Supreme Court New South Wales Medium Neutral Citation: Sackelariou, Edward v O'Donnell; Sackelariou, George v O'Donnell [2018] NSWSC 1651 Hearing dates: 25 October 2018 Date of orders: 25 October 2018 Decision date: 25 October 2018 Jurisdiction: Equity Before: Hallen J Decision: See Paragraph 91 Catchwords: SUCCESSION — FAMILY PROVISION — Settlement of Proceedings — Agreement in principle reached between Plaintiffs and Defendant at private mediation — Application made by four beneficiaries under the Will of the deceased who oppose settlement upon basis that they are to bear substantial portion of the burden of the Plaintiffs' additional provision — Applicants are step-grandchildren of the deceased — Plaintiffs under legal incapacity — Whether applicant beneficiaries should be permitted to be heard on application to approve compromise — Whether Court should make orders approving proposed settlement Legislation Cited: Civil Procedure Act 2005 (NSW) Family Provision Act 1982 (NSW) NSW Trustee and Guardian Act 2009 (NSW) Succession Act 2006 (NSW) Trustee Act 1925 (NSW) Cases Cited: Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286 Bartlett v Coomber [2008] NSWCA 100 Coric v Grotto; Nelson v Grotto [2007] NSWSC 1080 Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388 Hadley v McNamara (Supreme Court (NSW), Young J, 7 December 1995, unrep) Hodge v De Pasquale (2014) 15 ASTLR 1; [2014] VSC 413 Hoobin v Hoobin [2004] NSWSC 705 Hore v Perpetual Trustee Co Ltd (Supreme Court (NSW), Windeyer J, 8 June 1995, unrep) John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Kalyk v Whelan (Supreme Court (NSW), Bryson J, 31 August 1988, unrep) Morrison v Abbott [2012] NSWSC 320 Re Lanfear (1940) 57 WN (NSW) 181 State of Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56 Category: Procedural and other rulings Parties: 2017/342738 Edward Sackelariou by his tutor the NSW Trustee & Guardian (Plaintiff) Gabrielle Ann O'Donnell (Defendant) Christian Sackelariou by his tutor Susan O'Neill (Applicant) Alexandre Sackelariou (Applicant) Andreas Van Niekerk by his tutor Eraine Grotte (Applicant) Vincent Grotte (Applicant) 2017/342793 George Derek Sackelariou by his tutor the NSW Trustee & Guardian (Plaintiff) Gabrielle Ann O'Donnell (Defendant) Christian Sackelariou by his tutor Susan O'Neill (Applicant) Alexandre Sackelariou (Applicant) Andreas Van Niekerk by his tutor Eraine Grotte (Applicant) Vincent Grotte (Applicant) Representation: Counsel: 2017/342738 and 2017/342793 Ms T Catanzariti (Plaintiff) Mr L Ellison SC (Defendant) Ms S Clemmett (Applicants) Solicitors: 2017/342738 and 2017/342793 NSW Trustee & Guardian (Plaintiff) Lees & Givney (Defendant) Glass Goodwin (Applicants) File Number(s): 2017/342738, 2017/342793 Publication restriction: Nil Judgment – EX TEMPORE (Revised) Introduction 1. HIS HONOUR: There are two proceedings before the Court, one in which the Plaintiff is Edward Sackelariou by his tutor, the NSW Trustee and Guardian (2017/342738), and the other in which the Plaintiff is his brother, George Derek Sackelariou by his tutor, the NSW Trustee and Guardian (2017/342793), in order to determine a notice of motion, filed on 1 August 2018, on behalf of Christian Sackelariou by his tutor, Susan O'Neill, Alexandre Sackelariou, Andreas Van Niekerk by his tutor, Eraine Grotte, and Vincent Grotte ("the applicants"). (At the hearing, I was informed from the Bar table that Andreas is now 18 years old. Therefore, he no longer needs a tutor. He remains opposed to the orders sought.) 2. I shall hereafter refer to the parties and, where necessary, to the applicants individually, by his, or her, first name, for ease of reference and without any disrespect intended. 3. By a different Summons filed on 13 November 2017, respectively, George and Edward each makes a claim for a family provision order pursuant to Chapter 3 of the Succession Act 2006 (NSW) ("the Act"). A family provision order is an order made by the Court in relation to the estate, or notional estate, of a deceased person, to provide from that estate, for the maintenance, education, or advancement in life, of an eligible person. I shall refer to these proceedings as "the substantive proceedings". 4. In the notice of motion, the applicants seek orders permitting them to be heard in opposition to the proposed settlement of each of the substantive proceedings, which proposed settlement is said to have been reached by the Plaintiff, by his tutor, respectively, and Gabrielle Ann O'Donnell, the Defendant and the sole executrix of the Will dated 20 September 2016 of Dianne Maria Sackelariou ("the deceased") to whom this Court has granted Probate. 5. Although the notice of motion was filed only in Edward's substantive proceeding, it sought an order that it be treated as having been filed in respect of George's substantive proceeding as well. Strictly speaking, a notice of motion should have been filed in George's substantive proceeding, also, but the parties accepted that the result in one would be equally applicable to the other. I proceeded with the hearing of the notice of motion on that basis. Accordingly, the evidence and the submissions to which I shall refer apply to the proposed settlement of both proceedings. 6. The proposed settlement is reflected in Short Minutes of Orders, which have been marked as Ex. NME and Ex. NMG respectively. They are in near identical terms. (At the hearing, without objection, an amended version of the Short Minutes of Orders was provided and it is the amended version that is marked as an Exhibit respectively.) 7. At the hearing of the notice of motion, Ms T Catanzariti of counsel appeared for each Plaintiff; Mr L J Ellison SC appeared for the Defendant in each matter; and Ms S Clemmett of counsel, appeared for the applicants on the notice of motion. The Procedural History 1. The substantive proceedings were listed in the Family Provision List, for the first time, on 15 December 2017, on which occasion the Court made directions for the service of the Defendant's affidavits. There was a failure, by the Defendant, to comply with the directions and further directions were made on 16 February 2018. 2. On 3 April 2018, the Court referred both matters to private mediation on 10 May 2018, before Mr P Studdert. The mediation took place on that date. Apparently, a representative of the tutor for Edward and George, who attended by solicitor and counsel, the three siblings of the deceased, one of whom is the Defendant and the others being Eris and Antoinette, who were represented by a solicitor and senior counsel, were also present. 3. Eraine, without legal representation, who is the mother of Andreas, was present, but it would seem, in her capacity as the "surviving Executor of the estate of the late George Sackelariou" (the husband of the deceased). Neither of the adult applicants was present and nor was any representative of Christian. 4. At the mediation, agreement was reached, which agreement, in each case, was embodied in a handwritten document described as "Heads of Agreement". The document was signed by Eraine, as the "surviving Executor of the estate of the late George Sackelariou". She agreed and resolved "to pay the funds held on trust for the Plaintiffs pursuant to George's Will, and any interest, to the NSWT&G". 5. When the matter was listed for the private mediation, the Court, in Chambers, also made its usual directions for Consent Orders, affidavits required to be read, and a settlement checklist, to be delivered to the Court by 8 June 2018. Each matter was adjourned to 22 June 2018. 6. The matters were adjourned on 22 June 2018, and then, again, on 13 July 2018, no doubt, because of the involvement of the applicants. On each occasion the matter was mentioned after the private mediation, Ms Clemmett sought to appear for the applicants. 7. As stated, the applicants filed the notice of motion on 1 August 2018. It was returnable on 7 September 2018, at which time, the notice of motion was set down for hearing today. 8. On the hearing of the notice of motion, the only affidavit read in support thereof, was one, affirmed on 1 August 2018, by Ms L Gidley, the solicitor employed by the firm of solicitors acting for the applicants. Annexed to the affidavit was a list of assets and liabilities of each of the applicants. Without going into detail, each has very little by way of assets. I shall refer to the contents of Ms Gidley's affidavit, in more detail, later in these reasons. No objections were made to this affidavit. 9. The Plaintiffs read an affidavit made on 6 June 2018, of Mr G J Mackey, a senior legal officer for the NSW Trustee and Guardian with conduct of the proceedings on behalf of each of Edward and of George. The contents of the affidavit, as will be read, concerned the settlement of the proceedings and his view thereof on behalf of each of Edward and George. No objection was made to this affidavit. I shall refer to the contents of Mr Mackey's affidavit, in more detail, later in these reasons. 10. In addition, during the course of the hearing, counsel tendered a copy of the Probate of the Will dated 23 January 2007 of George Sackelariou Snr (the deceased's second husband) (Ex. NMP). This Court had granted Probate of that Will to Eraine on 23 June 2014. 11. The Defendant read the affidavit sworn 5 February 2018 of Gabrielle (the Defendant's affidavit) and two affidavits of Ms L J Lees going to service of notices of the application, and of the Court's power to disregard interests referred to in s 61 of the Act. None of these notices dealt with the resolution of the substantive proceedings. 12. At the hearing, without notice, senior counsel read a third affidavit sworn 8 June 2018 of Ms Lees, which stated that, on 10 and 11 May 2018, she had written to each of the charity beneficiaries "who may be adversely affected by the agreement reached between the parties". In addition, on 25 May 2018, she sent a letter to Messrs Glass Goodwin, the firm of solicitors acting for the applicants, enclosing a copy of the handwritten Heads of Agreement written by counsel for the Plaintiff, handwritten Heads of Agreement written by senior counsel for the Defendant, and a typed transcript of the Heads of Agreement. 13. On about 14 May 2018, a representative of Asylum Seekers Centre Incorporated, one of those charity beneficiaries, acknowledged receipt of the correspondence from Ms Lees. On 1 June 2018, a representative of St Vincent de Paul Society NSW, another of those charity beneficiaries, acknowledged receipt. On 1 June 2018, Ms Gidley acknowledged receipt of the documents that had been sent by Ms Lees to the firm. 14. Senior counsel for the Defendant provided to the Court, as part of his outline of submissions, a document that identified the nature, and the estimated value, of the deceased's distributable estate as at 26 June 2018, each pecuniary legatee, the amount of each pecuniary legacy, and the residuary beneficiaries and the estimated amount each would be likely to receive. Without objection, this document was marked as Ex. NMD. 15. None of the deponents of the affidavits was cross-examined. 16. Following the reading of the affidavits, each counsel spoke to the written submissions that she, and he, respectively, had filed and served. Brief Background 1. It is necessary to provide some of the background in order to put the application, and the submissions of the parties, into context. I start with the undisputed facts. 2. The deceased died on 14 November 2016, aged 73. Her husband, George Sackelariou Snr, predeceased her, having died on 6 December 2013. 3. There were no children of the marriage of George and the deceased. The deceased, in fact, died without any issue. 4. The deceased was survived by her siblings, Gabrielle Ann O'Donnell, Antoinette Riley, Paul O'Donnell, and Eris O'Donnell; by several nieces and nephews, being Erin Reilly, Claire Riley, Michaelean O'Donnell, Lachlan O'Donnell and Laila O'Donnell; and by her cousin, John Sullivan. Another person, Cassandra Bourke, who was described in the deceased's Will as "my niece", was, in fact, a niece of the deceased's first husband. 5. At the hearing, without objection, the Court was informed that Erin and Claire are the children of Antoinette and that Michaelean, Lachlan and Laila are the children of Eris. 6. The Court had been informed, in Ex. NMD, without objection, that whilst Paul had survived the deceased, he died on 3 February 2017, and that the pecuniary legacy to which reference will be made, which was to be held on trust for him by Gabrielle under the deceased's Will, now falls into the residue of the deceased's estate. 7. George Snr had previously been married to Marissa Sackelariou, who died on 27 March 1982. There were five children of their marriage, namely, William, who was born in August 1955; Richard, who was born in August 1954; Eraine, who was born in August 1957; George Jnr, who was born in August 1961; and Edward, who was born in May 1963. The five children, who were the stepchildren of the deceased, all survived her. Of the applicants, Christian and Alexandra are children of Richard, and Andreas and Vincent are children of Eraine. 8. The parties did not dispute that the Guardianship Tribunal had made a financial management order in respect of the estate of each of Edward, and of George, respectively, on 22 November 2010, making his estate subject to management under the NSW Trustee and Guardian Act 2009 (NSW) and committing the management of the estate to the NSW Trustee. 9. There was also no dispute that each of Edward and George is a person under a legal incapacity within the meaning of that term as defined in s 3 of the Civil Procedure Act 2005 (NSW), each being "a protected person within the meaning of the NSW Trustee and Guardian Act 2009". 10. In broad summary, Edward has an intellectual disability, reported to be in the moderate range. He has also been diagnosed with autism, depression, cardiomyopathy, Left Bundle Branch Block (a condition that delays the contraction of the left ventricle of the heart) and hypertension. His eyesight is said to be somewhat impaired. He is non-verbal, although he is able to understand simple requests. He is ambulant. He is regarded as having "high needs and requires assistance with all tasks of daily living … requires assistance with maintaining a satisfactory level of personal hygiene [and] self-care and the other more sophisticated self-care skills…". He is not socially focussed and does not appear to form significant attachments. 11. In broad summary, George has an intellectual disability, reported to be in the moderate range. He has been diagnosed with autism, a schizo-affective disorder, in remission, epilepsy, osteopenia (low bone density) and epididymitis (an infection near the testicles). He is non-verbal, although he is able to understand simple requests. He is ambulant. He is regarded as having "high needs". He is not socially focussed and does not appear to form significant attachments. 12. The deceased left a Will dated 20 September 2016. This Court granted Probate of the Will to Gabrielle on 6 March 2017. By the Will, the deceased: 1. Devised realty at Gladesville ("the Gladesville property") to Asylum Seekers Centre Incorporated, for its general purpose in providing short term accommodation for asylum seekers (Clause 3). 2. Made three gifts of jewellery to Cassandra, to Laila, and to Eraine (Clauses 4, 5, and 6). 3. Gave a pecuniary legacy of $100,000 to Cassandra (Clause 7). 4. Gave a pecuniary legacy of $50,000 to each of her step-grandchildren, Vincent, Alexandra, Christian and Andreas (Clause 8) (who are the applicants). 5. Gave a pecuniary legacy of $25,000 to each of her nieces and nephews, Erin, Claire, Michaelean, Lachlan, and Laila (Clause 9). 6. Gave a pecuniary legacy of $50,000 "to my stepdaughter Eraine Grotte for my stepson George [Sackelariou] and my stepson Edward Sackelariou" on trust as set out in the Will (Clause 10). 7. Gave a pecuniary legacy of $25,000 to Gabrielle, for Paul, on the trusts set out in Schedule 2 of the Will (Clause 11). 8. Gave a pecuniary legacy of $10,000 to each of three named friends (Clauses 12 and 13). 9. Gave a pecuniary legacy of $1,000 to each of 15 named friends (Clause 14). 10. Gave various pecuniary legacies, totalling $270,000, to 14 named charities (Clause 15). 11. Gave a pecuniary legacy of $20,000 to John (Clause 16). 12. Left the residue equally to her named siblings, Gabrielle, Antoinette and Eris (Clause 17). 1. From the above, it appears that there are various family members who receive gifts in the Will. Of those family members, Edward, George, Eraine, and the applicants, are related to the deceased through her marriage to George Snr, one is a relation of the deceased's first husband (a step-niece), and the rest are members of the deceased's family, being her siblings, nieces, nephews, and a cousin. There are 15 different charity beneficiaries and 18 natural beneficiaries, each of whom is identified as a "friend" of the deceased. 2. The terms of the trusts relating to the pecuniary legacy to each of Edward and George are set out in Schedule 1 of the Will. The trustee of the Trust is Eraine. Broadly, pursuant to the terms of the trust, when either of George or Edward dies, the balance (if any) of the legacy accrues to the benefit of the survivor. 3. Clause 4.2 of Schedule 1 stated: "On termination of this trust Eraine Grotte [holds] the balance of the fund, if any, for Richard Sackelariou, William Sackelariou and Eraine Grotte or the survivor of them." 1. (Richard and William are also related to the deceased through her marriage to George Snr.) 2. Eraine, as the Trustee, is given wide powers to use all, or any, of the income, and all, or part, of the capital of the trust fund for "the benefit" of Edward and George, or the survivor of them, "in the shares and amounts and at times as she in her discretion thinks fit". As a non-binding wish, the deceased set out the principles in accordance with which Eraine, as trustee, would exercise her powers, noting that the capital and income of the trust was "primarily for the maintenance, education, benefit, advancement in life, or well-being" of each of them or the survivor (Clause 5(ii) of the Schedule). 3. Apparently, agreement has been reached that Eraine will pay each trust fund to the NSW Trustee and Guardian, to be held by it on the same trusts as in the Will of the deceased. 4. The deceased recognised the physical and mental incapacity of George and of Edward. In Clause 5(i) of the Schedule to the Will, she noted that both had been diagnosed with autism; that they both could not handle money or make financial decisions; that they both needed assistance and reminders to do domestic chores and with personal care issues; and that it was unlikely that they would ever live independently without care and supervision. 5. In the Inventory of Property attached to the Probate document, the estimated, or known, value of the deceased's estate, was disclosed as $2,385,357. The value of the Gladesville property devised to Asylum Seekers Centre Incorporated, was $640,000. There was another parcel of real estate, at Huntleys Cove, a suburb in the northern suburbs of Sydney, located about 9 kilometres north-west of the Sydney central business district ($1,375,000), cash in bank ($347,171), interest ($385), moneys in credit union ($13,635), a car ($8,000), furniture ($1,000) and payments refunded to the estate ($165). (I have omitted cents which will explain any apparent mathematical miscalculation.) 6. In an affidavit sworn by Gabrielle on 5 February 2018, the Court was informed that only the gifts of jewellery had been distributed. She disclosed also, that omitting the costs of the proceedings, the then estimated value of the gross distributable estate was $2,237,378, and that it consisted of cash held in the trust account of her solicitors ($1,597,378) and the Gladesville property ($640,000). 7. In Ex. NM1, the estate is shown as comprising the Gladesville property ($640,000) and cash ($1,474,248). Estimated unpaid administration costs, testamentary costs, and the Defendant's costs (presumably of the substantive proceedings) are estimated to be $150,000. (How the difference in cash has been spent since the Defendant's affidavit of 5 February 2018 is not disclosed.) The Proposed Settlement 1. As each of Edward and George is a person under a legal incapacity, the parties agreed that, except with the approval of the Court, there may not be any compromise or settlement of any proceedings to which s 76 of the Civil Procedure Act applies, regarding a claim made by, or on behalf of, each. 2. Ex. NME and Ex. NMG, in summary, provides: 1. In addition to the legacy of $25,000 provided for him in the Will of the deceased, each of Edward and George will receive a lump sum of $125,000, as a life estate as to income, and with the right to borrow capital (interest free) from the lump sum, with any remaining capital and income repayable on his death to the remaindermen in accordance with the proportion to which the remaindermen contributed to the fund. 2. 50% of the additional $125,000 will be borne by the deceased's four step-grandchildren (who are the applicants) (Clause 8), 3. 50% of the additional legacy will be borne by the charity beneficiaries in the proportions, Oxfam Australia (12.5%), St Vincent de Paul Society NSW (12.5%), and Asylum Seekers Centre Incorporated (75%). 4. The additional lump sum provided by way of the orders will be managed by the NSW Trustee & Guardian, such that those step- grandchildren who, and the charities which, are bearing the burden of the additional provision, will receive a remainder interest to the extent that any of the additional lump sum remains after the death of the Plaintiff. 5. No order will be made as to the Plaintiff's costs, to the intent that he will bear his own costs of the proceedings. 6. The Defendant's costs, calculated on the indemnity basis, of the proceedings, will be borne by the three charities in the proportion noted in paragraph 7 of the orders. 1. Relevantly, the effect of the proposed resolution of each matter, so far as it affects the applicants, is that the step-grandchildren will contribute a fund of $62,500 to the settlement of each of the claims. In turn, this means that each of the four step grandchildren will contribute a total of $31,250, to the lump sums, with the result that the pecuniary legacy of $50,000 gifted to him and her in the Will, will be reduced to $18,750. However, as to the capital amount being contributed, the legatee will have a remainder interest in the amount contributed until the death of each of Edward and George. 2. Counsel for the Plaintiffs described it as: "The balance of their legacy of $31,250 is deferred, so that the Plaintiffs receive a life estate and the Step-Grandchildren receive a remainder." 1. Ms Gidley, as the legal representative of the applicants, stated that she does not believe, in relation to the proposed settlement, that it is to the advantage, financially, or otherwise, of the applicants; or that it is prudent for them to agree to it; or that the provisions are fair and reasonable. I have read her evidence as being relevant more to the manner in which the proposed provision for each Plaintiff is to be provided, and the part, or parts, of the estate out of which it is to be provided, rather than to the terms of the family provision order proposed to be made in favour of each of Edward and George. 2. Mr Mackey, on behalf of the NSW Trustee and Guardian, stated that having considered the documents served in each of the substantive proceedings, he believed that the proposed settlement was in the best interests of each of Edward and of George, principally because, if the case proceeded to a hearing, there would be significant factual issues; there was a risk that each Plaintiff may not be able to establish eligibility, or demonstrate "need"; that the hearing of both matters, consecutively, was likely to take more than 2 days, which meant that the proceedings would be expensive to run on behalf of the Plaintiffs; and because the settlement provided certainty, without the risk of each case being dismissed, or each Plaintiff receiving less than the amount that would be received by way of the proposed family provision order. I have read his evidence as being relevant more to the nature of the family provision order proposed to be made in favour of each of Edward and George, rather than to the manner in which the proposed provision for each Plaintiff is to be provided, and the part, or parts, of the estate out of which it is to be provided. 3. Other than the proposed Short Minutes of Orders, there was no evidence from the Defendant, regarding the manner in which the proposed provision for each Plaintiff is to be provided, and the part, or parts, of the estate out of which it is to be provided. 4. The evidence of Ms Lees, being her affidavit of 8 June 2018, makes clear that the charity beneficiaries, which are bearing part of the burden of the provision, and all of the burden of the Defendant's costs, calculated on the indemnity basis, have been informed of the proposed settlement, and, whilst two have acknowledged receipt, none of them have stated any opposition to how the burden of the provision is to be borne. 5. Nor was there any evidence of the financial circumstances of any of the beneficiaries named in the Will of the deceased, other than each of the applicants. The Applicant's Submissions 1. Having carefully read the submissions made by counsel for the applicants, it seems to me that the principal submission may be distilled to the proposition that the applicants are entitled to be heard on each of the proposed settlements as their interests under the Will are being adversely affected, and also because one of the four applicants is, himself, a person under a legal incapacity (a minor), and the three others, who are sui juris and capable, do not consent to their shares of the deceased's estate being reduced. 2. In relation to the reasons why the orders should not be made, counsel relied upon "the inequality of the burden vis-à-vis the family member beneficiaries", namely, that the only family members for whom provision is made in the deceased's Will who bear any of the burden of the order for further provision for each of Edward and George are the applicants, in circumstances where: 1. the deceased's Will provides specific bequests to various other family members, other than the Plaintiffs and the applicants; 2. of all the specific gifts, the gifts to the applicants is the second largest (at $50,000 each); 3. the total amount of the specific pecuniary legacies to other family members is $520,000; 4. the total amount of the devise and the pecuniary legacies to charities is about $910,000; and 5. the residue (estimated to be $489,248, or now $514,248) is provided for three of the five siblings of the deceased, one of whom is Gabrielle, the Defendant. 1. It was submitted that in the inequality, particularly in relation to relieving the residuary estate from the burden of contributing to the additional proposed provision and also costs, an inference should be drawn that "the Defendant has given priority to her own interests as a residuary beneficiary and the interests of the 'non-step' side of the family, over the interests of the step family … [thereby] acting under a conflict of interest". (In fact, it could be inferred that she had given priority to the beneficiaries, other than the charity beneficiaries that are sharing in the burden of the proposed settlement.) 2. Counsel then submitted that even though a life interest in the lump sum of $125,000 for each Plaintiff is proposed (and even though it is suggested that this is only "a temporary state of affairs"), there is a prospect that the applicants will not receive any of the balance of the pecuniary legacy held for the Plaintiffs for some years, if ever. (However, whether the applicants will or will not receive any part of the contribution, in my view, is a matter of speculation.) 3. She also submitted that although both Edward and George, respectively, live in a group home because of his autism and psychiatric condition, each is a relatively young man, Edward is 54 years of age, whilst George is 56 years of age. There is no evidence of the life expectancy of either. 4. Furthermore, whilst the proposed orders reflect an intention that the lump sum of $125,000, is to be used by way of "last resort" (i.e. to be used after each Plaintiff's other funds have been exhausted), and that any part of those funds used will be borrowed, if the lump sum is, in fact, used only as a "last resort", there is unlikely to be any estate of either Edward, or George, held at his death, available to repay any of the lump sum that is borrowed. 5. Finally, it was submitted that it is difficult to see why other family members, including the residuary beneficiaries, should not bear a share of the burden of the provision made in favour of each of Edward and George. 6. On the question of the costs of the notice of motion, counsel submitted that the applicants' costs should be borne out of the estate of the deceased. The Defendant's Submissions 1. Senior counsel for the Defendant submitted that the Defendant, as the executor, has the power to compromise the proceedings: Trustee Act 1925 (NSW), s 49(1)(d), and that it is only in exceptional circumstances that the Court should decline to make the orders invited to do so by the parties. He submitted that the circumstances of this case were not exceptional. 2. His submissions also dealt with "the utility of a court ordered mediation", referring to Coric v Grotto; Nelson v Grotto [2007] NSWSC 1080, at [18]; that the Court "will not automatically make consent orders" referring to Kalyk v Whelan (Supreme Court (NSW), Bryson J, 31 August 1988, unrep); Hadley v McNamara (Supreme Court (NSW), Young J, 7 December 1995, unrep); and Hore v Perpetual Trustee Co Ltd (Supreme Court (NSW), Windeyer J, 8 June 1995, unrep); and, then, on the topic of the resolution of family provision proceedings, the bases of the Court's consideration in making proposed orders, referring to my decision in Morrison v Abbott [2012] NSWSC 320 at [72] – [89] and Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286, at [14] – [16], [30], [34]. 3. He then seemed to refer to the evidence of Mr Mackey in support of the proposition that the Court should approve the proposed family provision orders. 4. In relation to the manner in which the proposed provision for each Plaintiff is to be provided, and the part, or parts, of the estate out of which it is to be provided, he submitted: "[Ex. NM1] shows the four step grandchildren receive more than any friend or member of the family of George Snr. Only the deceased's next of kin, her siblings, and her niece, Cassandra receive more. The deceased's other nieces and nephews received $25,000.00 each, which is less than the step grandchildren. The nature of the settlement is that the three charities receiving the largest benefit of all charities and the four individuals receiving the largest benefit of all individuals (apart from the residuary beneficiaries and niece) will bear 50% (in each group) of the additional provision. There is nothing unreasonable about that allocation or proportion. It is noted the three burdened charities will bear the costs of the litigation, being the Defendant's costs. Had the deceased died intestate, her whole estate would have passed to her siblings. None of George's children would have received anything. They would not have been entitled to bring a family provision claim, never having lived with or been dependent upon the deceased. The very detailed nature of the deceased's Will entitles the reasonable conclusion to be drawn that the deceased gave detailed consideration to the manner in which her estate should be distributed. That should not lightly be interfered with. When the deceased turned her mind to benefiting the children of her late husband, she was entitled to give consideration first to those children and only after that consideration was exhausted, to the children of her stepchildren. It is those "step grandchildren" who are identified in clause 8 of the Will. They are far removed from any persons to whom the deceased had a moral obligation. It is entirely proper they contribute, at least in the short term, to the making of provision for their uncles." The Plaintiff's Submissions 1. Although one might have thought that neither Edward, nor George, or their legal representatives, would be necessarily interested in the manner in which the proposed provision for each Plaintiff is to be provided, and the part, or parts, of the estate out of which it is to be provided, particularly since the estate comprises a significant amount of cash, and since there is no suggestion that the proposed family provision order in each case, if made, would not be satisfied, counsel for each of them made submissions in writing and orally. 2. Counsel submitted that the applicants are the only beneficiaries who are related to Edward and George and that should each of them die intestate, which is likely since he has no capacity to make a Will (and it is not suggested that an order for a court authorised Will is to be sought), his siblings, the applicants' parents (and if the siblings predecease Edward and George, the applicants themselves) will inherit the whole of the estate on intestacy. 3. (I am not sure that the submission as to the entitlement on intestacy is entirely accurate since the survivor of Edward and George will also share in the intestate distribution.) 4. Counsel then submitted that the applicants had not advanced a moral claim upon the deceased. They are, after all, the deceased's step-grandchildren. There is no evidence of any of them having a particularly close relationship with the deceased. Yet, they receive a larger legacy than the deceased's nieces and nephews. (This submission does not seem to recognise freedom of testation and the applicants' entitlement to rely upon the fact that they are chosen objects of the deceased's testamentary bounty. Nor does it recognise the fact that there is no such evidence relied upon in relation to any of the other family members.) 5. Thirdly, the applicants are young (in fact, one is a minor), at least thirty (30) years younger than the Plaintiffs, and they are likely to survive each of the Plaintiffs and enjoy the benefit of the remainder interest. 6. In relation to why the applicants should bear the burden of provision, it was submitted that the deceased's husband bequeathed only $50,000 to each of the Plaintiffs, and bequeathed half of the residue of his estate to the deceased, and the other half to his other children, the Plaintiffs' siblings, Eraine, Richard and William. Eraine and Richard are the parents of the applicants. (William has no children.) Consideration 1. At the commencement of the hearing, I suggested to counsel that it seemed to me that the applicants, on the one hand, and the parties, on the other, have approached the proposed settlement orders from different perspectives. The Plaintiff's solicitor and senior counsel for the Defendant were approaching the case, principally, upon the basis that the Court should focus on the proposed order for provision to be made in favour of each of Edward and George, and the circumstances in which agreement was reached, namely at a private mediation, and the powers of the Court to approve the settlement. Counsel for the applicants, on the other hand, was focussing on the manner in which the proposed provision for each Plaintiff is to be provided, and the part, or parts, of the estate out of which it is to be provided. 2. It will be appreciated that s 65(1) of the Act provides that a family provision order must specify, amongst other things, the manner in which the provision is to be provided and the part, or parts, of the estate out of which it is to be provided. 3. The first matter, however, concerns the entitlement of the applicants to be heard on the issues. 4. Even though the general rule in claims for a family provision order out of the estate is that the beneficiaries should not be parties, notwithstanding that they have an obvious interest in the proceedings: Re Lanfear (1940) 57 WN (NSW) 181, at 183; Bartlett v Coomber [2008] NSWCA 100, I have little doubt that the applicants, as beneficiaries, are entitled to be heard on the application to have the orders made and approved. After all, they have an interest under the deceased's Will that would be affected by the orders proposed. 5. I have based this view, at least in part on what was written in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19, at [131], in which the plurality of the High Court accepted the submission that "where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined". Whilst joinder has not been sought, the principle behind what was written is applicable. 6. In State of Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56 at [77], McHugh J said, of the foundational principle: "The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order." 1. More recently, and, perhaps, more pertinent to the present case is Hodge v De Pasquale (2014) 15 ASTLR 1; [2014] VSC 413, in which McMillan J wrote at [81]: "A trustee who, in good faith, believes an applicant for further provision has a strong claim or a claim that it would be cheaper to settle than to contest, may still settle the claim and may seek orders giving effect to that settlement by consent, or else by seeking the approval of all beneficiaries who are affected. Beneficiaries who wish to contest such a claim are entitled to be notified and appear, but as litigants are under the same obligations to promote the efficient administration of justice." 1. The applicants do not seek to be joined to the substantive proceedings, other than "for the purpose of being heard on the application for approval of the settlement reached by the parties on 10 May 2018". They are entitled to do so. 2. There was really no dispute about this by the parties to each of the substantive proceedings and no more needs to be written about it. 3. I next turn to the question whether the proposed family provision orders should be made. The Court was informed that, in the event the proposed orders, so far as they relate to the part, or parts, of the estate out of which it is to be provided, are not approved, the proposed settlement would not be regarded as a binding one and there would be no reason, then, to consider whether the proposed settlement, so far as it related to Edward and George, should be approved. 4. I have dealt with the relevant considerations in Morrison v Abbott, at [54] – [89] and in Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388, at [29] – [39]. I shall not repeat what I wrote in each of those cases, other than to note that in the latter case, I wrote: "Where someone opposes the approval of the settlement, her, or his, reasons for opposition may provide 'a convenient focus' (see, Jessup J in Darwalla Milling Co Pty Ltd v F Hoffman La Roche Ltd (No 2)) [2006] FCA 1388; (2006) 236 ALR 322, at [39]) by reference to which the court will consider whether to approve the settlement. Similarly, that no one opposes the settlement, in the interests of the person under the legal incapacity, may, in some circumstances, also be relevant." 1. In this case, I should deal with the question whether the orders should be approved in circumstances where a class of the beneficiaries, whose entitlements under the Will of the deceased are substantially reduced, and in circumstances where they do not consent. 2. On this topic, counsel for the Plaintiff referred to Hoobin v Hoobin [2004] NSWSC 705. In that case, which was not one dealing with a proposed settlement, but which was heard as a contested proceeding, White J (as his Honour then was), at [139], referred to s 13 of the Family Provision Act 1982 (NSW): "Section 13 of the Family Provision Act provides that where the Court makes an order for provision out of the estate of a deceased person it may specify the beneficial entitlements in the estate which shall bear the burden of the provision and, in relation to each of those entitlements, the part of the burden which it shall bear. The discretion is a wide one. In an appropriate case weight may be given to what the particular testator or deceased person would have wished. (Re Seery & Testator's Family Maintenance Act (1969) 90 WN (Pt 1) (NSW) 400 at 408-409; Kleinig v Neal [1981] 1 NSWLR 462 at 464-5; Cantrell v Williams [2004] NSWSC 579 at [7]-[8].) However the discretion should be exercised having regard to 'rules of reason and justice' with due regard to the whole of the surrounding circumstances. Where, as here, the Court is not satisfied that the deceased's likely preference would be informed by those rules, his likely actual preference carries little weight. Postulating a hypothetical wise and just testator does not provide particular guidance as to how the discretion should be exercised. In this case I make the assessment principally, but not solely, by reference to the proper claims on the deceased's bounty of the plaintiff, Anthony Hoobin and Leanne Pritchard, which in turn includes a consideration of their financial circumstances." 1. In the circumstances of the present case, bearing in mind the evidence that I have read and to which I have referred, I am not satisfied that merely because the applicants are step-grandchildren, and related to Edward and George, who are the deceased's step-children, that their relationship is enough to lead me to conclude, in accordance with rules of reason and justice, that the applicants should bear one-half of the proposed provision to be made for Edward and George. 2. Furthermore, that conclusion is reached, based, at least in part, on the lack of the evidence on the following matters: 1. whether any, and if so, what, enquiries were made by the Defendant of the beneficiaries as to their competing claims, financially, and otherwise; and if enquiries were made, what the result of those enquiries were; 2. whether, in circumstances of a potential conflict of interest, proper consideration was given to the interests of the applicants, as beneficiaries; in this regard, the matters raised in Ms Gidley's affidavit were not responded to by the Defendant despite having an opportunity to do so bearing in mind when the affidavit was served; 3. whether any consideration was given to alternatives that were available to requiring a substantial part of the burden of provision to be borne by the applicants as opposed to other beneficiaries; and 4. any explanation for, or reasons why, the additional capital sum payable to each of Edward and George, albeit in which each has a life interest respectively, should not be treated as other pecuniary legacies as set out in the deceased's Will and be distributed before the residue of the estate was calculated. 1. In all the circumstances of the case, I do not propose to approve the proposed settlement so far as it relates to the part, or parts, of the estate out of which it is to be provided. 2. It is, therefore, unnecessary to deal with whether the manner in which the provision is to be provided and the quantum of that provision would otherwise be approved. 3. The parties have now made submissions on the costs of the notice of motion. 4. Having heard the parties on the issue of costs, the Court: 1. Orders that the settlement of the proceedings not be approved (in relation to the part or parts of the estate out of which the propose settlement is to be provided). 2. Orders that the applicants' costs of the notice of motion filed 1 August 2018 be paid out of the estate of the deceased. 3. Orders that the Plaintiff's costs of the notice of motion be paid out of the estate of the deceased. 4. Orders that the Defendant's costs of the notice of motion, calculated on the indemnity basis, be paid out of the estate of the deceased. 5. Stands the matter over for further directions before the Family Provision List Judge at 9:30 a.m. on Wednesday, 12 December 2018. ********** 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: 01 November 2018