Spencer v Burton (2015) QCA 104 Case Summary

Posted by: Kylie Shaw

Background

In the case of Spencer v Burton [2015] QCA 104, Sharon Burton and Kent Spencer were in a romantic relationship for 13 years, however, those 13 years were not perfect. Kent had an affair in 2009 which resulted in an end to their relationship but they later reconciled.

In November 2010, Sharon was diagnosed with cancer and passed away in July 2012. They were never married and had no children during the course of their relationship.

At the time of Sharon's death, her estate was worth approximately $800,000.00. Sharon did not have a will. This meant she died intestate and that led to serious complications.

On 12 August 2012, Kent obtained Letters of Administration on Intestacy of her Estate on the basis that he was the deceased's de facto partner.

Five months later on 7 December 2012, the deceased's mother, Daphne Burton filed an Application seeking a declaration that Kent Spencer was not a de facto partner of the deceased and also sought orders that the Letters of Administration on Intestacy granted to him be revoked and that a replacement grant of Letters of Administration by granted to her.

The court takes account of several factors in determining whether a person is a de facto partner and this is where complications can arise. It can be very difficult in weighing up and balancing the competing factors which include:

• Nature and extent of their common residence;

• Length of their relationship;

• Whether a sexual relationship existed;

• Degree of financial dependence or interdependence, and any arrangements for financial support;

• Ownership, use and acquisition of property;

• Degree of mutual commitment to a shared life including care and support of each other;

• Performance of household tasks;

• Reputation and public aspects of their relationship.

Decision in the principal proceedings

In the principal proceedings, the Court found the respondent, Kent Spencer, had not been the de facto partner of deceased, under s32DA Acts Interpretation Act 1954 (Old) and was thus not entitled to share in estate on intestacy. The Court also revoked the Grant of Letters of Administration in favor of the Deceased's mother, Daphne Burton.

Decision on Appeal

On Appeal, the Applicant Kent Spencer argued that the primary judge erred in the application of the criteria set out in s 32DA of the Acts Interpretation Act, in particular attributed greater weight to financial and property matters.

The Appeal Court stated that the criteria in s 32DA are all to be weighed up and analysed together with any other factors or circumstances that the judge considers relevant. One criterion is not to be considered as more significant than the other.

The Appeal Court found the primary judge did place an overemphasis on financial and property matters and a discounting of the other indicia which was clearly present. Appeal was allowed.

The outcome of this case shows that the relevant factors in determining whether a de facto relationship exists is complicated and each situation must be considered on a case by case basis. There is no ‘one size fits all’ solution.

All this came about primarily because Sharon died without a valid Will.

Superannuation death benefits continue to be problematic for executors - Brine v Carter [2015] SASC 205

Posted by: Kylie Shaw

Professor Brine was in a de facto relationship with Ms Carter when he passed away. His Will named Ms Carter, along with his three adult sons from a previous relationship, as joint Executors of his Estate.

In his will, Professor Brine provided a life interest for Ms Carter in his principal residence and another property and gave the rest of his estate to his three sons and grandchildren.

Professor Brine had two superannuation accounts with UniSuper. One account was structured so that the only beneficiary of that superannuation could be a spouse. The second was an accumulation account from which a spouse, child, dependant or the member’s Estate could benefit.

Rather than making a binding death benefit nomination with UniSuper, Professor Brine had written a letter to them expressing his wish for the beneficiary of his superannuation to be his Estate. This was recorded with UniSuper however, given the form it was in, it was not enforceable.

Ms Carter learnt of the two superannuation accounts following Professor Brine’s death, and made applications to UniSuper to have the balance of each account paid directly to her.

For some months, Ms Carter was found to have failed to disclose the extent of the super benefits to the three sons and that the estate and each of them was a potential beneficiary of one of the accounts.

Once the sons found out about the super and the potential to claim, the three sons claimed the benefit as executors of the estate. Notwithstanding their claim, UniSuper exercised its discretion in favour of Ms Carter.

The Court found that, despite the misrepresentations made by Ms Carter and breach of her fiduciary duties as an executor up to the point in time when the three sons discovered her deceit, thereafter the actions of the sons in making a claim on behalf of the estate (without Ms Carter's involvement) effectively meant that they had accepted that she was not acting as an executor in the matter so that she was therefore entitled to pursue her claim for payment in her own personal capacity and not as a co-executor. Since she was no longer acting as an executor, she was therefore not in breach of her duties as such, and therefore was entitled to receive the payment herself without having to account to the estate for it.

Ironically, if the three sons did not make a separate competing claim (which effectively operated as a consent to Ms Carter claiming in her own right), she would have been held to be in breach of her duties as an executor and would have had to pay the money to the estate. As a result, despite Ms Carter's dishonest conduct, she won the case.

This case illustrates the importance of a valid binding death benefit nomination if you have specific wishes as to how your death benefit should be paid by the trustee of the Fund, as well as some of the issues that arise for executors who are also beneficiaries in claiming those death benefit payments.

Solicitor's duty to intended beneficiaries

Posted by: Kylie Shaw 

The High Court will hear an appeal against a decision of the Supreme

Court of Tasmania on the professional duties of lawyers in the context of a will dispute. The appeal is scheduled to be heard on 2 March 2016.

This case concerned the possible duties of a solicitor, when preparing a will for a client to take instructions and give advice as to the circumventing of the provisions of Testator's Family Maintenance Legislation ("TFM").

In Calvert v Badenach [2015] TASFC 8, Mr Badenach, a solicitor, took instructions to prepare a will for Mr Doddridge (the deceased) who at the time, was terminally ill. The deceased’s instructions were to pass his entire estate to his step son, Mr Calvert. Mr Calvert was the son of the deceased's long-term partner. However, when the deceased died six months later, the Mr Calvert did not receive all of his half-share of two real estate properties the pair owned, because the deceased's long estranged daughter successfully sued the estate under Tasmania’s family maintenance statute for $200,000 (and also recovered the costs for her action from the $600,000 estate.)

So, Mr Calvert sued the solicitors who prepared the deceased's will in 2009, arguing that they should have advised the pair about the possibility of such a turn of events, which could have been avoided by converting the pair’s shared ownership in the properties from ‘tenancy in common’ to ‘joint tenancy’ (so that the deceased's half share would have gone directly to the Mr Calvert, rather than via his estate).

Mr Calvert was unsuccessful at first instance. The decision was appealed and Mr Calvert was successful.

On appeal all three judges agreed that the Solicitor owed a duty of care to the deceased not only to enquire of the deceased whether he had any children, but to advise him why the enquiry was being made, the potential for a family provision claim, the impact it would have on his wishes, and any possible steps he could consider to avoid that impact. In the circumstances the solicitor's duty extended to not only asking questions that might elicit the existence of possible claimants but to advising about mechanisms to minimise the estate available to meet any claim.

Their Honours all agreed that this was a case of loss of opportunity or chance.  The Solicitor's negligence caused Mr Calvert to lose an opportunity to obtain a better outcome.

Day 4 - Succession Roadshow, Biloela Session

Posted by: Kylie Wilson 

The Biloela session of the rural succession and continuity roadshow saw good numbers again comprised of families wanting to demystify the tips and traps of rural succession planning.

John Moore of RCS gave some very interesting insights into being a sixth generation farmer on the land in South Africa.  There were also quite a few questions and concerns around the issues of gifting land to the next generation, and the duty implications where Queensland continues to remain behind the other states in assisting primary producers to pass land so the next generation can remain on the land.

The themes of lack of communication and a desire to maintain family harmony continued and reflected those that we'd heard in Emerald.  Aims of getting started early and achieving security whilst ensuring a comfortable retirement for parents also came through strongly from the younger generation. 

We then headed out on the road again for Rockhampton.  Another interesting and informative session in Rockhampton awaits before the long trip back to Brisbane.

Day 3 - Succession Roadshow, First succession and continuity session in Emerald

Posted by: Kylie Wilson

We had the first day of our succession and continuity roadshow in Emerald with RCS, Entello Group and Andrew McCormack of BestWilson Buckley Family Lawyers.

The session was very well attended, and there were some very impressive discussions from Simone Lawrie of the Lawrie family and Claudia Power about their own personal succession journeys, which illustrated how positive it is for families if the succession process is done properly.


RCS gave some good insights on how to get family meetings started and keep them progressing, Entello Group provided some valuable share tips, and Andrew McCormack talked about the advantages of binding financial agreements where there are concerns about marriage breakdown during the succession process.

It was a great pleasure for me to speak to so many committed families, with the overall message of the day from participants being an aim for family harmony in achieving intergenerational transfer.

After the completion of the Emerald session, we all set off in cars for the trip from Emerald to Biloela, where the land continues to look in very good shape, and I'm looking forward to talking to more families in Biloela on Wednesday.

Aims of older generation vs younger - some very similiar

Day 2 - Succession Roadshow, Roma to Clermont and back to Emerald

Posted by: Kylie Wilson

I headed out of Roma early on Monday morning.  A minor disagreement with a kangaroo just outside of Injune (from which both my car and the kangaroo emerged unscathed) reminded me why every car on the Dawson Highway, including the Kia Carnival that I passed outside of Rolleston, have bullbars almost bigger than the cars themselves.  The nudge bar on my Isuzu D-MAX seems rather puny by comparison. 

It was great to see the land on this section of the trip in as good a shape as the land further east, with some truly spectacular scenery in the central highlands between Injune and Rolleston, which included two of the biggest eagles I've seen for quite a few years.  Fortunately that wildlife chose to get out of the way of the car, because I'm sure my car would have come off second best from a tangle with a pair of birds whose wingspan is almost as wide as the road. 

The Dawson Highway between Rolleston and Emerald supported what many clients have been telling me about the fact that whilst there has been some good rainfall in many areas, it is certainly not universal, with some pockets clearly showing slightly less rainfall than that received further south.

I headed further north past Clermont and was very fortunate to be given a tour of a long-standing client's cattle property.  It was fantastic to see it so green with plenty of feed after decent rainfall in January, given they tell me that the early part of summer in that area was very tough. The feeling of relief that rain had finally come to their property was evident.   After that tour and a quick cup of tea, I headed back to Emerald to get ready for the first of the succession conferences in Emerald on Tuesday, with good numbers already registered.

Day 1 - Succession Roadshow, Ipswich to Roma

Chinchilla to Roma

Posted by: Kylie Wilson

I set out early on Sunday morning to head to Roma on the first leg of my road trip to central Queensland, which will include the Succession Roadshow with RCS, Entello Group Investments and Buckley Family Lawyers.  The most nerve-wracking part of the five hour-plus drive was navigating my 200m driveway after the four inches of rain that plummeted down in an hour on Friday night.  The roads were mostly in good shape, other than the 60km zone from Brigalow to Chinchilla for the roadworks to upgrade Warrego Highway.  I had no issue with the 60km speed limit, but obviously the truck driver behind me who tailgated me the entire way into town was feeling some level of frustration with the roadworks.

It's been a few years since I have taken the trip between Chinchilla and Roma, and it was an absolute pleasure to see how well the land is doing in that area at the moment compared to my last trip out that way.  My last trip was during a drought period and most of that section of the highway resembled an arid dustbowl.  It was fantastic to see such a good covering of feed for the majority of that section of Queensland.  Many properties further west have not had the level of rainfall experienced in that area and are obviously still doing it tougher, but it is still nice to see an improvement in this section compared to my last trip. 

After a very successful succession planning meeting with clients in Roma, where "communication is the key" was clearly evident, I'm looking forward to getting out bright and early Monday morning to head further north and visit clients in Clermont for a tour of their very successful cattle business, before the first of the succession seminars in Emerald on Tuesday.

More to come tomorrow after the next leg of the trip.