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24 November 2017 by Ray Christensen

WA Court of Appeal overturns highest-ever FPA payout

The Western Australian Court of Appeal has reduced the $25 million Family Provision Act award to the estranged heir of mining magnate Michael Wright down to $6,142,000.

Michael Wright died on 26 April 2012. His estate was worth approximately $1 billion. Mr Wright left the vast majority of his estate to his 3 children by one of his previous wives. However, Mr Wright had a fourth child, Olivia Mead.

The original decision: Mead v Lemon [2015] WASC 71

The Master of the Supreme Court found that Mr Wright never lived with Ms Mead's mother, and paid only legally-required child support for Ms Mead, as well as for private schooling for her.

The Master also found that Mr Wright spent very little time with his estranged daughter. At the time of the Court's primary decision, Ms Mead appeared to be in the typical financial position of a 19-year old woman, working at a restaurant to survive while studying at university.

In his Will, Mr Wright left Ms Mead "up to $3 million" by way of a testamentary trust. However, the terms of the trust allowed the trust to be depleted by circumstances outside of Ms Mead's control, and would also have deprived Ms Mead of anything if she were "involved" with illegal drugs or "was a member of or in any way involved with any religious body other than the Roman Catholic, Anglican, Presbytarian, Baptist, Uniting or other similar traditional faiths". 

The Master found that Mr Wright had failed to adequately provide for Ms Mead and ordered the estate pay her $25 million, Australia's largest ever Family Provision Act award. The reason for the size of the award was primarily because of the immense size of the deceased estate. 

The appeal: Lemon v Mead [2017] WASCA 215

On appeal, the Court of Appeal overturned the Master's decision, finding that under the Family Provision Act, the Court's discretion is fettered by what would be an “adequate” award for Ms Mead's “proper maintenance”. The Court relied on actuarial calculations prepared jointly by two experts, one retained by each party. The actuaries calculated that if Ms Mead were awarded $6,142,000, and she put the funds into an interest bearing account, she could purchase a property for $1.5 million and draw down an annuity of $100,000 per year for the rest of her life.

The Court of Appeal ordered that the Master's $25 million award be overturned and replaced with an award of $6,142,000 and that an independent trustee manage the funds for Ms Mead until she turns 30 years old.

Take away lessons:

When making a Will, if you fail to adequately provide for the proper maintenance of your spouse or children, the Court can alter the distribution of your estate so that they are adequately provided for. When we prepare a Will for you, we will advise you about how best to do this so as to reduce the likelihood of a successful Family Provision Act application being made against your estate.

If you are the beneficiary of a deceased estate and feel as though you have not been adequately provided for, you may be able to make a Family Provision Act application to receive more from the estate (at the cost of other beneficiaries of the estate). We can advise you about your rights and options in relation to this area of law and act for you if you choose to make an application.

If you have any questions, please contact our Ray Christensen.

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