Dead or Alive - The settlement you have when you do not have a settlement

08 DEC 2017

 

Dr Mohammad Lodin (the deceased) divorced his wife, Magdalena Lodin, in 1995 after entering into a binding settlement.  The deceased got on with his life and passed away 19 years later in 2014, comforted, as one imagines, in that he had resolved any and all obligations to his ex-wife. Or so he thought.

The Succession Act 2006 enables an applicant to apply for portion of a deceased person’s estate if the applicant did not receive a fair share from, or has been completely left out of the will of the deceased person.  In order to be successful however, the applicant must establish that the deceased owed a moral obligation to leave the applicant a portion of their estate. 

In this case, despite the divorce settlement and the 22 years that had passed since, the Supreme Court has ordered that the estate of Dr Lodin is to pay $750,000 to his former wife.

Do you have a will? Are you comfortable that your estate will be administered in line with your wishes? If you are concerned you might be exposed to an application by an eligible person for part of the estate in a Will, you should read this recent decision of the Supreme Court below and seek legal advice.

The Facts

In order to better understand this case and the decision that was made, it is necessary to consider the background facts.

Dr Lodin was a medical doctor.  In 1984 he met the Plaintiff, Magdalena Lodin, when she was his patient.  Dr Lodin developed a relationship with the Plaintiff whom he later married, lived with and had a child, the Defendant, Rebecca Lodin.

The Plaintiff and Dr Lodin separated after 18 months of marriage, however remained living together for 10 months. They eventually divorced in December 1995.

During the marriage, Dr Lodin supported the family financially. After the separation, following family court proceedings, the Plaintiff received $55,000, a car and retained title to a house in Mollymook. The deceased continued to pay child maintenance for Rebecca until she reached the age of 18.

Despite the advice of his lawyers, Dr Lodin died in 2014 without a will, which meant that the entirety of his estate, which was worth approximately $5m, passed to his daughter.

The Plaintiff was unhappy that she did not receive a portion of Mr Lodin’s estate and made an application for a Family Provision.

At the time of hearing the Plaintiff was 62 years of age and had $300,000 in assets. She was residing in a rented unit and she was receiving a disability support pension due to various health issues, including diabetes and chronic pain and restrictions from spinal injuries that she suffered as a result of multiple motor vehicle accidents.

The Court’s approach

The question before the Court was whether the Plaintiff was entitled to provision from Mr Lodin’s estate in circumstances where:

  1. They were divorced almost 20 years earlier;
  2. The marriage had lasted only 18 months; and
  3. There had been a financial settlement.

In making a decision, the Judge gave significant consideration to the past financial settlement between the parties.

The Judge concluded, that whilst a financial settlement ‘will usually pose a significant obstacle to overcoming that hurdle’, it is also necessary to consider whether the deceased has fulfilled any moral duty to make property and adequate provision to those whom it is expected to be made.

In deciding whether Dr Lodin had discharged any moral duty, the Judge was heavily guided by the long standing circumstances of the relationships between the Plaintiff and the deceased and even more so, the circumstances of the Plaintiff following the matrimonial financial settlement. 

Particularly, his Honour had regard to four circumstantial factors in finding for the Plaintiff:

  1. Breakdown of the marriage – his Honour referred to the “unusual and long lasting” impact that the doctor/patient relationship that arose between the plaintiff and the deceased, and the subsequent breakdown of the marriage had on the plaintiff.
  2. The past financial settlement – the judge was of the view that the past financial settlement did not give sufficient consideration to the circumstances of the relationship between the plaintiff and the deceased, and the plaintiff’s future needs. Interestingly, the judge held that: “…while the existence of a final matrimonial financial settlement is an important factor, it is not conclusive. What emerges from the cases to which reference has been made is that there will be factors warranting the making of a claim by a divorced former spouse, even where there has been a matrimonial property settlement, if at the date of the hearing of the family provision application there remained an undischarged moral obligation to the applicant.”
  3. The circumstances following the divorce – the judge commented that: “while the Plaintiff struggled, the deceased prospered. Untrammelled by responsibility for a wife or a child, he accumulated assets which by his death exceeded in value more than 10-fold those at the time of the matrimonial settlement.”
  4. The size of the estate – the judge found that given the large size of the estate, there could be enough for the needs of the plaintiff, while still leaving a substantial inheritance for the defendant. Otherwise, the plaintiff would be left in need and on social security pension while the daughter she raised enjoys an inheritance exceeding $5 million.

In making the award, His Honour said:
The unusual and enduring impact of the relationship and marriage on the plaintiff, her care and responsibility for the defendant for 15 years after the matrimonial property settlement and associated indirect contribution to the deceased’s estate, the respective post-divorce deterioration in her circumstances and great improvement in those of the deceased, the relative paucity of the matrimonial estate at the time of the property settlement compared to the amplitude of resources now available, and her current circumstances of need which are in part attributable to her relationship and marriage with the deceased, and where the only other claim on his testamentary bounty is that of the defendant for whom ample will remain after making proper provision for the plaintiff, amount to circumstances which made the plaintiff, at the time of the deceased’s death, a person who ought to have been an object of testamentary recognition by him, and thus constitute circumstances warranting the making of her claim.

The Take Away

Although the Judge was heavily guided by the unusual circumstances of the case, the court’s decision that previous financial settlements will not prevent an applicant from receiving a fair and just outcome to a family provision application will likely allow others in similar situations to make a claim.

If you believe you are entitled to make a family provision claim or if you are an executor who would like to defend a claim made against an estate, the Dispute Resolution Department at Marsdens Law Group have specialists who would be willing, able and ready to assist you. Call Carly Walsh on (02) 4626 5077 or email on cwalsh@marsdens.net.au.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

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