A recent decision of the Supreme Court of New South Wales in Stojanovski v. Stojanovski [2019] NSWSC 1713 considered the interaction of the terms of a will and an agreement entered into by beneficiaries prior to death, about the division of an estate. It also considered issues around family provision claims and adult children.
The decision has handed down by Justice Robb on 4 December 2019.
This matter focused on a family dispute arising from the estate of the late Nada Stojanovski who died on 20 December 2006. The dispute was between the deceased’s first son, Steven, who brought the proceedings against his brother (and the deceased’s second son) Robert (although, by the end there were 5 other defendants). The Court considered a testamentary agreement between Steven and Robert made at the behest of the deceased at the time she made her will, as well as a family provision claim made by the Steven.
Prior to her passing, Nada had amassed a substantial and desirable portfolio of seven properties. It was her intention to distribute these properties equally amongst her two sons.
The source of the dispute arose because the deceased had not acquired the properties in her name only, but rather, in many cases, jointly with one of both her sons. In order to attempt to engineer an equal distribution of the properties, she had Robert agree (and sign a statutory declaration to this effect) to transfer his share in one of the properties to his brother as part of the resolution of the estate.
Following her death, Robert failed to honour this agreement and provide that share of property to Steven. It is noteworthy that the Court found that “not only would Nada’s wishes have been given effect, if Robert had honoured the testamentary agreement, but Nada would have achieved a position where the properties that she had acquired would have been divided with rough equality between her two sons” at [37].
In response to Robert’s failure to honour his agreement, Steven commenced proceedings to enforce the agreement, and to seek a variation to the will by way of a family provision claim.
The legal proceedings became mired in complexity and problems for a series of reasons including that the executor failed to execute the testamentary intention of the deceased; both Robert and Stephen divorced and their former wives became involved in the dispute along side other Family court proceedings, and Robert became bankrupt (in part, it seems because of the cost of the litigation) which meant that his trustees in bankruptcy were also involved in the proceedings.
The Court found that the agreement by Robert to transfer his share in a property was binding, and should be enforced. The Court noted that a better process than that which had eventuated would have been for the executor to directly seek to enforce the agreement, rather than the difficult and messy way the matter had evolved.
Steven’s family provision claim was more complex. It was based in part on the fact that, following the death of Nada, Steven had suffered a work injury and was also in debt. The Court rejected the application noting that, as a result of the litigation, there were no further assets that may be provided to Steven under this claim. Additionally, and perhaps more importantly, the claim was dismissed as Robb J found that the enforcement of the testamentary agreement would result in a “sufficiently fair division” at [591].
Lessons from the decision
The litigation underscores the need for constructive, pragmatic and effective legal representation both in the preparation of a will, and in disputes after death. The estate was likely worth in excess of $8 million and should have resulted in the two brothers ending up with equal shares. They were only beneficiaries. Instead, it appears that after more than 10 years of litigation, it is likely that they ended up with very little.
The key take away from the decision is not one of legal principle. Rather, the case is an example of how litigation can spiral out of control and provide the oft repeated observation that while there are seldom two winners in court proceedings, there are often two losers.