Deceased’s former spouse was not a natural object of testamentary recognition

Introduction

The New South Wales Court of Appeal in Lodin v Lodin [2017] NSWCA 327 has found that the former spouse of a deceased person had not established any factors warranting her making a family provision application under Ch 3 of the Succession Act 2006 (NSW) (“SA”), being factors which indicated that she would be regarded as a natural object of testamentary recognition by the deceased person. The reasons given for the finding included that the financial affairs between the parties had been resolved by final orders of the Family Court of Australia and, in the absence of evidence showing a significant causal link between the deceased’s conduct towards the former spouse and her circumstances of need at the date of the hearing of the application, the Family Court orders retained their significance for the purposes of the application.

Relevant provisions

Chapter 3 of the SA deals with family provision applications. Under s 57(1)(d), a former wife or husband of a deceased person is an eligible person who may apply to the Court for a family provision order in respect of the estate of the deceased person. However, by s 59(1), the Court may only make a family provision order if the Court is satisfied of the following three matters:

• the person in whose favour the order is to be made is an eligible person (s 59(1)(a));
• in the case of a person who is an eligible person by reason only of para (d) (former spouse), (e) (dependent grandchild or member of the household) or (f) (close personal relationship) of s 57(1) — having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application (s 59(1)(b)); and
• at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the eligible person has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both (s 59(1)(c)).

Under s 59(2), the Court may make such order for provision out of the deceased’s estate as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.

Section 60(1) provides that the Court may have regard to the matters set out in s 60(2) for the purpose of determining:

• whether the applicant is an eligible person (s 60(1)(a)); and
• whether to make a family provision order and the nature of any such order (s 60(1)(b)).

Section 60(2) then sets out a long list of matters which may be considered by the Court.

Background

The deceased (“Deceased”) and his former wife had been in a relationship which lasted less than 6 years. Their marriage had lasted only about 19 months. At the time of the Deceased’s death, the parties had been separated for about 24 years, and divorced nearly 19 years. There was only one child of the relationship – R, a daughter – whom the former wife had raised after the breakdown of the marriage. The parties’ financial affairs had been resolved by orders of the Family Court of Australia after a contested hearing. Subsequently, the former wife had pursued the Deceased and his resources through refusal of access to R, reviews of child support, professional misconduct claims (the Deceased had been a medical practitioner), police complaints, and actions for damages. The Deceased had died intestate and, under the laws of intestacy, R was entitled to receive the whole of the Deceased’s estate which was valued in excess of $5 million.

The former wife applied for a family provision order under Ch III of the SA. At first instance, the judge made an order that the former wife receive a lump sum legacy of $750,000 by way of provision from the Deceased’s estate. R, who was the administrator of the Deceased’s intestate estate, appealed.

Decision on appeal

The Court of Appeal (Basten JA, White JA and Sackville AJA) allowed the appeal and set aside the legacy.

Sackville AJA

Construction of ss 59(1)(b) and 60

Sackville AJA made the following observations about the construction of ss 59(1)(b) and 60 of the SA. References to the cases have, for the most part, been omitted.

• The language used in s 9(1) of the former Family Provision Act 1982 (NSW) had contemplated the possibility that the Court might deal with the issue of whether there were factors warranting the making of the application as a threshold or preliminary question. It was not necessary to decide whether the language of s 59(1)(b) of the SA precluded determining this issue as a separate question. It was enough to observe that the legislation no longer expressly contemplated that the issue might be decided in advance of other issues in the case (at [110]).
• When ss 59(1)(b) and 60 of the SA were read together they were to be understood as allowing the Court to have regard to any of the matters in s 60(2), where relevant, when determining whether there were factors which warranted the making of the application. What was relevant in a particular case would depend on the particular circumstances (at [112]).
• Section 59(1)(b) was not co-extensive with s 59(1)(c). Only if the eligible person within the categories referred to in s 59(1)(b) showed that there were factors warranting the application could the Court make a family provision order in accordance with the criteria laid down by s 59(1)(c) (at [113]).
• The starting point for the application of s 59(1)(b) was that an eligible person such as a former spouse or grandchild of the deceased was not normally regarded as a natural object of testamentary recognition by the deceased. Therefore, in order to satisfy s 59(1)(b), an applicant had to establish that there were circumstances that justified regarding the applicant as a natural object of testamentary recognition by the deceased. Those circumstances had to go beyond the bare fact of a familial (or, in the case of a former spouse, a previous familial) relationship and had to be such as to demonstrate a social, domestic or moral obligation on the deceased to make some provision for the applicant (at [114]).
• In contrast, the starting point for the inquiry under s 59(1)(c) was that the applicant was a person who could ordinarily be regarded as a natural object of the deceased’s testamentary recognition and so was entitled to have his or her application for a family provision order considered by the Court. The application was then to be assessed in accordance with the two-step approach in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 (at [117]).
• A finding that an applicant had shown that there were factors warranting the application, thus satisfying s 59(1)(b), did not necessarily mean that the application was bound to succeed as, for example, it might fail because the estate was relatively small and there were other eligible persons whose needs were greater than the applicant’s or whose relationship with the deceased was closer and more mutually supportive. In deciding whether to make a family provision order the Court, depending on the circumstances, could take into account matters specified in s 60(2) that had little or no bearing on the question posed by s 59(1)(b) (at [119]).

Former spouse and factors warranting

As to the approach to be taken in deciding whether a former spouse had satisfied s 59(1)(b), Sackville AJA said that it was difficult to see how a former spouse could show that there were factors warranting the making of an application simply by relying on the existence of the marriage and the fact that he or she now had unmet financial needs, and that this position was unlikely to be different even if the estate was a relatively large one (at [126]).

Thus, his Honour further said that something more would usually be required for the applicant to show that he or she was a natural object of testamentary recognition by the deceased person. While all the circumstances of the case would have to be taken into account, his Honour indicated that matters of significance would be:

• whether the applicant and the deceased had finalised their financial relationship at the time of the divorce or subsequently. While a final property settlement was not necessarily an absolute bar to a family provision application being considered on its merits, in most cases such a settlement was likely to terminate any obligation on the deceased to make testamentary provision for the former spouse;
• whether there were features of the relationship between the applicant and the deceased which created a moral obligation on the deceased to make testamentary provision for the applicant, for example, physical or sexual abuse during the marriage (or later) causing the applicant to suffer a physical or psychological disability which impaired his or her capacity to earn an adequate income. However, care had to be taken to ensure that a family provision application would not become a forum for litigating questions of matrimonial fault long since removed from family law (at [127]-[129]).

Trial judge’s decision

The trial judge had found that the former wife had established factors warranting the making of the application for, principally, the following reasons:

• The Deceased’s estate comprised ample resources to make adequate provision for the former wife and still provide a substantial endowment for R, and it was “unbecoming” for the former wife to be left in circumstances of need while the daughter she had raised inherited in excess of $5 million.
• The relationship between the parties and the conduct of the Deceased towards the former wife were responsible to some extent for the former wife’s circumstances of need at the date of the hearing and for her persecution of the Deceased after the marriage had broken down.

As regards the first reason, Sackville AJA said that the approach taken was wrong because it assumed that a deceased person had a moral responsibility to make testamentary provision for a former spouse simply because the estate was a large one and the sole beneficiary of the estate was a member of the deceased’s family for whom the former spouse had had some responsibility. Therefore, whether or not the passing of the whole estate to R was “unbecoming” was not material to the resolution of the issue of whether there were factors warranting the making of the application and was an irrelevant consideration (at [141]-[145]).

As regards the second reason, Sackville AJA said, amongst other things, that the psychiatric evidence did not provide a foundation for the trial judge’s finding (at [146]-[160]).

Accordingly, his Honour concluded that the trial judge’s evaluative judgment required by s 59(1)(b) of the SA was affected by a significant error.

Reconsideration

After reconsidering the case, Sackville AJA found that the evidence did not establish that there were factors warranting the former wife making a family provision application. His Honour’s reasons were as follows (at [162]-[169]):

• The marriage had effectively ended a quarter of a century before the hearing of the former wife’s application, and the relationship between the Deceased and the former wife had lasted for less than 6 years and the marriage itself for only 19 months.
• The financial affairs between the Deceased and the former wife had been resolved by final orders of the Family Court. This was an important consideration counting against her application because, in the absence of evidence demonstrating a significant causal link between the Deceased’s conduct towards the former wife and her financial needs at the date of the hearing, the Family Court orders retained their significance for the purposes of the application.
• The Deceased had meticulously complied with his obligations to provide financial support for R, support which had been reasonably substantial. Moreover, he from time to time had given additional financial support over and above his legal responsibilities. At the same time, the former wife had not been entirely honest in her claims for support.
• The former wife’s financial needs at the date of the hearing and for a considerable period prior to that date were due to a combination of factors which included her own decisions to institute and maintain legal proceedings against the Deceased that ultimately yielded no benefit, as well as to her having received injuries in a series of motor vehicle accidents which had had a severe impact on her ability to join or re-join the workforce. The Deceased did not come under a moral duty to provide for his former wife because of injuries entirely unrelated to the parties’ relationship.
• The former wife had engaged in relentless persecution of the Deceased which had extended to the making of serious allegations against him which, apart from claims of professional misconduct, had not been upheld. If the former wife’s persecution of the Deceased had been the product of a psychiatric illness or genuine disability induced by the Deceased’s conduct or perhaps by the nature of the parties’ relationship, then the persecutory conduct might have been given relatively little weight but there was no evidence establishing such a causal relationship and so the former wife’s conduct counted against her entitlement to make a family provision application against the Deceased’s estate.
• The former wife had had responsibility for R after the marriage had broken down but the determination in the Family Court had been made after taking into account that she would have the custody and care of R. While the former wife’s role as a single parent had affected her ability to resume remunerative employment, it was also necessary to have regard to the Deceased’s financial contributions to R’s maintenance and education. The former wife’s refusal to allow the Deceased access to R, while not a critical matter, was not irrelevant in determining whether the Deceased had a moral responsibility to make testamentary provision for the former wife.

Other judges

Basten JA agreed with Sackville AJA, subject to two “minor reservations” as follows (at [1]-[3]):

• There might be doubt as to whether the factors set out in s 60(2) of the SA governed the exercise of the function under s 59(1)(b) as s 60(1)(a) did not clearly identify that operation. However, this made no difference to the outcome of the case, might never affect the outcome of any similar proceedings, and might never need to be decided.
• The SA did not require the two-step approach adopted in Singer v Berghouse.

White JA also agreed with Sackville AJA but made a number of additional observations (at [4]-[15]). These included the following:

• The suggestion by the Court of Appeal in Brown v Faggoter [1998] NSWCA 44 that the requirement that an application was warranted was fulfilled if the application had reasonable prospects of success was not the test to be applied.
• The case raised no issue as to whether or not a two-step approach was required by s 59(1)(c) of the SA and, therefore, it was not necessary to express a view on that question.