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Family Provision Case - Claim by ex-wife

Brindley v Wade (No 2) [2020] NSWSC 882 - Hallen J


This case concerns a family provision application made by the deceased’s former spouse for provision from the deceased’s estate or notional estate. The deceased died in July 2018 leaving a Will, three children and two ex-wives who were eligible to make a claim for provision or further provision from his estate. Only the plaintiff (the deceased’s second ex-wife) made a claim. The deceased and the plaintiff met in 1999, married in 2006 and separated in December 2012. There were no children of the marriage and the deceased and the plaintiff lived separately and apart from the date of their separation until the deceased’s death, 5 and a half years later.

In 2004, the plaintiff and the deceased purchased a real estate business which was known as Tuross Head Realty through a trust (the Brindley Wade Trust), the trustee of which is Tuross Head Realty Pty Ltd. From the period of 2004 to 2010, the deceased and the plaintiff purchased several more real estate businesses and each separately managed the two separate real estate offices of the business.

The plaintiff commenced proceedings for a property adjustment order in the Federal Circuit Court at Sydney on 20 August 2014. An interim property settlement was entered into by the deceased and the plaintiff in October 2015. The deceased suffered a seizure in September 2017 and was subsequently diagnosed with brain cancer. In March 2018, the deceased and the plaintiff reached the final settlement of the family law proceedings. As part of the final property settlement, the deceased’s interests in the remaining real estate businesses were to be transferred to the plaintiff to enable her to continue operating the business. In return, the deceased received a cash settlement of $50,000, in addition to $70,000 being part of the plaintiff’s superannuation.

The deceased’s Will provided for the whole of his estate to be divided equally between those of his children who survive him, with no provision made for the plaintiff. The value of the deceased’s estate at the date of his death was approximately $654,200. At the time of hearing, the net value of the deceased’s distributable estate was $460,433. The net distributable estate after costs had been accounted for was $300,121.

Decision:

Justice Hallen considered the comments made by the plaintiff to the effect that she was not aware of the severity of the deceased’s medical condition at the time of their family law property settlement, and that if she was, she would not have settled on the terms that she had. His Honour referred to the transcript from the family law mediation with Judge Sexton where the deceased was asked specifically about his condition and his likely prognosis, which was that the tumour in his brain, although removed in its entirety, was likely to return and that his chances of living for the next five years was about 10%. During cross-examination, the plaintiff asserted that she did not know whether to believe what the deceased and his daughter had said about his prognosis during the mediation. He considered that although the plaintiff was not made aware of the precise nature of the deceased’s health at that time, she was told enough to make it clear that the deceased was not in good health. Thus, his Honour completely rejected the plaintiff’s submission that the medical condition of the deceased was not disclosed to her in sufficient detail prior to the making of the family law orders.

Another issue for consideration was the inheritance received by the deceased from his late mother. This was in the amount of $137,284. This amount was paid to the deceased after the conclusion of the family law mediation, following the distribution of his mother’s estate.

Due to the plaintiff and the deceased’s divorce, the plaintiff was required to show factors warranting the making of her claim. Counsel for the plaintiff submitted that the plaintiff had been misled by the deceased in the settlement of the family law property proceedings, firstly by way of the deceased not disclosing the full extent of his illness and secondly by way of the deceased not disclosing the inheritance received from his mother’s estate. It was submitted that although it is not the role of the Supreme Court to re-open the Family Court proceedings, the failure of the deceased to disclose these relevant factors constituted factors warranting an order for provision in favour of the plaintiff. Counsel for the defendant submitted that there was no evidence that the plaintiff had maintained contact with the deceased’s mother after her separation with the deceased and that although the sum was relevant to the financial position of the deceased at the time, it would not have formed part of the pool of matrimonial assets to be divided between the deceased and the plaintiff. Relevantly, counsel for the defendant also pointed out that the hurdle for the plaintiff is the fact that there has been a formal family law property settlement finalising the financial relationship between the plaintiff and the deceased.

In considering whether the plaintiff had satisfied the Court that there were factors warranting the making of her claim, his Honour noted that s 59(1)(b) of the Succession Act does not normally regard the former spouse of the deceased as a natural object of testamentary recognition. His Honour considered Sackville AJA’s comments in Lodin v Lodin where, at [127]-[129] his Honour noted that a final property settlement is not necessarily an absolute bar to a family provision application being considered on its merits, but it is likely to terminate any obligation of the deceased to make testamentary provision for their former spouse. His Honour considered the facts of Johnston v Johnston, of which there are a number of factual similarities to the present case. In that case, Hodgson J was not persuaded by the plaintiff’s argument that she would not have consented to the Family Court orders if she had known the deceased had only 7 months to live.

His Honour concluded that he was not satisfied the plaintiff had established any factors which warranted the making of the application. His Honour held that the plaintiff and the deceased had engaged in a deliberate and systematic division of their jointly held assets and he was not satisfied that their decisions about this were impeachable based on the facts. As a result, his Honour dismissed the plaintiff’s claim.

Costs determination:

After considering the effect of offers made during the course of the proceedings, his Honour then considered whether the usual costs order, that the losing party ought to pay the winning party’s costs on the ordinary basis, ought to be made. Counsel for the plaintiff submitted that the usual costs order should not be made in this case as it would cause the plaintiff to suffer greater financial hardship. His Honour noted that there have been cases where an order other than the usual order has been made on the basis of the financial hardship suffered by the unsuccessful plaintiff: Penfold v Predny [2016] NSWSC 472 at [169].

However, his Honour was not satisfied that there was a sufficient reason to depart from the usual order as to costs in the present case. His Honour commented that legal practitioners should advise parties that a conditional costs agreement (ie a no win/no pay arrangement) does not protect the party from an adverse costs order in the event their claim fails. His Honour ordered the Plaintiff to pay the Defendant’s costs on the ordinary basis.

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