Forster v Forster

Case [2022] QSC 30

SUPREME COURT OF QUEENSLAND

CITATION:

Forster v Forster [2022] QSC 30

PARTIES:

JAMES DERWENT CAMPBELL FORSTER
(applicant)
v
ANNABEL LISA FORSTER

(respondent)

FILE NO/S:

BS No 12687 of 2021

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

8 March 2022

DELIVERED AT:

Brisbane

HEARING DATE:

7 December 2021; final written submissions received 9 February 2022

JUDGE:

Ryan J

ORDER:

1.       The application is refused.

2.       I will hear the parties as to costs.

CATCHWORDS:

SUCCESSION – MAKING OF A WILL – TESTAMENTARY INSTRUMENTS – JOINT AND MUTUAL WILLS – where deceased and his wife had each been married before – where each had children from their previous marriage – where deceased and his wife executed a mutual wills agreement in which they agreed to execute “mutual wills”, leaving their property first to their survivor absolutely, and then, upon the survivor’s death, to their five children/step-children in equal shares – where deceased’s wife inherited most of his estate in accordance with his (mutual) will – where it is not alleged that the deceased’s wife has breached, or will breach, the terms of the mutual wills agreement – where the deceased’s wife’s step-son seeks an order requiring her to account to him for her assets during her lifetime – whether the deceased’s wife holds the property, the subject of the mutual wills agreement, as constructive trustee for her children and step-children – whether court should make an order under section 8 of the Trusts Act 1973 (Qld) requiring the deceased’s wife to disclose her financial position to her step-son on a yearly basis

Trusts Act 1973 (Qld), section 8

Barns v Barns and others (2003) 214 CLR 169
Bauer & Ors v Hussey & Anor [2010] QSC 269
Birmingham & Others v Renfrew & Others (1937) 57 CLR 666
Dufour v Pereira (1769) 1 Dick 419; 21 ER 332
Flocas v Carlson and others [2015] VSC 221
Gordon Archibald Bigg v Queensland Trustees Limited Unreported, N0 825 of 1989

LordWalpole v. LordOrford (1797) 3 Ves. 402
Palmer v Bank of New South Wales (1975) 133 CLR 150
Re Basham [1986] 1 WLR 1498
Re Cleaver, decd. [1981] 1 WLR 939
Re Dale (decd) [1993] 4 All ER 129
Re Goodchild (deceased); Goodchild and another v Goodchild [1996] 1 All ER 670
Re Hagger [1930] 2 Ch 190, cited in ‘Mutual Wills’ paper

Schaefer v Schuhmann and Others (1972) 46 ALJR 82 (Privy Council

COUNSEL:

I Klevansky for the applicant

C A Brewer for the respondent

SOLICITORS:

The Estate Lawyers for the applicant

Holding Redlich for the respondent

OVERVIEW

  1. This application arose out of a dispute over the estate of Timothy Forster (the deceased).  The applicant is the deceased’s son, James.  The respondent is the deceased’s widow, and James’ stepmother, Annabel.[1]  Annabel was the deceased’s second wife.  They had each been married once before.  The deceased had three children (including James) from his first marriage.  Annabel has two.

    [1]Intending no disrespect, I have referred to…

Continue reading Forster v Forster

Sign in free to access the full text

Details
AGLC
Forster v Forster [2022] QSC 30
Case
[2022] QSC 30
Decision Date

CaseChat Overview and Summary

In the case of Forster v Forster, the deceased, having entered into a mutual wills agreement with his wife Annabel, passed away. The dispute arose when the deceased's step-son, James, sought an order requiring Annabel to account for her assets during her lifetime to her children and step-children. The central issue was whether Annabel held the property subject to the mutual wills agreement as a constructive trustee for the benefit of her children and step-children during her lifetime, and whether the court should compel her to disclose her financial position annually under section 8 of the Trusts Act 1973 (Qld).

The court considered the nature of the mutual wills agreement, which permitted Annabel to enjoy the estate absolutely during her lifetime but imposed certain limits on how she could dispose of it, including prohibiting substantial gifts to her own children. The court examined the legal authorities, which established that a mutual wills agreement does not create a constructive trust during the lifetime of the surviving spouse unless there is fraud or anticipated fraud. The court held that since there was no allegation of fraud or anticipated breach by Annabel, she held the property absolutely, subject to a floating obligation to deal with it in accordance with the mutual wills agreement. This obligation would crystalise into a trust upon her death, binding her personal legal representatives to distribute the estate according to the agreement.

Consequently, the court refused the application. The matter of costs was left to be heard separately.

Orders

Orders of the court

1. The application is refused.

2. I will hear the parties as to costs.

Background

Background to the litigation

My reasons, in more detail, follow.Background The deceased and Annabel were married for 24 years. It was a second marriage for each of them. Annabel has two children from her first marriage. The deceased had three children (including James) from his first marriage. There are no children of the marriage of the deceased and Annabel. The deceased and Annabel entered into a mutual wills agreement (MWA) on 20 August 2015, intending to achieve, after their deaths, the equal distribution of their combined estate among their five children and step-children. Paragraph C of the MWA’s recitals stated their intention – The parties desire to make Wills each providing entirely for the other on the first of them to die but on the second of them to die to ensure that as far as possible (subject to extenuating circumstances) all five children of both of them are treated equally with regard to the residue of the Estate. Essentially, under the MWA, the survivor of the deceased and Annabel was permitted to use the estate to maintain their (I infer, high) standard of living and to pay for their necessary health and aged care; but was not permitted to intentionally “substantially diminish” it, including by making gifts to their own children. These obligations are expressed at clause 3 of the MWA as follows –Each of the parties agrees that upon the death of the other and having inherited the Estate of the other:(a)he or she will ensure that any Will made subsequently is generally in accord with the provisions of the Will annexed hereto in the sense that it generally provides equally for all of the children of both parties subject as in herein provided; (b)he or she will not thereafter take any action which is intended to substantially diminish the assets which would otherwise comprise his or her Estate and would be the subject of his or her will (for example by a substantial gift or gifts to his or her own son or daughter) other than what is reasonably consistent with the maintenance of a reasonable standard of living to which the parties have been accustomed and for necessary health and aged care; and will take all reasonable precautions for the preservation of the Estate. The limits to which I referred in [11] above are those set out in clause 3(b). There was no will annexed to the MWA – or at least not in the copy of it relied upon by the applicant. The deceased’s will The deceased executed his will on the same day as the MWA was made. By clause 2, the deceased appointed Annabel to be his executor and trustee. By clause 3, he left certain shares to his own three children. By clause 4, which concerned the proceeds of his life insurance policy, he gave $125,000 to one of his own daughters (explaining that he had already given $100,000 to his two other children during his lifetime); and the balance to the trustee of a trust called “The JSLF Trust” – “J” “S” and “L” being the first initials of the names of the deceased’s own children.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Obviously, Annabel has had no opportunity to respond to the fresh argument made by James in reply – nor was the application brought on the basis. I will not therefore spend any time on it apart from observing that it reveals a misapprehension of the role of equity. Conclusion – Annabel does not hold the property the subject of the MWA on constructive trust for James during her lifetime This application is not to be decided in the abstract. The first question is whether, in this case, having regard to the terms of the MWA, Annabel is a constructive trustee of the property the subject of the MWA during her lifetime – (a)in the absence of fraud or anticipated fraud by Annabel;(b)where the property the subject of the MWA is not specified property;(c)where the property the subject of the MWA is the deceased’s property inherited by Annabel plus her own property (the “Combined Estate”);(d)where the MWA sets out some limits to the way in which Annabel might deal with the Combined Estate but where it anticipates that the assets or income of the Combined Estate will be diminished over Annabel’s lifetime, including to allow her to maintain the standard of living to which she is accustomed and for her necessary health and aged care; and(e)where the MWA anticipates that that which will be left to James and his siblings and step-siblings will be the residue of the Combined Estate – which cannot be ascertained until the time of Annabel’s death. It is in that context that the authorities must be considered and applied. Relevantly for my purposes, in my view, they establish the following propositions (where: “T1” and “T2” are the parties to the MWA; T1 is the first to die and T2 is their survivor; and B is the ultimate beneficiary under their MWA):(a)An MWA is an agreement between T1 and T2 to make, and not revoke, a will in a certain form (mutual wills), for the ultimate benefit of B. (b)An MWA may, and often does, allow T2 to enjoy the property the subject of the MWA absolutely during their lifetime.(c)A mutual will is a revocable instrument – notwithstanding the promises made by T1 and T2 not to revoke it.(d)If a mutual will is revoked and a later will is made, the existence of an MWA will not prevent probate being granted of the later will. (e)However, equity will intervene to prevent a fraud – fraud in this context meaning fraud committed by T2’s failing to adhere to the terms of the MWA, including (for example) by revoking T2’s mutual will or by T2’s disposing of the property the subject of the MWA during T2’s lifetime contrary to it.(f)Where there has been fraud equity would, if it could, decree specific performance of the MWA – but that is not possible in this context. Equity instead may impose a constructive trust upon the property the subject of the MWA, to ensure that it is dealt with in accordance with the MWA for B’s benefit. In other words, because a decree of specific performance is not possible, equity imposes a trust to achieve the same result.(g)The fraud is commonly discovered upon the death of T2, when a later will, revoking the mutual will, is produced.(h)In that case, whilst the trust is conceptualised as arising upon the death of T1 – T1 having abided by the terms of the MWA – it is T2’s executors (or those taking under the later will) upon whom the constructive trust is imposed.(i)But the remedy of a constructive trust is only necessary if T2 revokes his or her mutual will.(j)In the absence of fraud, the property the subject of an MWA in terms similar to the agreement in this case is not held on trust by the survivor during their lifetime. Trusteeship would be inconsistent with T2’s absolute ownership. (k)The property the subject of an MWA in terms similar to the agreement in this case is held by T2 absolutely, subject to a floating obligation to deal with the property only in accordance with the MWA.(l)The floating obligation crystallises into a trust upon T2’s death and T2’s personal legal representatives are bound to deal with the property the subject of the MWA in accordance with the MWA. (m)Although T2’s personal legal representatives may be considered constructive trustees of the property the subject of the MWA, in the absence of fraud, the property will pass in accordance with T2’s unrevoked mutual will and there will be no need for equitable intervention.(n)It is only where it becomes necessary to enforce the MWA – that is, in the face of T2’s defiance of its terms – that equity will intervene and may invoke the mechanism of the constructive trust to enforce T2’s promise to T1 to confer a certain benefit upon B.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.