself said to be an unlikely event in respect of a lengthy period). It is noted that the trustee's profit and loss statement for the 2003/2004 and 2004/2005 years record the purchase of large amounts of stock ($57,614 in the first year and $111,896 in the second).
The defendants say that Alexis' evidence does not explain why she caused Doiho to continue to trade shares if she experienced profound guilt from March 2000. It is said that the most obvious explanation is that the moneys used to invest belonged in truth to Alexis.
Further, it is said by the defendants that, contrary to Alexis' denial, the deceased entirely supported Alexis until about 2006, some six years after she completed university. In this regard, the defendants point to unsigned tax returns for Alexis which indicate that she commenced employment with Cedtip Pty Limited in the 2005/2006 financial year; noting that the preceding returns record receipt of no other income of substance other than director's fees (which Alexis indicated were not in fact paid). As to the fact that these tax returns were unsigned, the defendants say that it is more likely than not that they accurately represent the documents that were lodged on Alexis' behalf. It is said that the level of detail indicates this, as does the fact that the author has prepared a taxation estimate, calculating the amount of the anticipated tax refunds. It is said that a further indicator is that the 2006 return records, as a deduction, a FINSIA course, which Alexis accepted she took at the commencement of her career.
It is noted that Alexis accepted that, if she was not employed until the 2005/2006 year, the only person she looked to for support was her mother (see at T 128.46-50).

[60]

(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person

Alexis says that there can be no doubt that the deceased intended from 2005 to leave Alexis The Entrance Road Property by a gift under her Will noting that in 2007 the deceased made clear, by amendments to the 2005 Will, that this was to be unencumbered gift, which intention was reiterated in the 2008 Will.
The affidavit of Ms Michaela Money sworn 23 October 2019 deposes to the efforts that have been undertaken to both interview Mr Ryan and locate documents, including notes relevant to the preparation of the wills (see at [8]-[9] of that affidavit). There is a page of notes but it sheds no real light on the matter. Solicitors who had taken instructions from Mr Ryan stated that he had no recall of the matter or the circumstances and no longer practises as a solicitor.
It is noted that Erin in her affidavit sworn 8 May 2018 deposes to numerous conversations in which she asserts that she was told by the deceased of the deceased's intention to leave The Entrance Road Property to Alexis (for example at [27]; [168] and [266] - the last conversation being one that it is said again demonstrates the misconception underlying the 2005 Will). It is said that this is self-evident from the terms of the last three Wills.
Alexis contends that the reason behind the differential treatment of the deceased's daughters is most likely to be for reasons of the kind set out in the emails of 23 January 2015 (see above), namely that Erin had striven to further herself and had a desire to be given the Dover Heights Property and an income for support; and because of the loyalty the deceased mother had perceived she had shown. However, Alexis says that the deceased nevertheless considered that the gift she was leaving Alexis (being the unencumbered value of The Entrance Road Property, which was $2.1 million at April 2017, shortly after the date of her death (see at [5] of Erin's affidavit sworn 21 October 2019) would enable a sizeable deposit towards a harbour side home.
In summary, the defendants submit that the deceased held the view, over about 12 years, about the appropriateness of the structure stipulated in the 2008 Will; regularly turned her mind to the issue of will-making over that period; and was not influenced by irrational views of Alexis and Frank (as to the last, it is said that the relevant period was more than sufficient to let passions subside).
It is submitted by the defendants that, on balance, the evidence does not suggest that the deceased was prepared to amend the 2008 Will so as to favour Alexis. It is noted that the deceased did not tell Alexis that this was her intention. Moreover, the defendants say that the contemporaneous emails disclose no such intention.
The defendants submit, relevantly in this context, that significance attaches to Alexis' concession that she is prepared to adhere to the deceased's wishes, as found by the Court in this proceeding (T 109.3-9).
The defendants say that the reasons why respect should be afforded to the deceased's repeated statements of testamentary intentions were summarised by Macfarlan JA (with whom McCallum JA agreed) in Steiner v Strang, from [72]); his Honour there noting that "it was never meant that the Court should re-write the will of a testator" (referring to Squire v Squire at [10] per Meagher JA). The defendants say that such restraint acknowledges the fact that the deceased was in the best position to judge the competing needs of her daughters.
In this case, it is submitted that substantial weight can be placed on this consideration because the 2008 Will was not made in haste nor born out of passion. It is said that the deceased's mind turned to its provisions more than once; and the contemporaneous documents speak with one voice to the effect that the deceased wished only The Entrance Road Property to pass to Alexis (if need be, through ownership of Wheatley Investments). It is said that where the deceased erred was not in any consideration of Alexis' claims but in failing to take into account the tax burden which would arise upon the gift taking effect.
In this context the defendants attach significance to the fact that Alexis received an early inheritance, pointing to Erin's evidence that in late 1998 the deceased offered to give Alexis part of her inheritance; and that Alexis decided to take up that invitation by receiving cash to allow her to trade shares (a gift understood to be in the order of $200,000). The defendants say that a wise and just testator was perfectly entitled to take the view that Erin should not be disadvantaged because Alexis did not for whatever reason take full advantage of her early inheritance.

[66]

(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.

The defendants (in supplementary submissions filed on 3 November 2021) raise the incidence of the costs of the proceeding, and their effect on the parties, as a factor relevant to the determination of the family provision claim (and refers in this context to what was said in Poche v Poche [2020] NSWSC 835 (Poche) at [264]-[271] per Henry J).
It is noted that Ms Money, Alexis' solicitor, has estimated her client's costs to the end of what was then understood to be a six-day hearing to be $626,963 (see Ms Money's affidavit sworn 26 October 2021 at [2]). Before the trial that was vacated in October 2019, Ms Money estimated the costs (to the end of a five-day trial) to be $389,122 (see Ms Money's affidavit sworn 29 October 2019 at [2]). The defendants note that the updating affidavits and the opinions obtained from Mr Gangemi, together with whatever else has maintained what was a fully prepared case as at October 2019, have thus generated costs in the order of $225,000. It is noted that this figure of itself far exceeds the benchmarks referred to in the authorities in this area (see, for example, Wilson v Porada (No 2) [2017] NSWSC 1362 (Wilson v Porada) at [33]-[47] in which Slattery J opined that a standard family provision proceeding may be expected to incur costs of the order of $70,000 to $80,000, or approximately $120,000 to $140,000 in a more complex proceeding involving a four day hearing).
The defendants point to the fact that, from 26 March 2019, the defendants have made open offers to settle these proceedings on the basis (inter alia) that Alexis receive (net of expenses and taxes) the proceeds of sale of The Entrance Road Property. Relevantly, it is noted that on 21 May 2019 the defendants' solicitor communicated the following open offer: (a) pursuant to paragraph 6(c) of the further amended summons, our client, as executrix of the estate and director of Wheatley Investments Pty Ltd, does all things necessary to sell The Entrance Road Property and transfer the sale proceeds, less the costs, imposts and expenses associated with the sale, to your client (and in this regard, any tax payable by Wheatley Investments Pty Ltd and the estate arising from the sale and the receipt of the sale proceeds is treated as a cost, impost and/or expense to be deducted from the sale proceeds before the balance is paid to your client). Having regard to Mr Greg Vale's reports, the tax payable by Wheatley Investments Pty Ltd is anticipated to be about $262,441; (b) the Summons, as amended, be otherwise dismissed; and (c) there be no order as to costs of the proceedings to the intent that each party bear her own costs of the proceedings.
The defendants point out that Alexis has expressly acknowledged her objective to be to secure the whole estate other than the Dover Heights Property and to force Erin to take responsibility for the loans secured against that property (although see Alexis' recognition in cross-examination to the effect that this is not what can be expected on an application such as this - see T 46.49-50, 47.1-7). It is said that, if consummated, that strategy will cause the Torrens Avenue Property and the proceeds of sale of The Entrance Road Property to pass to Alexis and require Erin to shoulder the burden of the existing loan (now $900,978) and also any costs (be they her own or pursuant to any adverse costs order) incurred after 18 October 2021.
The defendants say that the fact that all of the loans were secured against the Dover Heights Property did not give effect to any estate planning strategy on the deceased's part. It is said that, prior to 2013, each of the Torrens Avenue Property and The Entrance Road Property had served as securities for investment loans (which Erin says were presumably entered into to fund the acquisition of the properties). It is noted that those loans were refinanced and secured over the Dover Heights Property alone in September 2013, to take advantage of the lower interest rates charged for a home loan. As noted above, Alexis arranged the refinance.
The defendants complain that an aspect of Alexis' strategy in this litigation is to cause Erin to take responsibility for loans which had nothing to do with the acquisition of the Dover Heights Property. The defendants submit that the deceased should be taken to have wished that any provision for Alexis did not interfere with Erin's overall financial provision in any significant deleterious manner and that this is something to which regard should be had in assessing the quantum of provision and the impact of making such an order.
It is noted that on 14 September 2018, Hallen J ordered Alexis to indicate whether she would press for a family provision order if she was successful in her claim of rectification of the will, following which Alexis caused her solicitors to respond on 28 September 2018 that Alexis would be pursuing a family provision claim, even if she succeeds in relation to the rectification claim (as is indeed the case having regard to the submissions made at the final hearing).
The defendants point out that Alexis has made allegations of misconduct against the deceased (in that there is evidence that Alexis told Dr Young that the deceased had subjected her to emotional coercion and abuse). The defendants say that this claim was false and was made to support a claim of ongoing and serious incapacity which is not supported by a report of Alexis' long-standing treating psychologist. Further, complaint is made that Alexis has insinuated (the defendants say without foundation) that Erin has fabricated emails which appear in Erin's first affidavit and that her signature on the power of attorney on which Erin relies (and the certified copies of Erin's passport and drivers license) has been forged and apparently maintains these allegations despite adducing no expert evidence in support thereof. The defendants say that these allegations are far from petty, pointing in this regard to the observation of Hallen AsJ, as his Honour then was, in O'Leary v O'Leary and Eccles [2010] NSWSC 1347 that: 82. From the early days of the family protection jurisdiction, the court has disapproved of attempts by litigants to blacken each other's character - See, for example, Hoffmann v Hoffmann (1909) 29 NZLR 425 at 428, per Sim J. Allegations and counter-allegations about petty incidents which occurred years before the date of death, are, generally, unlikely to advance anyone's case and when it is sought to support them by affidavits, they may merely deepen rifts in the family and dishonour the memory of the deceased. …
The defendants say that Alexis and Frank are both well-qualified and, after the stress of the litigation, will not struggle to live a comfortable lifestyle. It is submitted that the community would not expect the deceased to provide an unencumbered house with luxury features to Alexis (or, as Alexis seeks, a brand-new Mercedes Benz or Tesla).
The defendants contend that Alexis had no basis to assume that she could pursue this claim safe in the belief that all costs will be paid out of the estate. It is said that much of what has been offered to Alexis on an open basis has now been consumed by litigation "which has been ruinously expensive to all concerned, which has been conducted without regard to cost and benefit and which has been undertaken at her instance in an attempt to prosecute a strategy that is not justifiable". Reference is made to the observation by Hallen J at [135]ff in Armitage v Fraser [2020] NSWSC 979: 135. The Court's discretion in making an order is not untrammelled, or to be exercised according to idiosyncratic notions of what is thought to be fair, or in such a way as to transgress, unnecessarily, upon the deceased's freedom of testation: Pontifical Society for the Propagation of the Faith v Scales at 19 (Dixon CJ); McKenzie v Topp [2004] VSC 90 at [63] (Nettle J). 136. Bryson J noted in Gorton v Parks , at 6, that it is not appropriate to endeavour to achieve "an overall fair" division of the deceased's estate. It is not part of the Court's function to achieve some kind of equity between the various claimants. 137. As Pembroke J repeated in Sung v Malaxos [2015] NSWSC 186 at [5]: "Fairness and equality are not touchstones for relief under the Succession Act." 138. The role of the Court is not "to address wounded feelings or salve the pain of disappointed expectations" that the Plaintiff might feel: Heyward v Fisher (Court of Appeal (NSW), Kirby J, 26 April 1985, unrep) at 7.
The defendants submit that this is a case where a capping order is appropriate, referring to the cases summarised in Wilson v Porada at [33]-[40], where Slattery J said at [43]: 43. The costs burden on both sides of this case is much higher than is to be expected from an ordinary family provision case. A standard family provision proceeding conducted over a two day period with a handful of witnesses on each side could incur costs of the order of $70,000 to $80,000. A more complex case going four days may incur costs of the order of $120,000 to $140,000. But even allowing for the numbers of witnesses in this case and the fact that many of them came from the far South Coast of the state, costs of the solicitors concerned are between $235,000 and $252,000 are very high and difficult to justify in circumstances where the amount in issue, including notional estate, was only ever the sum of $760,000 (being the deceased's total actual estate $391,551 and notional estate $411,000), less liabilities of $42,039.16 (see the principal judgment at [196]).
In these circumstances, it is submitted that it is appropriate that any order for provision not provide Alexis with a full indemnity for her costs, or even that the circumstances render appropriate an adverse costs order. The defendants contend that the consequences of Alexis' forensic decision to prosecute an unjustifiable strategy should be at her cost, not the estate's.
In response to the defendants' submission that the costs of the proceedings relevant to the determination of the validity of the gift in cl 4 should be paid from the proceeds of sale, even if Alexis is successful (relying on the decision of Young J, as his Honour then was, in Ledgerwood) Alexis accepts that, given the discretionary nature of costs, there could undoubtedly be some circumstances in which an order of the sought referred to in Ledgerwood could be appropriate but it is said that such an order would not be appropriate in the present case.
First, (on which Alexis places much significance) is the fact that the matter is clearly adversarial litigation. Alexis says that Erin is not an independent executor merely seeking to abide the order of the court, noting that Erin's primary position throughout the litigation, up to and including the opening submissions of the present hearing, is that the gift in cl 4 fails. Alexis submits that the consequence of that, absent any mitigating order pursuant to s 59 of the Succession Act, is that the value of her interest in the estate is consequently expanded. It is submitted that it would be a remarkable outcome if Erin could litigate to expand the value of her interest in the estate and have Alexis pay her costs on that issue even should she lose. It is submitted that such an order would not be appropriate (referring to Murdocca v Murdocca (No 2) [2002] NSWSC 505 per Campbell J, as his Honour then was, at [71]-[81]; and BE Australia WD Pty Limited v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414 at [209]-[214] per Campbell JA, with whom McColl JA agreed). It is said that both decisions held that the adversarial nature of the litigation is a significant, if not determinative, factor with respect to the exercise of the discretion to make costs orders.
As to the defendants' submissions in regard to the conduct of the litigation at large and to the effect that there should be a capping order made, Alexis says that there is significant comparability in regard to the parties' costs which are almost identical with respect to solicitors' fees and disbursements. Alexis says that the criticisms made of Alexis' conduct are misplaced.

[67]

Determination of the family provision claim

As to the family provision claim made by Alexis, I have referred above to the principles relevant to claims of the kind. It is not disputed that adequacy of provision is determined at time of application. Given the failure of the cl 4 gift, there has been no provision made for Alexis under the Will. In all the circumstances, I consider that there has not been adequate and proper provision (even taking into account the provision made for Alexis during her lifetime). The deceased clearly intended to make a gift to Alexis, under the Will, of The Entrance Road Property (unencumbered) and that gift failed. (Had the gift not failed I would have concluded that there was adequate provision even though tax liabilities would follow from that gift. As it is, I consider that it is not adequate or proper provision for Alexis to receive nothing at all out of the deceased's large estate - and I do not understand Erin to suggest otherwise.)
As to what provision is adequate, this is not a question of parity of distribution or family fairness, as such (as the authorities to which reference was made in the submissions make clear). Moreover, the deceased in her emails to Erin (and the unsent email on her computer) made clear that there was a considered basis for the testamentary provisions that were made by the deceased. Statements to others by the deceased that she wanted to make things fair must be understood in this context.
Alexis and Frank have not insubstantial assets, professional qualifications and the ability to earn income in the future. As to Alexis, I accept that she has health conditions that may well impact on her ability to earn income in the future but the extent of this is unclear. I do not consider that much weight should be placed on the fact that the deceased permitted Alexis to trade in shares with moneys from the estate. The evidence does not permit me confidently to conclude that this was an early inheritance (particularly given that the deceased did not refer to it as such in any of her successive draft wills nor in the relevant emails in January 2015 and on her computer in February 2017); though the losses would then count as a factor against Alexis' contribution to the deceased's estate during her lifetime.
Highly relevant, in my opinion, are the consistently expressed testamentary intentions of the deceased. It is very clear that the deceased was very concerned that Erin be able to return to Australia and to live in the Dover Heights Property. I am troubled that costs of such magnitude have been incurred in these proceeding, which may jeopardise the possibility that effect may be given to those testamentary intentions. It seems likely that tax issues have overtaken common sense in that regard. That said, though I have taken into account the high level of costs (and the rejection of the open offer that was made to Alexis) I consider that those issues are better dealt with in the context of the costs overall after any further submissions on that issue.
What I am left with, therefore, is the difficulty of determining what adequate and proper provision for Alexis should be in light of the deceased's wish that Erin be able to live in the Dover Heights Property, and in light of the complex tax consequences of any such order for the making of provision. Any provision for Alexis by way of a legacy would leave the tax burden (as well as the existing debt secured over the Dover Heights Property) and would, I accept, likely require the sale of the Torrens Avenue Property with a consequential tax bundle there arising.
Having regard to the factors enumerated in s 60 of the Succession Act, set out above, I have concluded that the appropriate and proper provision for Alexis is a legacy in the sum of $820,000. As I understand the tax advice, that would leave the estate with a tax burden of somewhere in the order of $600,000 (which it may be able to offset against other amounts or structure in a more tax effective way) when the proceeds of sale in respect of The Entrance Road Property are disbursed (as a dividend). Assuming the same tax treatment for the Torrens Avenue Property that would mean a further tax liability of around $410,000 when that property is sold.
Thus, the tax burden for the estate would be in the order of $1 million. Erin would bear the burden of the debt owed by Wheatley Investments to Yonan, and the debt of Wheatley Investments to the estate which may or may not be enforced. The Dover Heights Property is, and would be, burdened by the mortgage currently in the sum of $900,978 (see T 299.4-5).
Therefore, Erin will obtain a very valuable property (and ownership of the companies with the benefit of the real estate in the case of the Torrens Avenue Property) but will need to use the funds available out of the estate representing the value of the commercial investment properties to fund the legacy to Alexis and the tax liabilities arising therefrom, and meet the mortgage repayments vis-à-vis the Dover Heights Property. The legacy to Alexis thus comes at a very real cost to the estate (and hence to Erin). In those circumstances, I cannot see that any greater sum for provision would be proper, in all the circumstances.
As to costs, I will hear submissions in this regard but I am inclined to think that it is appropriate to place a significant cap on such costs, albeit that it seems to me that there is a reasonable basis on which it might be thought that Alexis should bear her own costs of seeking the tax advice (since it seems to have been for her personal interests that this was sought).

Parties

Applicant/Plaintiff:

Wheatley

Respondent/Defendant:

Lakshmanan

Legislation Cited (11)

Companies Act 1936(NSW)

Evidence Act 2005(NSW)

Wills, Probate and Administration Act 1898(NSW)

Conveyancing Act 1919(NSW)

Corporations Act 2001(Cth)

Income Tax Assessment Act 1936(Cth)

Land Tax Management Act 1956(NSW)

Local Government Act 1993(NSW)

Succession Act 2006(NSW)

Trustee Act 1925(NSW)

Water Management Act 2000(NSW)

Cases Cited (67)

O'Leary v O'Leary and Eccles [2010] NSWSC 1347 Phillips v McCabe [2016] SASC 27 Poche v Poche [2020] NSWSC 835 Pontifical Society for the Propagation of Faith v Scales (1962) 107 CLR 9; [1962] HCA 19 Rawack v Spicer [2002] NSWSC 849 Re Bowcock [1968] 2 NSWR 697 Re Cobcroft [2015] NSWSC 346 Re Country Road Services Pty Limited (2019) 18 ASTLR 44; [2019] NSWSC 779 Re Duomatic [1969] 2 Ch 365 Re Estate of Dippert [2001] NSWSC 167 Re O'Callaghan [1972] VR 248 Re William MacPherson [1913] SALR 207 Riddle v Riddle (1952) 85 CLR 202; [1952] HCA 12 Salier v Watson [2014] NSWSC 237 Scott v Scott [1912] P 241, CA Sgro v Thompson [2017] NSWCA 326 Singh v Singh (2018) 17 ASTLR 317; [2018] NSWCA 30 Squire v Squire [2019] NSWCA 90 Steiner v Strang (2019) 19 ASTLR 330; [2019] NSWCA 143 Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 Stern v Sekers; Sekers v Sekers [2010] NSWSC 59 Taylor v Farrugia [2009] NSWSC 801 Verzar v Verzar [2013] NSWCA 170 Vescio v Bannister (2010) 3 ASTLR 619; [2010] NSWSC 1274 Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 Walker v Walker (Supreme Court (NSW), Young J, 17 May 1996, unrep) Watson v Foxman (1995) 49 NSWLR 315 Wilson v Porada (No 2) [2017] NSWSC 1362 Young v Outrim [2011] NSWSC 391 Texts Cited: Bridges MJ, Hayes & Jarman's Concise Forms of Wills with Practical Notes (13th ed, 1910, Sweet and Maxwell) Category: Principal judgment Parties: Vittoria Alexis Lakshmanan Wheatley (Plaintiff) Regina Erin Lakshmanan (First Defendant) Wheatley Investments Pty Ltd (Second Defendant) Yonan Pty Ltd (Third Defendant) Representation: Counsel: C Birch SC with C Hodgson (Plaintiff) M Condon SC (Defendants)

[2017] WASCA 215

[2016] SASC 27

Cited By (2)

- Admirable 1 Pty Ltd v Leighton Contractors Pty Ltd

Wheatley v Lakshmanan