Family Provision Law Update

A paper by Master John McLaughlin, a Master of the Supreme Court of NSW, in the April 2004 NSW Law Society Journal outlined possible important changes to practice in Family Provision Act 1982 (NSW) matters.1

The paper noted the enormous increase in the number of family provision claims and some reasons for the increase including changing family dynamics and the increase in Australia's population. Problems in practice were also noted including the continuing failure to provide adequate evidence of needs of a family provision claimant and the encouragement of questionable claims in the hope of achieving a settlement.

One possible important change to practice in this area is the introduction of appropriate Court rules which will have the effect of capping legal costs at maximum amounts in family provision claims.

Another important change which is being considered by the Court is whether family provision claims should be decided upon the papers without the necessity for a public Court hearing of the proceedings and, at least in the first instance, without written reasons for the Court's decision and orders.

A Strong Case for Independent Executors

The case of Roy?v-Roy [2004] NSWSC 463 is an excellent example of why appointing an institutional executor may be best to deal with difficult family situations involving spouses and children from different relationships.

The late Roderick Gordon Roy died in June 2002. His widow made a family provision claim against his estate. The marriage between the plaintiff and the deceased was a second one for both of them. Each had children from a prior marriage. As well, the deceased had two children from a de facto relationship.

In his Will, the deceased appointed three executors. He appointed his widow, his son Travis, and an old friend, Mr Stanwell. The deceased also endeavoured to make provision in his Will for the various people associated with different segments of his life.

There were two notices of motion before the Court relating to the estate. The first involved a dispute between two of the executors Travis and Mr Stanwell about which of them should have the conduct of the defence of the plaintiff's claim. The dispute (but not the issue of costs) was settled prior to the hearing. The second notice of motion brought by Travis was for an order that the family provision proceedings be referred to mediation. Justice Campbell was not prepared to order mediation.

There were some interesting observations by Justice Campbell in relation to the costs of the first notice of motion involving the dispute between two of the executors. Whilst the rule was noted that there should only be one set of costs out of an estate for executors, Justice Campbell commented that this was not an invariable rule. Where problems stem from the structure of the Will, as in this case, more than one set of costs for the executors can be paid from the estate.

The case highlights the importance of willmakers giving careful thought to the appointment of executors. Legal costs could have been avoided had an institutional executor such as a trustee company or the Public Trustee been appointed.

Family Provision - Non-Resident Applicant

The case of Lo Surdo v Public Trustee & Anor [2003] NSWSC 83 involved a family provision claim by an adopted son living in Italy against the estate of his mother in Australia. The applications before the Court by the second defendant (the sole beneficiary under the Will of the deceased) were for summary termination and security for costs. The plaintiff applied for an injunction to restrain the second defendant from dealing with two properties that may be designated as notional estate.

The brief judgment of Justice Gzell contains some useful guidelines to keep in mind in family provision litigation:-

• there is nothing on the face of the family provision legislation that excludes a non-resident child with no intention of becoming part of the Australian community;
• the mere fact that the plaintiff was a resident of Italy did not entitle the second defendant to an order for security for costs. Non-residence is a precondition to the exercise of the Court's discretion but there must be something more to justify an order; and
• in certain circumstances the Court has power to make orders of interim preservation of property pending the determination of family provision proceedings but there is real doubt as to whether there is power to restrain a third party from dealing with property that may never be designated as notional estate.

All the applications in this case were dismissed.

Family Provision for Defacto Spouse Despite a Period of Separation Before Death

The English Court of Appeal decision in Gully-v-Dix; in re Dix Deceased was handed down on 21 January 2004. It is an interesting decision that allows further provision to be made for a former defacto spouse despite a period of separation before death.

The claimant had lived with the deceased since 1974. The deceased became an alcoholic and his behaviour deteriorated so that the claimant, fearing for her safety, left in August 2001. She did not return and the deceased was found dead in October 2001. The claimant sought financial provision from the deceased's estate which was opposed by the deceased's brother. The English Court of Appeal upheld the decision of the lower court which had found that the claimant was living in the same household and being maintained by the deceased "immediately before" his death for the purposes of section 1 Inheritance (Provision for Family and Dependants) Act 1974. It found that, considering the settled state of affairs between the parties during the long period of their cohabitation, the judge was justified in ignoring the abnormal situation of the last three months of the deceased's life when, because of alcohol abuse, the claimant had been unable to cope and had moved away.

___________________________________________________________________________________________________________1. 1 Master John K McLaughlin "The Role and Function of the Master" (pages 74-77)