In a recent decision of the Supreme Court of NSW, Lodin v Lodin; Estate of Dr Mohammad Masoud Lodin [2017] NSWSC (the Lodin Case) a former spouse of 20 plus years who had only been married to the deceased for 18 months and had a final property settlement was awarded a portion of her ex‑spouse's estate.

The test for ex-spouses making claims on deceased estates

When considering a claim by an ex-spouse for provision out of a deceased estate the Court must give consideration to 2 questions:

• whether there are factors warranting the making of an application by that person; and

• if so, whether adequate provision for the proper maintenance, education or advancement in life of that person has been made.

It is generally accepted that a final financial settlement under the Family Law Act 1975 is an obstacle to ex‑spouses making claims on their ex's estates that is difficult to overcome.  This was also noted in the Lodin Case. 

The Court stated that factors which may warrant a claim by a former spouse are "such factors which, when added to the facts which render the applicant an eligible person, give him or her status of a person who would generally be regarded as a natural object of testamentary recognition by the deceased".  Some examples of these factors are:

• where the ex‑spouse died before all financial matters had been resolved by the Court;

• where the husband and wife have not finally settled all their property dealings at the time of the death;

• where maintenance was being paid to the ex‑spouse at the date of the deceased's death and the orders for maintenance were inadequate to provide for the ex-spouse after the death of the paying spouse; and

• where, despite the divorce, there was some dependency on the deceased at the date of death, ie, there was ongoing emotional and/or financial support provided.

How has the test previously been applied?

In past cases ex-spouses have mostly been successful in their claims for provision where they have established:

• an ongoing relationship of some kind, such as ongoing financial and/or emotional support. In the matter of Milewski v Holben [2014] NSWSC 388 the applicant was successful in obtaining an order for provision partly because she and the deceased had maintained a relationship following their divorce and the deceased had indicated that future provision would be made for her; and

• the lack of a final financial/property settlement at the time of their separation/divorce. In the matter of Scott v Scott [2009] NSWSC 567 the applicant was living separately from the deceased at the time of death but there had been no final division of assets.

What has changed with the Lodin Case?

Notwithstanding that the Family Court had considered the employment prospects of each spouse, the care of the child of the relationship, the contributions of each spouse to the relationship and the assets brought by each spouse to the relationship before making orders for the final property settlement, the Court still considered that it should make an order for provision for the deceased's ex‑spouse.  The reasoning for this included:

• that the deceased had gone on to build his wealth following the divorce;

• that the applicant had (indirectly) contributed to this build up of wealth by being the sole carer of the child of the relationship (even though the deceased had paid child support);

• the enduring impact of the relationship and marriage on the ex‑wife. Initially the applicant was a patient of the deceased and the Court was provided with doctor's reports from around the time of the breakdown of the relationship.  The Court was of the view that the breakdown in the relationship had long-lasting effects on the applicant which manifested in her "conduct towards the deceased from 1993 onwards, her fraught relationships with others, including her daughters and her daughters' attitudes towards her"; and

• the quantum of the estate. It was noted in the judgment that "[T]here is something unbecoming about an arrangement under which the [ex‑wife] 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".

Ultimately, the Court ordered that provision be made for the ex-wife in the amount of $750,000 out of a $5 million estate.

Can we distinguish the Lodin Case ?

In many respects this an extraordinary decision and it seems the Court was particularly influenced by what it perceived to be the unfairness of a child inheriting a substantial amount while the mother had very little.

The key facts that may distinguish the Lodin Case are:

• the relationship evolved from that of a patient/doctor relationship;

• the deceased was held accountable for the "unusual and long-lasting" impact that the marriage breakdown had on the applicant as a result of the prior patient/doctor relationship; and

• the size of the estate.

Where to from here?

There is no doubt that the Lodin Case will see other ex-spouses making claims.  This is an interesting time in estate litigation and the real test will be whether the Lodin Case is followed or overturned if appealed.  In our view, the Courts will go to some lengths to distinguish the particular facts of the Lodin Case.

Watch this space for updates.

The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.

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