The Facts
Man refuses to acknowledge his illegitimate child
The man’s story is one of Australia’s remarkable rags-to-riches immigrant stories. He began building his empire, with his wife, in the garage of his wife’s parents’ home.
The man became a renowned businessman, building a high-street fashion label and controlling numerous hotels and restaurants.
The man, his wife and their two children worked within the company, and by all reports, lived an affluent lifestyle.
In 1983 the man started a six-year affair with another woman, and in June 1990 she gave birth to a son.
The man refused to accept the child as his own.
In 1995, following DNA testing, the Family Court declared that the man was the child’s father.
Notwithstanding that ruling, the man continued to deny paternity. However, he did make child support payments to the child’s mother until the boy turned eighteen.
In 2010, the son began writing letters to his father, telling him that for as long as he could remember, he had wanted to meet him, to speak with him and to understand the missing person in his life.
His father refused to respond. Instead, he had his general manager respond, telling the son that his father would not talk to him or meet with him until further DNA testing was carried out.
The son did not have a further DNA test and so was unable to meet his father.
No provision made for illegitimate son in man’s will
The man died in 2015 at the age of 83 without ever having met his illegitimate son.
In the week before his death, the deceased transferred $5.7 million out of one of his bank accounts to his two legitimate children.
On his death, the deceased’s wife automatically inherited the family home as a joint tenant. The family home was worth $34 million and did not form part of the estate.
The deceased’s will left $2 million to his general manager and the remainder of his estate to his two legitimate children.
No provision was made in the will for the illegitimate son.
Son seeks family provision order in relation to deceased’s estate
In 2016, the son applied to the Supreme Court for a family provision order granting him a share of his father’s estate.
The court had to decide whether the deceased’s will had made “adequate provision for the proper maintenance, education or advancement in life” of the plaintiff, and if not, whether such provision ought to be made by the court.
Expert commentary on the court's decision
Supreme Court grants application for family provision order
In the case of Estate Hemmes; Cameron v Mead [2018] NSWSC 85, the Supreme Court of NSW granted the application by the plaintiff, Mr Edward Leslie Cameron, for a family provision order.
The court ordered that Mr Cameron be awarded the sum of $1.75 million from the notional estate of his biological father, Mr John Hemmes.
Deceased’s non-estate property designated as a notional estate
After Mr Hemmes transferred money to his legitimate children prior to his death, and taking into account the estate’s liabilities, the net estate had a negative value of $298,005.
Because the estate had a negative value, there was no money from which Mr Cameron could receive a family provision.
However, the court had the power to make an order designating Mr Hemmes’ non-estate assets as a notional estate, making those assets available to fund a family provision order.
When will a court designate non-estate property as a notional estate?
A typical example of the court designating non-estate property as a notional estate is where a will maker transfers a home to a child prior to death. This would reduce the size of the estate so that an excluded beneficiary, if they claim against the estate, would have very little to claim against. In this situation, the court can still consider the home as an asset for the purpose of making an order.
Another example is where a husband and wife own a home in joint names. Upon the death of one spouse, the home automatically passes to the other spouse, as happened in this case. However, the court can order that it forms part of the notional estate instead.
Similarly, a person’s failure to deal with their superannuation in such a way that it forms part of their estate can lead to a notional order being made.
In these proceedings, the court designated Mr Hemmes’ $4 million in superannuation as a notional estate from which a family provision order could be paid if Mr Cameron’s application were successful.
In Australia notional orders are only possible in the state of NSW. Therefore, the outcome of this case may have been different if Mr Hemmes’ assets had been held outside of NSW.
Court applies two-pronged approach to determining case
Under section 59 of the NSW Succession Act 2006, a person can apply for a family provision order if they are an “eligible person”. As Mr Hemmes’ biological child, Mr Cameron met this criterion.
In deciding whether to grant Mr Cameron’s application, the court applied what is commonly known as the two-pronged approach.
Under section 59(1)(c) of the Act, the first prong is whether “adequate provision for the proper maintenance, education or advancement in life” of Mr Cameron had been made by the will of Mr Hemmes.
If the answer to the above question is “no”, then under section 59(2) of the Act, the second prong for the court to consider was whether it should exercise its discretionary power to make provision out of the notional estate for Mr Cameron’s “maintenance, education or advancement in life”.
Court finds no provision made for plaintiff in deceased’s will
In considering the first prong, the court emphasised that although Mr Hemmes had made compulsory child support payments, he did not pay anything else to, or for the benefit of, Mr Cameron during his lifetime.
The court found that this was not a case in which the “bare fact of paternity” existed alone. Rather, Mr Hemmes made a conscious decision, aware of his parenthood, to have no contact with Mr Cameron, despite Mr Cameron’s ongoing attempts to ignite a relationship with him.
The estrangement was caused by Mr Hemmes, rather than Mr Cameron, and therefore any argument that the estrangement should nullify Mr Cameron’s claim was not accepted.
The court noted that Mr Cameron had to make his way in the world without any love, support, or encouragement from Mr Hemmes, despite his father being extremely wealthy and undoubtedly providing those benefits to his other two children.
The court concluded that “neither a person guided by wisdom and justice, nor a person guided by current community standards, could reasonably conclude” that Mr Hemmes had left Mr Cameron with adequate provision.
Court exercises its discretion to grant legacy out of notional estate
With respect to the second prong of the two-prong approach, the court ordered that Mr Cameron be granted a legacy of $1.75 million out of the notional estate.
In selecting that figure, the court took into account Mr Hemmes’ “moral duty” to make provision for Mr Cameron, the size of Mr Hemmes’ available notional estate, and Mr Cameron’s aspirations.
The court balanced these factors against Mr Hemmes’ entitlement to testamentary freedom, noting that while section 59 of the Act gives the court the power to make a family provision order, it does not empower the court to re-make the deceased’s will.
This case underscores the authority of the Supreme Court of NSW to consider non-estate assets as available for distribution in family provision claims. It also highlights the importance for the parent of an illegitimate child to think twice before leaving that child out of their will.
For more information about family provision claims, please see Family provision claims in NSW – spare us the details and curb your expectations.