Yalda v Penfold[2012] QDC 13

DISTRICT COURT OF QUEENSLAND

Introduction

2. [2]
   On 13 August 2010, the applicant filed an originating application seeking provision, out of the estate of the deceased, pursuant to s 41 of the Succession Act 1981.

3. [3]
   The Applicant is an adult child of the deceased, who died on 22 March 2010, leaving a will dated 26 September 2003. On 7 September 2010 probate for the will was granted to the First Respondent, one of the substituted executors named therein.

4. [4]
   The deceased had been predeceased by his wife, Cynthia, and was survived by their two daughters: Susan Jennifer Ryan (then aged 61 years, “Susan”) and the applicant (then aged 58 years) and a son from a previous marriage: Jeremy Steed Hawes (“Jeremy”).

5. [5]
   The estate has an estimated net value, before costs, of about $180,000 and the effect of the will is to provide:

1. (a)
   bequests of $500 each to the abovementioned daughters of the deceased and $50 to Jeremy; and

2. (b)
   the rest and residue in the proportions of 20% to the Queensland Cancer Fund and 80% to the deceased’s great grandson, Rigel Ivan Kent Surma-Hawes (“Rigel”). 

6. [6]
   The gift to Rigel is conditional upon him attaining the age of 18 years but with expressed powers of maintenance and advancement during his minority.^[1]It is then sufficient to note that there is a lack of expressed clarity as to what is to occur to the remainder of this part of the residue, should this condition ultimately not be fulfilled. 

7. [7]
   Rigel was born on 23 February 2004 and is the son of Anne-Louise Roxanne Surma-Hawes, who is the daughter of Susan.^[2]On 30 November 2011 and subsequently to the directions order made after the filing of the originating application in this matter, Rigel’s father, the abovenamed Second Respondent, filed a consent to act as his Litigation Guardian in this proceeding. 

8. [8]
   Otherwise, the directions order required service of a copy of the originating application material and that order on all of the abovenamed beneficiaries and also Felicity Hawes, who is the daughter of Cynthia from an earlier marriage and who now resides in America.  It can also be noted that Jeremy lives in England and unlike the daughters of the deceased, did not emigrate with him to Australia.  This occurred when the applicant was 17 years old.  Jeremy is now 70 years of age. 

The Application

9. [9]
   Accordingly, the only eligible applicant who has applied pursuant to s 41 of the Succession Act 1981, is the applicant.  That originating application was filed on 13 August 2010. 

10. [10]
    This matter then came before me in the Applications List in Brisbane, on 21 December 2011, consequently to an application filed by the Litigation Guardian on 15 December 2011.  The gravamen of the later application was to seek that effect be given to the terms of settlement executed by the parties to this proceeding and the Cancer Council Queensland (as a beneficiary under the will), as a deed of release and settlement dated 28 November 2011.

11. [11]
    That application is made in recognition of the requirement that the relief provided pursuant to s 41 of the Succession Act 1981 may only be achieved by Court order and, as has been recently observed in Affoo v Public Trustee of Queensland,^[3]such orders are made by exercise of discretion of the court.  Although, any agreement that may be reached as to the orders that the parties believe should be made, will usually be a significant factor in the exercise of that discretion.^[4]

12. [12]
    In Watts v Public Trustee of Queensland (as executor of the estate of Neta May Bruigom),^[5]Jones J stated the court’s position as follows:-

13. [13]
    It should also be noted that claims of this kind are to be resolved upon the underlying principle or rationale that a court will not seek to rewrite the terms of a Will but will have regard to what a deceased person ought to have done in all the circumstances and the application of a test of what a “wise and just, rather than a fond and foolish” person would do.^[6]In Vigolo v Bostin^[7]there are statements which support the underlying basis or justification for the court making orders of this kind as being “in terms of familial obligation, not unnaturally or inappropriately described as moral”^[8]and by resort to the concepts of “moral duty” and “moral claim”.^[9]

14. [14]
    It is appropriate to consider the matter in the two stage approach described in Singer v Berghouse^[10], albeit that was described in relation to similar New South Waleslegislation.

15. [15]
    Therefore and whilst the order of the court is ultimately made in the exercise of discretion, there are, in the first instance, jurisdictional conditions or requirements which underpin the exercise of power. However, it is also pertinent to note some observations made in Bartlett v Coomber^[11]to the following effect:

1. (a)
   Family provision litigation takes place in an adversary context in which the active parties are usually expected to be the best judges of what is in their own interests.  The policy of Australian law encourages settlement.  The legal system would collapse were it not for the fact that most disputes are resolved by agreement.

2. (b)
   One principle giving effect to this policy is the principle that a valid compromise gives effect to an agreement that effectively supersedes the antecedent rights of the parties.  The possibility of greater success and the risk of greater failure is transposed into an arrangement that frees the litigants of the risks, costs and toils of further dispute.

3. (c)
   This principle is not displaced in the context of family provision applications, although the court may decline to give effect to a settlement if doing so fails to effectuate the specific policies of the Act, amounts to an abuse of process, or otherwise offends public policy in a demonstrable way.

4. (d)
   A compromise made by the parties will generally be given effect to by the court and, because of the agreement, the court will generally be satisfied that the order agreed on is one which ought be made without the need for any significant investigation of the evidence.

5. (e)
   The circumstances to which the court may have regard are wide and an agreement to settle a claim is part of them.  There may be exceptions, but in almost every case an agreement which an executor has made in exercise of the statutory power to make compromises, with an understanding of the assets in the estate and in the interests of the persons otherwise entitled to them, and with legal advice, will ordinarily have an extremely strong claim for attention among the relevant circumstances.  Such agreements are always subject to the necessity of obtaining the court’s approval.  However, the importance of such agreements is high.

Sanctioning the compromise

16. [16]
    The additional complication is that, in this matter, both the originating application and the resolution of it, which is the subject of the subsequent application, involve and affect the interests of a minor. As has been noted, the recent application seeking the final orders of the Court, was made by the Litigation Guardian. That accords with an obligation contained in clause 5.2 of the deed of release and settlement:

17. [17]
    Accordingly, what has been contemplated is a process of the kind mandated by UCPR 98. Despite the express reference in that rule to the Court’s approval under s 59 of the Public Trustee Act 1959 and the fact that that section is only expressly made referrable to the sanctioning, by the Court, of claims made by or on behalf of persons under a legal disability^[12], it is the submission of the parties that the invariable practice where a minor is a party to compromised proceedings (such as here) is to seek the sanction of a court of appropriate jurisdiction.  That practice no doubt derives from the circumstance that UCPR 98 is expressed in terms of the ineffectiveness of any “settlement or compromise of proceedings in which a party is a person under a legal incapacity”^[13], unless so “approved” by the Court or Public Trustee. 

18. [18]
    What is therefore sought, in addition to relief pursuant to s 41 of the Succession Act 1981 is the removal of the effect of UCPR 98, so that the deed of release and settlement may take effect as an agreement.^[14]

19. [19]
    For the purpose of sanction or approval of the settlement or compromise, under UCPR 98, the function of the Court, is to ensure that the settlement is in all the relevant circumstances, reasonable and for the benefit of the person under legal disability.^[15]Another description is that it is in the best interests of the person under the legal disability.^[16]

20. [20]
    This situation was the subject of discussion by Dalton J in Affoo v Public Trustee of Queensland and her conclusion in respect of the correct approach to the considerations that arise is expressed as follows:^[17]

“[28] The approach taken by the Public Trustee on this application is that, like the agreement reached in Bartlett v Coomber, the agreement reached at the mediation was subject to the sanction of the Court pursuant to s 59 because of Mr Blair’s disability, but also that the Court needed to consider whether or not to make an order finally disposing of the family provision application in terms of the agreement reached at mediation. In view of my discussion of the law, above, that position is plainly correct.”

21. [21]
    In that case, as in Bartlett v Coomber^[18], the applicant for family provision was a person under a legal disability.  However, the need to separately consider each aspect is heightened here where, although in each instance, the relevant considerations will be similar, and, in each instance would require consideration of the relevantly competing interests and claims, the consideration of each aspect is directed at the perspective of different persons and differing rather than coalescing interests. 

Consideration of the application

22. [22]
    In support of her application, the applicant provided evidence directed at the requirements of s 41(1) and (1A) of the Succession Act 1981, including as to:

1. (a)
   Her being 59 years of age and of modest financial circumstances, she owns a house in which she has a net equity of about $240,000.  Otherwise she has minimal savings and her other assets total $24,500 in value and she has a credit card liability of $7,000;

2. (b)
   For the past six years she has been in full-time employment and she earns approximately $44,000 gross per annum. 

3. (c)
   After coming to Australia with her parents at age 17, she attended a business college and studied bookkeeping and left home at age 19.

4. (d)
   She has been married twice and both husbands are deceased.  She has four children from those marriages and all are now self-sufficient.  Her second husband died some 12 years ago and after that she supported her children by herself and by taking on odd jobs.

5. (e)
   After her second marriage, there was a period of ten years, during which her parents did not communicate with her and she deposes to being contacted by her mother in 2004 to organise a meeting at which, she says, her parents apologised for what had occurred, telling her then that they had believed some unspecified things that they had been told by Susan and her daughter, Anne-Louise, but now believed them to be untrue. 

6. (f)
   At the time of her mother’s death, on 10 June 2005, her parents were living at Bargara Beach, near Bundaberg and the applicant went there to see her mother before she died.  She stayed and made financial arrangements and then returned to Brisbane with her then 92 year old father, who then lived with her and was provided for and cared for by her, at her house and until his death.  She understood that her father had fallen out with her sister, Susan and was told not to let Susan know where he was living. 

7. (g)
   The applicant deposes to putting in air conditioning and ramps at her home, for her father’s benefit and also to an urgent need for repairs to that building^[19]which may cost up to $50,000.

23. [23]
    The material filed by the Litigation Guardian attests to some very significant needs of Rigel which may be assisted by the bequest in his favour and particularly by the use of the power of maintenance and advancement given with and/or attaching to that bequest. Without descending to more precise detail, it suffices to note that after a difficult and premature birth and the contraction of a severe case of gastroenteritis (requiring intravenous hydration) at 18 months, he has experienced a range of developmental, learning and psychological difficulties, which are expected to require ongoing occupational, speech, psychological and physio therapies. He will be 10 years of age on 23 February 2012 and since September 2010 he has been identified as requiring placement in a special education program.

24. [24]
    The Litigation Guardian has deposed that the cost of Rigel’s medical and therapeutic needs, in excess of that covered by private health insurance, has been in the region of $30,000 to $40,000, to date. The combined family income is $68,885.00 per annum plus Family Tax Benefits and Centrelink Care Allowance. He has also deposed to the fact that he is satisfied that the compromise is in Rigel’s best interests and that he has given instructions to his solicitor to settle on that basis.

25. [25]
    The compromise is attested to by the solicitor for the Litigation Guardian. In addition to the parties to this proceeding, the Cancer Council Queensland is also a party to that agreement. The effect of the agreement is for an additional sum of $45,000 to be paid to the applicant and that this payment come solely from the bequest to Rigel. Effectively, therefore, the proposal is that all other bequests under the will are to be exonerated from the incidence of the payment to be ordered as provision for the applicant.^[20]

26. [26]
    Further and apart from providing an assessment of the prospects of the applicant succeeding in her application, the solicitor attests to his assessment of the prospective incidence of the cost of defending this application to a contested hearing and as to how the interests of Rigel may be best served by the compromise rather that the prospect of a significantly smaller distribution of the residuary estate, after depletion of the estate by the incidence of legal costs and also, if the applicant succeeds in obtaining an order for provision out of the estate. Consistently with practice relating to applications for sanction, the court is provided with and has been assisted by a copy of an opinion of counsel in relation to the compromise.

Conclusion

27. [27]
    The relatively small value of the estate and the extent to which it may be depleted by further incidence of legal costs, if the application were further defended, are clearly salient circumstances and I am satisfied that it is a reasonable conclusion that it is in the interests of Rigel to seek to limit the potential impact upon his entitlement under the will.

28. [28]
    There is no need to discuss the evidence in any further detail, as it is apparent that there was a basis for the originating application^[21]and the position resolved by the parties necessarily implies that there is now sufficient acceptance of or, at least insufficient disputation about these and other relevant circumstances, to allow conclusions that adequate provision has not been made for the proper maintenance and support of the applicant and that some provision be made out of the estate, for her.

29. [29]
    In the circumstances, I am satisfied that the agreed proposal of the parties, as to the provision from the estate for the applicant, is within an appropriate range having regard to the circumstances relevant to the originating application.

30. [30]
    I am further satisfied that the compromise of this claim, on that proposal, is also to be reasonably regarded as in Rigel’s best interests and (not without some hesitation) that this conclusion also applies to the fact that the incidence of this award will fall entirely upon his share of the estate. In this last respect, some further observations may be made. First, there is no reason in this case for denying both respondents their costs of and incidental to this application out of the estate. Secondly, it is pertinent to note that given the nominal sums involved, it is pragmatically sensible to exonerate the small specific money bequests and that otherwise it is the residuary and therefore each of the shares of that part of the estate that will be somewhat reduced by that incidence of cost. Thirdly and given the relatively dominant share of the estate bequeathed to Rigel, the incidence of any such award would in any event be mostly taken upon his share. Fourthly, this proposal is the result of negotiation between a number of interested parties and the court is not privy to those negotiations and not necessarily presented with all of the considerations underpinning that result and it is necessary to note that this is but one aspect of the resultant compromise. Finally, I am otherwise satisfied that the Litigation Guardian and his legal advisors have acted appropriately and cognisant of their significant duty in protection of the interests of Rigel.^[22]

31. [31]
    Accordingly the order of the Court is: