Sgro v Thompson

1. [1]

   McCOLL JA: I agree with White JA’s reasons and the orders his Honour proposes.

2. [2]

   PAYNE JA: I have read the decision of White JA in draft and agree with the orders his Honour proposes. Subject to what appears below, I agree with his Honour’s reasons for upholding the appeal. I will adopt the same description of the parties as adopted by his Honour.

3. [3]

   I agree with White JA that the primary judge erred in limiting his consideration of Carmela’s competing claim on the estate to her contributions to the deceased, both financially and in other ways, during the deceased’s declining years. Fundamentally, Carmela’s competing claim was founded upon what all members of the family understood as her claim to the Greystanes property upon her parents’ death, Rosa having earlier received the Merrylands property in a way all members of the family understood as comprising an early inheritance. The failure of the primary judge properly to identify Carmela’s competing claim gave rise to error warranting intervention by this Court.

4. [4]

   As White JA explains, whether a two-stage analysis is applicable to claims for family provision orders under Ch 3 of the Succession Act 2006 (NSW) has been the subject of significant debate in this Court, but the question should be of no real significance, provided that the nature of the first stage of the inquiry is not misunderstood.

5. [5]

   The decision in Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 makes clear the multi-faceted approach necessary to be adopted in considering the question posed by s 59 of the Succession Act. In Vigolo at [74] Gummow and Hayne JJ cited the plurality in Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40, for the proposition that:

6. [6]

   What is “proper” requires an evaluative judgment that has regard to all relevant circumstances, not merely the parties’ financial circumstances. I agree with White JA that while the Court’s assessment of what is proper maintenance, education and advancement in life must be made at a time when the Court is considering the application, that does not mean that considerable weight should not be given to the assessment of a capable testator or testatrix who has given due consideration to the claims on his or her estate.

7. [7]

   In adopting the multi-faceted approach necessary when considering the question posed by s 59 of the Succession Act, I agree with White JA that Rosa has not been given less than adequate provision for her proper maintenance and advancement in life. It follows that the orders proposed by White JA should be made.

8. [8]

   WHITE JA: This is an appeal from orders of the Equity Division (Hallen J) made on 21 December 2016. His Honour ordered that provision be made in favour of the respondent out of the estate of the late Soccorsa Misiano pursuant to s 59 of the Succession Act 2006 (NSW) (Thompson v Sgro [2016] NSWSC 1869 (“Judgment”)).

9. [9]

   The deceased died on 27 October 2014 aged 88. She was survived by her two daughters, Carmela Sgro (the defendant and executrix of the estate and appellant on the appeal) and Rosa Thompson (plaintiff and respondent to the appeal). As did the primary judge, in these reasons I will refer to the appellant as Carmelo and to the respondent as Rosa. I intend no disrespect, but do so for ease of reading.

10. [10]

    The only substantial property in the estate was the deceased’s home in Jonathan Street, Greystanes (“the Greystanes property”). The primary judge recorded (at [15]) that at the hearing the parties were agreed that it was necessary to sell the Greystanes property. The estimated value of the Greystanes property was $800,000 and the estimated costs and disbursements of sale were about $30,000. The estate then consisted of cash held of about $19,000. This represented net rents received from the letting of the Greystanes property. The deceased had also owned shares in a public company and cash held in bank accounts to the value of only $5413. This was the residuary estate. It had been spent in paying debts, funeral or testamentary expenses.

11. [11]

    Rosa’s costs of the proceedings calculated on the ordinary basis were estimated to be $42,000 inclusive of GST. Carmela’s costs estimated on the indemnity basis were estimated to be $50,000 inclusive of GST of which $2,580 had been paid from the estate.

12. [12]

    By her will of 16 August 2010 the deceased appointed Carmela as her executrix and gave her property at Greystanes to her. The residue of her estate was left to both daughters in equal shares. It was common ground that Rosa would receive nothing after payment of debts, funeral and testamentary expenses from her half share of the residue.

13. [13]

    Both daughters had a good relationship with their mother. It was accepted that both were loving and dutiful daughters.

14. [14]

    The primary judge ordered that provision be made for Rosa in a lump sum that equated to 40 per cent of the net proceeds of sale of the Greystanes property. His Honour ordered that Rosa’s costs calculated on the ordinary basis, and the balance of Carmela’s costs calculated on the indemnity basis be paid out of the estate. His Honour ordered that the costs of the proceedings be included in the calculation of the net proceeds of sale.

15. [15]

    On the basis of the estimated value of the Greystanes property his Honour estimated that Rosa would receive $268,400 by way of provision (Judgment [138]). This Court was told that the property sold for $820,000 and the effect of the primary judge’s orders was that Rosa was to receive provision of $285,000.

Rosa’s Circumstances

1. [16]

   At the time of the hearing Rosa was 52 years of age. She lived with her husband and three adult children in a house at Ropes Crossing, a suburb of Blacktown. It is a five-bedroom property that, at the time of the hearing, had an estimated value of $840,000. It was subject to a mortgage to secure loans to the Commonwealth Bank totalling approximately $527,000. The property is jointly owned by Rosa and her husband.

2. [17]

   In July 2016 Rosa commenced casual employment as a carer with Senior Helpers.

3. [18]

   In November 2015 Rosa’s husband Stephen was made redundant. He obtained casual employment in August 2016 as a forklift operator and storeman. Rosa deposed that based on her husband’s average weekly income, her average income from part-time employment, and an upcoming Newstart Allowance, her and her husband’s weekly income (including board paid by their children) totalled $1,262 and their expenses totalled $1,208. The principal expense was mortgage payments totalling $590 per week. Rosa deposed that it was only when she received weekend shift allowances that her and her husband’s income equalled or exceeded their weekly expenses. She deposed that she and her husband were in arrears in repaying their car loan and in paying council rates. The primary judge observed that their expenditure on mortgage repayments was lower than it would be in the future because the bank had allowed them to enter into a payment schedule under which they made lower repayments until the end of 2016 (at [94]).

4. [19]

   On 8 April 2016 Carmela’s solicitors advised Rosa’s solicitors that Carmela did not raise her financial circumstances as an issue in the proceeding. That is to say, she did not put forward a competing claim on the estate on the basis of her financial position.

Rosa’s Early Inheritance

1. [20]

   There was a reason for the deceased’s leaving her only substantial asset to Carmela.

2. [21]

   In 1956 the deceased and her husband, Mr Saverio Misiano had purchased a property in Lackey Street, Merrylands (or Granville) (“the Merrylands property”). This was the family home until Mr and Mrs Misiano moved to a new house in Jonathan Street, Greystanes in 1975. The Merrylands property was rented, including for a period of about two years, to cousins of the family. Rosa married her husband, Mr Stephen Thompson, on 25 August 1984. Mr and Mrs Misiano transferred the Merrylands property to Rosa unencumbered and as a gift in September 1985. In her oral evidence, Rosa described the position thus:

3. [22]

   The transfer of the Merrylands property from Mr and Mrs Misiano to Rosa is in fact dated 27 September 1985.

4. [23]

   On 19 September 1985 Mr and Mrs Misiano both made wills by which they appointed Carmela as their executrix. Each left their whole estate to their spouse if their spouse survived him or her for two months, and in the event of their spouse not doing so they left the Greystanes property to Carmela; and their personal estate to Carmela and Rosa equally.

5. [24]

   Rosa deposed that:

6. [25]

   Rosa deposed that she, her mother and her sister attended at the Mount Druitt and Area Community Legal Centre in September 2007 and met a solicitor, a Ms Belinda Soszyn, who advised that the deceased’s will should be updated. According to Rosa, the solicitor suggested that as Rosa already had the Merrylands property, the fairest way to divide the balance of the estate was for Carmela to get 75 per cent and Rosa 25 per cent. She deposed that her mother said “OK, but we’ll have to talk about it”. The solicitor prepared a draft will which, if executed, would have provided for the deceased to have left her property to her husband if he survived her by 30 days, and otherwise to have divided personal belongings and contents of the home between the two daughters equally, and to have left her estate as to a 75 per cent share to Carmela and a 25 per cent share to Rosa. Carmela deposed that there was a conversation between her and Rosa to the following effect:

7. [26]

   Carmela deposed to later conversations with her parents as follows:

8. [27]

   The note that was written out and signed by Mr and Mrs Misiano, as translated into English, stated as follows:

9. [28]

   The paper is dated 8 October 2007.

10. [29]

    The primary judge did not refer to this evidence, but Carmela was not cross-examined on it and it was not disputed by Rosa.

11. [30]

    Mr Misiano died on 6 May 2010. Carmela gave evidence that after his death her mother moved to live on a farm on which Carmela and her husband live and decided that she would have the Greystanes property cleaned out and rented. She deposed that she called Rosa to see if she could come and help move their parents’ belongings out of the house, but she refused saying words to the effect:

12. [31]

    Rosa did not dispute this evidence and Carmela was not cross-examined on it.

13. [32]

    Carmela deposed that a few months after their mother’s death she asked Rosa if she was ready to see a solicitor to have the will read and Rosa replied:

14. [33]

    Again, Rosa did not dispute this evidence and Carmela was not cross-examined on it.

15. [34]

    This is not simply a case where the deceased and her husband had made a substantial gift to Rosa in 1985. Rather, there was an understanding, shared by all family members, that that gift was an early inheritance for Rosa and that Carmela would receive the Greystanes property from the estate of the last surviving parent.

16. [35]

    During her cross-examination Rosa disputed that the document referred to at [27] above was in her parents’ handwriting. This led to the primary judge’s intervening and to Rosa’s giving the following evidence in response to his Honour’s questions:

Rosa’s Financial History

1. [36]

   Rosa and her husband sold the Merrylands property in February 1989 for $136,000. (Rosa deposed that the property was sold for $125,000, but this was erroneous.) She and her husband and young daughter moved in with Mr and Mrs Misiano in the Jonathan Street, Greystanes property. Rosa deposed that she and Stephen signed contracts for the purchase of a “house/land” package at Plumpton, but withdrew from the transaction and lost their deposit on the purchase. She deposed that they then bought a property at Doonside into which they moved prior to the birth of their second daughter on 16 July 1989. She deposed that in 1990 Stephen’s courier business started to fail and they struggled to pay their mortgage over the Doonside property. They purchased the Doonside property for $144,000. They executed a mortgage over that property on 8 May 1989 to secure a sum of $80,000. Additional mortgages were taken out between 1997 and 2007. As at April 2007 the mortgage debt was $285,000. The mortgage was discharged in June 2010 when the property was sold for $420,000 (Judgment [31]).

2. [37]

   Rosa bought an investment property in Southport in Queensland in February 1998 for $169,900 with mortgage finance of $141,000. The property was sold at a loss in 2002. It was sold for $139,900 (Judgment [32]).

3. [38]

   The Ropes Crossing property was purchased in May 2009 for $560,000 with a mortgage of $528,958 (at [33]).

4. [39]

   In cross-examination Rosa was taken through entries on bank statements for her and her husband’s joint account. She gave the following evidence:

5. [40]

   Carmela submitted before the primary judge that Rosa’s and her husband’s current financial position was to a large extent of their own making, being partly the result of poor investment choices and partly through over-extending themselves with borrowings used for living expenses. His Honour noted Carmela’s submission that she should not have to lose part of her inheritance to bail out Rosa and her husband from the consequences of their poor investment decisions (at [118]). [1] His Honour found that there was no suggestion that Rosa and her husband had acted recklessly or frivolously in choosing the investments that they made, that they had not lived a particularly luxurious lifestyle and their lifestyle choices did not disentitle Rosa to provision out of the estate (at [118], [120], and [124]). There was no error in those findings but they do not meet Carmela’s submission.

Primary Judge’s Reasoning

1. [41]

   Rosa’s claim for an order for provision out of the deceased’s estate was made pursuant to s 59(1)(a) and (c) and (2) of the Succession Act. Section 59 relevantly provides:

2. [42]

   As a daughter of the deceased she was an “eligible person” (s 57(1)(c)). Section 60(1)(b) of the Succession Act provides that the court may have regard to matters set out in subs (2) for the purpose of determining whether to make a family provision order and the nature of any such order. Subsection 60(2) provides a list of numerous matters to which the court may have regard without assigning any priority between them. They include the following:

3. [43]

   The primary judge observed (at [39]) that whether adequate provision is made for the proper maintenance, education or advancement in life of the plaintiff will always, as a practical matter, involve an evaluation of what provision was made for the plaintiff, and an evaluation of his or her needs that cannot be met from his or her own resources (citing Hunter v Hunter (1987) 8 NSWLR 573 at 575 per Kirby P). If taken in isolation, this statement might suggest that a claimant’s “needs” when compared with the provision made for the claimant out of the estate, should be the dominant consideration. However, his Honour immediately added that:

4. [44]

   His Honour further discussed the concept of “need” by reference to Victorian and South Australian decisions (de Angelis v de Angelis [2003] VSC 432; Boettcher v Driscoll (2014) 119 SASR 523; [2014] SASC 86 at [41]; and Jones (a pseudonym) v Smith (a pseudonym) [2016] VSCA 178). In relation to the latter decision his Honour said that:

5. [45]

   In Jones (a pseudonym) v Smith (a pseudonym) the Victorian Court of Appeal was concerned with the Administration and Probate Act 1958 (Vic) that gave jurisdiction to a court to make an order for provision out of a deceased’s estate where the claimant had been left without adequate provision for his or her “maintenance and support” (s 91(3) as it was at the relevant time). Ferguson JA, with whom Whelan and Kaye JJA agreed, said (at [65]) that the Victorian authorities made it clear that establishing need was essential under the Act as it stood. Her Honour noted (at [65]) that in Lloyd-Williams v Mayfield (2005) 63 NSWLR 1; [2005] NSWCA 189, Bryson JA, with whom Giles JA and Stein AJA agreed, said that it was appropriate to look beyond needs because the concept of “advancement in life” could take a consideration well beyond needs. But the Victorian provision was different.

6. [46]

   The primary judge went on to observe (at [45]) that the inquiry is not confined only to the material circumstances of the applicant, but that the whole context must be examined.

7. [47]

   In the course of his Honour’s explication of the relevant principles, his Honour observed that the jurisdiction to make an order for provision is not 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” (citing Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19 per Dixon CJ; [1962] HCA 19 and McKenzie v Topp [2004] VSC 90 at [63]).

8. [48]

   His Honour referred (at [65]) to what I said in Slack v Rogan; Palffy v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 at [127], citing Taylor J in Stott v Cook (1960) 33 ALJR 447 at 453-454, that respect should be given to the judgment of a competent testator as to what provision is adequate for a person’s proper maintenance and advancement in life if it can be seen that the testator has given due consideration to the claims on his or her estate, in recognition that the testator is better placed to make such a judgment.

9. [49]

   His Honour summarised principles applicable to a claim by an adult child (at [69]), observing that those principles were not to be elevated into rules of law or rigid formulae (at [73]-[75]). His Honour noted that a very similar statement of principles had been cited with approval in Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 at [21] and [65]-[67]).

10. [50]

    The primary judge then considered additional factual matters by reference to the factors referred to in s 60(2). In relation to s 60(2)(a) his Honour found that the relationship between Rosa and the deceased was close and endured until the deceased’s death. They kept in contact, with Rosa visiting or being visited by her mother. They also holidayed together at different places in New South Wales, including at Carmela’s Central Coast holiday home. In the latter years Rosa did some housework for the deceased and cared for her father. His Honour noted that Rosa received a carer’s benefit whilst doing so. After 2012 the deceased regularly stayed with Rosa at the Ropes Crossing property. His Honour was satisfied that the relationship between Rosa and her mother was a close and loving relationship.

11. [51]

    In relation to s 60(2)(b) the primary judge referred to some general principles, without applying them to the facts of this case. Section 60(2)(b) refers to the nature and extent of any obligations or responsibilities owed by the deceased to the applicant, or, relevantly, any beneficiary of the deceased’s estate. The primary judge noted that this factor required a balancing of potentially competing obligations as between the applicant and the beneficiary (at [82]). His Honour did not refer in this connection to the moral obligation of the deceased to leave the Greystanes property to Carmela in accordance with the well-understood family arrangement that she would receive that property in recognition of the fact that Rosa had received an early inheritance of the Merrylands property. The deceased recognised that obligation in her will.

12. [52]

    In relation to s 60(2)(d) (which refers to the financial resources and present and future financial needs of, relevantly, Rosa and Carmela), the primary judge noted Rosa’s financial circumstances as summarised above and noted that she ran a very small hairdressing business from which she earned approximately $50 per week. His Honour said:

13. [53]

    The finding that Rosa’s and her husband’s mortgage repayments would increase after the end of 2016 was initially challenged on appeal. However, that challenge was ultimately not pressed.

14. [54]

    The primary judge noted that Carmela did not raise her financial “and material” circumstances. The only evidence of Carmela’s financial circumstances was that she and her husband live on a farm of 6.25 acres from which she operated a chicken-raising business and they own a house at Copacabana on the Central Coast which was mortgaged for about $350,000. No evidence was given as to the value of the farm or the house. Carmela has two adult children, one of whom has been diagnosed with motor neurone disease and who lives with Carmela and her husband in a granny flat on the farm. Currently he is relying on his superannuation and savings to support his own family, but Carmela and her husband will support him when his assets are depleted (at [97]).

15. [55]

    The primary judge had noted at [25] of his reasons, that Carmela was entitled to elect to remain silent about her financial resources and needs, and simply look to the Court to not disregard the deceased’s freedom of testamentary disposition and her preferable disposition to Carmela as a beneficiary, regardless of her financial position or needs.

16. [56]

    After considering matters arising under s 60(2)(f), (g) and (h) to which it is not necessary specifically to refer, the primary judge addressed the provision made for Rosa by the deceased. His Honour noted that Rosa accepted that effectively she had been given the Merrylands property by her parents and she acknowledged that the gift of that property to her had been on the understanding that when both parents had died the Greystanes property would be devised to Carmela. His Honour found that this was a “clear and unwavering intention, known by both daughters of the deceased for more than 30 years” (at [102]). Rosa also acknowledged that her parents had purchased a hairdressing salon for her in about 1981 which she sold several years later for $21,000 (at [103]).

17. [57]

    In relation to s 60(2)(j) the primary judge again referred to the deceased’s testamentary intentions to leave the Greystanes property to Carmela (at [106]-[108]). His Honour rejected Rosa’s denial that the document dated 8 October 2007 (referred to at [27] above) had been written by the deceased. His Honour considered matters arising under s 60(2)(k), (l) and (m), noting that there was no-one, other than her husband, liable to support Rosa and noted that there was no relevant (disentitling) conduct.

18. [58]

    In relation to s 60(2)(n) the primary judge found that Carmela was a loving daughter to the deceased and was the deceased’s principal carer and that Carmela had a very strong competing claim on the deceased’s bounty. His Honour said that the personal care Carmela provided, particularly in the deceased’s last years before moving into a nursing home, and the assistance she provided the deceased with activities of daily living should not be underestimated (at [114]).

19. [59]

    As noted above the primary judge found that the poor investment decisions, if that was what they were, of Rosa, or other lifestyle choices did not disentitle her from obtaining provision from the estate.

20. [60]

    Under the heading “DETERMINATION” the primary judge said:

Grounds of Appeal

1. [61]

   Counsel for Carmela contended that the primary judge erred in finding (at [137]) that Rosa’s obligations could not be met from her own resources. Counsel also contended that the primary judge erred by giving no weight or manifestly inadequate weight to the provision made for Rosa by her parents during their lifetime and the deceased’s intention that Carmela should receive the Greystanes property because Rosa had received the Merrylands property as an early inheritance. Carmela submitted that the primary judge’s reasons were inadequate. She submitted that paragraphs [133] and [134] of the primary judge’s reasons (which are quoted at [60] above) contain the entirety of the reasoning process and there was no attempt to analyse the application of the principles which his Honour had set out to the particular circumstances of the case. Carmela also complained that there was no elucidation as to how the judge determined that 40 per cent of the net proceeds of sale of the Greystanes property would be the measure of adequate provision for Rosa’s proper maintenance and advancement in life. The primary judge noted that based on the estimate of the value of the distributable estate, Rosa would receive an estimated lump sum of $268,400 (at [139]). In the course of his opening submissions below, Mr Tregenza, who appeared for Rosa, was asked by the primary judge to identify how much provision Rosa was seeking. Mr Tregenza said that her claim was for $200,000. Thus the provision awarded was more than one-third greater than the provision sought. Counsel for Carmela submitted that this bespoke error.

2. [62]

   In their written submissions counsel for Carmela submitted that:

3. [63]

   In his oral submissions Mr Sexton SC, who appeared with Mr Chin for Carmela on appeal, but not at trial, focused on whether the primary judge had erred in his assessment that Rosa faced a financial need, rather than a desire for a financial advantage (citing Smith v Johnson [2015] NSWCA 297 at [83]-[85]).

4. [64]

   Mr Tregenza, who appeared for Rosa on appeal as he had below, submitted that the primary judge had taken all relevant matters into account and that the matters identified under the heading “DETERMINATION” were to be read as a continuation of his Honour’s earlier reasons in which the gift of the Merrylands property to Rosa and the family understanding that the Greystanes property would be left to Carmela had been clearly identified (particularly at [102]). I agree with that submission.

5. [65]

   Mr Tregenza submitted that in dealing with what was said to be the first or jurisdictional question of whether adequate provision had been made for the plaintiff’s proper maintenance and advancement in life, the primary judge had regard to the totality of the relationship between Rosa and the deceased; the nature, extent and character of the estate and the other demands upon it; the claims which the deceased regarded as superior to the claim of Rosa; that generous provision had been made for Rosa during the deceased’s lifetime; that Carmela did not allege a financial claim on the deceased’s bounty; that Carmela’s claim was not to be ignored; and that Carmela’s claim was to be found in her contributions to the deceased, both financially and in other ways during the deceased’s declining years. Mr Tregenza submitted that the primary judge had taken all relevant considerations into account and that his assessment that adequate provision for Rosa’s proper maintenance and advancement in life had not been made was an evaluative judgment that should not be interfered with. He also submitted that there was no error in the primary judge’s assessment of Rosa’s financial need.

Consideration

1. [66]

   The primary judge’s finding that inadequate provision had been made for Rosa’s proper maintenance and advancement in life was an evaluative decision that can only be disturbed on appeal if there were an error of principle, a material error of fact, a failure to take some material consideration into account, or the converse, or the result is so unreasonable or plainly unjust to bespeak error of such a kind (Phillips v James (2014) 85 NSWLR 619; [2014] NSWCA 4 at [54]-[55] per Beazley P; Bates v Cooke [2015] NSWCA 278 at [59]-[61] per Sackville AJA).

2. [67]

   It has been said many times that the evaluative judgment made under s 59(2) is fact specific and that the general words of the provision cannot be read down by applying constraints that are not to be found in the text of the legislation (e.g. Bates v Cooke at [67]).

3. [68]

   Carmela also submitted that the primary judge erred in applying a two-stage test in the application of s 59. In Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40 the plurality (Mason CJ, Deane and McHugh JJ), in addressing the structure of predecessor legislation (s 7 and s 9(2) of the Family Provision Act 1982 (NSW) (the “Family Provision Act”)) said that a two-stage inquiry was engaged, the first involving a jurisdictional question of whether the applicant had been left without adequate provision for his or her proper maintenance, education and advancement in life that, though it involved the making of value judgments, was a question of objective fact to be determined at the date of hearing (at 211), whereas the second stage did involve an exercise of discretion in the accepted sense (at 211). Whether the same two-stage analysis is applicable to claims for family provision orders under Ch 3 of the Succession Act has been the subject of significant debate (e.g. Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308; Poletti v Jones [2015] NSWCA 107; (2015) 324 ALR 641; Underwood v Gaudron [2015] NSWCA 269; Burke v Burke [2015] NSWCA 195).

4. [69]

   The question should be of no real significance, provided that the nature of the first stage of the inquiry is not misunderstood. In relation to the task of an appellate court, the reason the question should be of no real significance is that, as the plurality said in Singer v Berghouse (at 212), and as has been repeatedly held subsequently, even at the first stage, the principles that govern appellate review of discretionary decisions apply. The plurality approved the following comments of Kirby P in Golosky v Golosky [1993] NSWCA 111; BC9302134 at 13:

5. [70]

   If the two-stage approach is still to be adopted, the same considerations apply at both stages. The plurality said in Singer v Berghouse (at 209-210):

6. [71]

   The risk of error arises if a two-stage approach is adopted and it is assumed that the first stage requires an evaluation of whether the applicant has been left without adequate provision for his or her maintenance, education or advancement in life, thereby focusing primarily, or perhaps exclusively, on the applicant’s financial needs. An applicant’s financial needs and the financial needs of other persons with claims on a deceased’s testamentary bounty are important, and often highly important considerations, but as Basten JA said in Chan v Chan [2016] NSWCA 222 at [22]:

7. [72]

   The question is whether adequate provision was made for the proper maintenance, education or advancement in life of an applicant. I agree with Basten JA’s reasoning in Andrew v Andrew that the structural changes between the Family Provision Act and Ch 3 of the Succession Act mean that a two-stage approach is generally no longer appropriate. In Poletti v Jones [2015] NSWCA 107 Basten JA (with whom Emmett and Leeming JJA agreed) accepted that there may be circumstances in which that approach is preferable (at [19]). However, as Allsop P said in Andrew v Andrew (at [6]) this may be an analytical question of little consequence.

8. [73]

   The risk is that if a two-stage approach is adopted, the first stage may be seen as confined to assessing the adequacy of the provision made for the applicant to satisfy his or her financial needs. In Underwood v Gaudron Basten JA said (at [68]):

9. [74]

   If a two-stage approach is adopted, it is erroneous to treat the first stage as confined to an assessment as to whether adequate provision has been made for the applicant’s material needs. That is clear from Singer v Berghouse in the passage quoted at [70] above that at the first stage of the inquiry (under the Family Provision Act) the question was whether the provision was inadequate in all the circumstances for the applicant’s “proper” maintenance, education and advancement in life, and that that required regard to be had to not only the applicant’s financial position, but the size and nature of the estate, the totality of the relationship between the applicant and the deceased and the relationship between the deceased and others with claims upon his or her bounty.

10. [75]

    Did the primary judge fall into the error of treating the first stage of the inquiry as directed solely or primarily to the adequacy of the provision for Rosa’s needs? On one reading of [134] of the primary judge’s reasons (set out at [60] above) his Honour considered only Rosa’s financial position in reaching his conclusion that inadequate provision had been made for her proper maintenance and advancement in life. But the paragraph should not be read in isolation. A fair reading is that the primary judge considered that, notwithstanding the other factors to which he had earlier made reference, the dominant and determinative consideration was Rosa’s financial need. That in itself does not involve an error of principle.

11. [76]

    However, in my view the primary judge did err in principle in his assessment of the significance of Rosa’s having been given the Merrylands property in 1985 as her early inheritance. There is no doubt that the primary judge took that transaction into account as one of the material considerations. His Honour did so in considering the provision made for the applicant by the deceased during the deceased’s lifetime (at [102] referred to at [56] above) and as evidence of the deceased’s testamentary intentions (at [106]-[108] referred to at [57] above). In the section of his reasons headed “DETERMINATION” the primary judge referred to the deceased’s having made generous provision for Rosa during her lifetime by, amongst other things, giving her an unencumbered house (at [130] referred to at [60] above). His Honour then went on to say that the level of provision made during the lifetime of the deceased could not alone determine what was proper on the deceased’s death, albeit it was one of the matters to be taken into account in determining what is “proper”.

12. [77]

    But in considering Carmela’s competing claim on the estate, the primary judge said (at [133]) that:

13. [78]

    Carmela’s competing claim was not founded only on her contributions to the deceased during the deceased’s declining years. Fundamentally, it was founded upon what all members of the family recognised as her moral claim to the Greystanes property upon her parents’ death because her sister had received an early inheritance of the Merrylands property.

14. [79]

    Moreover, the deceased and her then husband specifically considered in 2007 whether the passage of time and the changes in their children’s circumstances meant that they should change their existing wills to give further provision to Rosa. They decided that would be inappropriate because “it has always been one house each and Rosa has already had hers”. The deceased confirmed that position by her will made on 16 August 2010.

15. [80]

    In McCosker v McCosker (1957) 97 CLR 566; [1957] HCA 82 Kitto J (in dissent but in a passage referred to with apparent approval by Gleeson CJ in Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11 at [24]) referred to the necessity of restraint where he could not be satisfied that he understood “… the whole situation so well that I could deal with the estate more justly than the testator dealt with it …” (at 580).

16. [81]

    In Pontifical Society for the Propagation of the Faith v Scales Dixon CJ said (at 20):

17. [82]

    In Stott v Cook Taylor J (in dissent) said (at 453-454):

18. [83]

    In his discussion of the general principles, the primary judge quoted what I said in Slack v Rogan; Palffy v Rogan at [127] that:

19. [84]

    Nowhere in his disposition of the case did the primary judge refer to this consideration.

20. [85]

    Mr Tregenza did not submit that what I said in Slack v Rogan; Palffy v Rogan was wrong. I have considered whether it imposes an unwarranted gloss on the language of the statute analogous to the error identified by the majority of this Court in Andrew v Andrew which concluded that the trial judge had erred by holding that it was “essential for the maintenance of the integrity of the process” that the Court acknowledge the entitlement of a deceased to make no provision for his or her estranged adult child (Allsop P at [46] quoting Andrew v Andrew [2011] NSWSC 115 at [149]; Basten JA at [54]; Bates v Cooke at [67] per Sackville AJA).

21. [86]

    I adhere to the view I expressed in Slack v Rogan; Palffy v Rogan. To recognise that the court is not in as good a position as a capable testator to assess what maintenance or advancement in life is proper for an applicant having regard to all of a family’s circumstances, including the relationships between the applicant and the deceased, and the merits and claims of other family members, is not to put a gloss on the statute. Rather, it is to acknowledge the superior position of the testator. The most important word in s 59(1)(c) is “proper”. Until the court has identified what is proper maintenance, education and advancement in life for an applicant, it cannot assess whether the provision made, if any, is adequate. What is proper requires an evaluative judgment that has regard to all relevant circumstances, not merely the parties’ financial circumstances. Whilst the court will know the latter, it will only have an incomplete picture of the former. Of course, the court’s assessment of what is proper maintenance, education and advancement in life must be made when the court is considering the application. That does not mean that considerable weight should not be given to the assessment of a capable testator or testatrix who has given due consideration to the claims on his or her estate.

22. [87]

    The observations of Dixon CJ in Pontifical Society for the Propagation of the Faith v Scales (at 19) also need to be borne in mind:

23. [88]

    That observation has current significance. Applications are filed in the Supreme Court’s Family Provision List at an average rate of about 80 per month. One commentator has criticised the apparent readiness of courts to vary the expressed will of the deceased by granting family provision claims (A Gray, “Family Provision Applications: A Critique” (2017) 91 ALJ 750).

24. [89]

    Rosa’s evidence (referred to at [35] above) was that her parents wanted her to be considered, that her father had said that Carmela would give her a little bit of money because she had spent so much money in repairing the house (viz. the Merrylands property), and she was just asking for a little bit of money. Rosa was appealing to the Court for money to make good what she asserted was her parents’, or at least her father’s, wish. The primary judge made no finding that such a wish had been expressed by the deceased or Rosa’s father. It was clearly not their testamentary wish.

25. [90]

    As noted above, the primary judge stated some general principles drawn from decided cases relevant to claims made by an adult child, whilst emphasising that such “principles” were not propositions of universal application or rigid formulae and were provided merely as useful guidance to be applied with circumspection (at [69] and [74]). However, the statement of these “principles” was presumably relevant to the primary judge’s ultimate assessment. Relevantly to Rosa’s claim, they included observations of Brereton J in Taylor v Farrugia [2009] NSWSC 801 (at [57] and [58]) as to the moral obligation or community expectation of a parent in respect of an adult child. Relevantly, the statement of general principle in Taylor v Farrugia included that:

26. [91]

    The primary judge also said, relevantly to the present case, (at [69]) that:

27. [92]

    None of these statements of general principle addresses a case such as the present where the adult child who claims provision from the estate has already received by way of an early inheritance what would otherwise have been his or her share of the estate. The primary judge acknowledged the limitations on the principles he expressed, but when it came to the making of his determination, his central consideration was the financial need of Rosa and the fact that Carmela did not raise her financial circumstances as a countervailing claim on the estate. This was an error of principle that requires appellate intervention.

28. [93]

    I do not consider that the challenges to the primary judge’s findings as to Rosa’s financial need have been made good. But, contrary to the view of the primary judge (at [134]) it does not follow that the provision made for Rosa was inadequate for her proper maintenance and advancement in life. Such a conclusion elevates Rosa’s financial needs over what the deceased regarded as her moral obligation to her daughters. I do not know, and there is no means of discerning, what the “community’s expectation” would be as to the deceased’s moral obligation. I see no reason to conclude that the deceased did not act as a wise and just testatrix in weighing the competing claims of both her daughters on her estate, having regard to Rosa’s early inheritance and the family’s understanding as to the consequences of that early inheritance. Mr Tregenza submitted that the gift to Rosa more than 30 years ago had much less significance than an equivalent recent gift would have had. He submitted that the significance of the gift diminished over time. Whether that is so or not would depend upon the family’s circumstances about which the deceased and her husband were in a superior position than the court to make a judgment. It may be that the Merrylands property was more valuable than the Greystanes property. Carmela deposed (without objection) that that was so, but she had no qualification to express that opinion. A wise and just testator might well consider that Carmela should not be disadvantaged because Rosa did not take financial advantage of the opportunity offered to her. That was evidently the view the deceased and her husband took in 2007 and which the deceased repeated in her will of 16 August 2010.

29. [94]

    There appears to have been no significant deterioration in Rosa’s financial circumstances after the deceased’s death, or, for that matter, after she made her will. Rosa’s financial circumstances were marked by increasing levels of debt as she embarked on unsuccessful investments or borrowed to service her lifestyle choices. Although the details of Rosa’s financial circumstances undoubtedly changed up to the time of the hearing, it was not suggested that there was a change in kind rather than of degree.

30. [95]

    The deceased’s moral obligation to Carmela is not determinative (Vigolo v Bostin at [123] per Callinan and Heydon JJ). Rosa’s competing claim based on financial need must still be evaluated. But giving the respect that I consider is due to the deceased’s consideration of the competing claims of her daughters I do not think that Rosa has been given less than adequate provision for her proper maintenance and advancement in life, even though that provision is now effectively nil.

31. [96]

    For these reasons I consider that the primary judge’s evaluative assessment is liable to be reviewed and should be set aside. In my view, Rosa’s application for a family provision order ought to have been dismissed.

32. [97]

    I propose the following orders:

    1. (1)

       Appeal allowed.

    2. (2)

       Set aside the orders (a), (b) and (c) made on 21 December 2016.

    3. (3)

       In their place, order that the summons be dismissed.

    4. (4)

       Order that the respondent pay the appellant’s costs of the appeal and the proceedings below.

    5. (5)

       Grant the respondent a certificate pursuant to the Suitors’ Fund Act 1912 (NSW) in respect of the costs of the appeal.