Ross v Gordon

The appeal concerned the estate of the late Olga Hart, who, prior to her death, drew three cheques totalling $1,200,500 in favour of the Olga Hart Trust, of which she was also the trustee. These cheques were not presented before her death and were subsequently dishonoured. The appellant, James Ross, a former de facto partner of the deceased, made a claim for family provision under the *Family Provision Act 1969* (ACT). The primary judge had found that the estate had no net assets due to the liability created by the cheques, rendering the family provision claim futile, although she also contingently assessed and dismissed the claim. The appellant appealed this decision to the Supreme Court of the Australian Capital Territory.

The central legal issues before the Full Court were whether the cheques drawn by the deceased created a legally enforceable liability against her estate, and consequently, whether the estate possessed any net assets from which the appellant's family provision claim could be satisfied. This involved determining the operation of the *Cheques Act 1986* (Cth) in circumstances where cheques were gifted by a drawer to a trust of which the drawer was also the trustee, and whether such an arrangement constituted consideration for the cheques. The court also considered, in light of the primary judge's findings, whether the executor had committed devastavit or a fraud on the power, and the implications for the family provision claim.

The Full Court allowed the appeal, holding that consideration is a fundamental assumption underlying the *Cheques Act 1986* (Cth). In this case, the deceased provided the cheques as a gift to the Trust, and there was no consideration moving from the Trust to the deceased. Therefore, the holding of the cheques did not create a liability for the deceased's estate. The Court reasoned that the *Cheques Act* does not operate to create a liability in the absence of consideration, distinguishing the situation from a completed gift of a chose in action. Consequently, the estate was not depleted by the cheques, and the primary judge's conclusion that there were no net assets was erroneous. The proceedings were remitted to the Supreme Court for determination in accordance with these reasons, with costs to form part of those proceedings.