Wills: Greedy v Needy

July 4, 2018 / Autumn Report 2018

Dissecting Decisions: Swanson v Reis [2018] SASC 20

An Inheritance (Family Provision) claim has been dismissed on the first limb for the first time in South Australia.

The age old question, is there a big pot of gold at the end of the rainbow? You’ve grown up and seen that for some, it really does exist. People pass away and the ones they leave behind slide down that rainbow and leap right into the beneficiary pool of financial freedom. That’s how it is supposed to happen…

That time has come: you’re grieving the loss of someone who was dear to you, but the pot is being held by someone else and they are not sharing fairly. If you come within the category of persons who can apply for further provision, then you can claim your fair share through Section 7 of the Inheritance (Family Provision) Act 1972 (SA) for further provision out of the estate. Hallelujah.

But before you start listing off the maintenance and advancements you need in your life, there is a two stage process that the Court will take into consideration.

The first part of this process, limb one, is to decipher whether the plaintiff was left without “adequate provision for their proper maintenance, education or advancement in life”, and if so, then the second part, limb two, is to decide what that provision ought to be. However, as one man recently found out, this is not as easy as ticking boxes. He was entitled to receive one sixth of his late mother’s estate, while the defendant was due to receive two thirds, and after litigation, that is how the Court left it.

He was the first claimant in South Australia to be rejected for further provision out of the estate by failing to satisfy the first limb. This is not only unfortunate for him, but also for future persons who wish to claim, as they now face more uncertainty when launching a claim against a deceased’s estate.

Here are some of the issues that the Court took into consideration before dismissing the claim:

One-sixth

• The plaintiff was an adult claimant who lived comfortably and held a job with a salary of $150,000.00 per annum. In fact, he had a higher income, greater superannuation, more assets and fewer liabilities than the defendant.
• He had a good childhood and his relationship with his mother (the deceased) was good, except for a 2 year period of estrangement later in their lives (however this was not regarded in reaching her Honours conclusion as it was a comparatively short amount of time).
• The plaintiff was divorced with one child (who he was supporting financially, had living with him, and who had a heart condition which may have required surgery in the near future).
• The plaintiff was in serious motor bike accident in 2017 which he was still recovering from at the time of the hearing, and so his injuries were yet to be determined.

Two-thirds

• The defendant (being the plaintiff’s brother) had very little uncommitted income. He had been a carpenter, but due to the physical nature of the job could no longer work in that position. The defendant had no children and due to the stress of these proceedings was about to split from his long term partner.
• He had been very supportive to their mother, especially in her later years when she was lonely. He had never endured any period of estrangement with her, unlike his siblings. In fact, the defendant and his mother were arranging for her to move into a granny flat on his property which was being renovated for that purpose at the time of her death.

Evidence is telling

• The defendant had withdrawn over $60,000.00 from his mother’s bank account with her written consent, just days before she passed away in order to meet the costs of the renovation.
• The defendant maintained that this money was to assist with renovation and whatever remained was a gift. The plaintiff suggested that it was provided for a specific purpose and that the balance should be paid back into the estate.
• The plaintiff also made several allegations to debunk the defendant’s story, however there was no evidence before the Court to support the comments and his Honour accepted the defendant’s position that it was a gift.
• Even taking into consideration this gift, the defendant was still financially worse off than the plaintiff.

Moral duty

An observation which made for a potential twist in this story was that the deceased and her husband, the parents of the plaintiff and the defendant, found themselves in financial difficulty in 1990. The plaintiff assisted in preserving the assets of his parents by refinancing the mortgage over their home and lending them $12,000.00 to pay legal fees to prevent the bank from repossessing their property. The money was paid back over 15 years. The plaintiff stated that his mother had said at the time that “it was for the future of all three children” which he took to mean that the property was to be shared equally between them. However the Judge did not consider that it placed a moral duty on the deceased to provide any more for the plaintiff than she did.

The finding

The first limb question is to be determined as at the date of death, by reference to the objective facts then existing including prospective future expectations and contingencies foreseeable as at the date of death. It is not determined by the subjective knowledge, beliefs or intentions of the testator. Paraphrased from previous legal findings – the proper provision must be considered in the light of all the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child, his or her need of education or of assistance in some chosen occupation, and the testator’s ability to meet such claims having regard to the size of the fortune.

Her Honour in this case stated that the “provision provided by his deceased mother was adequate as it took into account his lifestyle and dependents, and proper, in that it was regard to the less advantageous providing sufficient funds to allow the plaintiff to pay off some debt, travel if he wished to do so, or afford some other luxury that he might otherwise forego”.

If you are in a similar position and find yourself asking whether you are eligible to make a claim, what threshold you’ll need to reach, what evidence you have, and whether a claim is even worth it, then contact us and we will guide you through the process.

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This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.