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Record award in estate of John Hemmes

In February 2018, the son of a six-year affair between the late business mogul John Hemmes and Fiona Cameron was awarded $1.75 million [Estate Hemmes; Cameron v Mead [2018] NSWSC 85] from Mr John’s (as he was known) estate. This is a new record and, while the facts were unusual, it should be factored in when managing disputes in large estates.

The legal community was watching this case with interest for a few reasons. One was that it seemed that Mr John lead an affluent life style yet he had minimal assets and secondly, he had never acknowledged the son to be his own.

Justice Lindsay awarded the sum to Edward Cameron, the son. Mr Cameron was born in 1990, a product of an affair between his mother and the deceased. The deceased refused to acknowledge the son until Family Court orders were made in 1995 following a DNA test. Over 13 years, the deceased was compelled to make child support payments to the sum of $300,000. He made no other contribution to the upbringing of the plaintiff.

The plaintiff sought family provision relief under Chapter 3 of the Succession Act 2006 (NSW) in relation to the estate of the deceased.

Details of the estate

Mr John owned his large home in Vaucluse, ‘The Hermitage’, as joint tenants with his wife Merivale. The property was valued at $34 million. The legal implication of this is that such an asset did not go into his estate but passed on the moment of death to Merivale. Mr John died on 1 March 2015 and by a will dated 14 January 2015, he left $2 million to a person named as his ‘general manager administration’ and the balance of his estate to his widow and his two adult children. He left a gross estate valued at $363,964, with liabilities totalling $661,969. This left his estate with a negative value of $298,005.

The plaintiff amended his family provision order to contend that the ‘notional estate’ be the subject of the claim. Although the defendants to the proceedings opposed the claim, they agreed to set aside a fund of $4.1 million to be held in the controlled account of their solicitor. The plaintiff made a claim on the fund for his ‘proper maintenance, education and advancement in life’.

The defendants rejected the provision of the order on three grounds:

  1. The deceased made adequate provision for the plaintiff through the child support payments
  2. The deceased had no relationship with the plaintiff and only had ‘bare paternity’
  3. The plaintiff is an adult who can take care of himself.

They alternatively claimed that the provision should not be any more than $1 million. This ceiling on damages has now been smashed by this decision.

The decision on a ‘notional estate’

Justice Lindsay stated [at 56]:

“No provision was made for the plaintiff in the deceased’s will. Neither a person guided by wisdom and justice, nor a person guided by current community standards, could reasonably conclude that the deceased’s bare payment of child support payments, under compulsion of law, has left the plaintiff with adequate provision, etc, from the estate, or notional estate, of a father of the deceased’s affluence. The plaintiff is a young man, unaided by paternal support beyond child support payments, who certainly has the advantages of youth and potential, but accompanied by a lack of substantial wealth that commonly accompanies youth. The defendants’ primary case (that the plaintiff’s summons should be dismissed) must fail.”

The Court held that provision for Mr Cameron come out of the ‘notional estate’ of the deceased. This is a concept unique to NSW in Australia and applies where the deceased may have kept his estate small by leaving his assets in trusts set up while he was alive. ‘Notional estate’ means that attempts to keep estate assets ‘out of harm’s way’ may well not succeed.

The sum of $1.75 million was awarded (with some costs). We understand that this is a record award for such a case in NSW.

These types of issues can be addressed earlier with some good estate planning, as we are doing in other cases for our clients.

 

Donal Griffin is a Principal of Legacy Law, a legal firm specialising in protecting family assets. The firm is not licensed to give financial advice. This article does not consider any individual circumstances and Cuffelinks does not know the case well enough to make a judgement on the merits or otherwise of the case.

8 Comments
BB
April 17, 2018

"Why should the child be deprived of opportunity in life, due to his parent’s relationship at the time of his birth"

Billions of children are deprived of things everyday by virtue of life's circumstances?

"deprived of opportunity" here refers specifically to being deprived of wealth, not just any wealth but wealth well beyond that achieved by let alone simply bestowed up on the average citizen.

By the same logic, entitlement to wealth, power and by extension "opportunity" purely by virtue of bloodline (despite no other connection or relationship) is also a concept that many citizens of 2018 disagree with? The ethics are by no means open and shut here and nor does righteous outrage sway that fact.

As an individual, I would be the first to criticise illegitimate wealth and the exploration of a system apparently built for the many but often exploited by the few. Ethics is by no means a core personality trait of the populace, especially the most elite among us. However, If you fundamentally agree with the premise that legitimately acquired wealth (after fair taxes) should not be confiscated and redistributed by the state in life then it stands to reason the same applies in death. Lawyers deem this important not just for the next ambulance to chase, but for the precedence it sets and perhaps the unintended consequences it produces.

Dee
April 16, 2018

EDP ............ on the money (no pun intended)

Lisa
April 12, 2018

Agree, although to be fair, lawyers are just reflecting the ethics of their clients.

DONAL GRIFFIN
April 17, 2018

Thanks. It is interesting. We see both sides in broadly equal numbers. Some parents are disgusted that "an ungrateful" child is likely to get something (there is no log book as every case is different) and sometimes parents are blinded by a new relationship or do nothing in which case a formula applies which no-one likes (intestacy).

Rod
April 12, 2018

To David and Extremely Disappointed parent...

Well said both of you. Can only agree.
Thank-you.

Extremely disappointed parent
April 12, 2018

Mr John enjoyed a six year affair. The creation of a child from that relationship - and it seems there must have been some love from Mr John to the mother for it to last such a period of time - is an issue of responsibility and commitment on behalf of both that child's parents. That is what 2018 ethics should demand!
The mother raised the child with small, grudging child support. The child was entitled to live according to the advantages of his father, as all children such as Mr John's other two children did. This is my modern, 2017-18 view of modern ethical behaviour which I believe would be today's majority view. Why should the child be deprived of opportunity in life, due to his parent's relationship at the time of his birth, when his father had the means to provide him with the benefits of that parentage. Why should that child have been raised in such different circumstances to his half siblings who will have benefited from lifestyle, and schooling opportunities denied to him.
Regardless of the state of the law, or the facts of the case I find that a modern law firm advertising that they help wealthy, advantaged people is repugnant.
Mr John left a home worth $34 million and we all know the family has extensive business interests, and yet there is a feeling here that $1.7 million was TOO much to leave Mr Cameron. Really?
While this article may state what is true and available in the current practice of family law, I turn to Cuffelinks as a newsletter of integrity produced by people of integrity. I would have liked a disclaimer at least from the editor that this article did not represent their ethical framework, and that the success of Mr Cameron's claim should be applauded - or something like that!
How else does societal change happen if this sort of thing goes unchallenged? How very sad! (Managing Editor note: both this comment and the article have been edited, as we often do).

Donal Griffin
April 16, 2018

Dear Extremely disappointed parent. Everyone is entitled to legal representation in NSW. We act for executors who want to resist claims by other parties and we also act for people who want to challenge estates. The important principle of freedom of attestation is subject to the right of "eligible people" as defined by the Succession Act 2006 (NSW) to bring a claim for provision out of an estate. Our firm does not make the rules. We are not offering any comment on the ethics of these cases. We do say, however, that they are often very hard cases.

David
April 12, 2018

Mmm ... just shows the rich stay rich (or try to) by using every inch of black letter law. Where is the sense of moral obligation?

 

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