The Facts

Father dies leaving small legacy to daughters and balance of estate to second wife

The deceased and his first wife had two children.

The deceased's first wife died in 1985, and in 1997 he married his second wife, S.

There were no children of this marriage, which ended when the deceased died in July 2003.

The deceased's estate was estimated at almost $2,000,000, with the main asset being the matrimonial home.

The deceased left each of his daughters a legacy of $25,000 in his will. He left the residue of his estate to his second wife, S.

The will named S's brother as executor.

At the time of his death, neither of the deceased's children sought to challenge the will.

Second wife sells matrimonial home

In March 2011, S sold the matrimonial home and purchased a home unit in its place.

Second wife dies leaving small legacy to stepdaughters and balance of estate to siblings

S died in November 2016, 13 years after the deceased's death.

At the time of her death, S's estate was valued at about $1.9 million, and included the home unit she had purchased with the proceeds from the sale of the matrimonial home.

S's will named her brother as executor and left a legacy of $100,000 to each of her two stepdaughters. She left the balance of her estate to her siblings and their children.

Executor sells home unit that replaced matrimonial home

Acting in his capacity as executor of S's estate, her brother sold the home unit and put the sale proceeds into an investment account.

Daughter belatedly applies for family provision order out of her father's estate

The deceased's younger daughter felt that the legacy of $100,000 from her stepmother was insufficient, given that much of the estate was acquired by reason of her stepmother's marriage to her father.

However, the daughter was not eligible under the relevant legislation to make a claim against her stepmother's estate.

She therefore applied to the Supreme Court for a family provision order against her father's estate. This was notwithstanding that he had died some 14 years earlier and his estate had been fully distributed shortly after his death.

For the daughter's claim to succeed, she required the court to grant her an extension of time for the making of the application.

She also required that the court designate property in her stepmother's estate as the notional estate of her father, so that provision could be made out of that property.

Supreme Court rules in favour of daughter and executor appeals

The Supreme Court found in favour of the daughter. The court granted the extension of time, designating $740,000 of S's estate as the notional estate of the father, and provisioning $250,000 for the daughter out of this notional estate. This was payable in addition to the $100,000 left to the daughter in S's will.

S's brother, as the executor of both the father's and S's estates, appealed the ruling to the NSW Court of Appeal.

case a - The case for the daughter

case b - The case for the executor

  • The provision my father made for me in his will was inadequate, and I have a right to claim against his estate for adequate provision, even though he died many years ago.
  • I have a recurrent history of ill-health with severe depression and hypertension. At 57 years I am not well placed to resume my business career. I do not own a home and my superannuation entitlement of $400,000 is not enough to provide for my old age.
  • The executor says that I should have made a claim at the time of my father's death. However, I justifiably delayed out of respect for my father and stepmother. My father and I had a close and loving relationship and I understood how important it was to him to provide for my stepmother in his will. This is particularly so given that she was 27 years younger than him and likely to survive him by a substantial period. I respected my father's concern for my stepmother's wellbeing and so didn't challenge his will while she was alive.
  • I also delayed due to a desire to maintain a good ongoing relationship with my stepmother. She consistently assured me over the years that my father's personal effects and property belonged to me, saying things like "when I pass away everything will come to you and [your sister]". I trusted her and I had no wish to put her through unnecessary litigation.
  • When my stepmother died without honouring her word, I acted promptly to bring proceedings to ensure that my father's wealth rightly goes to his children.
  • Although the property in my father's estate was fully distributed shortly after his death, legislation gives the court power to designate a notional estate over property held by a person "as a result of a distribution from the estate of the deceased person". In this instance, S's executor holds the proceeds of sale from S's home unit "as a result of the distribution" of the matrimonial home from my father's estate. But for that distribution, there would be no proceeds of sale for the executor to hold.
  • The court should deny the appeal and uphold the lower court's ruling.
  • The daughter cannot legally bring a family provision claim against my sister's estate since she is not eligible under the relevant legislation to do so. Why then should the court allow her to do so "through the back door" by seeking to designate my sister's estate as belonging to the daughter's long dead father?
  • Any application against the father's estate for further provision should have been made within the prescribed time limit. The daughter should not now be rewarded with an extension for her delay, particularly given that there would be a severe impact on other beneficiaries if further provision is made. After such a long period of delay these beneficiaries would have reasonably presumed their entitlement was not subject to litigation.
  • In any event, to get an extension of time, the legislation requires the daughter to show "sufficient cause" why the application was not made within the required time period after her father's death. A delay of 14 years is unreasonably lengthy and not one in which "sufficient cause" can be justified.
  • Nor is it sufficient cause that she delayed to preserve her relationship with my sister or in reliance on any assurances my sister may have made. Though my sister may have indicated that she would make some provision for the daughter, she never said anything that guaranteed entitlement to any property. Further, she met any moral obligation she might have had to the daughter by leaving her a legacy of $100,000.
  • The daughter is of the opinion that her father's wealth should revert to his children. However, her father was very clear that this wasn't his intention. He even wrote a statement at the time he made his will explaining that he was not leaving more to his daughters because they were gainfully employed at the time, both were in good health and financially comfortable.
  • Further, although the court has power to designate a notional estate over property held by a person as a result of a distribution from the estate of the deceased person, that power does not apply here. I do not hold any property as a result of any distribution from the estate of the daughter's father. My sister sold the matrimonial home that she inherited from him and purchased another property with the proceeds of sale. This subsequent property was then sold and I hold the proceeds of sale as executor. The daughter is wrongly attempting to claim that this subsequent property belonged to the estate of her father despite him never having owned it.
  • The court should grant my appeal, thereby protecting my sister's estate.

So, which case won?

Cast your judgment below to find out

Mark Shumsky
Family provision claims
Stacks Collins Thompson

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