Court Approvals of Releases in Family Provision Claims
Settlement of a claim against an estate for a family provision order often includes a release by the plaintiff of his or her rights to make a further claim for provision. Under the legislation, the Court’s approval to a release of rights to bring a further claim is required for the release to be effective.
Inter vivos releases of rights to claim in the future against the estate of a living person also require the Court’s approval to be of legal effect and binding on the party giving the release.
Further, the Court can only approve the release of rights if it is satisfied as to certain matters, which in turn requires evidence from the parties, and in particular the plaintiff, as to the matters set out in s.95(4) Succession Act 2006.
In a decision delivered on 10 February 2020, the NSW Court of Appeal dismissed an appeal from a decision of a judge in chambers approving releases by the appellant of any further family provision claim on her late father’s estate and any future claim on her mother’s estate. To satisfy s.95 (4) is not a mere formality, but the evidence need only be sufficient for the Judge to make the assessment required.
s.95 of the Succession Act 2006:
- 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family provision order has effect only if it has been approved by the Court and to the extent that the approval has not been revoked by the Court;
- 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;
- The Court may approve of a release in relation to the whole or any part of the estate or notional estate of a person;
- In determining an application for approval of a release, the Court is to take into account all the circumstances of the case, including whether:
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- 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
- it is or was, at that time, prudent for the releasing party to make the release; and
- the provisions of any agreement to make the release are or were, at that time, fair and reasonable; and
- the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice.
The estate
The late Ron Robinson died on 1 July 2016. His actual estate was minimal, not requiring Probate to administer; the potential notional estate largely comprised the deceased’s interest as joint tenant in the family home at Kincumber with his wife, Dr Portia Robinson, aged 93, and to whom he was married for over 60 years. The home passed by survivorship to her on his death, with Notice of Death registered by her on 6 December 2016.
The Claim for provision by the Appellant
The appellant who sought provision was Sarah Jane Robinson, daughter of the deceased. (Her daughter Jessica was also a plaintiff but later abandoned her claim.) The 1st respondent was the deceased’s son Leigh who was appointed to represent the estate.
The appellant had made allegations of fraud and undue influence at various times in relation to inter vivos transactions after the death of the deceased, in which Dr Robinson had transferred to Leigh half the home, and entered into a lease of the property as tenant on 6 December 2016.
Had those transactions been set aside, Dr Robinson would hold the whole property; if she held it at her death it would be part of her estate and available to meet any claim for provision from her estate. This issue was relevant to the appellant’s release of her mother’s estate.
At an initial judicial settlement conference, the matter settled in principle, but the appellant later withdrew from the settlement, and the matter was set down for hearing to begin 16 April 2018.
Deed of Release
On 6 April 2018, the parties reached a settlement by Deed of Release signed by the appellant, the 1st respondent and Dr Robinson. By the Deed the appellant gave the s.95 releases.
The settlement included payment to the appellant of $20,000 and a later payment of $180,000 from the proceeds of sale of the family home.
The Deed noted the value of the home was ‘about $900,000’; the Administrator’s affidavit referred to the value as ‘around $545,000’; the appellant had annexed to her affidavit internet appraisals between $976,000 to $1.4 million; and estimated the value as a mid-range of $1,220,386. This evidence was relevant to the issue of what the appellant was ‘giving up’ by her releases.
The Deed contained releases in favour of Dr Robinson but no releases by her. (This was relevant to an argument that her capacity should have been established, and whether a tutor was required.)
The Deed recited the provisions set out in s.95 (4) Succession Act.
Commencing 10 April 2018, the appellant’s daughter sent various emails to the Associate, objecting to the settlement. The matter was to be listed before open court for the orders to be made in settlement of the proceedings and for any submissions, including by Jessica; however, as this would increase costs of the parties, the primary judge decided against this initially.
Evidence in support of Approval of releases
Subsequently, on 13 April 2018, the Associate emailed the parties (copied to Jessica):
‘His Honour reviewed the draft orders and deed of release in Chambers yesterday afternoon. Having regard to the many emails which we continue to receive from Jessie Robinson contending that the plaintiff … was ‘in no fit state to sign anything’ and had ‘no choice but to sign something that should never have been signed’, his Honour has regrettably concluded that he should not make proposed orders … concerning the approval pursuant to s95 of the Succession Act 2006 of the release by the plaintiff of certain rights, without satisfactory evidence (in addition to the deed of release itself) of each of the matters listed in s95(4) [and setting out the provisions in full].… his Honour has decided that the prudent course in the circumstances of this particular case is to deal with the proposed orders in open court and to require sworn evidence of the matters that are required to be taken into account in determining an application for approval pursuant to s 95.’
The Court of Appeal noted that it appeared His Honour had considered the Deed provisions were insufficient and required more to satisfy s.95 (4).
On 16 April 2018, the appellant’s counsel served an affidavit by the appellant, reciting only the matters required under s. 95(4), and requesting the Consent Orders approving the settlement be made. On 17 April 2018, Pembroke J made orders in chambers approving the releases.
The Appeal
The amended notice of appeal relied on grounds including that there was inadequate evidence before the judge to consider whether the release was fair and reasonable, or prudent, and claimed that Dr Robinson may have lacked capacity, and was not joined to the proceedings.
Relevant principles
The Court of Appeal set out relevant principles as to the power to approve a release of rights under s.95, and that it is incidental to the Court’s exercise of jurisdiction to make an order for provision. Approval is not a mere formality; there must be sufficient material to consider all the circumstances and the terms on which the release has been agreed, in particular, on what is being released; the prudence of the release requires regard to the standard of a prudent person acting with care and thought for the future in relation to his/her own interests; and the specific requirements of s.95 (4).
(One factor that may be taken into account is the stress and cost of a contested hearing, and potential for future family disputation.)
The appellant argued that, due to the lack of evidence, one could conclude the Judge did not consider the s. 95(4) matters, as required, or gave them ‘independent scrutiny’. The lack of any evidence of Dr Robinson’s will to see what was being released was a factor. These grounds were rejected by the Court of Appeal; the affidavits on the Court file set out the relevant financial circumstances of the appellant and Dr Robinson, the estate assets and the home; and the evidence given as to independent legal advice. Whilst there was no direct evidence of the appellant giving due consideration to the advice, there was evidence from her counsel of a process whereby she considered and then reached a decision on the settlement.
Ward, JA in delivering the Court’s decision found further it could not be said the settlement was neither financially or otherwise advantageous, fair, reasonable or prudent for the appellant. No error on the part of the primary Judge could be found on that basis in approving the releases.
The Court of Appeal dismissed the appeal with costs, to be deducted from the appellant’s share of the proceeds of sale of the Kincumber property.
This article was written by Michael Henley, Partner and Christine McPhillips, Special Counsel.
