A drama in 3 parts
Prologue: The unhappy marriage of Mohammed and Magdalena
Back in 1984, Magdalena Melov met Dr Mohammad Masoud Lodin when she visited his clinic in Sydney for a medical appointment. A relationship followed and by 1988 they were married and living together, and their daughter, Rebecca, was born.
But things changed. After just 18 months of co-habitation, Mohammad moved out and in 1992 they reached a financial settlement in the Family Court, in which Magdalena was awarded $164,000 – about 38% of their total combined assets at the time.
Dissatisfied with this, Magdalena unsuccessfully appealed the decision then decided to try a different approach. She called her estranged husband, demanding that if he didn’t give her an additional $60,000 she would register a complaint with the NSW Health Department about the inappropriate sexual relationship they’d had while she was his patient. She made good on this threat, causing Mohammad to be reprimanded for his unprofessional conduct.
Yet this was only the beginning of Magdalena’s efforts. On top of denying Mohammad access to their daughter, she made accusations to police that he had sexually abused and threatened to kidnap the child. Although these accusations were ultimately found to be baseless, Mohammad was put under immense stress in having to defend himself.
Case 1: Mother versus daughter
In 2014, Mohammad passed away intestate – that is, without a valid will. He left behind an estate worth more than $5 million which, as per section 127(1) of the Succession Act 2006 (NSW), went to his daughter, Rebecca. Legally, the 1992 settlement was the end to any negotiation on the assets of the marriage and rights to money. Mohammad had paid all his child support payments obligations as well as occasionally paying additional sums to his ex-wife.
However, Magdalena challenged the distribution of his estate to Rebecca and sought provision for herself in the NSW Supreme Court.
She argued that while Mohammed had prospered financially since their divorce, her own life as a single mother had been financially difficult. She suffered numerous health problems, from diabetes to chronic pain caused by injuries suffered in a car accident, which forced her to live on disability support. Magdalena also argued that she had made an indirect contribution to Mohammed’s estate by caring for their daughter Rebecca – although over time her relationship with her daughter had also become estranged.
The judge in the case, Justice Paul Brereton, described Magdalena’s attitude to Mohammad since the end of their relationship as “one of relentless hostility”. However, despite her “relentless persecution” for more than two decades, he acknowledged the relationship and its breakdown had a greater impact on Magdalena than Mohammed, who, “untrammelled by responsibility for a wife or a child… accumulated assets which by his death exceeded in value more than 10-fold those at the time of the matrimonial settlement.”
Justice Paul Brereton continued that “[T]here is something unbecoming about an arrangement under which the plaintiff is left in circumstances of considerable need, reliant on a social security pension, while the daughter whom she raised inherits in excess of $5 million”, and awarded $750,000 plus costs from the estate of her former husband, noting that it represented only a small slice of the estate and that the vast majority would still be inherited by their daughter.
In his closing statements, he conceded that this was “not an easy case” and that “judicial minds may differ on it”.
It was not, however, the end of the matter.
Case 2: The appeal
The daughter, Rebecca – who was entitled to the whole estate on intestacy and was the administrator of her father’s estate – immediately appealed the decision.
Her appeal grounds stated: “His Honour’s decision is so divorced from reality, so unrepresentative of community standards or expectation, and so totally inconsistent with the objects and principles of family provision legislation as to be wrong and thus deserving of appellate correction.”
The Court of Appeal agreed, finding that Justice Brereton had erred in concluding that there were factors warranting Magdalena’s family provision application.
It held that an ex-spouse is “not normally regarded as a natural object of testamentary recognition by the deceased”, and that “the financial affairs between the deceased and Ms Lodin were resolved by final orders of the Family Court in December 1992”.
Moreover, since their divorce, Mohammed had meticulously complied with his obligations to provide substantial financial support for their daughter, as well as providing additional financial support from time to time beyond his legal obligations. The Appeal Court thus dismissed Magdalena’s argument that her care of their only child was to her detriment and allowed the deceased to flourish financially.
While Magdalena had indeed suffered injuries that severely impacted her ability to re-join the workforce, the Court held that her late, estranged ex-husband did not have any moral duty to provide for her on the basis of injuries entirely unrelated to their relationship.
Magdalena’s behaviour was another key factor to take into consideration and further persuaded Justice Sackville to overturn her family provision claim against Mohammad’s estate.
Afterword: The lessons learned
Ultimately, the question raised by this case is simply whether the claimant can be regarded as a natural object of testamentary recognition by the deceased – that is, a person to whom assets of the deceased’s estate should go in the absence of a will.
Magdalena’s initial success in making a family provision claim against her ex-husband’s estate demonstrates that even after a relationship has ended, notwithstanding of how individuals have behaved, in the eyes of the law, former spouses (as well as de facto partners, stepchildren and other past or present family members) can be seen to have rights to an estate.
However, the Court of Appeal ultimately overturned the decision, concluding that Magdalena had not satisfactorily established that there were factors warranting her family provision application in accordance with section 59(1)(b) of the Succession Act 2006 (NSW).
It’s worth noting, finally, that there were steps Mohammed could have taken to prevent his daughter from having to fight for all of her inheritance – steps involving a carefully prepared estate plan drafted by a professional who has seen what can happen when relationships break down – even long after the event and particularly where valuable assets are at stake.
Read the full judgments:
Original case (January 2017)
Appeal (December 2017)
This article was written by Nick McColl, Estate Planning Solicitor, Trustee & Wealth Services.
If you have any questions about any other estate planning or estate management issues raised by this article, please contact us.
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