$25 Million is Adequate Provision

On 26 February 2015 Master Sanderson of the Supreme Court of Western Australia delivered a decision in the matter of Mead v Lemon [2015] WASC 71 in which he found that $25 million was adequate provision for the plaintiff in a claim commenced under the Family Provision Act 1972 (WA) (the Act).

The estate was extraordinary.  Michael Wright had vast wealth.  When he died he was survived by 3 children of a former wife and the plaintiff, Olivia Mead, 19 years old, whose mother had had a relationship with him.  The deceased spent very little time with Olivia at all and had provided little support to her or her mother.

In this case the estate was so large that precise valuation was unnecessary.  The entitlement of 2 of the defendant children as residuary estate beneficiaries, for example, was in the order of $400 million each under the will, providing each of them an expectant income of approximately $24 million per year.   The speculated estate size was potentially $1 billion.

Olivia had a $3 million trust fund set up under the terms of the will, but which contained terms which the Master found could operate in an entirely oppressive and capricious fashion to exclude her from receiving anything, such as being other than of Christian faith.  Adequate provision had to be considered in the circumstances of the estate.

Evidence about Olivia’s claimed needs extended to many high value items and some found to be of a fanciful nature, such as a $250,000 guitar, despite not having had guitar lessons for some years nor being a professional musician.  However, speculation about what she might do study and career wise and how many children she might have as a 19 year old left many options for her in life as well as many uncertainties.  Olivia’s claim through actuarial evidence was of a need for $13 – $20 million.

The defendants argued $3 million was proper provision and that an award should do no more than provide adequate provision for the proper maintenance, support, education or advancement in Olivia’s life, though the Master noted that the Court’s discretion is unfettered once the Court was satisfied that the will made inadequate provision for her, and had to take into account the circumstances when the orders were made.

Relevant to that discretion, no other individual beneficiary would suffer the typical detriment where increased provision was made from a smaller estate.  In awarding an unprecedented $25 million cash on condition of forfeiting any right in the trust set up under the will, Master Sanderson mostly focussed on the size of the estate and the fact that, wisely invested, Olivia and her family would never want for anything ever again.  In the context of the estate he commented that that sum was “little more than a rounding error”.  He commented though that it was not about fairness or about compensating Olivia for the deceased’s limitations as a father but considered the position of a wise and just testator, that of community expectation and the duties of a parent arising under the Act

This case has been of significant media interest.  The award of such an enormous sum is extraordinary, particularly as it is higher than Olivia sought herself.  Nonetheless the principles applied will be of relevance to high value estates in future cases.

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