Publications - Estate planning

Just When You Think You Got it Right - the fight over Stanbroke

There have been recent reports in the news media concerning a court case involving the Menegazzo Family over the estate of their parents, Peter and Angela Menegazzo. Before his death, Mr Menegazzo was reportedly an extremely private person who rarely gave media interviews so the publicity generated by the recent court stoush is probably unwanted by his children. But it remains that there are some salient lessons that might be learnt from these court proceedings.

Mr Menegazzo Snr had been a very successful fruit and vegetable grower, when in 2003, two years before his death, he acquired an interest in Stanbroke Pastoral Company along with the founder of Hungry Jacks, Jack Cowin and Grazier, Peter Hughes in what was then the largest rural transaction in Australia’s history. When he bought out his partners about a year later he became one of Australia’s largest land holders and the third biggest cattle owner with a herd of approximately half a million cattle. When he and his wife were tragically killed in 2005 their four children inherited in equal shares, their parents’ deceased estate which comprised eight properties within the Stanbroke Property Group, valued at $330million.

The case that came before the courts in April 2015 involved an application for summary judgment by one of the defendants. The law firm that acted for one of the children and the decision of the court found that the arguments of negligence against the law firm could not be sustained and the firm was discharged as a defendant to the proceedings.

While the arguments about whether that law firm was negligent or not may be of little interest to most, there are two important estate planning issues that arise from this case as follows:

  • The wills of the parents seem to have been a simple and equal split of the deceased estate amongst all of the children, which allowed for the children to then negotiate the exit of one of them for an agreed value. In hindsight, given the court action that has followed, maybe a simple split was not the best option. A deceased estate of this value might have been better served by a testamentary trust with stipulated rules and formulas on how the children beneficiaries might be entitled to redeem any claim they might hope to make against the capital of the trust.
  • In this case the plaintiff was one of the sons of the deceased who claimed that he had been deceived by his siblings, not revealing that they had entered into a side agreement and that the valuations of the estate property did not take into account the tax benefits from this side agreement, and as a consequence of this and the valuation errors, he suffered a loss of $40million in his exit payment negotiated between the four children. The lesson therefore, is to consider at the time of making your will, the part that valuations might play in the administration of your deceased estate, particularly where there might be difficult challenges to valuing the assets, as would have occurred in this case.

While there is a large amount of money in dispute, the case that will now continue between the remaining parties relies on mostly technical arguments as to whether there was an error in valuations or any deceit of the plaintiff by his other siblings, but there may still be further lessons to learn from the outcome.

Paul Kelly is a Lawyer and Director and head of the Business & Estates Team at Kelly Legal and can be contacted on paul.kelly@kellylegal.com.au

 

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