3. Family Provision

There are two broad areas to consider here, as ever—people and property, namely eligibility and notional estate.

3.1 Eligibility

In New South Wales the list of eligible persons remains essentially the same as before, in s 57:

(a) a person who was the wife or husband of the deceased person at the time of the deceased person’s death,

(b) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person’s death,

(c) a child of the deceased person or, if the deceased person was, at the time of his or her death, a party to a domestic relationship, a person who is, for the purposes of the Property (Relationships) Act 1984 , a child of that relationship,

Note: A stepchild or foster child is not a child of a domestic relationship-see section 5(3) of the Property(Relationships) Act 1984.

(d) a former wife or husband of the deceased person,

(e) a person:

(i) who was, at any particular time, wholly or partly dependent on the deceased person, and

(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,

(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.

Let’s look at some particularly relevant contemporary issues: carers and adult children.

(a) Carers

The key differences are that: de facto partners are listed as a distinct category, as are persons living in a ‘close personal relationship’. Applicants in categories (d), (e) and (f) need to establish ‘factors warranting the making of the application’: s 59(1). Let’s explore some aspects of eligibility.

The idea of being in a ‘close personal relationship’ is defined in s 3(3), as supplemented by s 3(4):

(3) For the purposes of this Act, a close personal relationship is a close personal relationship (other than a marriage or a de facto relationship between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.

(4) For the purposes of subsection (3), a close personal relationship is taken not to exist between two persons where one of them provides the other with domestic support and personal care:

(a) for fee and reward, or

(b) on behalf of another person or an organisation (including a government or government agency, a body corporate or a charitable or benevolent organisation).

The latter qualification is particularly important in ruling out carers. How many of you are familiar with the scenario of a paid carer becoming particularly ‘close’ to a vulnerable and increasingly frail older person? This is a particular area that, in my view is ripe for abuse. One illustration of this which, however, stepped over another line and strayed into the area of alleged forgery is Burnside v Mulgrew; Estate of Doris Grabrovaz [2007] NSWSC 550.^[38] I looked at this last year.

Doris Miriam Ivy Grabovaz died on 27 August 2005, aged 90. Her estate, comprising property in New South Wales, was worth about $2.5 million. On 13 December 2004 Ms Grabovaz had made a will appointing her lifelong friend, June Eveline Burnside, as executor and gave her such furniture, contents and effects as she might choose. Ms Grabovaz then divided her residuary estate equally between June and Doris’s niece, Olive Brown. However another will, dated 1 July 2005, was propounded as Ms Grabovaz’s last will by Lina Angela Mulgrew, her carer in her last years. Ms Mulgrew was employed by a community care service agency to provide personal care for Ms Grabovaz from October 2004 until her death in August the following year. This later will left all of Ms Grabovaz’s estate to Ms Mulgrew. The issues focused on whether the signature on the 2005 will was really that of Ms Grabovaz, or was it forged. If the signature was genuine, did she know and approve of the will? Another possible issue, though it was not pressed, involved the circumstances in which the will was allegedly signed: was there undue influence?^[39]

As the proponent of the later will, Ms Mulgrew bore the onus of proving it.^[40] The matter was resolved on the basis of the onus of proof. The conclusion that Brereton J reached was as practical as it was simple: ‘it is unnecessary that I find affirmatively that there is a forgery; I am simply not satisfied that the signature on the questioned will is that of the deceased’.^[41] So it was unnecessary to consider the further question of knowledge and approval of the will, which would have been a serious matter in the circumstances of, in particular the deceased’s extreme age; her dependence on Ms Mulgrew; her limited contact with Ms Mulgrew prior to that date; the fact that Ms Mulgrew had filled out the will and selected both the attesting witnesses; and that the will made no provision for Ms Grabovaz’s only surviving relative, Ms Brown, nor the Burnside family.^[42] Simply ‘not satisfied’ on the evidence was the answer. There was enough doubt around the instrument, even without a positive finding that the document was forged, for it not to be admitted to probate.

Someone in the position of Ms Mulgrew has to take under the will or not at all. The terms of eligibility to apply for family provision would exclude her, unless she came within some other category under s 57.

(b) Adult children

In 1997 the National Committee recommended that adult children should not be automatically eligible, but would have to fall within a broad category of persons ‘for whom the deceased person had a responsibility to make provision for the person’s maintenance, education or advancement in life’.

Exactly what should be the right approach has troubled law reformers ever since TFM legislation was first proposed. Solicitors have their own collections of horror stories in this arena. The initial proponents of TFM in New Zealand were greatly concerned for wives, heartlessly omitted from their husbands’ wills, and many personal stories were clearly in the background.^[43] Such stories continued to fill in the narrative of family provision reform, such as the work that led to the introduction of the Family Provision Act 1982 (NSW).^[44] Adult children continue to fill the cases—reported and unreported. So who should be eligible to apply?

While family provision legislation began as a modest intrusion upon testamentary freedom, it has been subject to great pressure for expansion, both through the interpretation of the legislation, particularly in relation to adult children, and through specific legislative amendment. It is notable that the National Committee reversed the pattern in relation to adult children by moving them out of the status-list and into the circumstances list. (This is consistent with recommendations I put to the Victorian Attorney-General in an Expert Report I wrote for the Law Reform Advisory Council in 1994, that the legislation in relation to children ought to be restricted principally to the case of dependency during minority or to the completion of education.)

But the amendments didn’t do this. Section 57 keeps children in as a status category—as set out above. So we will continue to get cases of independent, self-sufficient 50 and 60 year olds wanting to get more of the pie from their parents, notwithstanding that the parent had made a conscious decision that they had already had enough and/or did not deserve more (or even anything).

Let’s look at a couple of recent examples. They can be described as falling into broad patterns, which I suggest as very rough stereotypes. First there is the dutiful child rewarded under the will, facing a claim by an estranged/undutiful child. Second there is the needy child rewarded under the will facing a claim by siblings who are not needy.

In Andrew v Andrew [2011] NSWSC 115, Hallen AsJ dismissed a claim by an adult daughter who had been estranged from her deceased mother, Rita Andrew, for 35 years. The executor of the estate was Mrs Andrew’s son, Michael, the brother of the applicant, Lynne Andrew, the eldest daughter of four sisters.

Rita died in March 2009, aged 83 years. She left a will leaving 40% of the value of a property to Michael; a legacy of $10,000 to Lynne; and the residue of the estate to be divided between Michael and the three other sisters—ie not Lynne. The net estate was approximately $800,000. Estimates of costs of Michael and Lynne, assuming that she were successful, amounted to approximately $100,000.

As Hallen AsJ remarked, Rita ‘was not silent as to the reasons for the dispositions in the will’.^[45] She left two handwritten documents explaining why she had only left Lynne a relatively small legacy: that she had ‘not acted as a daughter should’ and should therefore ‘not be remembered’ like the other children in relation to the disposition of assets in her will.

Such notes are helpful to give insight into a testator’s thinking, but, as Hallen AsJ noted,

While the Court will consider any explanations given by the deceased in the will, or elsewhere, for excluding a particular person as a beneficiary, such explanations do not relieve the court from engaging in the enquiry required by the Act: Slack-Smith v Slack-Smith [2010] NSWSC 625 at [27]. What an explanation may do is cast light on the relationship between the deceased and that person, at least from the deceased’s perspective.^[46]

The process of assessing an applicant’s needs for proper maintenance, education and advancement in life are considered carefully. I commend Hallen AsJ’s judgment to you for his consideration of these elements. They have an established history. The first step in the two-stage process of evaluating a claim is to consider the ‘jurisdictional question’, whether the court can make an order. The second stage is the ‘discretionary question’ and concerns whether the court should make an order, taking into account the matters now set out in s 60.

The first stage requires an examination of the applicant’s needs. It is given a reasonably wide construction, to include, for example ‘present and future needs including the need to guard against unforeseen contingencies’.^[47]

Hallen AsJ reiterated some of the key family provision rules:

•  the statutory jurisdiction is a ‘limited disturbance of the right of testamentary disposition’;^[48]
• it is not appropriate to endeavour to achieve a ‘fair’ disposition of the estate—it is not part of the court’s role to achieve some kind of equity between the various claimants;^[49]
• the court’s role is not to reward or to distribute according to notions of fairness and equity;^[50]
• the court’s role goes no further than the making of ‘adequate’ provision for the ‘proper’ maintenance, education and advancement in life of an applicant;
• the court’s job is not to rewrite the testator’s will, only to ensure that adequate provision has been made for proper maintenance, etc;^[51]
• the court cannot transgress unnecessarily upon the deceased’s freedom of testation;^[52]
• the nature and content of what is adequate provision for proper maintenance etc is not fixed or static and reflects contemporary accepted community standards.^[53]

With respect to adult children, he noted the following matters:

• although the relationship between parent and child changes, a child ‘does not cease to be a natural recipient of parental ties, affection or support’;^[54]
• the community expects parent to raise and educate their children ‘to the very best of their ability while they remain children’; probably to assist with tertiary education, ‘where that is feasible’; and to provide them ‘with a start in life’, ‘where funds allow’—such as a deposit on a home, ‘although it might well take a different form’;^[55]
• the community does not expect a parent, in ordinary circumstances, ‘to provide an unencumbered house, or to set their children up in a position where they can acquire a house unencumbered’, although there might be such an obligation ‘where assets permit and the relationship between the parties is such as to justify it’;^[56]
• the community does not expect a parent to look after a child ‘for the rest of the child’s life and into retirement, especially when there is someone else, such as a spouse, who has the prime obligation to do so’;^[57]
• where an adult child is still a dependant the community ‘usually expects the parent to make provision to fulfil that ongoing dependency after death’;^[58]
• where an adult child ‘falls on hard times’—and where there are assets available—the community ‘may expect a parent to provide a buffer against contingencies;^[59]
• where an adult child has been ‘unable to accumulate superannuation or make other provision for his, or her, retirement, something to assist in retirement where otherwise he, or she would be left destitute’;^[60]
• there is no obligation to treat children equally;^[61]
• there is no need for an adult to show a ‘special claim’.^[62]

The sense of wanting ‘equal’ treatment is a regular theme. It’s what I have referred to as ‘gut instinct’—a gut sense of ‘entitlement’, an almost dynastic assertion of right to inherit and to inherit equally with other siblings. But that is not what family provision is all about. Hallen AsJ refers^[63] to Palmer J’s remarks in Carey v Robson [2009] NSWSC 1142 that reflect neatly the court’s approach:

One can understand the sense of grievance which one child may have at being treated by a parent differently from another child. Some may be tempted to think that great disproportionality of testamentary treatment in itself indicates some essential error in the testamentary process which requires amelioration under the Family Provision Act so as to achieve approximate equality between a testator’s children.

That is not, of course, a position from which one can begin in this, or in any other case under the family provision legislation.^[64]

Estrangement/good conduct

The fact of distancing in a relationship often arises in the family provision context—and also the issue of dutiful conduct. Section 60 spells out the matters to be considered by the court when determining whether to make a family provision order. This includes matters such as the applicant’s contribution to the estate or welfare of the deceased (‘dutiful conduct’ captures this idea);^[65] and the character and conduct of the applicant before and after the deceased’s death (captured in the first Act in the idea of ‘disentitling conduct’).^[66] In this particular case there had been a long ‘estrangement’ of over three decades. Hallen AsJ makes an excellent analysis of the role of this element in assessing the strength of an applicant’s claim. In introducing the subject he refers to remarks in Hampson v Hampson [2010] NSWCA 359, by Campbell JA (with whom Giles JA and Handley AJA agreed):

The requirement to have regard to the totality of the relationship can in many cases be satisfied by considering the overall quality of the relationship assessed in an overall and fairly broad-brush way, not minutely. Consideration of the details of the relationship is ordinarily not called for except where there is an unusual factor that bears on the quality of the relationship, such as hostility, estrangement, conduct on the part of the applicant that is hurtful to the deceased or of which the deceased seriously disapproves, or conduct on the part of the applicant that is significantly beneficial to the deceased and significantly detrimental to the applicant, such as when a daughter gives up her prospects of a career to care for an aging parent. Neither entitlement to an award, nor its quantum, accrues good deed by good deed. Indeed it is a worrying feature of many Family Provision Act cases that the evidence goes into minutiae that are bitterly fought over, often at a cost that the parties cannot afford, and are ultimately of little or no help to the judge.^[67]

When it comes to the issue of estrangement, Hallen AsJ remarked that it is not descriptive of conduct but rather reflects a consequence—‘the condition that results from the attitudes, or conduct, of one, or both, of the parties’. Its impact on a family provision claim, ‘whether the moral claim of the plaintiff on the deceased is totally extinguished, or merely reduced, and the extent of any reduction’, must be assessed in the context of all the circumstances of the case.^[68] So how is this assessment made? Hallen AsJ suggested the following relevant points:

•  the court has to look at the nature of the estrangement and the underlying reason for it;^[69]
• there is no rule that estrangement means you get nothing, nor that you may not get ‘ample’ provision—the needs of a plaintiff, the size of the estate and the existence or absence of other claims must be considered;^[70]
• the deceased is entitled to make no provision for a child—particularly in the case of one ‘who treats their parents callously, by withholding, without proper justification, their support and love from them in their declining years. Even more so where that callousness is compounded by hostility’.^[71]

Should an order be made?

In the particular case there had been virtually no contact between the applicant and her mother for over 35 years. The applicant attributed the breakdown in the relationship to ‘her sexuality’,^[72] although other evidence suggested that her mother never asked anything about such matters.^[73] It seems that the deceased was very upset and confused about her daughter’s lack of contact.

In contrast, the deceased had an ‘extremely close and loving relationship’ with her son and her other daughters. The son lived with his parents for many years and assisted them. His mother assumed some responsibility for him even though he was an adult and employed.

The applicant sought a home—as the only eligible person not to have her own stable home; a car; money for medical things for herself and her son; and a sum for contingencies. All in all, in excess of $260,000.^[74] The defendant executor (the son) submitted that the claim should be dismissed, or no more than $40,000 be awarded. He and his other sisters agreed that this should be borne by his share of the estate.

Hallen AsJ went through each of the other siblings’ assets. He also noted the clear intention of the testator to give her son an extra reward of $50,000 ‘to compensate him for the work done and any money spent on the creation of a separate unit’ at the deceased’s property.^[75]

Other evidence of the testator’s intentions suggested that she had not wanted to leave the applicant anything at all from her estate, ‘because of the way she treated’ both the testator and her husband,^[76] but that it was her solicitor who advised that she should include a legacy with an explanation—which is what she did.^[77] I must say that I think this was very sensible advice—both the legacy and the explanation. As Hallen AsJ explained:

Because of this evidence, the comment, made in some other cases, that the deceased having made some provision by her, or his, Will, for the Plaintiff, provides an acknowledgment by him, or her, that there was an ongoing relationship between them, does not assist the Plaintiff in this case.^[78]

Assessing the claim, Hallen AsJ, he held that ‘judged by quantum and looked at through the prism of her financial and material circumstances, adequate provision for her proper maintenance or advancement in life’ had not been made by the will. And, while an additional sum would have been nice, that was not all that he was required to assess at the first stage:

The totality of the relationship of the Plaintiff and the deceased, the age and capacities of the other beneficiaries, and the claim of each on the bounty of the deceased are very relevant factors in determining the answer at the first stage.^[79]

His conclusions was, therefore that there was no failure to make adequate provision. The plaintiff therefore failed at the jurisdictional stage. Even if he were wrong, Hallen AsJ stated that the same considerations would produce the result that, as a matter of discretion, he would not have been satisfied that a family provision order ought to be made.^[80]

The key elements in this latter finding were that:

• there was no suggestion that the estrangement was caused by the deceased;^[81]
• the relationship with the other siblings continued;^[82]
• the estrangement was not of short duration, but more than half of the plaintiff’s life;^[83]
• the testator is entitled, in certain circumstances, to make no, or virtually no, provision for an adult child—‘particularly so in respect of a child who withholds, without proper justification, her, or his, support and love, from that parent over many years’;^[84]
• there is an interrelationship between the conduct said to disentitle an applicant to relief and the strength of the need for provision out of the deceased’s estate—‘the stronger the applicant’s case for relief, the more reprehensible must have been that person’s conduct to disentitle them to the benefit of any provision’;^[85]
• the estrangement in this case was self-imposed by the Plaintiff and, on the evidence, ‘appears to have been unjustified’;^[86]
• there were no sacrifices for the deceased but a complete severance of ties, by the plaintiff, and she withheld her love and support.^[87]

The plaintiff daughter’s claim was dismissed.

A contrasting decision is Bourke v Keep [2011] NSWSC 88, which was decided just before Andrew v Andrew. That case also concerned a daughter and defendant siblings. The testator made no provision for her daughter ‘because of her complete lack of concern or contact with me and other members of my family over a long period of time’. So there was a factual similarity to Andrew. One difference is the reason for the estrangement. In Bourke the plaintiff’s parents opposed her marriage and said that if she wished to marry the man who became her husband she would have to leave the family home. Macready AsJ described the relationship as one in which the plaintiff and her mother ‘had mutually turned their back on the relationship’.^[88] In such circumstances he concluded that while she should not be barred from making a claim, her conduct ‘means that her moral claim on the testator’s bounty is reduced’.^[89] He awarded the applicant $200,000 from an estate valued at about $620,000.^[90]

In reflecting upon the two cases in a paper he delivered to the Society of Trusts and Estates Practitioners in Sydney on 20 July 2011, Hallen AsJ commented that:

The principal distinguishing feature between the two cases appears to have been the explanation for the estrangement that was established in Bourke. It is plain that the deceased refused to approach the applicant to reconcile even though she knew of the existence of her grandchildren. As his Honour found, once the applicant was married, there was arguably no other reason for the deceased to continue the estrangement from her.

Another distinguishing feature may have been that the applicant did make contact with her family four times and she was either treated with hostility or ignored on those occasions.^[91]

These are excellent illustrations of the increasing scenarios of octogenarian and older parents and adults in their middle and later middle age seeking a ‘share’ of a parent’s estate, in circumstances of distinct disaffection of a parent. As Hallen AsJ concluded, ‘[i]t will be interesting to read the conclusions of the Court of Appeal in due course on Andrew and in Bourke’.

3.2 Property

The National Committee also recommended the introduction of claw-back provisions, based on the Family Provision Act 1982 (NSW), to enable the court to designate certain property as part of the ‘notional estate’ of the deceased—property acquired without full valuable consideration—and to order that provision be made out of the property so designated.

The wording of the notional estate provisions has been clarified. One particular example is in relation to jointly owned property. The new provision that gives examples of relevant property transactions is s 76, replacing s 22(4) of the Family Provision Act. Jointly owned property is now an express example in s 76(2)(b):

(b) if a person holds an interest in property as a joint tenant and the person does not sever that interest before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that, on the person’s death, the property becomes, by operation of the right of survivorship, held by another person (whether or not as trustee) or subject to a trust,

A further provision was included to deal with the problem of what amounts to full valuable consideration in the context of joint tenancy, for the purposes of considering whether the property should be designated as notional estate:^[92]

(4) For the purposes of this Chapter, in the circumstances described in subsection (2) (b), a person is not given full or any valuable consideration for not severing an interest in property held as a joint tenant merely because, by not severing that interest, the person retains, until his or her death, the benefit of the right of survivorship in respect of that property.

The property reach of the notional estate provisions remains pretty much as introduced in 1982, in the Family Provision Act. Tactically, the only way of avoiding them is to dispose of property beyond the three-year zone of notional estate.^[93] This may get away from a notional estate argument, provided the testator survives for the three years, but may involve pension issues, and won’t avoid a family dispute that may be brewing in any event. But it may give some satisfaction to the testator in his or her lifetime—and that is probably the key to it all.

If the testator does not survive the magical three years then property that has been disposed of may be within the notional estate zone if disposed of:

• within one year of death and there was a moral obligation to make provision for a person;
• within three years of death if the deceased intended wholly or partly to deny or limit provision for a person.^[94]

Then there are several things the court must consider. Under s 87, for example, the Court must not make a notional estate order unless it has considered the following:

(a) the importance of not interfering with reasonable expectations in relation to property,

(b) the substantial justice and merits involved in making or refusing to make the order,

(c) any other matter it considers relevant in the circumstances.

And, under s 88, the Court must not make a notional estate order unless it is satisfied that:

(a) the deceased person left no estate, or

(b) the deceased person’s estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or

(c) provision should not be made wholly out of the deceased person’s estate because there are other persons entitled to apply for family provision orders or because there are special circumstances.

In other words, it is far from straightforward to make a claim that is based upon bringing in notional estate.

A recent ‘celebrated’ example involving a notional estate argument arises from the estate of the late Richard Zelman Pratt, the ‘cardboard king’. I mentioned this one in my presentation last year but again it is illustrative of the way claims arise, and since last year’s presentation there has been one judgment in the chain: Hitchcock v Pratt [2010] NSWSC 1508. Pratt died in Melbourne and his major beneficiary was his wife of 49 years, Jeanne. In his will Pratt also left $22.8 million, mostly in shares, to his 12 year old daughter, Paula Hitchcock, which she can access when she turns 21. Paula was ‘the love-child’ of Pratt’s relationship with a Sydney woman, Shari-Lea Hitchcock. The will also confers a further $5.7 million in shares to be controlled by a trust company named SLH which is understood to benefit both Paula and her mother Shari-Lea.

On 27 April 2010 Shari-Lea instituted proceedings in New South Wales for a family provision order, claiming standing as a de facto spouse. On the same day her daughter also instituted proceedings in her favour, claiming standing as a child. On 13 and 17 May 2010 Shari-Lea and Paula applied for provision from Pratt’s estate under the Victorian legislation on the basis that she was his ‘domestic partner’ extending for a period of over 18 years.

On 6 July 2010 the executrix of Pratt’s estate, his widow, Jeanne, sought summary dismissal of the New South Wales proceedings.

In his lifetime Pratt is reported to have given Shari-Lea ‘a luxury $5 million Watsons Bay home, a South Coast farm, paid for her law degree and lavished her with trips and gifts’.^[95] This will be an interesting one to observe from north of the border. Unless Ms Hitchcock can pitch her claim as on the same basis as a de facto wife, she appears to have received more than enough for her ‘proper maintenance and support’ under s 91 of the Administration and Probate Act 1958 (Vic).

The application was lodged just two days before the anniversary of Pratt’s death. In New South Wales applications must be made with 12 months of the date of death, so this would have been an ‘in time’ application here. In Victoria, applications have to be within six months after the date of the grant of probate of the will.

There are several interesting issues. A principal one is the question of the reach of orders. Mrs Pratt (through her counsel) argued that, to the extent that s 64 purported to authorise a NSW court to make family provision orders with respect to assets outside of NSW, it was beyond the constitutional competence of the NSW parliament. On this line of argument, it was also argued that, to the extent that the NSW legislation purported to authorise family provision orders in respect of the estates of persons who died domiciled in another state, it was inconsistent with the laws of other states, pursuant to s 118 of the Commonwealth Constitution. Further, it was argued that s 64 could only apply to real estate in NSW where a person dies domiciled in another state, and that, on the facts, the deceased left no real estate in NSW nor could any property be likely to designate any property as notional estate in NSW.

Brereton J gave careful consideration to each of these issues. They raise really interesting conflict of laws propositions. The first was the constitutionality of s 64.

Constitutionality of s 64

A family provision order concerns provision for claimants out of the remainder of the estate, after debts have been paid. It is not a question of the payment of debts, as such. So, it concerns a fundamental question of succession. This is classic conflicts territory. Succession to movable property is governed by the lex dommicilis; succession to immovable property is governed by the lex situs.^[96]

Section 64 sought to dislodge this somewhat, by providing that a family provision order may be made in respect of property situated in or outside New South Wales. But, as Brereton J said,

For a state law to have extra-territorial operation, there must be a relevant connection between the persons or circumstances on which the legislation operates and the state, and while this test is to be liberally applied and legislation should be held valid if there is any real connection, even a remote or general one, between the subject matter of the legislation and the state, there must nonetheless be some such connection.^[97]

When introduced in the Family Provision Act 1982 the provision allowed the court to order provision out of the estate or notional estate in New South Wales, whether or not the deceased was domiciled in New South Wales.^[98] In 1989 the provision was amended to give it an even wider reach: to property in or outside New South Wales, regardless of the deceased’s domicile.^[99] The effect of this provision was subject to consideration, most particularly in Balajan v Nitikin (1994) 35 NSWLR 51, where Windeyer J held that a law with respect to family provision that applied to property outside the state of a testator who had died outside the state had no sufficient connection and was therefore unconstitutional.

Brereton J analyses the movement of this provision into the Succession Act and notes that ‘it seems that the provision was re-enacted without adverting to the circumstance that it had been held to be unconstitutional. He concludes that, to the extent that s 64 purports to apply to property outside the state of a testator who dies domiciled outside the state has no sufficient connection with the state to be a valid exercise of the state’s legislative power, it is invalid.^[100] Therefore the section could only apply to extend the reach of the Act, with respect to testators who die domiciled outside New South Wales, to movables in New South Wales; and, with respect to testators who die domiciled in New South Wales, to immovables outside of New South Wales.^[101]

Pratt left no actual estate in New South Wales. However, the presence of property that could be designated as notional estate was ‘sufficient to attract jurisdiction, since once designated it assumes for practical purposes equivalence to actual estate’.^[102]

Notional estate

Has there been a ‘relevant property transaction’ within ss 75 and 76? The sections identify a number of transactions that attract consideration and may bring property into the notional estate orbit if ‘full valuable consideration’ is not given. One such transaction concerns ‘a power to appoint, or dispose of, property that is not in the person’s estate’, and that power is not exercised before death so the property is now held by someone else. A good example of such a transaction is jointly owned property. Each joint tenant has a power to sever the joint tenancy, a result of which may be that the now severed share forms part of the deceased person’s estate. If they do not sever their notional share, the property, by survivorship, belongs entirely to the survivor.

Four properties were in issue: an apartment in Phillip Street, Sydney, a property in Tumut and two properties in Smithfield—all held in the names of companies. Hitchcock argued that Pratt had sufficient de facto control over the registered proprietors of the four properties in question. Did a company director have the relevant capacity to control the company’s property to bring it within the notional estate provisions? This matter had arisen in at least one other case to which Brereton J referred. In Estate of Thiess; Brinkman v Johnston NSWSC, Hodgson J, 4 February 1994, Hodgson J commented that:

It might be possible infer that the deceased had power, as a governing director or perhaps managing director [of a company], to dispose of that company’s real estate in New South Wales and that he omitted to do so prior to his death. But that power would been subject to the fiduciary duties of a director; so that in respect of the real estate in New South Wales, it would not seem that the requirement … that there be an omission to benefit the deceased or an eligible person, would be satisfied in respect of the New South Wales real estate.^[103]

Hence, for the purposes of s 76(2)(a), a director’s power to dispose of property of a company is not a power of the kind within the section, because it is constrained by fiduciary obligations. Brereton J concluded:

An omission to exercise such a power in favour of the director or an eligible person … , because the power could not lawfully have been exercised in favour of the estate or eligible person. In my view, a director cannot be said to be ‘entitled’ to exercise a power to dispose of a company’s property to himself or to an eligible person other than for valuable consideration.^[104]

On the basis of such reasoning, he concluded that there was ‘no apparent arguable basis on which the court could make a notional estate order in respect of the four New South Wales properties to himself or either plaintiff save for full valuable consideration’^[105].

The order was to dismiss the proceedings with costs.^[106]

Ms Hitchcock is not the only claimant against the Pratt estate. At the end of May the ‘adult entertainer’ Madison Ashton (a.k.a. Christine McQueen) emerged—‘burst onto the national radar’^[107]—to stake a claim against Jeanne Pratt, as the executor of her late husband’s estate. This is not a family provision claim, but one essentially in contract. Ashton claims that in 2003 Pratt asked her to stop providing escort services for other clients and become his personal mistress. She alleges that Pratt was to establish a $2.5 million trust fund for each of her two children, pay her a $500,000 a year retainer, buy her a $100,000 Mercedes Benz, pay her 36,000 for rent and $30,000 in annual travel expenses. Mrs Pratt is reported to have said that Ashton was paid in two separate settlements in 2005 as well as a Mercedes and that this was in settlement of any claim she had on Pratt. One instalment of this litigation is Ashton v Pratt [2010] NSWSC 1376, an ex tempore judgment of Brereton J on 22 October 2010 in relation to discovery and interrogatories.