Williams v Williams

1. [1]

   The Williams family have conducted farming and grazing operations on “Cwmteg” near Garah in northern New South Wales for over four generations. The property, which is about 50 km north-west of Moree, was originally settled by Watkin and Ann Williams in about 1875 and was named after the coalmining village near Swansea, in South Wales, where Ann Williams was born.

2. [2]

   The late Ioan (a Welsh form of John) Noel Williams (the deceased) farmed Cwmteg throughout his life and, together with his wife Diane, brought up their four children on the property. The deceased died in February 2019 aged 87 years. His wife Diane had died many years earlier in April 1988.

3. [3]

   The plaintiff, Richard Noel Williams, is the youngest of the deceased’s four children. By his Summons filed on 20 January 2020, he seeks an order for provision from the estate or notional estate of the deceased. The defendant, Timothy George Williams, the deceased’s executor, and the primary beneficiary of the deceased’s estate, opposes the grant of any relief to the plaintiff.

4. [4]

   The plaintiff and the defendant gave oral evidence; their two sisters did not. They referred to one another and other members of the Williams family by their first names. Without intending any disrespect to any family member, this Court will therefore mostly do the same in these reasons.

5. [5]

   On behalf of the estate, Timothy contends that no order for provision in Richard’s favour is warranted. He contends that Richard did not make any financial contribution to the acquisition, conservation and improvement of the deceased estate, obtained substantial financial benefits from the deceased during the deceased’s lifetime, and had a hostile relationship with the deceased, resulting at one point in costly litigation between them.

6. [6]

   Mr N Kirby of counsel, instructed by Webb and Boland Lawyers, appeared for the plaintiff in these proceedings. Mr M Meek SC, instructed by Giles Payne & Co appeared for the defendant. The Court has been much assisted by counsel and solicitors on both sides of these proceedings with their careful submissions in a case of some complexity. Those submissions and the evidence of the parties covered many factual disputes, not all of which it is necessary for the Court to resolve.

7. [7]

   The following is a narrative of the relevant history. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded in these reasons. For reasons of economy this narrative does not include reference to versions of the facts that have been rejected.

8. [8]

   At times that narrative requires the resolution of conflicting testimony between the plaintiff the defendant. Some preliminary general observations about their credibility are useful at the outset.

9. [9]

   Richard Williams. Richard Williams came across to the Court as a witness who attempted to give a complete and truthful account of the relevant history and mostly made reasonable judgments about family issues. His recollection was at times imperfect but not because of any intentional distortion of the past. He had a good general grasp of his own business and financial affairs. But his wife, Deborah, was the bookkeeper for his business, which made questioning of him on some aspects of his business less than fully efficient. His evidence is mostly accepted.

10. [10]

    Timothy Williams. Timothy Williams was a precise witness. He was a meticulous record keeper and was financially astute. He had a surprisingly good memory for transactions he had entered decades earlier. He was careful not to be drawn into matters of which he had little memory. He was also frank at conceding the limits of his otherwise good memory. But his evidence showed the effects of a lengthy hostility towards his brother, Richard. He could give little credit to Richard for anything that might show Richard in a good light and his evidence about his brother needed to be treated with caution but is otherwise generally accepted.

The Williams Family and Cwmteg

1. [11]

   The deceased was born in November 1931 and died in February 2019. He lived on Cwmteg throughout his life. He married Diane in the early 1950s and they had four children, Anne born in 1954, Timothy, born in 1955, Catherine (Cate) born in 1959 and Richard born in 1963. When the family grew up in the 1950s and 1960s at Cwmteg the siblings all had close relationships with one another and with their parents.

2. [12]

   When these proceedings commenced in 2019, Anne, Cate and Richard were plaintiffs, all seeking orders for further provision out of the deceased’s estate. Anne and Cate were separately represented from Richard and settled their proceedings before the hearing commenced for legacies totalling $700,000 plus costs of $40,000. Neither Anne nor Cate gave oral evidence at the hearing, but their affidavits were read in Richard’s case. These affidavits provide some framework for the contest between Richard and Timothy about family relationships and events, particularly in the early years of family history.

3. [13]

   Both Anne and Cate have very fond memories of their happy childhoods on Cwmteg. Richard and Timothy say much the same about their early years on Cwmteg. As they grew up on Cwmteg, all the Williams children learned the usual skills of country children; how to drive, how to ride a horse, how to operate machinery and how to safely work cattle and sheep.

4. [14]

   Anne moved away from Cwmteg into Moree in 1972 and was married in 1974. Thereafter she moved with her husband to the Sunshine Coast. She is a disability employment consultant and her husband, Michael, is a meat inspector. She always maintained a very close relationship with the deceased.

5. [15]

   Anne, Timothy and Richard all attended boarding schools in the New England district. Cate was educated locally at Moree. Cate also describes very close family relationships in those days with everyone getting along well at Cwmteg. Like her sister, she always maintained a very close relationship with the deceased. About the time that Diane died in 1988, Cate moved out of home at Cwmteg, to Goondiwindi, where she has lived ever since, working as a bus and taxi driver, and maintaining her own household.

6. [16]

   After Diane died in April 1988, Timothy and Kerry moved into the family home at Cwmteg. This was a joint family decision at the time and the arrangement worked well for the first few years.

7. [17]

   But in the longer term it appeared to create some tensions. Cate says that “after a couple of years” Timothy organised family meeting which was held at Cate’s home at Goondiwindi at which Tim said to both Anne and Cate that they would henceforth need to be invited by Tim or Kerry before they could come to stay at Cwmteg. Cate found this very upsetting, indeed so much so that when she came to stay at Cwmteg she would live in the horse truck in the shed “so as not to upset anyone in the house”.

8. [18]

   Timothy left school in 1973 and between 1974 and 1978 he studied and was employed as an accountant in Tamworth. In 1979 the deceased invited him back to work on and ultimately to manage the property, which he has done ever since.

9. [19]

   Timothy married his wife Kerry in 1986. After marriage they lived in Garah and she commuted the lengthy distance to Moree to work at Medicare whilst he worked on Cwmteg. They have three children, Ella who was aged 32 at the time of the trial, Benjamin aged 30 and Claire aged 26. Claire has special needs.

10. [20]

    Timothy describes his early life with the deceased, his mother Diane and his siblings as a very happy one and he was much advantaged by “growing up in a large and loving family in the bush”. The deceased taught him fundamental farming skills. He moved to Moree in about 1982 or 1983 and worked in various roles as a stockman, labourer, and farmhand. He eventually found his way in about 2002 to work in stock and station agencies with the Landmark Group, in Moree. He married his wife Debbie and they built a house on a property, Dyfed, which he acquired with Richard, as is explained below. Their children are now independent.

11. [21]

    The Court accepts Richard always had a close relationship with his father, except for a period between 2012 and just before his death which is dealt with below.

12. [22]

    After Diane’s death the deceased was happy about the arrangement for Timothy and Kerry to move from Garah to Cwmteg. A close bond developed between Timothy’s family and the deceased both from their proximity and from the care he received from them. As the years went on the deceased became increasingly dependent upon Timothy and Kerry not only for farm work but also for household assistance and attending to his medications and in later years travelling to medical appointments and office and legal work. There is little doubting that Timothy and Kerry looked after the deceased for the more than 30-year period after Diane’s death giving close care and attention to his daily needs. That alone creates a strong moral obligation in the deceased towards Timothy.

13. [23]

    In an otherwise harmonious family, there are some criticisms by other family members of Timothy’s and Kerry’s care for and attention to the deceased’s needs. Some of Cate’s comments to that effect have been recorded above in these reasons. And it can be accepted that tensions also developed from time to time between Timothy and the deceased. It can also be accepted that the other siblings perceived that Timothy and Kerry were insufficiently accommodating and welcoming to their desires to see the deceased during this period.

14. [24]

    But as was correctly submitted on behalf Timothy, the Court does not have to decide the detail of these disputes. They do not affect the fundamental moral obligations owed by the deceased to each of his children. Any tension that arose from time to time between Timothy and the deceased was over differences in perspective that are almost inevitable in relation to aspects of farm management in a complex combined enterprise. And any tensions that arose between Timothy and his siblings after 1988 were partly driven by their perception that he was insufficiently sensitive to the fact that by his location at Cwmteg he had a greater share of the deceased’s time and affection. And because of their constant work for the deceased Timothy and Kerry perceived that looking after the comforts, interests and accommodation of Anne, Cate or Richard during visits to Cwmteg was of a lower priority for them.

15. [25]

    During the period after Diane’s death the deceased had sustaining and regular contact with his children who did not live on Cwmteg and their families and friends. The evidence clearly establishes that the deceased’s relationships with all his children were rich and fulfilling.

16. [26]

    Cwmteg comprises 2,248.59 ha of mixed-use cultivation and grazing property. The deceased also acquired a neighbouring property, Oakstand, which adjoins Cwmteg. Oakstand is comprised of four lots. In March 2001 the deceased transferred two lots comprising the largest portion of Oakstand to Timothy and Kerry for an expressed consideration of $239,481.81. As a result, the estate owns two of Oakstand’s four lots, comprising 99.75 ha, and Timothy owns two lots, comprising 660 ha.

17. [27]

    Timothy gave evidence that the Court accepts that Cwmteg and Oakstand are only viable properties if operated together in the one farming enterprise and that sale, for example, of Oakstand would significantly impair the capacity of Cwmteg to be operated as a farming enterprise on its own. The lots on the two properties are used either for farming or raising stock or a mixture of both. The paddocks of Cwmteg differ in quality and in how they are impacted by weather conditions such as rain or drought, so that a substantial sized property such as Cwmteg with Oakstand provides more options for the grazing of stock and resting of paddocks from farming production. Having a larger farming area significantly improves the flexibility to meet unexpected rural challenges. Apart from the obvious challenges of the weather these challenges include fluctuating commodity prices, pest damage and the impact of economic policies such as the People’s Republic of China’s announcement in May 2020 of an 80.5% tariff on Australian barley, which put significant pressure on Cwmteg’s barley margins. No compelling financial case was put challenging Timothy’s account of the need to keep Cwmteg and Oakstand together as the basis of a single farming enterprise.

18. [28]

    Several partnerships were formed to operate Cwmteg over the years. Apart from their structure, their details are not material to the issues in the proceedings. In 1989 after Diane’s death an existing farming partnership including her on Cwmteg was reformed so that it comprised the deceased, Richard, Timothy and Kerry.

19. [29]

    In June 2011 this partnership was dissolved following Richard’s resignation and he was paid out his share of $90,684 in December 2013. A new farming partnership was formed on 1 July 2011 involving only the deceased, Timothy and Kerry.

20. [30]

    In an affidavit filed in the proceedings Mr Gillies, of the firm of solicitors acting for the estate has satisfied the Court that the estate owed the partnership a substantial sum of money, which Timothy has written off and accepted as a loss and that the partnership is not of any value in the estate’s accounts.

21. [31]

    It is incontestable that Timothy has contributed significantly to the growth, preservation, and improvement of Cwmteg. He has now worked as a farm manager on the property since 1979. Timothy has carried out significant works to improve Cwmteg, mostly planned with the deceased. He worked on a full-time basis for over 40 years without taking a regular wage or salary out of the operating business on Cwmteg. And it would not be uncommon for his share of profits to be nil or negative in a financial year in which droughts or other natural disasters had occurred. But he also derived benefits from his participation in the farming partnerships on Cwmteg. And these benefits were to the exclusion of Richard after 2011.

22. [32]

    In the early 1990s, Timothy and Richard agreed to form a partnership, the ‘TKR & D Williams Partnership’ to purchase a nearby property known as “Dyfed”, which comprised both grey and black soil country and grew cereal crops and grazed beef cattle. Richard and Debbie borrowed to build a house and they lived on Dyfed. But Richard worked in Moree as a stock and station agent and did not work at Dyfed. During the term of the TKR & D Williams Partnership, Timothy continued to live on Cwmteg and worked on both Dyfed and Cwmteg.

23. [33]

    After just under a decade of this arrangement a neighbour offered to purchase Dyfed. Timothy and Richard decided to accept the offer of $775,000. They took a practical course is to what should be done with the partnership assets. It was agreed that Timothy would take the partnership’s plant, equipment, and ready cash. This would be useful for his continued farming and grazing operations on Cwmteg. And Richard would take the surplus proceeds of sale, which could also be used to discharge the ANZ mortgage taken out to acquire Dyfed.

24. [34]

    On 24 May 2001, the deceased made a will, leaving Cwmteg and the Cwmteg partnership to Timothy and Richard in equal shares. The will also left legacies of $100,000 each to his daughters, Anne and Cate and divided the residue of his estate equally between his four children. The deceased appointed Timothy and Anne as his executors of this will and of his two subsequent wills in 2012 and 2013.

25. [35]

    This will indicates that before the deceased promoted Richard’s advancement in life by securing substantial borrowings over Cwmteg that his intention was for Timothy and Richard to benefit equally from his estate. But those intentions changed once the deceased loaned money to Richard.

26. [36]

    Richard gained his stock and station agent’s licence in 2007. Soon afterwards the director of a local stock and station agency, Ronald Hunter (Sales) Pty Ltd (Ron Hunter Sales), approached Richard and offered him the opportunity to purchase the agency business.

27. [37]

    Richard was not able to raise sufficient finance on his own assets to fund the acquisition and the future working capital needs of the business. Richard was dealing with the Commonwealth Bank of Australia (CBA), which told him that he would need other support if the acquisition were to proceed. Richard ultimately approached the deceased, who agreed to guarantee Richard’s borrowings up to a maximum of $1.75m. The acquisition proceeded in 2007 on this basis. In March 2009, to support the working capital needs further, the cap on the deceased’s guarantee was increased to about $2m. The CBA borrowings fluctuated around that level until September 2015 when reduction commenced.

28. [38]

    Richard has now had secure employment as a stock and station agent for 14 years. The clients of the Ron Hunter Sales business are predominantly graziers. Ron Hunter Sales provides services for the purchase, maintenance, feeding and eventual sale of their livestock, both cattle and sheep for profit by way of commission. The commission earned in the business is largely a function of the number and quality of breeding stock of his clients. His business income is significantly impacted by market downturns resulting in a reduction of the numbers of stock or the price of stock held by clients, or both. Richard says that the business was trading profitably when he acquired it due to then favourable market conditions. But the drought in the Moree region between 2017 to 2020 had a disastrous effect on graziers and the livestock industry, including Richard’s business. Land for agistment was scarce and graziers turned increasingly to cropping because of their incapacity to feed and sustain breeding livestock. As a result of the drought, for example, total sales of livestock at the Moree Saleyards were reduced from 17,954 in 2016 to 6,741 in 2021. This resulted in a reduction in Ron Hunter Sales gross sales revenue from a peak at $648,000 in 2017 to $334,000 in 2021.

29. [39]

    Richard acknowledges that after the drought market conditions have improved but restocking and breeding livestock has not occurred immediately and it is an open question as to how much graziers who had converted to cropping will return to grazing. The answer to that question probably will lie in the longer-term differential in the profitability of the two types of rural operations. At the time of the hearing this question had not been answered and the sale of livestock in the Moree area had not yet returned to pre-drought levels.

30. [40]

    Borrowings were reduced by $1.1 million between 2015 and the hearing in 2021 to just over $885,000. Richard was able to achieve that reduction partly by a fortuitous increase in sales due to destocking at the onset of the drought, taking a more businesslike approach within Ron Hunter Sales by charging interest to his clients greater than the CBA was charging him and through a transaction which is discussed later in these reasons.

31. [41]

    The deceased commenced proceedings against the CBA and Richard in 2012 with the objective of setting aside the guarantee and the mortgage supporting it in favour of the CBA. It is to be wondered why they were commenced, when there seems little doubt on the available objective evidence that the deceased had been a willing guarantor of Richard’s financial facility with the CBA supporting Ron Hunter Sales. And they were odd proceedings to set aside a guarantee, as they were brought in the absence of Richard defaulting upon his financial obligations to CBA. Indeed, Pembroke J described the proceeding as “an unusual case”.

32. [42]

    The unusual nature of the CBA proceedings tends to indicate that the deceased commenced them more for personal reasons than with objective commercial considerations in mind. Richard submits that Timothy must have urged the deceased to rid Cwmteg of the guarantee and mortgage and thus drove the deceased into the proceedings. Timothy contends it was the deceased’s idea. Both these theories for the litigation are probably partly right. The litigation must have been driven by some strong motivation in the deceased. At this distance exactly what it was remains a mystery. At the time of the CBA proceedings the debt was a little over $1.8 million. Part of the evidence before Pembroke J was that the deceased’s shock at finding that the debt was still this high was one of the disturbing features leading to the litigation.

33. [43]

    Pembroke J’s judgment grapples with this conundrum, which expressed itself in the deceased’s own evidence. His Honour observed that the deceased said that he had provided the guarantee:

34. [44]

    Pembroke J theorised (at [3]) as to the most probable explanation for the litigation and the following terms:

35. [45]

    Pembroke J ultimately dismissed the deceased’s claim in the CBA proceedings and the guarantee and mortgage remained in place. The deceased was forced pay the CBA’s costs. Pembroke J’s observations about the deceased (at [4]) coincide with those of some family members in these proceedings, observations which the Court accepts, that he was “a proud and independent-minded man who was confident in his own decisions” but with a propensity at times to be stubborn.

36. [46]

    The Court proceedings had a profound effect upon the deceased. It is to be wondered whether his heart was really in them. He expressed to Anne some ambivalence about pursuing them, when he was up in Queensland with her in the days leading up to the trial. He said in conversation with her, without going into specifics:

37. [47]

    The deceased’s and Richard’s relationship took a step downwards from about the time of the CBA proceedings. It has been described in the proceedings as an “estrangement”. But if by this it is meant a mutual desire of the pair to be distant from one another, the description is wrong. According to Richard, the deceased became more distant from Richard and withdrew from him, so that it became increasingly difficult to maintain a relationship with him. The Court accepts this evidence. But Richard also says, and the Court accepts, that he wanted to maintain his existing relationship with the deceased but that became more difficult after the CBA proceedings.

38. [48]

    The reasons for the distance between the deceased and Richard are more complex. The Court infers that the deceased felt that he had become incapable of formulating any proper succession plan for his children, whilst the mortgage remained in place over Cwmteg. He felt trapped and blamed Richard for this situation, as Richard was the person taking the benefit of the guarantee and the mortgage and was not paying off the debt owed to the CBA at a sufficient rate. The deceased was probably resentful about the costs orders made against him in the CBA proceedings. And no doubt pre-existing factors were in play: Richard could not be a frequent visitor to his father because he did not feel welcome at Cwmteg, perceiving Timothy as a hostile gatekeeper in his relationship with his father and as instigator of the CBA litigation.

39. [49]

    But the so-called “estrangement” after 2012 was essentially fragile and the underlying father-son relationship between the deceased and Richard came to the fore, when the deceased became ill in 2018.

40. [50]

    The deceased revised his testamentary intentions in late February 2012 by making a new will and an inter vivos deed of covenant with Richard and his wife Kerry. He also executed a suite of other estate planning documents in late January/early February 2012. The estate planning documents are of little relevance to the issues in these proceedings and will be discussed after the documents relevant to the deceased’s testamentary intentions.

41. [51]

    The deceased’s decision to revise his testamentary intentions generally coincided with and was consistent with his decision to commence the CBA proceedings. The overall objective of both the CBA proceedings and the 2012 transactions, including the 2012 will was to try and achieve a clear devolution of Cwmteg to Timothy, freed from the CBA mortgage but giving Richard an opportunity to acquire Oakstand. The complexity of the arrangements in 2012 is perhaps a reflection of the deceased’s exasperation in being unable to discharge the mortgage over Cwmteg and give clear title of it to Timothy.

42. [52]

    The 2012 Will. On 27 February 2012 the deceased made another will (the 2012 will) in which he forgave any debt owing to him by Timothy and his wife, left his share of the Old and New Cwmteg partnerships to Timothy, left legacies of $1,000 for each of his grandchildren, and left legacies of $180,000 to Anne and Cate, payable in equal instalments over seven years.

43. [53]

    The 2012 will also gave Cwmteg to Timothy if it “has not been transferred by me to my son Tim before the date of my death”. The 2012 will also imposed conditions on Timothy for this gift. The conditions imposed on Timothy were that he pay 75% of any shortfall in the estate’s ability to provide the legacies for Anne and Cate; and that Oakstand be transferred to Richard (at Richard’s expense) subject to a list of conditions imposed on Richard.

44. [54]

    The conditions imposed on Richard (by clause 3.6 of the 2012 will) were the following: that there be no relevant variation to the 2012 will pursuant to the Succession Act, Chapter 3, that Richard secure a release of Cwmteg from the CBA mortgage and guarantee in favour of Ron Hunter Sales, that Richard assume a pro rata share of any debt due to the Rural Assistance Authority (RAA), that Richard pay or secure 25% of any shortfall of the estate’s ability to provide the legacies for Anne and Cate; that Richard bear all costs associated with the subdivision and transfer of Oakstand, and that Richard pay $50,000 to each of his three siblings.

45. [55]

    The 2012 will’s solution to the encumbrance of the CBA mortgage on Cwmteg was to require Richard to pay out the CBA and in exchange for that he would receive Oakstand. This does reflect a continuing intent on the part of the deceased to benefit Richard with a substantial part of his real estate but only provided he could free Cwmteg from the CBA debt.

46. [56]

    The proviso in the 2012 will makes sense when it is understood that some three weeks before on 1 February 2012 the deceased executed as transferor a form of memorandum of transfer under the Real Property Act 1900 and Timothy signed as transferee. The consideration field was blank. But Cwmteg could not be transferred at that time as the CBA, the first of two mortgagees, held the title deeds and the transfer could not be registered without dealing with the CBA. The 1 February 2012 transfer was stamped by the Office of State Revenue on 4 April 2012. No stamp duty was payable as the transfer was within the exemption provisions of the intergenerational rule and transfer stamp duty exemption scheme. In December 2014 Richard registered a caveat over Cwmteg to protect his interest in the transfer.

47. [57]

    The Deed of Covenant. The deceased also wanted to ensure that the same conditions would be binding on Richard, even if Cwmteg were transferred to Timothy before his death. In other words, if the family was able to successfully deal with the CBA and achieve a transfer of Cwmteg, the deceased still wanted Timothy committed to the transfer of Oakstand to Richard on the same conditions as were in the will. This intent was achieved the following way.

48. [58]

    On 27 February 2012 (the same day the deceased made his 2012 will) he and Timothy executed a deed of covenant in which Timothy promised to abide by conditions that were substantially identical to those expressed in the 2012 will. The deed of covenant was made between Timothy and his wife Kerry as the covenantor and the deceased as the covenantee. The deed of covenant recited that pursuant to the Intergenerational Rural Land Transfer Stamp Duty Exemption Scheme that the covenantee “has transferred to the covenantor” the lands described in the deed’s first schedule, which was Cwmteg but that the transfer was of the whole of the legal and beneficial interest in Cwmteg, such transfer was nevertheless conditional upon the covenantor entering the deed of covenant. The deed of covenant annexed the 2012 will.

49. [59]

    The deed of covenant provided that in consideration of the transfer by the covenantee of Cwmteg to the covenantor, and subject to the satisfaction of the conditions set out in the deed’s second schedule, the covenantor would upon the death of the covenantee transfer to Richard, the land described in the deed’s third schedule, which was the lands of Oakstand, and pay 75% of any shortfall of the estate’s capacity to pay legacies to Anne and Cate. The conditions in the second schedule were substantially identical to those in the 2012 will (clause 3.6), which Richard was required to satisfy before Oakstand could be be transferred to him.

50. [60]

    The Estate Planning Documents. Several other estate planning documents were executed on the 31 January and 1 February 2012, which are ultimately not material to the issues in these proceedings, but their existence and effect should be briefly mentioned.

51. [61]

    On the advice of Cole & Butler the deceased adopted several protective measures to ensure that Timothy would receive Cwmteg and that the deceased would have security of tenure there until his death. These protective measures included the following instruments:

    1. (1)

       A deed of licence and option dated 31 January 2012 between the deceased and Richard, giving the deceased a licence to occupy the Cwmteg homestead with the option to convert the licence to a registered lease.

    2. (2)

       An irrevocable power of attorney dated 31 January 2012 by Richard to the deceased to give the deceased authority to sign a transfer of Cwmteg to the deceased’s solicitor, Ormonde Roger Butler (Mr Butler) for the sum of $3.88 million and a mortgage for that sum from Mr Butler to Richard for the purposes of transferring Cwmteg to the trustee of the Cwmteg Trust. The object of this was to transfer Cwmteg out of the defendant’s hands to the Cwmteg Trust, if necessary for future asset protection purposes.

    3. (3)

       An option deed from Richard as vendor to Mr Butler as purchaser dated 31 January 2012, with the apparent object of giving the Cwmteg Trust the option to require Richard to transfer Cwmteg to the Trust for $3.88 million.

    4. (4)

       A deed of trust for the Cwmteg Trust dated 1 February 2012 – creating a discretionary family trust for the purposes of asset protection between Jacqueline Mary Legg (an employee of Cole & Butler) as settlor and Mr Butler as trustee. The class of eligible beneficiaries for the Cwmteg Trust included the deceased, Richard and his wife Kerry, and their relatives but not including any of Richard siblings or their issue. Richard and Kerry were the default beneficiaries as joint tenants.

    5. (5)

       A deed of release dated 1 February 2012, under which the deceased released any debt of $3.88 million owed by Richard in consideration of the entry into the other arrangements. This instrument seems to have been designed to ensure that the 1 February 2012 transfer would always be treated as a gift and to the extent that it might be said that an implied obligation arose out of the transfer to pay then it was forgiven.

52. [62]

    The structure incidentally shows the deceased including Richard’s wife, Kerry as a default beneficiary of the Cwmteg Trust. This is significant in showing the deceased’s recognition of her day-to-day care for him at Cwmteg in the years after Diane’s death.

53. [63]

    A preliminary question arises as to what comprises the deceased’s estate. The deceased signed the transfer of the lots comprising Cwmteg as transferor on 1 February 2012, as part of the suite of estate planning documents signed that day. The transfer did not express that it was for receipt of any consideration and the surrounding documents are a basis to infer it was a gift. The 1 February 2012 transfer was never lodged for registration or registered, so the transfer did not transfer the legal title to Cwmteg. The question arises as to whether it was effective to transfer the deceased’s equitable interest. Richard contends it was ineffective for this purpose. The estate indicated that it would not be “actively asserting that it was effective”. The Court concludes that it transferred neither the legal nor the equitable title.

54. [64]

    The 1 February 2012 transfer was not effective to transfer the equitable title in Cwmteg to Timothy. It is not in contest that the transfer was executed as a gift and not for valuable consideration. The transferor’s dealings with the 1 February 2012 transfer, were insufficient to complete the gift of Cwmteg to Timothy.

55. [65]

    The applicable legal principles are well-established. Equity will not assist a volunteer or perfect an imperfect gift. An unregistered transfer creates no equitable estate unless the putative donor has all that it was necessary for the donor to have done to effect a transfer. When dealing with Torrens title land that at least includes the transferor/donor providing the transferee/donee with a transfer in registrable form and authorising the mortgagee of the land to hand the certificate of title to the transferee/donee, thereby arming the transferee/donee with the ability to effect the transfer: Corin v Patton (1990) 169 CLR 540; 92 ALR 1, applying Anning v Anning (1907) 4 CLR 1049 at 1056, Brunker v Perpetual Trustee Co. Ltd (1937) 57 CLR 555, Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 28–29, Cope v Keene (1968) 118 CLR 1 at 6, and Taylor v Deputy Federal Commissioner of Taxation (1969) 123 CLR 206. These principles were recently applied in Isin v Ozen [2016] NSWSC 1480 at [160]-[164] and on appeal: Isin v Ozen [2017] NSWCA 316 at [39] and [45] (per White JA).

56. [66]

    As of 1 February 2012, the deceased could not produce the certificates of title himself. The CBA held a first mortgage over Cwmteg as security for Richard’s borrowings. And the RAA held a second mortgage over Cwmteg as security for it advancing rural development finance to the deceased under the RAA’s Special Conservation Scheme. The correspondence at the time of the 1 February 2012 transfer does not indicate that the putative transferor, the deceased, gave any access to the certificates of title, held by the CBA, to enable Timothy to register the transfer in his name. The mortgages to the CBA and the RAA remained an insuperable obstacle to registration, which could not occur without satisfactory arrangements being made with the CBA and the RAA to pay out, to refinance the facilities secured by the mortgage, or to give their consent to the transfer. Nevertheless, the CBA and the RAA had the power to decide for themselves, whatever the deceased had said or authorised, to deal with the certificates of title in accordance with their existing rights against the deceased under their mortgages.

57. [67]

    Despite some correspondence about the issue with the CBA, the deceased remained unable to make the certificates of title available for Timothy to him to complete the transfer. The relevant evidence is in narrow compass.

58. [68]

    Earlier, on 10 April 2012, the deceased’s solicitors, Cole and Butler had written to the CBA and made an offer on behalf of Timothy, setting out the conditions upon which Timothy was willing to assume the mortgage in support of the guarantee, if Cwmteg were to be transferred to him. The terms offered included a defined maximum period for the guarantee, a reduction in the amount guaranteed, and the provision of information to Timothy about Richard’s business affairs. The letter reserved the deceased’s right under Conveyancing Act 1919, s 96, in relation to the transfer. Section 96 confers a right to have the certificates of title produced at the Registrar General’s office, “to allow the registration of any authorised dealing by the mortgagor with the land.”

59. [69]

    In December 2013 Cole and Butler wrote to the CBA on behalf of Timothy indicating it no longer wished to press the conditions he had stipulated in the letter of 10 April 2012 for taking over the mortgage. The firm stated that it looked forward “to hearing from you further so this matter can be completed”. But the deceased did not press the matter further with the CBA, made no demand under s 96 and the CBA continued to retain the certificates of title.

60. [70]

    Dealings with RAA on the issue depended upon the CBA’s position. In June 2012 Cole and Butler sought RAA’s consent to the transfer of Cwmteg “by way of intergenerational transfer” from the deceased to Timothy. Cole and Butler’s correspondence sought RAA’s consent to the transfer, claiming that it was consistent with the RAA’s Special Conservation Scheme. On 19 December 2013 RAA requested certain forms be signed to enable the RAA’s consent to the transfer to be progressed. But Cole and Butler wrote to the deceased and Timothy on 6 January 2014 suggesting that it may be “a waste of time” for them to pursue that application until they had the CBA’s cooperation and that “you may therefore choose to wait until you have heard from the bank before doing anything further”. There is no evidence that the deceased pursued the matter further with the CBA.

61. [71]

    Cwmteg therefore forms part of the estate both at law and in equity. Even though the attempted gift of 1 February 2012 was ineffective in equity, Timothy submits that when the Court is considering Richard’s family provision claim, the 1 February 2012 transfer of Cwmteg itself creates a very powerful reason why the Court should exercise restraint in attempting to deal with the property inconsistently with the deceased’s wishes as demonstrated by this attempt to gift the property to Richard.

62. [72]

    The deceased made his last will on 11 April 2013. This was only a week after Pembroke J’s judgment in the CBA proceedings. This will expressly adverts to the continuing indebtedness over Cwmteg to the CBA.

63. [73]

    In his 2013 Will, the deceased forgave Timothy and his wife Kerry any debt owing by them to him, left to Timothy the deceased’s interest in both the old and new Cwmteg partnerships, left legacies of $1000 for each of his grandchildren, left legacies of $170,000 to Anne and Cate (this time payable in equal instalments over ten years), and forgave a debt of $200,000 said to be owed to him by Richard concerning the ““Dyfed/Wadden transactions” on condition that Richard not commence family provision proceedings and that Richard secure a release of Cwmteg from any indebtedness owed by Ron Hunter Sales. Finally the 2013 will left the residue of the estate to Timothy.

64. [74]

    The lack of any specific reference to the gift of Cwmteg to Timothy in this 2013 will, seems perhaps to assume that the 1 February 2012 transactions had been (or may yet be) effective to transfer Cwmteg to Timothy. But in any event Timothy takes the deceased’s real estate as part of the residuary estate.

65. [75]

    Although this will also appointed Timothy and Anne as executors, Anne renounced probate and it was granted to Timothy.

66. [76]

    Clause 4 of the 2013 will provides that the deceased gives Richard the “$200,000 debt he owes me out of the Dyfed/Wadden transactions”. It is doubtful that any such debt exists and if it does it is almost certainly not enforceable and probably was not enforceable even at the time of the 2013 will.

67. [77]

    The debt is said to arise out of the sale of the Dyfed property on 24 March 1999 after which the Dyfed partnership in that property was wound up. It is best described in a letter of the deceased’s accountants to Cole & Butler on 23 April 2012. That letter explains that the net proceeds of the sale of the Dyfed property available in the Dyfed partnership ($379,278.84) were mainly paid to Richard and Debbie. It is said that Timothy and Kerry only drew $11,111.18 in contrast and as a consequence as at 30 June 2000 Richard and Debbie owed the Dyfed partnership, or Timothy and Kerry, the sum of $197,154.58.

68. [78]

    This figure is indeed close to $200,000. But it is not exactly $200,000. And how that becomes a debt owed by Richard to the deceased is something of a mystery. The accountant notes that the balance sheet for FY 2000 was the last balance sheet for the Dyfed partnership that was prepared and there is no money trail showing “if this debt was paid”. The accountant then takes a speculative leap and says, “if this was around the time the block of land [Oakstand] was transferred from Noel to Tim then Richard owes Noel”. The accountant is referring here to the fact that Tim and Kerry did not pay the deceased the $239,481.81, which was the expressed consideration for the transfer of Oakstand in March 2001 and so was a debt due by them to the deceased.

69. [79]

    But there are many problems with any contention that the forgiveness of this debt had any value. Among them are the following. There is no evidence of any assignment to the deceased of a debt of $197,154, which Richard and Debbie owed the Dyfed partnership or Timothy and Kerry. The Court does not accept any of Timothy’s evidence in relation to this debt which was a most unsatisfactory part of his evidence. The Court accepts Richard’s evidence that he was unaware such a debt existed. The existence of such a debt is inconsistent with the 2001 and 2012 wills, which forgive the debt Timothy and Kerry owed to the deceased on the transfer of Oakstand to them. And it is difficult to understand why a debt allegedly owed by Richard, which should have existed at the time of the 2001 will and the 2012 will was not mentioned in either will. Moreover, the debt was arguably unenforceable as being statute barred.

70. [80]

    Clause 4 of the 2013 will does not confer any value upon Richard. In substance, he does not receive any benefit under the will.

71. [81]

    From 2012 the deceased’s health began to decline more rapidly and in 2018 the deceased’s and Richard’s relationship had reached stalemate and their contact reduced to the barest engagement. Then a change in circumstances allowed for a thaw in their relations.

72. [82]

    Anne intervened when the deceased’s health worsened in 2018. To avoid him having to go into a nursing home, Anne generously volunteered to have him live with her. The deceased moved into her home in January 2018, and she cared for him at her home as part of her family. He stayed with her until he suffered a stroke and in about August/September the deceased moved into the Kaloma Nursing Home. He died there on 4 February 2019.

73. [83]

    Anne had not been satisfied that Timothy and Kerry were sufficiently involved in the deceased’s medical affairs at Cwmteg or that his medical and personal needs were being fully met. Nor was she satisfied that he had enough stimulation being engaged and communicating with the people around him, contributing to confusion and memory loss. Anne gives evidence, that the Court accepts, that Richard visited the deceased whilst he was staying with her and when he was later in Kaloma. These visits appear to have been welcomed and whatever estrangement had occurred had ended.

74. [84]

    Arising out of these facts there is a mild estrangement contest in these proceedings. A finding of estrangement is a relevant matter to determining whether provision should be made and what is an appropriate provision but the Court may enquire into any claimed estrangement: Burke v Burke [2015] NSWCA 195 at [95] and [103]. If the immediate cause is one-sided, it may be necessary to apportion responsibility for that situation: Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308 at [49]. But apportioning responsibility will not always be possible.

75. [85]

    Here the issue of estrangement is a minor one. Richard had a good relationship with the deceased almost all their mutual lives. In the last six or more years there was tension leading to and resulting from the CBA proceedings. But the proper interpretation of the situation is that it was personal tension arising from the financial structure which the deceased and Richard took on. The deceased willingness to assist Richard in acquiring Ron Hunter Sales was generous but at least in retrospect imprudent in scale. The size of the debt and the risk that Richard would not be able to reduce it steadily due to financial circumstances was an ever-present one in a borrowing of that kind. That risk was realised leading to family tension. Although the deceased went into the transaction with his eyes open he clearly regretted being entrapped by a debt level which vetoed his freedom to deal with Cwmteg as he wished.

76. [86]

    The deceased began to resent the situation which had been imposed upon him. He had few outlets to provide a balanced and objective view of the circumstances that led to his situation, so perhaps not surprisingly he began to blame Richard. Estrangement cases can be occasioned by emotional or physical abuse or other gross misconduct by a child towards a parent or vice versa. This case is remarkable for the absence of such misconduct, in what clearly was a loving family. The difficulty for the deceased was regretting what in retrospect was his over generosity to Richard in encumbering Cwmteg in 2007.

77. [87]

    The final financial position of the estate may be shortly stated. Cwmteg is valued at $6,360,000. Together with liquid assets of $56,381.49, the total gross assets of the estate are $6,416,381.49.

78. [88]

    The estate’s settlement with each of Anne and Cate total $700,000 and the legal costs the estate must pay to them are $40,000. The legacies to the grandchildren amount to $8,000 and the estate’s legal costs are estimated at $117,000. The estate then adds in the current amount of the contingent liability of the CBA of $885,056.94 to the estate liabilities to produce total estate liabilities of $1,750,056.94.

79. [89]

    This in turn produces net current assets for the estate of $4,666,324.55.

80. [90]

    Richard disputes this figure, saying the estate is more valuable, principally by writing off the liability to the CBA as only contingent. But unless Richard has other demonstrable resources to pay this debt, and his case does not say that he has, this debt though contingent, cannot be ignored. It should be included the way the estate has included it, as a liability of the estate.

81. [91]

    Richard’s case also tended to ignore the estate’s liabilities for costs and its obligations to pay out Anne and Cate and his submissions continued to cite the estate’s value at $6.7 million. But this is not a correct approach to assessing the estate’s financial position.

82. [92]

    The CBA proceedings had some positive effects. The deceased and the local CBA bank manager requested Richard to commence reducing the debt to the CBA. By the time of the hearing, as earlier indicated it had been reduced to an approximate outstanding balance of $885,000.

83. [93]

    The Court accepts Richard’s evidence that since the drought, many farmers in the region have switched from raising livestock to farming crops. Ron Hunter Sales’ revenue relies on commissions from livestock sales and has been impacted from the general regional de-stocking. Despite a fall in gross sales turnover the business was able to average earnings of $65,000 over the five years prior to 2020 and maintain net earnings of around (an average of) $65,000 with the highest departure from that average being just under $75,000 in 2018 and just above $56,000 in 2020.

84. [94]

    Richard’s evidence is that due to the deterioration of the capacity of Ron Hunter Sales to generate revenue and the prevailing uncertain market conditions, he is seriously considering closing Ron Hunter Sales. But there is little evidence of him acting upon that statement and it is belied by the relatively stable average earnings of the business in the last five years. The Court infers that with prudent cost-cutting and business management and some reduction of financial flexibility, the business has been able to ride out the drought.

85. [95]

    Richard and Debbie summarised their financial position in a balance sheet which, subject to certain comments and adjustments below, the Court largely accepts. They claim their combined net asset position is $957,720 including superannuation. This is comprised of the following assets and liabilities.

86. [96]

    Richard and Debbie own the following non-superannuation assets said to be worth a total of $936,420:

    1. (1)

       Their investment in Ron Hunter Sales (3 shares) valued at $100,000,

    2. (2)

       Their home also comprising a small farm, Jamaka, valued at $720,000;

    3. (3)

       Part of a commercial property situated in Moree, owned through a unit trust in which most of the units in the unit trust are owned by Richard’s accountant (a Mr Bill Malvern), the units being valued at $60,420; and

    4. (4)

       Some 30 cattle ($36,000), machinery ($5000), personal effects ($10,000) and cash ($5000).

87. [97]

    Richard and Debbie have the following liabilities totalling $222,700:

    1. (1)

       A loan, mortgaged against Jamaka of $165,500; and

    2. (2)

       A debt in the sum of $57,200 owed to Ronald Hunter Sales for the purchase of the couple’s sheep and cattle.

88. [98]

    This leaves Richard and Debbie with a claimed net asset position, excluding superannuation of $712,720. They also have a superannuation balance of $215,000 in the Jamaka Super Fund, a family self-managed superannuation fund. This gives them a resultant asset position, including superannuation, of $927,720.

89. [99]

    But this was strongly challenged by Timothy’s case. That challenge is best understood by more a detailed description of the structure of Richard’s financial affairs.

90. [100]

    Richard’s evidence in chief as to his financial circumstances was not very detailed. This attracted criticism from the estate which contended that he had not produced all his financial records. Richard then produced more records and more detailed affidavit evidence, which in the Court’s view presents a satisfactory picture of his financial position.

91. [101]

    Richard has not ever defaulted on the CBA facility the deceased provided him in 2007 to acquire Ron Hunter Sales. Richard says, and the Court accepts, that the deceased did not ask him to be released from the guarantee before the deceased commenced the CBA proceedings. As a practical matter the guarantee could not be surrendered because Richard and his wife did not have enough other assets to guarantee a liability of that order.

92. [102]

    Richard takes advice from his accountant Bill Malvern who has established several corporate entities and structures to assist him in asset protection and tax minimization. These are the following:

    1. (1)

       R & D Williams Partnership – Richard and his wife Debbie operate a partnership business of livestock sales from their hobby farm, “Jamaka”;

    2. (2)

       Ron Hunter Sales – this company runs the stock and station agency and Richard is its sole shareholder and director;

    3. (3)

       Williams National Moree Pty Ltd t/as LJ Hooker Moree – Richard’s daughter, Kahla operates this business and Richard and she are the directors and he is the sole shareholder; Richard says and the Court accepts that his daughter takes wages from this business and that neither Richard nor Debbie draw a wage or receive any dividends from the company and that his long-term intention is to transfer his shares to Kharla;

    4. (4)

       The R & D Williams Family Trust – this discretionary family trust with a corporate trustee was established for tax minimisation and asset protection for the benefit of Richard and Debbie;

    5. (5)

       The Moree Property Unit Trust – This unit trust with a corporate trustee owns the commercial building in Heber Street, Moree, from which both Ron Hunter Sales and LJ Hooker Moree operate; and the unitholders in this unit trust are the R & D Williams Family Trust and the Plaintiff’s accountant Mr Malvern; and

    6. (6)

       The Jamaka Superannuation Fund – Through a corporate trustee Richard and Debbie maintain this self-managed superannuation fund.

93. [103]

    Timothy’s case criticised the “complexity” of these financial structures created by Richard. But they are no more complex than those created by the deceased and not much more complex than those that might be established by many professional persons with limited capacity to otherwise minimise tax and protect their assets.

94. [104]

    There is a large area of agreement about the assets held by Richard and his wife Debbie. The Court will here focus on the main areas of criticism or difference.

95. [105]

    Timothy points out that Richard has the benefit of using the Heber Street, Moree commercial property. It is owned through financial structures, but the Court accepts that he is only a co-investor in it with Mr Malvern and does not control it entirely himself, which is explained later below.

96. [106]

    Timothy contends that Richard has cattle and machinery valued at $60,000 in the RN & DL Williams Farming Partnership. But any difference between this value and what Richard has disclosed is not material for the purposes of these proceedings.

97. [107]

    Timothy points out that the the financial reports of Ron Hunter Sales show that it has net assets of about $320,000 as disclosed in its financial statements for FY20. But whatever the value of this business, its ultimate realisable market value appears to be dwarfed by the size of its debt to the CBA which also probably constrains its growth.

98. [108]

    Timothy submits that the value of Williams National Moree P/L t/as LJ Hooker Moree has not been made clear from Richard’s financial disclosure however Timothy points out the past financials of that company show an average revenue generated from commissions of $266,288 a year. But it is not clear that this business has realisable market value for Richard as it is earmarked to provide his and Debbie’s daughter with a start in life.

99. [109]

    Timothy points to the several motor vehicles Richard has access to through his business, which are for personal and business use. But these are not of remarkable value and are in any event depreciating assets.

100. [110]

     Timothy says that the documents produced to Court reveal that Richard has not disclosed the loans he is owed by Ron Hunter Sales totaling approximately $80,000. But the loans are no more valuable than the realisable value of the business, which presently is overwhelmed by its debts to CBA.

101. [111]

     Richard’s average taxable income for the past five years is approximately $65,000 and Debbie’s average taxable income for the past four years is approximately $63,000. Timothy submits that their total net income in 2020 was $105,600 is quite ample for their needs at approximately $8,800 per month. But these combined incomes have been necessary to meet their living expenses, which they estimated at a total of $5,987 per month, which leaves them with a modest capacity to save for their retirements.

102. [112]

     Timothy also points to the relative financial stability in the last two years of Richard and Debbie’s superannuation fund, the Jamaka Superannuation Fund and that it is likely to have met some of their health insurance and life insurance costs. But the current fund balance is not large given their retirement needs and its stability is also an indirect indicator that they do not have sufficient surplus money to invest in superannuation.

103. [113]

     Timothy also points to the fact that Richard was able to arrange a lease for an $80,000 tractor to use on his hobby farm. But this seems to be a small-scale sensible financial venture allowing him to earn money contracting out the tractor to neighbouring properties. This shows a degree of small-scale enterprise and adaptability. It does not indicate significant hidden financial resources at Richard’s disposal.

104. [114]

     Timothy’s case submits that Richard has a significant capacity to pay down debt and that he should be debt free in a few years. Timothy’s case points to the accepted fact that over the six years from 2015 up to the time of the trial he was able to pay off approximately $1.1 million from the debt. He was able to do this by the combination of factors indicated in these reasons. The other very significant factor was a transaction.

105. [115]

     Richard entered a transaction in 2016 selling the Heber Street Moree commercial property to the Jamaka Superannuation Fund from which he was able to realise $600,000 to pay down the CBA facility. The Jamaka Superannuation Fund did this by borrowing $600,000 from the National Australia Bank (NAB). But after an ATO audit of the Jamaka Superannuation Fund Richard had to resell the Heber Street property to the Moree Property Unit Trust in 2017 for $620,000. Richard and his wife did not have sufficient capital at the time to purchase the building from the superannuation fund. But to facilitate the purchase they borrowed $60,000 from Ron Hunter Sales. The accountant offered to assist them in the transaction by contributing $150,000 to the Moree Property Unit Trust. The remaining balance of approximately $410,000 for the Moree Property Unit Trust’s acquisition was borrowed from the NAB. Richard has an option to purchase the property from the Moree Property Unit Trust by paying back the $150,000 to the accountant, exercisable after mid-2022.

106. [116]

     It was submitted on behalf of Timothy that Richard has an option to buy for $150,000 the property (which is presently valued at $640,000) back from the Moree Property Unit Trust through which it is presently held. But this somewhat oversimplifies the situation. Exercising the option would not give him an immediate net accretion in worth of $490,000 as he would still have to pay off the NAB loan. So, he has not understated his net worth in relation to this item of property.

107. [117]

     Finally, Timothy says that Richard’s gross assets are the order of $1,700,000, or about $600,000 more than Richard’s estimate of gross assets. But the major components of the difference are the market value of Ronald Hunter Sales and the availability to Richard of the market value of the Heber Street Moree commercial property. But neither of these criticisms is made out for the reasons already given.

108. [118]

     Timothy’s case accepts that his financial position is “effectively asset rich and cash poor” a not uncommon feature of parties in family provision cases involving rural properties.

109. [119]

     Richard’s wife Kerry works as a teacher at the Garah Public School on two days of the week and one day a week at the Moree Secondary College.

110. [120]

     The Defendant and his wife Kerry have net assets of $2,265,351. This is comprised of the following major assets:

     1. (1)

        Oakstand, valued at $1,400.000;

     2. (2)

        A home unit in Moree valued at $220,000;

     3. (3)

        Cash of $59,087;

     4. (4)

        Kerry’s superannuation balance is $119,183;

     5. (5)

        The net assets of the Cwmteg partnership are $558,069.

111. [121]

     These assets add to the sum of $2,356,339. But liabilities associated with the Cwmteg partnership (RAA loans) and the home unit in Moree (a small Westpac loan) amount to $90,988, leaving a net balance of $2,265,351.

112. [122]

     Timothy and Kerry’s personal monthly expenditure is $3670 per month.

113. [123]

     Richard challenges Timothy’s assessment of the market value of his own assets by pointing to the FY 22 budget for Cwmteg, which certainly shows that the business owners are budgeting for improvement in business. He points out that Cwmteg is debt free apart from the CBA mortgage and only $90,000 in loans are secured over Oakstand. The FY 22 Cwmteg partnership budget indicates Timothy holds an optimistic view of the rural operations planned for Cwmteg.

114. [124]

     The Court is cautious in assessing the financial evidence in this case. It can be accepted that the business of Ron Hunter Sales contracted considerably due to the prolonged drought and the poor prevailing market conditions. Richard submits that his business is now in decline and that he is poorly resourced to look after his needs in his old age. His counsel described his position as “precarious”.

115. [125]

     But the Court must act on the evidence before it, not on speculation. Both Richard and Timothy acknowledged in their oral evidence that the drought had broken. The Court was hampered by the fact that all the valuation and earnings evidence available both in relation to Cwmteg and Ron Hunter Sales was mainly based upon the experience of that property and that business in years of drought. Both Timothy and Richard were able with justification to look at the financial figures in evidence and strike a note of pessimism in their submissions.

116. [126]

     The Court cannot recalibrate the parties’ submissions to infer higher figures because the drought is broken. Because of the timing of the hearing the Court has no reliable basis to do that. But the Court has actual evidence from the parties that the drought has broken apart from taking judicial notice of that fact. The Court can use that common evidence to temper somewhat the competing pessimism in each party’s evidence. The Court does not wholly accept the negative outlook of either brother and is of the view that they each tended to put the worst face on their financial situation, because it suited their cases. And neither side had much of an interest in challenging the other on this issue without exposing his own similar weaknesses. But all that can perhaps be said is that each of Richard and Timothy has the potential for slightly greater financial flexibility in the short to medium term than they have stated.

Richard’s Claim for Provision under Succession Act, Chapter 3

1. [127]

   The test of whether provision should be made in any case is set out in Succession Act, s 59(1)(c):

2. [128]

   There are many judicial statements summarising the operation of what is said to be a two-step provision. For example, in Singer v Berghouse (No. 2) (1994) 181 CLR 201 at 209, the High Court of Australia said of the test under the previous legislation:

3. [129]

   Whether the two-step test operated with the same full vigour in the current legislation has been discussed in the Court of Appeal: Evans v Levy [2011] NSWCA 125. But such considerations are not an issue in this case, which is a very clear one.

4. [130]

   Some other authorities have explained in more detail the meaning of the words in the legislation "adequate", "proper", and "advancement in life". Some of these authorities have been conveniently collected in the decision of Hallen AsJ (as his Honour then was) in Drury v Smith [2012] NSWSC 1067 at [153], [154], [155], [158] and [160], which relevantly provides:-

5. [131]

   The principles regarding claims by an adult child are also well-established. They have been concisely summarised by Hallen J in several cases, most recently in North v Daniel [2021] NSWSC 828 at [162]-[168], and before that in Rogers v Rogers [2018] NSWSC 1982. In Rogers v Rogers, Hallen J discussed the principal guidelines in this area in the following terms: (a) The relationship between parent and child changes when the child attains adulthood, but a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed (b) it is impossible to describe, in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. It can be said that, “ordinarily, the community expects parents to raise and educate their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life (c) the community does not expect a parent to look after his or her children for the rest of [the child’s life] and into retirement but where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect parents to provide a buffer against contingencies (d) there is no need for an applicant adult child to show some special need or some special claim (e) the adult child’s lack of reserves to meet demands, particularly of ill health, which become more likely with advancing years, is a relevant consideration, and (f) the applicant has the onus of satisfying the Court, on the balance of probabilities, of the justification for the claim.

6. [132]

   There are no special rules or principles applicable to the claims of an adult child: Xiang bht Cao v Tong [2021] NSWSC 44 at [361]. Each case is considered by reference to its particular facts and circumstances.

7. [133]

   The Court may impose conditions upon and make consequential orders affecting the way any provision from an estate is provided: Succession Act, ss 65 and 66.

8. [134]

   There is no issue that Richard’s claim was brought within time and that Succession Act notices have been served on all potentially eligible persons.

9. [135]

   The Court must now decide whether an order for provision should be made and what, if anything, is appropriate provision in this case.

10. [136]

    Richard’s submissions. Richard submits that as the deceased’s son, the deceased had a continuing moral duty to support him. He submits that the deceased long ago recognised this by his provision of his guarantee to assist Richard with the acquisition of Ron Hunter Sales. But Richard submits, that moral duty did not end on the deceased’s death.

11. [137]

    And he submits that at more than $5.7 million, the estate is well able to support provision for all the deceased’s children. The prehearing settlement with Anne and Cate better positions the Court to settle upon an appropriate order for provision for Richard.

12. [138]

    Richard acknowledges that the Court must sever his and the estate’s financial affairs, which are currently bound together through the CBA guarantee. Indeed, this is accepted on all sides. At their stage of life, for their respective advancement in life they each need to make independent decisions about their own family and financial affairs.

13. [139]

    Richard accepts that the testamentary intentions that he says that the deceased had earlier expressed to him – that he would inherit half of Cwmteg – cannot have survived the scarring of their relationship through the CBA proceedings. But Richard submits that the deceased has already traced out the profile of the proper order for provision in his favour. He says the proper outcome was written into the deceased’s penultimate will and the Deed of Covenant, which the deceased signed with Timothy. On this scenario Oakstand, which was largely transferred to Timothy in March 2001 should be the source of provision for Richard so that Cwmteg can continue to be held by the primary heir, Timothy.

14. [140]

    But Richard’s submissions acknowledge that the Court cannot now give effect to such a solution, because the transaction by which the deceased transferred most of Oakstand to Timothy was over twenty years ago. The Court can only make provision out of the deceased’s estate and notional estate and, accordingly, has no jurisdiction to make orders concerning Oakstand. But Richard submits that the part of Oakstand the deceased had earmarked for Richard provides a guide to what the deceased himself saw as adequate provision to Richard before Pembroke J’s judgment in the CBA proceedings intervened.

15. [141]

    In opening submissions Richard submitted that a family provision order in an amount of the order of $1.4 million would provide Timothy with the ability to himself decide whether to retain Oakstand (and borrow against it) or to sell it. Richard submits that provision was made for him in that order of magnitude, and any award could be made conditional on the CBA guarantee and associated mortgage in favour of Richard’s interests being released. Such an award it is said would allow Richard to pay off his debt and top up his superannuation to a level in which he could have a modest but comfortable retirement. Richard submits that the estate is easily large enough to justify such an order and that a wise and just testator would have made such provision for him. He says that the deceased in fact made such provision until the result of the CBA proceedings was known and the deceased changed his testamentary intentions.

16. [142]

    Richard ultimately put this case in closing submissions on the basis that the hatched part of Oakstand which the deceased had promised him in the 2012 will, including both the part of Oakstand transferred to Timothy and Kerry and the part of Oakstand which the deceased had retained, was worth $1,480,000 after clearing, based on Exhibit 2. He submits that after meeting the other conditions that were imposed on him under the 2012 will, including making up 25% of the shortfall from the estate to pay out Anne and Cate ($162,500) for their settlement and paying the $50,000 to each of his siblings ($150,000), he should receive a legacy equivalent to the Oakstand related benefit he would have received under the 2012 will, which is a sum of $1,167,500.

17. [143]

    In summary, Richard says that he needed the provision of the deceased’s guarantee during the deceased’s lifetime to support him. The deceased freely and generously gave that guarantee reflecting his moral duty to Richard. Richard says he now needs an order for provision both to continue to reflect that moral duty, to disentangle the estate’s and Richard’s finances and to ensure Richard’s advancement in life and maintenance in his retirement.

18. [144]

    The estate’s submissions. The estate strongly contests Richard’s submissions. The estate’s primary submission is that the Court should dismiss Richard’s claim for provision. In the alternative the estate submits that if the Court contemplates ordering some provision for Richard, that order should only be for a small lump sum in the range of the order of $50,000-$100,000. The estate submits that the financial constraints imposed on the estate and on Timothy by these proceedings are a weighty consideration that should confine the order to a modest sum. The estate submits that Timothy’s capacity to fund provision for the legacies payable to his sisters and the costs of the estate coupled with his own costs of the proceedings is limited.

19. [145]

    Timothy quantifies his existing liability for orders for provision and for the costs of the proceedings, including administration costs, are currently in the order of $865,000 being: the agreed settlement provision for Anne and Cate – $700,000; provision for Anne’s and Cate’s costs – $40,000; the legacies to the 8 grandchildren – $8,000; and provision for his own family provision costs and probate costs (unpaid) – $117,000.

20. [146]

    The estate submits that it is clear from the above that the maximum provision that Timothy could bear, including meeting the costs of the plaintiff and having regard to the existing loans of $91,000, would be in the order of $50,000 to $100,000.

21. [147]

    Each party’s case describes the financial position of the other party in very different and somewhat unrealistic terms. Richard contends that Timothy’s admitted net asset position is 2.4 times better than Richard’s. He submits that the estate is worth over $5.7 million and that even with the legacies of $700,000 to be paid to Anne and Cate, there is ample in the estate, including the ability to obtain finance to make proper provision for Richard without over leveraging Cwmteg and putting it at risk. But this submission has not been tested by advancing and exploring any realistic proposal for raising finance on Cwmteg as Richard proposes and is therefore ultimately speculative.

22. [148]

    Timothy contends that Richard does not have dependents and can manage himself into a comfortable retirement. Timothy says that if he inherits Cwmteg from the estate, he can only borrow enough to meet estate liabilities and pay Richard a maximum of $100,000. Timothy relies upon a letter from Westpac in response to a recent finance inquiry which indicates that he could establish with Westpac an overdraft facility of $250,000 and bank bill business loan of $950,000, making a total borrowing capacity of $1.2 million, subject to meeting the bank’s normal lending criteria and a professional valuation of Cwmteg and Oakstand.

23. [149]

    Richard has compelling present financial needs. His principal need is to reduce the substantial debt that he has to the CBA, funding Ron Hunter Sales so that he can retire with an asset to sell and be relatively free of debt. That CBA business-related debt is a clear obstacle to him being able to move towards a reasonable retirement plan. If that debt were substantially reduced, what remained of it could be paid off far more quickly. No existing provision in the deceased’s 2013 will enable him to address that critical need.

24. [150]

    The 2013 will not only fails to address that need, it also leaves outstanding the problem of the linkage of Ron Hunter Sales with Cwmteg and Oakstand which neither the deceased nor the parties have been able to resolve. That is another compelling need for an order for provision for Richard, so that he can live an independent life free of the financial support and obligations to the estate or to Timothy. The current position is unacceptable and there is a compelling case for the Court’s intervention on this ground alone.

25. [151]

    The Court will make an order for provision in Richard’s favour. The appropriate order in this case is one that will give independence and some measure of security to Richard but without becoming unreasonably burdensome to the estate or Timothy.

26. [152]

    Timothy’s case points to opaque aspects of Richard’s disclosed financial position and the lack of early disclosure of some of his financial structures. That is true but has been partly explained in terms the Court accepts and which have not substantially undermined the reliability of the plaintiff’s case. And the estate does not advance compelling evidence of Richard having access to other funds which have not been disclosed.

27. [153]

    If it decides to make provision, the Court faces competing considerations that are like those that faced the deceased. Neither of the uncompromising extremes presented by Richard’s and Timothy’s cases is as attractive to the Court as representing appropriate provision and would potentially lead to ruinous results for one or the other brother.

28. [154]

    Richard’s case that he should receive an award of over $1.1 million plus costs on top of the other borrowings required to meet the legacies to Anne and Cate and the costs of the proceedings fails on several grounds. Undertaking borrowing for working capital burdening even a property the size of Cwmteg and Oakstand with about $2 million worth of structural debt, would set up Timothy for years of financial instability as he sought to pay down his obligations from the farm’s earnings.

29. [155]

    Moreover, such a case unrealistically attaches itself to a scenario of returning Oakstand (or its financial equivalent) to Richard, a scenario which could perhaps reasonably be contemplated at the time of 2012 will. But even the deceased seems to have abandoned this scenario by the time of his 2013 will. And whatever the deceased may have thought in 2012 the objective circumstances of years of drought affecting Cwmteg from 2017 to 2020 severely testing its carrying capacity, show the need, as Timothy explained, for the combined operation of Cwmteg and Oakstand. The deceased’s vision could not readily have been achieved. Given the financial conditions placed on Richard in the 2012 will, the poor performance of Ron Hunter Sales during the drought would also have made the deceased’s vision difficult. The Court does not see why it should attempt now to implement a solution which the deceased contemplated but was never able to execute and which is now 10 years out of date. Richard’s submissions in support of this contention took the Court through recent valuations of respective parts of Cwmteg and Oakstand. But the Court’s rejection of this approach means that it is not necessary to analyse this evidence in these reasons.

30. [156]

    In the meantime, Richard had the benefit of another 10 years of first mortgage security support from his father and then from the estate, without which his borrowings would not be possible. Every year such support confers a financially valuable benefit upon him. Valuing that benefit is difficult and no attempt has been made to value it independently in these proceedings, for it is Ron Hunter Sales that pays interest on the CBA loan. But the lost opportunity to the deceased and now to the estate is significant over such a long term. It prevents the capital of a property as valuable as Cwmteg and Oakstand from supporting the partnership business being conducted on the property through the vicissitudes of a highly volatile and fluctuating rural market moving in recent years from drought to flood. The lack of access to capital over such a long time is one measure of the high cost of the deceased’s guarantee to Richard’s business and is another compelling answer to Richard’s case for a large award of the order of $1.1 million.

31. [157]

    But Timothy’s case is also understated. It does not recognise Richard’s real current financial needs stated earlier among these considerations. An award of $50,000 or $100,000 would do little to improve the debt position of Ron Hunter Sales other than to meet interest payments for a few years. And that would leave the CBA debt in place.

32. [158]

    Nor does Timothy’s case give proper recognition to the financial flexibility that comes with a property of the size of Cwmteg and Oakstand. He has choices because of the combined size of the properties, as to where and over what term he borrows, whether he would consider selling some small part of the properties, which would be less likely to affect their overall financial viability and earning capacity.

33. [159]

    This is a case where the Court should reach a figure that recognises Richard’s need for capital for his maintenance and advancement in life and these competing considerations. In the Court’s view an appropriate balance which will not jeopardise Timothy’s future security on Cwmteg and Oakstand and which will give Richard an opportunity to stabilise his position before retiring is an award of a legacy of $625,000. Timothy will regard this as adding a significant financial burden to him, but it will nevertheless leave Richard with a debt of approximately $250,000 to the CBA. This remaining debt can foreseeably be eliminated over the next few years in improving or stable rural conditions.

34. [160]

    The Court can draw upon the deceased’s wisdom in rural affairs in structuring this award of further provision to Richard. In both the 2012 and 2013 wills the deceased allowed the legacies for Anne and Cate to be paid over a period, respectively seven years and 10 years, the burden of which was shared 75:25 between Timothy and Richard. This was no doubt to accommodate the obligation he had created in the will to the uncertainty of the income from Cwmteg and Oakstand and from Ron Hunter Sales.

35. [161]

    A similar mechanism should be built into the present award, with one difference. The term of seven or 10 years is not appropriate for these parties at their age and stage in life. They need greater certainty much earlier, so they can each soon find a clear financial path. The Court will allow the estate 2.5 years to pay this sum, until 30 November 2024. But if circumstances permit the estate to organise its finances to pay the $625,000 earlier than that, then it should do so. The Court’s orders will provide an incentive for as much of it as is possible to be paid within six months, that is by 30 November 2022. And in default of payment by that date interest will be chargeable from the date of these orders on the amount unpaid from time to time at Supreme Court rates of interest on judgments. Such an order is appropriate where if the legacy remains unpaid the capital it represents will be used by Timothy to support a business.

36. [162]

    Distributing the payment of the legacy over several years also gives due weight to a feature in family provision cases involving farming properties such as Salmon v Osman [2015] NSWCA 42 that some consideration should be given to a testator’s intention of maintaining a viable farming property for the family member who inherits and remains on the land.

37. [163]

    But these orders do not directly address the CBA debt and the mortgage security over Cwmteg. They provide a structure in which the debt can be reduced and ultimately removed. Richard submitted that provision should be made for him on condition that the CBA guarantee and associated mortgage were released. But the Court is unwilling to impose such a condition, because if it cannot be fulfilled, either another legal standoff may ensue, or the risk of unfairness will arise of Richard not getting anything from the estate. So, the Court will direct the parties to come up with plans for the release of the guarantee and mortgage to the CBA. The Court is ready to address the possibility that the parties cannot reach agreement about how to remove the guarantee and mortgage from Cwmteg within the time allowed by the Court’s orders.

38. [164]

    The Court will therefore grant liberty to apply and will stand ready if necessary to exercise its powers to compel both Richard and the estate, or Timothy in his personal capacity, to take such steps as are necessary to remove the CBA guarantee and mortgage from Cwmteg by 30 November 2024. Once the parties appreciate that this aspect of their affairs will ultimately be subject to compulsory orders of the Court, they should be motivated to make the difficult decisions required now that the estate’s financial obligations have been clarified.

39. [165]

    The Court will place upon both parties an obligation to undertake their best endeavours to reach agreement to unwind the existing CBA guarantee and mortgage in the near term, namely by 30 November 2022. If the parties cannot reach such a plan by mutual agreement the Court will intervene and is likely at that time to direct the parties to advance their competing plans, but the unwinding must occur by no later than 30 November 2024. The Court has ample power under Succession Act, ss 65 and 66 if required at that time to make orders compelling the parties to take specified steps to remove the CBA guarantee and mortgage from Cwmteg and the Court reserves that issue for further consideration.

40. [166]

    The Court will treat any contest in relation to these plans to remove the CBA guarantee and mortgage as a separate part of these proceedings warranting separate costs orders and is likely to require the parties to file Calderbank letters with their plans. This will ensure realism in the plans to be put forward. Unreasonable plans may become the subject of a costs order and even an indemnity costs order against an unsuccessful party proposing them. It is not necessary to make these full directions at this stage but these reasons foreshadow that this is the approach the Court will take if and when the time comes for its intervention. The parties know that when negotiating a mutually agreed removal of the mortgage there is a clear default position.

41. [167]

    The Court is conscious that the legacy ordered in these reasons exceeds the borrowing capacity Timothy has demonstrated in the financing offer that he received from Westpac 12 July 2021. But the determination that the Court makes in these reasons provides greater certainty to the parties that was not available at the time that that letter was obtained. Now it is clear that Richard’s claim to Oakstand has been rejected and the estate’s final payment of a significant legacy to Richard has been deferred by two and half years. This significantly changes the foundation for the separation of the financial affairs of Richard and the estate and for renegotiating the CBA mortgage. That should also provide more borrowing options than are reflected in the letter from Westpac. Not all the assumptions behind the Westpac letter have been teased out and whether the whole, or only part of Oakstand was offered as security. But it was obtained under the shadow of uncertainty of the CBA mortgage. It is expected that with the benefit of this judgment and with the assets that he has and will receive, Richard should soon be able to bear the burden alone of funding Ron Hunter Sales from his own assets and financial resources.

42. [168]

    Both sides need to accept in this case that the Court has tried to resolve the difficult conundrum it faces, and which faced the deceased, and that it is possible that the solution may not be successful because finance cannot be obtained and that Ron Hunter Sales or parts of Cwmteg or Oakstand may have to be liquidated to pay the legacy ordered by the Court. But the limits on the parties’ available financial resources are facts on the ground that simply must be accepted. The Court must do the best it can whilst facing those real limits, to apply the relevant law as creatively as it can for these parties to achieve as stable and beneficial an outcome for each as is possible.

43. [169]

    The Court raised with the parties whether it should make cost-capping orders, a well-established jurisdiction in family provision cases. The parties need as much certainty as possible as they try and finalise the remaining administration of this estate and as they negotiate the removal of the CBA guarantee and mortgage.

44. [170]

    The Court’s orders with these reasons complicate the making of costs capping orders, as it is now clear that more consequential work will be required than was anticipated at the hearing. So, the Court proposes to make costs capping orders in accordance with the parties’ last estimates of costs only in respect of all costs incurred up to the conclusion of the hearing. Any later disputes between the parties may need to be covered by a separate costs regime.

45. [171]

    Mr Brendan Moylan the solicitor for the plaintiff has estimated in an affidavit dated 7 August 2021 that his combined solicitor’s and counsel’s fees and client’s costs on an indemnity basis to date at $101,844. Mr Moylan estimated his further costs of the conclusion of the hearing on the indemnity basis at an additional $64,200. The total of Richard’s costs up to the conclusion of the hearing is $166,044 on the indemnity basis. The total of counsel’s fees comprising this sum is $73,564. The balance of $92,480 represents the solicitor’s professional fees and some disbursements.

46. [172]

    What fees Mr Moylan and counsel charge their own client is a matter between them. Given the nature of the orders made, being a fixed legacy, Richard is unlikely to be involved in a dispute about the fees of the solicitors for the estate. The Court is concerned to avoid unnecessary disputation between the parties about costs. The Court has only made an order for the estate to pay the plaintiff’s costs on the ordinary basis, not the indemnity basis. The Court will therefore cap Richard’s recovery against the estate up to the conclusion of the hearing at 100% of counsel’s fees ($73,564) and 80% of solicitor’s fees ($73,984), namely a total of $147,548.

47. [173]

    General liberty to apply will be granted in relation to the implementation of these orders and a shorter period of 14 days will be allowed by motion to deal with costs issues and any other consequential relief that is required.

48. [174]

    For these reasons the Court makes the following orders and directions:

    1. (1)

       Order that a legacy of $625,000 be paid to the plaintiff out of the estate of the late Ioan Noel Williams (“the estate”) by 30 November 2024 in addition to any other benefits received by the plaintiff under the last will of the deceased dated 11 April 2013 upon the following conditions:

    2. (2)

       Order the plaintiff and the defendant shall each undertake best endeavours to reach agreement with the other by 30 November 2022 for a plan for the revocation and discharge of the guarantee and first mortgage to the Commonwealth Bank of Australia Ltd secured over Cwmteg in favour of Ronald Hunter (Sales) Pty Ltd (“the CBA securities”);

    3. (3)

       In the absence of agreement pursuant to order (2) the parties are directed to contact the chambers of Slattery J to relist the proceedings for the Court for the making of orders binding on the parties for the revocation and discharge of the CBA securities;

    4. (4)

       Order that the plaintiff’s costs to the conclusion of the hearing be paid out of the estate on the ordinary basis capped to a maximum calculated in accordance with the last estimate of costs provided to the Court in Mr Moylan’s affidavit of 7 August 2021 but discounted by 80% in respect of solicitor’s costs to reflect the difference between indemnity and ordinary costs, to a figure of $147,548;

    5. (5)

       Order the defendant’s costs be paid out of the estate on the indemnity basis;

    6. (6)

       Direct that if any party seeks a special costs order or any other consequential relief not dealt with by these reasons that party should do so by motion within 14 days, that is on or before Tuesday, 14 June 2022; and

    7. (7)

       Otherwise grant liberty to apply in relation to the implementation and performance of these orders.