Early mediation of TFM disputes
– and the challenges facing lawyers and mediators
As a mediator I have in the past been involved in several Testator Family Maintenance (“TFM”) disputes so I thought that it might be helpful to share some observations in the hope that this article might assist in tackling mediations of that kind.
Lawyers and mediators will no doubt be aware of the subtle, and sometimes not so subtle, differences between a commercial dispute and a TFM dispute, the latter, not unlike a matrimonial dispute, requiring some special skills.
The story of an elderly gentleman who had serious hearing problems for a number of years is perhaps illustrative. His GP referred him for hearing aids. When he returned to the GP for review a month later the doctor remarked: “Your hearing is perfect. Your family must be really pleased that you can hear again”. The gentleman replied, “Oh, I haven’t told my family yet about the hearing aids. I just sit around and listen to their conversations but I’ve changed my Will three times since!”
In Victoria Part IV of the Administration and Probate Act 1958 (Vic) was amended by the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 (“Act”), to allow, inter alia, for claims by an “eligible person” who may now bring a claim where there is a dependency (wholly or partly) on the deceased for the person’s proper maintenance and support, and where at the time of death the deceased had a moral duty to provide for that person, and the distribution of the deceased’s estate failed to make such provision.ˆ The amended Act has now been in operation for just over 3 years.
A lawyer’s dilemma often is to decide when to mediate. In a previous article in the LIJ,° I noted that early mediation can engender a spirit of cooperation between lawyers and obviate entrenched and polarised positions as opposed to the situation when significant amounts have been spent on legal fees, making the challenge much greater.
Prior to the amendments to the Act, the Court could make costs orders which in its opinion were just.˜ (and which usually involved the plaintiff’s costs being paid out of the estate assets) but could order costs against the plaintiff if the claim was made frivolously, vexatiously or with no prospect of success.†
The position in the preceding paragraph was repealed by the amendments to the Act and as a consequence costs are now be left to be determined on the basis that the unsuccessful plaintiff may likely be ordered to pay costs, rather than the costs being paid from the pool of estate assets. The defendant trustee’s position has presumably remained unchanged as a consequence of a trustee’s right to be indemnified out of a trust fund.
These costs considerations alone are now more than likely a significant incentive for the plaintiff to consider embarking upon early mediation rather than risking a costs order in the event of an unsuccessful claim or, even if successful, risking considerably diminishing the asset pool by the colossal costs which could be incurred and which could otherwise be available for distribution to the beneficiaries.
There are a variety of factors that might influence a plaintiff – or for that matter the parties generally – in deciding whether or not to mediate early. Some of those factors are:
- Certain new provisions contained in Section 91A‡ of the Act that the Court must have regard to in making a TFM provision order. What might be relevant here is the anecdote, were it true, of the testator with the hearing problem and what he might have said in his Will.
- If a beneficiary is old and/or seriously ill it may be prudent to arrange mediation at an early stage rather than risk having to deal with the beneficiaries’ executor in Court proceedings.
- If it’s not just about the money, the needs, wants and underlying interests of the parties need to be considered.
Professor Jay Folberg,ª Dean Emeritus at the University of San Francisco School of Law and a highly experienced ADR practitioner noted that:
“Brothers and sisters may fight over partnership property, but they are really sorting out old issues of sibling rivalry and dominance. Once a patriarch or matriarch of a family has given up control or passed away, adult children are often left in a position of ambiguity or, worse, contrary beliefs about their rightful role. Disputes surface that are usually less about malevolence than about conflicting feelings, misunderstandings of intent, divergent expectations, and resistance to change or unspoken fears.”
- Where other “stakeholders”, not parties to the dispute, may need to be part of the solution. An example may be creditors, co-shareholders or business partners.
- If a sibling just wants to repair and maintain relationships as part of a resolution.
Ultimately serious consideration should be given by the parties to the flexibility of the mediation process, which could promote reaching early agreement as opposed to the Court process where the Court can only order what is requested in the statement of claim, with resultant winners and losers – and most likely irreparably fractured relationships.
What then are the considerations and techniques that might be employed by mediators in TFM mediations?
Most practitioners will acknowledge that they have encountered a diversity of styles by mediators in the TFM resolution process. While some mediators may be particularly process driven and perhaps consider the task as “just another mediation”, other mediators may have the ability to sense the mood of the dispute by relying on their gut feeling and adapting the process to suit the circumstances. What works for commercial disputes does not necessarily work in TFM disputes so the greater the flexibility of the process the greater might be the prospect of a good outcome.
Even though there may have been some considerable time since the passing away of the testator (particularly where the parties in dispute are close family members) it is likely that they may not yet have overcome their grief, which is likely to again be stirred up through the mediation process as well as rehashing of old issues. It is hard to envisage when or how this will manifest in the mediation. Utilising emotional intelligence in these circumstances is crucial.
Those mediations can frequently decline into juvenile confrontations which do little to promote an outcome but can explain how the relationships became fractured. It is therefore crucial that the mediator intervenes when the time is right to divert those conversations to a more positive engagement and to rather encourage the parties to focus on the future.
Striking the right balance between allowing the parties to vent and refocussing on the financial and other demands – whether justified or not – and the possibility of preserving relationships, is where the real emphasis should be. The challenging aspect is being able to understand what the money actually means to the parties without the mediator being a party to damaging the relationships further.
All of this can be an emotional drain on the parties, which frequently results in an early loss of concentration and commitment, so it’s always prudent to allow a party time to gather his or her thoughts by suggesting a short break to refocus when that need is sensed by the mediator.
A party may be accompanied by a support person, who may be a husband or a child or a trusted friend. Where the support person doesn’t have any “skin in the game” I have often observed a support person who has not been privy to the full history of the dispute attempting to discourage a party (whose best interests might be to settle) from resolving the dispute for unjustified, selfish and illogical reasons. In these circumstances the mediator may be well advised to meet with the party alone – and if represented, perhaps with or without his or her legal representative – to establish what that party really wants.
Undoubtedly practitioners and mediators will acknowledge that parties in a TFM dispute, unlike in commercial disputes, can be especially emotional and volatile so to create an atmosphere for resolution takes an enormous amount of patience, resilience and perseverance. Unfortunately that effort may all be wasted if the root cause of conflict is so deep seated that only more “pain in the pocket” will reignite settlement discussion or a Court determination will satisfy the parties’ needs – which for some lawyers and mediators, may be hard to cope with after having invested so much time and energy in an effort to reach an outcome. It is said that 80% of mediations resolve – so someone has to be in the 20%.
Jonathan Kaplan (LL.M) is accredited by the Law Institute of Victoria, Melbourne, Australia as a Specialist in Mediation and also practises as a commercial lawyer.
ˆ Section 91(2) of the Administration and Probate Act 1958 (Vic) No. 6191 of 1958 (as amended).
° When is the best time to mediate? LIJ April 2017 @ 70.
˜ Section 97 (6) of the Administration and Probate Act 1958 (Vic) No. 6191 of 1958.
† Section 97 (7) of the Administration and Probate Act 1958 No. 6191 of 1958.
‡ (1) In making a family provision order, the Court must have regard to
(a) the deceased’s will, if any; and
(b) any evidence of the deceased’s reasons for making the dispositions in the deceased’s will (if any); and
(c) any other evidence of the deceased’s intentions in relation to providing for the eligible person.
ª Mediating Family Property and Estate Conflicts: Keeping the Peace and Preserving Family Wealth – originally published in JAMS Dispute Resolution ALERT, Vol. 9, No. 2, 2009 and subsequently on www.mediate.com.
