A Limited v J

THE FACTUAL MATRIX

1. The occasion for the making of a statutory will arose, essentially, from facts lying within a narrow compass: 1. K is possessed of a large estate. 2. K lacks, not only a capacity to manage his own affairs generally, but also testamentary capacity specifically. 3. Although his incapacity is presently grounded in his age, it is also more fundamentally grounded in his physical condition; he is not expected ever to have capacity to manage his own affairs or to make a will for himself. 4. Absent a court-authorised will, should K die in the foreseeable future his estate would pass on intestacy (under section 128, in Chapter 4, of the Succession Act 2006) to his parents, who are estranged from one another. 5. K is actively cared for by his mother and his maternal grandparents. 6. K's father has had virtually nothing to do with him, and has manifested no interest in his welfare.
2. The father was served with notice of the proceedings; but, with the benefit of legal advice, he chose not to appear formally in them or to participate in the decision-making processes of the Court.
3. Instead, he used the pendency of the proceedings to extract information concerning the size and composition of K's estate and to provide himself with evidence in support of an application to the Child Support Agency (governed by the Child Support (Assessment) Act 1989 Cth) for his financial contribution to the welfare of K to be radically reduced because of the availability to K of a substantial estate.
4. But for a question as to the form of the will to be approved by the Court, in dispute as between the plaintiff and K's mother, the proceedings could have been dealt with in chambers in accordance with the practice of the Court established by Palmer J in Re Fenwick; Application of JR Fenwick; Re "Charles" (2009) 76 NSWLR 22 at 67-68.
5. The evidence in support of the making of a statutory will was clear and convincing as to all matters upon which the Court must be satisfied under sections 19 and 22 of the Succession Act. The dispute between the parties focused attention on the proper operation of section 18 of the Act.

The Ambit of Submissions

1. The Court had the benefit of detailed written submissions prepared, on either side of the record, by experienced counsel who canvassed the requirements of the Succession Act; referred to relevant authorities (including, notably, the judgment of the Queensland Court of Appeal in GAU v GAV [2016] 1 Qd R 1, Re Fenwick (2009) 76 NSWLR 22, Re Will of Jane [2011] NSWSC 624, Secretary, Department of Family and Community Services v K [2014] NSWSC 1065, Banks v Goodfellow (1870) LR 5 QB 549 at 565 and Read v Carmody [1998] NSWCA 182); and summarised evidence bearing upon each of the statutory criteria required to be considered by the Court.
2. In oral submissions, particular reference was made to A Limited v J [2017] NSWSC 736 and A Limited v J (No. 2) [2017] NSWSC 896 as recent illustrations of the Succession Act in operation.
3. Given that substantial costs had been incurred in preparation of the contested question submitted for the Court's determination, reference was made to section 98(1) of the Civil Procedure Act 2005 NSW as the principal source of the Court's discretionary powers relating to costs, and to the practice of the Court (noticed in In Re An Incapable Person D [1983] 2 NSWLR 590 at 595 and Snelgrove v Swindells [2007] NSWSC 868 at [25]) of asking in protective matters, "What is the proper order for costs to be made?", rather than simply making an order that "costs follow the event" or for costs to be paid out of an available fund.

The Approach to Costs in Protective Cases

1. The rationale for such an approach is found in a need to give due recognition to factors not generally found in adversarial proceedings: CAC v Secretary, Department of Family and Community Services (No. 2) [2015] NSWSC 344 at [15]-[16].
2. The protective jurisdiction of the Court (including, subject to particular legislative provisions, statutory jurisdiction) is generally governed by the "welfare principle" (namely, the principle that the welfare and interests of a person in need of protection are the paramount consideration) and an associated concern to ensure that whatever is done, or not done, is done in the interests, and for the benefit, of the particular person in need of protection.
3. The Court needs to be alive to the possibility that private individuals who would otherwise be concerned to act to protect a person in need of protection might be deterred from acting if bound to submit to a costs order on an unsuccessful application made by them to the Court, even though reasonably made: CCR v PS (No. 2) (1986) 6 NSWLR 622 at 640F.
4. Where participants in protective proceedings are close family members of the person in need of protection, the Court needs to hasten slowly in burdening a family member with an obligation to pay costs in circumstances in which imposition of such an obligation might impact adversely on relationships of, or care for, the person in need of protection.
5. Protective proceedings are not adversarial in the sense encountered in ordinary civil litigation but, rather, are attended by a strong public interest element in which (as noted by Lord Eldon in Ex parte Whitbread in the Matter of Hinde, a Lunatic (1816) 2 Mer 99; 35 ER 878, extracted in W v H [2014] NSWSC 1696 at [39]-[40]) the Court generally needs to look to family members and carers for assistance in identifying problems to be solved and available solutions.

The Judgment of the Queensland Court of Appeal in GAU v GAV

1. The only occasion upon which the jurisdiction of Australian courts to authorise the making of a statutory will has been considered at an appellate level is in the judgment of the Queensland Court of Appeal in GAU v GAV [2016]1 Qd R 1. Courtesy of Farah Constructions Pty Ltd v Say-Dee Pty Limited (2007) 230 CLR 89 at 151-152[135], I am, quite contentedly, bound to apply the reasoning in that judgment.
2. With acknowledgement of the assistance received from counsel, in this and the following paragraph I adapt written submissions made by counsel for the plaintiff (a co-author, with Sam McCullough, of Statutory Will Applications: A Practical Guide (LexisNexis Butterworths, Australia, 2014)) which serve as a bridge to an understanding of the Queensland judgment in a New South Wales context: 1. "Statutory wills", also known as "court-authorised wills", were introduced in New South Wales upon the commencement of the Succession Act 2006 on 1 March 2008. The relevant provisions are contained in Part 2.2 of the Act. 2. The scheme of Part 2.2 requires a person who seeks an order under section 18 of the Act to apply, first, for a grant of the leave of the Court under section 19. 3. Section 19 specifies certain information that must be provided to the Court unless the Court otherwise directs. That information traverses the personal circumstances of the person on whose behalf a statutory will is sought to be made, including evidence directed to an assessment of the person's ongoing capacity, his or her wishes, available resources and identification of persons (or charitable causes) reasonably identifiable as an object of the particular person's bounty. 4. The substantive provision is section 18, which provides that the Court may authorise a will be made on behalf of a person who lacks testamentary capacity. 5. On the hearing of an application for leave under section 19, the Court may give leave only if it is satisfied of five matters specified in section 22. The Court must be satisfied that, first, there is reason to believe that the person in relation to whom a statutory will is sought to be made is, or is reasonably likely to be, incapable of making a will (section 22(a)); secondly, the proposed will is, or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity (section 22(b)); thirdly, it is or may be appropriate for a section 18 order to be made (section 22(c)); fourthly, the applicant for leave is an appropriate person to make the application; and, fifthly, adequate steps have been taken to allow representation of all persons with a legitimate interest in the application, including persons who have reason to expect a gift or benefit from the estate of the person in relation to whom a section 18 order is sought (section 22(e)).
3. Upon a consideration of the function of the requirement that there be a grant of leave to make a statutory will application, adapting the Court of Appeal's consideration of the Succession Act 1981 QLD to the provisions of the Succession Act 2006 NSW, the Court found as follows: 1. The leave requirement is a composite of the requirement for leave in section 19(1) [QLD section 22(1)] and the constraint on granting leave in section 22 [QLD section 24]: [2016] 1 Qd R 1 at [39]. 2. There is nothing in the text or context of section 22 [QLD section 24] that limits the role of the leave application to screening out vexatious or unmeritorious claims: [45]. 3. The power to grant leave is given to the Court to be exercised, or not exercised, at discretion, but in accordance with the provisions of the Act. Section 22 [QLD section 24] imposes a substantial constraint upon the exercise of the discretionary power to grant leave. The Court may exercise the power to grant leave only if it is satisfied of each of the five matters listed in the section. Unless so satisfied, the Court may not grant leave: [46]. 4. The discretionary power to grant leave is distinctly separate from the discretionary power conferred under section 18 [QLD section 21]: [47]. 5. The scope of section 22(c) [QLD section 24(e)] is to be discerned against that background and by reference to the words of the provision itself. The Court needs to be satisfied that an order under section 18 [QLD section 21] is, or may be, appropriate, and no more. The Court need not be satisfied that such an order is appropriate; satisfaction that it may be appropriate will suffice: [49]. 6. Both discretionary powers (that is, the powers conferred by sections 18 and 19) are contained in a Division of the Act which confers a jurisdiction which is protective in nature and is informed by the protective jurisdiction historically exercised by the Court over persons without testamentary capacity; that jurisdiction is purposive, the purpose being, at its highest level of abstraction, protection of a person in need of protection. So grounded, the jurisdiction is broad in scope and flexible in nature. Its guiding principle is that whatever is done, or not done, for or on behalf of the person in need of protection must be for the benefit, and in the interests, of that person: [48]. 7. The Court undertakes the inquiry with regard to the information provided to it pursuant to section 19 [QLD section 23] in circumstances in which that information is designed to allow the Court to be placed in a position to make broad evaluative judgments about the personal, and family, circumstances of the person in respect of whom a will is sought to be made: [50]. 8. The assessment made at the leave stage of appropriateness of making an order under section 18 [QLD section 21] is made objectively with reference to the matters given to the Court pursuant to section 19 [QLD section 23] and such other matters as the Court considers relevant. Importantly, it is undertaken with conscious regard for the fact that making an order under section 18 [QLD section 21] is an exercise of a jurisdiction which is protective in nature and informed by what is for the benefit, and in the interests, of the person who requires protection: [52].

FORMAL NOTATIONS AND ORDERS MADE

1. At the conclusion of oral submissions, and in consultation with counsel, I settled, and made, formal orders and notations reproduced, in redacted form, as a Schedule to these reasons for judgment.
2. Mindful of a need in all cases to minimise any risk of death between the time of authorising the making of a statutory will and the time an approved will is executed (a risk belatedly realised in Estate of Scott; Re Application for Probate [2014] NSWSC 465), I made arrangements for Senior Deputy Registrar Brown, expeditiously, to sign the approved form of will in accordance with section 23 of the Succession Act.
3. The form of the orders and notations made reflects, in part, a desire to ensure that there is an easily accessible record of the Court's transaction of business relating to K's estate. An accessible record is required by the NSW Trustee and others in management of any protected estate. In management of such an estate, prospectively over a lifetime, it can be important to have a paper-trail conveniently available.

ELABORATION OF REASONS

1. In disposition of the proceedings, with the agreement of counsel, I reserved for another occasion publication of reasons for judgment in support of the notations and orders made.
2. These reasons for judgment are published pursuant to that reservation.
3. The necessity for elaboration of reasons arises from: (a) a contention of K's mother that the will to be authorised for K should include provision for establishment of testamentary trusts for the benefit of a range of people, and institutions, beyond those presently engaged in K's everyday life; and (b) a concern that, should a practice develop of using a statutory will application as a vehicle for establishment of unnecessarily complex estate management structures, the estates of incapacitated persons might be burdened by costs and schemes foreign to the protective purpose of the Succession Act.
4. Of particular focus in this judgment is section 18(1) (a) of the Succession Act insofar as it provides (with emphasis added) that "[the] Court may … make an order authorising … a will to be made…, in specific terms approved by the Court, on behalf of a person who lacks testamentary capacity."
5. The Court's discretion is not at large. It is, at least, confined by the subject matter, scope and purpose of the protective jurisdiction (as broad as that jurisdiction undoubtedly is) served by the statutory will provisions of the Succession Act: Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505; O'Sullivan v Farrar (1989) 168 CLR 210 at 216; Pilbara Infrastructure Pty Limited v Australian Competition Tribunal (2012) 246 CLR 379 at 400-401.
6. In my opinion, and consistently with the observations of the Court of Appeal at [2016] 1 Qd R 25[48], the "specific terms" of a will "approved by the Court" should ordinarily be approved by reference to the guiding principle that whatever is done, or not done, for or on behalf of an incapacitated person must be for the benefit, and in the interests, of that person. There may be an exceptional case (eg, where an incapacitated person has expressed a strong preference, albeit not altogether wisely so), but this is not such a case.
7. The "guiding principle" has particular application in proceedings such as the present because it is, to use the language of Re Fenwick (2009) 76 NSWLR 22 at 57-58, a "nil capacity case". K was without testamentary capacity well before ever being able to develop any notion of testamentary disposition, or any subjective, testamentary intention. He is unlikely to develop capacity in the future.
8. One should not lose sight of the fact that, whatever artificiality there may be in attribution of a testamentary intention to a person lacking capacity to form any such intention, a will approved by the Court takes effect as a will and must be able to be justified (perhaps, more accurately, rationalised) as an expression of an intention reasonably and appropriately attributed to a real live person in need of protection.
9. A will providing for the establishment of one or more testamentary trusts for the benefit of an object beyond the immediate comprehension, or orbit, of an incapacitated person by its nature might be thought to look primarily to the conferral of future benefits upon, and the future enjoyment of property by, persons other than the incapacitated person.
10. If such a will is to be approved (particularly on behalf of an incapacitated person in a "nil capacity case") there needs to be some basis upon which it can reasonably be said that the terms of the will are for the benefit, and in the interests, of the incapacitated person during his or her lifetime.
11. The more remote a proposed will is from the personal circumstances of an incapacitated person, the less likely it is to be able to be justified as an exercise of jurisdiction protective of that person.
12. The degree of complexity of a proposed will is not, of itself, a determinative factor in whether or not it should be approved by the Court. However, complexity unrelated to the present or prospective, personal circumstances of an incapacitated person (or complexity designed, primarily, to benefit others after the death of the incapacitated person) renders more difficult the task of the Court in approving a statutory will.
13. Concerns of this nature reinforce the requirements of section 22 of the Succession Act that the Court must refuse a grant of leave (under section 19 of the Act) to a person to make an application for an order under section 18 unless the Court is satisfied that: (a) a proposed will is, or is reasonably likely to be, one that would have been made by the incapacitated person if he or she had testamentary capacity (section 22(b)); and (b) it is, or may be, appropriate for a section 18 order to be made (section 22(c)).
14. In the present proceedings, the form of will approved for K conferred benefits on his mother, his maternal grandparents and people within his immediate social orbit, incorporating no greater complexity than required to make provision for K's mother to be appointed executor (with the plaintiff available as a substitute executor, if required), with standard powers of management, authorisation of remuneration and ancillary provisions. The gifts for which the will provides involve the interposition of no testamentary trusts.
15. To guard against the possibility that K's will may cease to answer his needs, a consequential order was made, subject to further order, that the manager of his protected estate (currently the plaintiff) provide to Court, no later than six months after K attains the age of 18 years or the death of his mother, whichever first occurs, a report as to consideration, if any, given to whether the will should be revised.
16. That order has a parallel in orders made, at the time of appointment of the plaintiff as K's protected estate manager, requiring the pendency of the protected estate management orders affecting K to be reviewed at about the time he attains his majority: See, generally, Re AAA; Report on a protected person's attainment of the age of majority [2016] NSWSC 805. Orders of that character have their genesis in White J's judgment in AG v AP-G [2013] NSWSC 272 at [9] and JP v CP [2013] NSWSC 373 at [4].
17. As illustrated by the respective judgments of Robb J and Ward CJ in Eq in A Limited v J [2017] NSWSC 736 and A Limited v J (No. 2) [2017] NSWSC 896, there may be a need, even in the short-term, to make provision for a statutory will to be reviewed.
18. In the longer term, a mechanism for review is likely to assume greater importance. Allowance needs to be made for potential changes in the personal circumstances of the incapacitated person for whom a will is made if a court-approved will is to serve a protective purpose and to accommodate such, if any, expression of the particular person's state of mind as may reasonably be discernible.
19. It is just as important for the will of an incapacitated person to be reviewed as it is for the will of a fully capable person to be reviewed in light of changing circumstances. Lest such a necessity is overlooked, it is appropriate in a case such as the present for the Court to build into its orders a mechanism for a timely review of any will authorised to be made.
20. In response to the question, "What is the proper order for costs to be made?" I determined that the costs of the proceedings should be paid out of the estate of K, in the case of the plaintiff on the indemnity basis, but I declined to allow to K's mother any costs on a basis more generous than the ordinary basis.
21. The novelty of the question in dispute between the plaintiff and K's mother, if not the size of K's estate and the intimacy of the relationship between mother and child, justifies some leniency in allowing her more than nominal costs out of K's estate. However, in my assessment it would not be appropriate to burden K's estate with two sets of costs assessed on the indemnity basis. K's mother could, and did, contribute evidence in support of the statutory will application through provision of an affidavit to the plaintiff. Beyond that, in large measure, her advocacy of a will more complex than necessary went beyond what, in my opinion, could reasonably be justified as being in the interests, and for the benefit, of K.
22. If (contrary to my expectations) the form of costs order made in favour of K's mother leaves her substantially out of pocket, it would be open to her, as K's mother, to apply for an ex gratia payment out of his estate. See Protective Commissioner v D (2004) 60 NSWLR 513 at 540-542, 543 and 544; Griffin v Union Trustee Co of Australia Limited (1947) 48 SR (NSW) 360 at 363; 65 WN (NSW) 5 at 7. On such an application, different considerations might be taken into account.

SCHEDULE (A redacted form of the notations and orders made by the Court at the conclusion of the hearing of the Summons on 3 November 2017) 1. NOTE the Summons filed 20 July 2017. 2. NOTE the draft will prepared for K, annexure "C" to the affidavit of … sworn 20 October 2017 and the corrected form of draft (Exhibit P5) propounded by the plaintiff. 3. NOTE the written submissions dated 31 October 2017, entitled "Submissions on behalf of the plaintiff" and signed by Mr Richard Williams of Counsel (MFI P1). 4. NOTE the written submissions dated 1 November 2017 entitled "First Defendant's Outline of Submissions" and signed by Dr Simon Chapple of counsel (MFI 1D2). 5. NOTE the seven listed affidavits read in support of the Summons (including an affidavit of the first defendant). 6. NOTE the five listed affidavits read by the first defendant (including one of her own). 7. NOTE that: 1. K was born in 2010 and is aged 7 years. 2. K is the son of the first defendant and the second defendant. 3. The first defendant was born in 1978 and is aged 49 years. 4. The second defendant was born in 1973 and is aged 44 years. 5. K's birth certificate does not record the name of his father. 6. the first defendant's evidence is that the second defendant [the father] has never met K or had any involvement in his life. 7. K lives with the first defendant, who his been his principal carer since his birth, assisted by her parents. 8. the first defendant acted as tutor for K in a claim for compensation made on behalf of K against a Local Health District in (identified) proceedings in the Supreme Court of New South Wales. 9. in 2014 the Court, in those proceedings, approved a settlement of that claim. 10. in 2015 the Court (in separate, identified proceedings) made protected estate management orders appointing Australian Executor Trustees Limited (the plaintiff in this present proceeding) to manage K's estate, subject to the orders and directions of the NSW Trustee. 11. as at 19 October 2017, K's estate was valued by the plaintiff at $... (of which $... relates to a residential property which is the home of K, the first defendant and the first defendant's parents), and a further $... was held in investments for K's benefit. 12. the NSW Trustee has been made aware of this application for a court-authorised will and has provided written confirmation that it authorises the plaintiff to make such application. 13. at the hearing of the Summons, counsel on behalf of the plaintiff and counsel on behalf of the first defendant addressed the Court. 14. the second defendant did not attend the hearing. 15. the plaintiff seeks that a will be authorised in terms of Exhibit P5. 16. the plaintiff consents to act as an executor of that will. 17. the first defendant supports the plaintiff's application for a court-authorised will to be made for K but proposes a different form of will which contains various testamentary trusts. 18. the Court is satisfied that the form of will proposed by the plaintiff is for the benefit, and in the interests, of K because it makes provision for those members of his family who are natural objects of his bounty and are in close, regular contact with him; but the Court is not satisfied that the more complex form of will proposed by the first defendant is for his benefit or in his interests. 1. ORDER, pursuant to section 19 of the Succession Act 2006 (NSW), that the plaintiff be granted leave to make an application for an order under section 18 of the Act on behalf of K. 2. ORDER, pursuant to section 18 of the Succession Act, that a will be authorised to be made on behalf of K in terms of the draft will that is Exhibit P5. 3. ORDER that the Registrar be authorised and directed to sign, and seal with the seal of the Court, pursuant to section 23 of the Succession Act, a will in the terms of the draft will that is Exhibit P5. 4. ORDER, subject to further order, that the manager of the protected estate of K (currently the plaintiff) provide to the Court, no later than 6 months after K attains the age of 18 years or the death of the first defendant, whichever first occurs, a report as to consideration, if any, given to whether K's will should be revised. 5. NOTE that Order 11 is not intended, of itself, to require or prevent a further application for authorisation of a will, or codicil, for K. 6. ORDER that the plaintiff serve on the NSW Trustee: 1. a copy of these orders; and 2. a copy of the authorised will of K. 1. ORDER that the plaintiff's costs of these proceedings be paid out of the estate of K on the indemnity basis. 2. ORDER that the first defendant's costs of these proceedings be paid out of the estate of K on the ordinary basis. 3. ORDER that these orders be entered forthwith. 4. NOTE that these orders have been made at 12.20pm on 3 November 2017.

Amendments 11 December 2017 - Schedule numbering amended. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 December 2017