Estate Planning, Litigation and Dispute Resolution

Lifestyles of the not so rich and famous – the Federal Court of Australia refuses Salim Mehajer’s bid to annul his bankruptcy

10 December, 2019

Last week the Supreme Court of New South Wales handed down judgment in an estate dispute where it applied the law of intestacy to a complex factual scenario involving a de facto partner who was in a secret relationship with the deceased: Estate of the late Shirley Joan Violet Gardner; Bernengo v Leaney [2019] NSWSC 1324. The decision affirms that any determination about the existence of a de facto relationship involves an empirical investigation of the facts and highlights the importance of the strength of the evidence substantiating those facts.

The factual background of the dispute

Shirley Joan Violet Gardner (the Deceased) died without a valid will in 2017. Her last known will dated 10 October 1989 was voided by a subsequent marriage in 1998 (and her husband from that marriage predeceased her).

The Deceased died with no surviving husband or children – her only daughter predeceased her by some 10 years.

The plaintiff (Mr Bernengo) commenced proceedings in 2018 seeking a grant of letters of administration and a declaration that he is the surviving de facto spouse of the Deceased and is entitled to the whole of her estate.

The defendant in the proceedings (Mr Leaney) was a nephew of the Deceased. Mr Leaney filed a cross-claim in the proceedings seeking letters of administration and a declaration that he and the other nineteen nieces and nephews (and grand-nieces and grand-nephews) of the Deceased are entitled to the whole estate.

Mr Bernengo’s evidence was that he and the Deceased had been in a de facto relationship for approximately 10 years up until the time of her death. However, Mr Bernengo acknowledged that he and the Deceased had kept the relationship largely secret from the outside world, and even denied the existence of the relationship to members of the Deceased’s family. Mr Bernengo’s evidence was corroborated by the Deceased’s step-daughter and the Deceased’s neighbour, who were both relatively close to the Deceased and gave evidence as to the nature and duration of the relationship.

Mr Bernengo also gave evidence that he split his time between two residences: the Deceased’s home in Cammeray and his own country property in Rylstone, NSW. However, he gave evidence that he spent more time staying at Cammeray with the Deceased than he did at his property in Rylstone.

Mr Leaney’s evidence was that, from his observations of the Deceased and Mr Bernengo at family events, they never displayed any affection to one another and there was nothing to suggest that they were anything more than friends. Furthermore, while Mr Leaney acknowledged that Mr Bernengo occasionally stayed at the Deceased’s residence in Sydney, it was his position that it was not as often as Mr Bernengo submitted. In support of this Mr Leaney relied on documentary evidence from hospitals where the Deceased stated she lived alone.

Mr Leaney also deposed to a conversation that he had with the Deceased in which she purportedly said that she “tolerated” Mr Bernengo – the inference being that this was a denial of the existence of a relationship between the Deceased and Mr Bernengo. Mr Leaney’s evidence was corroborated by a number of the other nieces and nephews, as well as other family relations and friends, who gave evidence to a similar effect to Mr Leaney.

Legal principles

The main issue in the case was whether Mr Bernengo was the spouse of the Deceased. If he was, he would be entitled to the whole of the Deceased’s estate (after payment of funeral and administration expenses) because the Deceased left no children.

In order for a de facto partner to be a spouse for the purpose of the law of intestacy, he or she must have been in “a relationship as a couple living together” at the time of the death and that relationship either:

had been in existence for a period of at least 2 years; or
had resulted in the birth of a child.

In this case, the Deceased and Mr Bernengo had not given birth to a child, so the relevant issue was whether they had been “a relationship as a couple living together” for at least 2 years at the time of the death.

Living together

It is well established that two people do not need to share the same residence all of the time in order to be considered to be “living together”.

The courts in Australia have made it clear that the concept of living together is more concerned with the nature of the relationship (and the extent to which there has been a “merger of two lives”) than the quantities of time that the couple spend together.

Relationship as a couple

The concept of a “relationship as a couple” connotes the existence of a romantic relationship.

Section 21C(3) of the Interpretation Act 1987 (NSW) lists a number of factors that are relevant to the question of whether two people have a relationship as a couple, being:

the duration of the relationship
the nature and extent of their common residence
whether a sexual relationship exists
the degree of financial dependence or interdependence, and any arrangements for financial support, between them
the ownership, use and acquisition of property
the degree of mutual commitment to a shared life
the care and support of children
the performance of household duties
the reputation and public aspects of the relationship.

However, none of these matters (or any combination thereof) is determinative of the question – they are merely factors that are relevant to the enquiry.

The judgment

Bell P (sitting as a trial judge in the Supreme Court of New South Wales) handed down judgment and reasons on 1 October 2019.

In addition to the evidence from the witnesses referred to above, Bell P had a wealth of documentary evidence before him, including:

a video recording of the funeral;
Mr Bernengo’s bank records and telephone records, which together painted an objective picture of how Mr Bernengo split his time between the Rylstone property and the Cammeray property;
telephone records of Mr Bernengo and the Deceased, which demonstrated the frequency of communication between them;
medical records of Mr Bernengo and the Deceased, which highlighted how they described their relationship (including that they listed each other as emergency contacts); and
photographs of Mr Bernengo and the Deceased, including at family functions at which the Mr Leaney and the other witnesses for the defence were present.

His Honour found that Mr Bernengo presented as a credible witness and accepted his evidence, including his explanation for why he and the Deceased kept the relationship secret. His Honour specifically referred to the highly detailed nature of Mr Bernengo’s affidavits and found that this made them all the more believable. Similarly, His Honour accepted the evidence of the other witnesses for the plaintiff and held that their closeness with the Deceased and Mr Bernengo meant that they were well positioned to have insight into the true nature of the relationship between them.

On the other hand, Bell P found that the evidence of the defendant’s witnesses tended to be highly generalised and that it should be given little weight, especially given the relatively infrequent level of contact that they had with the Deceased and Mr Bernengo. His Honour further held that the evidence of the defendant’s witnesses actually corroborated the plaintiff’s evidence to the extent that it demonstrated that these witnesses suspected that there may have been more to the relationship between the Deceased and Mr Bernengo than the couple had let on.

Furthermore, Bell P held that the documentary evidence tended to corroborate the evidence of Mr Bernengo and the other witnesses for the plaintiff. Most persuasively, the objective data both demonstrated the high frequency of telephone conversations between the Deceased and Mr Bernengo. Mr Bernengo’s financial records showing the location of each transaction, and the telephone records together also allowed for an “accurate if not absolutely precise analysis” to be done as to where Mr Bernengo was staying on a given day. His Honour was able to conclude that the couple spent approximately 55% of their time living together at the Deceased’s residence in Cammeray.

In reaching his conclusion, Bell P had specific regard to each of the factors in s 21(c) of the Interpretation Act 1987 (NSW). His Honour noted that a number of these factors superficially pointed to a conclusion that the Deceased and Mr Bernengo had not been in a de facto relationship and said that it was a “borderline” case.

Despite this, His Honour held that there was “much evidence strongly supportive” of the conclusion that the Deceased and Mr Bernengo were in a de facto relationship for at least 2 years before her death.

Accordingly, His Honour made orders declaring that Mr Bernengo was the surviving spouse of the Deceased, such that he was entitled to the entirety of her estate, and granting him letters of administration.

Upshot

The decision demonstrates that the question of whether two persons are in a de facto relationship can involve a complex factual enquiry into all aspects of their lives. It also highlights the weight that the court will place on detailed affidavit evidence and objective forensic data (including telephone records and bank records) when assessing the nature and extent of the relationship.

Finally, the decision is a reminder of the importance of proper estate planning and having a current will that reflects your testamentary intentions.

McCabes acted for Mr Bernengo in the proceedings and has extensive experience in advising on and acting in will disputes, as well as drafting wills and estate planning. If you have a potential dispute concerning an estate or wish to update your estate plan, get in contact with us today.

published by

Andrew Lacey

Managing Principal

contributors

Guy Lewis

Senior Associate

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Litigation and Dispute Resolution

Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract. Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed. Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)." Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter. Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship. Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the dictionary.com definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest. What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan

29 August, 2023

Government

Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty. The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.

Published by Leighton Hawkes

18 August, 2023