Barns v Barns

Case [2003] HCA 9

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

Matter Nos A68 and A69 of 2002

KATHRYN FAY BARNS   APPELLANT

AND

MALCOLM PHILLIP BARNS   FIRST RESPONDENT

ALICE ELIZABETH BARNS  SECOND RESPONDENT

MICHELLE LOUISE FISHER AND
RHIANNA KATE FISHER BY THEIR
NEXT FRIEND PETER CHARLES SYMES   THIRD RESPONDENTS

Barns v Barns [2003] HCA 9

7 March 2003
A68 and A69 of 2002

ORDER

1.   Appeals allowed.

2. Set aside the orders of the Full Court of the Supreme Court of South Australia dated 12 October 2001 and, in their place, order that the declaration in order 1 made by the Master be set aside and, in place thereof, declare that the Deed of 2 May 1996 does not operate to render incompetent an application by the appellant or the third respondents for an order for provision out of the estate of Mr Lyle Barns pursuant to the Inheritance (Family Provision) Act 1972 (SA). Otherwise, order that the appeal to the Full Court be dismissed.

3.   Set aside the order of Nyland J made on 24 April 2002, dismissing the appellant's claim, and remit the claim for hearing by the Supreme Court.

4.   Costs of the proceedings before Nyland J and of the disposition of the appellant's application to be determined by the Supreme Court.

5.   Set aside the order of the Full Court of the Supreme Court of South Australia dated 6 March 2002 and order that the costs of the appeal to the Full Court and of each appeal to this Court of the appellant and all respondents be taxed or agreed on an indemnity basis and be paid out of the estate to his or her respective solicitors.

On appeal from the Supreme Court of South Australia

Representation:

Matter Nos A68 and A69 of 2002

S W Tilmouth QC with D M Haines QC and M F Crichton for the appellant (instructed by Boltons Lawyers)

M E Shaw QC with C S L Abbott for the first respondent in his personal capacity (instructed by von Doussas)

No appearance for the first respondent in his capacity as executor

No appearance for the second and third respondents

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Barns v Barns

Succession – Family provision – Deed between husband and wife – Mutual wills executed pursuant to deed – Effect of deed and wills upon family provision claim – Whether property the subject of deed and wills available as part of estate out of which provision made – Whether deed invalid for reasons of public policy – Inheritance (Family Provision) Act 1972 (SA), s 7.

Precedent – High Court and Privy Council – Conflict between two Privy Council decisions – Circumstances in which High Court should depart from Privy Council decisions – Where decision of Privy Council was on a matter of State law in appeal directly from primary judge in a State Supreme Court, rather…

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Barns v Barns [2003] HCA 9
Case
[2003] HCA 9
Decision Date

CaseChat Overview and Summary

The High Court considered appeals from the Full Court of the Supreme Court of South Australia concerning an application for family provision. The appellant, Kathryn Fay Barns, sought provision from the estate of her deceased father, Lyle Phillip Barns. Mr Barns' will left his entire estate to his widow, Alice Elizabeth Barns, and made no provision for the appellant, his adopted daughter, or his son, Malcolm Phillip Barns. However, on the same day as executing his will, Mr Barns, along with his wife and son, also executed a deed. This deed stipulated that Mr Barns and his wife would make wills in a specified form and agreed not to revoke these wills without the consent of the other parties, thereby creating a contractual fetter on their statutory power of revocation.

The central legal issues before the High Court were whether the deed and the mutual wills executed pursuant to it operated to prevent the appellant from making a claim for provision out of her father's estate under the *Inheritance (Family Provision) Act 1972* (SA), and whether the deed was invalid for reasons of public policy. The Court also considered the circumstances in which the High Court should depart from previous decisions of the Privy Council, particularly where those decisions concerned State law and were made on direct appeal from a State Supreme Court.

The High Court reasoned that the *Inheritance (Family Provision) Act* is remedial legislation and should be construed broadly to give the most complete remedy permitted by its wording. The Court held that the contractual obligations undertaken in the deed did not render the appellant incompetent to apply for provision under the Act. The Court found that the intention of the Act was to ensure adequate provision for dependants, and that a contractual arrangement, even if intended to prevent a claim under the Act, did not, of itself, invalidate the claim if the statutory criteria were otherwise met. The Court distinguished the present case from situations where a testator might divest themselves of assets prior to death, which would genuinely leave no estate from which provision could be made.

The High Court allowed the appeals, setting aside the orders of the Full Court of the Supreme Court of South Australia. The Court declared that the deed did not operate to make the appellant's application for provision incompetent. The matter was remitted to the Supreme Court for hearing, and costs were ordered to be paid out of the estate on an indemnity basis.

Orders

Orders of the court

1. Appeals allowed.

2. Set aside the orders of the Full Court of the Supreme Court of South Australia dated 12 October 2001 and, in their place, order that the declaration in order 1 made by the Master be set aside and, in place thereof, declare that the Deed of 2 May 1996 does not operate to render incompetent an application by the appellant or the third respondents for an order for provision out of the estate of Mr Lyle Barns pursuant to the Inheritance (Family Provision) Act 1972 (SA). Otherwise, order that the appeal to the Full Court be dismissed.

3. Set aside the order of Nyland J made on 24 April 2002, dismissing the appellant's claim, and remit the claim for hearing by the Supreme Court.

4. Costs of the proceedings before Nyland J and of the disposition of the appellant's application to be determined by the Supreme Court.

5. Set aside the order of the Full Court of the Supreme Court of South Australia dated 6 March 2002 and order that the costs of the appeal to the Full Court and of each appeal to this Court of the appellant and all respondents be taxed or agreed on an indemnity basis and be paid out of the estate to his or her respective solicitors.

Background

Background to the litigation

Earlier, in Holmes v Permanent Trustee Co of New South Wales Ltd[35], Rich J (with the concurrence of Evatt J and McTiernan J) observed of the Testator's Family Maintenance Ordinance 1929 (NT) that this legislation was remedial in character and therefore to be construed so as to give the most complete remedy which its phraseology permitted; the court should not be alert in placing a restricted construction upon the terms of such a law. Thereafter, in Worladge v Doddridge[36], a case under the Tasmanian statute[37], Williams and Fullagar JJ referred to what had been said by Rich J in Holmes and added:"The provision can be made out of any part of the testamentary estate so that the whole of the estate corpus or income is available for the purposes of the Act. The jurisdiction is conferred in very wide terms and no court or judge would be justified in attempting to define it otherwise than in accordance with the ordinary natural meaning of the words of the section."These statements in this Court provide the starting point for consideration of the issues of statutory construction upon which these appeals turn.[35](1932) 47 CLR 113 at 119.[36](1957) 97 CLR 1 at 9. See also the judgment of Barwick CJ, Mason and Murphy JJ in Easterbrook v Young (1977) 136 CLR 308 at 324, and, more generally, Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 44; Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 260‑261.[37]Testator's Family Maintenance Act 1912 (Tas).The facts Mrs Barns was born in 1930, the appellant in 1957 and Mr Malcolm Barns in 1951. Mr and Mrs Barns carried on business together as farmers at Wudinna and elsewhere in South Australia from about 1950. By his last will, Mr Barns left the whole of his estate to his widow; he made no provision for his daughter or his son. However, on 2 May 1996, the date of the execution of his will, Mr Barns, with his wife and son, also executed a deed ("the Deed"). This stated that Mr Barns had agreed with his wife and son to make a will in the form set out in the First Schedule to the Deed and that his wife had agreed with him and their son to make a will in the form set out in the Second Schedule to the Deed. The Deed also recited agreements by the two testators to act in such a manner as to ensure that all property they owned at death devolved in the manner set out in the respective wills unless the other parties consented in writing to the testator acting otherwise. Section 22 of the Wills Act conferred rights or powers of revocation upon Mr Barns, for example, by another will executed in the manner required by that statute. However, Mr Barns accepted a contractual fetter upon those statutory rights or powers. He did so by undertaking in cl 3.3 of the Deed not to revoke his will without the written consent of his wife and their son. He also agreed in cl 6.1 that, if he failed "to perform the terms of this deed", Mrs Barns and Mr Malcolm Barns "shall be entitled to specific performance of the terms of this deed".

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GLEESON CJ (dissent) GUMMOW AND HAYNE JJ
The appellant also relied upon a qualification expressed in the reasons of Lord Cross of Chelsea, speaking for the majority in Schaefer v Schuhmann. His Lordship stated that he was considering "the rights of a person on whom a testator has agreed for valuable consideration under a bona fide contract to confer a benefit by will" (emphasis added)[30]. The meaning of the expression "bona fide" in this context is a little obscure. No doubt his Lordship was concerned with the obvious possibility that, if his general conclusions were correct, then it would be very easy for a person, who was not willing to divest himself or herself of all assets prior to death, to make, by deed or for nominal consideration, a binding contract to make a certain form of testamentary disposition and thereby leave the legislation with no work to do. But why could not a person, in good faith, set out to do that? In this case, the Court knows very little of the reasons behind the actions of the parties. It may be inferred that at least one of the purposes of the deed and the mutual wills was to make it impossible for the appellant to claim under the Act against the estate of the survivor of the deceased and the second respondent. Unless that, of itself, is sufficient to justify a conclusion that the legal arrangements were not bona fide, then the qualification expressed by Lord Cross would not be relevant. However, for the reasons already given, if the deed and the wills had that effect, it was only because of the scheme of the Act. There is no reason to describe conduct intended to produce a state of affairs that falls outside the scheme of the Act as, on that account, lacking good faith. If the deceased, during his lifetime, had given all his assets to charity, that would have left the appellant without a claim under the Act; but it would have been a bona fide gift, even if one of the reasons for making the gift was to deprive the appellant of a claim.[30][1972] AC 572 at 585.Conclusion The appeals should be allowed. I agree with the consequential orders proposed by Gummow and Hayne JJ. On 24 April 2002, a judge of the Supreme Court of South Australia (Nyland J) dismissed an application under the Inheritance (Family Provision) Act 1972 (SA) ("the Inheritance Act") by the appellant, Kathryn Fay Barns. She had sought an order for provision out of the estate of her father, Lyle Phillip Barns ("Mr Barns"). He died on 14 August 1998. On 14 January 1999, probate of his last will dated 2 May 1996 was granted to the first respondent, Malcolm Phillip Barns ("Mr Malcolm Barns"), the child of the marriage of the deceased and his widow, the second respondent, Alice Elizabeth Barns ("Mrs Barns"). The appellant is the adopted daughter of Mr and Mrs Barns. The third respondents are two infant children of the appellant, who appear by their next friend.The policy of the Inheritance Act Reference first should be made to the Wills Act 1936 (SA) ("the Wills Act"). Section 4 thereof confers a power of testamentary disposition in broad terms. The exercise and effectiveness of this freedom of disposition are qualified by the formality requirements of the Wills Act and by the operation of the Inheritance Act[31]. This case turns upon the construction of the Inheritance Act. The long title describes the statute as "[a]n Act to assure to the family of a deceased person adequate provision out of his estate."[31]See Hill v Van Erp (1997) 188 CLR 159 at 223‑224.

Ratio Decidendi

Legal Principle Established

Established by: GUMMOW AND HAYNE JJ

The will executed by Mrs Barns was in like form, save that the whole of the residuary estate was devised and bequeathed to her husband if he survived her for 30 days; if, as has proved to be the fact, that gift fails, Mrs Barns gives the whole of her estate to her son, Mr Malcolm Barns. Mrs Barns has covenanted in the Deed not to revoke that will without the written consent of Mr Malcolm Barns or his legal personal representative. There is also a provision that, in the event of her failure to perform the terms of the Deed after the death of her husband, Mr Malcolm Barns "shall be entitled to specific performance of this deed".The administration of the estate The Supreme Court had jurisdiction in relation to the granting of probate of wills of deceased persons within the State[38]. Section 121A of the Probate Act obliged Mr Malcolm Barns with the application for probate "in respect of the estate of" his father to disclose to the Supreme Court the assets and liabilities of the deceased known to him at the time of the probate application. This disclosed real and personal estate of a total value of $1,851,188.37 and unsecured liabilities of $31,013.73, comprising funeral expenses and a loan account of $28,066.93 with a family company.[38]Probate Act, s 5. The whole of the property of the testator is held by Mr Malcolm Barns, as executor, for the purpose of carrying out the functions and duties of administration; equity does not recognise or create for Mrs Barns, the residuary legatee, a beneficial interest in any particular asset in the hands of Mr Malcolm Barns during the course of the administration[39]. What Mrs Barns has is a right to due administration of the assets in accordance with the duties of the executor; it is in that sense that she may be said to have an interest in the entire estate, which is capable of transmission both by her under her will[40], and by operation of law, as in Official Receiver in Bankruptcy v Schultz[41]. Mrs Barns also has the contractual rights and obligations created by the Deed. To these it will be necessary to refer further in these reasons.[39]Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12 at 18; [1965] AC 694 at 707; Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 312‑313.[40]In re Leigh's Will Trusts [1970] Ch 277.[41](1990) 170 CLR 306 at 313‑314.The provisions of the Inheritance Act The central provision is found in s 7(1). This states:"Where –(a)a person has died domiciled in the State or owning real or personal property in the State;and(b)by reason of his testamentary dispositions or the operation of the laws of intestacy or both, a person entitled to claim the benefit of this Act is left without adequate provision for his proper maintenance, education or advancement in life,the Court may in its discretion, upon application by or on behalf of a person so entitled, order that such provision as the Court thinks fit be made out of the estate of the deceased person for the maintenance, education or advancement of the person so entitled." (emphasis added)