Sweet (disinherited) Child of Mine

College of Law Advanced Wills and Estates Conference – 25 October 2018

SWEET (DISINHERITED) CHILD OF MINE

Michelle Painter SC – 9 Selborne Chambers

1.            The title of this speech is “Sweet (disinherited) child of mine”, because I think that poignant reflections of Guns N’ Rose on childhood nostalgia are especially relevant to the family provision trend I will discuss today. You might recall, for example, that Axl Rose looked fondly back on childhood memories, “where everything was fresh as the bright blue sky”. 

2.            The parents in the cases we will discuss today unfortunately did not share this rose-coloured perspective and left nothing or very little behind for that sweet child of theirs. The result is a number of disgruntled adult children lining up at the Supreme Court for what they perceive as a ‘fair share’ from their parent’s estate. 

3.            Yet rather than allowing further provision as compensation for their disgruntlement, the Supreme Court in 2018 has been very reluctant to interfere with testamentary intention in order to provide for an able-bodied, financially stable adult children – even where they have received zero by way of provision from an otherwise loving parent. 

4.            Today I’ll suggest that this trend reaffirms the original rationale of the family provision jurisdiction. You’ll recall that this scheme was originally designed as an equitable mitigation of complete testamentary freedom in circumstances where dependants (most often women and children) were by virtue of social circumstances unable to provide for themselves and so were reliant on distribution from an estate to live.[1]

5.            In contrast to the civil law tradition in which children and widows are entitled to a fixed share of the deceased estate, family provision laws in New Zealand then Australia were informed by common law liberal thinking that testators should be able to leave their property to whomever they wished.[2]

6.            The common law thinking behind the Australian family provision scheme was therefore premised on a reluctance to adjust wills, but a willingness to do so in a confined range of circumstances. The 20th Century attitude was captured well by Lord Simon of the Privy Council in overturning a decision of the NSW Supreme Court in 1972, who commented that children of the deceased only had “a right to support until capable of self-support”.[3]

7.             However, there is a prevailing view in academia (and I suspect the profession) that administration of the testamentary regime has gone well beyond this “provision until self-support” rationale. An empirical study of family provision cases found that in 2011, adult children were the most frequent claimants and successful in a staggering 73 per cent of cases.[4]Professor Rosalind Croucher is critical of what she perceives as a cohort of: 

independent, self-sufficient 50 and 60-year old’s wanting to get more of the pie from their parents, notwithstanding that the parent had made a conscious decision that they already had enough or did not deserve more (or even anything).[5]

8.             Professor Anthony Gray attributes the exponential growth of the family provision jurisdiction to what he regards as an overly-broad judicial discretion, resulting in a situation where the deceased’s wishes have only ‘prima facie’ effect, in which the “real dispositive power” is vested in the courts.[6]

9.              I want to suggest that the experience of family provision litigation in 2018 debunks these academic misgivings by showing that the Court has taken a hard line on applications by adult children where it appears they are simply squabbling over the last piece of pie – to adopt Professor Croucher’s apt characterisation. 

The Family Provision Scheme 

10.          First, I’d like to quickly refresh your minds on the operation of family provision in NSW in case this is not your primary area of practice. The two main contested elements of family provision claims concern the eligibility of the plaintiff and whether their entitlement under a will was inadequate for their proper maintenance such that an order for further provision should be made. Of course, the issue of eligibility is irrelevant for the purpose of todays’ discussion, as children can make an application as of right under section 57 of the Succession Act 2006(NSW). With regard to proving the inadequacy of provision under section 59, I’ve noted elsewhere[7]how the Court of Appeal has emphasised that although impecuniosity is a significant factor, this inquiry must be decided after a holistic inquiry of all relevant circumstances, such as prior generosity by parents.[8]

11.          The judge must then have regard to 15 factors under section 60(2), such as whether another person is liable to support the plaintiff, and their contributions to the deceased. These factors must be attributed equal significance in the judge’s discretionary decision to order further provision. 

12.          Now, in support of my contention that a trip to the Hospital Road Court is becoming less lucrative for adult children, I’d like to take you through three cases decided this year that I believe are indicative of this trend. 

Estate Kranjac; Cadden v Widdowson [2018] NSWSC 285 

13.          I turn first to the estate of a Ms Kranjac.[9]This case is an archetypal example of the mistaken belief that the Court will carve up a deceased estate to achieve what the children believe is an equal division of their parents’ wealth. 

14.          Playing to an unfortunate stereotype, the four children were pitched against each other along what seemed to be well established sibling lines: the older sister having recruited the youngest brother to face off against her other sister and brother. As noted by Justice Lindsay, the family schism evident on the face of the record preceded the litigation by about a decade, with the two groups of siblings having previously fought over the rights to their mother’s power of attorney.These already-hardened positions set the scene for very uncompromising litigation between the parties, which is a particularly unhelpful circumstance in family provision cases where the estate often bears the burden of costs. 

15.          From the outset, we can suspect that the players in this case fall into the cohort that Professor Croucher warned us about. The two plaintiffs and cross-claiming defendant were all in their 60s or 70s and each had a net worth of about $2 million, thereby exceeding the value of their mother’s $1.8 million estate.

16.          Similarly, the use of the proceedings as a proxy for the sister’s broader animosity was evident in the “collateral disputes” that Justice Lindsay was forced to determine, such as whether the plaintiff had stolen some of her mother’s jewellery, and whether the defendant had wrongly claimed one of her mother’s properties as her own.  After hearing evidence on these issues for most of the four days of the hearing, Justice Lindsay pithily observed that the “net effect of [these] attacks was to diminish all parties” and simply caused him to regard the credibility of their other evidence with caution. I mention this undesirable aspect of the case to urge you to settle such collateral aspects of a client’s grievance well before a court date is set. 

17.          The main issue from the eldest daughter’s point of view, of course, was that the $1.75 million family home had been left entirely to her brother and the residue of the estate left to that sister’s son. While on its face this choice may appear spiteful or unfair, a closer examination of the facts reveals that the deceased made a perfectly rational choice in excluding most of her children. 

18.          Though financial circumstances are not determinative, they certainly played a part in this decision – with good reason. The plaintiff was described as “asset rich but cash poor”. She owns a $3 million house, has no dependants, no major debt and no major health problems. She identified her financial needs as desiring a fund for contingencies and to renovate her house. Her brother, the other plaintiff, also owned his home outright and has a financially supportive partner but would like some more money as a contingency fund for retirement.

19.          On the other hand, their brother (the principal beneficiary) relied on the family home for his residence and had been the principal carer and companion to the deceased in her old age.  In these circumstances, it is easy to see why the deceased felt she owed him a special obligation to provide him with security of tenure in the family home. 

20.          More importantly, within the limits of her available resources for distribution, the deceased would be unable to confer substantial benefits on any of her children without significantly diminishing the provision for a son who had provided her with gratuitous care and companionship for most of her life.

21.          In a legal system that respects freedom of testamentary intention, what basis do we have to disagree with or overturn the deceased’s decision? None of the claimants were beyond the point of ‘self-support’, and none suffered financial distress or a disability that impeded their capacity to work. I think we can also safely assume that the family provision scheme was not designed to assist those who are “asset rich and cash poor”. 

22.          Finally, in dismissing the claim, Justice Lindsay observed (justifiably, in my opinion) that “the idea that the deceased’s children should have been treated equally in the deceased’s will appears to have informed much of the thinking of the plaintiffs”.

23.          Such thinking is reminiscent of compulsory divisions in a civil law system, which obviously has no purchase in estate distribution in NSW. Keeping this in mind, we can see that circumstances need to be more compelling than an able-bodied adult wanting to renovate her house and get back at her sister before the Court will vary a parent’s will in a child’s favour. 

Beech v Squire [2018] NSWSC 594 

24.          This same kind of thinking also received short shrift from Justice Kunc in the case of Beech v Squire, involving another unsuccessful claim by two able-bodied and financially comfortable adult children. I also raise this case because it’s a good illustration of how to approach claims by clients who have separated from the testator.

25.          The whole of Mr Squire’s estate was due to be inherited by his second wife. The main problem was that it was already insolvent by about $48,000 by the time the case came to trial, and the only potential ‘notional estate’ was the deceased’s half of the proceeds from the recently- sold marital home, which had passed to his wife by survivorship. This meant that the children’s successful claim would have deprived the widow of her means to buy another home.[10]

26.          The other issue which took up a ponderously long portion of this case was the contention over whether the deceased was still in a relationship with the primary beneficiary of his will when he died. The plaintiffs’ position was that because their father had been recently heartbroken by his wife leaving him, the Court should give effect to his unexpressed intention to exclude her from the will and divide his estate equally between his children.

27.          Justice Kunc then had to wade through the most anodyne evidence to decide whether the two had truly separated. By this, I mean that he had to assess the 

evidentiary implications of one party having returned a road toll ‘e-tag’ to the other, and whether cancellation of a TPG internet plan was proof of permanent separation.

28.          Although the evidence disclosed a “deliberate and accurate splitting of all the jointly held assets”,the widow maintained this was an elaborate ruse to pressure the deceased into leading a healthier lifestyle.

29.          The reason I say that the parties spent a ‘ponderously long’ time discussing whether the two had separatedis that it would ultimately have no bearing on the determination of the claim. The separation of the pair was so recent that they did not have time prior to his death to reach a financial settlement, which has been held in other cases to determine a party’s obligation to financially provide for the other without the court’s intervention.[11]

30.          More importantly, we must remember that a deceased’s partner’s entitlement to a will is not statutorily extinguished the moment they enter a new relationship. This is made clear by s 57(1)(d) of the Act which expressly provides that a ‘former wife’ is an eligible claimant for a family provision application.

31.          But the more fundamental issue with the contention over the separation was that it revealed the adult children’s’ assumption that once the primary beneficiary was out of the way, the estate would naturally devolve into an equal division between the two of them. Again, this misguided thinking is reminiscent of the ‘fixed share’ divisions effected under a civil law testamentary system. 

32.          But of course, this was not a civil law Court. Justice Kunc recognised that while a separation may affect the size of the provision made for an ex-partner, any adjustment must be restrained by the size of the estate and whether the children could prove their current provision was inadequate for their needs. In any case, his Honour was right to observe that exercising his jurisdiction under s 59(1)(c) did not involve speculating on what kind of will the deceased would have made in light of the separation, the terms of any financial settlement or “postulating a notional intestacy”.

33.          The more pressing consideration, as it was for the first case, was that even assuming a notional estate order was made, there would still not be enough money after expenses to satisfy the claims for $85,000 by each child.

34.          While in more persuasive circumstances a judge may still have awarded a reduced provision for each plaintiff, unfortunately the basis of the children’s claim in this case did not extend far beyond their conviction that they deserved their father’s money. Both were able-bodied with no health problems, shared living costs with their partners, had no substantial debt and had enjoyed positive relationships with their father.

35.          To particularise the claimed financial needs to assist you in your own practice, the son wanted to pay for a wedding and buy a house in Sydney, for which he estimated a very optimistic figure of $70,000 for a deposit. Now, we all agree Sydney is a wonderful place to live but it’s clearly not the kind of financial need envisaged by the legislation.I would argue family provision isn’t supposed to operate as a kind of safety net where you chug along on a standard salary in an inexpensive suburb and just wait for a parent to drop off so you can crack into a prohibitively expensive property market.

36.          As for the daughter, her financial needs were finances for the general upkeep of her farming business and for the educational and medical expenses of her children.Yet Justice Kunc was unable to assess the validity of these needs given the lack of clear financial evidence, leading him to suspect the main need was really for a handy source of cash.

37.          Beyond the obvious need to provide clear financial records if you’re the plaintiff ... I think the main lesson we can derive from this case is that it’s important not to treat clients’ claim as though they operate in a vacuum. Even if the adult children in this case had compelling financial needs, this has to be weighed against the fact that an order would deprive the deceased’s widow of the proceeds of sale from a house she had partly owned.  This means that in presenting factors that could outweigh another compelling claim on the estate, you need to provide evidence that finances are required for proper maintenance rather than vague future desires. 

Sariban v Pocock [2018] NSWSC 724 

38.          The final substantive case I’d like to look at today is Sariban v Pocock,[12]which is a great illustration of how the Equity Division does not appreciate being used as a forum to vindicate someone’s sense of injustice that their sibling was favoured by a parent in their will. You get a good sense of the hurt feelings motivating the plaintiffs from the opening paragraph of the judgment, with Justice Hallen invoking some very Shakespearian language: 

[n]o dispute can be bloodier than when the blood, thicker than water, is spilled in uncompromising and uncompromised litigation ... in a fight over inheritance.[13]

39.          As is common, the blood in this case was being spilled over the family home, in which the five children of the deceased owned a two-thirds interest as tenants in common as a result of the intestacy of their father, who died many years earlier. Their mother held the other one-third interest, which (surprise, surprise) she gifted to her eldest son, who had lived in the house rent-free since her death.

40.          The mother made the specific bequest of her interest to her son on the basis of her belief that her “other four children have adequate accommodation and do not rely on my estate for their future welfare”.She outlined her reasons for doing so in a detailed and thoughtful appendix to her will, noting how her son had lived with her his whole life and in particular had nursed her through ill-health, including through multiple hospitalisations and heart attacks. She saw it as ‘only fair’ that her son should have a home like his siblings.

41.          It’s important to recognise the proper weight to give to such expressions of testamentary intention. Although courts can obviously interfere with these intentions where provision is found to be inadequate, they have also consistently recognised the superior position of the testator in assessing the relative merits of the claims made by various potential beneficiaries.[14] Where the testatrix has provided clear evidence of such consideration, the threshold beyond which the court will intervene is necessarily heightened. 

42.          Another interesting aspect of this case was what it revealed about the proliferation of family provision claims more broadly, and the sense that plaintiffs are starting to learn the tunes they think they should sing in order to convince a judge. For example, Justice Hallen commented that he developed the impression the plaintiff had been advised that she would be more likely to succeed in her family provision claim if she could demonstrate a distinctive kind of financial ‘need’.Relevantly, the plaintiff had developed a burning desire to enjoy the great outdoors in rural Tasmania, which coincidentally arose at the same time the court proceedings came about.

43.          Unsurprisingly, Justice Hallen wasn’t overly persuaded by this asserted financial need, especially on account of the many reasons why Tasmania was an irrational choice: the plaintiff had a strong support network of health care workers, she had no drivers licence – which one would think would be useful in a rural town on an Island – and had no idea whether she could move into public housing, on which she had been reliant in Sydney.

44.          The only real evidence was that she was unhappy with her lot because there was no space for potted plants and there was a neighbour with Tourette’s who bothered her, as well as a noisy lady called Julie.But perhaps the plaintiff’s most egregious complaint was that her neighbours refused to participate in the flower growing competitions she arranged for friendly competition in the housing block.

45.          I’m sure you are starting to appreciate that complaints such as these are unlikely to amount to the kind of financial need that must be satisfied in order to ‘properly maintain’ an adult child, and that would justify displacing her brother from his home. The plaintiff did herself no favours by adding to her ‘wishlist’ for provision some money to sound-proof a piano room, to get laser hair removal and to purchase a car she does not have a licence to drive.

46.          Does this list sound ridiculous? Well then it’s a good example of why it’s important to constrain your client in listing their financial needs in a family provision claim, such that it doesn’t turn into a fantasy wish-list, but is a faithful account of their necessary expenses – for example in this case I would have confined this list to the plaintiff’s medical costs and a fund for her exigencies given she lives alone and has no working capacity. 

47.          Another aspect of this case which is worth remembering for your practice was the relevance of the plaintiff’s receipt of a disability pension and the NDIS toward the determination that she was already adequately provided for, which has also been recognised in a number of other decisions this year.[15]However, it’s important to note that the deceased specifically averted to her daughter’s ‘income’ from these sources and her secure public housing in the letter attached to the will.Consequently, it wasn’t simply that Justice Hallen thought the pension dis-entitled the plaintiff from further provision, but more so that the deceased had specifically regarded this as the plaintiff’s financial provision relevant to the disposition of her assets. Nonetheless, given the increasing attention given to receipt of government welfare, I would advise you not to rely on this as a factor proving financial need in family provision; as it can be found to demonstrate quite the opposite. 

48.          In any case, none of the matters relevant to the plaintiff in this case would carry sufficient weight on their own to compel a judge not to make a family provision order. It always depends on the entire factual matrix and other ‘compelling claims’ on the estate. There was a very notable other claimant in this case – I hope you had not forgotten about the prodigal son! 

49.          I know parents supposedly don’t have favourites, but this son was definitely the sweet child of hers. He had certainly done well from her especial attention; having lived in her house rent-free since childhood, receiving a car and living off her income entirely since he became unemployed.

50.          On the other hand, the son’s profound contribution to his mother’s welfare was undeniable; he had saved her life numerous times after various health crises, and even described the two as ‘life partners’,the psychoanalytical implications of which I will leave to you. 

51.          In these circumstances, I suggest that Justice Hallen’s Shakespearian opening may have overstated the drama of this case just a tad. There was no severe ill-will between the siblings, or between the mother and her children. Rather, it was clear that in the absence of any dire financial need of her other children, the deceased’s decision as to how to distribute her estate was hers to make, in a way she clearly regarded as fair and had outlined in very clear terms. 

52.          In finding that the deceased had not failed to make adequate provision for the plaintiff, Justice Hallen made what I think to be the most clear-sighted observation on regarding family provision claims by adult children. While he readily appreciated that the plaintiff would feel ‘hurt and upset’ that the deceased chose to leave the whole estate to her brother, his Honour emphasised that the legislation “does not justify orders to remedy perceived unfairness or hurt feelings”.

53.          I’d say that just about sums it up. Children may feel that their parents should have treated them equally, but the family provision jurisdiction is not a posthumous parenting committee where children can come and excoriate the unfairness of their childhood. I would suggest that is a matter which children should raise with their parents in their lifetime over a cup of tea. It’s certainly not something the court is ready to – nor should they – rewrite a will over. 

Condello v Kim [2018] NSWSC 394 

54.          These cases might have led you to form a very dim view of an adult child’s chances of success in family provision. Before you go rushing back to the office to call those clients and tell them to abandon the claim, I’d like to briefly discuss a successful adult plaintiff, in a case which I think perfectly illustrates the circumstances properly envisaged for family provision legislation. 

55.          In Condello v Kim,[16]the plaintiff was a disabled adult man, confined to a wheelchair and requiring extensive assistance from his elderly mother.The deceased father was described by Justice Kunc as a “violent and controlling man”, a personality which explained the severe falling out between father and son once the parents divorced.

56.          Despite the fact the plaintiff had worked on the family farm without pay for many years prior to the development of his disability and had very high financial needs, his father left the lion’s share of the estate – about $2.5 million – to his new wife, and his disabled son only $400,000. 

57.          Justice Kunc had regard to the fact the plaintiff would not be able to rely on his elderly mother as a carer for much longer so had very pressing financial needs in terms of tailoring a house to his needs and paying for a full-time carer.Although he ordered an extra half a million dollars in provision for the plaintiff, Justice Kunc refused to do so for the deceased’s daughter: finding that her entitlement under the will was adequate for her financial needs.

58.          The relative assessment of these two claims is a perfect illustration of the family provision jurisdiction being utilised for the purpose for which it was created. A disabled adult son had his dire need for funds satisfied to ensure his future financial security, whereas his sister, who just fancied some cash to pay off a mortgage, was denied relief. 

59.          Although I don’t think they need to be this extreme, this case demonstrates the kind of compelling circumstances that are required before the Court will allow a claim by an adult child on their parent’s estate. 

Conclusion 

60.          To return to Axl Rose, I don’t want you to leave this session thinking: “where do we go now?”. So here’s a quick summary of the three key trends I’ve picked up on in the family provision list this year you can take away into your practice when dealing with estate litigation by sweet disinherited children. 

61.          First, you cannot rely on the fact another sibling got more money out the will as a self-sufficient basis for interference in a deceased’s estate. Secondly, while financial or other needs may be one of these proper bases for intervention, this is necessarily constrained by the size of an estate and the competing claimants – remember that adult children do not have an a priori right to provision. Thirdly and finally, make sure you consider the effect of a client’s receipt of public welfare or housing, as the Court is increasingly likely to perceive the government as the legitimate financial supporter of a plaintiff in refusing them further relief. 

Michelle Painter SC

Nine Selborne Chambers

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[1]Anthony Gray, ‘Family Provision Applications: A Critique’ (2017) 91 Australian Law Journal 750, 750

[2]See Rosalind Atherton, ‘Expectation without Right: Testamentary Freedom and the Position of Women in 19th Century New South Wales’ (1988) 11 University of New South Wales Law Journal 133.

[3]Schaefer v Schuhmann [1972] AC 572, 596 (on appeal from NSW Supreme Court).

[4]Ben White et al, ‘Estate Contestation in Australia: An Empirical Study of a Year of Case Law’ (2015) 38 University of New South Wales Law Journal 880, 900.

[5]Rosalind F Croucher, ‘Succession Law Reform in NSW – 2011 Update’ (Speech delivered at the Blue Mountains Annual Law Conference, Katoomba, 17 September 2011).

[6]Gray, above n 1, 762.

[7]Michelle Painter, ‘Court of Appeal Reins in Generous Family Provision Decisions in 2017’ (2018) 43 Law Society Journal 71.

[8]See, eg, Sgro v Thompson[2017] NSWCCA 326.

[9]Estate Kranjac; Cadden v Widdowson[2018] NSWSC 285. Ibid [7].

[10]Beech v Squire[2018] NSWSC 594, [2]. 

[11]See, eg, the finding in Lodin v Lodin[2017] NSWSC 10, [53] (Brereton J).

[12][2018] NSWSC 724

[13]Ibid [1], citing Bolger v McDermott[2013] NSWSC 919, [1]

[14]Sgro v Thompson[2017] NSWCCA 326, [83] (White JA).

[15]see Harris v Harris[2018] NSWSC 552, [110] (Ward J (CJ Eq).

[16][2018] NSWSC 394.