The integers which feed into the overall equation in this unfortunate family provision claim are somewhat simple.
The Deceased, Elizabeth Ann Baker, passed away on 1 July 2022 leaving an estate consisting of $214,585 in various bank accounts and a 2008 Subaru vehicle of little or no value. The net balance after payment of funeral expenses and the like, all of which is now in a Commonwealth Bank Business Transaction Account, is $203,045. In the scheme of things this is a modest estate.
The deceased is survived by two daughters and two sons (collectively, the children):
Robert James Baker (Robert) (now 67);
The First Plaintiff, Annette Rita Baker (Annette) (now 6);
The Second Plaintiff, Denise Maree Hughes (Denise) (now 65); and
The Defendant, Allan Christopher Baker (Chris also known as Allan), the youngest (the evidence does not reveal his age).
The contest is between Annette and Denise, on one hand, and Chris, on the other. Robert played no role in the proceedings, other than to provide an affidavit in support of Chris.
The deceased made a Will (the Will) on 6 April 2021, leaving her vehicles to Chris and the residue of her property to those of her children who survived her. It is not in issue that each of the children is entitled to a quarter of the money in the estate. Thus, if matters remain undisturbed, each will take about $50,000 (less whatever share of costs is allowed to the estate).
The deceased lived at 35 Alfred Street, North Haven (the house) on the NSW North Coast. She had inherited it from a person with whom she had once had a relationship. The deceased and her husband (the father of the children) lived in the house until 2003, when he died. Chris lived with his parents intermittently from the 1980s but moved in permanently after his father passed away. From 2003 and until she died, Chris was the deceased's permanent carer. He maintained the house. It was inundated with water when the area flooded in March 2021, Chris and his son, Jarden, a concreter, and some friends, rebuilt the interior of the house. He says he spent about $30,000 on materials (although the source of this money was not revealed by the evidence).
Sometime before 2020, the deceased told Chris that the house was going to be left to him because he had been with her for many years and but for that, she would have been in a nursing home. She told him that she was going to "sign the house over" to him but stay there until she died and that he would have to keep looking after her, to which he agreed. The evidence does not suggest that Chris did not look after her.
On 19 February 2020, the deceased transferred the house to Chris for $1.00.
The house is worth in the region of $610,000.
In 2007, Denise's son Shane, then 12, made a complaint to the police that Chris had sexually assaulted him. Chris was subsequently charged and pleaded guilty to this reprehensible offence. Chris went to prison for 18 months. It was not the first time he had been in prison. He had on a prior occasion been jailed for drunk driving. He says he has never worked due to medical issues, including anxiety, agoraphobia and depression. So far as may be relevant, I proceed on the footing, that Chris is not someone deserving of admiration.
As one can well understand, these circumstances caused a major rift between Annette and Denise, on the one hand, and Chris, on the other. Annette and Denise took the view that the deceased supported Chris on the issue. Denise says that after this she was not able to reconnect with her mother. Annette says her relationship with her mother changed after Chris was convicted.
However, Robert gave unchallenged evidence, by way of an affidavit sworn 8 September 2023, upon which he was not cross-examined, that Annette did not have a good relationship with the deceased for a very long time before the deceased died and well before Shane reported Chris to the Police. Robert described Denise's relationship with the deceased as "toxic" well before 2007. Chris' evidence was consistent with this.
Neither Annette nor Denise attended the deceased's funeral because they did not want to be in the company of Chris and his family.
Shane sued Chris for damages in the District Court. The proceedings were resolved when, on 17 November 2023, Chris consented to judgment in favour of Shane for $275,000 (inclusive of costs and disbursements). Interest continues to accrue on the judgment at 10.35% p.a. As at the date of the trial, interest amounted to $13,334. Shane procured the issue of a writ for execution, the costs of which are $2,300. This means that Chris owes Shane, not less than $290,634. It is common cause that Chris has to sell, and is in the process of selling, the house to meet the judgment. He moved out a month or two ago. By all accounts, the house is likely to sell for $610,000. Agents' fees and other disposition costs are of the order of $20,000. This means that the net proceeds from the sale of the house will be about $299,000.
The evidence does not establish, in any satisfactory way, the reasons for the original estrangement of Annette and Denise from the deceased. There was a suggestion that a cause was that Annette and Denise borrowed money from the deceased which they did not pay back. Whilst I find that there were difficulties prior to Chris' heinous behaviour, I am not in a position to be satisfied as to what caused the estrangement.
What is, however, clear is that Annette and Denise deeply resent the fact that their mother gave the house to Chris alone. They believe that this was unfair not least of all because of Chris' criminal behaviour and their belief that the deceased sided with him. They freely admitted that their resentment and belief of unfairness is the driving force behind this claim.
Against this background Annette and Denise, by Summons issued on 12 July 2023, claim orders that provision made for their maintenance, education and advancement in life pursuant to s 59(2) of the Succession Act 2006 (NSW) (the Act) out of the estate and/or notional estate of the deceased. The Summons claims an order that the costs of the parties be paid out of the estate.
Sections referred to below are to sections of the Act.
[2]
THE LEGAL PRINCIPLES
A brief synopsis of the relevant provisions of the Act and the legal principles pertinent to the case will suffice.
The following useful summary of the basal provisions of the Act concerning this type of application was recently provided by Basten AJ in Bohen v Mitchelmore [2024] NSWSC 171 (Bohen v Mitchelmore) at [18]-[20]:
[18] The statutory scheme for family provision orders is found in Pt 3.2 of the Succession Act. It commences by identifying classes of "eligible persons" who may make such an application: s 57. The classes include a child of the deceased person: it is not in dispute that the daughters were thus eligible persons pursuant to s 57(c).
[19] The Court may make such an order if satisfied that, at the time the Court is considering the application, "adequate provision for the proper maintenance, education or advancement in life of the person … has not been made by the will of the deceased person": s 59(1)(c). If so satisfied, the Court is empowered to make "such order" as it thinks "ought to be made for the maintenance, education or advancement in life of the eligible person": s 59(2).
[20] In determining whether an order should be made and, if so, in what form, the court is empowered to have regard to matters set out in s 60(2) of the Succession Act. Those matters provide guidance, but are not exhaustively stated. Importantly, they inform the content of what may be considered "adequate" provision and "proper" maintenance, education or advancement in life. These matters require the Court to consider the family relationship between the applicant and the deceased person, "including the nature and duration of the relationship" (par (a)); "the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant … or to any beneficiary of the … estate" (par (b)); "the nature and extent of the … estate" (par (c)); "the financial resources (including earning capacity) and financial needs, both present and future, of the applicant" and of any beneficiary of the estate (par (d)); "the age of the applicant" (par (g)); "evidence of the testamentary intentions of the deceased person" (par (j)); "the character and conduct of the applicant before and after the date of the death of the deceased person" (par (m)); and "any other matter the Court considers relevant" (par (p)).
It is well established that s 59 requires a two-step process. First, the Court considers whether adequate provision for the proper maintenance, education or advancement in life of the applicant for the order has not been made by the Will, and if the Court is satisfied that it has not been made, the Court may make such order for provision out of the deceased's estate as the Court thinks ought to be made for the maintenance, education or advancement in life of the applicant having regard to the facts known to the Court at the time the order is made (the emphasised words appear in s 59(2)). Those words focus attention on the necessity for the Court to have updated information, which in turn casts upon an applicant a duty to make full and frank disclosure of her or his financial circumstances as at the date of the hearing: DJ Singh v DH Singh and Others [2018] NSWCA 30 at [284]-[291].
The requirement for the Court to have regard to the facts known to it at the time of the order brings with it the clear implication that the relevant facts will be placed before the Court. Added to this, an applicant's financial circumstances are matters specifically within their own knowledge. In Srekovic v Srekovic [2018] NSWSC 1597, Hallen J (as His Honour then was) had occasion to remark, with reference to Practice Note SC Eq 7 (as it then stood), that:
[228] I have stressed, on numerous occasions, the need of an applicant for provision to disclose her or his financial circumstances at or about the time of the hearing. Indeed, Paragraph 17 of Practice Note SC Eq. 7 requires updating affidavits to be filed and served, and, invariably, when a matter is set down for hearing, a direction is made for such affidavits to be served a few days prior to the final directions hearing. Regrettably, more often than not, as in this case, the direction is not complied with.
There were no directions in this case for updating of affidavits.
If it becomes clear that there are pertinent facts which have not been placed before the Court, it cannot make the evaluative judgment which s 59(1)(c) requires it to make: Cringle v Cringle [2018] NSWSC 1558 at [35]-[36]; Stone v Stone [2019] NSWSC 233.
The following canons emerge from the series of decisions cited immediately below:
1. an applicant has the onus of establishing that adequate provision for their proper maintenance, education or advancement in life was not made by the will;
2. the terms "proper" and "adequate" do not invoke any precise or immutable standard. The standard will depend on the circumstances of the case;
3. the jurisdiction is not exclusively needs-based. There are other relevant considerations, as the list of relevant factors in s 60 makes clear;
4. the notion of advancement in life is concerned or envisages, not merely maintaining a standard or status of an eligible person, but in an appropriate case improving and enhancing it;
5. the Act does not create legal rights of inheritance;
6. fairness and equality are not touchstones for relief, and it is not appropriate for the Court to endeavour to achieve an overall fair division of the deceased's estate; and
7. the discretion to make an order is not untrammelled or to be exercised according to idiosyncratic notions of what is thought to be fair or in such a way as to transgress unnecessarily upon the deceased's freedom of testation.
Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9; Hughes v National Trustees (1979) 143 CLR 134 at 149; Gorton v Parks (1989) 17 NSWLR 1; Singer v Berghouse (1994) 181 CLR 201; McKenzie v Topp [2004] VSC 90; Vigolo v Bostin (2005) 221 CLR 191 at [10]; Sung v Malaxos [2015] NSWSC 186 at [5]; Steinmetz v Shannon (2019) 99 NSWLR 687; Barbuto v Barbuto [2019] NSWSC 1023 at [308] and following; Bohen v Mitchelmore at [21] and following.
Section 63(5) provides that a family provision order may be made in relation to property that is not part of the estate of the deceased if it is designated as notional estate of the deceased by an order under part 3.3.
Part 3.3 creates the concept of a notional estate. Property may be designated as notional estate if, relevantly, it is property held by a person as a result of a relevant property transaction. Under s 75(1), relevantly, a person enters into a relevant property transaction if the person does any act which results in property being held by another person and full valuable consideration is not given to the person for doing or not doing the act. It is not in issue that, by transferring the house to Chris for $1, the deceased entered into a relevant property transaction.
Section 80(1) provides that the Court may make a notional estate order designating property in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which the section applies.
Section 80(2)(a) provides that s 80 applies to the following relevant property transactions:
(a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order,
Although the Summons does not, in terms, seek a notional estate order, Annette and Denise seek such an order in relation to the house. Chris does not take any point about the terms of the Summons. His position is that the deceased's intention was not, wholly or partly, to deny or limit provision being made out of the estate for Annette and Denise, but to reward him for looking after her and to fulfil her undertaking to him that he would have the house, so that s 80 does not apply.
In Kastrounis v Foundouradakis [2012] NSWSC 264 at [111]-[112], Hallen J noted:
[111] Whether the deceased has the necessary intention is a question of fact to be decided upon consideration of all the circumstances. One might expect there to be some language, written or oral, used, or adopted, by the deceased, from which the court is able to find, as a fact, the necessary intention prior to, or at, the time of, the relevant property transaction.
[112] It is the intention with which the transaction was entered into, rather than the effect of that transaction, which is important. If that intention cannot be established, that the effect of the transaction is to wholly or partly, deny, or limit, provision, does not matter. It is not enough that the relevant property transaction has that particular result. In other words, what the subsection requires is not cause and effect, but intention and effect: Wilson v Wright (NSWSC, 25 February 1992, unreported), per Windeyer J.
I am not persuaded that the deceased's intention was, wholly or partly, to deny or limit provision being made out of the estate for Annette and Denise. I find that her intention was only to reward Chris and not to deny or limit provision for the others. The unchallenged evidence of the conversation between the deceased and Chris about giving him the house makes no reference to denying or limiting provision in favour of anyone else. In this context, Robert gave evidence that he had no problem with Chris being left the house because that is "what Mum wanted and Chris had looked after Mum".
This conclusion is bolstered by the fact that the deceased in fact made provision for Annette and Denise which has not been shown to be inadequate. Additionally, Chris gave unchallenged evidence that the deceased had made an earlier will excluding Annette and Denise but included them in the Will because she had been told that, if she left them out, they might protest it and take it to Court.
I also observe that, if further provision was necessitated, it could be made out of the remaining cash in the estate earmarked for Chris or Robert, or both (I interpolate that, when I asked counsel for Annette and Denise what additional provision should be made, he plumped for $50,000 each). No party, however, suggested that Robert should not get his share.
[3]
ANNETTE
Annette's principal Affidavit was sworn on 7 August 2023.
Annette lives with her partner of 40 years, Darren Miranda. They were separated for a while but have reconciled. She is on JobSeeker payments of $761.30 per fortnight. He is on a disability pension of just over $1,000 per fortnight. She pays rent of $350.00 per week. Her other expenses relate to day-to-day living. She has no assets of any significant value. Her son, Johnathan, lives with them and contributes $350 per fortnight towards living expenses.
Her Affidavit does not disclose whether Darren has any assets. I am, however, prepared to infer that, if he does, they are not sufficient to make a difference to the outcome.
The Affidavit annexes a bank statement for the period 28 May 2023 to 27 July 2023. Her Affidavit did not deal with it, but the bank statement reveals that she is in receipt of regular payments from her daughter, Bonnie, ranging from $250 down to $50. Her Affidavit also did not disclose that she has casual but regular employment at a local bakery. These matters should undoubtedly have been disclosed.
Her Affidavit does not disclose why she needs any further money or how much. It does not disclose the purpose to which any further provision would be put.
Either way, having regard to her circumstances, I consider that $50,000 is a significant amount of money for her, and will no doubt make a difference in some way. No rational criteria were identified which could found a conclusion that $50,000 is inadequate, but $100,000 is not.
I am not persuaded that this amount is inadequate provision for her maintenance or advancement in life in her particular circumstances. Her education is not a relevant factor.
[4]
DENISE
Denise's principal Affidavit was sworn on 7 August 2023.
She deposed to the fact that she was on a carer's pension of $1,020 per fortnight, and that she was in a marriage with Peter John Hughes for 49 years. He was, then, 67 years of age, and on an aged pension. She had been his carer since 2013.
During cross-examination, however, she revealed (to the obvious surprise of counsel appearing for her - who told me from the bar table that this was the first time he and his instructing solicitor had been told this) that her husband had since passed away and that she was now living with one of her daughters and is on the Newstart allowance. Living with her are her daughter, her granddaughter, and two great-grandchildren.
Her own financial circumstances, the financial circumstances of her daughter, the arrangements, if any, under which she lives with her, and her now financial needs and requirements were not revealed.
It became clear that pertinent facts had not been placed before the Court. I cannot make the evaluative judgment which s 59(1)(c) requires the Court to make.
After this problem was drawn to counsel's attention, he proposed that he be permitted to elicit adequate information by way of "re-examination". I refused leave. Manifestly, this would have been unfair to Chris.
Her claim falls to be dismissed by reason of her non-disclosure alone. Whether the additional material, had it been disclosed, would have helped or hindered her application is unknown to the Court but, in the light of the Court's not finding that the deceased's intention, by the sale of the house to Chris, was, wholly or partly, to deny or limit provision out of the estate, the available assets are only $205,000 and, in that context, even had Denise established under-provision, it is unlikely that I would have exercised my discretion to make further provision. No rational criteria were identified which could found a conclusion that $50,000 is inadequate, but $100,000 is not.
As with Annette, Denise's Affidavit does not disclose why she needs any further money or how much. It does not disclose the purpose to which any further provision would be put.
Also as with Annette, I consider that $50,000 is a significant amount of money for her, and it will no doubt make a difference in some way.
On the information before the Court, her claim fails in any event because she has not established that the Will makes inadequate provision for her.
The occasion should, however, not be left to pass without further reference to Denise's failure to disclose the change in her financial circumstances at or about the time of the hearing.
Given the fundamental nature of the obligation to disclose and the impediment to success of a claim which such a failure may bring about, it is elementary that a legal practitioner appearing for an applicant ascertains from the applicant, at or about the time of the hearing, whether there has been any change in their financial circumstances necessitating disclosure. Plainly, that did not happen here.
The following exchange took place between the Court and counsel for Denise after the lack of disclosure became apparent:
HIS HONOUR: Mr Maconachie, this is not her fault. This lacuna, failure to lead evidence, is not her fault.
COUNSEL: No, your Honour.
HIS HONOUR: It's not her fault.
COUNSEL: It's not her fault. She didn't understand, in my submission, the significance--
HIS HONOUR: No. It's not for her to understand. She's not a lawyer.
COUNSEL: Indeed, your Honour.
HIS HONOUR: Don't blame her for it.
COUNSEL: I'm not blaming anyone, your Honour. I'm asking your Honour to accept a submission as to why it is that there was the lacuna in her evidence. She didn't recognise the significance of it.
HIS HONOUR: Well, sorry, Mr Maconachie, it's not for her to recognise the significance of anything.
COUNSEL: Your Honour, the difficulty that her case faces is that because she didn't recognise the significance, no one knew about it until she gave evidence of it in the witness box.
It is obvious that those representing Denise had not (as they undoubtedly should have) enquired of her before the hearing whether her circumstances had changed. The submission that the situation had been caused by a non-recognition on her part of the significance of the change is rejected and, in my view, should not have been made.
[5]
CHRIS
Chris took the deceased to all her medical appointments and took her shopping. He cooked for her, washed her clothes and did general housework. He repaired and maintained the house. He is in receipt of the JobSeeker allowance but with a medical exemption in the amount of approximately $700 per fortnight.
His only asset is the house. He is presently living with his son, Jack, in Port Macquarie but he says this is only temporary and he will need to find somewhere to live with whatever funds he has remaining after the sale of the house, satisfaction of the judgment in favour of Shane, and whatever he has left after this case. He also has needs.
Chris' conduct undoubtedly had a deleterious effect on a number of family relationships. I do not consider that, had Annette or Denise otherwise established under-provision by the Will, that their conduct towards their mother was such as to have weighed against them in the outcome of the claim.
[6]
CONCLUSION
Neither Annette nor Denise have established that the Will made under-provision for them. In the case of Denise, there was plainly a material non-disclosure which prevents the Court from making the evaluative judgment required.
The requirements for a notional estate order have not been met, with the consequence that the whole estate is worth no more than $205,000. Neither side suggested that Robert should not get his share. This would leave about $153,750, of which Annette and Denise will receive a total of $102,500, leaving a residual of $51,250 (before taking account of any costs allowed). This leaves scant room for any additional provision anyway.
The claim is founded in resentment and a charge of unfairness. Irrespective of the merits in that regard (about which I make no comment), those circumstances are not a sound foundation for the exercise by the Court of any discretion under the Act. I also consider that the relief sought would transgress unnecessarily upon the deceased's freedom of testation.
The Summons is dismissed. I will hear the parties on costs.
[7]
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Decision last updated: 13 May 2024