Stojanovski v Stojovski

HIS HONOUR: This is a claim for a family provision order, under Part 3.2 of the Succession Act 2006 (NSW) (“the Act”), out of the estate and notional estate of Petra Stojovski (“the deceased”) who died on 29 December 2013. It is made by Luba Stojanovski (“the Plaintiff”), a child of the deceased.

The Act applies in respect of the estate and notional estate of a person who died on, or after, 1 March 2009. The Act replaces the Family Provision Act 1982 (NSW) (“the former Act”), which was repealed, effective from 1 March 2009. A family provision order is an order made by the Court, under Chapter 3 of the Act, in relation to the estate of a deceased person, to provide from that estate for the maintenance, education, or advancement in life, of an eligible person. Section 63(5) of the Act provides that a family provision order may be made in relation to property that is not part of the estate of a deceased person, or that has been distributed, if it is designated as notional estate of the deceased person by an order under Part 3.3 of the Act.

The parties agreed, at the hearing, that if an order is to be made in favour of the Plaintiff, and/or if there is an order made in her favour for her costs, it can only be made out of property that is designated as notional estate. In this regard, the question is whether any part of certain real estate, registered solely in the name of the deceased until about late November 2012, should be designated as notional estate of the deceased.

The Defendant named in the proceedings is Ivan Stojovski, the only other child of the deceased, and the brother of the Plaintiff. Since late November 2012, he has been the sole registered proprietor of the real estate sought to be designated as notional estate.

The Plaintiff commenced proceedings by Summons filed on 5 May 2015. It is not in dispute that the proceedings were commenced outside the time prescribed by the Act (not later than 12 months after the date of the death of the deceased). However, the Plaintiff did not seek an order extending the time for the making of her application until she filed an amended Summons on 10 June 2015. (Nothing turns on the difference in the time of the filing the amended Summons.)

The Defendant submits that none of the orders sought by the Plaintiff should be made. Importantly, he submits, even if one assumes that inadequate provision has been made for her maintenance and advancement in life by the operation of the intestacy rules, there is no property in the actual estate and no property that may be designated as notional estate, of the deceased, out of which a family provision order, or a costs order, may be made. In relation to notional estate, in the alternative, he submits, even if the same assumption is made, and that there is such property that could be designated as notional estate, the Court should not exercise its discretion to make a designating order. It would follow that it would then be unnecessary to determine the Plaintiff’s claim for an extension of time, or what provision, if any, ought to be made for her.

Unsurprisingly, when one considers the nature of the claim and the global opposition to it, the parties were not able to resolve the proceedings. That a case between the only two children of the deceased has proceeded, with virtually all matters put in issue (with the exception of eligibility), provides yet another example of the high level of emotion that is generated in relation to the distribution of the property of a parent. I shall return to the quantum of costs that have been incurred by the parties in the conduct of the proceedings.

It is clear that the relationship of the Plaintiff and the Defendant has broken down, it seems irretrievably, and that, at least since the occurrence of the relevant events to which reference will be made, they are no longer close siblings. As was demonstrated in the way that she gave some of her evidence, the Plaintiff harbours deep feelings of resentment against the Defendant, and appears to be openly hostile to him, because of what she regards as his duplicitous conduct. No doubt, these feelings have also contributed to the matter proceeding to a final hearing.

Before proceeding further, what the case was not about should be identified. The Plaintiff, it seems, despite threatening to do so, did not seek any order setting aside the transfer of real estate by the deceased to the Defendant, because, for example, the deceased did not have capacity to enter the transaction at that time; because of the undue influence (in the equity sense) of the Defendant; or because the transaction was, otherwise, unconscionable due to a special disability of, or disadvantage to, the deceased. She did not assert that the deceased had ever made any promissory statements to her that she would receive any share of the real estate, upon which statements she relied to her detriment.

Nor did the Plaintiff allege that there was any binding agreement between her and the Defendant, upon which she could rely, to obtain an order for the payment by him of any amount to her.

That she did not seek any such relief is of some importance because it means that the only matter for determination is her claim for a family provision order and a notional estate order.

As stated, the deceased died intestate and because there is no property of the deceased in New South Wales, or elsewhere, neither party made application for Letters of Administration.

An application for a family provision order may be made in respect of the estate of a deceased person. In s 3 of the Act, "deceased person" is defined as including "any person in respect of whose estate administration has been granted". Section 55 of the Act sets out the circumstances in which "administration is granted in respect of the estate of a deceased person". Section 58(1) of the Act provides that an application for a family provision order may be made whether or not administration of the estate of the deceased has been granted.

Then, s 91(2) of the Act, relevantly, provides that the Court may, if it is satisfied that it is proper to do so, grant administration in respect of the estate of the deceased person to the applicant, for the purposes only of permitting the application concerned to be dealt with, whether or not the deceased person left property in New South Wales. If it were necessary to do so, I would be prepared to make that order.

In Wheat v Wisbey [2013] NSWSC 537 at [29] – [60], I dealt with the need for a grant of administration. I do not need to repeat the matters that I set out in that case. However, it is important to note that, relevantly, s 91(2) only permits the grant of administration to “the applicant”, who in the context of the section is the person who makes an application for a family provision order, or notional estate order, in respect of the estate of a deceased person.

(Consideration should be given by the legislature to amending the sub-section to include a grant being made to any suitable person, including a Defendant, for the same purpose.)

Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 7.8, provides that the Court may give the conduct of the whole, or any part, of any proceedings, to such person as it thinks fit. The parties agreed that the named Defendant is the appropriate party and contradictor of the Plaintiff’s claim. He is the sole registered proprietor of the property that the Plaintiff asks the Court to designate as notional estate and, in any event, without opposition, he has represented the estate of the deceased, since the commencement of the proceedings.

An order that he be appointed to conduct the proceedings and represent the deceased’s estate and notional estate for the purposes of these proceedings will be made.

I am satisfied that the following facts have been established, and that they provide a useful background. In relation to any disputed matters to which I refer, the following facts should be regarded as the findings of the Court.

The deceased died aged 79 years, having been born in July 1934.

The deceased married Cvetko Stojovski in January 1958, in Macedonia, and they remained married until his death in February 2003.

The deceased and Cvetko had only two children, who are the parties in the proceedings. The Plaintiff was born in October 1958 and the Defendant was born in July 1963.

Whilst in Macedonia, the family lived in a small village. It is said that the deceased had only very basic schooling and that she never learned to read or write in English.

Cvetko migrated to Australia in 1967. The deceased and the children followed about a year or so later. After arriving in Australia, Cvetko worked, for a time, in the NSW Railways, whilst the deceased worked in various factory jobs.

In May 1973, the Plaintiff, when she was not quite 15 years old, married her husband, Zivko (“Jim”), in Macedonia. They remain married and have 3 children: Peter, who was born in October 1974; Steven, who was born in November 1978; and Alexander, who was born in August 1973. (Only Peter played a role in an event that happened, to which reference will be made, but he was not a witness in the proceedings. He was, however, present in Court, virtually throughout the hearing. No evidence was given to explain his failure to be called as a witness.)

The Defendant married his first wife, Suzana, in 1988. They separated in 1998 and subsequently divorced. There were no surviving children of their marriage.

The Defendant met his current partner, Vilma, in 2000. They commenced to live together in 2001, and they now have 4 children, namely Jessica, born in January 2002, Stephanie, born in June 2003, Rebecca, born in November 2004, and Elizabeth, born in July 2010.

In about 1980, Cvetko and the deceased purchased, as joint tenants, a property at Lorraine Avenue, Bardwell Valley (“the Bardwell Valley property”), a suburb of southern Sydney. They lived in that property, together, initially with the Defendant, until Cvetko’s death, and then, apart from a short time when she was hospitalised, or in a nursing home, the deceased continued to live there until early 2013, when she was admitted to a nursing home.

The evidence (part of Ex. 9) reveals that a Notice of Death, together with a copy of Cvetko’s Death Certificate, was lodged under s 101 of the Real Property Act 1900 (NSW), on behalf of the deceased, in March 2003. Thereafter, until November 2012, she was the sole registered proprietor of the Bardwell Valley property.

The deceased was admitted to St George Hospital on 18 August 2012 and was discharged on 31 October 2012. Upon her admission, she was diagnosed as having suffered a left middle cerebral artery (MCA) stroke. She had been brought to the hospital with dense right hemiplegia and aphasia.

The deceased was admitted to St George Hospital, again, on 10 December 2012. She was described, then, as having suffered an acute stroke with left sided weakness.

(There is a dispute about the deceased’s medical condition, during and following, her hospitalisation, but since there is no claim brought alleging an incapacity to enter the transaction that the deceased did, not much else needs to be written about this topic.)

In November 2012, the deceased transferred the Bardwell Valley property to the Defendant. A copy of the Transfer, which is dated 22 November 2012, reveals that the Defendant provided no consideration to the deceased for the transfer of the Bardwell Valley property. A valuation obtained, at the time of the transfer, revealed that its then value, for stamp duty purposes, was $900,000.

It will be necessary to return to the events surrounding the Transfer of the Bardwell Valley property by the deceased to the Defendant as it is this transaction that has been the principal cause of the proceedings. It is this property, or its proceeds of sale, that the Plaintiff seeks to have designated as notional estate.

The Defendant also disclosed that, at the time of the deceased's death, an amount of $92,440, which had belonged to the deceased, was then held in the bank accounts of the Defendant’s four daughters. His evidence is that he expended amounts totalling $47,440 from these accounts, principally for the deceased’s funeral and associated expenses ($42,440), and that the balance ($45,000) was paid to the Plaintiff on 22 January 2015. (The Plaintiff acknowledges receipt of the cheque and says that it was only banked many months later.)

Although there was a dispute as to the conversation between the Plaintiff and the Defendant regarding the reason for the transfer of these funds and for opening accounts in the names of the Defendant’s minor children, at the hearing the proper expenditure of the funds was not in contest. Neither party suggested that any of the amounts expended should be repaid to the estate, or designated as notional estate. In particular, whatever the result of the proceedings, the Defendant did not seek to recover the amount paid to the Plaintiff out of the funds.

At the date of hearing, the parties agreed that the current market value of the Bardwell Valley property is $1,550,000. It is described in the valuation (Ex. A) as a reasonably level regular shaped block of land, with a single storey house constructed on it. The house comprises 2 to 3 bedrooms, which provides a reasonable standard of accommodation. There is a lounge room, kitchen-family room, bathroom, laundry, additional toilet, front balcony, and rear balcony. It has a single carport and converted single garage/studio storeroom, as well as a double carport.

The valuation also refers to the house as “currently being renovated with the kitchen, some electrical, painting, flooring, laundry, mezzanine bedroom yet to be completed” and it states that the valuation was conducted on an “as is” basis.

The Defendant gave evidence that he commenced these renovations in late January 2015. As at July 2015, he had spent about $50,000 on the renovations.

Subject to any submissions that may be made on costs, usually, in calculating the value of the deceased’s estate and notional estate finally available for distribution, the costs of the present proceedings should be considered, with circumspection. A Plaintiff, if successful, normally, will be entitled to an order that her, or his, costs, calculated on the ordinary basis, be paid, whilst the Defendant, as the person appointed to represent the estate and notional estate, irrespective of the outcome of the proceedings, normally, will be entitled to an order that his, or her, costs, calculated on the indemnity basis, be paid out of the estate or notional estate.

The solicitor at the firm representing the Plaintiff, Mr T L Goldberg, deposed, in an affidavit sworn on 18 May 2016, that the Plaintiff’s costs and disbursements, calculated on the indemnity basis, are $136,762 (upon the basis of a two day hearing). This estimate includes an “uplift premium”, pursuant to a conditional costs agreement between the Plaintiff and the firm. A copy of the conditional costs agreement is not in evidence and, therefore, the Court was not provided with the percentage rate of the uplift fee, although the total amount thereof is estimated to be $24,348.

Section 323(1) of the Legal Profession Act 2004 (NSW), which applies to this case (but which was repealed from 1 July 2015, and was replaced by the Legal Profession Uniform Law 2014 (NSW)), provides that:

Section 323(2) provides that a conditional costs agreement may relate to any matter, except a matter that involves criminal proceedings or proceedings under the Family Law Act 1975 (Cth).

Section 324 of the Legal Profession Act 2004, permits a conditional costs agreement that contains provision for an "uplift fee”. An “uplift fee” is defined, in s 302, as “additional legal costs, excluding disbursements, payable under a costs agreement on the successful outcome of the matter to which the agreement relates”.

Mr Goldberg also disclosed that the Plaintiff’s costs and disbursements calculated on the ordinary basis, inclusive of GST, were estimated to be $95,733. It was agreed that if the amount of the “uplift fee” is not included as part of the Plaintiff’s ordinary costs, the estimate of her costs and disbursements, calculated on the ordinary basis, would be $71,385.

Neither party made any submissions, in writing, as to the entitlement of a Plaintiff to an additional amount for costs for the uplift fee, or the reasons why any such amount should be passed on to a Defendant by an order for costs calculated on the ordinary basis.

During oral submissions, however, it seems to have been accepted that the “uplift fee” was not part of the ordinary costs of the Plaintiff: Professor G E Dal Pont in Law of Costs, (3rd ed 2013, LexisNexis) at [17.55]; T180.45 – T181.31.

The Defendant’s solicitor, Ms D C Chambers, in an affidavit sworn on 25 May 2016, estimated the Defendant’s costs and disbursements of the present proceedings, including counsel’s fees, calculated on the indemnity basis (upon the basis of a two day hearing), to be about $84,678. Of those costs, the Defendant has paid $44,418 from his own resources, with the amount of $40,260 left to be paid. However, in calculating the amount available as the value of property to be designated as notional estate, the whole of the Defendant’s costs, calculated on the ordinary basis, should be deducted.

There was no suggestion that an Offer of Compromise, or Calderbank offer, may be relevant to the determination of how costs should be borne. It was accepted by the Defendant, without demur, that if the Plaintiff were successful, she should receive her costs, calculated on the ordinary basis (and without the uplift fee), out of the estate. It was not accepted, however, by the Plaintiff, that if she were unsuccessful, that she should pay the Defendant’s costs. Rather, counsel for the Plaintiff submitted that in those circumstances, there should be no order that the Plaintiff pay the Defendant's costs: T181.33 – T181.36.

I shall deal with the question of costs later in these reasons.

I shall use the estimates agreed upon to provide a guide to whether an order should be made, and the quantum of the family provision order, if any, to be made in favour of the Plaintiff.

It follows that if all of the estimates prove accurate, and if all of the costs (other than the uplift fee) are ordered to be paid out of the notional estate, the estimated amount (subject to s 89(2) of the Act, to which I shall refer) that will be available to be designated as notional estate, will be $1,393,937.

The parties were also able to agree, at the hearing, that the Defendant should be allowed a period of 3 months to satisfy any order for provision, and for costs made in favour of the Plaintiff, before an order is made for the sale of the Bardwell Valley property. The Defendant was satisfied with that amount of time being given to him to raise the necessary funds.

Finally, the parties agreed that there are no other eligible persons in respect of whom an application for a family provision order may be made.

In September 1975, the Plaintiff’s husband, Jim, and Cvetko purchased a property, also at Lorraine Avenue, Bardwell Valley, (“the Lorraine Avenue property”) for $37,000. A mortgage, securing a debt of $15,000, was registered on the title to the property.

In July 1979, the Plaintiff and Jim purchased Cevtko’s interest in the Lorraine Avenue property for $27,500. A mortgage securing a debt of $19,000 was registered on the title to the property. At least some of the money borrowed was used by the Plaintiff and Jim to renovate the Lorraine Avenue property.

It is the Lorraine Avenue property in which the Plaintiff and her family have lived since that time, and in which the Plaintiff and Jim now live alone. It is described as a single storey 3 bedroom house, which provides a good standard of accommodation. A detached 3 bedroom granny flat is located at the rear of the property: Ex.C. Rental from the granny flat provides an income to them.

The Bardwell Valley property was renovated in about 1988. During the renovations, which took about 12 months to complete, the deceased and Cvetko lived with the Plaintiff and Jim in the Lorraine Avenue property.

In 1998, the Plaintiff, her husband and two of their sons, Peter and Steven, purchased a property, as joint tenants, in Gipps Street, Bardwell Valley (“the Gipps Street property”) for $295,000. A mortgage, securing a debt of $311,000, was registered on the title to the property.

By Transfer dated 9 April 2013, the Plaintiff and Jim transferred their interest in the Gipps Street property to Peter and Steven for $400,000. (It was said to have a value of $800,000.) They took a mortgage for the whole of the sale price. I shall return to the Plaintiff’s evidence about this transaction later in these reasons.

The Gipps Street property is described as having two 3 bedroom homes built on the land. Peter and Steven each live in one of the homes.

On a date not disclosed in the evidence, shortly after his separation from Suzana, the Defendant purchased a property at Victory Street Belmore (“the Belmore property”). It is described as having a single storey, 3 bedroom house which provides a reasonable standard of accommodation. It is the home in which the Defendant, his wife, and their 4 children currently live, although when the renovations to the Bardwell Valley property are completed, they hope to move there and rent the Belmore property.

The Defendant returned to live in the Bardwell Valley property for about 4 years commencing in the late 1990s. However, it is clear from the evidence that he has not returned to live there since then.

I have referred to the Plaintiff’s open hostility to the Defendant and her belief that he acted duplicitously in relation to the transfer of the Bardwell Valley property. Indeed, she described the Defendant and Vilma as having “planned this all along” (T108.09 – T108.23). The Plaintiff also made the blanket statement: “My brother hasn’t told the truth … in this matter from the day it started” (T91.49 – T91.50).

There is a similar allegation expressed in correspondence addressed to the Defendant, from a solicitor, on behalf of the Plaintiff, in February 2015, to which reference shall be made. Even fraud is alleged in that correspondence. Finally, the Plaintiff admitted that she was “upset” with the Defendant: T101.20.

I regret to say that these views have coloured the Plaintiff’s evidence. The allegations were unsubstantiated.

The Plaintiff did not accept any suggestion that the deceased had ever said that she wished to give the Bardwell Valley property to the Defendant. The following exchange in the evidence is instructive:

(When the Defendant was cross-examined about this conversation, it was not suggested that it had not occurred, but rather counsel attempted to elicit the answer that the deceased was determined to ensure that the Bardwell Valley property was to go to the Defendant: T129.27 – T129.47.)

The conversation between Jim and the deceased referred to above appeared in the Defendant’s affidavit sworn 20 July 2015. The conversation was denied by the Plaintiff in her affidavit in reply, but Jim gave no evidence denying the conversation.

In addition, there were some other aspects of her evidence that also cause me some concern.

The Plaintiff, initially, suggested that her husband had contributed, equally with Cvetko, to the purchase price and to the mortgage repayments of the Lorraine Avenue property, although, ultimately, she accepted that she did not really know whether this was so.

Jim’s failure to give evidence in the proceedings because “he did not want to get involved in this… matter between me and my brother” (T98.23 – T98.25) does not assist her in this regard. I note that the Plaintiff gave evidence that upon their return from Macedonia, in December 1973, she and Jim were employed as factory workers. The Lorraine Avenue property was purchased in September 1975.

The Plaintiff was not prepared to concede that Cvetko had assisted her and Jim at the time the Lorraine Avenue property was purchased, or when they purchased his interest in that property.

At the time of the initial purchase, the Plaintiff’s husband was about 22 years old and the Plaintiff was about 17 years old. I think it highly unlikely that they would have been able to contribute $11,000 towards the purchase price (being one half of the purchase price that had not been borrowed).

Similarly, I do not accept that a few years later, they would have had the financial ability to pay Cevtko for his interest, even though $19,000 was borrowed at or about the time. In this regard, it is to be remembered that soon after the purchase, renovations were done to that property.

In her first affidavit, the Plaintiff did not disclose that she and Jim had been receiving rent of $400 per week from the granny flat, built on the Lorraine Avenue property. The omission was corrected in her second affidavit of 25 August 2015.

In the Plaintiff’s first affidavit, she had stated that she had not sold any real estate, or made any gifts of amounts of $1,000 or more, in the previous 3 years. I have earlier set out that the Plaintiff and Jim transferred their interest in the Gipps Street property to their sons, Peter and Steven, for $400,000, and that they took a mortgage for the whole of that amount.

In cross-examination she gave the following evidence (at T19.43 – T20.09):

And then (at T21.10 – T21.22):

She acknowledged that she had not disclosed this transaction in the affidavit and when asked about it, she said “I didn’t know I had to”: T25.00 – T25.01.

The Plaintiff said that even though two of her sons had lived in a home constructed on the Gipps Street property, neither had paid any rent to her or her husband during the period of their joint ownership.

Later in the cross-examination, she gave the following evidence about this transaction (at T26.47 – T27.06):

The Plaintiff was cross-examined about a transfer of funds ($63,713) out of a term deposit held in her name. She gave evidence that it was all Peter's money, and that it was held in her name “because he, he didn't work at the time”: T23.16 – T23.22. She conceded that there were no documents in existence that verified her evidence that the money in the term deposit in her name belonged to your son. (As stated earlier, Peter, although present throughout virtually all of the hearing, did not give evidence.)

Although it was not relevant to the paragraph in her first affidavit relating to gifts in the past three years, the Plaintiff accepted that in March 2011, she had given amounts, totalling $85,000, to her son, Alexander, from her own funds: T36.29 – T36.35.

The value of so-called “present and future needs” disclosed by the Plaintiff in her first affidavit exceeded $1.1 million, of which $520,000 was the estimate of the costs of renovation work to, and the addition of a garage on, the Lorraine Avenue property (which was slightly reduced in her latest affidavit). Further, almost $200,000 was for a recreational vehicle and for a car; $50,000 was estimated to be the costs of a wedding for her son, Steven (when he was not then, or at the date of hearing, engaged), almost $100,000 was the estimated costs of private health insurance; and $200,000 was described as a “contingency fund”.

It does a Plaintiff no credit to set out as “needs” what can only be accurately described as extravagant “wants”, the value of which, even on the best case being advanced, almost exceeds the value of the actual and/or notional estate of the deceased.

When asked about some of the “needs”, she gave this evidence (at T85.14 – T85.19):

There was criticism of expenditure by the Plaintiff and Jim on poker machines (Ex. 11). I do not find the criticism warranted. It does not appear to me to be extravagant.

On the other hand, I found the Defendant to be a careful witness, who seemed to be prepared, without prevarication, and in only a few words, to make concessions, for example, about the Plaintiff (T130.33-50):

Indeed, even before the Defendant gave evidence, his counsel conceded that there was no dispute that the Plaintiff had been a loving and dutiful daughter to the deceased and that there was no criticism being made of her conduct towards the deceased.

The Defendant was cross-examined about the reasons for not having the deceased see another independent lawyer after she was discharged from hospital. He explained that there was no real point in doing so because the deceased had “no trust in lawyers”: T134.

Since there has been no challenge to the validity of the transfer of the Bardwell Valley property and the issue of the deceased’s capacity does not arise in these proceedings (although the suggestion was made in the correspondence to which I have referred that there would be such a challenge), there really is no reason not to accept the Defendant’s evidence on this topic. Had there been a reasonable, or proper, basis to make that claim, the Plaintiff, more likely than not, would have made the claim.

The Defendant denied that he made any suggestion to the Plaintiff regarding a share of the proceeds of sale of the Bardwell Valley property, or otherwise promised to give her a share of its value. The following exchange took place at T149 – T150:

The effect of this evidence is that it provides some rational explanation for the Plaintiff abiding what, I accept, she was told, by the deceased, about was to be done by the deceased. She appears to have accepted that the deceased wished to benefit the Defendant, rather than her, by giving him the Bardwell Valley property. It was not until some months after the deceased’s death that a complaint was made by the Plaintiff to the Defendant concerning the transfer.

I accept the Defendant’s denial of the Plaintiff’s version of events, according to which she did not complain because he “had promised to give her half of the proceeds”. Once again, had the allegation had a reasonable and proper basis, I think it is more likely than not that a claim for relief, based upon that promise, would have been made by the Plaintiff.

In many respects, the Defendant’s evidence is corroborated by Vilma. I found her to be a witness who was frank and careful not to embellish. I accept that she gave reliable evidence. For example, she admitted, without prevarication, that when the deceased was discharged from St George Hospital in October 2012, she was unable to assist in looking after the deceased because of her own family commitments.

By way of further example, I refer to the following passage of evidence in cross-examination (at T153.29 – T154.19):

I have difficulty accepting some of the Plaintiff’s evidence where it conflicts with the evidence of the Defendant and the evidence of Vilma. Indeed, I consider that she is convinced, mistakenly, of the accuracy of some of her recollections. Even though the Defendant and Vilma both have a financial stake in the result of the proceedings, taking into account the evidence overall, and my observations of him, and her, respectively, in the witness box, I am satisfied that each was a reliable witness whose evidence was coherent and consistent.

A significant part of the evidence related to the events surrounding the transfer of the Bardwell Valley property, which evidence, of course, was the subject of some dispute. On this topic, both of the parties gave evidence, as did Ms Gordana Bozinovska, a solicitor the parties consulted, together, on 5 October 2012, and who attended upon the deceased, whilst she was a patient at St George Hospital, on 6 October 2012.

I shall deal with Ms Bozinovska’s evidence first.

Ms Bozinovska is admitted to practice as a solicitor in New South Wales. She has practiced for about 10 years. She is also qualified to practice as a lawyer in Macedonia. She speaks Macedonian fluently.

Ms Bozinovska swore an affidavit on 6 May 2016 that was read in the Plaintiff’s case. She was cross-examined. She stated that she had a recollection of the events that had occurred, but that she had read the documents in the file which she had produced (a copy of the contents of which formed Ex. 9) in order to prepare her affidavit. She acknowledged that the whole file had been produced and that it contained “the totality of any notes of [her] attendances in October 2012”: T42.42 – T42.44.

It is clear that a number of significant matters, in respect of which she gave evidence, did not appear in her notes to which she referred. (She stated that she had not written down the conversations but “[j]ust my advice and information which I got”: T44.05 – T44.07.)

It was suggested that Ms Bozinovska’s recollection of events had diminished with time, and, in part, I think that this is so. However, I am satisfied that she endeavoured to provide her best recollection of the events that had occurred.

The parties consulted Ms Bozinovska on 5 October 2012. She appears to have been selected because she spoke the Macedonian language fluently, and it was thought that she would be able to communicate with the deceased. Also, she was prepared to attend the St George Hospital at which the deceased was then a patient.

Ms Bozinovska gave evidence that she saw the parties together, for about 40 minutes, on 5 October 2012, for the purpose of providing advice to them because she was informed that the deceased wished to do something about the Bardwell Valley property.

Ms Bozinovska advised the parties that there were two alternatives, one by the inter vivos transfer of the Bardwell Valley property, in which case, each of the transferor and the transferee would require separate independent advice and representation; the transferor would require an independent interpreter; and there would be stamp duty payable on the transfer, the calculation of which would require an independent valuation, which would take two weeks to obtain. She also advised them that the other alternative was to transfer the Bardwell Valley property by devise in a Will to be made by the deceased, in which case there would be no stamp duty payable. She also stated that whichever procedure was adopted, the deceased would need to be assessed to confirm that she had capacity. She told them of the sorts of questions that the deceased would be asked to test her capacity. (There is a reference to these things in the file note which forms part of Ex. 9.)

Immediately after the conference with the parties, Ms Bozinovska obtained a land titles search of the Bardwell Valley property and a copy of the Notice of Death that had been filed following the death of Cvetko. A copy of each of these documents also formed part of the documents in Ex. 9.

Included as part of Ex. 9, was a copy of an unsigned Transfer from the deceased to the Defendant relating to the Bardwell Valley property which showed a consideration of $10. Ms Bozinovska gave evidence that she had been instructed to prepare the Transfer by him, in the presence of the Plaintiff, and that she had been instructed to take the Transfer to the Hospital.

At T62, the following passage appears:

None of these matters appear in the file note which forms part of Ex. 9. Nor had she referred, in her affidavit, to any specific instructions, given by the Defendant, to prepare that Transfer, although there is a passing reference to the deceased’s property being transferred to the Defendant.

In her affidavit, Ms Bozinovska stated that, during the conference, the Defendant had said that he and the Plaintiff had agreed that he was to give the Plaintiff “around $100,000 - $150,000 as her share because I will look after Mum and because of some other things, family things, she doesn’t need to appear on the Will, she cannot appear on the Will but I will give to her her share.”

Again, there is no reference to anything said by the Defendant along the lines stated in Ms Bozinovska’s affidavit, in the file note forming part of Ex. 9. Nor is there any reference to the amounts referred to.

The Plaintiff did not advert to any such conversation, in those terms, in her first affidavit. However, she stated, in an affidavit sworn 5 November 2015, in reply, that the Defendant had said, at a later time (after he had arranged for the valuation of the Bardwell Valley property in November 2012), that she would “get $450,000 when the house is sold”.

In her affidavit sworn on 9 June 2016, in response to the Defendant’s affidavit of 8 June 2016, the Plaintiff stated that she had read Ms Bozinovska’s affidavit but “do not recall my brother saying he would give me $100,000, however my brother did inform Ms Bozinovska words to the effect of ‘I will give her her share’”.

The Defendant had denied that any of these conversations occurred.

Ms Bozinovska also gave evidence that the Defendant had referred to the amount that the deceased had in the bank (about $100,000).

Ms Bozinovska attended upon the deceased, at St George Hospital on 6 October 2012. Initially present were the parties, but they left as Ms Bozinovska wished to interview the deceased alone.

She stated in her affidavit the questions that she asked the deceased and referred to the lack of response to the questions (none of which appears in her file note). She stated that the deceased “appeared… unable to speak or to indicate in any way that she understood my questions. I concluded that [she] had no capacity to give me instructions and she had no capacity to understand any legal document which I was asked to prepare for her”.

However, in cross-examination, Ms Bozinovska stated that the deceased had “responded a little bit” by “moving her head”.

Ms Bozinovska stated that following her attendance upon the deceased, she and the parties had a coffee together, and that she had told them of her conclusions. None of this evidence appeared in her file note.

Ms Bozinovska did not accept that the deceased’s lack of response may have been due to a “conscious lack of a desire to deal with a solicitor”: T54.40 – T54.43. However, she did not deny the Defendant’s evidence that she had said to him and the Plaintiff, following her meeting with the deceased, the deceased was “not listening to me, she looks like she is ignoring me. In any event, since she is still in the Hospital she will need to be assessed… There is nothing I can do here. I am going to send you my account”: T58.24 – T58.35.

The Plaintiff says that she remembered Ms Bozinovska saying that the deceased “is not capable of making legal decisions”. Although the Plaintiff had described the deceased as not responding to her when she visited, she did not deny, in her affidavit in reply, the Defendant’s version of their conversation with Ms Bozinovska following the meeting with the deceased.

A Tax Invoice, dated 8 October 2012, from Ms Bozinovska (Ex. E), relevantly refers to “Taking Instructions 05/10/2012” and “On hospital visit 06/10/2012”.

There was no evidence given by Ms Bozinovska, and no information appears in her file note, about the former Act and what, if any rights thereunder, would be available to the Plaintiff if, in fact, the Bardwell Valley property was transferred to the Defendant during the deceased’s lifetime, or devised to him in a Will.

As importantly, counsel for the Plaintiff did not seek leave to ask any questions about that topic. Nor did he seek leave to ask Ms Bozinovska any questions about any discussions regarding the reasons, if any, suggested for the deceased wishing to transfer the Bardwell Valley property to the Defendant, or any intentions that the deceased might have had in that regard.

Ms Bozinovska also gave evidence that she received a letter dated 5 February 2015, from Mr G Cerin, solicitor, who then acted for the Plaintiff. The letter, a copy of which was Ex. 10, was, relevantly, in the following terms:

It is to be noted that no suggestion is made in this letter of anything said by the Defendant, in the presence of Ms Bozinovska, regarding the Defendant giving the Plaintiff “about $100,000- $150,000”, “a share”, “$450,000”, or anything else to suggest that the Defendant had made any promise to do so. The whole tenor of the letter appears to relate to the capacity of the deceased to transfer the Bardwell Valley property to the Defendant.

Ms Bozinovska thought that she had prepared a statement, in letter form, in response, on her computer, but no copy of the statement had been included in the file produced by her. She did not state whether she had checked her computer to ascertain whether she had, in fact, done so, and whether any such statement still existed.

Both of the parties gave evidence of the circumstances surrounding the signing of the Transfer of the Bardwell Valley property.

The Plaintiff gave evidence, in her first affidavit, about the circumstances surrounding the transfer of the Bardwell Valley property. She stated that the Defendant had said, in October 2012, that it would be transferred to him alone because “[i]t’s too complicated if there is more than one signature…it is easier to have it one name”. In a later affidavit, she added, when repeating this conversation, that he had said, “[w]hen I sell the house, I will give you half”.

She also gave evidence in the affidavit in reply that there had been a conversation following the transfer, in which the Defendant had repeated that the transfer had occurred in order to “make sure the nursing home doesn’t take the house”.

In her affidavit in reply, she “disagreed” that the deceased had said “Luba took her share when we gave her …Lorraine Ave” or that she had heard the deceased say “I have always helped with your children”. She also added that, following the valuation of the Bardwell Valley property, the Defendant had said:

The Plaintiff did not refer to the fact that she was present on 22 November 2012, when the deceased signed the Transfer of the Bardwell Valley property in favour of the Defendant. However, in her affidavit in reply to the Defendant’s affidavit, she wrote that the Defendant had the Transfer, that he placed it in front of the deceased and said, “Mum, please sign here”. She acknowledged that her uncle witnessed the deceased’s signature on the Transfer and that the Defendant then signed it.

Annexed to the Plaintiff’s first affidavit is a copy of a letter dated 2 February 2015, from Mr Cerin to the Defendant. It is in similar terms to the letter sent a few days later to Ms Bozinovska (Ex. 10). Relevantly, after referring to s 129 of the Act (which is part of Chapter 4 dealing with the entitlement to the whole of an intestate estate), the letter asserts that “what took place appears to have been a deliberate and well thought-out strategy on your part to take the whole of the estate for yourself and deny [the Plaintiff] her rightful share...”.

(I note, in passing, that there is no allegation that it was the deceased’s intention to deny the Plaintiff any share of her estate.)

The letter went on:

It is to be noted that there is no suggestion made in this letter of anything said by the Defendant regarding giving the Plaintiff “about $100,000- $150,000” (as stated by Ms Bozinovska). However, there is the reference to her receiving “her half share from the sale, or that the property would be transferred into the names of the “children” i.e. your children and my client’s children (although taking into account the ages of your children that proposal may not have been achievable).”

Otherwise, the whole tenor of the letter appears to relate to the capacity of the deceased to transfer the Bardwell Valley property to the Defendant and the Defendant’s entitlement on intestacy if the transfer of the Bardwell Valley property was set aside.

The Defendant gave detailed evidence about conversations that had occurred involving the deceased. In his first affidavit, he wrote:

Vilma also gave evidence about what occurred. She wrote:

In an affidavit sworn on 9 June 2016, the Plaintiff annexed a copy of the registered Transfer between the deceased and Ivan in relation to the Bardwell Valley property. She wrote:

The Plaintiff gave no evidence, in her first affidavit, when setting out the circumstances of the signing of the Transfer, that she had witnessed the Defendant’s signature.

It is to be noted, also, that even though there is a reference to the Transfer, in the letters from Mr Cerin, sent in February 2015, it is not suggested that the Transfer was different from the one that had been signed by the deceased.

Indeed, in the Plaintiff’s affidavit, having exhibited a copy of the Transfer to her affidavit, she identified the deceased’s signature as having been witnessed by her uncle, Nick. She wrote nothing else about the Transfer.

In relation to this evidence, I prefer the evidence of the Defendant and of Vilma, to that of the Plaintiff.

In her first affidavit, the Plaintiff set out her explanation for the delay in filing her Summons on 5 May 2015. She says that despite enquiries being made by her of the Defendant regarding the Bardwell Valley property, he would say that it could not be sold and provide spurious reasons for not being able to do so.

She also gave evidence of a discussion that occurred in October 2014 in which she, her son, Peter, and the Defendant were involved:

However, in cross-examination, a slightly different version of the events was accepted by the Plaintiff as having occurred (with editorial amendments) at T 119 - T121:

And at T124 –T125:

The Plaintiff gave evidence that she saw a solicitor friend, who worked at Slater and Gordon Lawyers, Ashfield on 10 January 2015 and that she contacted Mr Cerin on 12 January 2015 and made an appointment to see him that day. She said that he “never said I should or could bring a claim for Family Provision. He also did not tell me that there was a time limit to do so. Mr Cerin never mentioned the words ‘notional estate’ to me.”

The Plaintiff saw her current solicitors on 5 May 2015 and the Summons was filed on that date.

No explanation was given by the Plaintiff, or by any legal representative who had been retained to act for her, relating to the Plaintiff’s failure to litigate the matters asserted by Mr Cerin concerning the alleged incapacity of the deceased at the time of the transfer of the Bardwell Valley property or otherwise, in his letters to which reference has been made.

I have taken the following from the Defendant’s outline of submissions, which counsel for the Plaintiff accepted accurately stated the Plaintiff’s and Jim’s financial position:

Neither the Plaintiff, nor Jim, currently works. Their three children are all adults, although it would seem that they still provide for each of those children.

The Defendant works as an architectural draftsman. He has only been able to work two to three days a week. Vilma is aged 47. In 2011, she was injured in a motor vehicle accident and suffered dysfunction of the neck and upper right limb. She is not employed and is dependent on the Defendant.

They have four minor children, all of whom are also financially dependent upon the Defendant.

The Defendant’s and Vilma’s financial position was disclosed in Ex. F (amended to ensure privacy and excluding any reference to cents):

Their monthly expenditure is disclosed as being $9,562.

Taking into account the ownership of the Bardwell Valley property, it does seem that the Defendant’s and Vilma’s financial circumstances are better than the Plaintiff’s and Jim’s. However it is to be remembered that the Defendant and Vilma have 4 minor children to support.

Next, I shall discuss the statutory scheme that is relevant to the facts of the present case. I have collected the principles that are generally applicable in many other cases. For reasons to which I shall come, which relate to the inability to designate any property as notional estate, I shall not set out all of the principles again.

Usually, in cases such as the present, the Court must determine (not necessarily in the order set out below) whether:

These matters are not entirely distinct, but are related and overlap. For example, the strength of the substantive claim for provision is relevant to the exercise of discretion to make an order extending the time for the making of the application.

The key provision is s 59 of the Act. The Court must be satisfied, first, that the applicant is an eligible person within the meaning of s 57(1) (s 59(1)(a)). It is only an “eligible person” who may apply to the Court for a family provision order. Relevantly, in this case, the Plaintiff relies upon the category of eligibility referred to in s 57(1)(c) of the Act. There is no dispute that she is a child of the deceased.

The language of the relevant sub-section is expressive of the person’s status, as well as her or his relationship to the deceased. There is no age limit placed on an eligible person making an application.

Section 58(2) of the Act provides that an application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown. If sufficient cause is shown, then the Court, having regard to all the circumstances of the case, may extend the time for making an application.

In Moore v Randall [2012] NSWSC 184 at [39], White J said that the expression “sufficient cause” means “sufficient explanation or sufficient justification or excuse for the application not having been made within the prescribed period.”

In Verzar v Verzar [2014] NSWCA 45 at [24], in the Court of Appeal, Meagher JA wrote that “[t]he sufficient cause or reason to which s 58(2) is directed is that for allowing an application to be made out of time”.

Clearly, permitting the Court to “otherwise order” was included in the Act to avoid the section becoming an instrument of injustice. Yet, “[t]he time constraint imposed by s 58(2) on the making of a family provision application is not a mere formality”: Verzar v Verzar [2012] NSWSC 1380 at [98] (Lindsay J). (The equivalent section in similar UK legislation has been described as “a substantive provision laid down in the Act itself, and is not a mere procedural time limit imposed by rules of court which will be treated with the indulgence appropriate to procedural rules”: Re Salmon, Deceased [1981] Ch 167 at 175.)

In Madden-Smith v Madden (Estate of the late Doris Linda Madden) [2012] NSWSC 146 at [23]-[24], Pembroke J put it more strongly:

In Thomas v Pickering; Byrne v Pickering [2011] NSWSC 572 at [84]-[90], I set out the applicable legal principles relating to an application to extend the time, as follows:

To refuse to make an order extending the time for the making of an application that is devoid of merit, or otherwise cannot succeed, would not visit an injustice on the applicant. As Keane JA wrote in Hills v Chalk [2008] QCA 159; [2009] 1 Qd R 409, at [31]:

Also see, Andre v Perpetual Trustees WA Ltd (as Executor of the Will of Barbara Helen Owen Stewart) [2009] WASCA 14 at [42].

Meagher JA noted in Verzar v Verzar [2014] at [33]-[35]:

As well as taking into account the reasonableness of the conduct of the applicant, it will also be necessary to have regard to the history of the proceedings, the conduct of the other parties, the nature of the litigation, and the consequences for the parties of the grant, or refusal, of the application for extension of time, “the size and nature of the estate, the position of the individual applicants, the rightful expectations of those already interested under the will, and, to some extent at least, the importance that there be some finality and certainty in the administration of a deceased person’s estate”: Harrison v Harrison [2011] VSC 459 at [292].

As I said in Butler v Morris; Butler (bht NSW Trustee & Guardian) v Morris [2012] NSWSC 748 at [117]:

It is only if eligibility is satisfied, and if sufficient cause for an order extending the time for the making of the Plaintiff’s application is shown, that the Court must determine whether adequate provision for the proper maintenance, education or advancement in life of the applicant has not been made, relevantly, by the operation of the intestacy rules (there being no Will (s 59(1)(c)). It is this mandatory legislative imperative that drives the ultimate result, and it is only if the Court is satisfied of the inadequacy of provision that consideration is given to whether to make a family provision order (s 59(2)). Only then may “the Court… make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made”.

The parties were largely agreed as to the principles to be applied on this topic so it is not necessary to re-state them. I have dealt with them in many cases, the most recent of which is Hinderry v Hinderry [2016] NSWSC 780 at [207] – [275].

In this case, the operation of the rules of intestacy would apply, but since there is no property of the deceased at the date of her death, those rules also become irrelevant. Had there been property of the deceased, there is no dispute that, pursuant to s 127 of the Act, since the deceased left no spouse but had issue, her only two children, the parties to these proceedings, would be entitled to share equally the whole of the intestate estate.

In the circumstances of this case, the Plaintiff will receive nothing unless an order under the Act is made.

Adequacy of provision is not to be decided in a vacuum, or by simply looking at whether the Plaintiff has enough upon which to live. It will depend upon all of the relevant circumstances of the case including age, capacities, means and competing claims of other potential beneficiaries. In this regard, I also remember the close relationship of the Plaintiff and the deceased and the contribution made to the welfare of the deceased by her.

Considering all of the circumstances, I am prepared to conclude that the Plaintiff has established that, at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life has not been made for her by the operation of the intestacy rules.

Although it was submitted by counsel for the Defendant that no order for provision ought to be made, it was submitted, in the alternative, that her claim would be categorised as one for the contingencies of life. I respectfully agree.

I have earlier referred to s 63(5) of the Act.

Section 73(1) states that Part 3.2 of the Act applies to property designated as part of the notional estate of a deceased person in the same way as it applies to property that is part of the estate of a deceased person.

Rosalind Croucher in “Contracts to Leave Property by Will and Family Provision after Barns v Barns [2003] 196 ALR 65 – Orthodoxy or Aberration?” (2005) 27(2) Sydney Law Review 263, 278 has commented on the notional estate provisions of the former Act:

In New South Wales Law Reform Commission Report 110, Uniform Succession Laws: Family Provision (2005), at paragraph 3.1, "notional estate orders" are described as "orders issued by the Court which are intended to make available for family provision orders assets that are no longer part of the estate of a deceased person because they have been distributed either before or after the deceased's death (either with or without the intention of defeating applications for family provision)".

In Galt v Compagnon (NSWSC, 24 February, 1998, unrep) Einstein J, at 21, said that notional estate was "a complex concept" but shortly described it as "property which would have become part of the deceased's estate, had it not been dealt with, or had it been dealt with, by the deceased in a particular way, and in particular circumstances, prior to his or her death".

The notional estate provisions of the Act are dealt with in Part 3.3 of the Act. However, in s 3 of the Act, “notional estate” of a deceased person is defined as meaning “property designated by a notional estate order as notional estate of the deceased person”. “Notional estate order” means “an order made by the Court under Chapter 3 designating property specified in the order as notional estate of a deceased person”.

Section 74 of the Act provides that "relevant property transaction" means a transaction, or circumstance, affecting property and described in s 75 or s 76. "Property" includes “any valuable benefit”.

Section 75 of the Act provides:

Section 76 of the Act then provides a description of some, but not all, of the circumstances that constitute the basis of a relevant property transaction for the purposes of s 75. Whilst none of the descriptions are applicable in this case, s 76(3) makes clear that nothing in the section prevents any other act or omission from constituting the basis of a relevant property transaction for the purposes of the section.

Any such circumstance is “subject to full valuable consideration not being given”. Importantly, a distinction must be drawn between “valuable consideration” and “full valuable consideration”: see, for example, s 76(4) of the Act.

Important, also, is the omission of the words “in money or moneys worth” after “full valuable consideration” which had appeared in s 22 of the former Act. Furthermore, the phrase “is not given” rather than “is not received” is also significant.

The expression “subject to full valuable consideration not being given”, in my view, has the effect of imposing a requirement, wholly separate from the result, which is that property becomes held by another person.

Section 77(1) provides that for the purposes of Chapter 3 of the Act, a relevant property transaction is taken to have effect when the property concerned becomes held by another person, or subject to a trust, or as otherwise provided by the section. Sub-section (3) provides that a relevant property transaction consisting of circumstances described in s 76(2) (b) or (e) is taken to have been entered into immediately before, and to take effect on, the person’s death, or the occurrence of the other event referred to in those paragraphs.

Section 78 of the Act provides:

Section 80(1) limits the range of transactions that may qualify as “relevant property transactions.” It provides that the Court may, on application by an applicant for a family provision order, or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person, if the Court is satisfied that the deceased person entered into a relevant property transaction before his, or her, death and that the transaction is a transaction to which the section applies.

It is to be noted that the power to make a notional estate order is discretionary. Even so, before the Court is able to exercise that discretion, it is necessary to establish that the transaction is one to which the section applies.

Section 80(2) provides for the section to apply only to the following relevant property transactions:

It is not essential that the applicant be able to rely upon the provisions of more than one of the sub-paragraphs identified. It is sufficient if she, or he, is able to establish the matters in any one of them.

In this case, only sub-section (a) may be relied upon since the registration of the Transfer of the Bardwell Valley property, is the transaction “when the property concerned becomes held by another person” within the Act: s 77(1), and that occurred more than one year before the deceased died, but within three years of her death.

In relation to sub-section (a), in Kastrounis v Foundouradakis [2012] NSWSC 264 at [108]-[112], I wrote:

I continue to hold these views as to the meaning of the subsection.

In Hildebrandt v Soncini [2007] NSWSC 1227 at [25]-[26], Macready AsJ had noted that merely intending to benefit one eligible person does not amount to an intention to deny, or limit, provision being made for another. It is the intention with which the transaction is entered into, being to wholly or partly, deny or limit provision being made out of the estate of the deceased for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order, that is essential for the sub-section to operate.

More recently, in Gillett v Nelson (No 2) [2014] NSWSC 580, Darke J referred to Kastrounis v Foundouradakis and to Hildebrandt v Soncini. His Honour also concluded, at [130], that it was the deceased’s intention that was relevant. A similar view was taken by Slattery J in Manning v Matsen [2015] NSWSC 1801 at [148].

It is difficult to construe the section as requiring the Court to consider the intention of the other party to the transaction, who obtains the property as a result of the transaction, but who does not own the property prior to the transaction having effect. It must be remembered in this regard, that s 80(1) requires the Court to be satisfied that the deceased entered into a relevant property transaction before her, or his, death and that it is a transaction to which the section applies.

It is always difficult to assess the intentions of a person who has left no specific directions, or indications of that intention. The Court, in those circumstances, looks at such facts and circumstances as are available, in order to determine what was more likely to have been intended by the deceased. Regard may be had to all of the circumstances (whether before or after the time of the transaction) in determining whether, at the time of the transaction, the Court is satisfied that the deceased had the relevant intention.

It is for the party relying upon the section to establish clear and convincing proof that the deceased, by some act or words, demonstrated that it was her, or his, then intention to deny, or limit, the provision that might be ordered in a claim brought by an eligible person.

Section 83 of the Act relevantly provides that the Court must not, merely because a relevant property transaction has been entered into, make an order under s 80, unless the Court is satisfied that the relevant property transaction, or the holding of property resulting from the relevant property transaction, directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death).

The effect of a notional estate order is that a person's rights are extinguished to the extent that they are affected by a notional estate order (s 84).

Section 85 provides:

The Court’s power to make a notional estate order is also circumscribed by other sections. Section 87 provides:

In reference to s 87(a), Basten JA in Phillips v James [2014] NSWCA 4 at [125], wrote:

Importantly, the power to make a notional estate order does not arise unless the Court is satisfied that (a) the deceased person left no estate, or (b) the deceased person’s estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or (c) provision should not be made wholly out of the deceased person’s estate because there are other persons entitled to apply for family provision orders or because there are special circumstances: s 88.

Section 89(1) of the Act, relevantly, provides that in determining what property should be designated as notional estate of the deceased, the Court must have regard to (a) the value and nature of any property the subject of a relevant property transaction; (b) the value and nature of any consideration given in a relevant property transaction; (c) any changes in the value of property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), in the time since the relevant property transaction was entered into; (d) whether property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), could have been used to obtain income in the time since the relevant property transaction was entered into; and (e) any other matter it considers relevant in the circumstances.

Furthermore, the Court must not designate as notional estate, property that exceeds what is necessary, in the Court’s opinion, to allow the provision that should be made, or, if the Court makes an order that costs be paid from the notional estate under s 99, to allow costs to be paid as ordered, or both: s 89(2).

Section 90 of the Act provides:

In Underwood v Gaudron [2014] NSWSC 1055 at [202] to [204] I wrote, in regard to “other special circumstances”:

(In Underwood v Gaudron [2015] NSWCA 269, though there was a challenge related to the contingent refusal to make a notional estate order, it was not necessary to address that ground because the appeal was dismissed for other reasons: at [5], per Basten JA (Macfarlan and Ward JJA agreeing).)

Similarly, in Charnock v Handley [2011] NSWSC 1408 at [90] I wrote, in regard to “other special circumstances”

Brereton J, in Stone v Stone [2016] NSWSC 605, after making reference to these, and a number of other decisions at [71], added at [72]:

In his written submissions, all that counsel for the Plaintiff wrote was:

There was no factual basis for this bald assertion. However, in oral submissions counsel submitted at T166 – T167:

Similarly, all that counsel for the Defendant wrote was:

In oral submissions, he submitted that it mattered not whether the intention referred to is that of the deceased or of the Defendant. In either case, there was not a “scintilla” of evidence of the relevant intention.

In Carr v Douglass [2016] NSWSC 854, Slattery J, at [70], after dealing with the sections referred to above, formulated a series of questions that deal with the relevant sections of the Act going to notional estate. Respectfully, I agree that they provide a useful basis for the determination of the issues that arise in relation to the designation of property as notional estate:

In relation to question (1), the parties agreed that any potential “relevant property transaction” here occurred when the deceased transferred the Bardwell Valley property, for no consideration to the Defendant. That was the doing of “any act” that “results in property” being “held by another person”, within s 75.

It was not suggested that “full valuable consideration” had been given.

It is not clear precisely when the Transfer dated 22 November 2012 was registered although it was probably soon after it was signed as it was lodged on or about that day.

In answer to question (2), since there is no actual estate, a notional estate order is required to satisfy any family provision order made in favour of the Plaintiff.

In answer to question (3), only s 80(a) of the Act could apply since the transfer of the Bardwell Valley property “took effect within 3 years before the date of the death of the deceased person” and more than 1 year before her death.

However, that is not all that the Plaintiff must establish under the sub-section. She must also establish that the transaction “was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order”.

I am not satisfied that s 80(2)(a) is enlivened because, amongst other things, there is simply no evidence that the relevant property transaction was entered into by the deceased with the relevant intention. There is no suggestion that the deceased was engaged in any estate, or succession, planning. Nor is there any evidence of advice given to the deceased, or to either of the parties, by Ms Bozinovska, relating to the rights of a child, as an eligible person, to make a claim under the Act. There is not even a hint that any of the persons involved was conscious, in November 2012, of the possibility of a claim being made by the Plaintiff for a family provision order after the deceased’s death. Nor is there any suggestion that either the deceased, or the Defendant, held any concern about such a claim being made by the Plaintiff.

There was no evidence of any contemporaneous statement by the deceased of the requisite intention, particularly in circumstances where there had been some discussion about the making of a Will. There is no suggestion, by the Plaintiff, that the deceased said anything to the effect that she was transferring the Bardwell Valley property, wholly or partly to deny or limit any entitlement to make a claim that the Plaintiff would have in relation to her estate. There is no evidence at all that the deceased was even aware that there was such an entitlement. Nor is there any evidence of the Plaintiff indicating that she might wish to make such a claim if the Bardwell Valley property was transferred to the Defendant.

Ms Bozinovska does not give any evidence to support a conclusion that the deceased held any such intention. None of the documents she produced that were tendered record any conversation in which she was told of an intention, then held by the deceased, to transfer the Bardwell Valley property to the Defendant in order to, wholly or partly, deny or limit provision being made out of the estate for the maintenance, education or advancement in life of the Plaintiff.

Overall, the evidence reveals that the deceased felt an obligation to transfer the Bardwell Valley property to the Defendant because the Plaintiff had received her, and Cvetko’s, assistance previously in relation to the Lorraine Avenue property and in the deceased looking after the Plaintiff’s children when they were young.

The evidence also establishes that the deceased wished to benefit the Defendant, rather than to deny the Plaintiff, and the steps that she took in signing the Transfer in his favour were taken to facilitate the distribution of the Bardwell Valley property to him before she died.

Nor am I able to infer the requisite intention. There is no need to do so when the deceased stated her intention clearly and unambiguously. That intention was to benefit the Defendant. The conversations repeated by the Defendant, which I accept as having occurred, which I have earlier recorded, provide the evidence of that intention.

It follows that I am not satisfied that the Plaintiff has established the relevant intention.

Since s 80 does not apply, the Court cannot make an order designating the Defendant’s interest in the Bardwell Valley property as notional estate. That is sufficient to resolve the proceedings in a practical sense against the Plaintiff, as there is no actual estate from which to satisfy any family provision order that the Court could have made.

To the extent that it is necessary to do so, had the posited transaction been one to which s 80 applies, I would be satisfied that it did disadvantage the estate in that there would, otherwise, be no property out of which a family provision order or a costs order may be made.

The only restrictions in s 87 preventing the making of a notional estate order relied upon is that the Defendant has spent a significant amount of money renovating the Bardwell Valley property. I am not sure that this is a relevant consideration as the expenditure appears to have been incurred after the events in October 2012 and at or about the time of the letter sent by Mr Cerin to the Defendant.

Since the Plaintiff’s claim was not made within time, and since s 90(2)(a) of the Act does not apply, she must also satisfy s 90(2)(b), namely that there are “other special circumstances that justify the making of the notional estate order”. I am not satisfied that there are such special circumstances.

Counsel for the Plaintiff submitted that the Plaintiff did not commence proceedings within the period prescribed by the Act, because she relied upon the Defendant's statements to the effect that he would give her a half share of the sale proceeds of the Bardwell Valley property, and that he had to wait a while after the deceased’s death before he could sell it.

I am not satisfied that the Plaintiff’s evidence of what she says that she was told by the Defendant about giving her a share, half of the proceeds of sale or any other amount, should be accepted. In this regard, I prefer the evidence of the Defendant to the evidence of the Plaintiff, even though there is a reference to the Defendant having made such a statement in the letter addressed to him by Mr Cerin.

I have also considered the evidence of Ms Bozinovka, but, overall, I have not been persuaded that her evidence on this topic should be accepted over the evidence of the Defendant. Importantly, there is no reference to it in her contemporaneous diary note. Had such a statement been made, it strikes me that she would have made a note about it. Her affidavit is one sworn in May 2016, more than 3.5 years after the conference with the parties. (I am not suggesting that Ms Bozinovska gave untruthful evidence. It is simply that I am unable to be satisfied, on the balance of probabilities, that it is what the Defendant said.)

Even if the statements were made, it is clear from the Plaintiff’s own evidence that in the conversation in October 2014, the Defendant did not give the Plaintiff any basis for a reasonable expectation that, if fulfilled, an application for a family provision order would be unnecessary. Indeed, at the meeting of 12 October 2014, it was clear that he was not prepared to sell the Bardwell Valley property and then give the Plaintiff any share of its value.

It was also clear that there would be no ongoing relationship between the Plaintiff and the Defendant, and between their families, in the future. The Defendant accepted as much in responding to what was said by the Plaintiff and by Peter in the way that he did.

Otherwise, there are no circumstances that are unusual, uncommon or exceptional in character, quality or degree and none which differ from the ordinary or the usual. There is no suggestion of incapacity in the Plaintiff.

Furthermore, the explanation given for her not commencing proceedings, which explanation I do not accept, does not contribute to a finding of “special circumstances”. In this regard, I am satisfied that she was well aware by October 12, 2014, which was within the 12 month period from the date of death, that the Defendant was not going to give her any share of the Bardwell Valley property.

The Plaintiff was also aware, from what her son had told her, that something needed to be done within 12 months from the date of death, but she did nothing until some months after the 12 month period expired. It follows that the cause of the delay does not lie with the Defendant who I am satisfied did nothing to encourage her to not commence proceedings.

The inapplicability of s 80(2)(a) and s 90(2)(b) means that the Court cannot make an order designating the Defendant’s interest in the Bardwell Valley property as notional estate. That is sufficient to resolve the proceedings in a practical sense against the Plaintiff, as there is no other property in the estate to satisfy any order for family provision that the Court would have made.

Since there is no actual estate and no property that may be designated as notional estate, an order under the Act cannot be made and the Plaintiff’s proceedings must be dismissed. It is unnecessary to deal with the application for the extension of time, accepting, in the circumstances, that it would be futile to make an order extending the time.

In the circumstances, I order that Defendant be appointed to conduct the proceedings and represent the deceased’s estate and notional estate for the purposes of these proceedings, and that the Plaintiff’s Summons be dismissed.

Section 98(1) of the Civil Procedure Act 2005 (NSW) provides that subject to the rules of Court and to this, or any other, Act, costs are in the discretion of the Court. Similarly, UCPR r 42.1, provides that costs should follow the event unless it appears to the Court that some other order should be made as to the whole, or any part of the costs.

UCPR r 42.20(1) provides that if the Court makes an order for the dismissal of proceedings, then unless the Court otherwise orders, the plaintiff must pay the defendant’s costs of the proceedings to the extent to which the proceedings have been dismissed.

The effect of these rules, in this case, is that the Plaintiff must bear the Defendant’s costs of the proceedings for the family provision order, unless the Court otherwise orders. The Court can only order otherwise if there is a discretionary decision to depart from what the UCPR provide.

In Commonwealth of Australia v Gretton [2008] NSWCA 117, Hodgson JA with whom Mason P agreed, observed, at [121], that:

In Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34, at [98], that observation was cited, with apparent approval, by the Court of Appeal.

There is no suggestion that the Civil Procedure Act and the UCPR do not apply to family provision proceedings.

As I have also written in other cases, the UCPR reflect the general proposition that an award of costs is discretionary but generally, the discretion is exercised in favour of the successful party.

Because of the wording of s 98(1) of the Civil Procedure Act it is necessary to mention the relevant provision of the Succession Act 2006 (NSW). Section 99 of that Act provides that the Court may order that the costs of proceedings under Chapter 3 of that Act in relation to the estate or the notional estate of a deceased person (including costs in connection with mediation) be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit.

It is clear that s 99 of the Succession Act, also, provides for an unfettered discretion as to how the costs of the proceedings for a family provision order may be borne.

In other cases, including Harkness v Harkness (No 2) [2012] NSWSC 35 at [18]-[19], I set out the general principles that apply in cases in which a family provision order is sought. For the assistance of the parties, I repeat the principles stated which I consider relevant to the present case:

I have referred to these principles since then and they have been cited, with approval, by Pembroke J in Sung v Malaxos (No 2) [2015] NSWSC 290.

In addition to the above principles, I should note that the usual costs rule in an unsuccessful family provision application “reflects the policy embodied in s 56 Civil Procedure Act that litigation must be conducted responsibly and should only be commenced by a plaintiff after careful evaluation of the costs consequences likely to attend to failure”: Carey v Robson; Nicolls v Robson (No 2) [2009] NSWSC 1199 at [20] (Palmer J), and that “[t]here is a public policy in the usual practice as well as the element of justice reflected in the rule that costs follow the event”: Friend v Brien (No 2) [2014] NSWSC 614 at [20] (White J).

It is clear, as I noted at the commencement of these reasons, that the Plaintiff was emotionally invested in bringing these proceedings. However, that is not a matter that can, or should, be given undue weight in determining the question of how the burden of costs is to be borne.

Furthermore, she brought the proceedings secure in the belief that if she were unsuccessful, she would not have to bear the burden of her own costs. The Defendant, on the other hand, did not have that luxury and is responsible for his own costs.

I bear in mind, also, that the Defendant was protecting his own position and that this is not a case where he was seeking to uphold the terms of a Will or the operation of the rules of intestacy, for the benefit of himself and others.

An additional important matter for consideration is the relationship of the Plaintiff and the deceased. I have referred to the Defendant’s evidence in this regard. There was no dispute that the Plaintiff was a loving, and dutiful daughter.

The most significant matter, it seems to me, however, is that the Defendant has received the most valuable asset that would have formed part of the deceased’s estate, had its transfer not taken place. Furthermore, had the transfer of the Bardwell Valley property taken place a few months later, or not at all, different matters would have had to be considered. The result may then have been different.

Doing justice between the parties, and considering all of the facts of the case, with some hesitation, I have come to the view that this is a case where the usual order for costs should not be made. I order that the Defendant is to bear his own costs of the proceedings. It is unnecessary to make any other order.