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Failing to provide for your grandchildren in your will: Can they claim?

Newsletter Article 03 March 2015

"Grandchildren are eligible to claim for provision from an estate provided they can prove ‘dependence’; and ‘factors warranting’ the claim. Only spouses and children are eligible as of right. This article examines the considerations including ‘community expectations’ the Court of Appeal recently took into account in dismissing such a claim."

Michael Henley, Partner and Team Leader

Chapple v Wilcox [2014] NSWCA 392: Claims by grandchildren for family provision orders, ‘community expectations’ and discretion as to costs.

On 18 November 2014 the Court of Appeal delivered its decision in Chapple v Wilcox [2014] NSWCA 392 allowing an appeal from the NSW Supreme Court which had granted the deceased’s grandson provision from his estate. The judgment considered claims of grandchildren generally, and included discussion of community standards or community expectations with regards to such claims. This newsletter discusses those aspects of the decision and the Court’s review of the legislation regarding costs orders in court proceedings generally and specific provisions in family provision proceedings.

1. Grandchildren - eligibility to claim

Grandchildren may be eligible persons for the purposes of an application for a family provision order provided they satisfy the requirement of dependency under section 57 (1) (e) Succession Act, 2006 (NSW):

S. 57 Eligible persons

(1) The following are "eligible persons" who may apply to the Court for a family provision order in respect of the estate of a deceased person:

(a) a person who was the wife or husband of the deceased person at the time of the deceased person’s death,

(b) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person’s death,

(c) a child of the deceased person,

(d) a former wife or husband of the deceased person,

(e) a person:

(i) who was, at any particular time, wholly or partly dependent on the deceased person, and

(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,

(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.

Grandchildren are within those categories of eligible persons under (d), (e) and (f) above who, apart from proving their eligibility, must in addition prove ‘factors which warrant the making of the application' - S. 59 (1) (b).

2. Background facts - a brief summary

In Chapple, the plaintiffs were the only grandsons of the deceased who left his entire estate to his only daughter. He had acted as a father figure to the plaintiffs, especially after their parents separated. He had paid for their education at a private school, provided them with paid work and accommodation, shaped and directed their lives after school and to a considerable extent groomed them for what he expected would be their eventual inheritance. The respondent on appeal was the elder grandson whose grandfather had paid in addition for him to attend a tertiary college, travel, clothing and miscellaneous expenses associated with his attendance at college. The evidence was that the deceased trusted his daughter to provide for her sons and it was assumed that the grandsons would in due course inherit the farming properties through their mother.

3. Consideration of claims by grandchildren

In the Court below, it was noted that grandchildren have no claim as of right and that as a general rule, a grandparent has no responsibility to make provision for a grandchild. It should not be assumed that generosity, including payment of school fees, converts the relationship into one of obligation to provide for the grandchild on death of the grandparent.

There may be special circumstances that entitle a grandchild to make a claim as recognised in section 57(1)(e) referring to dependency.

The earlier decision of Bowditch v NSW Trustee & Guardian [2012] NSWSC 275 set out the principles and limitations governing claims by grandchildren which were confirmed in the Court of Appeal in Chapple:

  1. ‘as a general rule, a grandparent does not have a responsibility to make provision for a grandchild; that obligation rests on the parent of the grandchild. Nor is a grandchild, normally, regarded as a natural object of the deceased’s testamentary recognition;
  2. …where the grandparent becomes in loco parentis …the fact that the grandchild resided with one or more of his or her grandparents is a significant factor. Even then, it should be demonstrated that the deceased had come to assume, for some significant time … a position more akin to that of a parent than a grandparent, with direct responsibility for the grandchild’s support and welfare, or else that the deceased has undertaken a continuing and substantial responsibility to support the applicant grandchild financially or emotionally;
  3. the mere fact of a family relationship between grandparent and grandchild does not of itself establish any obligation to provide for the grandchild…;
  4. generosity by the grandparent … including contribution to the education of the child, does not convert the grandparental relationship into one of obligation to provide for the grandchild upon the death of a grandparent;
  5. the fact that the deceased occasionally, or even frequently, made gifts to, or for, the benefit of the grandchild, does not in itself make the grandchild wholly or partially dependent on the deceased…;
  6. it is relevant to consider what inheritance, or financial support, a grandchild might fairly expect from his or her parents.’

The Court of Appeal noted that the principles constitute a reflection of community values. In Andrew v Andrew the Court placed emphasis on the central role of such concepts as community standards or community expectations in any decision whether to take the significant step of overriding the expressed wishes of a testator.

In Chapple the Court referred to ‘the feeling and judgment of fair and reasonable members of the community’ which falls to be ascertained according to the circumstances of the particular case. Having considered the factual circumstances, the Court considered that they ‘left no room for any view that community standards and community expectations required or countenanced the making of any provision for the respondent out of the estate of the deceased’.

The Court also stated ‘the scheme of benefaction that clearly accorded with community standards and community expectations was that which the testator himself chose to adopt, with the whole estate passing to his only child, if living, and provision being made for the respondent and his brother only if their mother predeceased the testator’.

4. Legislative provisions re Costs Orders in Court proceedings – generally and in family provision claims

Civil Procedure Act 2005

s.98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

Uniform Civil Procedure Rules (UCPR)

Rule 42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

Rule 42.20 Dismissal of proceedings etc.

(1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant’s costs of the proceedings to the extent to which they have been dismissed.

(2) If the court makes an order striking out a defence, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the defendant must pay the plaintiff’s costs of the proceedings in relation to those matters in respect of which the defence has been struck out.

Section 99(1) of the Succession Act 2006 makes special provision:

S. 99 (1) The Court may order that the costs of proceedings under this Chapter in relation to the estate or notional estate of a deceased person (including costs in connection with mediation) be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit.

The particular proceedings in Chapple included an estoppel claim which failed, and a family provision claim which succeeded at first instance and was reversed on appeal.

The Court of Appeal restated the prima facie position that costs as a whole should follow the event, and the respondent should be ordered to pay the successful appellant’s costs in full; that position ‘needs to be tested in light of the additional discretion under section 99 Succession Act 2006’ and that family provision claims raise issues with respect to costs that differ from those in other litigation.

‘The ‘more modern’ approach is as stated in rules 42 and 42.20 of the UCPR that there should be an order that the unsuccessful plaintiff pay the defendant’s costs. Further, the next question is whether there is any demonstrated reason for departure from that principal that costs follow the event. The only potentially relevant factor is the respondent’s unfavourable financial position and the circumstance that if an order for costs was made against him he will ‘instantly become impecunious’.

In concluding its decision as to costs, the Court of Appeal said that the overall justice of the case, even after applying liberality and discrimination, requires that the costs of the claim be borne by the plaintiff and not by the estate. There was no factor that warranted departure from the consequences prescribed by rules 42.1 and 42.20 (1).

A further aspect was whether section 99 applies to appeal proceedings. The Court concluded that section 98 Civil Procedure Act and related provisions of the UCPR apply of their own force to the separate proceeding that is the appeal and that on that basis, section 99 Succession Act has no direct application.

However, the fact that section 99 has no direct application is relatively unimportant, because it has been recognised in many cases that the general approaches to first instance family provision cases are also to be borne in mind when determining the costs orders that should be made in a family provision appeal.

Unless the Appeal Court has good reason to think that some other result is more appropriate, costs should follow the event and accordingly the respondent was ordered to pay the appellant’s costs of the appeal.


Christine McPhillips, Special Counsel
Sydney

Newsletter Article 03 March 2015
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