This decision has been amended. Please see the end of the decision for a list of the amendments.
Court of Appeal
New South Wales
Case Title: Phillips v James Medium Neutral Citation: [2014] NSWCA 4 Hearing Date(s): 16 September 2013 Decision Date: 06 February 2014 Before: Beazley P at [1];
Basten JA at [112];
Meagher JA at [130]Decision: (1) Appeal allowed;
(2) Set aside the orders made by Stevenson J at first instance;
(3) Order that further provision be made in favour of Brian in the sum of $100,000 out of property to be designated as notional estate;
(4) Reserve the question of what property is to be designated as notional estate for the purposes of Order 3;
(5) Direct the respondents, Gaye James and Gary Phillips, to file written submissions by 25 February 2014 in respect of the property to be designated as notional estate and in respect of costs of the trial and the appeal;
(6) Direct the appellant Brian Phillips to file any submissions by 11 March 2014 in respect of the property to be designated as notional estate and in respect of the costs of the trial and the appeal;
(7) Direct that the questions of the property to be designated as notional estate and of the costs of the trial and the appeal be determined on the papers.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: SUCCESSION - family provision and maintenance - whether the allocation of the residue of the estate to the applicant was a failure by testator to make sufficient provision - diminishment of the residue by decisions benefiting the respondents.
SUCCESSION - family provision and maintenance - distribution of estate - whether an order for property to be designated as notional estate can be made regardless of whether that property is property into which the distributed asset can be traced - whether a notional estate order ought not be made on discretionary grounds - relevance of the executors distributing the estate, including to themselves, within the time in which an application may be made for an order for family provision to matters the Court is required to consider pursuant to the Succession Act 2006, s 87.Legislation Cited: Family Provision Act 1982 (NSW), s 27
Succession Act 2006 (NSW), ss 59, 60, 79, 87, 89Cases Cited: Andrew v Andrew [2012] NSWCA 308; 81 NSWLR 656
Charnock v Handley [2011] NSWSC 1408
Coulton v Holcombe [1986] HCA 33; 162 CLR 1
Durham v Durham [2011] NSWCA 62; 80 NSWLR 335
Ernst v Mowbray [2004] NSWSC 1140
Gersbach v Blake [2011] NSWSC 368
Golosky v Golosky (Court…
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- AGLC
- Phillips v James [2014] NSWCA 4
- Case
- [2014] NSWCA 4
- Decision Date
CaseChat Overview and Summary
The Court of Appeal was required to determine whether the deceased had failed to make adequate provision for the proper maintenance, education, and advancement in life of the applicant. A further key issue was whether an order designating property as "notional estate" could be made even if the original asset could not be traced into it, and whether such an order should be refused on discretionary grounds, considering the executors' distribution of the estate, including to themselves, before the family provision application was determined.
The Court applied the principles established in cases such as *Singer v Berghouse* and *Vigolo v Bostin*, which outline a two-stage process for assessing family provision claims. This involves first determining if the provision made was inadequate, considering the applicant's circumstances, the estate's size and nature, and the relationships with other beneficiaries. If inadequacy is found, the second stage involves determining the appropriate provision. The Court noted that while the two-stage approach has generally been accepted, the language of the *Succession Act 2006* (NSW) may not strictly align with this framework, particularly in light of the factors listed in section 60(2) that the court must consider.
The Court allowed the appeal, setting aside the orders made at first instance. It ordered that further provision of $100,000 be made in favour of the applicant out of property to be designated as notional estate, reserving the question of which property would constitute notional estate for further submissions from the parties.
Orders
Orders of the court
(1) Appeal allowed;
(2) Set aside the orders made by Stevenson J at first instance;
(3) Order that further provision be made in favour of Brian in the sum of $100,000 out of property to be designated as notional estate;
(4) Reserve the question of what property is to be designated as notional estate for the purposes of Order 3;
(5) Direct the respondents, Gaye James and Gary Phillips, to file written submissions by 25 February 2014 in respect of the property to be designated as notional estate and in respect of costs of the trial and the appeal;
(6) Direct the appellant Brian Phillips to file any submissions by 11 March 2014 in respect of the property to be designated as notional estate and in respect of the costs of the trial and the appeal;
(7) Direct that the questions of the property to be designated as notional estate and of the costs of the trial and the appeal be determined on the papers.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
In Singer v Berghouse, at 209-210, the majority elaborated upon each of the stages in the following terms: "...The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v. Leeder ([1951] HCA 44; 82 CLR 645.), where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." (emphasis added) In Vigolo v Bostin [2005] HCA 11; 221 CLR 191 Callinan and Heydon JJ, at [122], observed that: "We do not therefore think that the questions which the Court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances ... The age, capacities, means, and competing claims, of all of the potential beneficiaries must be taken into account and weighed with all of the other relevant factors." (emphasis added) That there may not be a strict or bright line division between each stage of the process was recognised in Singer v Berghouse in the emphasised portion of the passage set out above. A question has been raised in this Court whether the two stage approach identified in Singer v Berghouse applies to the provisions of the Succession Act 2006. It would be fair to say that there has continued to be general acceptance of the two stage approach, particularly at first instance, but also in this Court: see Keep v Bourke. However, in Andrew v Andrew Basten JA observed, at, inter alia, [41], that the language of the Succession Act was not consistent with the two stage enquiry that was a feature of prior legislation. His Honour had earlier, at [26]-[28], identified the differences in the statutory provisions that led him to his view in relation to the appropriateness of the two stage enquiry. His Honour noted the difference in the language of s 59 as compared to the language under the previous legislation. His Honour also referred to the listing of factors in s 60(2) that the court may take into account in determining whether to make an order for family provision and, if so, the nature of the order that should be made.