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. Which Option? 1. The defendant submitted that Option 1 is the most administratively straightforward option, which is undoubtedly correct. She also submitted that it involves doing the least violence to the Will, because the plaintiff's gift, Razorback, is already in the process of being sold and she could only realistically have expected to receive cash from the estate. 2. However, as I mentioned at [158] of my initial judgment, the scheme of the Will was that none of the properties should be sold. Given this fact, it would be somewhat incongruous to make an order for further provision entirely in cash, thereby necessitating the sale of the properties. This is particularly so given that the Little Darling Street property seems perfectly suitable to meet the plaintiff's housing needs; and that the alternative (ie, generating cash to meet the plaintiff's housing needs) exceeds the cost to the estate of transferring the Little Darling Street property to her in specie, even if she still receives $1,250,000 in cash for her other needs. 3. Of the other options, Option 3 has the advantage that it, potentially at least, avoids the sale of the other properties and does so in a way that the other beneficiaries either prefer or are at least content with. However, the difficulties which I mentioned above need to be addressed. Subject to resolving those issues, I consider that Option 3 is the most appropriate option. The value of the Little Darling Street property 1. In my view, if the plaintiff is to receive further provision by way of an order that includes the transfer of the Little Darling Street property, it will be appropriate for her to receive additional cash in the sum of $962,500 as the defendant contends. My reasons for reaching this conclusion are as follows. 2. In my earlier reasons I found that the plaintiff should receive further provision in the total sum of $2,750,000. That figure reflected, in part, my conclusion that the deceased should have provided for the plaintiff's accommodation for the rest of her life but that he had failed to do so. If she were required to vacate the Little Darling Street property, I found that it would be reasonable to expect that she would wish to obtain a small apartment nearby and that this would cost her approximately $1,500,000. I also found that she had a need for income and a fund to meet contingencies. 3. However, an order for further provision is not an order by way of compensation. The three sums I identified in my earlier reasons, being for accommodation, future income and contingencies, are not heads of damages for economic loss. In reaching a conclusion as to an appropriate order for further provision, it is appropriate to take account of the overall effect of the order, particularly where, as here, the order may provide for property other than cash. 4. Had the deceased appropriately turned his mind to the plaintiff's future needs, it is likely that he would have taken into account more than just her need for cash. He would also have taken into account her strong desire to remain living in the Little Darling Street property. 5. It is also necessary to take into account the effect of an order for further provision on the estate as a whole. The value at which the Little Darling Street property is transferred to the plaintiff, and the related issue of the value at which the Montague Street property is transferred to Khristine, has an impact on the amount which the other beneficiaries are required to contribute to meet a shortfall of funds. David's interests are particularly affected by this issue, because the starting point for working out his entitlement will be the value at which the estate disposes of the Montague Street property to Khristine. Khristine, in turn, would be required to make a contribution to the estate to make up the shortfall between what she was given in the Will (Little Darling Street) and what she would be entitled to under the orders for provision (Montague Street). 6. If the properties are transferred at their full market values (ie without any reduction for latent CGT liability) and if the plaintiff receives the sum of $962,500, David's net entitlement before costs and other expenses will be $1,560,000, assuming the values referred to in my earlier reasons. By comparison, if Montague Street is required to be sold, his net entitlement would only be $1,090,633.70. In circumstances where he is already bearing a significant portion of the burden of additional provision, there is much to be said for preserving his already reduced net entitlement as much as possible. 7. If the plaintiff receives $962,500 in cash in addition to the Little Darling Street property, she will not receive the specific amounts which I earlier concluded were appropriate to meet her financial needs. On the other hand, she will receive a property worth $287,500 more than what I considered necessary to acquire suitable accommodation. Moreover, she will be able to remain living in the Little Darling Street property, which is something she very much wants to do. 8. I accept the defendant's submission that the plaintiff should receive cash in the sum of $962,500 under Option 3. The burden of provision if the Razorback property sells for less than $2,550,000. 1. The defendant submits that any additional amount should be borne rateably by the beneficiaries according to their prima facie entitlement to the value of the estate. Khristine's position is that the burden should be borne in the percentages mentioned in paragraph [128] of my initial judgment. She has submitted (in submissions furnished to the Court by the defendant) that the result of requiring any increased burden to be borne by the parties in the manner suggested by the defendant will be that Gina and Khristine will contribute more to that part of their mother's additional provision than David. She submitted that this would be contrary to what I said at paragraph [143]: "I therefore conclude that it is just and equitable that David should bear significantly more of the burden of the additional provision for Anecia than either Khristine or Gina." 1. However, what I said at paragraph [143] was in the context of the valuations and amounts referred to earlier in my reasons. In that context, I said that it would be reasonable for David to bear the burden of the shortfall as to an amount of $950,000. I reached that conclusion having regard to my assessment of his overall circumstances and needs and having regard to the likelihood that he would inherit his mother's house, which has now occurred. However, beyond that amount, I do not consider it would be fair to require him to contribute to the shortfall disproportionately to his entitlement to the property of the estate. In my view, if the beneficiaries are required to bear the burden of further provision in amounts more than contemplated by me in my earlier reasons, they should do so as the defendant submits, namely rateably according to the value of the property they were otherwise entitled to receive under the Will. 2. The defendant submitted that the burden of administration expenses of the estate should, generally, be borne by all beneficiaries rateably according to the value of their adjusted entitlements. Leaving aside the question of how the burden of additional provision should be borne, which I have dealt with above, I agree. Other matters 1. The defendant has sought direction as to various matters concerning the administration of the estate and the steps to be taken to give effect to my conclusions. The orders are necessarily somewhat complicated. I will give the parties general liberty to apply. The parties had asked me to note a form of theoretical outworking of these orders including notional distributions to the beneficiaries on the assumption of certain values being achieved for the properties and a variety of other matters. I will not note that document because I cannot be confident that I can identify all of the bases on which it has been prepared. This is not a criticism of the document. If there is any need for further direction in relation to the matters set out in that document, or otherwise, the parties should exercise liberty to apply. Orders 1. The parties had helpfully reached broad agreement on a form of orders that takes into account the possibility that I would reach the conclusions stated in these supplementary reasons. I will therefore make orders reflecting what they called Option 3 but with some minor changes. Because the orders are complex and because many of the orders are in the nature of directions or advice to the defendant as to the manner in which the estate is to be administered, I will give the defendant liberty to apply for further directions for a period of six months. 2. The Court therefore: 1. ORDERS pursuant to s 59 of the Succession Act 2006 (NSW) that the Plaintiff receive provision out of the Estate of Bruce Arthur Pillinger (the "Estate" and the "deceased"), in lieu of the provision made for her in clause 3D of the deceased's Will dated 9 May 2011, consisting of the following: 1. An absolute devise of the real property situated at and known as 20 Little Darling Street, Balmain in New South Wales (being the whole of the land in Identifier Folio 292/1009922) ("Little Darling Property"); and 2. A lump sum in the sum of $962,500. 1. Pursuant to s 59 of the Succession Act, s 46(2) Probate and Administration Act 1898 (NSW) and r 54.3(4) of the Uniform Civil Procedure Rules 2005 (NSW), the Court makes the orders and directions and gives advice to the defendant in accordance with Annexure A to these orders. 2. ORDERS that no interest is to be paid on the lump sum referred to in Order 1(b) if it is paid in accordance with these Orders and if not so paid, interest is to be paid on any unpaid part thereof, calculated at the rate prescribed by s 84A(3) of the Probate and Administration Act , on any part of the lump sum not so paid, from 28 days after the day after payment was due, until the date of payment in full. 3. ORDERS that the Plaintiff's costs of the proceedings, calculated on the ordinary basis, be paid out of the estate of the deceased. 4. ORDERS that the Defendant's costs of the proceedings, calculated on the indemnity basis, be paid, or retained, as the case may be, out of the estate of the deceased. 5. GRANTS LIBERTY to the parties to apply, in these proceedings, for consequential and ancillary orders for the purposes of, or with respect to, giving effect to and implementing the orders made herein for a period of six months from the date of this judgment. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 February 2025