Keep v Packham

Supreme Court of NSW|2012-06-22|Before: Ms P, Mr J

The Claim 1This matter was, originally, listed before me, in the Friday Duty List, on 22 June 2012, for the making of a family provision order and consequential orders, in terms of a written agreement, contained in a document headed "Short Minutes of Order", which agreement had been reached between the Plaintiff and the Defendant. I shall return to the Short Minutes of Order and to other documents that were attached to those Short Minutes later in these reasons. 2At about 8:45 a.m. on 22 June 2012, my Associate received an email from Mr Ben Carroll, a solicitor at S+P Lawyers of Lismore, identifying himself as the solicitor acting for Peter Frederick Keep, to which email was attached an unfiled notice of motion and supporting affidavit, which documents, the email indicated "my town agent will be seeking to file in Court this morning". The email contained a statement that the "other parties were served late yesterday and have been copied into this email". The email also identified Mr H Altan as counsel retained to appear on behalf of Peter Keep. 3The unfiled notice of motion sought orders that Peter Keep be given leave to intervene in the proceedings and an order that his costs, calculated on the indemnity basis, be paid. The basis of his application was that he opposed the Court making orders in accordance with the Short Minutes of Order. 4I shall return to the events of 22 June 2012 and what occurred subsequently later in these reasons.

The Agreement between the Plaintiff and the Defendant 21However, it is not the provision that is to be made for Paul that has caused the real dispute in the proceedings. 22To demonstrate the cause of the issue, it is necessary to turn to the proposed Short Minutes of Order. So that Peter's complaints regarding the agreement can be understood in context, I shall set out the terms of the Short Minutes of Order verbatim: "1.ORDER pursuant to section 59, 65 & 66 of the Succession Act 2006 that in lieu of the provision made in clauses 4 and 5 of the will of Frederick Charles James Keep deceased dated 28 August 2010 provision be made as follows: "Clause 4: 4.I give devise and bequeath my interest in my property at xx Mitchell Street Norah Head ("the Norah Head property") to my daughter Janette Packham for her life PROVIDED THAT my daughter Janette Packham shall be responsible to pay all rates and taxes and insurance premium and unit maintenance levies incurred in respect of such property and shall keep the same in proper repair AND PROVIDED FURTHER THAT: i.Should the Norah Head Property be sold during her life (whether at the instigation of Janette Packham or otherwise) the net proceeds of sale, and the investments arising from the use of those proceeds from time to time and any income arising from the investment of such proceeds (hereafter "the Norah Head Funds") are to be held by my Trustee on the following trusts: ii.The Nora (sic) Head Funds may be used to acquire for Janette Packham a reasonable replacement residence as selected by her, which replacement residence shall be held subject to Janette Packham being responsible for payment of rates and taxes and insurance premiums and unit maintenance levies incurred in relation thereto; iii.The Nora (sic) Head Funds may also be otherwise used to obtain suitable replacement accommodation for Janette Packham from time to time, including by having recourse to the income and the capital of the Norah Head Funds to pay for suitable rental accommodation; iv.The Norah Head Funds may also be used (including by having recourse to the income and capital thereof) to purchase for Janette Packham by lump sum or periodical payments the right to have provided to or for her by a church, government or other suitable private institution or organisation providing the same for elderly, retired, sick or incapacitated persons, accommodation with or without health care, hospitalisation and nursing, or one or more of such services or like services, for her lifetime; v.Any income of the Nora (sic) Head Funds from time to time during the life of Janette Packham that is not applied under the forgoing trusts, is to belong to Janette Packham absolutely; vi.To the extent that under the powers given above, amounts comprising capital in the Norah Head Funds are applied for the benefit of Janette Packham, but without limiting such powers, such amounts are to be treated, so far as her interest in the residue allows, as advances to Janette Packham of her interest in the capital amount comprising the Norah Head Funds. vii.Upon the death of Janette Packham the unexpended capital of the Norah Head Fund will be held on the trusts provided below for the rest and residue of my Estate. CLAUSE 5 5.Subject to and conditional upon the sum of $35,000 being paid by my Daughter Janette Packham to my son Paul Robert Keep in accordance with Order 2, I GIVE DEVISE AND BEQUEATH the rest and residue of my Estate as follows: i.As to 70% to my daughter JANETTE PACKHAM; ii.As to 20% to my son PETER FREDERICK KEEP iii.As to 10% to my wife MARIE GLADYS KEEP. 2.ORDER pursuant to Succession Act 66(2) that upon the making of these orders, the defendant Janette Packham is to pay to the solicitors for the Plaintiff Paul Robert Keep, the sum of $35,000.00 in satisfaction of the Condition provided for in replacement Clause 5 set out in Order 1 above. 3.ORDER pursuant to Succession Act section 95(3) that the Court hereby approves the release of the Plaintiff's rights to apply for a family provision order recorded in paragraph (b) of the Agreement noted below. 4.ORDER that the Defendant's costs be paid out of the Estate of the deceased on an indemnity basis. 5.There is no order as to the plaintiff's costs to the intent that he bears his own costs of the proceedings. 6.The Plaintiff's Summons filed on 23 August, 2011 is otherwise dismissed. NOTE the agreement of the parties: (a)Upon the making of these orders the plaintiff hereby acknowledges receipt from the defendant of the amount of $35,000.00 by Bank Cheque payable to the plaintiff's solicitors in satisfaction of the condition for which replacement clause 5 provides under Order 1. (b)The plaintiff hereby forever releases the defendant and the Estate from all further or other right or rights to make an application for a family provision order or otherwise to obtain further provision out of the Estate or notional Estate of Frederick Charles James Keep, deceased and having obtained advice from his solicitors concerning the effect of the release, the plaintiff seeks court approval of this release under section 95 of the Succession Act, 2006. The parties further agree that: (c)The application was made within time; (d)The plaintiff is an eligible person; (e)The plaintiff has served notice identifying all other eligible persons on the administrator at the time of serving the Summons; (f)The administrator has filed a copy of the affidavit required by SCR Schedule J; (g)The administrator has served notices of the plaintiff's claim on any person who, in the administrator's opinion, may be an eligible person; (h)The administrator has filed a notice of appearance; (i)Annexed hereto and marked with the letter "A" is a copy of the response from the residuary beneficiaries, Peter Frederick Keep and Marie Gladys Keep to the notices referred to in point (g) above." 23Thus, subject to the provision that is made for Janette, the provision made for Paul is that he will receive a lump sum of $35,000, from which he will pay his own costs. Janette will pay the amount to Paul. However, she will receive his share of residue and also receive the provision made by the proposed change to Clause 4 of the deceased's Will. 24I should next note that there was attached to the Short Minutes of Order, a letter, dated 9 September 2011, from Marie, to Michael C Smith, Janette's solicitor, which letter is in the following terms: "... RE:NOTICE OF CLAIM Thank you for your letter dated 1 September 2011. I understand that I am to receive 10% of the net value of the estate. I wish to confirm that I do not intend to make a claim seeking further provision from the estate. Paul's need for additional provision is far greater than mine and I think he has been treated very poorly by his father. I believe Paul is entitled to greater provision from the estate and I intend to support him with his claim." 25Of course, the understanding is inaccurate, because Marie's entitlement is to 10 per cent of the rest and residue of the estate, not to "10 per cent of the net value of the estate". 26There was also attached to the Short Minutes of Order, a letter dated 9 September 2011, from Peter, to Michael C Smith, which letter is in the following terms: "... I acknowledge your letter dated 1 September 2011 giving me notice that I am eligible to make a claim against the estate of my late father Frederick Charles James Keep. I am aware of my entitlement under the will for provision of 20% of my father's estate. I do not intend to make a claim to seek further provision from the estate. I wholeheartedly support the plaintiff Paul Robert Keep in his claim for additional benefits from the estate. I believe that such provision should come from my sister's 60% share of the estate." 27His understanding, too, is inaccurate, since his entitlement is to 20 per cent of the rest and residue of the estate, not to "20 per cent of the deceased's estate". 28It is next necessary to refer to the nature of Peter's submissions. I shall quote from his affidavit, sworn 21 June 2012, which is referred to simply so that the nature of his concerns are elucidated. Relevantly, the affidavit provides: "1.I am a beneficiary of the estate. 2.On or about 13 June 2012 I received from my step-mother a copy of the proposed orders finalising the claim by my brother Paul Keep for additional provision from the estate. 3.I instructed my solicitor to write to the estate's solicitor raising my concerns with the proposed orders ... ... 6.I instructed my solicitor to respond highlighting my concerns with the matter and in particular about: (a)having to arrange separate representation; (b)the executor seemingly preferring her own interest to those of the other beneficiaries; (c)the executor seemingly seeking to obtain greater provision from the estate and the apparent conflict of interest this created; (d)the fact that the executor had not made a formal application for greater provision and that if she pressed such a claim that I believed she should resign as executor. ... 8.I was served with a Notice of Claim some time ago. I obtained advice from my solicitor and determined not to make my own challenge for greater provision from the estate. 9.I have not been served with any application by Janette Packham (the executor) seeking greater provision from the estate. The only notice of any claim for greater provision that I have received is from my brother Paul. 10.My concerns with the proposed orders specifically relate to the proposed amendments to clause 4 of the will. 11.The will did not give Janette Packham the ability to sell the property, buy a replacement property or to expend the capital on herself. 12.The clear intention of the will was that the capital be preserved for the residual beneficiaries. 13.It seems that the claim by Paul Keep has been settled on the basis that he sells his 10% residual interest in the estate of Janette Packham. There is no need for amendments to clause 4 to provide greater provision to Paul Keep. 14.It appears to me that the sole purpose of the proposed amendments to clause 4 of the will are to provide additional benefits to Janette Packham. 15.The proposed amendments would allow Mrs Packham to sell the property. This would see a diminution of capital through the payment of real estate agent's commission. 16.The proposed amendments would also allow her to purchase a new property. This would see a diminution of capital through the payment of stamp duty. 17.The proposed amendments would also allow her to use the capital to pay rent on a new property. This would see a diminution of capital through the payment of rent. 18.The proposed amendments would permit Janette Packham to use the capital to pay fees and accommodation bonds for aged care accommodation. Accommodation bonds do not incur interest and commonly only a proportion of the original investment is refunded on the death of the resident. 19.The proposed amendments do not impose any limit on the extent to which Janette Packham can utilise the capital. Should she utilise more than her 70% residual interest I would be directly affected and my interest in the residual estate could be used by her to provide greater provision to herself. ... 29.I recognise that the estate is not large enough to make adequate provision for all beneficiaries which is why I did not make a claim for greater provision. However I do not believe that the little I do get from the estate should be taken from me. 30.I am concerned that by pursing (sic) the proposed amendments to clause 4 of the will that my sister Janette Packham is preferring her own interests to my interests as a beneficiary. 31.I am concerned that I have been required by her to intervene and engage separate representation to have my interests as a beneficiary represented in these proceedings. 32.As executor Janette Packham should be protecting my interests. 33.I do not believe that I should be required to pay legal costs to have my interests as a beneficiary under the will protected. I believe such costs should be met by the estate. 34.I believe that: (a)by seeking orders which give her greater benefits under the will than that provided for; and (b)preferring her own interests to that of other beneficiaries; that Janette Packham is in conflict with her duties as executor of the estate and she should either resign as executor or be removed by the Court ..." 29Peter then sets out his financial and material circumstances and that of his partner, Claire. I do not propose to repeat what he has outlined, other than to say that his financial and material circumstances appear to be better than those of Paul and of Janette. 30It is not necessary to refer to Janette's evidence in any detail. It is clear from the terms of the deceased's Will and the other evidence I have read in relation to Paul's proceedings, that the deceased regarded her as having a significant claim on his bounty, and that he wanted her to enjoy the occupation of the Norah Head property for her lifetime, or at least for such time as she required accommodation in it. 31It was submitted by Mr J E Thomson, counsel for Janette, in my view, incorrectly, that by the terms of the agreement reflected in the Short Minutes of Order, Janette's life estate is to be altered to provide what has been described in the authorities as a "Crisp Order" and that her entitlement to share in residue is increased from 60 per cent to 70 per cent "of the unexpended capital of the Norah Head fund". He submitted that this is in consideration of her paying the lump sum to Paul. He submitted that each of Peter's, and Marie's, entitlement, remains the same.

Events of 22 June 2012 32During the course of argument on 22 June 2012, I suggested that, perhaps, Peter had misconceived the nature and value of his interest in the estate. I suggested that he should reconsider, with the assistance of further legal advice, the difference between his entitlement under the deceased's Will and under the Short Minutes of Order. 33I also suggested that he should consider the consequences of granting the order that he sought, if the Court did not make the orders of the type sought in the Short Minutes of Order, and if the proceedings continued with him being joined as a party/Defendant. 34I also raised with counsel for Paul and counsel for Janette various concerns that I had in regard to the Short Minutes of Order that did not, in my view, reflect what had been stated by counsel for Janette. 35I adjourned the matter to my list on 6 July 2012, upon the basis that Peter's notice of motion would be regarded as not filed and that he would seek further advice and, if he wished to do so, would then file the original notice of motion on the adjourned date.

Events of 6 July 2012 36On 6 July 2012, only counsel for Paul and for Janette appeared. Counsel for Janette read an affidavit from a solicitor assisting his instructing solicitor, to which affidavit there was annexed various copy letters, one of which was dated 2 July 2012, from Peter's solicitors to Janette's solicitor. That letter included the following passages: "... Our client has no problem with greater provision being provided for Paul. This is accommodated by your client paying him $35,000.00 and in return her taking his 10% residual interest in the estate. What our client finds hard to stomach is that your client not only now has Paul's residential interest in the estate but also now seeks to utilise our client's residual interest to not give Paul any greater benefit but rather to give herself greater benefits. Capping her use of the capital at 70% and giving her the use of all of the income would have given her an additional benefit that she didn't have in the will and would also have preserved a part of the estate for our client and the widow of the deceased but that is not enough for the executor. She obviously wants to be able to utilise the whole estate for her benefit. The offer made by our client was a genuine attempt to reach a compromise but evidently your client's position is that it is 'all or nothing'. Given that our client does not want to jeopardise payment to Paul, the small size of the estate and the fact that our client is unlikely to see any benefit during his lifetime even if the will had stood we are instructed that our client will not proceed with his application to intervene. However he does not and will not consent to the proposed orders and places on the record his strong objection to the amendments to clause 4 of the will. He does not object to Paul's 10% residual interest in the estate being transferred to your client. He would also not object to your client being given extra provision in the form of a Crisp order provided that her use of capital is limited to 70%. However, he does not agree to the orders in their present form and will not provide the executor with a release pertaining to her administration of the estate. Our client will not intervene however the executor puts the orders before the Court at her own risk." 37I have taken the contents of the letter to mean that Peter does not wish to intervene in the substantive proceedings, but that he remains opposed to orders that benefit Janette in the form of the Short Minutes of Order. 38Despite the contents of the letter from Peter's solicitors, in considering whether to make orders under the Act, whether by agreement, or otherwise, the court ought not to disregard the interests of beneficiaries (see, for example, s 60(2)(b), (d), (f), (n), s 61(1) of the Act). 39During the course of his submissions on 6 July 2012, counsel for the Defendant, ultimately, came to accept that there were certain infelicities in the form of the Short Minutes of Order as originally drafted. He suggested that Paul and Janette were unlikely to have any difficulty amending the Short Minutes of Order to accommodate some of the changes that would alleviate the Court's, and other, concerns. 40The parties agreed that an amended form of Short Minutes of Order would be forwarded to the Court, in accordance with which the Court would be asked to make orders. In those circumstances, I reserved my decision. 41Subsequently, counsel for the Defendant sent a form of amended Short Minutes of Orders, which I set out hereunder with the amendments noted: "1.ORDER pursuant to section 59, 65 & 66 of the Succession Act 2006 that In lieu of the provision made in clauses 4 and 5 of the will of Frederick Charles James Keep deceased dated 28 August 2010 provision be made as follows: "Clause 4: 4.I give devise and bequeath my interest in my property at xx Mitchell Street Norah Head ("the Norah Head property") to my daughter Janette Packham for her life PROVIDED THAT my daughter Janette Packham shall be responsible to pay all rates and taxes and insurance premium and unit maintenance levies incurred in respect of such property and shall keep the same in proper repair AND PROVIDED FURTHER THAT: i.Should the Norah Head Property be sold during her life (whether at the instigation of Janette Packham or otherwise) the net proceeds of sale, and the investments arising from the use of those proceeds from time to time and any income arising from the investment of such proceeds (hereafter "the Norah Head Funds") are to be held by my Trustee on the following trusts: ii.The Nora (sic) Head Funds may be used to acquire for Janette Packham a reasonable replacement residence as selected by her, which replacement residence shall be held subject to Janette Packham being responsible for payment of rates and taxes and insurance premiums and unit maintenance levies incurred in relation thereto; iii.The Nora (sic) Head Funds may also be otherwise used to obtain suitable replacement accommodation for Janette Packham from time to time, including by having recourse to the income and (only if and to the extent that the income is insufficient) the capital of the Norah Head Funds to pay for suitable temporary rental accommodation; iv.The Norah Head Funds may also be used (including by having recourse to the income and capital thereof) to purchase for Janette Packham by lump sum or periodical payments the right to have provided to or for her by a church, government or other suitable private institution or organisation providing the same for elderly, retired, sick or incapacitated persons, reasonable and appropriate accommodation with or without health care, hospitalisation and nursing, or one or more of such services or like services (provided such services are reasonably required on medical grounds), for her lifetime; v.Any income of the Nora (sic) Head Funds from time to time during the life of Janette Packham that is not applied under the forgoing trusts, is to belong to Janette Packham absolutely; vi.To the extent that under the powers given above, amounts comprising capital in the Norah Head Funds are applied for the benefit of Janette Packham so as to reduce the amount of such capital, but without further limiting such powers, such amounts are to be treated, so far as her interest in the residue allows, as advances to Janette Packham of her interest in the capital amount comprising the Norah Head Funds and are to brought to account by way of hotchpot in calculating the entitlements of the residuary beneficiaries provided for in clause 5 below. vii.Subject to the operation of clauses 4iii, 4iv and 4vi above, Uupon the death of Janette Packham the unexpended capital of the Norah Head Fund will be is to comprise part of my residuary estate and be held on the trusts provided below for the rest and residue of my Estate. CLAUSE 5 5.Subject to and conditional upon the sum of $35,000 being paid by my Daughter Janette Packham to my son Paul Robert Keep in accordance with Order 2, I GIVE DEVISE AND BEQUEATH the rest and residue of my Estate as follows: i.As to 70% to my daughter JANETTE PACKHAM (but adjusted as required to give effect to the operation of clause 4vi above); ii.As to 20% to my son PETER FREDERICK KEEP iii.As to 10% to my wife MARIE GLADYS KEEP. 2.ORDER pursuant to Succession Act section 66(2) that upon the making of these orders, the defendant Janette Packham is to pay to the solicitors for the Plaintiff Paul Robert Keep, the sum of $35,000.00 in satisfaction of the Condition provided for in replacement Clause 5 set out in Order 1 above. 3.ORDER pursuant to Succession Act section 95(3) that the Court hereby approves the release of the plaintiff's rights to apply for a family provision order recorded in paragraph (b) of the Agreement noted below. 4.ORDER that the Defendant's costs be paid out of the Estate of the deceased on an indemnity basis. 5.There is no order as to the plaintiff's costs to the intent that he bears his own costs of the proceedings. 6.ORDER that there be liberty to apply reserved to any person interested in the estate to apply to the Court for directions in connection with the exercise of powers concerning the Norah Head Funds. The Plaintiff's Summons filed on 23 August, 2011 is otherwise dismissed. NOTE the agreement of the parties: (a)Upon the making of these orders the Plaintiff hereby acknowledges receipt from the Defendant of the amount of $35,000.00 by Bank Cheque payable to the Plaintiff's solicitors in satisfaction of the condition for which replacement clause 5 provides under Order 1. (b)The Plaintiff hereby forever releases the Defendant and the Estate from all further or other right or rights to make an application for a family provision order or otherwise to obtain further provision out of the Estate or notional Estate of Frederick Charles James Keep, deceased and having obtained advice from his solicitors concerning the effect of the release, the plaintiff seeks court approval of this release under section 95 of the Succession Act, 2006. The parties further agree that: (c)The application was made within time; (d)The Plaintiff is an eligible person; (e)The Plaintiff has served notice identifying all other eligible persons on the administrator at the time of serving the summons; (f)The administrator has filed a copy of the affidavit required by SCR Schedule J; (g)The administrator has served notices of the plaintiff's claim on any person who, in the administrator's opinion, may be an eligible person; (h)The administrator has filed a notice of appearance; (i)Annexed hereto and marked with the letter "A" is a copy of the response from the residuary beneficiaries, Peter Frederick Keep and Marie Gladys Keep to the notices referred to in point (g) above." 42It can be seen that the amended Short Minutes do make some substantial amendments and make clearer the nature of Janette's, and the other beneficiaries', entitlements.

Determination 43In this case, I have considered the following alternatives: (i)The Court makes the orders in accordance with the Short Minutes of Orders (or orders of a similar nature agreed to), with the result that Paul's proceedings will be concluded. (ii)The Court does not make the orders in accordance with the Short Minutes of Orders (or orders of a similar nature agreed to), with the result that the hearing of Paul's proceedings would continue. 44In the second alternative, it is also necessary to consider that Janette and/or Peter might then make a claim for a family provision order, with the result that further costs would be incurred. (Janette has made clear that she would do so.) 45I have come to the view that there is much to be said for making orders that conclude Paul's proceedings. Leaving aside the other property of the deceased's estate, which is of negligible value, and assuming that the remainder interest falls into residue on Janette's death, it would appear that the value of Peter's interest in the estate, on current values, is about $55,727 (calculated as 20 per cent of $278,638). 46The true value of his interest cannot be calculated that simply, since, even under the terms of the deceased's Will, Janette is given an interest for life in the Norah Head property. Accordingly, Peter would not receive his interest in the share of the proceeds of sale of the deceased's interest in the Norah Head property until after the death of Janette. 47At the conclusion of a fully contested hearing, which hearing might be lengthened because of proceedings by Janette, it is unlikely that the deceased's interest in the Norah Head property would be able to be retained, if for no other reason than to satisfy any family provision order made in favour of Paul and/or Janette, or to pay the costs of the parties, if such an order were made. 48In this regard, consideration would also have to be given to whether Kathleen Mary Lambert should be given notice of the proceedings, and perhaps, even whether she would have to be joined as a party/Defendant because of the likelihood that the Court might order that the deceased's interest in the Norah Head property be sold. This, no doubt, would add further to the duration and costs of the proceedings. 49If that step were not taken, then after the proceedings, the consent of Kathleen Mary Lambert would be required for the sale the Norah Head property and if she did not consent, perhaps, an application under s 66G of the Conveyancing Act 1919 would have to be made. If such an application were contested, additional costs to the estate would be incurred. There might then be further delay. 50Naturally, if a sale of the Norah Head property occurred, Janette would no longer have any place to live, although she might receive 60 per cent of the net proceeds of sale. Of course, if she brought a claim, that claim might be successful, with the result that Peter's share might be reduced. 51Mr Thomson submitted that, even if she did not make a claim, the court, under s 66(2) of the Act, may make an order to adjust Janette's interest as a person affected by the family provision order in favour of Paul, especially as, in this case, Janette would lose her life interest in the Norah Head property, and so as to be just and equitable to all persons affected by the order in favour of Paul. There is some merit in this submission. 52It can be seen that if the court does not make the orders in accordance with the Short Minutes of Orders (or orders of a similar nature agreed to), at the end of a fully contested hearing, taken with the consequences to which I have adverted (and there may be other consequences which I have not foreseen), the entitlement of all the beneficiaries, including Peter, is likely to be substantially reduced, perhaps, even to a negligible amount or nothing. 53If the court makes the orders in accordance with the Short Minutes of Orders (or orders of a similar nature agreed to), then, the consequences to which I have adverted (as well as others which I have not foreseen) would be avoided. 54I have also considered whether making the orders in accordance with the Short Minutes of Orders (or orders of a similar nature agreed to), would alter Peter's interest in the deceased's estate in any significant way. In my view, it probably would not, provided that the Norah Head property is, or the funds received for its sale are, dealt with in accordance with Short Minutes of Orders (or orders of a similar nature if agreed to).

The Legislative Framework 55Section 98 of the Act provides: "(1)The object of this section is to encourage the settlement by affected parties of disputes concerning the estate of a deceased person. (2) Unless the Court, for special reasons, otherwise orders, it must refer an application for a family provision order for mediation before it considers the application. (3) The Court may make a family provision order in terms of a written agreement (a "consent order") that: (a) is produced to the Court by the affected parties in relation to an application after mediation, or on the advice of a legal practitioner, and (b) indicates the parties' consent to the making of the family provision order in those terms. (4) The regulations may make provision for or with respect to the following: (a) mediations and consent orders under this section, (b) regulating or prohibiting advertising concerning the provision of legal services in connection with mediations and other proceedings under this Chapter in relation to the estate or notional estate of a deceased person. (5) In this section, "legal services" has the same meaning as in the Legal Profession Act 2004." 56Importantly, s 98(3) makes clear that the court has a discretion ("may") whether to make a family provision order in terms of a written agreement (a "consent order") reached at mediation or on the advice of a legal practitioner. In this regard, it appears that the family provision order spoken of in subsection (3) is one identified in a written agreement of the parties reached after mediation or upon the advice of a legal practitioner. 57Although no reference was made to the Uniform Civil Procedure Rules 2005 ("UCPR"), I note that UCPR rule 54.3(4) provides that proceedings may be brought for an order approving, inter alia, any compromise by an executor, administrator or trustee. Thus, under this rule, the Court has the power to make an order "approving any ... compromise ... by an ... executor". 58Section 61 of the Act provides that in determining an application for a family provision order, the Court may, in certain circumstances, disregard the interests of any other person by, or in respect of whom, an application for a family provision order may be made (other than a beneficiary of the deceased person's estate) but who has not made an application. 59Importantly, even though Peter has not made an application for a family provision order, and even though he has been served with a notice of claim, the court is not entitled to disregard his interests as a "beneficiary of the deceased person's estate" (s 61(1)). 60Section 66(2) of the Act provides that the Court may make such additional orders as it considers necessary to adjust the interests of any person affected by a family provision order and to be just and equitable to all persons affected by the order.

Some General Principles 61In Morrison v Abbott [2012] NSWSC 320, I set out some general principles that appeared to me to be relevant in a case where this sort of issue is raised. I wrote: "[72] It is well established that, in proceedings for a family provision order, the primary duty of the executor or administrator, as defendant, is to uphold the deceased's will and to put before the court any necessary material that can reasonably be found to assist the court: Vasiljev v Public Trustee [1974] 2 NSWLR 497. [73] Of course, the duty to uphold the deceased's will is not an absolute duty. In Re Will of Lanfear (1940) 57 WN (NSW) 181, Williams J said, at 183: In an ordinary case, especially where the estate is a small one, it is the duty of the executors either to compromise the claim, or to contest it and seek to uphold the provisions of the will. [74] In McCusker v Rutter [2010] NSWCA 318, Handley AJA (with whom Campbell JA agreed), said at [57]: An executor or administrator with the will annexed, faced with a claim under this legislation, is bound, within reason, to uphold the terms of the will. However in appropriate cases the legal personal representative will be justified in compromising the claim or even consenting to the orders sought: Re SJ Hall (dec'd) (1958) 59 SR (NSW) 219; Vasiljev v Public Trustee [1974] 2 NSWLR 497 CA, 503-4. [75] Thus, the duty of the executor to uphold the will does not extend to doing so where it is of no commercial benefit to anyone, and regard should be had to the extent to which upholding the will would benefit beneficiaries. The executor or administrator, as defendant, must exercise "a due sense of proportionality in the conduct of any such defence and seek to compromise a claim, if at all possible, in a way that would save both the plaintiff and the other beneficiaries' costs": Szlazko v Travini [2004] NSWSC 610; Re Appln of Ferdinando Scali [2010] NSWSC 1254, at [10]. [76] Turning next to the role of the court, even in circumstances where the parties have reached an agreement, the court must still consider whether it has jurisdiction. In Hore v Perpetual Trustee Co Ltd (NSWSC, 8 June 1995 unreported) Windeyer J referred to the provisions of the Family Provision Act 1982 (NSW), and said at 11-12: Those provisions give the basis for exercise of jurisdiction by the court. Parties are absolutely entitled of course to make any rearrangement of the terms of a will they wish, if all beneficiaries are of age and absolutely entitled. That has nothing whatever to do with the jurisdiction under the relevant Act. Section 7 and s 9(2) raise jurisdictional questions. This has been described in various ways, sometimes making it appear discretionary, but there is no doubt now that for the court to assume jurisdiction, the provisions of s 9(2) must be satisfied. As the power to make orders is governed by s 9(2) and s 7, the court cannot by consent, assume a wider jurisdiction. Parties cannot by consent, confer power upon the court to make orders which the court lacks power to make. Settlements of claims under the Family Provision Act are of course very common. It is obviously in the interest of the parties and the court to encourage settlement and in any week the Masters and Equity Division may be asked to make a number of orders agreed between the parties in such actions. In such matters, in my experience, the court looks quickly at the evidence, and is informed of the relevant facts by counsel or solicitor, and if the matter appears to be reasonable makes the orders. No detailed consideration of jurisdiction takes place as long as the plaintiff appears to have a proper basis for his or her claim. In cases where the interests of infants or unascertained classes of persons may be affected by the orders, then the proposed orders are considered in more detail, not usually on the jurisdictional question, but more often on relevant terms of the orders themselves, and the extent of the benefit provided by them. On occasions the court refused to make the orders proposed, but this is unusual. [77] In Schaechtele v Schaechtele [2008] WASC 148, Le Miere J, in the Supreme Court of Western Australia, said, at [18]: This Court cannot make an order giving effect to the proposed settlement unless the Court thinks that such provision should be made out of the estate of the deceased for the proper maintenance or support of the plaintiff. But that does not mean that the Court is in effect to hear the matter as if it were it a contested application and then to give or withhold orders to give effect to the settlement by comparing the settlement with the judgment which the Court would have given. The Court must give proper consideration to the evidence before it. The Court should be aware of the risks of litigation in an area in which reasonable people can reasonably reach different conclusions and give proper weight to the fact that the parties wish to effect the settlement. If the Court is satisfied that the settlement falls within the bounds of a reasonable exercise of discretion then the Court should make orders to give effect to that settlement. [78] In Bartlett v Coomber [2008] NSWCA 100, the Court of Appeal had to determine an appeal from a decision of Macready As J in which his Honour had to decide whether a binding agreement to compromise a proposed claim under the Family Provision Act 1982 had been reached and ought to be specifically performed, with an accompanying order to give it effect. Although there was an alternative claim for provision pursuant to s 7 of the Family Provision Act, his Honour's decision was restricted to the question whether the executrix (the second respondent in the appeal) was bound to perform the alleged agreement. Macready AsJ made findings in favour of the plaintiff and proceeded to make orders that disposed of the proceedings. His Honour ordered that the plaintiff have a legacy in the sum of $659,467 to be paid to the Public Trustee and held on her behalf during her minority. [79] An appeal was brought against those orders and the consequential costs order. The appeal was dismissed with costs. [80] Hodgson JA said, in relation to the duty of the executor or administrator: [70] The parties to proceedings for such an order are generally just the applicant for the order and the legal personal representative of the deceased person: Re Lanfear (1940) 57 WN (NSW) 181; Re S J Hall [1959] SR (NSW) 219; Vasiljev v Public Trustee [1974] 2 NSWLR 497. These cases were decided under the legislation that preceded the Act, but are still applicable. [71] According to these authorities, the duty of the legal personal representative is either to compromise the claim or to contest it and to seek to uphold the provisions of the will (or the distribution on intestacy); and to that end, to put before the court evidence made available by beneficiaries that is relevant to the issues. The beneficiaries may be joined as parties, but generally only if it appears that the legal personal representative is not fulfilling this duty to represent their interests, or there is some other reason justifying this unusual course. [81] In relation to the court's power to make an order, by agreement of the parties, Mason P said, at [37]-[39]: [37] In the context of claims under the Act, one often encounters references to the court's "jurisdiction" to make a particular order in a particular estate. Thus, to give an example of present relevance, de Groot & Nickel, Family Provision in Australia 3rd ed, Lexis Nexis Butterworths, Chatswood, 2007 at 8.7 states that: The court's jurisdiction depends not upon the agreement of the parties but upon the court's view of the question whether the deceased has made adequate provision for the applicant. The learned authors cite three authorities which support this proposition and do so in the language of "jurisdiction" (Mudford v Mudford [1947] NZLR 837 at 838; Re Archibald [1950] QWN 3; Re Julso [1975] 2 NZLR 536 at 538). [38] In my opinion, "jurisdiction" and "power" are concepts that should not be blurred or subjected to ecthlipsis in the present context (see, Harris v Caladine (1991) 172 CLR 84 at 136). Macready AsJ had undoubted jurisdiction to entertain the application before him. The critical question in the appeal relates to the scope of his Honour's power to reject the settlement. [39] In McMahon v McMahon (New South Wales Supreme Court, Young J, 2 August 1985, Young J said: An order [under the relevant NSW Family Provision Act] does not follow just because all the parties to the proceedings have agreed between themselves that such an order should be made. Whilst in general if a Court is asked by consent of all parties to make an order it will make an order, as I said in my judgment in Kalyk v Whelan 31 July 1985 where the legislature casts on the Court the duty of seeing that an order is only made in appropriate circumstances the Court is not bound to make any order tendered by all the parties by consent. Because of this it is necessary for me to look into the facts and circumstances of the plaintiffs and the defendant so far as they are relevant to a possible claim under the Family Provision Act. [82] On this topic, Hodgson JA said at [72]: As with other types of proceedings, agreements to compromise are possible, and indeed are to be encouraged. Such an agreement may be made by the parties to the proceedings, and the court will generally give effect to it. However, the court will need to be satisfied that the pre-condition in s 9(2) of the Act is fulfilled, and that the order agreed on is one which ought to be made in terms of s 7 of the Act. Because of the agreement, the court will generally be satisfied of these things without the need for any significant investigation of the evidence. [83] Bryson JA said: [79] The agreement between Mrs Stott the executrix of the late Mr B.G. Thomas and the first respondent Katherine Coomber a minor, acting through her mother and solicitors, was an agreement which Mrs Stott was empowered to make under her power of compromise in s 49 of the Trustee Act 1925. Mrs Stott made the agreement on the advice of her solicitors and also of counsel. She was acting within the limits of her power; exercising the power of compromise in good faith for the purpose for which it was conferred and not for any ulterior or improper purpose. ... [84] The agreement could only be given effect by an order made by the Court, and the Court could only act in exercise of the power in s 7 of the Family Provision Act 1982. If claimants and executors agree to settle a Family Provision claim their agreement cannot have effect unless the Court exercises its power under s 7 and orders provision in accordance with the agreement. Whatever their agreement says, obtaining an order of the Court is impliedly a condition of its effectiveness. [85] If the Court simply accepted the agreement of the parties and ordered the provision for which the agreement provides without considering exercise of its power under s 7 the Court would act in error; it would in substance fail to exercise its power. [86] An order for provision always adversely affects property rights in estate assets which somebody would otherwise have. Alterations of property rights of this kind are authorised by law only if the Court makes a decision under s 7; not otherwise. [84] In relation to the court's power to not make a consent order, Mason P, in Bartlett v Coomber, said: 56 I accept that the court's power to reject a compromise reached in proceedings under the Act is available both where the sum to be provided is too low or too high. Either extreme might indicate, for example, that the proceedings were being conducted through to completion for a purpose foreign to that of the Act and/or that some fundamental mistake vitiated the settlement process. 57 But it must be borne in mind that litigation under the Act takes place in an adversary context in which the active parties to the particular litigation are usually expected to be the best judges of what is in their own interests. The policy of Australian law encourages the settlement of disputes (see eg Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9 per Gleeson CJ and Uniform Civil Procedure Rules 2005, Part 20). Our legal system would collapse were it not for the fact that most disputes are resolved by agreement. 58 One of the principles giving effect to this policy is the principle that a valid compromise gives effect to an agreement that effectively supersedes the antecedent rights of the parties. The possibility of greater success and the risk of greater failure is transposed into an arrangement that frees the litigants and witnesses of the risks, costs and toils of further disputation. This principle is not displaced in the context of proceedings under the Act, although for reasons already outlined, the court may decline to give effect to a settlement if doing so failed to effectuate the specific policies of the Act, amounted to an abuse of process or otherwise offended public policy in a demonstrable way. 59 The compromise agreement in the present case suffered from none of these difficulties. It was reached in circumstances where the deceased's executrix availed herself of the advice of solicitor and counsel. It was also reached with the concurrence of the appellant, albeit given with a qualification about no claim being made on Mrs Thomas' estate. 60 When determining whether or not to translate a binding agreement into an order, a court proceeds in the full knowledge that it lacks full knowledge about the rights and wrongs of the yet to be litigated dispute. Allegations are necessarily undeveloped and untested. ... 65 Naturally, there will be situations where a court can be sufficiently satisfied that the proffered compromise agreement lies outside the range of possible outcomes and to such a degree that the proposed order should be regarded as giving effect to some purpose extraneous to those within the Act. But much more is required than that one party to the compromise has repented of it, a fortiori a non-party like the present appellant. [85] Bryson AJA said at [88], in talking of the different discretionary powers that the court had relation to the decision of Macready AsJ to give effect to the agreement: 88 The third is the power of the Court to decline to make orders giving effect to a compromise where it is unjust to enforce the compromise or it is in the interests of justice that the matter proceed to trial. This power is associated with and illustrated by Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235 and Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528. Exercise of this power is often associated with the existence or the manner of exercise of the authority of counsel in making a compromise; there is no such question here ... [86] The decision of the Court of Appeal does not mean that any agreement reached by the parties at the mediation of a claim for a family provision order is not binding upon the parties. In such a case, the agreement will be binding on the parties, but its operation is suspended until the court approves it by making the orders: Smallman v Smallman [1972] Fam 25 at 31; Mitchell v Osborne (NSWSC, 20 May 1987unreported); Groser v Equity Trustees Ltd [2008] VSC 163; Albany v Albany [2010] NTSC 25 at [51] per Mildren J. [87] Thus, upon settlement of this type of proceeding, if a family provision order is to be made, the court, upon making such an order, even if by agreement of the parties, must be satisfied that an order is only made in appropriate circumstances, so that it must itself consider the facts and circumstances of the case: Re Appln Ferdinando Scali [2010] NSWSC 1254 at [11]. Those facts will include the legitimate claims of the other parties, including the beneficiary or beneficiaries whose interests would be adversely affected by the making of an order. [88] In considering whether to make the consent order, the court would also be aware of the risks of litigation in an area in which reasonable people can reach different conclusions. This is particularly so in proceedings in which a family provision order is sought: Sherborne Estate: Vanvalen v NeavesGilroy v Neaves (No 2) [2005] NSWSC 1003 at [56] per Palmer J. [89] Even though the authorities cited refer to the former Act or the legislation in other jurisdictions, I am satisfied that the principles stated are relevant to cases under the Act." 62I adhere to the views expressed in that case. Of particular relevance is what I said in [87] and [88] of the reasons for judgment. 63I have earlier referred to a Crisp order, which is an order of the kind made by Holland J in Crisp v Burns Philp Trustee Company Ltd (NSWSC, 18 December 1979, unreported), extracted in part, in Mason and Handler's "Succession Law and Practice New South Wales" at 13580, at [9433]. Such an order gives the party obtaining the benefit of such an order, an interest for life in real property, or in an interest in real property, with the right to sell it (should the need arise) for the purposes of securing, for that person's benefit, more appropriate accommodation. That type of order is intended to provide flexibility, by way of a life estate, the terms of which could be changed to cover the situation of the person moving from her, or his, own home to retirement village to nursing home to hospital. The flexibility provided by such an order underlies the notion that a Crisp order confers a "portable life interest": Ipp JA in Milillo v Konnecke [2009] NSWCA 109 at [47] - [48]. 64In considering whether to approve the release of the Plaintiff's right to apply for a further family provision order, I refer to s 95 of the Act, which relevantly provides: "(3) The Court may approve of a release in relation to the whole or any part of the estate or notional estate of a person. (4) In determining an application for approval of a release, the Court is to take into account all the circumstances of the case, including whether: (a) it is or was, at the time any agreement to make the release was made, to the advantage, financially or otherwise, of the releasing party to make the release, and (b) it is or was, at that time, prudent for the releasing party to make the release, and (c) the provisions of any agreement to make the release are or were, at that time, fair and reasonable, and (d) the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice. (5) In this section: "release of rights to apply for a family provision order" means a release of such rights, if any, as a person has to apply for a family provision order, and includes a reference to: (a) an instrument executed by the person that would be effective as a release of those rights if approved by the Court under this section, and (b) an agreement to execute such an instrument."

Determination 65Peter having informed the court that he no longer wishes to intervene in the proceedings, but that he does not consent to the orders, I have considered whether I should make orders in accordance with the amended form of Short Minutes of Order now agreed to by the parties. 66Having considered the evidence and the proposed amended Short Minutes of Order, I am now satisfied that the disadvantages to the beneficiaries, including Peter, of not making orders in accordance with the amended Short Minutes of Orders, far outweigh the advantages of not doing so. 67Having considered the evidence of Paul, and all the other circumstances, to some of which I have adverted, I am satisfied that the Court should approve the release of Paul's rights to make any claim for a further family provision order. 68In all the circumstances, subject to one matter (the extent of costs payable out of the estate to Janette) upon which I wish to hear counsel for the Defendant, I am satisfied that I should make orders as agreed to by the parties to the proceedings, particularly as the entitlements of Janette, Peter and Marie have been made more clear. 69At the time of informing the parties of the delivery of reasons for judgment, I requested my Associate to inform counsel for Janette that I would wish to hear submissions on why the estate should bear all of the costs of Janette. Accordingly, these reasons will not deal with the issue of the Defendant's costs, which have been adverted to in Paragraph 4 of the amended Short Minutes. 70In the meantime, I make orders in accordance with Paragraphs 1, 2, 3, 5 and 6 of the Short Minutes of Order (as amended) set out above. I note the agreement of the parties in relation to the matters noted under the heading "Note the agreement of the parties" in sub-paragraphs (a) to (i) of the Short Minutes of Order.

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: 13 July 2012

Family Provision Act 1982(NSW)

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Judgment (10 paragraphs)

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