Executors can enter into many types of arrangements to satisfy a disgruntled family member who files a family provision application. Not all are straightforward and some simply prolong the dispute.
Consider the case of Sylvester Cross who died in February 2016 leaving his home on trust for his six children with a specific provision that his intellectually disabled daughter Kathryn be provided a place of residence to account for her special needs and sufficient income to ensure her well-being.
Kathryn’s sister Virginia filed a family provision application in February 2017. Her claim was resolved on the basis that she be granted a right to reside in the deceased’s Maroubra residence with Kathryn – subject to Kathryn’s ongoing consent to such arrangement – on payment of a contribution of $150 “toward expenses for the maintenance and upkeep of the property”.
A Deed of Family Arrangement was entered into in August 2018 recording the terms including the termination of the arrangement if Kathryn were to move to assisted accommodation or decide to live with her brothers.
Clause 1(c) of the Deed provided that failure to pay the contributions for four weeks would constitute a default entitling the executors to terminate the “license” agreement.
Weekly payments were sporadic but in November 2018 Virginia got ahead and continued to make regular payments for some time. In the meantime however her brother William – one of two of her siblings who received a grant of Probate for the administration of the estate – gave her a written notice of termination requiring her to vacate the premises.
A further notice of termination was served in February 2020 and in May 2020 the solicitors for the executors filed court proceedings seeking a declaration that Virginia’s right to reside had been validly terminated on the basis that she had been arrears for four or more weeks on several occasions.
Virginia disputed the allegations and the argument came before Justice David Davies in the NSW Supreme Court in June 2021.
The court deliberated on four issues: whether there had been a breach of the deed; whether there had been a waiver of those breaches by the acceptance of payments after delivery of the termination notices; whether relief against forfeiture should be granted to Virginia if she was found to be in default; and whether the agreement constituted a residential tenancy agreement.
Justice Davies observed that while Virginia had been in arrears, it was apparent that at no time between October 2019 and February 2020 – the relevant period referred to in the Statement of Claim – had she failed to make a payment for a four-week period. On that basis she could not be held to have been in breach.
Furthermore, the acceptance of payments after the executors had purported to terminate the right to reside constituted – in His Honour’s view – a waiver of any alleged breach.
In any event, the arrangement with Virginia was a residential tenancy – so held the court – notwithstanding that Kathryn had to consent to her occupation. Given the Supreme Court has no jurisdiction in respect of residential tenancies, the executors’ application would have been required to have been dismissed on that ground alone.
His Honour ordered judgement in favour of Virginia with the executors pay her legal costs of the proceedings out of the estate.