In a recent case, the Supreme Court of New South Wales court of appeal observed the ruinous nature of family provision claims by adult siblings. This included the financial burden of the litigation, embittered family relationships, adverse health consequences and the breakdown of relationships due to the pressure of the proceedings. Highlighting the importance of legal practitioners emphasising that their clients fully appreciate the benefits of early mediation at the outset of family provision litigation.
Elaine Jill Bassett (Jill) died on 21 March 2007, William Bassett (Bill) who died on 22 January 2014, aged 85, married in 1953 and had four children – Merilyn, Sue, Geoff and Bruce. Bill and Jill, were farmers who conducted their farming business through a series of rural partnerships.
Geoff was the only child to take up a career as a farmer working alongside his parents over the years.
In 1998, Bill and Jill gifted Geoff a rural property known as “Pindaroi”- referred to by family members as his “early inheritance”. Pindaroi was sold by Geoff in 2009 for approximately $4.2 million.
At the time of his death, Bill and Geoff had a 50% share in a rural property, known as “The Springs”. In his will Bill left Geoff his share in any farming plant and equipment machinery, implements and livestock however Bill expressly excluded any real estate which he may have owned with Geoff. Merilyn, Sue and Bruce were residuary beneficiaries under both their parents Wills.
In 2015, Geoff made a claim under proprietary estoppel to Bill’s 50% interest in The Springs; alternatively, Geoff made a family provision claim from Bill’s Estate.
Merilyn and Bruce, as representatives of Jill’s Estate brought a cross-claim to recover money said to have been the subject of maladministration of Jill’s estate against Bill’s Estate and Geoff as executors of Jill’s Estate. Jill’s Estate had been fully administered well before the commencement of these proceedings and was seen to be
“an attempt to trawl through accounting documents (many years after Jill’s death) in order to see what could be recovered for their ultimate benefit.”
Additionally, Merilyn and Bruce sought indemnity from Bill’s Estate.
Geoff was unsuccessful in the proprietary estoppel claim. However, at first instance, the Court awarded Geoff a family provision of $600,000. Additionally, as Merilyn and Bruce had rejected Geoff’s Offer of Compromise on 31 May 2019 they were ordered to pay the costs of Geoff’s estoppel and family provision claims from 1 July 2019 on an indemnity basis. Importantly the Costs decision the court remarked it was outrageous, extraordinary and..to be deplored that the deceased’s estate was worth between $3.5 m and $4,274,518 yet total costs of the parties were in the order of $2.5 to $3 million.
Merilyn and Bruce appealed against the award of family provision to Geoff, the rejection of their cross-claim and the costs orders. Sue also sought to appeal from the primary judge’s decision on costs.
In dismissing Geoff’s family provision claim the Court of Appeal held that there was no basis in concluding that adequate provision had not been made for Geoff’s proper maintenance and advancement in life when the court had failed to take into account the “early inheritance”.
The court ordered that Geoff pay the Estate’s costs of the family provision and his estoppel claim until 28 June 2019, and that Merilyn and Bruce pay Geoff’s costs of the First Cross-Claim on the ordinary basis and not out of the Estate.
In discussing it’s discretion factors the court may consider when deciding the impact of legal costs in assessing the needs and financial circumstances of applicants for family provision orders under the Succession Act.
The court observed that it is doubtful that a “wise and just testator” in whose shoes the Court notionally stands in considering questions of adequate provision for proper maintenance of an eligible applicant, would look favourably upon an adult child whose financial position has been diminished as a result of unsuccessful legal proceedings commenced against their siblings concerning the estate