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Family provision claims by grandchildren in NSW

  • Family Law, Wills and Estates Law
  • Christian Tager
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  • November 7, 2016

Family provision claims by grandchildren in NSW

Diamond Conway Legal Article

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ELIGIBILITY TO MAKE A CLAIM – dependency or close personal relationship

In some circumstances grandchildren can be eligible to claim some or even additional provision from the estate of their grandparent where they can establish dependency on their grandparent or alternatively that they were in a close personal relationship.  However there are a number of additional hurdles to overcome before a grandchild can succeed in these types of claims.

Section 57(1)(e) of the Succession Act 2006 (NSW) states that one of the categories of eligible persons who may apply for a family provision order is a person:

  1. Who was, at any particular time, wholly or partly dependent on the deceased person; and
  2. 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.

The word “dependant” has been interpreted by the courts to mean a person who relies upon the support of another but is not limited to purely financial support. In Doshen v. Pedisich [2013] NSWSC 1507 (17 October 2007) Justice Hallen stated “the authorities reveal that the words are wide enough to cover any person who would naturally rely upon, or look to, the deceased rather than to others, for anything necessary or desirable for his, or her maintenance and support.”

As an alternative to the dependency eligibility, the grandchild may in some circumstances be entitled to make a family provision claim pursuant to Section 57(1)(f) of the Act if the grandchild was living with their grandparent in a close personal relationship at the time of the grandparent’s death and that either of them provided the other with both domestic support and personal care.   A close personal relationship will not exist where the domestic support and personal care were provided for fee or reward or on behalf of another person or an organisation including a government agency, or charitable or benevolent organisation.

 

FACTORS WARRANTING THE MAKING OF THE APPLICATION – Section 59(1)(b)

Applications for provision by grandchildren involve an additional hurdle not faced by spouses, children and de facto spouses of the deceased, in that they must also in accordance with Section 59(1)(b) of the Act  establish that, having regard to all of the circumstances of the case (whether past or present), that there are factors warranting the making of the application.

The factors referred to in Section 59(1)(b) have been interpreted by the court to mean factors which, when added to the facts which render the applicant an eligible person would lead to a conclusion that the applicant should be regarded as a natural object of testamentary recognition by the deceased.

WHETHER ADEQUATE PROVISION HAS BEEN MADE FOR THE APPLICANT AND THE TWO STAGE DETERMINATION – Section 59(1)(c), Section 59(2) and Section 60

Assuming a grandchild has established eligibility as a result of some dependency or as a result of a close personal relationship under Section 57(1)(f), and the Court determines that there are factors warranting the making of the application pursuant to Section 59(1)(b) the Court must then:

  1. determine whether adequate provision for the applicant’s proper maintenance, education or advancement has not been made. If that is determined in the affirmative then the Court must secondly;
  2. determine whether it should make an order and if so the nature of such order. In exercising this discretion the Court may have regard to the range of factors set out in Section 60(2) of the Act which are because of their length, are attached at the rear of this paper.

 

GENERAL PRINCIPLES THAT ARE RELEVANT FOR CLAIMS BY GRANDCHILDREN

In Griffiths v Craigie [2014] NSWSC 1339 (2 October 2014) and previously Bowditch v. NSW Trustee and Guardian [2012] NSW SC 275 (26 March 2012),  the facts of which I will set out later in this paper, Justice Hallen set out the following general principles in relation to claims by grandchildren which have been adopted by the Court of Appeal of NSW:

  • As a general rule, a grandparent does not have an obligation or responsibility to make provision for a grandchild; that obligation rests on the parent of the grandchild. Nor is a grandchild, normally, regarded as a natural object of the deceased’s testamentary recognition.
  • Where a grandchild has lost his, or her, parents at an early age, or when he, or she, has been taken in by the grandparent in circumstances where the grandparent becomes a surrogate parent, these factors would, prima facie, give rise to a claim by a grandchild to be provided for out of the estate of the deceased grandparent. The fact that the grandchild resided with one, or more, of his, or her, grandparents is a significant factor. Even then, it should be demonstrated that the deceased had come to assume, for some significant time in the grandchild’s life, a position more akin to that of a parent than a grandparent, with direct responsibility for the grandchild’s support and welfare, or else that the deceased has undertaken a continuing and substantial responsibility to support the applicant grandchild financially or emotionally.
  • The mere fact of a family relationship between grandparent and grandchild does not, of itself, establish any obligation to provide for the grandchild upon the death of the grandparent. A moral obligation may be created, in a particular case, by reason, for example, of the care and affection provided by a grandchild to his, or her, grandparent.
  • A pattern of significant generosity by a grandparent, including contributions to education, does not convert the grandparental relationship into one of obligation to the recipients, as distinct from one of voluntary support, generosity and indulgence.
  • The fact that the grandparent occasionally, or even frequently, made gifts to, or for, the benefit of the grandchild does not, in itself, make the grandchild wholly, or partially, dependent on the grandparent for the purposes of the Act.
  • The grandchild’s dependence, whether whole or partial, on the grandparent must be direct and immediate; it is not sufficient that the grandchild’s dependence is the indirect result of the deceased providing support and maintenance for his, or her, own adult child, and thereby, incidentally, benefiting the deceased’s grandchildren who are directly dependent on that child.
  • It is relevant to consider what inheritance, or financial support, a grandchild might fairly expect from his, or her, parents. Yet, the obligation of a parent to provide for his, or her child does not, necessarily, negate, in an appropriate case, the moral obligation of a grandparent to make provision for the maintenance, education or advancement in life of a grandchild out of her, or his, estate.
  • The fact that the parents, or either of them, of a grandchild have, or has, predeceased the grandparent may be a relevant factor in support of the claim made by a grandchild.
  • A relative want of resources in the parent of the grandchild may create an obligation of the deceased towards a grandchild. For example, where the deceased is of ample means, she or he, reflective of prevailing community standards, might well recognise, in certain circumstances, a duty to make provision out of her, or his, estate for the grandchild who has needs. If the estate or notional estate could satisfy the grandchild’s claim without significant adverse impact on the chosen beneficiaries, a duty to provide for the education, maintenance and advancement in life may arise.

Justice Hallen went on in his judgement to state that these general principles should not be elevated into rules of law but that he merely identifies them as providing useful assistance in considering the statutory provisions the terms of which must remain firmly in mind.

 

Case studies

Case Study 1 – Claim by two grandchildren in relation to a small estate was unsuccessful as it was determined that there were no factors warranting the making of the claim.  The relationship between the grandchildren and their grandmother did not go beyond a normal family relationship.

In Bowditch v. New South Wales Trustee & Guardian [2012] NSWSC 275 (26 March 2012) Associate Justice Hallen dealt with a claim by an adult daughter (Wendy) and her two children (Luke and Amiiy) who were the grandchildren of the deceased. The deceased left her estate which had a net value of $414,515 to her two adult children Greg and Wendy in equal shares.

 

The financial circumstances of the parties

The deceased’s 51 year old son Greg was living in rented premises and in receipt of about $630.00 income per week from his superannuation and Centrelink allowances.  He did not work and his financial affairs were managed by the New South Wales Trustee & Guardian as a result of a major depressive and anxiety disorder.

The deceased’s 53 year old daughter Wendy lived with her two children Luke and Amiiy in rented premises and received income and other payments of $825.00 per week.

The deceased’s grandchild Luke was completing Year 11 at school and intended to start a trade course in the following year. The deceased’s grandchild Amiiy had recently completed her schooling and was working in the childcare industry earning $195.00 per week.

 

Relationship between the grandchildren and the deceased

Each of the grandchildren had a good relationship with their grandmother and for short periods stayed with her when their mother Wendy was unwell.  During these stays their grandmother arranged to take them to school and cooked meals for them. The grandmother also provided her grandchildren with some financial assistance from time to time if they needed help.

In describing the relationship between the deceased and her grandchildren Associate Justice Hallen stated “The deceased did assume some obligation, and responsibility, towards each of Amiiy and Luke during the periods that each stayed with her.  However, there is no suggestion, during these periods, that Wendy was abrogating her responsibility to them as their mother or that the deceased had taken over the direct responsibility for her and his support or welfare, or that she had undertaken a continuing and substantial responsibility to support each financially”.

 

Judgement

Justice Hallen was not satisfied that there were facts warranting the making of the application by the grandchildren and stated “Whilst there was a personal relationship and emotional bond between each and the deceased, it seems to me that it was no more than is appropriate to a grandparent and grandchild.  I am not satisfied that the deceased had come to assume, for some significant time in the life of either Amiiy or Luke, a position more akin to that of a parent than a grandparent, with direct responsibility for her, and his, support and welfare. Nor am I satisfied that the deceased had undertaken a continuing and substantial responsibility to support either financially or emotionally. There is simply no evidence to suggest that a bond existed between either and the deceased that would give rise to each being regarded as a natural object of testamentary bounty”.

Wendy’s application also failed as Associate Justice Hallen was satisfied that the deceased had made adequate provision for her daughter by leaving her 50% of her estate in circumstances where both children were living in rented premises, had limited financial means, and similar needs.

 

Case Study 2 – Claim by 11 year old grandson against grandmother’s estate was successful in circumstances where the grandmother exercised parental responsibility for the grandson for a substantial period of the grandchild’s life

In Griffiths v. Craigie [2014] NSWSC 1339 (2 October 2014) Justice Hallen dealt with a claim by an 11 year old grandson against his late grandmother’s estate which had a net value of $1.4 million. The deceased left her entire estate in a discretionary trust controlled by her eldest daughter. The deceased’s 3 children and 3 grandchildren were nominated as beneficiaries of this discretionary trust.

Within the deceased’s Will it stated that if the trust failed, then the grandson Kyle Griffiths (who was the plaintiff in these proceedings) should receive 10% of the estate and that his mother should receive 20% of the estate. Accordingly Kyle was clearly a natural object of the deceased’s testamentary bounty.

In this case Kyle’s mother suffered severe psychological problems and for a period he was removed from her care by the Department of Community Services. The grandmother cared for her grandson Kyle and exercised parental responsibility from 2006 to 2012 (from November 2011 this was pursuant to a court order ) . This position of care only stopped when the grandmother needed to be hospitalised and was seriously ill and subsequently died.

The grandmother provided substantial financial support to her grandson Kyle and it was claimed that he needed provision for private school fees, psychological counselling, private tuition, holidays, and future university expenses. Notably the applicant’s mother was incapable of managing her financial affairs and New South Wales Trustee & Guardian were appointed as her guardian. Although she had received a settlement of her family provision claim against the estate which included a $355,000 property where she intended to reside with Kyle and a $180,000 legacy, it was determined this award of provision did not diminish the claim made by her son Kyle.

 

Judgment

Justice Hallen awarded the grandchild the sum of $195,000 plus costs.

Case Study 3 – Claim by adult grandson in relation to a small estate was successful in circumstances where the grandson lived with his grandmother for various periods and she became a surrogate parent.

In Fraser v. Simmonds [2014] NSWSC 654 (22 May 2014) Justice Kunc dealt with an application by a 44 year old grandson, where the total value of the estate was $680,000, the applicant grandson had been left a legacy of $10,000, and the grandmother had left numerous legacies to various children, grandchildren, friends and charities

.

Relationship between the grandson and his grandmother

The applicant was raised solely by his mother and did not know the identity of his father. From the date of his birth the applicant and his mother lived with the grandmother in her home up until the applicant’s mother re-married. The applicant then lived solely with his grandmother from the age of 14 to 19 as a result of an argument with his mother. During this period his grandmother cooked and cleaned for him, provided him with clothing, and took over the parental role.

As the applicant’s mother was of limited means the grandmother at various times paid for the applicant’s education, tennis lessons, driving lessons, and dental work. Whilst he was at university the grandmother paid for some of the applicant’s accommodation and other university expenses as he completed a bachelor of commerce degree. She also provided him with monies to contribute to the costs of lap-band surgery to address his obesity.

The applicant maintained a close relationship with his grandmother whilst he was working at the ATO in Sydney as an accountant between 1994-2001 and to a lesser extent after he moved to the Gold Coast in 2001 to live with his mother in another property owned by his grandmother (the grandmother remained living in Sydney).

 

Grandson’s circumstances

The grandson’s circumstances were that he had been unemployed since 2001 having left his position at the ATO as a result of bullying.  He was physically unwell, receiving a disability pension, had little or no assets, and owed $74,000 in debts.  He had been studying since 2009 for an MBA and had started a law degree incurring HECS liabilities of $50,700. He was morbidly obese, suffered from arthritis in his hand, a hernia, and oedema. He also needed extensive dental work. He was currently living with his mother in a house in Queensland that was owned by his grandmother. His mother’s financial circumstances continued to be of limited means.

Judgement

Justice Kunc made an order for a provision in the sum of $56,000 in addition to the $10,000 that the applicant was given under the Will plus his costs of the proceedings. The additional provision was to assist the grandson to reduce his debts, fund surgery to address his obesity problems, and to allow additional funds to assist him to improve his difficult circumstances.

In describing the relationship between the applicant and his grandmother Kunc J stated that “the role she assumed towards him went beyond grandparental generosity and was to some extent more like that of a parent”.

Justice Kunc stated in his judgement that “given a relationship that was at times more maternal than grand-maternal and David’s ongoing health issues, it would accord with community standards of what might be right and proper for a greater provision to have been made for David to meet the exigencies of his current situation. Community standards recognise that a parent may have to provide for a sick adult child. In this case where David’s mother cannot do so, the history of their relationship justifies that expectation being transferred to Mrs Rich”  [ie the grandmother ]

Case Study 4 – Able-bodied but impecunious adult grandchild fails in claim against substantial estate of grandfather where the estate was left solely to the applicant’s mother who was the only child of the deceased. The application succeeded at first instance but was overturned by the Court of Appeal.

In the decision of Wilcox v. Wilcox [2012] NSWSC 1138 (12 October 2012) and (No 2) [2014] NSWSC 88 (21 February 2014) Justice Pembroke dealt with a case involving two adult grandchildren, Robert aged 43 years and Ben aged 37 years who issued proceedings against their mother Patricia who was the executor and sole beneficiary of their grandfather’s estate.  The claim was brought in the alternative as a contract/estoppel claim or a family provision claim.

 

Assets of the estate

The deceased’s estate was worth about $5.5 million and was essentially comprised of his interests in eight parcels of adjoining land at Walgett that were used for cattle and sheep grazing.

 

The Will

The grandfather left his entire estate to his only child Patricia who had lived with him on his property all of her life and had been involved in managing their grazing business since 2002. Patricia had an equal shareholding in the grazing business and interests in five of the eight properties that were utilised for the grazing operations. The grandfather solely owned three of the properties and partially owned the balance of the properties with Patricia.

 

Relationship between the grandfather and his grandchildren

Ben and Robert grew up on their grandfather’s property with their mother Patricia and their father. Their grandfather paid for their private school fees to attend Kings as their parents were unable to pay these fees. The grandfather also paid for all of Robert’s expenses to attend a two year course at Long Reach Pastoral College after he left school at year 10, to learn skills relating to agriculture.   Robert worked on his grandfather’s property from 1986 – 1993 after completing his college studies.

In early 1993 when Robert was aged about 23 years and Ben about 17 years their parents separated with their father leaving their grandfather’s property to live elsewhere. Patricia in fact insisted that her husband and two sons leave her father’s property due to the failure of her marriage and arguments occurring within the household.  Robert did not live on his grandfather’s property after the separation of his parents and thereafter had no involvement with his grandfather’s grazing business.

Robert maintained contact with his grandfather after 1993 who encouraged him to undertake an apprenticeship as a plant mechanic. He then worked in this field for the next 6 years before moving to Sydney to start his tree lopping business. Robert visited his grandfather infrequently over the next 10 years (1993 – 2004) and not at all after 2004.

 

Were these grandchildren dependent on their grandfather?

Justice Pembroke was satisfied that Robert and Ben were during their lives partly dependent on their grandfather and therefore eligible persons to make this claim. Justice Pembroke was of the view that as the grandfather controlled the grazing business and its finances to the exclusion of his daughter for the majority of his life the family’s prosperity depended on the choices he made and “in a practical sense the family was captive to him.” He also took into account the payment of the school and college fees, together with provision of paid work and accommodation after they finished their schooling.

 

Factors warranting the making of the application – Section 59(1) (b)

Justice Pembroke stated that he was readily satisfied on the facts of this case that there were factors warranting the making of the application. In doing so he referred to the fact that both grandchildren were “penurious [possibly impecunious was intended] and have not made a success of their lives.” and that “Given the circumstances of their relationship with their grandfather and their current circumstances most observers would regard the plaintiffs as natural objects of the testator’s testamentary recognition” .

 

The grandchildren’s circumstances

Robert was living in shared premises at Darling Point and had no assets. He was involved in a tree-lopping business in Sydney which he set up in 2001, but was at the time of the application in receipt of Centrelink benefits and supplementing these benefits with some tree lopping work income.  He had no assets and owed $107,000 to the ATO. In his evidence Robert stated that with his technical skills he could obtain work for a mining company and earn about $100,000 per annum but he chose to do otherwise.

In his judgement Justice Pembroke stated “No one is responsible for the position in which Robert now finds himself, except himself”…“His unhealthy sense of entitlement may have constrained his ambition”…“imprudently assuming that he and his brother would inherit their grandfather’s estate”…“he gave no thought to the priority his mother naturally deserved.”

Ben was unemployed and physically handicapped as a result of a motor vehicle accident. His injuries included mild brain damage and an inability to walk properly. He was currently receiving a disability pension. It was not clear what compensation would be paid to him arising from this motor vehicle accident.

 

Contract/Estoppel claim

Justice Pembroke rejected that the grandfather had made any clear and unequivocal representations to his grandchildren as to their inheritance from him, in reliance on which they acted to their detriment so as to give rise to an estoppel. He was of the view that taken at its highest it consisted of assertions to the effect that “you and your brother would be taking it over when I pass on” or “when I am not here you are going to have to run the place and will have to look after your mother” and various other similar statements from which Justice Pembroke construed that the testator was effectively saying that “he hoped and expected that his grandsons would help their mother in the running of the properties and he expected that they would inevitably inherit the properties from her. These were not promises but expressions of present expectation.”

 

Adjournment of the proceedings

Although Justice Pembroke determined that the grandfather had made inadequate provision for his grandchildren and decided that some provision should be made, he had insufficient information to determine what provision ought to be made due to the failure of both plaintiffs to properly address in their evidence the details of their future needs. Further there was no evidence before His Honour as to what effect a division of the eight properties would have on the viability of the existing grazing operation. The proceedings were adjourned and an expert was subsequently appointed by the Court to address the position in relation to dividing the property.

A court appointed expert subsequently concluded that it was not economically feasible to divide the eight land holdings as none would be a viable agricultural unit.

In the interim whilst this report was being carried out Ben settled his claim against his grandfather’s estate.

 

21 February 2014 judgement in respect of Robert’s claim

Justice Pembroke awarded Robert $387,000, of which $107,000 was to be paid within 90 days and a further $40,000 would be paid each year for seven years commencing 21 February 2016.

This decision was appealed on the basis that the trial judge failed to give adequate reasons and erred in his statutory discretion in the making of the family provision order.

 

Court of Appeal decision overturned award to grandson

On appeal it was determined that there was a failure by Justice Pembroke to articulate any cogent basis for departing from the testator’s scheme of benefaction in favour of his only child and the decision was overturned.

In Justice Barrett’s judgment he affirmed the guidelines for dealing with applications by grandchildren as set out by Associate Justice Hallen  in Bowditch v. NSW Trustee & Guardian and commented that they “provided a useful touchstone that may be applied with circumspection by judges called upon to ascertain and apply the feeling and judgement of fair and reasonable members of the community.”

Justice Barrett went on to state that although the trial judge acknowledged these guidelines “he did not pay any attention to them.  Had he done so he would have necessarily noted that the deceased had never stood in loco parentis to the respondent who had until his parents separated in 1993 lived as part of their household except when away at boarding school and college; also that while there was a close relationship between the deceased and the respondent (who looked up to his grandfather as an authority figure: mentor and example) it did not involve the bestowing of any special care of affection by the respondent as contemplated by Justice Hallen’s item (c).”

Justice Barrett went on to state that the findings of the trial judge that were made about the deceased’s financial support “did not indicate anything beyond the frequently encountered situation of financial assistance to an adult son or daughter in meeting family expenses”.   “None of these matters supported a conclusion that the deceased according to community standards and expectations should have given anything to the respondent by Will.”

Justice Barret stated in his judgement that “it was incumbent upon the primary judge to explain why the scheme of testamentary benefaction adopted by the deceased should be altered – in substance why the gift of the whole estate to the deceased’s only child should be countermanded by diversion of $387,000 to a grandson in circumstances where that only child had been a caring and dutiful daughter, was a part owner of the deceased’s scarcely viable business and, under his Will came to own all of it; and where the grandson had the capacity to earn $100,000 per year by applying skills as a mechanic and fitter he had acquired with the deceased’s encouragement, had chosen not to exploit that earning capacity, preferred to seek no more than a bare subsistence living and was not at all motivated to clear a substantial tax debt that had been hanging over him for several years or to provide for his own future.”

Justice Barrett went on to state that “this case is, as described as in House v. The King one in which it does not appear from the primary judge’s reasons how he has reached the result embodied in his order but, on the facts, the order is unreasonable or plainly unjust in such a way that there has been a failure to properly exercise the discretion which the law reposes in the Court of first instance”.

Justice Basten in his judgement also confirmed the principles set out by Associate Justice Hallen in Bowdich v. NSW Trustee & Guardian and stated that “the real provenance of the these principles is that they constitute a reflection of community values.”  Further these principles are relevant to not only the question as to what is adequate and proper provision but also the prior question for the Court as to whether there are factors which warrant the application.

In Justice Basten’s judgement he stated “that there may be circumstances in which widely held community standards might expect a grandfather to make some provision for his grandchildren, for example where they had maintained a strong relationship and where there was reason to doubt that the willingness or the ability of the parents to make adequate provision for their children. However such considerations would always be influenced by the fact that the grandchildren are themselves mature adults.   In the present case relevant community values will be affected by the nature of the estate. Quite particular values might operate with respect to farming properties…”

Justice Basten went on to state “that it was a failure to give adequate consideration to these matters which was in my view the critical error on part of the primary judge. Once these matters are taken into account it is not possible to identify any social, domestic or moral obligation on the part of the testator to provide for the claimant.  In other words there were no sufficient factors to warrant the making of the application for the purposes of Section 59(1)(b)”.

 

Summary

Claims made by grandchildren have no guarantee of success even where there has been some level of dependency on the grandparent. These claims are complex and expert advice is needed to assess whether there are any genuine prospects of succeeding.   Diamond Conway has a number of accredited specialists who can assist you in respect of these claims.

 

Disclaimer

This document was prepared by Diamond Conway Lawyers.  It contains information of a general nature only and is not intended to be used as advice on specific issues.  Opinions expressed are subject to change.  Although Diamond Conway gathered the information contained in this document from sources deemed reliable, and has taken every care in preparing the document, it does not guarantee the document’s accuracy or completeness.  Diamond Conway disclaims responsibility for any errors or omissions.