Mikhaiel v Breene

Supreme Court of NSW|2022-02-11|Before: Ward CJ

Judgment

HER HONOUR: This is an application brought by summons filed 26 November 2021 by the plaintiff (Ms Mikhaiel) seeking approval pursuant to s 95 of the Succession Act 2006 (NSW) (Succession Act) of inter vivos releases by each of the plaintiff and her former partner (the defendant, Mr Timothy Breene) of their respective rights to apply for a Family Provision Order in respect of the estate or notional estate of the other, in the event that the other shall become a deceased person. The application is brought in the context of the "irretrievable" breakdown of the couple's relationship and following the execution of documents (including a Deed of Release) on 20 August 2021 intended to give effect to a complete and final severance of the financial relationship between the two (see the plaintiff's affidavit sworn 18 November 2021 [6]; [10] and the documents annexed to that affidavit; and see the defendant's affidavit sworn 9 February 2022 at [6]; [10]; [15]). The parties have two minor children from their relationship.

Section 95 of the Succession Act

Section 95 of the Succession Act provides, relevantly, that: (1) A release by a person of the person's rights to apply for a family provision order has effect only if it has been approved by the Court and to the extent that the approval has not been revoked by the Court. … (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. …

Relevant principles

The power to approve a release of rights under s 95 of the Succession Act is incidental to the exercise of the principal jurisdiction of the court under s 59 of the Succession Act to make an order for provision out of the deceased's estate or notional estate (see Oxley v Oxley [2014] NSWSC 1606 (Oxley v Oxley) at [68] per Hallen J; Robinson v Robinson (2020) 102 NSWLR 1; [2020] NSWCA 4 at [95] (Robinson v Robinson).
As noted in Robinson v Robinson the principles applicable when an application is made for approval of a release under s 95 of the Succession Act (or its equivalent in the predecessor legislation - s 31 of the Family Provision Act 1982 (NSW)) have been considered in a number of cases (see, for example, Russell v Quinton [2000] NSWSC 322 (Russell v Quinton) per Bergin J, as her Honour then was; Neil v Jacovou [2011] NSWSC 87 per Slattery J; Boardman v Boardman [2012] NSWSC 1257 per Lindsay J; Oxley v Oxley per Hallen J; Anthony John Clifford v Mark Ronald Joseph Clifford [2015] NSWSC 2136 (Clifford v Clifford) per Brereton J, as his Honour then was; and Kelly v Kelly [2019] NSWSC 994 (Kelly v Kelly) per Hallen J).
There must be sufficient material put before the Court to enable consideration of all the circumstances of the case (see Kelly v Kelly at [72] per Hallen J) and there must be active consideration by the Court of the terms on which the release has been agreed and the circumstances of the case. In particular, attention must be focused on what is being released (see Clifford v Clifford at [3]).
As to the matters which, pursuant to s 95(4), the Court must take into account in determining an application for approval of a release, I note as follows.
First, as to whether it is or was to the releasing party's advantage, financially or otherwise, to make the release, account may be taken of all the circumstances of the case, and, having regard to the wording of s 95(4)(a), the time at which this is to be considered is both at the time of the application and at the time of the making of the release.
Second, in considering the prudence of making the release (s 95(4)(b)), the Court has regard to the standard of a prudent person being someone who acts with care and thought for the future, in particular in exercising care and good judgment in relation to his or her own interests (see Russell v Quinton at [70]).
Third, (s 95(4)(c)), regard is had to whether the provisions of the agreement to make the release are or were at the time fair and reasonable.
Fourth, (s 95(4)(d)) there must be consideration as to whether the releasing party has had the benefit of independent advice in the relation to the release and, if so, whether the releasing party has given due consideration to that advice.
As noted in Robinson v Robinson, one or more of these factors may require consideration of how the agreement was reached and the context of the negotiations in question. An example of the consideration of the s 95(4) matters may be seen in Oxley v Oxley (from [79]ff).
The distinction between applications for approval of releases in relation to deceased estates and inter vivos releases was noted by Hallen J in Kelly v Kelly (at [69]), his Honour there rejecting the suggestion (drawn from earlier cases in other contexts) that the Court should try and approve inter vivos releases where possible (see [64]-[68]) and distinguishing cases where a release is made in the context of pre-nuptial agreements, such as Cook, Michael Knox Norton, by his tutor Richard D'Apice v Michael James Harris [2015] NSWSC 2147 per Brereton J, as his Honour then was.
In Robinson v Robinson, where complaint was made as to the approval, by orders made in chambers, of s 95 releases given by the appellant as part of a Deed of Release entered into (with the benefit of legal advice) not long before the hearing of proceedings in the then Family Provision List was due to commence, I observed that it will not be necessary in every case for there to be an oral hearing or (as there happened) an interrogation by the judge as to the understanding of the releasing party. In the present case, the parties have agreedthat the matter be dealt with in chambers.

Determination

On the present application, the plaintiff relies on an affidavit sworn 18 November 2021 and the defendant has filed an application sworn 9 February 2022. The parties have jointly completed the Succession List Judge's Applications List checklist in respect of applications for approval of inter vivos releases.
The context in which the application has been brought is as noted above. Following the breakdown of the couple's relationship the parties entered into a Deed of Release in contemplation of their Application for Consent Orders made in the Family Court. That application and the Consent Orders dated 20 August 2021 set out the agreed alteration of property interests between the parties. The plaintiff has deposed to the value of the expected net assets of each of the parties following the sale of their former matrimonial home (being of an equivalent amount).
The Deed of Release recites, among other things, that the Financial Agreement and minute of consent orders agreed between the parties have been entered into in the expectation that each will finalise all claims by either party against the other arising out of their (de facto) marriage in respect of property settlement and spouse maintenance and their desire and agreement to complete the final severance of their financial relationship by discharging each other's estates from any potential claim (see cl 2.14).
The Deed of Release (which was conditional upon entry by the Family Court of Australia of orders in accordance with the minute of orders to which the parties had consented (see cl 3.1)), contains express acknowledgements by each of the parties that: the Deed constitutes a mutual release of rights before the death of either party (cl 3.3.); the giving of the release is in consideration of the minute of consent orders and Financial Agreement and in order to complete the final severance of their financial relationship otherwise represented by and embodied in each of those documents (cl 3.4); that it is prudent and in their respective interests and to their respective advantage to grant the release (cl 3.5); that the minute of consent orders and Financial Agreement have taken into account the position of the other party in the event of the death of the other party (cl 3.6); and that the provisions of the minute of consent orders, the Financial Agreement and the release are fair and reasonable (cl 3.7). The parties further acknowledge that each has received independent legal advice in relation to the Deed and prior to entering into the Deed in relation to the matters set out in cl 3.9.1-3.9.6 of the Deed and that each has give due consideration to the advice so received (cl 3.9).
Certificates of independent legal advice signed by the lawyers for each of the parties were annexed to the Deed. It should also be noted that each of the parties is a qualified legal practitioner, whom I would expect to be more than competent to understand the effect of the legal advice so received.
The parties further acknowledged in cl 3.10 of the Deed of Release that the release shall operate in relation to the whole of the estates of the parties, respectively, including any notional estate within the meaning of the Succession Act (cl 3.10).
As noted above, each of the parties has filed an affidavit setting out his or her position and I have taken those matters into account.
Addressing then the matters required to be taken into account pursuant to s 95(4) of the Succession Act, I note as follows.
As to the value of what each of the parties is giving up by entry into the Deed of Release (s 95(4)(a)), this is to some extent presently unquantifiable, in that it is the right in future to make a claim under Chapter 3 of the Succession Act in respect of the whole or any part of the other's estate and notional estate when the other dies notwithstanding that, as the other's de facto spouse, the releasing party might be eligible to make such a claim. The value of the parties' estimated net assets is disclosed in the material put forward before the Family Court. I have taken it into account but I do not consider it necessary here to record those details.
As to the prudence of making the release (s 95(4)(b)), I am satisfied that, having regard to the standard of a prudent person being someone who acts with care and thought for the future, in exercising care and good judgment in relation to his or her own interests, the making of the mutual releases is prudent in order to enable each of the parties to have certainty as to his or her financial affairs and the ability to organise and plan for each own's future testamentary dispositions having excluded the other from making a claim on his or her estate in the future; and having regard to the mirror nature of the releases. In this context, I also have regard to the prudence of making such a release given the recognised potential for stress, cost and family disputation of any future family provision claim were such a release not to be given (see for example, what was said by Mason P in Bartlett v Coomber [2008] NSWCA 100 at [58]; and the observation of White J (as his Honour then was) in MacDonald v MacDonald [2012] NSWSC 1376 (at [18]).
As to s 95(4)(c)), I am satisfied that the provisions of the agreement to make the release are fair and reasonable (again noting that the releases are mirror in nature), and intended to bring about certainty as to the complete severance of the financial relationship between the couple.
As to s 95(4)(d), there is evidence before me that each releasing party has had the benefit of independent legal advice in the relation to the release and, by reference to the respective parties' affidavits, I am satisfied that each has given due consideration to that advice. In particular, I note that the respective legal practitioners have certified the provision of legal advice as to the effect of approval being granted by the Court of the releases. That would include that the releases once approved can be revoked only if obtained by fraud, undue influence or if all persons who would be affected by the revocation of the releases consent to that course (see s 96 of the Succession Act).
There is no issue as to the power of the Court to approve such releases in chambers (see s 11 of the Supreme Court Act 1970 (NSW)) and there is no doubt that the present case is an appropriate one to be dealt with in chambers having regard to the lack of dispute; that the parties are legal practitioners and have been independently advised; that the parties have consented to the consideration and making of orders in chambers; and noting the saving of Court time and expense of so doing and the overriding statutory purpose of the just, quick and cheap determination of the real issues in dispute (see s 56 of the Civil Procedure Act 2005 (NSW); and Kelly v Kelly at [75]-[80] per Hallen J).
Accordingly, I consider that the releases should be approved and will make orders to that effect.
Finally, I should add that I do not consider it by any means necessary in the ordinary course for a judge approving such releases in chambers to publish reasons beyond the notation on the court orders of the material to which the judge has had regard in the consideration of the application and the making of the orders; and these reasons should not be treated as a precedent in this regard. It has simply been more convenient in the present instance for me to do so.

Orders

For the above reasons, I make the following orders: 1. Pursuant to s 95 of the Succession Act 2006 (NSW), approve the release by the plaintiff pursuant to Deed of Release dated 20 August 2021 of her rights to apply for a Family Provision order in respect of the estate, or notional estate, of the defendant, in the event that the defendant shall become a deceased person. 2. Pursuant to s 95 of the Succession Act 2006 (NSW), approve the release by the defendant pursuant to the Deed of Release dated 20 August 2021 of his rights to apply for a Family Provision order in respect of the estate, or notional estate, of the plaintiff, in the event that the plaintiff shall become a deceased person 3. Order that there be no order as to costs.

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: 11 February 2022

Family Provision Act 1982(NSW)

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