Family provision order provisions are in Pt 3.2 of the Succession Act. It starts by identifying “eligible persons” who can make such an application under s 57, such as the children of the deceased. In this case, the daughters fall under this category.
Suppose the Court is satisfied that the testator’s provision for the proper maintenance, education, or advancement in life in their Will was inadequate at the time of the application. In that case, it may make such an order under s 59(1)(c). If this is the case, the Court can make “such order” as it deems fit for the eligible person’s maintenance, education, or advancement in life under s 59(2).
Adequate provision
When considering whether the Court should make such an order and what form it should take, the Court may consider the matters set out in s 60(2) of the Succession Act; these matters provide guidance and are not exhaustive. They inform what may be considered adequate provision and proper maintenance, education, or advancement in life.
The Court must consider the relationship between the testator and the applicant, including the nature and duration of the relationship (par (a)); the nature and extent of obligations or responsibilities owed by the testator to the applicant or any beneficiary of the estate (par (b)); the nature and extent of the estate (par (c)); the applicant’s present and future financial resources (including earning capacity) and any beneficiary of the estate (par (d)); the age of the applicant (par (g)); evidence of the testamentary intentions of the deceased person (par (j)); and the character and conduct of the applicant before.
Before the Court can make a family provision order, it must be satisfied that any provision made for the applicant is inadequate “at the time when the Court is considering the application” (s 59(1)(c). Only on being satisfied with the inadequacy of the provision can the Court exercise its discretion to make an order
“for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.” (s 59(2)).
The statutory language expressly turns the Court’s attention to the personal and financial circumstances of the plaintiff at the time it considers the application.
Updating Affidavits
Bringing to the Court’s attention the up-to-date personal and financial circumstances of applicants and competing beneficiaries is achieved by so-called “updating affidavits”. Current Practice Note SC Eq 7 at paragraph 32 provides that if a matter does not settle, the Court may make directions to prepare the matter for a final hearing, including for an “updating affidavit by any party or beneficiary.”
“I have stressed, on numerous occasions, the need of an applicant for provision to disclose her or his financial circumstances at or about the time of the hearing. Indeed, Paragraph 17 of Practice Note SC Eq. 7 requires updating affidavits to be filed and served, and, invariably, when a matter is set down for hearing, a direction is made for such affidavits to be served a few days prior to the final directions hearing. Regrettably, more often than not, as in this case, the direction is not complied with. “
Baker v Baker [2024] NSWSC 559 at 22
Full and honest financial disclosure
In Stone v Stone [2019], NSWSC 233, Hamerschlag J emphasized the importance of full and honest financial disclosure by all parties involved in Family Provision proceedings. Includes disclosing all assets, liabilities, financial resources, and sources of income. Individuals seeking to challenge an estate under Family Provision legislation must demonstrate that the deceased’s Will did not make adequate provision for the applicant’s proper maintenance, education, or advancement and request the Court to make an order for further provision.
When determining what constitutes adequate provision, the Court considers the facts known when making the provision order. Therefore, parties involved in such proceedings must be forthcoming and proactive in providing information to their solicitors and the Court.
In Stone v Stone, court proceedings arose between a son and daughter following the death of their mother, who left her entire estate to her son and made no provision for her daughter due to a strained relationship. When the daughter brought her claim, she failed to disclose her income, liabilities, and financial circumstances, including those of her de facto partner, despite being requested.
Despite directions from the Court to file additional and updated material, the applicant did not comply. The Court criticized the applicant during the hearing for not providing evidence about her partner’s financial circumstances, and Hamerschlag J expressed concern about the state of her evidence. It was ultimately not considered when she attempted to introduce evidence concerning her partner’s financial circumstances during the hearing.
In Baker v Baker [2024] NSWSC 559, the Court made no order for updating affidavits: [23] Ordinarily, parties would seek the Court to make orders at the time of the allocation of the hearing date or the latest at any pre-trial direction.
Background
Elizabeth Ann Baker (the deceased) passed away on 1 July 2022. The value of the deceased estate was $214,585. After funeral expenses and other related costs, the net balance of her estate, which is now in a Commonwealth Bank Business Transaction Account, is $203,045. The estate is considered small in comparison to others.
Two daughters and sons survive the deceased: Robert, Annette – the first plaintiff; Denise – the second plaintiff; and Chris (also known as Allan). The dispute is between Annette and Denise, and Chris on the other. Robert played no role in the proceedings other than providing an affidavit to support Chris.
Elizabeth made a Will on 6 April 2021, leaving her vehicles to Chris and the residue of her property to her surviving children. Each child is entitled to a quarter of the estate, meaning each will receive about $50,000 (excluding any share of the costs allowed to the estate).
Elizabeth lived at 35 Alfred Street, North Haven, on the NSW North Coast, which she inherited from a past relationship. She and her husband lived in the house until he died in 2003. Chris lived with his parents intermittently since the 1980s, but he moved in with Elizabeth permanently after his father’s death. Chris was Elizabeth’s permanent carer from 2003 until she passed away. He also maintained the house, which flooded in March 2021. Chris and his son, Jarden, a concreter, and some friends rebuilt the house’s interior, which cost him approximately $30,000 in materials. However, Chris did not reveal the source of this money in the evidence.
Elizabeth told Chris sometime before 2020 that she would “sign the house over” to him. She said he would have to keep caring for her, to which he agreed. Chris was to receive the house because he had been with her for many years, and without him, she would have had to be in a nursing home. The evidence does not suggest that Chris did not look after her.
On 19 February 2020, Elizabeth transferred the ownership of the house to Chris for $1.00. The house’s value is around $610,000.
In 2007, Denise’s son Shane, then 12, reported to the police that Chris sexually assaulted him. Chris was charged and pleaded guilty to the offence, serving 18 months. Chris was imprisoned previously for drunk driving. Chris says he has never worked due to medical issues, including anxiety, agoraphobia, and depression. For the case, the Court proceeded on the basis that Chris was not a person deserving of admiration.
The circumstances caused a significant rift between Annette and Denise, on the one hand, and Chris, on the other. Annette and Denise believed that Elizabeth supported Chris on the matter. Denise claims that she was unable to reconnect with her mother after this. Annette states that her relationship with her mother changed after Chris’s conviction. However, Robert gave evidence that Annette did not have a good relationship with Elizabeth for a very long time before the incident and well before Shane reported Chris to the police. Robert described Denise’s relationship with Elizabeth as “toxic” well before 2007. Chris’s evidence supported this.
Neither Annette nor Denise attended Elizabeth’s funeral because they did not want to be in the same space as Chris and his family.
The decision
The evidence does not satisfactorily establish the causes of Annette and Denise’s estrangement from Elizabeth. There was a suggestion that they borrowed money from the deceased, which they did not pay back. Whilst the Court found difficulties before Chris’ heinous behaviour, it was not in a position to be satisfied with what caused the estrangement.
Shane sued Chris for damages in the District Court. Chris consented to judgment in favour of Shane for $275,000 (inclusive of costs and disbursements) on 17 November 2023. Interest continues to accrue on the judgment at 10.35% p.a. As of the trial date, interest amounted to $13,334. Chris owes Shane no less than $290,634.
Chris has to sell the house, which he is doing, to settle the judgment. He moved out of the house a month or two ago. The house is expected to sell for $610,000. The agents’ fees and other disposition costs are around $20,000; the net proceeds from the house sale will be approximately $299,000.
Changed circumstances
In Baker v Baker, there was a change in circumstances for one of the plaintiffs, revealed as follows:
“During cross-examination, however, she [the relevant applicant] revealed (to the obvious surprise of counsel appearing for her – who told me from the bar table that this was the first time he and his instructing solicitor had been told this) that her husband had since passed away and that she was now living with one of her daughters and is on the Newstart allowance. Living with her are her daughter, her granddaughter, and two great-grandchildren.”
Baker v Baker [2024] NSWSC 559 at [44]
Pertinent financial facts were not placed before the Court, preventing the Court from making an evaluative judgment required by the law. The counsel’s proposal to elicit adequate information through “re-examination” was refused, and the Court dismissed the claim due to non-disclosure. The Court also mentions that even if the applicant had disclosed additional material, it would unlikely order further provision as the applicant identified no rational criteria to support it.
Additionally, the affidavit of one of the parties does not disclose the need for additional money or the purpose for which the applicant would put any further provision.
“Her own financial circumstances, the financial circumstances of her daughter, the arrangements, if any, under which she lives with her, and her now financial needs and requirements were not revealed.
It became clear that pertinent facts had not been placed before the Court. I cannot make the evaluative judgment which s 59(1)(c) requires the Court to make.”Baker v Baker [2024] NSWSC 559 at [45] – [46]
As with Annette, Denise’s Affidavit does not disclose why she needs any further money or how much. It does not disclose the purpose to which any further provision would be put.
Also as with Annette, I consider that $50,000 is a significant amount of money for her, and it will no doubt make a difference in some way.
Baker v Baker [2024] NSWSC 559 at [49]-[50]
“Neither Annette nor Denise has established that the Will made under-provision for them. In the case of Denise, there was plainly a material non-disclosure which prevents the Court from making the evaluative judgment required.”
Baker v Baker [2024] NSWSC 559 at[59]
The conditions for a notional estate order have not been satisfied, meaning the entire estate’s value is no more than $205,000. Neither party proposed that Robert should not receive his portion, which will result in approximately $153,750, of which Annette and Denise will get a total of $102,500, leaving a remaining $51,250 (before considering any allowable expenses), leaving little room for any additional provision anyway.
The Court held that the basis of the claim is resentment and an allegation of unfairness. Regardless of the claim’s validity (on which Hamerschlag J offered no opinion), those circumstances are not a solid basis for the Court to exercise discretion under the Succession Act. The Court also believes that the requested relief would unnecessarily infringe upon the deceased’s freedom to distribute their assets as they saw fit.