Although someone might be ‘eligible’ to bring a family provision claim, that alone does not guarantee success.There are many factors a court must take into account when considering a claim, including the financial position of the applicant, the size of the estate and competing interests of others.Another very important consideration for the court that applicants tend to forget or ignore is their conduct before and during the litigation process.
Courts will not tolerate applicants wasting an estate’s time and resources by pursuing vexatious or unmeritorious claims, and this type of conduct can have dire consequences for the person making a challenge. One example of this is the recent decision of Morris v Smoel  VSC 31.
The deceased died, leaving behind his second spouse (who was entirely financially dependent on him during their 18 year marriage), two adult children and two adult step-children. His Will left his estate as follows:
- a life interest in his home and holiday home, the contents of those homes and his Mercedes Benz motor vehicle to his spouse; and
- the remainder of his estate to his two children as tenants in common.
The deceased’s Will also included a direction to his executors to pay all expenses and outgoings for the two properties and the Mercedes Benz from the residuary of his estate and to provide a living allowance for his spouse from a family trust.
The spouse filed a claim for family provision on the basis that the deceased had not adequately provided for her.
At the date of the deceased’s death, the estate was estimated to have a value of just over $1.8 million. At the date of the trial (four years later), it was estimated to have a much lesser value of no more than $200,000. The reduction in the value of the estate was the result of various court proceedings involving the estate, all fuelled by the surviving spouse. Aside from the family provision claim, these included:
- a claim brought by the deceased’s children against the surviving spouse in relation to the deceased’s self-managed superannuation fund.
The deceased signed a binding death benefit nomination directing his superannuation to his children.After he died, the surviving spouse refused to pay the benefit to the children and they were forced to bring proceedings to enforce the payment.
The children were successful. However, by that time, there were insufficient funds in the superannuation fund to pay the benefit to them. Therefore, the wife was ordered to pay the amount personally, as well as costs and interest.
- a claim brought by the deceased’s children against the corporate trustee of the family trust (controlled by the surviving spouse after the deceased’s death) for moneys owed to the estate, which the surviving spouse refused to pay.
The children were successful in this claim and the trustee was also ordered to pay costs and interest. However, by that time, there were insufficient funds in the family trust to pay the award, so it was unlikely that the estate would recover this amount.
- an application brought by the deceased’s children for orders to sell estate assets (including one of the properties left to the surviving spouse),presumably to raise funds for the litigation and pay debts, which the surviving spouse opposed.
The children were successful.The surviving spouse then appealed the decision,but was unsuccessful.
As a result of all the costs orders against her, the surviving spouse filed for bankruptcy. She then passed away before the trial of her family provision claim. Despite all of that, her estate decided to continue with her claim on her behalf.
At the trial, the judge dismissed the spouse’s family provision claim.
In making his decision, the judge accepted that the surviving spouse was eligible and that the deceased had a moral obligation to at least provide a home for her. However, the circumstances of the case and the spouse’s conduct lead the judge to ultimately dismiss her family provision claim.
The judge said, '[she] held a stubborn belief in what she considered to be her entitlements, as well as the correctness of her stand, no matter what the ultimate financial or emotional cost was to her, to the estate of the deceased, or to the defendants. Throughout the litigation, [she] either failed to understand, or refused to accept, the economic consequences of the position that she took in the various proceedings. This approach has been disastrous, both legally and financially, for her and the estate … By the various proceedings referred to, [she] is primarily (although not solely) responsible for the astonishing diminution of the assets of the estate of the deceased'.
Another consideration for the judge was the spouse’s bankruptcy, because any award made to her would automatically be given to her creditors (the biggest of which were her solicitors) to satisfy her debts.
This case is a great example of how a claim that would ordinarily have good prospects of success can go horribly wrong and why all claimants should carefully check their conduct and attitude throughout proceedings.