Inheritance dispute delays benefit all parties in an unusual case

Published 13 Feb 2018

Long-running family provision claims often result in claimants and beneficiaries receiving a smaller legacy due to ongoing legal costs cutting into the value of the estate.

However, extensive delays in a complex case that went before the NSW Supreme Court last year resulted in all the deceased’s beneficiaries receiving more money than originally planned. But how is this possible?

The answer lies in the Australian property market, which has seen nationwide housing prices jump 3.3 per cent in the year to January 31 2018. The major asset at the heart of this case was a multi-million-dollar home in Randwick, an eastern suburb of Sydney.

Why did the plaintiff launch a claim?

The plaintiff’s parents lived together in the Randwick property while they were married, but the couple divorced in 1975.

During divorce proceedings, a judge approved a deed of property settlement that gave right of occupancy to the plaintiff’s mother, while excluding the father from living there.

The divorcees also became tenants in common in equal shares, meaning they owned 50 per cent of the property each after they split. The deed also specified that in the event of either parent’s death, their share of the home would become the plaintiff’s.

But the father later remarried, and legal title for his 50 per cent share passed to his second wife, thus becoming part of her estate. The executor of the wife’s estate was her niece, who is the first defendant in this case.

The father and his second wife died in 1997 and 1999, respectively. The plaintiff’s mother passed away in 2013, and he successfully made a claim for provision in 2016 based on the promises made in the 1975 deed of property.

What legacy was offered to the plaintiff?

Justice Michael Slattery’s original decision ordered that the plaintiff pay the first defendant $50,000, as well as 30 per cent of the Randwick property’s value after a professional estimate.

If these payments were honoured, the first defendant would pass ownership of the 50 per cent property share to the son, who was currently living in the home. However, failing to meet the payments would result in the plaintiff having to vacate the property and the dwelling being sold at auction.

The proceeds of the sale would be split 70:30 to the plaintiff and the first defendant, respectively.

But a series of misunderstandings between the parties involved meant the implementation of Justice Slattery’s orders were significantly delayed.

How did the delays benefit the beneficiaries?

The home was originally valued at $2 million, but the price tag had risen to $2.3 million during the 16 months taken to resolve the plaintiff and the defendants’ issues.

Justice Slattery was again asked to preside over the matter. He ruled that the first 10 months of delays were no one’s fault, although the plaintiff was largely responsible for hold-ups in the final six months.

As such, he awarded the first defendant $75,000 as compensation from the $300,000 additional value held in the home, while the plaintiff received the remainder. Despite the extra legal costs involved, the two parties both received financial benefits from the 16-month settlement delays due to growth in the Sydney property market.

Nevertheless, this is an unusual case and individuals should seek advice from expert inheritance dispute lawyers to ensure family provision claims are resolved as quickly and cost-effectively as possible.

Contact Gerard Malouf & Partners Will Dispute Lawyers to speak to an experienced member of our team today.

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