Barns v Barns

• Jurisdiction: Australia Federal only
• Court: High Court (Australia)
• Judge: Gleeson CJ,Gummow,Hayne JJ,Kirby J,Callinan J
• Judgment Date: 07 March 2003
• Neutral Citation: 2003-0307 HCA A,[2003] HCA 9
• Docket Number: Matter Nos A68 and A69 of 2002
• Date: 07 March 2003

[2003] HCA 9

HIGH COURT OF AUSTRALIA

Gleeson CJ, Gummow, Kirby, Hayne and Callinan JJ

Matter Nos A68 and A69 of 2002

A68 and A69 of 2002

Kathryn Fay Barns

Appellant

and

Malcolm Phillip Barns

First Respondent

Alice Elizabeth Barns

Second Respondent

Michelle Louise Fisher and Rhianna Kate Fisher by Their Next Friend Peter Charles Symes

Third Respondents

Inheritance (Family Provision) Act 1972 (SA), s 7.

Barns v Barns

Succession — Family provision — Deed between husband and wife — Mutual wills executed pursuant to deed — Effect of deed and wills upon family provision claim — Whether property the subject of deed and wills available as part of estate out of which provision made — Whether deed invalid for reasons of public policy — Inheritance (Family Provision) Act 1972 (SA), s 7.

Precedent — High Court and Privy Council — Conflict between two Privy Council decisions — Circumstances in which High Court should depart from Privy Council decisions — Where decision of Privy Council was on a matter of State law in appeal directly from primary judge in a State Supreme Court, rather than from High Court.

Words and phrases — ‘estate’.

1 Gleeson CJ. The appellant is the only daughter of the late Lyle Barns (‘the deceased’), who died on 14 August 1998, and Alice Barns, the second respondent. The first respondent is the only son of the deceased and the second respondent. The first respondent is the executor of the will of the deceased, and the second respondent, in the events that have occurred, is the sole beneficiary. The appellant made a claim against the estate under the Inheritance (Family Provision) Act 1972 (SA) (‘the Act’). The claim was dismissed by the Supreme Court of South Australia. The procedural steps involved in that dismissal have given rise to two appeals to this Court. The central issue in the appeals concerns the effect upon the operation of the Act of a deed made between the deceased and the first and second respondents, and of mutual wills executed pursuant to that deed.

Gleeson CJ

The legislation

2 In his dissenting judgment inSchaefer v Schuhmann1, a decision of the Privy Council on an appeal concerning the Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW), Lord Simon of Glaisdale referred to the history of legislation of the kind presently in question2. Such legislation was enacted in order to subject freedom of testamentary disposition to discretionary curial intervention in certain classes of case, where moral rights and obligations of support were disregarded. It took as its focus of attention the family, which his Lordship described as ‘the social and legal institution within which these … rights and obligations are worked out’3. Its purpose was ‘to prevent family dependants being thrown on the world with inadequate provision, when the person on whom they were dependent dies possessed of sufficient estate to provide for or contribute towards their maintenance’4. The first such legislation was enacted in New Zealand: the Family Protection Act 1908 (NZ). It was followed in New South Wales by the Act of 1916 mentioned above, in other Australian States, and in the United Kingdom by the Inheritance (Family Provision) Act 1938 (UK). The present South Australian Act repealed and replaced the Testator's Family Maintenance Act 1918 (SA).

3 The general scheme of the original legislation, which is replicated in the Act, but which has since been altered in later legislation in the United Kingdom, and some Australian jurisdictions, was relatively simple. It identified certain classes of person, typically a spouse, parent, child, or sibling, who might have a

moral claim upon the bounty of a deceased. Where a deceased who was subject to such a moral claim failed to make adequate testamentary provision for the maintenance, education or advancement of such a person, then the court was empowered, in its discretion, to order that provision for such person be made out of the estate of the deceased.

4 Such legislation was necessarily limited in its effect by the testamentary setting in which it operated. The capacity of a court to give effect to the moral claims of a person was limited by the extent of the deceased's estate, as well as by other competing claims on the deceased's bounty. The legislation had no practical effect in relation to property of which the deceased was not the beneficial owner at the time of death. Thus, a legally effective disposition of property prior to death placed such property beyond the reach of the legislation. This inherent limitation in the legislative scheme was emphasised by a statutory provision that an order made in favour of a successful claimant should take effect as a codicil to the deceased's will executed immediately before death.

5 In recent years, in some jurisdictions, amendments have been made to the legislative scheme. In New South Wales, for example, theFamily Provision Act 1982 introduced a concept of a ‘notional estate’5. However, the Act with which we are concerned follows the original scheme.

6 Section 6 of the Act identifies the classes of person who are entitled to claim a benefit. Relevantly, they include a child of a deceased person. Section 7 provides that where a person has died domiciled in South Australia owning real or personal property in the State, and, by reason of his testamentary dispositions, or intestacy, a person entitled to claim a benefit is left without adequate provision for proper maintenance, education or advancement in life, the court may, in its discretion, ‘order that such provision as the Court thinks fit be made out of the estate of the deceased person for the maintenance, education or advancement of the person so entitled’. There is a time limit on making applications (s 8). The order for provision may specify what part of the estate of the deceased person will bear the burden of the provision (s 9). Every provision made by an order is to operate and take effect as if it had been made by codicil to the deceased's will executed immediately before death or, if the deceased was intestate, by a will executed immediately before death (s 10).

7 Three matters may be noted. First, provision may be made, and can only be made, out of a deceased's estate; that is to say, out of property which is beneficially owned by the deceased at the time of death and which passes to the deceased's legal personal representative6. Secondly, contractual obligations

undertaken by a deceased during his lifetime, which bind an estate, may affect the property available to meet an order under the Act. For example, if, during his lifetime, a testator contracted to sell Blackacre, and the contract remained on foot at the time of death, although full beneficial ownership of Blackacre had not passed to the purchaser at the time of death7, Blackacre would not be an available asset for the purposes of an order for provision, although the purchase price payable under the contract would be. And, of course, if the contract were subsequently rescinded, the position would change. Thirdly, the estate out of which an order for provision may be made is the available estate after meeting the liabilities of the deceased. Obligations incurred by a deceased, and binding upon a legal personal representative, must be taken into account in determining the extent of the estate out of which provision may be made.

The deed and wills

8 Because of the procedural background to these appeals, it is neither necessary nor possible to explain in full the family circumstances that gave rise to the appellant's application. The substantial merits of the case have never been litigated. The only facts proved in evidence are those that were regarded by the parties as material to certain legal issues raised for preliminary decision.

9 The deceased and the second respondent carried on business together as farmers near Wudinna in South Australia. The net value of the deceased's estate at the time of his death was about $1.8 million. There is no information before the Court as to the value of the assets of either the first or the second respondent. The first respondent had worked on the family farm for the whole of his working life. The appellant, who had two children, had been married and divorced. She and her husband had embarked upon a failed business venture. She had been made bankrupt.

10 Although the evidence on the topic is thin, it appears that the deceased and the second respondent had made some financial provision for the appellant. Subject to that provision, they wished their son, the first respondent, to inherit their assets. The evidence did not deal with the history of their financial relationship with their son, or the arrangements under which he worked on the farm. Those were matters that may have become relevant if the appellant's claim had not failedin limine.

11 The deceased and the second respondent took legal advice. A solicitor described that advice as relating to ‘the steps … Lyle and Alice Barns should take should they wish to effectively exclude their [daughter] from participating inthe

estate of the survivor of them ‘(emphasis added). This was said to be on the assumption that the first of them to die would leave his or her entire estate to the survivor. The present proceedings do not concern the estate of the survivor. They concern the estate of the first to die.

12 Pursuant to that advice, on 2 May 1996, a deed was entered into between the deceased and the first and second respondents. The deed recited that the first respondent was the natural son of the deceased and the second respondent, that the deceased had agreed with the other parties to make a will in a certain form, that the second respondent had agreed with the other parties to make a will in a certain form, that the deceased had agreed to act so as to ensure that all...