Supreme Court New South Wales Medium Neutral Citation: Austin v Austin [2019] NSWSC 1397 Hearing dates: 28 August 2019 Date of orders: 30 August 2019 Decision date: 30 August 2019 Jurisdiction: Equity Before: Hallen J Decision: See Paragraph [63] Catchwords: SUCCESSION – Family Provision – Approval sought of inter vivos release made by the Defendant in respect of his rights to make an application for a family provision order in respect of the estate of his wife, the Plaintiff, in the event she shall become a deceased person – No proceedings extant between the parties and no other familial dispute between them – Section 95 Succession Act 2006 (NSW) – Extent of circumstances considered on approval of inter vivos release – Importance of the parties' right to enter into agreement – Whether inter vivos release made should be approved by Court – Amended release made by the Defendant – Amended release approved Legislation Cited: Civil Procedure Act 2005 (NSW) Succession Act 2006 (NSW) Cases Cited: Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286 Affoo v Public Trustee of Queensland (2012) 1 Qd R 408; [2011] QSC 309 Bartlett v Coomber [2008] NSWCA 100 Kelly v Kelly [2019] NSWSC 994 Robinson v Robinson [2019] NSWCA 180 Smith v Smith (No 3) (1986) 161 CLR 217; [1986] HCA 36 Category: Principal judgment Parties: Fiona Louise Mac Cormick Austin (Plaintiff) Philip Daniel Austin (Defendant) Representation: Counsel: Mr A Harding (Plaintiff) Mr M Jassy (Solicitor) (Defendant) Solicitors: HWL Ebsworth Lawyers (Plaintiff) Jassy Lawyers (Defendant) File Number(s): 2019/226913 Judgment – EX TEMPORE (REVISED) The Claim 1. HIS HONOUR: On Wednesday, 28 August 2019, I heard an application for the approval of an inter vivos release, by the Defendant, of his rights to apply for a family provision order commenced before the date of the death of the Plaintiff, his spouse, whose estate may be the subject of an order for provision upon her death. These are my reasons for approving the release, amended by the agreement of the parties, following the hearing, and before any decision had been made in regard to the release initially made by the Defendant. 2. The release that was the subject of the initial application for approval was contained in a Deed of Release and Indemnity dated 27 March 2019. It provided, amongst other things, that the Defendant "agrees to release his rights to make any claim for further provision against [the Plaintiff's] estate or notional estate pursuant to Chapter 3 of the Succession Act". In other words, the release, as initially made, was an inter vivos release, by the Defendant, in relation to the whole of the estate or notional estate of the Plaintiff. 3. The legal representatives of the parties requested that I deal with the matter in Chambers. I have dealt with the power of the Court to deal with a matter in Chambers in my recent decision of Kelly v Kelly [2019] NSWSC 994. In addition to the matters to which I referred in that case, I should also have referred to s 71 of the Civil Procedure Act 2005 (NSW), which section permits the business of a court, in relation to any proceedings, to be conducted in the absence of the public, "…(f) if, in proceedings in the Equity Division of the Supreme Court, the court thinks fit". 4. On the first return date of the Summons, because of what I considered to be deficiencies in the evidence that had been filed and served, and because I had some reservations about whether to approve the release, I listed the matter for oral argument. I also suggested, then, that the legal representatives consider Kelly v Kelly, in which I had dealt with the principles that apply in relation to the approval by the Court of a release under s 95 of the Succession Act 2006 (NSW) ("the Act"). 5. During the course of the hearing on 28 August 2019, the legal representatives sought a short adjournment in circumstances to which I shall come, which was granted, and following which they informed the Court that there had been further discussions between the parties and that they had agreed the release to be made by the Defendant, which would then be sought to be approved, would be one in relation to part of the estate or notional estate of the Plaintiff, rather than in relation to the whole of her estate: Tcpt, 28 August 2019, p 18(42-47). 6. In the circumstances, I stood the matter over and informed the parties that if the form of the release was one in the terms that had been indicated, I would deal with the approval, and, perhaps, provide short reasons for the orders that I would make. 7. On Thursday 29 August 2019, a copy of a different Deed of Release and Indemnity, dated 28 August 2019, the original of which was signed by the parties, was sent to the Court as an attachment to an email of that date. The copy Deed is marked Ex. A, and it will remain in the Court papers. (To clarify, the copy Deed was not formally marked as an Exhibit, however, it has been treated as such in the proceedings, and will be hereafter referred to as Ex. A.) 8. The amended Deed of Release and Indemnity, relevantly, provided: "Recitals … D. Philip agrees to Fiona arranging her affairs in this way and wishes to release his right to make any further claim against Fiona's estate or notional estate on her death other than assets to the value of the Release Excluded Amount, as defined below. … F. Philip: (a) agrees to release his rights to make any claim for further provision against Fiona's estate or notional estate pursuant to Chapter 3 of the Succession Act other than a claim against the Release Excluded Amount; (b) acknowledges the approval of the Court is required to give effect to the release of rights under section 95 of the Succession Act; (c) agrees to seek Consent Orders approving the release of his rights under section 95 of the Succession Act; and (d) agrees to do all such things and sign all such documents as may be required for that purpose. … 1.1 Definitions … Release Excluded Amount means assets to the value of A$6 million, adjusted for inflation between the date the Court makes the Consent Orders and the date any claim for family provision is filed in the Court according to the movement of the Consumer Price Index (or such other index that replaces it) between those two dates. … 2 Termination of former Deed of Release and Indemnity 2.1 Fiona and Philip agree that the terms, rights and obligations they had under the Deed of Release and Indemnity they executed on the 27 March 2019 are at an end. 2.2 Fiona and Philip agree that the terms, rights and obligations under this Deed of Release and Indemnity replace those under the former deed. … 4 Releases and indemnities 4.1 Except so far as he has a right to make a claim arising under this Deed in particular a claim under the Act limited to the Release Excluded Amount or with respect to the enforcement of this Deed, in consideration of her obligations in clause 3 above, Philip releases and holds harmless and abandons forever all his rights to make any claim against the Estate, in relation to: (a) all claims and all demands and all potential claims and all potential demands of whatever nature against the Estate that he alleges, or may have alleged in the past including, without limitation, all claims or demands that he may allege in the future, whether or not the facts, matters or circumstances relating to any such claims are currently within his knowledge, and whether or not it would have been possible for him to obtain knowledge of any such facts, matters and circumstances as at the date of this Deed; and (b) any alleged legal, beneficial or any other equitable interest in any asset of the Estate. 4.2 In consideration of the matters set out at clause 3 above, Philip further releases and abandons forever all his rights to make any further claim under the Act against the Estate other than a claim limited to the release Excluded Amount and covenants to do all things reasonably necessary to obtain the approval of the Court to the release and abandonment of his rights under this clause." 1. It follows that the release made by the Defendant is now one in relation to part of the estate or notional estate of the Plaintiff and that any claim for provision made by the Defendant will be limited to the "Release Excluded Amount". 2. In addition, the parties provided Short Minutes of Order signed by each of the legal representatives. 3. Subsequently, in an email sent by my Tipstaff, at my request, the parties were informed that the matter would remain listed and that I would provide reasons for the orders to be made. I followed this course because the circumstances of the case give rise to important and difficult considerations of general importance. Background Facts 1. The Defendant and the Plaintiff are husband and wife. They have been married for 13 years. They have three children, all of whom are minors. There is no suggestion that their marriage, which continues to subsist, is other than an harmonious, happy, and loving, one. During the hearing they were both present in Court and sat with each other. Only the Defendant, as the releasor, gave oral evidence in order to supplement his affidavit that was read. 2. In broad summary, the Plaintiff is almost 45 years of age. She gave evidence that she has assets, in New South Wales, of substantial value. Those assets include real estate and cash in bank. She has one significant liability, being a debt secured by a mortgage registered on the title to the matrimonial home, which is one of the parcels of real estate that she owns. In addition, she has financial resources, located in the United States of America and in Sweden. These include real estate, cash in bank, properties in different trusts, and interests, as a beneficiary, in various trusts. The value of those financial resources is slightly less than the value of the Plaintiff's assets in New South Wales. 3. As well, the Plaintiff is an object of a trust in the United States of America, which trust has property, the value of which is many times greater than the value of the Plaintiff's own assets and financial resources. Although it is uncertain (because of litigation concerning the trust there), the value of the Plaintiff's share of that specific trust is estimated to be slightly more than double the value of the Plaintiff's assets in New South Wales and her financial resources otherwise in the United States and Sweden. 4. Without going into precise detail, it is fair to say that the value of the Plaintiff's estate, or potential estate, is in the order of many millions of dollars. 5. The Plaintiff gave the following evidence: "12. My current health is very good. I have built up my family assets over my lifetime and I wish those assets to pass to my children leaving aside the specific benefits to be provided to the defendant as set out in my Will, which is annexed to the Deed of Release and Indemnity dated 27 March 2019 …. 13. I have considered at length my moral obligation to the defendant as compared to my obligation to my children. I am in the fortunate position of having greatly benefited from wealth generated by my grandfather and great-grandfather on my father's side of the family. The defendant is aware of, and also benefits from, this good fortune. As the father of my children, the defendant is very happy for me to arrange my affairs in such a way as to continue the inheritance of this wealth to our children and their descendants rather than directly to him. Even though we hope such circumstances will not occur, if I were to predecease the defendant and he were then to remarry, it could have the effect of diverting the flow of inheritance my children stand to receive to persons unrelated to the creation of that wealth. Accordingly, in my Will, I have decided to provide for the defendant by permitting him to receive income from the testamentary trusts created in my Will; to reside in my Australian residence for his life and to pay all outgoings in relation to that property; and to have access to the capital of the trusts in any emergency as required. I have drafted a Memorandum of Wishes to my trustees in which I inform them of my wish that, barring any emergency, the capital of my trusts is to be preserved. A copy of my Will dated 19 March 2019 is annexed to the Deed of Release and Indemnity…. 14. I have gone through this process in the hope of preserving harmony and tranquillity in our lives and to reduce any disputes between our separate families. The approval of the statutory release will provide me with the comfort and satisfaction of knowing that no further claim can be made by the defendant against my estate upon my death and that I have adequately provided for the defendant. This represents an important, indeed fundamental, pillar to ensure that a potential financial claim against my estate will not otherwise mar our relationship. 15. I understand that if the Court approves a release of the defendant's rights as against my estate, the approval of the release will extinguish those rights once and for all, regardless of any change in the defendant's circumstances or if he becomes ill, impoverished or infirm or otherwise in need of any support or assistance that may be needed. I have taken into account these factors in seeking the approval of the Court to the release." 1. (The Plaintiff's evidence that her Will permits the Defendant "to receive income from the testamentary trusts created in my Will" is not entirely accurate as the Will creates certain discretionary testamentary trusts, one of the objects in each of which is the Defendant. As stated in the Deed of Release and Indemnity earlier referred to, the Defendant's current Will provides for "[A] potential income stream from the testamentary trusts created for [my] children for [the Defendant's] and their maintenance, education, benefit and advancement in life at the discretion of the trustees of which he is one, while his children are under the age of 30 years": Recital C(b) (my emphasis). 2. The Plaintiff's current Will also provides the Defendant with a right to reside in the Plaintiff's Australian principal place of residence at her death, rent, maintenance, and outgoing, free, or in such alternative accommodation as he may need for his life or as long as he wishes. (There is also provision of an amount to be set aside in a testamentary trust fund for the purpose of the payment of outgoings, maintenance and upkeep of the Australian principal place of residence to alleviate him from that expense.) 3. Finally, there is a power "to access capital in the event of an emergency, at the discretion of the trustees from the testamentary trusts created for [the] children". 4. In addition, the Plaintiff stated that she had left a Memorandum of Wishes directed to the trustees regarding her Will, a copy of which Memorandum of Wishes is annexed to the copy Deed of Release and Indemnity. Clauses 3.2 and 3.3 of the copy Deed of Indemnity and Release identified certain specific parts thereof. 5. It is unnecessary to recite those parts as the Memorandum of Wishes is not binding upon the trustees of the testamentary trusts created by the Will. It is an express statement of what, currently, the Plaintiff hopes to achieve by her testamentary arrangements. 6. The Plaintiff did not state, in her affidavit, or otherwise, any intention not to revoke her current Will or state that there was an agreement in place, otherwise, not to do so (a matter that was raised in arguendo before the amendment of the terms of the release). 7. In support of the application, evidence was also given by Mr M V Henley, an extremely experienced, and if I may say, well respected, estate solicitor, who drafted the Will of the Plaintiff that she signed in March 2019, which "affects my property and affairs in Australia, but does not take effect in, or affect, property or affairs of [the Plaintiff] in any other part of the world". 8. In his affidavit, affirmed on 27 August 2019, Mr Henley dealt, in some detail, with the property in the United States of America, the subject of the trusts. He confirmed, having taken advice from the Plaintiff's lawyer in the United States of America, that the trustee of one of the sub-trusts was required to "pay all of the net income from the non-GST Marital assets to the defendant … if assets flow to the Non-GST Marital Trust, then the defendant will have a vested right to the net income of that sub-trust". He also stated that the trustee of another of the sub-trusts was required to "pay all of the net income of the GST Marital assets to the defendant … [and then the defendant will] have a vested right to the net income of that sub-trust". In this way, he made very clear that the Defendant's entitlement is dependent entirely on assets flowing into the relevant sub-trust. 9. Mr Henley also stated that the trustee of another of the sub-trusts has discretion "to pay some of the capital from the assets of each sub-trust to the defendant for his health, education and support in reasonable comfort". He pointed out that the trustee "shall be generous in exercising discretion with respect to payment of principal to or on behalf of [the Plaintiff's] husband". 10. It is clear from Mr Henley's evidence that the receipt of the entitlement, if any, of the Defendant, in respect of the trust in the United States of America, cannot be stated with any degree of certainty. 11. The Defendant is 53 years of age. Comparatively, he has, currently, very little by way of property and financial resources. He is a post-doctoral research fellow employed as a lecturer at a university and is also a practising osteopath on a very regular basis. His income exceeds his expenditure: Tcpt, 28 August 2019, p 3(30) – p 3(37); p 13(5) – p 13(8). 12. He solely owns two parcels of real estate in the United Kingdom, a half share in the family car, and has a modest amount of cash in bank. He discloses no other financial resources of any real value. He currently has an income, which exceeds his expenditure. He has an earning capacity. It was accepted by the parties that "the financial circumstances and resources of the parties are significantly different": Tcpt, 28 August 2019, p 3(40) – p 3(45). 13. The Defendant acknowledged that his financial contribution to the property of the Plaintiff, in Australia, was limited to the use, as part of the family's income, of his own income: Tcpt, 28 August 2019, p 15(05) – p 15(16). 14. He gave the following evidence in relation to the application in his affidavit that was read in the proceedings: "13. As mature adults, the plaintiff and I have discussed my financial needs now and in the future. In the hope of preserving a good relationship with the plaintiff and in order to give myself peace of mind, I wish to proceed with the approval of the grant of the statutory release. During the plaintiff's life, I have the advantage of benefitting from the inherited wealth that the plaintiff brings to our relationship. If the plaintiff were to predecease me, following her death I would continue to benefit from an income stream from the trusts created in the plaintiff's will dated 19 March 2019 and a right to reside in the plaintiff's properties on her death free of any outgoings. Should any emergency arise requiring access to the capital of those trusts, the trustees would have the discretion to release it to me, under the guidance, should they wish to follow it, of a Memorandum of Wishes prepared by the plaintiff. This money will provide both me with the financial security that I need and will be satisfactory for my maintenance and advancement in life. Finally I am satisfied that the plaintiff will receive the comfort and satisfaction of knowing that no further claim can be made by me against her estate as I am aware of her other moral obligations to our children, which I respect and wholeheartedly endorse. This represents an important part of our relationship which bodes well for the future. 14. I understand that if the Court approves a release of my rights as against the estate of the plaintiff the approval of the release in the Affidavit will extinguish those rights once and for all, regardless of any change in my circumstances or if I become ill, impoverished or infirm or otherwise in need of any support or assistance that I might otherwise be entitled to call upon from the estate of the plaintiff. Notwithstanding my belief that such dire circumstances are most unlikely to befall me, I have nevertheless taken this into consideration in seeking the approval of the Court to such release. I consider that the release of such rights is the only appropriate vehicle to ensure the preservation of our relationship and provide me with a solid financial foundation for my benefit in the future. 15. I wish to release my rights pursuant to Section 95 of the Succession Act 2006 (NSW) (Act) to make an application under that Act against the plaintiff's estate, as evidenced by the Short minutes of Order signed by my solicitor on my behalf in these proceedings. 16. Prior to signing the draft Short Minutes of Order I sought advice from my solicitor Michael Jassy, Jassy Lawyers, … as to the effect of: (a) the release to be given by me; and (b) the Court's approval of the release. I am satisfied that: (a) it is to my advantage to grant the release; (b) it is prudent for me to grant the release; and (c) the granting of the release is fair and reasonable." 1. As with the Plaintiff's evidence, the Defendant's evidence that "I would continue to benefit from an income stream from the trusts created in the plaintiff's will dated 19 March 2019" is inaccurate, since he is but one of a number of objects of each discretionary testamentary trust created by the current Will of the Plaintiff. 2. The Defendant also gave evidence that he had given due consideration to the legal advice that he has received. 3. During the course of the hearing before me, the Defendant was called to give oral evidence. In answer to questions, he maintained his request that the release that he had made be approved by the Court. When it was confirmed that he had been present in Court when a number of different future scenarios had been advanced, including that the Will of the Plaintiff could be revoked at any time, and a new Will making no provision for him could be made by her, at any time, he maintained his stance, explaining that he understood the matters raised by the Court as of concern: Tcpt, 28 August 2019, p 13(5) – p 16(19). 4. However, almost immediately following the completion of his oral evidence, the Court was informed that the release sought to be approved would be amended. The Court adjourned, briefly, so that the parties could discuss the precise terms of any amended release. Upon returning, as stated earlier, the Court was informed that the parties had agreed that an amended Deed of Release and Indemnity would be provided as soon as reasonably possible: Tcpt, 28 August 2019, p 18(42-47). I have referred to its terms above. Determination 1. Section 95 of the Act provides: "(1) A release by a person of the person's rights to apply for a family provision order has effect only if it has been approved by the Court and to the extent that the approval has not been revoked by the Court. (2) Proceedings for the approval by the Court of a release of a person's rights to apply for a family provision order may be commenced before or after the date of the death of the person whose estate may be the subject of the order. (3) The Court may approve of a release in relation to the whole or any part of the estate or notional estate of a person. (4) In determining an application for approval of a release, the Court is to take into account all the circumstances of the case, including whether: (a) it is or was, at the time any agreement to make the release was made, to the advantage, financially or otherwise, of the releasing party to make the release, and (b) it is or was, at that time, prudent for the releasing party to make the release, and (c) the provisions of any agreement to make the release are or were, at that time, fair and reasonable, and (d) the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice. (5) In this section: 'release of rights to apply for a family provision order' means a release of such rights, if any, as a person has to apply for a family provision order, and includes a reference to: (a) an instrument executed by the person that would be effective as a release of those rights if approved by the Court under this section, and (b) an agreement to execute such an instrument." 1. As has been stated, the Court, in this matter, is concerned with an executed instrument rather than with an agreement to execute such an instrument. 2. In Kelly v Kelly, I set out the principles that I considered relevant in the Court approving a release. I repeat what I wrote in that case, at [71]-[72]: "Some general principles It is possible to state some general principles that apply to s 95 of the Act. I make clear that I do not intend what I shall describe as 'general principles' to be elevated into rules of law, propositions of universal application, or rigid formulae. Nor do I wish to suggest that the jurisdiction of the Court in relation to the approval of a release under the Act should be unduly confined, or that the discretion should be constrained, by statements of general principle found in dicta in other decisions, or by preconceptions and predispositions. Decisions of the past do not, and cannot, put any fetters on the discretionary power given to the Court, which is left largely unfettered. The general principles that I consider to be relevant under s 95 of the Act are: (a) The power of the Court to approve a release under s 95 is incidental to the exercise of the principal jurisdiction of the Court under s 59 to order provision out of the estate or notional estate of a person. (b) The authority given to the Court to approve a release qualifies the old principle that contracting out of the statutory benefits is prohibited: Lieberman v Morris (1944) 69 CLR 69; [1944] HCA 13. Also see Smith v Smith (No 3) (1986) 161 CLR 217; [1986] HCA 36, per Mason, Brennan and Deane JJ, who pointed out, at 250, that the effect of s 31 of the Family Provision Act 1982 (NSW), the predecessor of s 95 of the Act, was to qualify the pre-existing prohibition against contracting out of certain statutory benefits, and that s 31 laid down a precondition to rendering effective an agreement to contract out. (c) The Act, so far as it relates to family provision, generally, operates only after the death of a person whose estate (actual or notional) is sought to be made liable for the maintenance, education or advancement in life of an 'eligible person', an expression which includes a child of the deceased person: s 57(1)(c). An exception, however, relates to an application for the approval of a release commenced before the date of the death of the person whose estate or notional estate may be the subject of the order. (d) A release has effect only if it has been approved by the Court and to the extent that the approval has not been revoked by the court. If the Court approves the release, and does not subsequently revoke its approval, no application for provision out of the estate or notional estate (or the part thereof that has been released) of the person whose estate is released can be made thereafter. If the Supreme Court refused to approve of the release, the only consequence would be that a potential barrier to the making of an application for provision out of the estate or notional estate of a person, after his, or her, death, would be removed. (e) Gibbs CJ, Wilson and Dawson JJ in Smith v Smith (No 3) at 240‑241, construed s 31 of the Family Provision Act, which was in similar terms to s 95 of the Act, as a section making the efficacy of an agreement depend upon approval by the Supreme Court of New South Wales and if, absent a seal or stamp, 'the agreement is not effective'. (f) Assuming that there is evidence of the matters in s 95(4), there is no presumptive right to an order, but there remains a general discretion, vested in the Court, to make an order approving the release. The application to approve a release of rights is not a mere formality. Importantly, an order approving the release does not follow just because all the parties have agreed that such an order should be made: Boyter v Lepre; Estate of Umberto Lepre [2001] NSWSC 127. In McMahon v McMahon (Supreme Court (NSW), Young J, 2 August 1985, unrep), Young J, put it this way: 'Although I am not aware of any important reported decision on s 31, I am aware that on at least two occasions since the Family Provision Act came into force judges in this division have made an order under s 31 as an adjunct to approving a settlement of proceedings brought in a family property dispute. The view that has been taken is that [the members of] a family come to an all-up settlement and once and for all release each other from liabilities and wish to go their separate ways and they are all sui juris and advised by competent counsel and solicitor, then it is in the public interest that the disputes between them be put to an end forever by also releasing the rights under s 31 of the Family Provision Act. A prodigal son who takes his inheritance and also releases his rights under s 31 with the approval of the Court can thereafter not expect any fatted calf upon his return to the family property. In my view, the attitude previously taken is the correct one, although parties should not automatically assume when they have settled a family dispute that the Court will make an order under s 31...'. (g) As stated in s 95, in determining whether to approve the release, the court is required to take into account all the circumstances of the case, including those matters referred to in s 95(4)(a) to (d). Some of the matters referred to will be considered by particular reference to the party granting the release, namely what is referred to in s 95 (a), (b) and (d), but s 95(c) will be considered by reference not only to that party but also by reference to the other party or parties. (h) The parties should put before the Court sufficient material for the Court to consider all the circumstances of the case. Those circumstances would include the events leading to the giving of the release, where any agreement was signed, for example, whether it was at the conclusion of a formal mediation (within the contemplation of s 98 of the Act) and, in particular, evidence that there had been no coercion. Another circumstance would be the value of the estate, or part of the estate, or notional estate of the person whose estate may be the subject of the order, at the date of the giving the release. (i) The Court's enquiry is not limited to the circumstances as they existed when the agreement for the release was signed: Neil v Jacovou [2011] NSWSC 87; Russell v Quinton; Mulcahy v Weldon [2001] NSWSC 474; Dark v Dark [2016] NSWSC 1223. (j) A relevant consideration, in all cases in which there is approval of a release sought, is that litigation under the Act takes place in an adversarial context, in which the active parties to the litigation are usually expected to be the best judge of what is in his, or her, own interests: Bartlett v Coomber [2008] NSWCA 100, per Mason P, at [57]. (k) Yet, one of the express considerations referred to is whether it is, at the date of the giving of the release, prudent for the releasing party to make the release. A prudent person is someone who acts with care and thought for the future, in particular in exercising care and good judgment in relation to his or her own interests: Russell v Quinton, at [70]. In Piper v Mueller (2015) 54 Fam LR 369, at 381; [2015] FamCAFC 241, at [52], Ryan and Aldridge JJ wrote (albeit in another context): '…in determining what is "prudent", the court looks to the future and the interests of the person in taking, or not taking, the proposed course. In other words, whether a particular course is prudent involves consideration of the advantages and disadvantages of the proposed course. Similarly, an assessment of whether the provisions of an agreement were fair and reasonable, necessarily involves a consideration of the advantages and disadvantages of those provisions.' Murphy J wrote, at [91]: 'Ryan and Aldridge JJ arrive at a similar conclusion by reference, in particular, to analogous provisions of a piece of State legislation (albeit that that legislation, in stark contrast to s 90UJ, and the statutory scheme applicable to financial agreements, involves court supervision and the exercise of a judicial discretion in relation to it). A similar point might be reached by, for example, reference to dictionary definitions of "prudent" which include "judicious or wisely cautious in practical affairs; discreet or circumspect"; or "characterized or proceeding with care in following the most politic and profitable course; … circumspect," noting in particular that the latter word is defined, in turn, to mean "… cautious, wary, taking everything into account."' (l) Another specific consideration, whether the provisions of any agreement to make the release are fair and reasonable, is an evaluative decision. In Neil v Jacovou, Slattery J wrote, at [84]: 'Fairness and reasonableness must be assessed over time, "having regard to all the circumstances": Family Provision Act, s 31(5). When determining whether or not to approve the release, the court can also take into account the value of the rights that in these reasons the court finds that [the plaintiff] would have but for the operation of the release as well as the fact that she made the agreement for the release. As Bryson J (as his Honour then was) said in Mulcahy v Weldon [2001] NSWSC 474 at [10], "... the question whether the court should make an order under [Family Provision Act] s 31 would lead to a consideration of the same matters as are raised by the plaintiff's claim for further provision. If when all the circumstances are considered, including the contractual arrangement for a release, the right outcome is that the plaintiff should have further provision, approval under s 31 would not be forthcoming. The fact that the arrangement was made, even though no approval under s 31 had been obtained, has a bearing on whether provision ought be ordered." The court concludes under question 9 below that further provision should be made for [the plaintiff] despite her execution of the pre-nuptial agreement. The quantum of the rights the release neutralised is one measure of its unfairness.' (m) Whether the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice, may require a consideration of the independent advice that has been given, although all that is required by the sub-section is whether independent advice was given, and whether due consideration was given to that advice. The sub-section does not mandate that the Court cannot approve a release unless the releasing party has obtained independent advice. Nor does it require the Court to determine the content of the independent advice given. However, if there were evidence of the advice given, and no challenge was made to that evidence, the Court could consider the correctness, or otherwise, of that advice, as part of all the circumstances of the case: Russell v Quinton at [65]-[66]. In Kamil Faltas v Hong Peng; Tammy Westbury v Hong Peng; Bianca Faltas v Hong Peng; Emile Faltas v Hong Peng [2014] NSWSC 1922, Brereton J wrote, at [17]: 'Section 95(4)(d) requires the Court to take into account whether the releasing party has taken independent advice and, if so, has given due consideration to that advice. It does not mandate that the Court cannot approve a release unless the releasing party has taken independent advice. In order to be satisfied that Bianca understood what she was releasing and the terms of the settlement as a whole and had made an informed decision about it, I required that some oral evidence be adduced from her for that purpose. Having heard that evidence, I am so satisfied, and while I note and take into account that she has not taken independent advice, in all the circumstances I do not consider that that factor tells significantly against approving the release that she proposes to give.'" 1. I should also mention that "a change of circumstances does not provide a basis under s 96 of the Succession Act for revocation of the approval of a release given under s 95 in relation to an existing or a prospective family provision claim": Robinson v Robinson [2019] NSWCA 180, per Basten JA, at [5]. 2. As has been made clear, the principles stated above are not suggested, or intended, to be an immutable statement of legal principles. 3. Whilst the principles that I stated are relevant, it should be noted that the facts in Kelly v Kelly are different, in one very important respect. In that case, I had the firm impression, having heard the evidence of the plaintiff in that case, that he lacked a full appreciation of the meaning, and effect, of the release that he had made and the consequences of the approval by the Court of that release. 4. That impression (of the Defendant's knowledge and understanding of what he is giving up) does not exist in the present case. I have no doubt that he fully understood the terms, and the effect, of the release he had initially made, as well as the effect of the approval by the Court of that release. 5. (It was unnecessary to hear further evidence from the Defendant as the terms of the amended release may be, in all the circumstances, more favourable than the initial release. There is no suggestion that he does not understand the terms of the amended Deed of Release and Indemnity.) 6. It is because it has been established that, knowing all of the facts, the Defendant has given the release and maintained his desire to have the release approved, that the Court has been prompted to provide these written reasons. 7. The legal representatives of the parties strongly submitted, in this case, that one of the applicable principles to be remembered is that parties should be able to determine the terms of their succession arrangements, including entering into an agreement, intending that agreement to provide a statutory bar to there being proceedings under Chapter 3 of the Act; that they should be free to determine, for themselves, what primary obligations relating to private rights they accept; that they should be permitted to enter into an agreement, in that regard, in order to avoid future litigation; and where they have given unimpeachable evidence, including of the matters in s 95(4) of the Act, the Court should respect their autonomy, hold them to the bargain made, and not stand in the way of the agreement freely entered into by them, as adults who are sui juris. 8. It was also submitted that there is a public interest in parties being encouraged to settle their disputes, and potential disputes, with the confidence that if they do so, the Court will be likely to approve the terms of their agreement, if it is freely entered into on each side. 9. However, as was pointed out, the power given to the Court to approve the making of a release, particularly in the case of an inter vivos release, is an important, and in some ways, an exceptional, power. The section itself makes the efficacy of the release of the person's rights depend on approval by the Court. If the Court approves the release, no application for provision out of the estate or notional estate of the person whose whole estate is released can be made upon the death of the person whose estate may be the subject of the order (other than in circumstances where the Court, pursuant to s 96 of the Act, revokes an approval of a release given by it under s 95). 10. In Smith v Smith (No 3) (1986) 161 CLR 217; [1986] HCA 36, the members of the High Court acknowledged the principle that unless statute provides otherwise, any agreement to forego a right to apply for a family provision order is void as being contrary to public policy. If the Court refuses to approve the release, the only consequence will be that a potential barrier to the making of an application for provision out of the estate or notional estate of the person, after his, or her, death, would be removed. 11. I accept that there will be cases in which a party will make a reasoned judgment that making a release of rights is genuinely in his, or her, own best interests, perhaps because it provides a route to familial harmony, or otherwise, and where there is no suggestion that the release has been procured by harassment or undue pressure. Usually, on such an application, the evidence also records that the releasor was independently advised by a named legal adviser, and on the face of the evidence, the agreement does not appear to have any unethical vices. 12. It was submitted that this is one such case and gives rise to the conclusion that the Court should approve the release that had been made by the Defendant. However, none of the principles relied upon by the parties are absolute. In the case of a release, which requires the approval of the Court to be effective, the parties should not assume that there is an automatic entitlement to have the release approved. They cannot, by their agreement, usurp the discretion given to the Court by s 95 of the Act. 13. Furthermore, it seems to me, in circumstances where the Court is given a discretion by the Act whether to approve a release, that there is a protective purpose of the legislation which overrides the principles relied upon by the parties, and which provides an inherent limit on their ability to restrict the entitlement of one, or both, to make an application given to one, or both, of them by statute. 14. The parties are not prevented from reaching arrangements to avoid potential expensive disputes. An evaluative assessment, by the Court, whether to approve the release, however, must be made in each case. Close attention must be paid by the Court to all of the facts of the particular case, including the financial circumstances of each of the parties, the extent of the right being released, and also the matters identified in s 95(4) of the Act. Nothing within the section suggests, in terms, any restriction on the matters that might inform the exercise of the discretion of the Court. 15. In addition, as I wrote in Kelly v Kelly, the power of the Court to approve a release under s 95 is incidental to the exercise of the principal jurisdiction of the Court under s 59 to order provision out of the estate or notional estate of a deceased person. 16. As with a settlement of family provision proceedings generally, and as Bryson AJA wrote in Bartlett v Coomber [2008] NSWCA 100, at [84]-[86]: "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. 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." 1. As was also written by Dalton J in Affoo v Public Trustee of Queensland (2012) 1 Qd R 408; [2011] QSC 309, at [24]: "The final disposition of a family provision application calls for the exercise of the Court's discretion, it cannot be achieved by agreement or deed. The rule has its origins in the policy that a person cannot by contract exclude the jurisdiction of the Court to make a family provision order." 1. The statement made by Dalton J was approved by the Queensland Court of Appeal in Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286, at [30]. 2. As earlier noted, there can be no doubt that the Court, in this case, has jurisdiction to approve the release of the rights, as amended, made by the Defendant, in respect of the Plaintiff's estate and notional estate. 3. In determining the application for approval of the release, as amended, I have taken into account all of the circumstances of the case, including the four matters specifically referred to in s 95(4)(d) of the Act. Although I may not have approved the initial release made by the Defendant, it seems to me that, now, the approval of the release, in its amended form, ought to be given. 4. In this regard, and amongst other things, I consider that it is, at the time the agreement to make the release is made, to the advantage, financially or otherwise, of the Defendant to make the release. He has confirmed the reasons why that is so. 5. It is to the Defendant's advantage otherwise to make the release because it brings to an end the concerns on the part of the Plaintiff that she has identified, and enables both of the parties to continue their familial relationship in the manner appropriate to them. 6. In addition, even if the Plaintiff were to change her current Will, or in the event there is a detrimental change to his financial circumstances, the Defendant, upon the death of the Plaintiff may still, if he wishes to do so, bring a claim for a family provision order, although the available estate out of which any provision may be made for him will be limited to the "Release Excluded Amount". In other words, the Defendant's entitlement to make a claim will survive the approval of the release because it is one made in relation to a part, albeit a significant part, of the estate and notional estate of the Plaintiff. 7. The Defendant believes it is prudent to make the release in its amended form. For similar reasons, I also consider that it is, currently, prudent for him to make the release as amended. The Defendant also believes the terms of the release, in its amended form, are fair and reasonable, in that only part of the Plaintiff's estate is being released (albeit, as has been earlier stated, a substantial part). The "Release Excluded Amount", on present indications, appears to be sufficient to satisfy any order for provision and for costs that might be made in favour of the Defendant out of the Plaintiff's estate. 8. The Defendant has taken independent advice in relation to the amended release and says that he has given due consideration to that advice. This is clear by reason of the amendment to the release. 9. In all the circumstances, the Court: 1. Notes the agreement of the parties in the Deed of Release and Indemnity dated 28 August 2019, a copy of which is Ex. A in these proceedings. 2. Notes the release of his rights, given by the Defendant in Ex. A, to apply for a family provision order out of the whole, or any part, of the estate or notional estate of the Plaintiff, other than in respect of the Release Excluded Amount as defined therein, in the event that the Plaintiff shall become a deceased person. 3. Orders pursuant to s 95 of the Succession Act 2006 (NSW), that the release, by the Defendant, of his right to apply for a family provision order in relation to the whole of the estate or notional estate of the Plaintiff, other than in respect of assets to the value of AUD$6.0 million, adjusted for inflation between the date of these orders until the date any claim for a family provision order is filed according to the movement of the Consumer Price Index (or such other index that replaces it) between those two dates, in the event that she shall become a deceased person, be approved. 4. Notes the agreement of the parties that for the purposes of these orders the Consumer Price Index means the Index All groups, Weighted Average of Eight Capital Cities of Australia. 5. Makes no order as to costs of either party to the intent that each party will bear her, and his, own costs, respectively, of the proceedings. ********** 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: 15 October 2019