Vaughan v Curran

1. All of the assets of the Deceased's estate were distributed to the beneficiaries in accordance with terms of the Will no later than 14 November 2016. Accordingly, Allen, Edward and Jennifer became registered as the proprietors of an estate in fee simple as tenants-in-common in equal shares in Lot 3. They also became the joint holders of 25 shares in the capital of Kizron.
2. As at 9 October 2018, Lot 3 had a value of $960,000. Lot 3 is a parcel in a subdivision of a property consisting of 130 acres situated in Wisemans Ferry Road, Cattai (Wyoming), which was formerly owned by Reginald Curran, the late husband of the Deceased, who died in 1969. Under the will of Reginald, the Deceased received a life estate in Wyoming and Reginald's four children, Allen, Edward, Jennifer and Lurrain were entitled to the remainder in equal shares. However, following the death of Reginald, Wyoming was divided into five lots, which were owned in fee simple as follows: Jennifer Lot 1 Allen Lot 2 The Deceased Lot 3 Lurrain Lot 4 Edward Lot 5.
3. Subsequently, Lurrain and her former husband, Terrence O'Brien, borrowed money on the security of a mortgage of Lot 4 for the purposes of a business carried on by them. The business failed and Lurrain sold Lot 4 to Kizron in order to raise funds to discharge the indebtedness secured by the mortgage of Lot 4.
4. As at the date of death of the Deceased, the issued capital of Kizron consisted of 100 shares held as follows: Allen Curran 13 Gloria Curran 12 The Deceased 25 Jennifer Westland 25 Edward Curran 25.
5. The financial statements of Kizron for the year ended 30 June 2019 show that, as at 30 June 2019, Kizron had current assets of $236,783.06 and non-current assets of $288,791.20, being Lot 4 ($288,038.20) and preliminary expenses ($753), making total assets of $525,574.26. As at 9 October 2018, Lot 4 had a value of $1,020,000. The financial statements also show total liabilities of $55,414.27, giving net assets or total equity of $470,159.99. That figure can be adjusted by substituting the value of Lot 4. On that basis, the net equity of Kizron would be $1,202,121.79.
6. Lots 1, 2, 3, 4 and 5 together constitute the site of quarry operations conducted by GQ Products Pty Ltd (the Licensee) under a deed dated 28 April 2015 (the Licence). The parties to the Licence are Jennifer, Allen, the Deceased, Kizron and Edward (as the Landowners), Kizron (as the Licensor) and the Licensee. By cl 2 of the Licence, the Licensor granted to the Licensee full and exclusive licence to enter upon Lot 1, 2, 3, 4 and 5 for the purpose of extracting and carrying away, sand, sandstone, soil and tailings. The term of the Licence was 10 years ending on 31 July 2023. Consideration for the Licence is a royalty calculated by reference to the quantity of product quarried from Wyoming, with a minimum royalty of $4,500 per month, subject to review in accordance with variations in the Consumer Price Index.
7. The consideration payable by the Licensee for the Licence consists of a royalty. Kizron distributes the royalty to Allen, Edward and Jennifer in equal shares. While the bank statements of Kizron characterise the payments to them as dividends, the accounts of Kizron characterise the payments as wages. The distinction, of course, would be critical in relation to the assessability of Kizron and the three recipients for income tax. For present purposes it does not appear to be significant whether the payments are made by way of dividend or by way of wages.
8. By lease dated 20 March 2015 (the Lease), the Deceased granted a term of 10 years ending on 31 July 2023 to Kizron in respect of Lot 3. It appears that similar leases were granted by Allen, Edward and Jennifer in respect of Lots 1, 2 and 5. The interests of the Licensee under the Licence and of Kizron under the Lease are protected by caveats lodged in respect of Lot 4.

Statutory Framework

1. Chapter 3 of the Succession Act deals with "Family Provision". Part 3.2, which deals with "family provision orders", consists of ss 57 to 73 inclusive. Part 3.3, which deals with "notional estate orders" consists of ss 74 to 90 inclusive.
2. Under s 57(1)(e), a person who was, at any particular time, wholly or partly dependant on a deceased person and who is a grandchild of the deceased person may apply to the Court for a family provision order. Under s 58(2), an application for a family provision order must not be made later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown.
3. Under s 59(1), the Court may make a family provision order in relation to the estate of a deceased person if the Court is satisfied that:

• the person in whose favour the order is to be made is an eligible person;
• in the case of a person who is an eligible person by reason of s 57(1)(e) there are, having regard to all the circumstances of the case, whether past or present, factors that warrant the making of the application; and
• at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person.

1. Section 60 specifies the matters to which the Court may have regard for the purposes of determining whether the person in whose favour the order is sought to be made is an eligible person and whether to make a family provision order and the nature of any such order.
2. Section 63(1) provides that a family provision order may be made in relation to the estate of a deceased person. However, under s 63(3), a family provision order may not be made in relation to property of the estate that has been distributed by the legal representative of the estate in compliance with the requirements of s 93, except as provided by s 63(5). Under that provision, a family provision order may be made in relation to property that has been distributed if it is designated as notional estate of the deceased person by an order made under Pt 3.3.
3. Section 79 of the Succession Act relevantly provides that the Court may make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that as a result of a distribution of the deceased person's estate, property became held by a person. Under s 89(1), in determining what property should be designated as notional estate of a deceased person, the Court must have regard to:

• the value and nature of any property the subject of a distribution from the estate of the deceased person;
• the changes in the value of property of the same nature as the property referred to above; and
• any matter it considers relevant in the circumstances.

1. The Court must not designate as notional estate property that exceeds that necessary, in the Court's opinion, to allow the provision that should be made. Section 90(2) relevantly provides that, where an application for a family provision order is made later than 12 months after the date of the death of the deceased person, the Court must not make a notional estate order in the proceedings unless:

• it is satisfied that the property was the subject of a distribution from the estate of the deceased person, the person who holds the property holds it as a result of the distribution as trustee only and the property is not vested in interest in any beneficiary under the trust; or
• it is satisfied that there are other special circumstances that justify the making of the notional estate order.

1. Section 93 of the Succession Act relevantly provides that the legal representative of the estate of a deceased person may distribute the property in the estate if the property is distributed at least six months after the deceased person's death, the legal representative has given the prescribed notice of intention to distribute the property after the expiration of a period of time of not less than 30 days, the time specified has expired and at the time of distribution, the legal representative does not have notice of any intended application for a family provision order.
2. It is accepted that each of Lurrain, Fallon and Sarah is an eligible person for the purposes of s 59. However the defendants disputed that:

• there were factors that warranted the making of applications by Fallon and Sarah;
• sufficient cause has been shown for the Court to order otherwise under section 58 in relation to either application; and
• there were special circumstances that justified the making of a notional estate order in relation to either application.

Sufficient Cause

1. Following the death of the Deceased, Edward approached Lurrain and suggested that she accept the sum of $65,000 on condition that she sign legal documents prepared by the solicitors acting in connection with the estate of the Deceased. The first occasion when Lurrain was advised concerning family provision proceedings was in February 2018, when she sought legal advice from the solicitors who are presently acting for her.
2. Apart from the above, Lurrain has never obtained legal advice from a lawyer about any matter. The only contact that she has had with a lawyer was when her son was charged with driving offences and he went to court in connection with those proceedings. Lurrain was aware that a person could "challenge a will" but did not know what that involved. Until 2018, Lurrain thought that obtaining advice would be intimidating. It was only because Edward was insistent about her signing papers that she decided to take legal advice.
3. Lurrain says that she had difficulty coming to terms with the death of the Deceased and not being a beneficiary under the Will and found the period up to the end of 2017 a difficult one. She was initially reluctant to seek legal advice because she was concerned about how her siblings would react. After speaking with Fallon, she arranged an appointment with a lawyer in January 2018. Her solicitor wrote a letter to the solicitors for the estate of the Deceased. Shortly after that, Lurrain received a telephone call from Edward saying that he was disturbed that she was making a claim in respect of the estate of the Deceased.
4. The only occasion on which Fallon has obtained legal advice was in 2014 when she engaged a firm of solicitors to prepare a will. During the process of preparing and signing her will, she was not informed about how a will might be "challenged" or how a claim could be made on an estate. The first time that she learnt that a claim could be made for a family provision order was in February 2018 when she and Lurrain went to consult the solicitors now acting for Lurrain.
5. The only time that Sarah has seen a lawyer, apart from in relation to the current proceedings, was in relation to guardianship documents for her nephew. She first learnt that she could make a claim in relation to the estate of the Deceased in May 2018, when she received a letter from the solicitors acting in connection with the estate of the Deceased.
6. In light of the above, I am satisfied that sufficient cause has been shown for the Court to order that the present applications may be made notwithstanding that they were made later than 12 months after the death of the Deceased. In any event, by consenting to the orders to which I have referred above, Allen and Edward, as executors under the Will, must be taken to have consented to the applications being made out of time.

Factors Warranting the Applications

1. Lurrain was born in 1959 when her family lived at Wyoming. She lived with her parents until 1985 when she left the family home with Terence and her oldest two children. They began residing next door. Apart from a 12 month period in or around 1993, when Lurrain and the Deceased had a temporary falling out, Lurrain had a close relationship with her mother for the entirety of her life.
2. Lurrain has few assets. She is not employed and relies upon her present husband to support her financially. Lurrain and her husband trade as a farming partnership although her husband does most of the work for the partnership. The last full time job that Lurrain had was in 2015 cleaning duck eggs. Lurrain suffers from a number of health issues and has had to stop work. She has no formal training or tertiary education, having left school when she was 16 years old. From time to time she babysits for her grandchildren and receives a modest payment for that service as an alternative to day care.
3. Lurrain married her second husband, James Vaughan, in September 2000. They have been in a relationship for some 23 years. James is 67 years old and has three sons from his previous marriage. Lurrain has four children from her marriage to Terence.
4. Form the late 1990s until the death of the Deceased, Lurrain visited her mother at least once a week. The Deceased preferred not to use the telephone as she had hearing aids and preferred to speak to Lurrain face to face. Lurrain would visit her mother and bring lunch. From 2012 onwards, Lurrain visited the deceased once or twice a week to help her bathe and shower. Lurrain and Jennifer shared the care of the Deceased.
5. Fallon was born in 1987 and Sarah was born in 1981. They lived with their parents, Lurrain and Terence, until 1993 when the Lurrain left the matrimonial home and ceased thereafter to live with Terence. At that time, the Deceased lived next door to the house where Lurrain and Terence and their children lived. The Deceased moved from her house and moved into the house with Terence and his four children.
6. The Deceased took on the role of mother of Fallon and Sarah and their siblings. Terence was not at home very much since he worked night shifts. The Deceased cooked, cleaned, washed, ironed, disciplined and gave advice to Fallon and Sarah. Fallon shared a bedroom with the Deceased from the age of six until the age of 12 when she moved out and began to live with Lurrain.
7. The Deceased taught Fallon and Sarah how to knit, a pastime enjoyed by the Deceased. On the occasions when Fallon and Sarah went out for dinner or away on holidays, the Deceased accompanied them. The Deceased attended functions at Fallon's and Sarah's school. Sarah left the home at the age of 19 when a job opportunity became available for her. However, she continued to live with the Deceased and Terence at weekends.
8. Sarah and Fallon continued to maintain a close relationship with the Deceased after they left their father's home.
9. During the last 10 years of the Deceased life, she found it increasingly difficult to shower herself and Sarah helped her to do so. Sarah also took the Deceased shopping weekly for groceries and to doctors' appointments when required. Sarah took the Deceased to social events and visited her when she was in hospital.
10. When she reached adulthood, Fallon cooked and cleaned for the Deceased, did her washing and put it in the dryer. She assisted in showering and dressing the Deceased from time to time.
11. From the early 2000s up to the time of her death, the Deceased said to Fallon on many occasions that Fallon and her siblings would be looked after when the Deceased was no longer there. Two weeks before she died, the Deceased told Fallon to be sure to buy a new car with what she left her. The Deceased told Sarah approximately ten times over the years that she and her siblings would be looked after when the Deceased was gone.
12. Having regard to the material indicated above concerning Fallon and Sarah, I considered that there were factors that warranted the making of the application by Fallon and Sarah.

Special Circumstances

1. The orders made by consent include orders under Pt 3.3 designating Lot 3 as notional estate of the Deceased, to the extent necessary and for the purpose of satisfying the family provision orders made in favour of Lurrain, Fallon and Sarah. By reason of s 90, no such order could be made unless I was satisfied that there were special circumstances, within the meaning of s 90(2), that justified the making of such notional estate orders.
2. There is nothing in the language of s 90 to indicate the character of special circumstances that would justify the making of an order. Section 90 has an origin in s 28 of the Family Provision Act 1982 (NSW) (the Provision Act). In dealing with that provision, it has been suggested that a similar approach should be taken to the phrase "special circumstances" as has been taken to the phrase "special reasons" in s 101(5) of the Adoption Act 2000 (NSW). [1] The Court's discretion in relation to such a phrase can be characterised as "very large and necessarily so" but must have as its basis some circumstance that can reasonably be regarded as special reasons for taking the particular circumstances out of the usual. [2]
3. On the other hand, the hurdle provided by s 90 is different from the hurdle provided by s 58 of the Succession Act. By reason of s 58, the plaintiffs were required to show sufficient cause for the Court to order that their applications for family provision orders may be made later than 12 months after the date of the death the Deceased. For the reasons indicated above, I was satisfied that sufficient cause had been shown. Nevertheless, it was still necessary for me to be satisfied that there are special circumstances to justify the making of the notional estate orders, since there would otherwise be no utility in making family provision orders.
4. Section 90 contemplates two possibilities. The first, under s 90(2)(a), is that the Court is satisfied that the property to be designated as notional property was, relevantly, the subject of a distribution from the estate of the deceased person, the person who holds the property holds it as a result of the distribution as trustee only and the property is not vested in interest in any beneficiary under the trust. That is to say, an order may be made if no person has acquired a vested interest in the property distributed. The use of the word "other" in s 90(2)(b) indicates that the circumstance specified ins 90(2)(a) is treated by s 90 as a special circumstance. That is to say, the fact that no person has acquired a vested interest in the distributed property is a special circumstance.
5. Section 90(2)(b) then deals with the second possibility. Thus, other special circumstances may exist, for the purpose of s 90. That is to say, notwithstanding that there has been a change in beneficial ownership in property of a deceased person, the property might still be the subject of a notional estate order, by reason of the facts surrounding the property in question and the identity of the person or persons to whom the property has been distributed. I was satisfied that the circumstances outlined below constituted special circumstances that justified making notional estate orders in relation to Lot 3, to the extent necessary and for the purpose of satisfying the family provision orders in favour of the plaintiffs.
6. Lot 3 was one of five lots into which Wyoming was subdivided following the death of Reginald and the deed of agreement between the Deceased and her four children to give effect to the subdivision. Further, in essence, Wyoming remains as a single entity, in so far as the owners of the five lots granted the License to the Licensee to carry on the quarry operations on the land that was known as Wyoming. The distribution of Lot 3 to the defendants, Allen, Edward and Jennifer, was subject to the prior existing rights of the Licensee, under the Licence, and Kizron, under the Lease.
7. There is no evidence to suggest that any of Allen, Edward or Jennifer has changed his or her position by reason of the distribution of the estate of the Deceased. The making of notional estate orders could not, of course, prejudicially affect the interest, in relation to Lot 3, of the Licensee, under the Licence, or Kizron, under the Lease.

Conclusions

1. In the circumstances, I was satisfied that adequate provision was not made by the Will for the proper maintenance, education and advancement in life of Lurrain, Fallon or Sarah. No applications for family provision orders have been foreshadowed on behalf of any other person. Accordingly, I considered that the orders proposed should be made that each of Lurrain, Fallon and Sarah receive a lump sum out of the notional estate of the Deceased in the sums indicated in Appendix 1 and Appendix 2, which sums included their costs of their respective applications.

Appendix 1 TERMS OF SETTLEMENT (re 2018/80076)

1. The time in which to commence the plaintiff's claim be extended up to and including the filing of her Summons on 12 March 2018.
2. Having found that the plaintiff is an eligible person and that adequate provision for her proper maintenance for advancement in life has not been made from the estate of Norma May Curran (the deceased), order pursuant to section 59 Succession Act 2006 that the plaintiff receive a lump sum of $225,000 (two hundred and twenty five thousand dollars) out of the estate or notional estate of the deceased.
3. The lump sum in order 2 above be paid within 28 days of the making of these orders, and if not so paid shall accrue interest at the rate provided by section 84A (3) Probate & Administration Act 1898 on the unpaid amount on and from the 29th day;
4. The parcel of land situate at and known as "Wyoming" 528 Wisemans Ferry Road, Cattai (folio identifier 3/240610) be designated as notional estate to the extent necessary and for the purpose of satisfying order 2 above.
5. No order as to the plaintiff's costs to the intent she pays her own costs.
6. The defendants' costs be paid or retained from the Deceased's estate on the indemnity basis. THE COURT NOTES:
7. The deceased's estate has been administered and paid or transferred to the defendants as tenants in common in equal shares.
8. The application was not made within time but an order extending time has been made.
9. The plaintiff is an eligible person.
10. The plaintiff has served a notice identifying all other eligible persons on the administrator at the time of serving the summons.
11. The executors have filed: a. the executors' affidavit required by SCR Schedule J; and b. the affidavit of service of notice of the plaintiff's claim on any person who is, or may be, an eligible persons as well as upon any person beneficially entitled to the distributable estate, and any person holding property as a result of a distribution from the estate, as trustee or otherwise.
12. The executors have filed an Appearance.
13. Liberty reserved to the parties to apply in relation to the implementation of these orders on 5 days' notice.

Appendix 2 TERMS OF SETTLEMENT (re 2018/182471)

1. The time in which to commence the plaintiffs' claim be extended up to and including the filing of their Summons on 12 June 2018.
2. Having found that the plaintiffs are eligible persons and that adequate provision for their proper maintenance for advancement in life has not been made from the estate of Norma May Curran (the deceased), order pursuant to s 59 of the Succession Act 2006 that: a. the first plaintiff receive a lump sum of $50,000 (fifty thousand dollars); and b the second plaintiff receive a lump sum of $50,000 (fifty thousand dollars); out of the estate or notional estate of the deceased.
3. The lump sums in orders 2 (a) and (b) above be paid within 14 days of the making of these orders, and if not so paid shall accrue interest at the rate provided by section 84A (3) Probate & Administration Act 1898 on the unpaid amount on and from the 15th day;
4. The parcel of land situate at and known as "Wyoming" 528 Wisemans Ferry Road, Cattai (folio identifier 3/240610) be designated as notional estate to the extent necessary and for the purpose of satisfying order 2 above.
5. No order as to the plaintiffs' costs to the intent they pay their own costs.
6. The defendants' costs be paid or retained from the Deceased's estate on the indemnity basis. THE COURT NOTES:
7. The deceased's estate has been administered and paid or transferred to the defendants as tenants in common in equal shares.
8. The application was not made within time but an order extending time has been made.
9. The plaintiffs are eligible persons.
10. The plaintiffs served a notice identifying all other eligible persons on the administrator at the time of serving the summons.
11. The executors have filed: a. the executors' affidavit required by SCR Schedule J; and b. the affidavit of service of notice of the plaintiffs' claims on any person who is, or may be, an eligible persons as well as upon any person beneficially entitled to the distributable estate, and any person holding property as a result of a distribution from the estate, as trustee or otherwise.
12. The executors have filed an Appearance.
13. Liberty reserved to the parties to apply in relation to the implementation of these orders on 5 days' notice.

Endnotes

1. See Cetojevic v Cetojevic [2006] NSWSC 431 at [77] and [78].
2. See Gourlay v Casey (1927) 38 CLR 586 at 591; [1927] HCA 6. 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 November 2019