When an Estate is left to adult children but not the deceased's spouse

Yet again, the Supreme Court has dealt with the issue as to whether provision should be made from a deceased estate for a person who claims to have been the deceased's de facto partner, or some other form of "eligible person", for that person's future maintenance, education or advancement in life.

McGuire bht McGuire v New South Wales Trustee and Guardian [2023] NSWSC 1013 (24 August 2023)

This matter concerned the Estate of a person, Victor Warren, who passed away in July 2021, aged 77 years.  In his 2003 Will, he appointed the Public Trustee as the executor and trustee of his Estate and left the whole of his Estate to his daughter and son in equal shares.

Section 59 of the Succession Act 2006 (NSW) provides that an eligible person can make a claim on the Estate if they consider that adequate provision for their future maintenance, education or advancement in life was not made in the Deceased's Will.  The Plaintiff, Eileen McGuire, claimed that she was an eligible person as "a person with whom the deceased person was living in a de facto relationship at the time of the deceased person's death", or alternatively, that she was a dependent member of the same household, or further alternatively, that she was in a close personal relationship with the Deceased.

What is a de facto relationship?

The term "de facto relationship" is not defined in the Act as such.  Rather, we need to look at other legislation to determine what type of relationship falls within the term "de facto relationship".

• Section 21C(2) of the Interpretation Act 1987 (NSW) provides that a person is in a "de facto relationship" with another person if:
  • they have a relationship as a couple living together; and
  • they are not married to one another or related by family.
• Section 21C(3) of that Act provides that in determining whether 2 persons have a relationship as a couple, all of the circumstances of the relationship are to be taken into account, including things such as the duration of the relationship, the nature and extent of their common residence, the degree of financial dependence (or interdependence), the degree of mutual commitment to a shared life, and so on.
• There is significant case authority to support the position that the matters listed in Section 21C(3) are not prerequisites - one decision has even suggested that the determination of the existence of a de facto relationship is "essentially impressionistic" (Indjic v Stojanovic [2020] NSWSC 470 at 145 per Hallen J).

What about a member of the household?

An alternative argument raised was that the plaintiff was a member of the Deceased's household "at that particular time or at any other time" and that she was "at any particular time, wholly or partly dependent on the deceased person".  There was no question that the plaintiff was a member of the same household for a period of at least 14 years up to the deceased's death.  In dispute, however, was whether the plaintiff was wholly or partly dependent on him.

What about a close personal relationship?

A further alternative argument was that the plaintiff was in a close personal relationship at the time of the Deceased's death.  Section 3(3) of the Interpretation Act defines this relationship as being one other than through marriage or de facto, where the persons live together and one or each of whom provides the other with domestic support and personal care.  Personal care is not confined to physical care, but may extend to emotional support (Hayes v Marquis [2008] NSWCA 10 at [87] per McColl JA).

The nature of the relationship

The Deceased's children agreed that the Deceased and the Plaintiff met in around 2004 and that the Plaintiff moved into the Deceased's Lismore unit a year or so later. It was common ground that she continued to live there, rent-free, until the Deceased's death in 2021.  Various family members and friends gave evidence as to the nature of the relationship, noting that they shared a bedroom, had a "normal married like relationship", shared in domestic activities and chores, attended family events together, and holidayed together.  The Deceased's funeral notice, approved by the Deceased's children, referred to the Plaintiff as the Deceased's partner.

In providing evidence, one of the Deceased's children noted that she only approved the reference to the Plaintiff as being the Deceased's partner to "keep the peace with everyone".

The Court held that the overwhelming weight of the evidence supported the conclusion that the Deceased and the Plaintiff had a relationship as a couple living together, and did not bear much weight on the fact that they had separate Medicare cards, that the Plaintiff maintained a postal address at another property which she owned or that the Plaintiff had claimed a single pension rate from Centrelink.

Interestingly, evidence was submitted that the Deceased had made statements to certain family members that he wanted the Plaintiff to leave, but that he could not "seem to get rid of her".  The Court noted that disharmony in a de facto relationship does not bring it to an end.

Was inadequate provision made for her?

After finding that the Plaintiff was an "eligible person", the Court's next question was whether inadequate provision was made for her by considering the various matters set out in section 60 of the Succession Act.  In this instance, the Court considered the Plaintiff's need for ongoing medical care, her income source and her expenses, and also took into account the Deceased's children's respective financial positions and ongoing financial needs.

The Court acknowledged that if a widow has assets and income of her own, that will moderate a deceased's obligation to provide for her, particularly if there are significant competing claims (Steinmetz v Shannon [2019] NSWCA 114 at [115] per Brereton JA).

The Court concluded (at 104):

In the present case, I do not rely on any inflexible rule about the need for provision to be made for a widow, or regarding the paramountcy of a widow’s claim over the claims of adult children. Instead, I have formed the view, having regard to the particular circumstances of this case, including the nature and duration of the relationship between Eileen and the deceased, her dependency on the deceased at the date of his death, her age and state of health, and her circumstances including her financial needs, that the deceased had an obligation to make provision for Eileen out of his estate. However, in determining the extent of the provision that should be made, I have taken into account the limited size of the estate, and the circumstances and needs of the deceased’s children, and the nature of his relationship with them. 

The Court calculated that there was a shortfall of $250,000 between the Plaintiff's income and expenses, assuming a life expectancy of 14.6 years, and taking into account the size of the Estate, made an order for provision of $220,000 by way of a lump sum payment, which would leave some $383,957 for distribution between the Deceased's 2 children.

How were the costs of the proceedings dealt with?

The usual rule is that the costs of the proceedings are paid out of the estate.  In this instance, the Court ordered that:

• the Plaintiff's costs are paid on an "ordinary basis" - that is, a "fair and reasonable amount" for the legal costs and disbursements that were reasonably incurred in the conduct of the proceedings; and
• the Defendant/Estate's costs are paid on an "indemnity basis" - that is, all costs are to be allowed other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount.