The recent case of Clayton v Clayton [2023] NSWSC 399 highlights the complexity and overlapping equity doctrines that often apply to cases of a contested estate.
In Clayton v Clayton, the deceased made a number of wills leading up to her death, the last of which gave all of her estate to her daughter on trust to be sold, with the exception of 10% of a life insurance policy which was gifted to her son. The deceased had only two children and no spouse at the time of her death. The main asset in the estate was a property in Murwillumbah. While the son made a family provision claim under the Succession Act 2006 (NSW), the daughter made a cross-claim for declaration that the property was held on constructive trust for her.
Constructive Trust
A constructive trust is a special kind of trust imposed by a Court on property. Constructive trusts are imposed in cases where there has been no express declaration or creation of a trust, but a Court finds that in the circumstances, it would be unconscionable for the property to remain in the name of its legal owner, so a trust is declared over that property in favour of the claimant.
Constructive trusts are often considered to fall into two broad categories (as were considered in this case): a ‘common intention’ and a ‘joint endeavour’ constructive trust. In this case, His Honour Justice Meek helpfully summarised the distinction: ‘[the] crucial distinction between the two classes of case is that the common intention constructive trust turns on the actual intentions of the parties, unlike the joint endeavour constructive trust’.
In Clayton v Clayton, the daughter cross-claimed against the brother asserting that because she had lived with the deceased for some 20 years, and they had made joint payments to the property and managed their finances as though they were shared.
Outcome
Both the son’s claim for further allowances to be made for him, and the daughter’s cross-claim for declaration that the Murwillumbah property was held on constructive trust for her (and therefore did not form part of the deceased estate) were dismissed.
This was a case that turned heavily, as many cases do, not on technical legal issues, but on the volume, quality and reliability of the evidence presented to the Court.
Much of the son’s evidence was challenged at the Hearing and was rejected by the Judge. The son was evasive, inconsistent and sometimes apparently dishonest in giving evidence for his family provision claim. The Court similarly found that the daughter’s cross-claim lacked sufficient evidence to establish a constructive trust.
In dismissing the family provision claim, the Court looked at the son’s ability to continue to find work, his present not-dissatisfactory accommodation and living situation, and his long history of independence. This was contrasted against the fact that the daughter had lived with the deceased for some years, was unlikely to be able to gain future employment, and had been close to the deceased up to the time of her death.
The case of Clayton v Clayton highlights the importance of having evidence to substantiate your claim, as well as the risk of pursuing a claim with unsatisfactory evidence. It also serves as an important reminder that even though the distribution of an estate may seem one-sided or even unfair, that does not always satisfy the relevant legal tests.
What this means for you
If you think you might be eligible to challenge a Will or contest an estate, but are concerned about the strength of your claim, our estate dispute specialists in the Private Wealth Law team at Chamberlains can assist you.
This article was prepared with the assistance of Alex Miglietti.
If you have any questions or concerns please contact our Private Wealth Director Ashleigh Blewitt on 02 6188 3600