Supreme Court New South Wales Medium Neutral Citation: Morrison v Abbott [2012] NSWSC 320 Hearing dates: 16, 23 and 30 March, 2012 Decision date: 05 April 2012 Jurisdiction: Equity Division Before: Hallen AsJ Decision: Order in the substantive proceedings that: (a)There be provided out of the estate of Beverly Rose Morrison, to the Plaintiff, a lump sum of $105,000. (b)Interest on such amounts shall run at legacy rates from 16 April 2012. (c)The costs of the first Defendant, on the indemnity basis, are to be paid out of the estate of the deceased. (d)There be no order as to costs for the Plaintiff, with the intention that the Plaintiff will pay his own costs. (e)Note the agreement of the parties in Paragraphs 1 to 6 of the Short Minutes of Order under the heading "The Parties agree that". Order in the contested application that: (a) The second Defendant is to pay the costs of the first Defendant of the application, such costs to be calculated on the ordinary basis; to the extent that there is any difference between the costs recovered from the second Defendant and the indemnity costs of the application, those costs are to be paid out of the deceased's estate. (b) In the event the Plaintiff succeeds in his defence of any proceedings commenced by the second Defendant to recover unpaid arrears of child support, or in the event that those proceedings are not commenced within 21 days of the date of these orders, then he should receive his costs of the present application, such costs to be calculated on the ordinary basis. However, if in those proceedings, he is found to be liable for any amount by way of arrears of child support, he should not have his costs of the present application. Catchwords: SUCCESSION - FAMILY PROVISION - Consent Order in terms of a written agreement reached after mediation - Mother of sole minor residuary beneficiary opposes orders being made in accordance with consent order- Whether order should be made despite opposition Legislation Cited: Child Support (Assessment) Act 1989 (Cth) Child Support Registration and Collection Act 1988 (Cth) Civil Procedure Act 2005 Family Provision Act 1982 Practice Note SC Eq 7 Succession Act 2006 Uniform Civil Procedure Rules 2005 Cases Cited: Albany v Albany [2010] NTSC 25 Bartlett v Coomber [2008] NSWCA 100 Davis v Insolvency and Trustee Service Australia [2010] FCAFC 141 Groser v Equity Trustees Ltd [2008] VSC 163 Hore v Perpetual Trustee Co Ltd (NSWSC, 8 June 1995, unreported) Lanfear, In the Will of (1940) 57 WN (NSW) 181 Luton v Lessels (2002) 210 CLR 333 McCusker v Rutter [2010] NSWCA 318 McGrath v Troy [2010] NSWSC 1470 Mitchell v Osborne (NSWSC, 20 May 1987, unreported) Scali, The Application of Ferdinando [2010] NSWSC 1254 Schaechtele v Schaechtele [2008] WASC 148 Sherborne Estate: Vanvalen and Anor v Neaves and Anor; Gilroy v Neaves and Anor (No 2) [2005] NSWSC 1003 Smallman v Smallman [1972] Fam 25 Szlazko v Travini [2004] NSWSC 610 Vasiljev v Public Trustee [1974] 2 NSWLR 497 Category: Procedural and other rulings Parties: Dean Thomas Morrison (Plaintiff) Douglas William Abbott (first Defendant) Suzanne Lee Neville (second Defendant) Representation: Counsel: Mr G Hockley (Sol) (Plaintiff) Mr M P Cleary (first Defendant) Mr J Heazlewood (second Defendant) Solicitors: Lamrocks (Plaintiff) Higgins & Dawson (first Defendant) Branston Neville Solicitors (second Defendant) File Number(s): 2011/195352 Judgment The Issue in the Application 1HIS HONOUR: This matter was, originally, listed before me, in the Friday Duty List, on 16 March 2012, for the making of a family provision order in terms of a written agreement (a consent order) reached between the Plaintiff and the first Defendant at, or following, a mediation held on 24 February 2012. 2The consent order, which is headed Short Minutes of Order, and which was signed by the legal representative of the Plaintiff on 16 March 2012 and by the legal representative of the first Defendant on 14 March 2012, is in the following terms: "By consent, the Court orders: 1.There be provided out of the estate of Beverly Rose Morrison to Dean Thomas Morrison a legacy of $105,000. 2.Interest on such amounts shall run at legacy rates from 16 April 2012. 3.The costs of the defendant on the trustee basis are to be paid out of the estate of the deceased. 4.There be no order as to costs for the plaintiff with the intention that the plaintiff will pay his own costs. The Parties Agree that: 1.The application was made in time. 2.The Plaintiff is an eligible Person. 3.The Plaintiff has served notices identifying all other eligible persons on the administrator. 4.The Administrator has field (sic) a copy of the affidavit required by Supreme Court Rules Schedule J. 5.The Administrator has served notices of the plaintiffs (sic) claim on any person who, in the Administrator's opinion may be an eligible person. 6.The Administrator has filed a notice of appearance." 3I shall, hereafter, refer to these proposed orders as "the consent order". 4Subsequently, in circumstances that I shall describe, there was opposition to the court making the consent order and the matter has proceeded, as a contested application in respect of the question whether the court should make the consent order as sought by the Plaintiff and the first Defendant. I have heard extensive argument and read detailed written submissions (that will remain on the court file) on the application. 5The person opposing the making of orders in terms of the consent order is the mother of the sole residuary beneficiary, Ms Suzanne Lee Neville, who as will be seen, was joined as a second Defendant. Formal Matters - The Substantive Proceedings 6The Plaintiff commenced the substantive proceedings by originating Summons filed on 15 June 2011 seeking a family provision order under Chapter 3 of the Succession Act 2006 ("the Act"), out of the estate, or notional estate, of his mother, Beverley Rose Morrison ("the deceased"). Those proceedings were commenced within the time prescribed by the Act (not later than 12 months after the date of the death of the deceased). 7The Defendant named in the Summons is Douglas William Abbott, the brother of the deceased and the uncle of the Plaintiff. Initially, he opposed the Plaintiff's claim. 8The deceased died on 18 June 2010. She left a Will that she made on 21 November 2000 and a codicil made on 19 March 2007, in the latter of which she appointed the first Defendant as executor and trustee. On 14 October 2010, this court granted Probate of the deceased's Will and codicil to the Defendant, as executor named in the deceased's Will and codicil. 9By the Will, the deceased, after payment of all just debts, funeral and testamentary expenses, "including Federal Estate Duty (if any)", left a number of specific bequests of furniture, jewellery, and household effects to named beneficiaries, and then gave the rest and residue of her estate, both real and personal, to her grandson, Jay Morrison ("Jay"). Jay was born on 29 September 1996. 10Jay is the son of the Plaintiff and Ms Neville. Ms Neville and the Plaintiff were married on 5 September 1992; they separated in December 1997; and a Divorce Order was granted on 12 February 1999. Since separation, Jay has lived with Ms Neville, although, until 22 June 2007, he spent time with the Plaintiff each alternate weekend. Since then, however, Jay has not spent very much, if any, time with the Plaintiff. Currently, Jay has no contact with the Plaintiff. 11Ms Neville has remarried and Jay currently lives with her and her husband. 12In the Inventory of Property, a copy of which was placed inside, and attached to, the Probate document, the deceased's estate, at the date of death, was disclosed as having an estimated, or known, gross value of $225,650. No liabilities were disclosed. The actual estate, at the date of death, was said to consist of the refund of the accommodation bond and credit fees ($192,210), and money in banks and in financial institutions on deposit ($29,083 and $4,356). There was no notional estate. (I have omitted any reference to the cents and shall continue to do so.) 13In an affidavit sworn on 12 August 2011, the first Defendant stated that the estate had been realised ($230,497) and after payment of debts funeral and testamentary expenses, the net amount available for distribution was $225,757, which, since then, has been invested on term deposit on behalf of the estate. 14At 23 March 2012, the date when the term deposit matured, the amount held on behalf of the estate was $237,722. Whilst there may have been a little more interest accrued since that date, the parties proceeded, at the hearing, upon the basis that this amount should be regarded as the gross distributable estate of the deceased. 15There is no dispute that the Plaintiff, as a child of the deceased, is an eligible person within s 57(1)(c) of the Succession Act. 16Other persons who are, or who may be, eligible persons within the meaning of the Act, are Thomas Morrison, the deceased's husband (the father of the Plaintiff) and Luke Thomas Holt, another grandson of the deceased (and a son of the Plaintiff.) 17It was accepted that Jay is not an eligible person within the meaning of the Act. However, he is the sole residuary beneficiary named in the Will of the deceased. 18Prior to the mediation, notice of the Plaintiff's application was served on Thomas Morrison and on Donna Holt, the mother of Luke Thomas Holt. Ms Holt, through her solicitors, Messrs Matthews Dooley Gibson, responded by letter dated 13 January 2012, stating that they were "not instructed to take any steps in relation to the Estate ...". 19Mr G J Hockley, the Plaintiff's solicitor, swore an affidavit on 16 March 2012, in which he stated that Thomas Morrison had informed him, by telephone, on 7 March 2012, that he (Mr Morrison) was the deceased's husband; that he and the deceased had separated about 20 years ago and when Mr Hockley informed him that, as the husband of the deceased, he had a right to bring a claim against the estate, Mr Morrison responded "Why would I at this late stage?" I have taken this statement to mean that Mr Morrison has no intention of making any claim against the deceased's estate. 20In the circumstances, pursuant to s 61 of the Act, I shall disregard the interests of each person by, or in respect of, whom, an application for a family provision order may be made (other than a beneficiary of the deceased person's estate), but who has not made an application since notice of the application, and of the Court's power to disregard the interests, has been served on those persons. 21The only beneficiary whose interests I shall consider is Jay. There is no suggestion that the other bequests made in the deceased's Will are affected by the consent order and no one suggests that those bequests should not be exonerated from the provision sought to be made for the Plaintiff. The Dispute with Ms Neville 22Notice of the Plaintiff's application for a family provision order was given to Ms Neville, on behalf of Jay, on a date not known to the court. However, on 16 December 2011, Mrs Neville affirmed an affidavit, filed in the substantive proceedings, on 13 March 2012, in which she responded to the Plaintiff's affidavit in chief (which had been affirmed by him on 31 August 2011). In broad terms, Ms Neville agreed with some matters, disagreed with others, and stated that she "could not admit or deny" other matters, which the Plaintiff had asserted. 23It is clear from the affidavit that Ms Neville, on behalf of Jay, held the view that "as Jay is a minor, he should not be disinherited, or cease to be a major beneficiary of Beverly's estate, if that is what her intentions were". 24In her affidavit, Ms Neville also referred to the fact that the Plaintiff had not contributed to the support of Jay since March 2009. She stated that the Plaintiff had "never made any attempt to pay any child support funds towards Jay privately, since I discontinued CSA (Child Support Agency) intervention in 2009 ...". 25In a subsequent affidavit, Ms Neville stated that the amount of $19,330 was the amount that should have been paid to her, by way of child support, for Jay, by the Plaintiff, since 10 March 2009. 26There is no dispute that the amount to which Ms Neville referred has been calculated correctly, as assessments by the Child Support Agency are in evidence and these have been served upon the Plaintiff. The Plaintiff, however, denies that he is legally obliged to pay any child support for Jay, in that, or any other, amount. The Mediation 27On 15 November 2011, the Plaintiff and the first Defendant had the substantive proceedings listed for court annexed Mediation on 24 February 2012. 28Ms Neville was invited to attend the mediation on behalf of Jay, but she did not do so. No evidence explaining why she did not attend has been provided to the court. 29I was informed from the bar table, without objection, that the mediation took place. Both of the parties in the substantive proceedings were legally represented. Ultimately, a written agreement was signed, which led to the consent order. The consent order was in terms of the written agreement that had been produced at the mediation by the parties in relation to the Plaintiff's application, following discussions, anxious consideration and advice, and reasonably lengthy negotiations, by the parties and their legal representatives at the mediation. 30I was informed, during submissions, that the consent order would result in the Plaintiff receiving about 45 per cent of the gross distributable estate (after the payment of the first Defendant's costs). 31The first Defendant estimated that, if payment were made to the Plaintiff in accordance with the consent order, and after payment of the first Defendant's legal costs of the proceedings calculated until 24 February 2012, there would have been held, on behalf of Jay, between about $110,000 and $115,000. It may be, in the events that have happened, he will now receive somewhat less. Matters following the Mediation 32In accordance with the usual procedure when a matter is resolved at mediation, and where it is considered that the approval of the court is required, the matter was placed in the Registrar's List for referral to the Associate Justice's Duty List conducted on a Friday for the making of the consent order on 16 March 2012. 33As the interests of a minor beneficiary were being adversely affected, and perhaps because of Ms Neville's affidavit, it must have been thought by the parties, and by the mediator, that the court's approval was required. I note that the mediator did not enter the consent orders as he, or she, was, otherwise, able to do (as to which see later). 34I was informed by the parties' legal representatives who appeared on 16 March 2012, that there was opposition, by Ms Neville, on behalf of Jay, to the court making orders in accordance with the consent order. 35In those circumstances, I directed the first Defendant's solicitor to advise the solicitors who were said to be acting for Ms Neville, by 4:00 p.m. on Friday, 16 March 2012, that the matter was listed on 23 March 2012; and that those solicitors should advise the solicitor for each of the parties, in writing, by 4:00 p.m. on Wednesday, 21 March 2012, whether Ms Neville intended to oppose orders in accordance with the consent order being made and the basis of that opposition. 36I also required the court to be informed, by email addressed to my Associate, whether Ms Neville had notified the parties legal representatives of her opposition to those orders being made, and that, in the event that she had not, that I would deal with the matter, in Chambers, without the necessity of any legal representative appearing on the adjourned date. 37In accordance with the directions, Ms Neville's solicitors gave notice of her intention to oppose orders being made in accordance with the consent order and the court was informed of that notification. 38On 23 March 2012, Mr J F Heazlewood, of counsel, sought to appear for Ms Neville. He informed me that he had been instructed to appear on her behalf to make submissions opposing the court making the consent order. Although it was not stated, it appears that Ms Neville was seeking to act, effectively, as Jay's guardian ad litem. 39As I considered that if this aspect continued as a contested application, there was a risk of costs being incurred which would, otherwise, have to be met by one, or both, of the parties, I ascertained whether Ms Neville, effectively as guardian ad litem for Jay, would consent to being joined as a party/Defendant to the proceedings, with a risk as to costs. 40With her consent, provided by Mr Heazlewood, after taking instructions, Ms Neville was joined as the second Defendant. I then stood the proceedings over for hearing, on 2 April 2012, to hear argument and to determine whether the court should make the consent order. 41Subsequently, Ms Neville served and filed an affidavit that was read at the hearing on 2 April 2012. Claim for Child Support 42Because it played a large part in the submissions of Ms Neville, I shall deal, briefly, and in a summary way, with Ms Neville's claims based upon the Plaintiff's failure to pay child support for Jay since March 2009. 43The legislative scheme for the assessment and enforcement of child support liabilities is contained in the Child Support (Assessment) Act 1989 (Cth) and the Child Support Registration and Collection Act 1988 (Cth). The High Court discussed aspects of the Child Support Scheme in Luton v Lessels [2002] HCA 13; (2002) 210 CLR 333, in which Gaudron and Hayne JJ said, at [42]-[43]; 350-351: "The Assessment Act records (s 3(1)) that "[t]he parents of a child have the primary duty to maintain their child". This duty is said by the Assessment Act (s 3(2)), (a) to be not of lower priority than the duty of the parent to maintain any other child or another person; (b) to have priority over all commitments of the parent other than commitments necessary to enable the parent to support himself or herself and any other child or person the parent has a duty to maintain; and (c) to be not affected by the duty of any other person to maintain their child or any entitlement the child or another person may have to an income tested pension, allowance or benefit ... the principle object of the Assessment Act is said (s 4(1)) to be "to ensure that children receive the proper level of financial support from their parents". Part 5 of the Assessment Act (Sections 35-39) provides for the administrative assessment of child support....;child support" is defined (s 5) as "financial support" under [the Assessment] Act including financial support under [the] Act by way of lump sum payment or by way of transfer or settlement of property. An administrative assessment of child support requires the application of one or more of several statutory forms that is, or are, apposite in a particular circumstance. Section 79 of the Assessment Act provides that "an amount of child support due and payable by a liable parent to a carer entitled to child support is a debt due and payable by the liable parent to the carer." 44In Davis v Insolvency and Trustee Service Australia [2010] FCAFC 141, at [2], the Full Federal Court (constituted by Keane CJ, Besanko and Perram JJ) summarised the scheme as follows: "[2] The laws of the Commonwealth attach significance to the obligation of separated parents of children to provide for their proper financial support. The important features of these laws are a set of provisions by which the liability of parents to pay child support is assessed and another set by which the payments thus assessed to be due are collected. The amount of child support payable by a parent to the child's carer is assessed by the Child Support Registrar, a Commonwealth office established under s 10 of the Child Support (Registration and Collection) Act 1988 (Cth) (the Collection Act). The Registrar is empowered, on application by a child's carer, to assess the liability of a parent to pay child support and the process of assessment bears similarities to the way in which income tax is assessed. Once assessed the parent must pay the amount of child support to the child's carer in accordance with the assessment (s 31 of the Child Support (Assessment) Act 1989 (Cth)). A carer may choose to register the liability with the Registrar (s 25 Collection Act). Where this occurs the child's carer is no longer entitled to enforce the child support obligation against the other parent and that obligation becomes, instead, a debt due by the parent to the Commonwealth (s 30 Collection Act). The carer becomes entitled to a payment from the Commonwealth in respect of whatever has been collected from the parent (s 76 Collection Act). To aid the efficacy of this regime the Registrar is equipped with ample powers to secure compliance with it. They include, by way of example, a power to sue in a court to obtain judgment for the child support amount (s 113 Collection Act); appurtenant powers to enforce any resulting judgment debt against the judgment debtor such as the levying of execution or the appointment of receivers (s 105 Collection Act and Chapter 20 Family Law Rules 2004 (Cth)); powers of garnishment by which those owing moneys to a person with child support obligations may be compelled to pay those moneys directly to the Registrar (s 72A); and, a power to prevent a person with such an obligation from leaving the country (s 72D)." 45At the hearing, Ms Neville asserted that the Plaintiff had a child support liability for Jay of $19,330, and that the way to ensure the discharge of that liability was to make an order that a part of the lump sum provision made for the Plaintiff should be paid to her following agreement of the parties, or failing any agreement, set aside pending the determination of the actual liability for child support. In her last affidavit, she stated: "I withdraw my opposition to the consent to the settlement on the condition that the Plaintiff request the First Defendant retain from the moneys payable to the Plaintiff the sum of $19,330.07 which represents the amount I claim I am owed in respect of child support. I seek that the defendant retains those moneys and pay them out in accordance with the written agreement of the plaintiff and myself or alternatively the order of any court of competent jurisdiction. I would accept any other order the court might impose which preserves the sum of $19,330.07 and my right to claim same in respect of child support." 46The Plaintiff disputed any obligation, and any child support liability, based on not having paid child support since 10 March 2009, for Jay. As I understand it, he submitted that Ms Neville, as the carer entitled to child support for Jay, by notice given to the Child Support Registrar, had elected that the Plaintiff's liability to pay, or provide, child support to her, was to end from 10 March 2009; that, thereafter, he only had an obligation to pay, or provide, child support if there was a private agreement between him and her, pursuant to which agreement he undertook to pay, or provide, child support for Jay. Since there was no such agreement, the Plaintiff had no obligation, and hence, no liability, to pay, any child support for Jay. 47Because of the dispute between the parties on this issue, and to avoid further costs on the application being incurred, the suggestion was made that, perhaps, the parties could agree to the first Defendant, or for that matter, the Plaintiff's solicitors (following receipt of the lump sum), retaining the amount claimed, or such other amount as the parties agreed, from the lump sum, pending the determination, in another jurisdiction, of the Plaintiff's obligation and liability, if any. 48Despite several opportunities given to him to do so, the Plaintiff was not prepared to consent to any condition being imposed in the consent order that enabled $19,330, or any other amount, to be held to discharge the child support liability, if any, that he had. 49The Plaintiff submitted that there was no power, in the circumstances of this case, to impose any condition, limitation or restriction in the consent order, since it was a written agreement that was produced to the Court by the parties in relation to proceedings, after mediation, and which indicated the parties' consent to the making of the family provision order in those terms only. 50Ms Neville submitted that in making a family provision order, I could make other orders or impose any condition, limitation or restriction. She referred to s 65 and s 66 of the Succession Act. Matters agreed at the Hearing 51The parties at the hearing agreed upon the following additional facts: (a)The consent order contained the terms of a written agreement that was produced to the Court by the parties in relation to an application, after mediation, and which indicated the parties' consent to the making of the family provision order in those terms. (b)The amount of his own costs and disbursements, inclusive of GST, that the Plaintiff was obliged to pay out of the lump sum (inclusive of costs) referred to in the consent order was $11,000. (c)The first Defendant's costs and disbursements up to and including 23 March 2012 (of which $4,389 for counsel's fees which had been paid) totalled $21,211. Since then an additional $21,376 has been incurred in costs and disbursements including the costs of the present hearing. (d)That had the matter not settled at mediation, the additional costs and disbursements of the Plaintiff, calculated on the ordinary basis, for the substantive contested hearing, would have been in the order of $10,000 to $15,000. (e)That had the matter not settled at mediation, the additional costs and disbursements of the first Defendant, calculated on the indemnity basis, for the substantive contested hearing, would have been in the order of $21,376. (f)The estimated duration of the contested hearing of the Plaintiff's application for the family provision order was one day. (g)That the amount for which the Plaintiff's claim had settled at the mediation was within the range of the provision that the court might order if there was a contested hearing. (Mr Heazlewood submitted that it was at the upper end of the range, but nonetheless within the range.) (h)Had the matter proceeded to a final hearing, the court would have power (under s 65(1)(d) of the Act) to impose any condition, restriction or limitation, including a term of the family provision order that part of the amount ordered to be paid by way of lump sum for the Plaintiff, should be retained by the first Defendant, pending the determination whether any child support for Jay was outstanding; if so, the amount of the outstanding child support; and the amount so determined, if any, be paid by the first Defendant to Ms Neville out of the amount retained by the first Defendant. (It was not agreed that any condition, restriction or limitation could be imposed in respect of a consent order.) (i)Had the matter proceeded to a final hearing, the court would have power (under s 66(2) of the Act) to make such additional orders as it considered necessary to adjust the interests of any person affected by a family provision order and to be just and equitable to all persons affected by the order. (It was not agreed that it could do so in respect of a consent order.) 52It is unnecessary to repeat the Plaintiff's evidence in the substantive proceedings (which, at least to some extent, is the subject of dispute). In light of the matters previously referred to, as well as those matters agreed, particularly the matter in sub-paragraph (g) above, and having read the Plaintiff's evidence and the first Defendant's evidence in reply (including the evidence of Ms Neville), which was filed in the substantive claim, I am satisfied, at the time when the Court is considering the application, that there is sufficient evidence to conclude that adequate provision for the proper maintenance, education or advancement in life of the Plaintiff has not been made by the Will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. 53(It is clear, following the receipt of the written submissions on behalf of Ms Neville, that the position of all of the parties necessarily implies that they accept, or at least do not wish to any longer dispute, what is stated in the last paragraph, and that they acknowledge that some provision should be made out of the deceased's estate for the Plaintiff.) The Legislative Framework - The Contested Application 54It is next necessary to consider the legislative framework in which the case must be decided. The Succession Act 55As stated, the proceedings commenced by the Plaintiff were under Part 3 of the Act. 56Section 98(3) of the Act provides: "(1) The object of this section is to encourage the settlement by affected parties of disputes concerning the estate of a deceased person. (2) Unless the Court, for special reasons, otherwise orders, it must refer an application for a family provision order for mediation before it considers the application. (3) The Court may make a family provision order in terms of a written agreement (a "consent order") that: (a) is produced to the Court by the affected parties in relation to an application after mediation, or on the advice of a legal practitioner, and (b) indicates the parties' consent to the making of the family provision order in those terms. (4) The regulations may make provision for or with respect to the following: (a) mediations and consent orders under this section, (b) regulating or prohibiting advertising concerning the provision of legal services in connection with mediations and other proceedings under this Chapter in relation to the estate or notional estate of a deceased person. (5) In this section, "legal services" has the same meaning as in the Legal Profession Act 2004." 57Importantly, sub-section (3) makes clear that the Court has a discretion ("may") whether to make a family provision order in terms of a written agreement (a "consent order") reached at mediation. In this regard, it appears that the family provision order spoken of in sub-section (3) is one identified in a written agreement of the parties reached after mediation. 58It was submitted that the sub-section does not speak of a family provision order made by the court after a substantive hearing, as that is not "a family provision order in terms of a written agreement reached after mediation". I respectfully agree. 59However, this is not to say that in determining whether to make the consent order, s 59 of the Act, which provides that the court must be satisfied, first, that the applicant is an eligible person within the meaning of s 57(1) and then determine whether adequate provision for the proper maintenance, education or advancement in life of the applicant has not been made by the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both (s 59(1)(c)), does not apply. Practice Note SC Eq 7 60This is the Practice Note, which commenced on 1 June 2009, and which applies to all applications under the Family Provision Act 1982 or Chapter 3 of the Act. 61The Practice Note relevantly provides: "8 Unless ordered otherwise, all proceedings involving Family provision applications must be mediated. ... 10 If parties settle the proceedings before a court appointed mediator and provided the settlement does not require court approval, the mediator will enter the consent orders and vacate the next listing. ... 20 Consent Orders finalising proceedings must include provisions that the parties agree that: The application was made within time The plaintiff is an eligible person The plaintiff has served a notice identifying all other eligible persons on the administrator at the time of serving the summons The administrator has filed a copy of the affidavit required by SCR Schedule J The administrator has served notices of the plaintiff's claim on any person who, in the administrator's opinion, may be an eligible person The administrator has filed a notice of appearance." Civil Procedure Act 2005 62Because it was referred to, (and is often referred to in similar cases), it is necessary to refer to sections 74 and 75 of the Civil Procedure Act 2005, which deal with the settlement of claims made on behalf of, or against, a person under legal incapacity. 63Section 75 applies to any claim, enforceable by proceedings in the court, which is made by, or on behalf of, or against, a person under legal incapacity and which relates to an agreement for the compromise, or settlement, of the claim, before proceedings are commenced with respect to any such claim. 64Section 76 applies to proceedings commenced by, or on behalf of, or against (a) a person under legal incapacity; (b) a person who, during the course of the proceedings, becomes a person under legal incapacity; and (c) a person whom the court finds, during the course of the proceedings, to be incapable of managing his or her own affairs. In each case, a person under a legal incapacity includes a child under the age of 18 years: s 3(1) Civil Procedure Act. 65In the present case, during submissions, all of the parties accepted that: (i)there is no claim enforceable by proceedings in the court that was made by, or on behalf of, or against, Jay, who is a person under a legal incapacity; (ii)the proceedings under Part 3 of the Act brought by the Plaintiff was not one by, or on behalf of, or against Jay, who is a person under a legal incapacity, but only a beneficiary named in the Will of the deceased. 66Accordingly, neither of those sections applies to the present case and neither is the basis for any requirement for the court's approval in respect of the compromise, or settlement, reached between the Plaintiff and the first Defendant after mediation. Uniform Civil Procedure Rules 67Although no reference was made to the Uniform Civil Procedure Rules 2005 ("UCPR"), I note that UCPR rule 54.3(4) provides that proceedings may be brought for an order approving, inter alia, any compromise by an executor, administrator or trustee. 68It was not suggested by the first Defendant that this was the basis upon which the matter was brought before the Court. 69In light of the submissions made by Ms Neville, I have also considered the power of the Court under UCPR rule 25.11 to grant a freezing order, but I formed the view that there was no evidence of a danger that a judgment or prospective judgment of the court would be wholly, or partly, unsatisfied. I also formed the view that the effect of doing so would be more to provide security in respect of any judgment or order, rather than for the purpose of preventing the frustration or inhibition of the court's process. Reasons for seeking the Court's approval of the Consent Order 70There are a number of reasons why the approval of the court is invariably sought in cases where a minor beneficiary's entitlement under a will, or on intestacy, is, or may be, adversely affected by the making of a consent order. These include, but are not limited to, the need to protect the interests of a person under a legal disability; the need to protect that person from any lack of skill, or experience, of the defendant/executor's or administrator's legal representatives, who might settle the Plaintiff's claim under the Act for more than it is worth; the need to protect the defendant executor or administrator, who, because the beneficiary is not of full age and capacity, would not be protected from a departure from his duty to uphold the terms of the deceased's Will and codicil; and to avoid the minor beneficiary, in other litigation, seeking an order to set aside the consent order when he, or she, attains the age of majority. 71No doubt, the supervisory, or parens patriae, jurisdiction of the Court is relied upon to found the jurisdiction of the court. There is no doubt also, that UCPR rule 54.3(4) is available to found the court's jurisdiction. Some General Principles 72It is well established that, in proceedings for a family provision order, the primary duty of the executor or administrator, as defendant, is to uphold the deceased's will and to put before the Court any necessary material that can reasonably be found to assist the Court: Vasiljev v Public Trustee [1974] 2 NSWLR 497. 73Of course, the duty to uphold the deceased's will is not an absolute duty. In In the Will of Lanfear (1940) 57 WN (NSW) 181, Williams J said, at 183: "In an ordinary case, especially where the estate is a small one, it is the duty of the executors either to compromise the claim, or to contest it and seek to uphold the provisions of the will." 74In McCusker v Rutter [2010] NSWCA 318, Handley AJA (with whom Campbell JA agreed), said at [57]: "An executor or administrator with the will annexed, faced with a claim under this legislation, is bound, within reason, to uphold the terms of the will. However in appropriate cases the legal personal representative will be justified in compromising the claim or even consenting to the orders sought: Re SJ Hall (dec'd) (1958) 59 SR (NSW) 219; Vasiljev v Public Trustee [1974] 2 NSWLR 497 CA, 503-4." 75Thus, the duty of the executor to uphold the will does not extend to doing so where it is of no commercial benefit to anyone, and regard should be had to the extent to which upholding the will would benefit beneficiaries. The executor or administrator, as defendant, must exercise "a due sense of proportionality in the conduct of any such defence and seek to compromise a claim, if at all possible, in a way that would save both the plaintiff and the other beneficiaries' costs": Szlazko v Travini [2004] NSWSC 610; The Application of Ferdinando Scali [2010] NSWSC 1254, at [10]. 76Turning next to the role of the court, even in circumstances where the parties have reached an agreement, the court must still consider whether it has jurisdiction. In Hore v Perpetual Trustee Co Ltd (NSWSC, 8 June 1995, unreported) Windeyer J referred to the provisions of the Family Provision Act 1982 (NSW), and said at 11-12: "Those provisions give the basis for exercise of jurisdiction by the court. Parties are absolutely entitled of course to make any rearrangement of the terms of a will they wish, if all beneficiaries are of age and absolutely entitled. That has nothing whatever to do with the jurisdiction under the relevant Act. Section 7 and s 9(2) raise jurisdictional questions. This has been described in various ways, sometimes making it appear discretionary, but there is no doubt now that for the court to assume jurisdiction, the provisions of s 9(2) must be satisfied. As the power to make orders is governed by s 9(2) and s 7, the court cannot by consent, assume a wider jurisdiction. Parties cannot by consent, confer power upon the court to make orders which the court lacks power to make. Settlements of claims under the Family Provision Act are of course very common. It is obviously in the interest of the parties and the court to encourage settlement and in any week the Masters and Equity Division may be asked to make a number of orders agreed between the parties in such actions. In such matters, in my experience, the court looks quickly at the evidence, and is informed of the relevant facts by counsel or solicitor, and if the matter appears to be reasonable makes the orders. No detailed consideration of jurisdiction takes place as long as the plaintiff appears to have a proper basis for his or her claim. In cases where the interests of infants or unascertained classes of persons may be affected by the orders, then the proposed orders are considered in more detail, not usually on the jurisdictional question, but more often on relevant terms of the orders themselves, and the extent of the benefit provided by them. On occasions the court refused to make the orders proposed, but this is unusual." 77In Schaechtele v Schaechtele [2008] WASC 148, Le Miere J, in the Supreme Court of Western Australia, said, at [18]: "This Court cannot make an order giving effect to the proposed settlement unless the Court thinks that such provision should be made out of the estate of the deceased for the proper maintenance or support of the plaintiff. But that does not mean that the Court is in effect to hear the matter as if it were it a contested application and then to give or withhold orders to give effect to the settlement by comparing the settlement with the judgment which the Court would have given. The Court must give proper consideration to the evidence before it. The Court should be aware of the risks of litigation in an area in which reasonable people can reasonably reach different conclusions and give proper weight to the fact that the parties wish to effect the settlement. If the Court is satisfied that the settlement falls within the bounds of a reasonable exercise of discretion then the Court should make orders to give effect to that settlement." 78In Bartlett v Coomber [2008] NSWCA 100, the Court of Appeal had to determine an appeal from a decision of Macready As J in which his Honour had to decide whether a binding agreement to compromise a proposed claim under the Family Provision Act 1982 had been reached and ought to be specifically performed, with an accompanying order to give it effect. Although there was an alternative claim for provision pursuant to s 7 of the Family Provision Act, his Honour's decision was restricted to the question whether the executrix (the second respondent in the appeal) was bound to perform the alleged agreement. Macready AsJ made findings in favour of the plaintiff and proceeded to make orders that disposed of the proceedings. His Honour ordered that the plaintiff have a legacy in the sum of $659,467 to be paid to the Public Trustee and held on her behalf during her minority. 79An appeal was brought against those orders and the consequential costs order. The appeal was dismissed with costs. 80Hodgson JA said, in relation to the duty of the executor or administrator: "[70] The parties to proceedings for such an order are generally just the applicant for the order and the legal personal representative of the deceased person: Re Lanfear (1940) 57 WN (NSW) 181; Re S J Hall [1959] SR (NSW) 219; Vasiljev v Public Trustee [1974] 2 NSWLR 497. These cases were decided under the legislation that preceded the Act, but are still applicable. [71] According to these authorities, the duty of the legal personal representative is either to compromise the claim or to contest it and to seek to uphold the provisions of the will (or the distribution on intestacy); and to that end, to put before the court evidence made available by beneficiaries that is relevant to the issues. The beneficiaries may be joined as parties, but generally only if it appears that the legal personal representative is not fulfilling this duty to represent their interests, or there is some other reason justifying this unusual course." 81In relation to the court's power to make an order, by agreement of the parties, Mason P said, at [37] - [39]: "[37] In the context of claims under the Act, one often encounters references to the court's "jurisdiction" to make a particular order in a particular estate. Thus, to give an example of present relevance, de Groot & Nickel, Family Provision in Australia 3rd ed, Lexis Nexis Butterworths, Chatswood, 2007 at 8.7 states that: The court's jurisdiction depends not upon the agreement of the parties but upon the court's view of the question whether the deceased has made adequate provision for the applicant. The learned authors cite three authorities which support this proposition and do so in the language of "jurisdiction" (Mudford v Mudford [1947] NZLR 837 at 838; Re Archibald [1950] QWN 3; Re Julso [1975] 2 NZLR 536 at 538). [38] In my opinion, "jurisdiction" and "power" are concepts that should not be blurred or subjected to ecthlipsis in the present context (see, Harris v Caladine (1991) 172 CLR 84 at 136). Macready AsJ had undoubted jurisdiction to entertain the application before him. The critical question in the appeal relates to the scope of his Honour's power to reject the settlement. [39] In McMahon v McMahon (New South Wales Supreme Court, Young J, 2 August 1985, Young J said: An order [under the relevant NSW Family Provision Act] does not follow just because all the parties to the proceedings have agreed between themselves that such an order should be made. Whilst in general if a Court is asked by consent of all parties to make an order it will make an order, as I said in my judgment in Kalyk v Whelan 31 July 1985 where the legislature casts on the Court the duty of seeing that an order is only made in appropriate circumstances the Court is not bound to make any order tendered by all the parties by consent. Because of this it is necessary for me to look into the facts and circumstances of the plaintiffs and the defendant so far as they are relevant to a possible claim under the Family Provision Act." 82On this topic, Hodgson JA said at [72]: "As with other types of proceedings, agreements to compromise are possible, and indeed are to be encouraged. Such an agreement may be made by the parties to the proceedings, and the court will generally give effect to it. However, the court will need to be satisfied that the pre-condition in s 9(2) of the Act is fulfilled, and that the order agreed on is one which ought to be made in terms of s 7 of the Act. Because of the agreement, the court will generally be satisfied of these things without the need for any significant investigation of the evidence." 83Bryson JA said: "[79] The agreement between Mrs Stott the executrix of the late Mr B.G. Thomas and the first respondent Katherine Coomber a minor, acting through her mother and solicitors, was an agreement which Mrs Stott was empowered to make under her power of compromise in s 49 of the Trustee Act 1925. Mrs Stott made the agreement on the advice of her solicitors and also of counsel. She was acting within the limits of her power; exercising the power of compromise in good faith for the purpose for which it was conferred and not for any ulterior or improper purpose. ... [84] The agreement could only be given effect by an order made by the Court, and the Court could only act in exercise of the power in s 7 of the Family Provision Act 1982. If claimants and executors agree to settle a Family Provision claim their agreement cannot have effect unless the Court exercises its power under s 7 and orders provision in accordance with the agreement. Whatever their agreement says, obtaining an order of the Court is impliedly a condition of its effectiveness. [85] If the Court simply accepted the agreement of the parties and ordered the provision for which the agreement provides without considering exercise of its power under s 7 the Court would act in error; it would in substance fail to exercise its power. [86] An order for provision always adversely affects property rights in estate assets which somebody would otherwise have. Alterations of property rights of this kind are authorised by law only if the Court makes a decision under s 7; not otherwise." 84In relation to the Court's power to not make a consent order, Mason P, in Bartlett v Coomber, said: "56 I accept that the court's power to reject a compromise reached in proceedings under the Act is available both where the sum to be provided is too low or too high. Either extreme might indicate, for example, that the proceedings were being conducted through to completion for a purpose foreign to that of the Act and/or that some fundamental mistake vitiated the settlement process. 57 But it must be borne in mind that litigation under the Act takes place in an adversary context in which the active parties to the particular litigation are usually expected to be the best judges of what is in their own interests. The policy of Australian law encourages the settlement of disputes (see eg Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 at 9 per Gleeson CJ and Uniform Civil Procedure Rules 2005, Part 20). Our legal system would collapse were it not for the fact that most disputes are resolved by agreement. 58 One of the principles giving effect to this policy is the principle that a valid compromise gives effect to an agreement that effectively supersedes the antecedent rights of the parties. The possibility of greater success and the risk of greater failure is transposed into an arrangement that frees the litigants and witnesses of the risks, costs and toils of further disputation. This principle is not displaced in the context of proceedings under the Act, although for reasons already outlined, the court may decline to give effect to a settlement if doing so failed to effectuate the specific policies of the Act, amounted to an abuse of process or otherwise offended public policy in a demonstrable way. 59 The compromise agreement in the present case suffered from none of these difficulties. It was reached in circumstances where the deceased's executrix availed herself of the advice of solicitor and counsel. It was also reached with the concurrence of the appellant, albeit given with a qualification about no claim being made on Mrs Thomas' estate. 60 When determining whether or not to translate a binding agreement into an order, a court proceeds in the full knowledge that it lacks full knowledge about the rights and wrongs of the yet to be litigated dispute. Allegations are necessarily undeveloped and untested. ... 65 Naturally, there will be situations where a court can be sufficiently satisfied that the proffered compromise agreement lies outside the range of possible outcomes and to such a degree that the proposed order should be regarded as giving effect to some purpose extraneous to those within the Act. But much more is required than that one party to the compromise has repented of it, a fortiori a non-party like the present appellant." 85Bryson AJA said at [88], in talking of the different discretionary powers that the Court had relation to the decision of Macready AsJ to give effect to the agreement: "88 The third is the power of the Court to decline to make orders giving effect to a compromise where it is unjust to enforce the compromise or it is in the interests of justice that the matter proceed to trial. This power is associated with and illustrated by Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235 and Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528. Exercise of this power is often associated with the existence or the manner of exercise of the authority of counsel in making a compromise; there is no such question here ..." 86The decision of the Court of Appeal does not mean that any agreement reached by the parties at the mediation of a claim for a family provision order is not binding upon the parties. In such a case, the agreement will be binding on the parties, but its operation is suspended until the court approves it by making the orders: Smallman v Smallman [1972] Fam 25 at 31; Mitchell v Osborne (NSWSC, 20 May 1987, unreported); Groser v Equity Trustees Ltd [2008] VSC 163; Albany v Albany [2010] NTSC 25 at [51] per Mildren J. 87Thus, upon settlement of this type of proceeding, if a family provision order is to be made, the court, upon making such an order, even if by agreement of the parties, must be satisfied that an order is only made in appropriate circumstances, so that it must itself consider the facts and circumstances of the case: The Application of Ferdinando Scali [2010] NSWSC 1254 at [11]. Those facts will include the legitimate claims of the other parties, including the beneficiary or beneficiaries whose interests would be adversely affected by the making of an order. 88In considering whether to make the consent order, the court would also be aware of the risks of litigation in an area in which reasonable people can reach different conclusions. This is particularly so in proceedings in which a family provision order is sought: Sherborne Estate: Vanvalen and Anor v Neaves and Anor; Gilroy v Neaves and Anor (No 2) [2005] NSWSC 1003 at [56] per Palmer J. 89Even though the authorities cited refer to the former Act or the legislation in other jurisdictions, I am satisfied that the principles stated are relevant to cases under the Act. Determination 90In the matter, the sole question for determination appears to be whether the consent order should be made following the agreement reached at mediation, despite the fact that it will reduce Jay's share of the residuary estate, or whether it would be in the interests of the estate to not make the consent order and require the Plaintiff to continue the family provision proceeding in the hope that the Court's order, after a contested hearing, will result in Jay receiving more than the amount that he will otherwise receive. 91However, it is not only the possibility of the Plaintiff receiving less than the amount he would receive if the consent order were made, that I must consider. The possibility that he may receive an order for provision that is greater must also be considered. In the latter case, the amount that Jay will receive as the balance of the residuary estate will be less. 92In either case, the additional cost of the proceedings that might have to be borne by the estate is also a relevant consideration. The small value of the deceased's estate and the fact that it may be depleted by further legal costs, if the substantive proceedings are further defended is a very important matter. 93With these considerations in mind, and noting the concession that the amount that the Plaintiff is to receive if the consent order is made, is within the range of orders that might be made after a contested hearing, I am of the view that I should make the consent order despite the opposition of Ms Neville. 94Furthermore, I have earlier referred to the Court's desire to have all claims for a family provision order mediated, and the encouragement given to executors and administrators to resolve proceedings at mediation, if not before, in small estates, where this can be done, consistent with their obligations to the beneficiaries whose interests are affected. 95I am satisfied, in this case, that the first Defendant, as the executor to whom probate of the deceased's Will had been granted, gave serious and proper consideration to Jay's entitlement as the sole residuary beneficiary. Furthermore, there is no suggestion that the first Defendant was not acting within the limits of his power to compromise; or not exercising that power in good faith for the purpose for which it was conferred; or that he was doing so for any ulterior or improper purpose. Nor is there any suggestion that the first Defendant did not form an honest judgment that it would be in the best interests of the estate to resolve the Plaintiff's claim at mediation, rather than to incur the further costs, expenses and delay in defending the claim, the outcome of which was doubtful: McGrath v Troy [2010] NSWSC 1470 at [55] per White J. There is also no evidence to suggest that the resolution of the substantive proceedings involved some misconception of principle, either as to his relevant functions as the executor of the deceased's estate, or as to what was at stake in the proceedings that were to be compromised. 96In my view, particularly in an estate of this size, the first Defendant's power to compromise should not be curtailed. In my opinion, the interests of the estate would be best served by the making of the consent order. 97In his final written submissions on behalf of Ms Neville, Mr Heazlewood noted that "the Second Defendant has withdrawn her objection to the agreement reached between the Plaintiff and the Defendant subject only to an Order that provision is made out of the monies payable to the Plaintiff to pay child support". 98I have considered the submission made on Ms Neville's behalf in relation to the Plaintiff's alleged failure to pay child support since March 2009. In my view, even if her evidence on this topic is accepted (since it has not been tested), I am not satisfied that there is power to, in effect, add a term to the consent order. 99It seems to me, on an application to make a consent order, that either the court can make the consent order or refuse to make it. If it refuses to make it, then the substantive matter would proceed and it would be for the trial judge, in determining the application, to specify any conditions, restrictions or limitations to be imposed in the family provision order or to make any additional order considered necessary to adjust the interests of any person affected and to be just and equitable to all those persons. 100To impose a condition or make any additional order in a case where there has been a mediation, a written agreement reached, and a consent order proposed, would be to alter the terms of the agreement reached between the Plaintiff and the Defendant. Section 98 does not, in my view, permit the specification of any conditions, restrictions or limitations, which might be imposed by the Court, or permit additional orders to be made, as could occur if it were making a family provision order after a contested hearing. 101Even if I were to have such a power, as a matter of discretion, I would not exercise the power in favour of Ms Neville for the following reasons (in no particular order of priority): (i)No steps were taken by her to obtain child support from the Plaintiff after March 2009. Whilst she may have had very sound emotional, commercial, and other, reasons for not seeking child support, the simple fact is she requires me to assume that it is payable, when the Plaintiff denies that it is. (ii)Since what is sought is arrears of child support, and because there is no evidence that the arrears are required so that Jay's financial future might be assured, it seems to me that what is being sought is the amount required to reimburse Ms Neville for what she has already paid on behalf of Jay. (iii)The matters that Ms Neville sought to agitate during the hearing could have been agitated by her at the mediation had she attended. (iv)I was informed by Mr Heazlewood that Ms Neville intends to commence proceedings to obtain an order for the arrears of child support, and she has indicated that she will commence those proceedings in the Federal Magistrates Court promptly. These proceedings could have been commenced well before the hearing of this application. (v)To make an order of the type proposed by her, would, in effect, be providing security to Ms Neville (or the Commonwealth) in respect of any judgment obtained against the Plaintiff. 102In conclusion, I am satisfied that the consent order agreed to by the Plaintiff and the first Defendant, as to the provision from the estate for the Plaintiff and costs, is within an appropriate range, having regard to all the circumstances. I am also satisfied that the compromise of the Plaintiff's claim should be regarded as in Jay's best interests even though the incidence of the provision made for the Plaintiff will be borne solely out of the deceased's residuary estate which passes to him under the Will. 103I make the following orders (which is in accordance with the consent order with minor amendments): (a)There be provided, out of the estate of Beverly Rose Morrison, to the Plaintiff, a lump sum of $105,000. (b)Interest on such amounts shall run at legacy rates from 16 April 2012. (c)The costs of the first Defendant, calculated on the indemnity basis, are to be paid out of the estate of the deceased. (d)There be no order as to costs of the Plaintiff, with the intention that the Plaintiff will pay his own costs. (e)Note the agreement of the parties in Paragraphs 1 to 6 of the Short Minutes of Order under the heading "The Parties agree that". Costs of the Application 104I have considered whether, in the circumstances of this case, I should not make any order for costs against Ms Neville. I have come to the conclusion that even though she purported to act in Jay's best interests, his interests were being properly considered, and protected, by the first Defendant. 105In addition, I am satisfied that I had no power on the present application, other than consensually, to make an order of the type she ultimately sought. It seems to me that what she has sought would have the effect of protecting her own, rather than Jay's, interests. 106Accordingly, I order her to pay the costs of the first Defendant of the hearing on this application, such costs to be calculated on the ordinary basis. To the extent that there is any difference between the costs recovered from Ms Neville and the indemnity costs of the application, those costs are to be paid out of the deceased's estate. 107In relation to the costs of the Plaintiff of the hearing of the application, since he did not dispute that he had not paid child support since 2009, and since the mathematical calculations setting out the amount were agreed by him, I propose to make a conditional costs order. In the event that the Plaintiff succeeds in his defence of any proceedings commenced by Ms Neville to recover unpaid arrears of child support, or in the event that those proceedings are not commenced within 21 days of the date of these orders, then he should receive his costs of the present application, such costs to be calculated on the ordinary basis. However, if in those proceedings, he is found to be liable for any amount by way of arrears of child support, he should not have his costs of the present application. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 April 2012