Pillinger v Lees (No 2) [2025] NSWSC 97

Supreme Court New South Wales

Medium Neutral Citation: Pillinger v Lees (No 2) [2025] NSWSC 97 Hearing dates: 30 October 2024 Date of orders: 25 February 2025 Decision date: 25 February 2025 Jurisdiction: Equity Before: Hmelnitsky J Decision: See [33] Catchwords: SUCCESSION – Family provision – Nature of Orders Legislation Cited: Succession Act 2006 (NSW) s 59 Cases Cited: Pillinger v Lees [2024] NSWSC 1067 Texts Cited: Nil Category: Consequential orders Parties: Anecia Pillinger (Plaintiff) Lucille Janette Lees (Defendant) Representation: Counsel: C Hodgson (Plaintiff) M Pringle (Defendant)

Solicitors: Glass Goodwin (Plaintiff) VRT Lawyers (Defendant) File Number(s): 2023/24751

JUDGMENT 1. In my reasons for decision delivered on 23 August 2024 (Pillinger v Lees [2024] NSWSC 1067), I found that the late Mr Pillinger had failed to make adequate provision for the plaintiff and that it would be appropriate to make an order under s 59 of the Succession Act 2006 (NSW) for further provision. I found that the adequate provision would comprise the sum of $1,500,000 for accommodation; a fund of $850,000 to produce income; and a fund of $400,000 for contingencies. I also found that the burden of that additional provision should be borne by the other beneficiaries of his estate, namely his children, disproportionately. 2. For the reasons I gave at paragraphs [152]-[162], I did not make final orders to give effect to my conclusions at the time. As I explained, the estate includes three residential properties in Balmain and a semi-rural property southwest of Sydney, each of which was specifically devised under the deceased's Will: see paragraphs [8]-[10] of my initial judgment. The overall scheme of the Will was that each of the plaintiff and the other beneficiaries was to receive a particular property or share in a property. 3. However, the requirement to make further provision for the plaintiff (which no-one disputed) and the costs of the litigation mean that the beneficiaries are unable to receive their gift of property unless they are willing and able to contribute to the estate to meet their share of the costs of the litigation and other estate expenses and their share of the burden of further provision for the plaintiff. The financial situation of the beneficiaries means that this is unlikely to occur, which means that it is probable that the properties will need to be sold in order to administer the estate. That is something that the deceased did not wish to occur. 4. I suggested at paragraphs [152]-[162] that an appropriate order for further provision might, in these circumstances, involve a division of the estate in a way that was different to what was proposed in the Will but which would (a) partially accommodate the plaintiff's need for further provision by the transfer of the Little Darling Street property, where she is already living, and (b) adhere, albeit only to an extent, to the deceased's plan for the other Balmain properties to be inherited by his children. 5. I invited the parties to make further submissions on this issue, which they duly did. Following a short hearing on 30 October 2024, the parties made further written submissions which were received on 18 and 20 December 2024. 6. The parties addressed their submissions to the following three possible outcomes. 7. Option 1 would simply involve an order for provision in the sum of $2,750,000 to be provided to the plaintiff in cash from the sale of estate assets. 8. Option 2 would involve an order for provision to be made for the plaintiff by a transfer of the Little Darling Street property plus an amount of cash. The other properties would be sold as needed and, after a deduction for each beneficiary's obligation to contribute to estate expenses and to the burden of additional provision, they would receive cash in lieu of the specific devise under the Will. An unavoidable difficulty about Option 2 is that it would deprive Khristine of the Little Darling Street property which was given to her under the Will, albeit that she would almost certainly not be able to take that gift because of the matters outlined above. 9. Option 3 would seek to deal with this last-mentioned difficulty. This option would also involve a transfer of the Little Darling Street property to the plaintiff plus cash but would also involve an adjustment of rights as between Khristine and David, such that Khristine would receive the Montague Street property and David would receive cash (less his obligation to contribute). To recap, the Montague Street property was left to David under the Will but his financial circumstances and his requirement to contribute to costs and further provision mean that the property will be sold under both Option 1 or Option 2. He has not indicated a willingness to contribute cash to the estate to prevent that occurring. 10. Option 3 involves difficulties. If I make an order adjusting the rights of the beneficiaries such that Khristine is entitled to receive the Montague Street property in lieu of the Little Darling Street property and that David is instead entitled (at least in the first instance before taking into account costs and contribution to further provision) to residue in an amount equal to the value of the Montague Street property, it will still be necessary for the defendant to identify the correct value of those properties and to calculate the shortfall required for the administration of the estate, which may be more than had previously been envisaged if the Razorback property sells for less than anticipated or if it is unable to be sold. It will also be necessary for Khristine and Gina to satisfy the defendant that they are able to make cash contributions to the estate such that the defendant is able to convey the Balmain properties to them. There will remain the prospect that they will be either unable or unwilling to do so when the time comes. 11. The parties were in general disagreement as to which of these three options was most appropriate. The defendant contends for Option 1, which is unquestionably the most straightforward from an administrative point of view, although it would almost certainly involve the sale of both Little Darling Street and Montague Street. The plaintiff contends for Option 2 or Option 3. The other beneficiaries contend for, or are at least content with, Option 3 or some version of it. 12. There are however some additional complications. 13. The estimated value of the Little Darling Street property is $1,787,000, which is more than the $1,500,000 I identified as being required for the plaintiff to obtain accommodation. She nevertheless submits that it would still be appropriate for her to receive a sum of $1,250,000, comprising the fund to produce income together with the fund for contingencies which I described in my earlier reasons, because she would receive the property with a latent CGT liability of approximately $330,000 (see Part 3.1 of the Income Tax Assessment Act 1997 (Cth) and [84] of my initial judgment) that would otherwise have been borne by the estate if the property had been sold, and because she will still need that sum of cash to meet her income and other needs. 14. The defendant submits that the full value of the property should be taken into account in determining the amount of cash to be paid to the plaintiff by way of provision, with the result that she should receive an amount of only $962,500. I will deal with this issue below. 15. Furthermore, the Razorback property has not sold. One possibility is that the property has a lower value than the evidence suggests. The valuation of that property to which I referred in my earlier reasons may therefore be inaccurate. If that is the case, the amount of additional provision which the beneficiaries are required to bear will increase. A question arises as to whether that increased burden (ie, the amount over and above the amounts I referred to in paragraph [151] of my initial judgment) should be borne in the percentages I mentioned in that paragraph or in some different proportion. I will also deal with this issue below. 16. It is also important to note that David's mother has died and he has become entitled to her estate, including the house at Birrong in which he has been living.