Out of time Family Provision claim overturned on appeal

Donald Whiteway died on 14 July 2003, aged 74. Donald married Sheila in 1956; although they separated in January 1984 they remained married until Sheila’s death in December 1985. There were two children of this marriage: Jane and Elizabeth.

In February 1987 Donald married Stephne; there were no children of this marriage. Donald left $25,000 each to Elizabeth and Jane, with the balance of the estate left to Stephne.

Stephne died, on 18 November 2016, aged 60 with no children. Stephne named her brother Adrian Haertsch, as her executor with Elizabeth and Jane receiving $100,000 each with the balance of the estate being left to Stephne’s siblings and their children.

Family Provision claim

Elizabeth, being unable to make a provision claim against Stephne’s estate under the Succession Act 2006 (NSW), made an application for provision out of Donald’s estate under the Family Provision Act 1982 (NSW) (”the Act”) seeking an order designating property in Stephne’s estate as the notional estate of Donald.

As her claim was some 12 and a half years out of time, she also sought an extension of time in which to make an application, under the Act. The court accepted that Elizabeth’s delay in making her application was sufficiently explained by:

(a) her reasonable expectation of benefit from Stephne’s estate as compensation for any disappointment attending administration of Donald’s estate in the interests of Stephne;

(b) the respect she paid to Donald’s concern for Stephne’s wellbeing, and for her ongoing relationship with Stephne, by deferring any claim she might have had until the death of Stephne; and

(c) the consistent assurances of future benefit she received from Stephne (in due course acted upon by Stephne), articulated by reference to a common bond with Donald.

In assessing what provision should be made for the Elizabeth out of Donalds notional estate, the primary judge granted an extension of time, designated $740,000 of Stephne’s estate, as notional estate of Donald, and made an order for a further provision of $250,000 to be made to Elizabeth out of that notional estate. The court considered that a larger grant would pay insufficient respect for Stephne’s reasonable expectation of testamentary freedom in disposition of her estate.


On appeal, the NSW Supreme Court held that s 24 of the Act is concerned with beneficiaries of the estate and does not invite a broader “chain of causation” inquiry. As a corollary, there is no basis for Adrian Haertsch who did not hold property “as a result of” the distribution to Stephne from Donald’s estate.

Similarly, the general assurances of a testamentary benefit given to Elizabeth by Stephne were not “sufficient cause” for the application not having been made within time, as required by s 16(3)(b) of the Act.

Additionally, the primary judge erred in finding that there was no prejudice to Stephne or her estate in allowing the application out of time in circumstances where the strength of Elizabeth’s claim for provision was improved by Stephne’s death.

Teddy Pendergrass – Estate Litigation

Teddy Pendergrass the only child of Jesse and Ida Pendergrass was born on March 26, 1950, in Philadelphia. He first sang in church at 2, was ordained a minister at 10 learning to sing and play the drums as a junior deacon of his church.

Teddy found fame as the lead singer of Harold Melvin & the Blue Notes with hits: Wake Up Everybody, If You Don’t Know Me by Now, The Love I Lost, and Don’t Leave Me This Way subsequently covered by Thelma Houston in 1977 and the Communards in 1986. Houston’s version of the song became widely known for its association with the AIDS epidemic in the 1980s and 1990s

However, the proceeds from the Blue Notes’ success were not shared equally; on tour, Melvin enjoyed luxury accommodation while the other group members stayed in cheap motels. In 1976 Teddy quit the Blue Notes. Melvin responded by threatening the singer with bodily harm.

Teddy’s voice has been described as deep, rich warm and fuzzy, like someone hugging your body. Often referred to as “black Elvis” Teddy was tall, handsome and stylish; women found him irresistible, fathering three children by two different women, in the same year.

Shep Gordon offered to manage Teddy following a drug-off to see who could handle their drugs better; Teddy … collapsed after two days, when he came to, he and Gordon shook hands, and Gordon became his manager.

At Gordon’s insistence, Teddy began his infamous “Ladies Only” concerts with his next three albums going gold or platinum. Teddy received several Grammy nominations during 1977 and 1978, Billboard’s 1977 Pop Album New Artist Award, an American Music Award for best R&B performer of 1978, and awards from Ebony magazine and the NAACP.

In 1982 following a car accident Teddy was left paraplegic however he continued to successfully record. He formed the non-profit Teddy Pendergrass Alliance in 1998 to advocate for those with spinal cord injuries

Teddy suffered complications following colon cancer surgery dying on January 13, 2010. Following Teddy’s death, probate of his entire estate was granted to his wife, Joan.

However, his son Teddy Jr denied the legitimacy of the Will — an amendment of an earlier document naming him as his father’s sole beneficiary – claiming that his father lacked the capacity make such a decision and that it had been signed by Joan, not Teddy.

Teddy Jr. claimed he possessed the sole copy of his father’s legitimate will.

Montgomery County Pennsylvania Orphans Court, declared the Will produced by Teddy Jr. as fake, finding that his testimony about the will was “wholly lacking in credibility,” similarly the notary public, who, certified the Will and testified to its authenticity in court — further complicated the $850,000 six-year-long legal battle.

However, the conflict exacerbated animosity among family members with relatives and friends picking sides during the case. Joan commenced an action against Teddy Jr and his lawyers to recover costs.

De Facto, Intestacy, Tenants in Common

Phung Thanh Mac (“the deceased”) died intestate with a relatively small estate in November 2019. An intestate estate in Queensland is distributed under Part 3 of the Succession Act (“the Act”). Nga Thi Vu and the deceased lived in a de facto relationship from September 1994; therefore, she is a spouse under of s 5AA of the Act.

Who takes under Intestacy

In this case, those who can take under the intestacy are the deceased’s:

(a) spouse, and

(b) any children who have survived him.

Under Part 3 of the Act, Ms Vu is entitled to $150,000 together with any household chattels and, on the basis that more than one child of the deceased survived him, one-third of the residue. The deceased estate consists of the home owned with Ms Vu as tenants in common (valued at $310,000) and approximately $80,000 in a trust account. 

Tenants in Common

When property is owned by parties as tenants in common it means they co-own a property in defined shares that they can dispose of as they wish; meaning that there is no right of survivorship.

Ms Vu made an application to acquire the deceased’s interest in the home they owned as tenants in common.

The applicant (the administrator of the deceased’s estate) seeks an order under s 6 of the Succession Act that he is justified in:

(a) transmitting to Ms Vu, under s 39(3)(b) and s 39C of the Act, the interest of the deceased in the home for $156,052.40 (“transfer value”), and

(b) setting off the transfer value against the entitlement of Ms Vu to the estate of the deceased.

The applicant believes the deceased had four children from a marriage in Vietnam. He did not have contact with them during his de facto relationship with Nga Vu; she does not know the names of the children or where they are. The applicant engaged a private investigator to find any surviving children without success. 

The Decision

The Court held that from the evidence submitted it is appropriate for the applicant to proceed on the basis that the deceased was survived by more than one child allowing distribution of the estate on that basis and to make further inquiries so that any surviving child can receive his or her entitlement. Noting that it would be a nonsense if Ms Vu could not obtain sole ownership of the shared home by setting off the statutory legacy due to her as the only way for her to generate the funds necessary to pay the transfer value would be to sell the house.

The applicant, therefore, is entitled to the direction he seeks under s 6 of the Act.

Step Daughter, Survivorship, Family Provision & the Notional Estate

Frank Radinksi died in September 2018 at the age of 85 he married twice. Frank had two daughters Anna and Blzena (“the Plaintiff”) with his first wife Jela who died in 1983. He later married Terezija who had a son and a daughter (Frank’s stepdaughter) Tereza Osrecak from a previous marriage. Terezija also predeceased him, dying in 2015.

Frank’s main asset was his home which was owned by Frank and Tereza as joint tenants. Therefore, Frank’s share passed to Tereza by survivorship; the value of a half share in the property is approximately $410,000.

Frank’s last will made in 2011 left his estate to Terezija, if she predeceased him, (which was the case) the estate went to Tereza (the second defendant). Jasna Vukic (the first defendant) Tereza’s daughter, was appointed executor of the deceased’s estate. On Frank’s death all his assets passed to Tereza; as the estate was small (around $5000) there was no formal grant of probate.

Blzena received nothing from her father’s estate. She seeks an order for provision out of his estate under the Succession Act 2006 (NSW) in the form of a lump sum payment of between $200,000 and $250,000. To fund this payment, she seeks an order designating a half share of the property as Frank’s notional estate.

As I have discussed in previous posts in a Family Provision Claim the court must balance the testator’s moral obligation for the maintenance and education of a defined class of beneficiaries with the testamentary freedom to leave their estate as they wish. However, as Blzena is an adult beneficiary who has reached retirement age the Court held that any entitlement to family provision is best seen as a provision for “advancement” rather than “maintenance” 

The Court accepted that Frank failed to make adequate provision for Blzena’s advancement; finding the provision which “ought” to be made is a legacy for $220,000 to be taken from Frank’s half share of the property as notional estate. 

A Will, Family Provision & the Surveillance Devices Act

Robert Rathswohl, sought a family provision order under the Succession Act 2006 (NSW) from his father’s estate for his maintenance and advancement in life. Robert’s sister, Yvette Court, is the executor of their father’s estate.

In January 2017, while on a family visit to their mothers nursing home an argument arose where Yvette protested that Robert and their sister Lisa Davies had left the care of their elderly parents to her alone.

Later that day Robert and Lisa drove their father back to his home; after discussing the events at the nursing home, they looked for a Will the father had made in 2007 – but could not find it. Robert and Lisa took prompt steps to have a replacement Will executed by the father; leaving his Estate to his children equally.

On 15 March 2017, the father executed another Will leaving the family home to Yvette and funds in a bank account to Robert and Lisa. Yvette promptly sent a text to her brother advising that a new Will, power of attorney and enduring guardianship had been executed. In cross-examination, Robert gave the following evidence:

Yvette … moved into the house. One week after she moved in, she texted me and Lisa, ….saying that dad had left her the house. Lisa and I both thought that was outrageous because we knew there was a will but Yvette didn’t know there was a will previous to that”

On the evening of 29 April 2017,  Lisa recorded a conversation with the father using her mobile phone, without his knowledge or consent

 “to prove that Yvette wasn’t there every day like she stated she was”.

Objection was taken under s138 of the Evidence Act 1995 (NSW) that the recording was improperly or illegally obtained. With the agreement of counsel, the Court listened to the sound recording to consider whether it was reasonably necessary for the protection of Lisa’s lawful interests under s7(3)(b)(i) of the Surveillance Devices Act 2007 (NSW), and thus not an offence under that Act.

The Court stated that whilst none of the children had a legal right or title to insist that their father leave his Will in any particular manner, they might have an interest in ascertaining whether Yvette’s claim to warrant a greater entitlement to the father’s Estate was truthful or exaggerated.

The Court accepted that when Lisa had spoken to her father over the years about his Will, he consistently stated that his Estate would be divided equally amongst the three children. The dispute between the siblings had crystallised into a real and identifiable concern about the imminent potential for significant harm to Lisa’s lawful interests. Similarly, the recording reflected Lisa’s concern for her father’s welfare.

However, the Court was concerned that elderly parents being secretly recorded by those who believe they are entitled to receive a distribution from an Estate is unpalatable and unseemly. It not only breaches the testator’s privacy but, a parent may say what they perceive the listener wants to hear to avoid “home truths” if they think it is likely to lead to conflict; the recording may also contain evidence which is unwittingly damaging to the person who made it.

A Spouse, a De facto & Intestacy

Brian Palombo died, suddenly and unexpectedly, at the age of 55 in October 2018 without a Will. Brian married Gail in March 1983, migrated to Australia in 1985 living with his parents at their home in St Clair (the St Clair property). Moving to their own home in St Clair in 1986, Brian and Gail raised three children, Ashleigh, Emma and Kristy.

Brian and Gail separated in about July 2010. Immediately before their separation, they had lived together in a property at Emu Plains, Gail continues to reside in the Emu Plains property. Following their separation, neither Brian nor Gail, initiated, negotiated or applied for a property settlement or entered into a Financial Agreement, under the Family Law Act 1975 (Cth).

Jacqueline Bailey met Brian in 2011 she had separated from her husband in 2010 and they divorced in 2013. Brian’s mother died in September 2010; when his father died in July 2013 Brian purchased the St Clair property from his father’s estate. Jacqueline has remained living in the St Clair property, which is still registered in Brian’s name.

Chapter 4 of the Succession Act 2006 (NSW) (“the Act”) provides the order in which your eligible relatives will inherit your estate if you die without a will.

A spouse is defined as person who was married to, or was a party to a domestic partnership immediately before the death of the intestate -which may include a de facto spouse. If the intestate leaves more than one spouse and children who are all issue of one or more of the surviving spouses, the spouses are entitled to the whole estate in shares determined by the Act in accordance with inter alia a distribution order of the court.

In May 2019, Ashleigh’s application for a grant of Letters of Administration was rejected as she had no “interest” in the deceased’s estate. On 11 June 2019, Jacqueline lodged a caveat requiring that

“[n]o grant of Letters of Administration be made in the estate of [the deceased] … without prior notice to me”.

The Court was satisfied the St Clair property, owned solely by the deceased, at the date of his death, forms part of Brian’s intestate estate. Gail is a spouse as she was married to Brian immediately before his death and there had been no divorce order made to dissolve their marriage.

Similarly, Jacqueline and Brian were not married to one another or related by family; their relationship wasn’t a registered relationship, within the meaning of the Relationships Register Act 2010 (NSW) and had not resulted in the birth of a child. However, the Court was satisfied that Jacqueline and Brian were in a de facto relationship for more than two years, and although Brian was the sole registered proprietor of the St Clair property, Jacqueline treated it as her home.

Section 126(3) of the Succession Act 2006 (NSW) provides the Court with the ability to distribute Brian’s estate between Jacqueline and Gail in any way it considers just and equitable.

The Court took the view that a distribution order which provides Jacqueline with the St Clair property, unencumbered, (the St Clair property was security for two loans that are liabilities of the deceased’s estate) and a lump sum of $500,000, would ensure that she is secure in accommodation, enable her to discharge the mortgage on her investment property, and still leave her with a lump sum of about $250,000 for exigencies of life. Gail received approximately $2,117,841 out of the estate and retains the death benefits that she has received.

Knowing Receipt, Knowing Assistance; Barnes v Addy

Barnes v Addy (1874) outlined what may constitute third-party liability concerning breach of trust or fiduciary duties: ’Knowing receipt’ and ‘knowing assistance’.

Henry Barnes appointed William Crush, John Lugar and John Addy to be testators and executors of his Will with a sum of money to be invested as the basis of an annuity for his widow, three daughters and son.

John Addy, as the sole remaining trustee, appointed a sole trustee to half the trust (with an indemnity) against the advice of his solicitor, William Duffield. However, Duffield drew up the deeds of appointment and indemnity and introduced Addy to a stockbroker who transferred money to the trustee.

The trustee mismanaged the trust property and became bankrupt. Barnes children sued Addy and Duffield; the Court held that the third parties could be liable for a breach of trust in two circumstances, known as the two ‘limbs’ of Barnes v Addy: knowing receipt and knowing assistance

To prove ‘knowing receipt’, the principal must establish the recipient knew that the property they received was a transfer of trust property in breach of the trustee’s duties.

To prove ’knowing assistance’ there must be a breach of trust or fiduciary duty by a third party who knowingly assists in the breach.

In a recent decision, the High Court of Australia insisted on strictly applying Barnes v Addy and holding that the breach must be dishonest and fraudulent.

Where the two limbs in Barnes v Addy are established, a third party will be held to be a constructive trustee with the party bringing the claim against them having the same remedies as they would have against a constructive trustee.

The court accepted that Duffield, never knew nor suspected any dishonest purpose, or believed that any actual fraud would result from what was done; it was therefore unable to hold him responsible.

The Will, a Trustee and a Deed of Family Arrangement

Alice Critchley made a Will consisting of only four clauses, in October 1964, (‘the Will”) and died in December 1967 survived by her eleven children. Probate of the Will was granted in May 1968.

The Will

Clause 1 of the Will directs that her home in Kirrawee (”the Kirrawee property”) – or another property that may be acquired with the proceeds of sale of the Kirrawee property – is to be held in trust for two of her daughters Dulcie and Leonie to ”use and enjoy during their lifetimes”

Clause 2 directs “all the rest and residue of the estate” be held on trust “to pay the income to my daughters”, clause 3 of the Will provides that upon the remarriage of either Dulcie or Leonie

“the other daughter shall be entitled to the exclusive use of the property at Kirrawee or such other property as may be acquired and the income from the residue of my estate until her death or remarriage.”

However, the Will didn’t gift the residue of the estate in the event that any of Alice’s other children survive Dulcie and Leonie. 

The Will provided that if both Dulcie and Leonie request the trustee to sell the Kirrawee property,  the trustee shall acquire such other residential property from the proceeds and permit Dulcie and Leonie to use and enjoy the property on the same terms as the Kirrawee property.

The NSW Trustee and Guardian (“the plaintiff”) was appointed as trustee of the trusts created under the Will by deed in April 1992.

Leonie remarried before 2002 relinquishing the use of the Kirrawee property and the income from the residue of Alice’s estate. 

In 2002, the plaintiff sold the Kirrawee property, using the proceeds of the sale to purchase a property at Clear Island Waters in Queensland (“the Queensland property”); the excess funds from the sale were invested in a fund administered by the plaintiff. Dulcie resided at the Queensland property and received the income from this fund until her death in 2017.

Deed of Family arrangement

A deed of family arrangement is a variation of the terms of a trust agreed to by beneficiaries and enforceable by a court.

In August 2003, seven of Alice’s then surviving children and 12 of her grandchildren (children of three of the children who had survived Alice but had died before August 2003) entered into a Deed of Family Arrangement (“the Deed”)

“the residuary beneficiaries have agreed to a distribution of the estate assets, which in their considered opinion creates a fair and equitable distribution of the estate”

that the children of any deceased children of the testator would take instead of their deceased parent; and, the Deed would be binding upon and enforceable by the executors of the parties to it.

The plaintiff although acting as trustee of Alice’s estate, Dulcie and one other of Alice’s children were not parties to the Deed.

The current proceeding

The plaintiff sought the determination of questions arising under the Will and the Court held that upon the true construction of the Will the phrase, “residue of my estate” includes the Queensland property;

”amongst my surviving children equally” means those children of the deceased surviving as at 19 December 2017;

therefore as Leonie and Ann Dransfield are the only surviving children of the testator as at 19 December 2017 the plaintiff as executor and trustee of the Will is at liberty to distribute the residue of the estate to them equally.

The Will, Real Estate & Water Rights – How is a Will construed?

Ethel Greenham died in February 2017 aged 80 years of age with an estate valued at over $2M. Ethel’s Will dated 9 December 2003, named her daughter Jennifer executor leaving land at Pental Island on the Murray River (“the land”) to her son Alan, and the residue of her estate to Jennifer.

By clause 4(d) of the Will Ethel devised to Alan:

… my real estate at Pental Island being Allotment 7 in the Parish of Pental Island County of Tatchera and being the land comprised in Crown Grant Volume 9429 Folio 754.

Real Estate 

Alan and his wife, Mary live in a house situated on the land and operate a caravan park and holiday business (the caravan park) together with farming activities. The land was purchased in 1939 by Alan and Jennifer’s grandfather and used as a farm; the caravan park is now the main commercial enterprise conducted on it. 

The land does not have access to town water; with water for the farm and the caravan park provided by rainfall and the Murray River which abuts the land.

Water Shares

Until the Water Act 1989 was amended on July 1, 2007, water flowing in a watercourse in Victoria was not property capable of being owned and transferred separately to land. Common law rights to use water were derived from a person’s ownership or occupation of land abutting the watercourse.

From July 1, 2007, ownership of a water share could be transferred independently of a transfer of land and, on the death of the owner, forms part of their estate. Ethel owned three water shares issued in relation to the Murray River water system. 

Ethel made her Will in 2003 several years before the commencement of the above amendments to the Water Act 1989.

The Proceedings 

Probate of the Will was granted to Jennifer in April 2019. 

Jennifer commenced proceedings in the Supreme Court seeking a declaration as to the nature of the water shares; if those shares form part of the devise of ‘real estate’ under the will, they pass to Alan; if they are part of the residue of the estate, they pass to Jennifer.

According to the Inventory of Assets and Liabilities prepared as part of the application for probate the total value of the water shares was $754,850. However, in evidence before the Court their value was approximately $1,589,580. 

The question for determination is whether, properly construed, the reference to ‘my real estate at Pental Island’ includes the water shares.

When does a Will take effect?

A key issue in determining the proper construction of the Will was whether, concerning property disposed of by the Will, s34 of the Wills Act 1997, provides that unless a contrary intention appears (whether in the will or elsewhere) the Will takes effect as if it had been executed immediately before the death of the testator.

A Court uses the armchair principle to ascertain the testamentary intention of the Will maker. Such intention must be disclosed through the ordinary meaning of the words used; however, the intention is to be gathered from a study of the Will as a whole, and in the light of any relevant and admissible evidence of surrounding circumstances.

In Victoria, s 36 of the Wills Act 1997, supplements the armchair principle providing that where a Will is made on or after 20 July 1998, evidence of the testator’s intention is admissible in cases of uncertainty or ambiguity, to assist in the interpretation of the language of the will, both where the uncertainty or ambiguity arises on the face of the Will or in light of surrounding circumstances. 

The Court held that the Will manifests an intention that it should be construed as at the time that the will was made – therefore the reference to ‘my real estate at Pental Island’ in the Will includes the deceased’s water shares. 

BDBN & the Superannuation Trustee

The purpose of a superannuation death benefit is to provide for the deceased member’s dependants who had a reasonable expectation that they would continue to receive financial support from the deceased, had they not died.

In a recent case, the deceased had not made a superannuation binding death benefit nomination (”BDBN”) directing the trustee of the fund to pay the death benefit to a nominated beneficiary.

The deceased had made a will the day before he went missing. A coronial inquest found that the deceased committed suicide by drowning. He was survived by his estranged wife and two adult children.

When a member dies not having made a BDBN the death benefit distribution is governed by the superannuation trust deed and the law. In this case the trust deed specified that in the absence of a BDBN (or an approved non-lapsing death benefit form) the trustee must pay the benefit to one or more of the deceased member‟s dependants and/or his legal personal representative in whatever proportion it decides.

The trustee considered that the estranged wife was not financially dependent upon the deceased at his death. However, as the adult children were named beneficiaries under the member’s will the trustee determined that the death benefit should be paid to them in equal shares.

The estranged wife made a complaint to the Australian Financial Complaints Authority (AFCA) that as the separated spouse who was financially dependent upon the deceased she expected to receive a financial benefit from her husband; submitting she should receive the entire benefit.

AFCA set aside the trustees decision on the grounds it was not fair and reasonable in the circumstances. Although the deceased and his wife had been separated for 19 months – following 28 years of marriage – they had not entered into a financial settlement before his death.

As a corollary, the adult children were not financially dependent on the deceased at his death, and as the Will did not refer specifically to superannuation should not be treated more favourably than the wife.

AFCA set aside the trustee’s decision and substituted payment of 50 per cent for the wife with 25 per cent to each child.