Defendant: Protected Person
Applicants: Four Surviving Daughters of Defendant
Representation: Counsel:
Ms K James: Plaintiff
Ms R Kako: Applicants
Ms C Phang, NSW Trustee and Guardian (Amicus Curiae)
This judgment deals with an application for approval of a family settlement (including orders authorising the making of a statutory will under sections 18-26 of the Succession Act 2006 NSW) referable to the estate of an 80-year-old male, RB ("the defendant"), a "protected person" within the meaning of the NSW Trustee and Guardianship Act 2009 NSW, section 38.
The defendant became a "protected person", within the definition of section 38, when, on the application of his wife ("the plaintiff"), the Court, constituted by me, in chambers, made management orders under section 41 (1) of the NSW Trustee and Guardianship Act on 17 December 2014.
Those orders included orders to the following effect:
1. Declare, pursuant to section 41 (1)(a) of the NSW Trustee and Guardian Act, that the defendant is incapable of managing his affairs.
2. Order, pursuant to section 41 (1)(a) of the NSW Trustee and Guardian Act, that the estate of the defendant be subject to management under the Act.
3. Order, pursuant to section 41 (1)(b) of the NSW Trustee and Guardian Act, that the plaintiff be appointed manager of the estate of the defendant subject to the orders and direction of the NSW Trustee and Guardian.
4. Order that the plaintiff may not do anything in reliance on her appointment as manager of the estate of the defendant until the NSW Trustee and Guardian has authorised her to assume management of the defendant's estate.
5. Order, pursuant to section 68 of the NSW Trustee and Guardian Act, that the plaintiff give such, if any, security in respect of her management of the defendant's estate as the NSW Trustee and Guardian may determine to be appropriate.
6. Order that, subject to any further order of the Court or any order or direction of the NSW Trustee and Guardian, funds presently held in Court on behalf of the defendant including accrued interest (in respect of personal injury compensation proceedings instituted in the District Court of New South Wales on behalf of the defendant) be paid out to the NSW Trustee and Guardian pending consideration and approval by the NSW Trustee and Guardian of a plan for management of the defendant's estate.
As the last of these orders evidences, the plaintiff's application for management orders was occasioned by a need to obtain from the Court an order under the Civil Procedure Act 2005 NSW, section 77, for the payment out of Court of an award of compensation (of the order of $300,000) made in favour of the defendant in separate litigation, conducted on his behalf by a tutor (governed, inter-alia, by section 80 of the Civil Procedure Act 2005 NSW and Part 7 Division 4 (rules 7.13-7.18) of the Civil Procedure Uniform Rules 2005 NSW) in separate litigation in the District Court.
Prior to that necessity arising, the plaintiff had been managing her husband's estate, notwithstanding his decline into dementia, by means of an enduring Power of Attorney (governed by the Powers of Attorney Act 2003 NSW) granted to her by the defendant on 27 June 2009.
At the time the defendant appointed the plaintiff as his attorney, he also (pursuant to the Guardianship Act 1987 NSW) appointed her as his enduring guardian.
The defendant was born in 1935. The plaintiff was born in 1942 and is currently aged about 72 years. They were married in 2008, in confirmation of a relationship that commenced in 1993. They commenced living together at a later time. The longevity of their relationship is not measured by the length of their marriage alone. The plaintiff is entitled to be regarded, in substance, as a wife of about 20 years' standing.
The marriage of the plaintiff and the defendant is not a first marriage for either of them. It was, for each of them, a second marriage.
Although they have had no children together, each of them has children by an earlier marriage.
By his first marriage, the defendant had five daughters. Four of them ("the applicants") survive. One has died, leaving a daughter.
The surviving daughters are here described as "the applicants" because, in the circumstances outlined in this judgment, when appraised of the management orders made in relation to their father's estate, they moved the Court for orders (specifically, under the Succession Act 2006 NSW, sections 18-19) authorising the making of a statutory will on his behalf. In making that application they invited the Court, by the orders for a statutory will, to make testamentary provision for themselves and (representing their deceased sibling's family interest) their niece.
The applicants are respectively aged between 47-53 years or thereabouts. They each have a family of their own. As daughters of the defendant they would be eligible to make an application for family provision relief, from his estate or notional estate, under chapter 3 (sections 57-100) of the Succession Act 2006 NSW, should he die in the near future: section 57 (1)(c).
The daughter of the defendant's deceased daughter (a grandchild of the defendant) is aged about 15 years. She is under the care and custody of her father. He was given notice of these proceedings by the applicants. I have been informed by the legal representatives of the plaintiff, and the applicants, and for the purpose of this judgment, I accept, that she has never been a member of the same household as the defendant or dependent upon him.
On that assumption (upon which the parties invited the Court to proceed), she would not qualify as an "eligible person" (within the meaning of the Succession Act, section 57 (1)) for the purpose of making an application for family provision relief from the defendant's deceased estate.
The plaintiff has two daughters by her first marriage. They are presently aged about 44 and 42 years respectively. The plaintiff's counsel advised the Court, and the applicants' legal representatives accepted, that they have never resided with the defendant or been dependent upon him. Upon that assumption (on which the parties invited the Court to proceed), neither of them would qualify as an "eligible person" for the purpose of making a family provision application against the defendant's estate: Succession Act, section 57 (1).
Upon the assumption that she survives the defendant, the plaintiff, as his widow, would qualify as an "eligible person" (within the meaning of the Succession Act, section 57(1)(a)) with standing to make an application for family provision relief from his estate.
The parties are agreed that, in the context of any application for family provision relief made by her under chapter 3 of the Succession Act, any assessment of the adequacy of provision for her proper maintenance, education or advancement in life (to paraphrase sections 59(1)(c) and 59(2) of the Succession Act) would be guided by the classic observation of Powell J in Luciano v Rosenblum (1985) to NSWLR 65 at 69G-70A:
"It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies."
I agree with this approach as a sound guide to the measure of a testator's "moral duty" to a wife or partner of 20 years' standing.
I do not pause to join the debate, noticed in Andrew v Andrew (2012) 81 NSWLR 656 at 659 [8]-661 [14], about the correctness and utility of the concept of "moral duty" in the evaluative decision-making required of the Court in disposition of a family provision application. It may, as in these proceedings, provide a convenient short-hand description of how contemporary Australians, living in community, approach value judgements required to be made about the orderly succession of property upon death.
In any event, language suggestive of an acknowledgement of "moral" obligations owed by a protected person is not unfamiliar in discussion of principles governing allowances, for family or by way of gift more generally, out of a protected estate: e.g, HS Theobald, The Law Relating to Lunacy (Stevens & Sons, London, 1924), pages 462-467; Protective Commissioner v D (2004) 60 NSWLR 513 at 540-543 and 544.
In no case can customary, or convenient, language about "moral" duty or "moral" obligations displace the central informing idea of the protective jurisdiction. In each case, the welfare and interests of the person in need of protection are generally paramount. The jurisdiction exists for the purpose of protecting those incapable of managing their own affairs. Its exercise is governed by that purpose in its application to a particular person in need of protection.
In theory, the defendant's former wife might have standing to make a family provision application against his deceased estate. If she survives him, she would be an "eligible person": Succession Act, section 57(1)(d). However, to succeed she would need to prove, in addition to other elements of a family provision claim, that "having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making" of an application by her: Succession Act, section 59(1)(b). In circumstances in which (as I am informed) she and the defendant entered into a property settlement, under the Family Law Act 1975 Cth, at or about the time of their divorce in or about 1991, that could reasonably be expected to be a substantial hurdle: Re Fulop (dec'd) (1987) 8 NSWLR 679 at 681; Churton v Christian (1988) 13 NSWLR 241 at 252A-E; Skarica v Toska [2014] NSWSC 34 at [50]. In any event, evidence presently before the Court includes a statement by the defendant's former wife that she consents to the making of the orders sought by the plaintiff and the applicants to give effect to the family settlement. A prospect that she might make an application for family provision relief against the defendant's estate cannot be excluded in the absence of a formal release of her rights, approved by the Court under section 95 of the Succession Act, but it is a remote possibility at best.
The plaintiff and the applicants, jointly and severally, invite the Court to give effect to the family settlement they have negotiated (and embodied in a deed dated 10 February 2015 to which they are the signatories) on the basis that:
1. they alone are the persons prospectively entitled to participate as beneficiaries in the estate of the defendant (under the Succession Act, chapter 4) should he die intestate.
2. for practical purposes, they alone are the only persons with a prospective entitlement to apply for family provision relief (under the Succession Act, chapter 3) in respect of the deceased estate of the defendant.
3. for practical purposes, should the Court approve the proposed family settlement (including their respective releases of rights to apply for family provision relief) it will pre-empt the possibility of any family provision litigation arising after the death of the defendant.
To the extent that the family settlement requires the Court to grant (under the Succession Act, section 95) approval of the respective "family provision releases" proffered by the plaintiff and the applicants, I am satisfied that a grant of approval of each of the releases is appropriate. By reference to the criteria set out in section 95(4), I am satisfied that it is to the advantage of each of the parties to release their rights to apply for a family provision order; it is prudent for them each to grant a release; the provisions of the family settlement deed are fair and reasonable; and each of the parties has taken independent advice in relation to the release and given due consideration to that advice.
Larger questions (to which I have given due consideration) are:
1. whether, in management of the defendant's protected estate (as required by section 39 of the NSW Trustee and Guardian Act 2009 NSW and principles governing the Courts' protective jurisdiction under the general law) and in the exercise of discretionary powers upon the making of a statutory will (as discussed in Secretary, Department of Family and Community Services v K [2014] NSWSC 1065, GAU v GAV [2014] QCA 308 and W v H [2014] NSWSC 1696), it is in the interests, and for the benefit, of the defendant as a protected person to approve the proposed family settlement; and
2. whether the statutory criteria for the making of a statutory will (including, particularly, the specific criteria for which section 22 of the Succession Act provides) have been satisfied.
The language of section 22 of the Succession Act is compatible with the general principles governing an exercise of the Court's inherent, protective jurisdiction.
An exercise of jurisdiction affecting the person or estate of a protected person must consult the welfare and interests of the protected person as a, if not the, paramount consideration; it generally yields only to public safety considerations: Secretary, Department of Family and Community Services v K [2014] NSWSC 1065 at [54] et seq; A (by his tutor Brett Collins) v Mental Health Review Tribunal (No. 4) [2014] NSWSC 31 at [145]-[147].
Sections 22 (b) and (c), in particular, have a parallel in the general law. Those paragraphs state two of the conditions for the making of a statutory will. The Court must refuse leave to make an application for a statutory will unless it is satisfied, inter-alia, that:
1. the proposed will "is, or is reasonably likely to be, one that would have been made by [the person lacking testamentary capacity] if he or she had testamentary capacity" (section 22 (b)); and
2. "it is or may be appropriate for" an order granting leave to be made (section 22 (c)).
This language is reminiscent of that used by Lord Eldon in Ex Parte Whitbread In the matter of Hinde, a Lunatic (1816) 2 Mer 99 at 101-103; 35 ER 878 at 879 (extracted in W v H [2014] NSWSC 1696 at [40] and JPT v DST [2014] NSWSC 1735 at [47]-[49]), a seminal judgment about the principles to be applied in determining whether a voluntary allowance might be made out of a protected estate:
"The Court does nothing wantonly or unnecessarily to alter [a protected person's] property, but on the contrary takes care for his [or her] sake, that, if he [or she] recovers, he [or she] shall find his [or her] estate as nearly as possible in the same condition as he [or she] left it, applying the property in the meantime in such manner as the Court thinks it would have been wise and prudent in the [protected person] himself [or herself] to apply it, in case he [or she] had been capable.
… if we get to the principle [governing whether a voluntary allowance should be made out of a protected estate], we find that it is not because the parties [for whom an allowance was sought] are next of kin to [the protected person], or, as such, have any right to an allowance, but because the Court will not refuse to do, for the benefit of [the protected person], that which it is probable [the protected person] himself [or herself] would have done. [Emphasis added]"
In each of the protective jurisdiction's manifestations, the Court is generally required to pay due regard to the views of the protected person if they are known or if, reasonably, they can be ascertained or presumed.
This is a "lost capacity case" within the analytical scheme of statutory will cases established by Palmer J in Re Fenwick; Application of JRF Fenwick; Re "Charles" (2009) 76 NSWLR 22 at [154]-[170]: the defendant once had, but has now lost, testamentary capacity.
With this in mind, the plaintiff (on the one hand) and the applicants (on the other) have adduced evidence about the defendant's expressions of testamentary intention, formal and informal.
The last will the defendant is known to have made was dated 26 June 2000, still relatively early in his life of cohabitation with the plaintiff. The effect of their marriage was to revoke that will, save for the comparatively modest provision it made for the plaintiff: Succession Act, section 12. He could hardly have been unaware of the effect of the marriage. He was, at the time of his marriage, a solicitor of many years' standing.
There is equivocal evidence about attempts made by, or perhaps more accurately made on behalf of, the defendant to make a fresh will following his marriage. Evidence adduced by the applicants record repeated statements by him of an intention to divide his estate, or a substantial part of his estate, between his five daughters equally, with modest provision for the plaintiff. Evidence adduced by the plaintiff records statements by the defendant to the effect that he intended to die intestate, leaving others to accommodate competing claims on his bounty.
Experience teaches that, in contemplation of death and in the hope of buying peace, people of all descriptions may be prone to tell expectant heirs what they want to hear, or to allow them to believe what they want to believe, about testamentary intentions. I say this accepting the bona fides of the evidence given by family members, and with due respect for the bona fides of the defendant himself.
Although evidence of statements of testamentary intention may be desirable in support of or in opposition to an application for a statutory will, the Court may be required to rise above such evidence in the proper disposition of an application. Beyond a point governed by what is reasonable, an application for a statutory will generally provide no practical opportunity for a detailed judicial determination of the authenticity, and veracity, of competing statements of testamentary intention attributed to a protected person.
In the present proceedings the evidence of such statements has been contained within reasonable bounds. The plaintiff, the applicants and their respective lawyers engaged in meaningful negotiations from the time an application for a statutory will was brought before the Court, at which time they were encouraged into open dialogue, and discouraged from the adoption of an adversarial approach to the application.
The constructive approach adopted by the parties in moving towards a family settlement is to be commended, all the more so because it required disciplined effort as well as a genuine attitude of goodwill within an extended family environment.
When she applied to the Court for management orders relating to the defendant's estate the plaintiff resisted disclosure of her application to her stepdaughters (the applicants), fearing that she would be unable to work with them in management of the defendant's protected estate; that they would seek allowances out of the estate or demand a deed for dealing with it.
As events unfolded, those fears were not entirely unfounded. Perhaps, they were inevitably self-fulfilling.
In any event, the Court cannot lightly pass over any member of a protected person's family. It can do so in an appropriate case. However, what is "an appropriate case" must be measured against the purpose for which the jurisdiction exists and, more particularly, what is in the interests, and for the benefit, of the protected person: J v Lieschke (1987) 162 CLR 447 at 457. Generally, an application of that standard tends towards ensuring that all close family members are at least aware of major developments in the life of the person in need of protection.
With that in mind, in making management orders in favour of the plaintiff on 17 December 2014 I directed that the plaintiff, no later than 22 December 2014, provide to each of the daughters of the defendant a copy of the orders and notations of the Court in dealing with the application for management orders . That put the applicants squarely on notice that management orders affecting their father had been made and led them to a chain of inquiry that, within the administrative context of the same proceedings in which management orders were made, allowed them to engage the plaintiff about issues relating to: (a) management of the defendant's affairs by the plaintiff acting under the enduring power of attorney granted to her in 2009; (b) ongoing management of the defendant's protected estate by the plaintiff as manager of the estate under the supervision of the NSW Trustee and Guardian and the Court; (c) ongoing provision to be made for the plaintiff out of the protected estate of the defendant; and (d) arrangements for disposition of the deceased's estate, and administration of it, following his death.
These questions fell to be considered in circumstances in which the defendant is living in a nursing home, in Sydney, on an end-of-life care programme, with a life expectancy estimated by his professional carers to be of the order of six months or so. The plaintiff lives in a retirement village, to which both she and the defendant repaired before his declining health necessitated that he be moved to nursing home accommodation.
Within his family, she remains his principal carer. She remains a devoted wife. To state this as a fact is not to deny the devotion of the applicants to their father, their genuine love for him or the reality of the extended family network that surrounds him.
The family settlement that was negotiated (embodied in the parties' deed and proposed statutory will) envisages, I was informed by counsel, an outcome in which, on the death of the defendant, a pool of assets (including superannuation and life insurance entitlements) with a total anticipated value of the order of $2.9 million will be divided so that:
1. the plaintiff will have the benefit of cash or other liquid assets valued at about $1.4 million, together with a secure right of residence for life in the retirement village in which she currently resides; and
2. each of the defendant's four daughters and his granddaughter by his deceased daughter will receive about $300,000 ($1.5 million in total).
These figures are but estimates, and they need to be approached with due recognition of the possibility that there may be a reduction in the size of the defendant's estate by virtue of expenditure for the benefit of the defendant, and the plaintiff, during the ordinary course of the defendant's remaining days.
As his protected estate manager the plaintiff has fiduciary obligations to the defendant which preclude her from simply applying his estate as she may wish. However, under the supervision of the NSW Trustee and Guardian and the Court, she has a reasonable expectation of being allowed a generous but reasonable living allowance from his estate, and similar allowances should be made to enable the defendant to enjoy his final days, so far as he can, in the company of his family generally.
In order to emphasise this, I have made orders to the effect that the NSW Trustee and Guardian is at liberty, from time to time, to authorise the plaintiff to receive or retain from the protected estate under her management a reasonable living allowance for her own use and benefit, and to authorise the plaintiff or any other member of the family of the protected person to expend, on the account of the defendant, such sums as may be reasonable for amelioration of his personal circumstances or for his personal enjoyment.
The NSW Trustee and Guardian has ample statutory power to authorise such allowances in any event: NSW Trustee and Guardian Act, sections 64(1)-(2), 65(1) and 66; Protective Commissioner v D (2004) 60 NSWLR 513 at 540-542, 543 and 544. However, the orders I have made will reinforce the authority of the NSW Trustee and Guardian and serve as a reminder that, notwithstanding a family settlement in anticipation of the defendant's death, his protected estate remains his, and is to be managed primarily in his interests and for his benefit: W v H [2014] NSWSC 1696; JPT v DST [2014] NSWSC 1735.
Towards the same end, I have made declarations to the effect that, although the parties' family settlement deed may be binding on each of them inter se, nothing in the orders of the Court approving the settlement, in the statutory will authorised by the Court to be made for the defendant or in the parties' deed operates to bind the defendant or, in management of his estate or person, the Court, the NSW Trustee and Guardian or the manager for the time being of the defendant's protected estate.
The plaintiff had no authority to sign the deed in her capacity as protected estate manager, as the applicants could not but have known had they reflected on the question at the time of its drafting. In any event, the deed was drafted, at least implicitly, subject to the Court's approval. Without the Court's sanction, it could bind the plaintiff only in her personal capacity. It does not bind the defendant or his estate.
In inviting the Court to approve their settlement and to authorise the making of a statutory will on behalf of the defendant, the plaintiff and the applicants each, by their counsel, acknowledged that this must be so. Nevertheless, there is utility in headlining the point. The parties' deed contains a misconceived provision purporting to record that the plaintiff's execution of it binds her, not only in her personal capacity, but in her capacity as the defendant's protected estate manager. It does not. She cannot, and the Court will not, bind the defendant or his estate by such a side wind. The defendant (as a protected person) and his estate (as a protected estate) remain under the Court's protection generally, unconstrained by the family settlement in all future decision-making affecting the person or property of the defendant. Parties may reach agreement as between themselves, but they cannot govern the defendant or constrain the Court, the New South Wales Trustee and Guardian or the defendant's protected estate manager for the time being in management of the defendant's affairs.
The protective jurisdiction of the Court, and the statutory regime that supplements and coexists with it, are governed by their purposive character. Their purpose is protective: to care for those who are not able to take care of themselves: Secretary, Department of Health and Community Services v JWB and SMB (Marion's case) (1992) 175 CLR 218 at 258-259, citing Re Eve [1986] 2 SCR 388 at 407-417; (1986) 31 DLR (4th) 1 at 14-21; Wellesley v Duke Beaufort (1827) 2 Russ 1 at 20; 38 ER 236 at 243; and Wellesley v Wellesley (1828) 2 Bli NS 124 at 131, 136 and 142; 4 ER 1078 at 1081, 1083 and 1085.
The primacy of the welfare of a protected person generally prevails against all comers, even in the context of decisions required to be made about allowances from a protected estate sought by members of the protected person's family or others to whom he or she might reasonably be supposed to have a personal obligation: Ex parte Whitbread in the Matter of Hind, a Lunatic (1816) 2 Mer 99 at 101-103; 35 ER 878 at 879, extracted in W v H [2014] NSWSC 1696 at [38]-[40]. A hope or expectation of, or a prospective entitlement to, participation in a protected person's deceased estate may be taken into account by the Court upon a consideration of what, if anything, would have been done by the protected person had he or she enjoyed capacity for self-management, but it is not a tail with which to wag the dog. It may inform, but cannot govern, decisions required to be made in the interests, and for the benefit, of the protected person.
In their preparation of their joint application to the Court for approval of their family settlement, the plaintiff and the applicants took notice of observations made in W v H [2014] NSWSC 1696 at [72] about safeguards generally required to be considered on the determination of such an application.
They also specifically addressed the concern of the Court to ensure that whatever was done, or not done, in disposition of their application could be measured against what was in the interests, and for the benefit, of the defendant.
Put bluntly, what is in it (the family settlement) that can be said to be in the interests, and for the benefit, of the defendant? Why should not his protected estate be managed simply on the basis that he will die, substantially, intestate, and those who may be eligible to do so can be left to institute family provision proceedings after his death?
Upon an exercise of protective jurisdiction, it must be remembered, what is regarded as for the "benefit" of the protected person is approached in a large and liberal manner: Protective Commissioner v D (2004) 60 NSWLR 513 at [149]-[156]. The Court generally proceeds on the basis that it is for the benefit of a protected person that that should be done on his or her behalf, which there is evidence to show he or she would, or should, have done for himself or herself if capable of self-management: Theobald, The Law Relating to Lunacy (1924), pages 380 and 462.
I was satisfied that it was in the interests, and for the benefit, of the defendant that approval be given to a final settlement, with ancillary, consequential orders. This is because:
1. A timely resolution of all simmering questions in dispute between members of the defendant's family was calculated to bring peace to the task of management of his affairs during the indefinite, but decidedly finite, span of life still left to him. Absent a statutory will, duly made, the defendant's family was, manifestly, a multi-party family provision case waiting to happen.
2. The family settlement was calculated by the parties, with the benefit of legal advice, to bring certainty to the lives of those who ostensibly have a call on his bounty, in life or death. Such certainty was sought by the terms of the parties' deed, including their agreement: (i) subject to court approval under the Succession Act, section 95, to release all rights to apply for family provision relief; and (ii) to invite the Court to order that the plaintiff be released from any claims that could otherwise have been made against her arising out of her management of the defendant's affairs before management of his estate was brought under the NSW Trustee and Guardian Act on 17 December 2014.
3. If the defendant had been allowed to die substantially intestate, the daughter of his deceased daughter (his grandchild) would have been be left without any provision from his estate, and without an entitlement to apply for family provision relief, notwithstanding the probability that, if capable of managing his own affairs, he would have made equal provision for the respective families of all five of his children. By means of a statutory will, provision could be made for a grandchild prospectively without standing to apply for family provision relief; provision could be made for the next generation of the defendant's family on the "equal terms" he probably would have insisted upon had he been capable of self-management; and the amount of provision made for family members could be defined without reference to the vagaries of an award of discretionary family provision relief. All this could be done on terms designed to ensure that reasonable provision will be made for all members of the defendant's family (including, importantly, the plaintiff as his wife) and, within the reasonable and the practical, that an opportunity has been allowed for family members, generally, to participate in estate planning decision making.
4. Proceedings for the approval of a family settlement, within the context of an exercise of protective jurisdiction (including that relating to authorisation of a statutory will) can be (as these proceedings have been) dealt with summarily, informally and without the constraints of rules of evidence that may constrain the conduct of family provision proceedings, with costs consequences for the estate of the defendant and those who have a call on his bounty.
5. Because proceedings upon exercise of protective jurisdiction are governed by the purposive character of the jurisdiction, and the usual criterion for the making of costs orders in protective cases is that the Court makes such orders as "in all circumstances seem proper (CCR v PS (No 2) (1986) 6 NSWLR 622 at 640; CAC v Secretary, Department of Family and Community Services [2014] NSWSC 1855 at [129]-[130]), no party has a presumptive right to costs out of the estate of the defendant, with the consequence that the Court may be better placed to limit any prospective costs burden on the estate.
An application for approval of a family settlement in the context of an exercise of protective jurisdiction enables the Court to call upon the office of the NSW Trustee and Guardian for its expertise, administrative oversight and objectivity in moving parties towards a constructive outcome, both in management of a protected estate and estate planning.
The availability of the NSW Trustee and Guardian as an amicus curiae, with functions and powers defined by legislation (principally, the NSW Trustee and Guardianship Act), is an important safeguard against the possibility that unreasonable demands upon a protected estate or upon a vulnerable member of a protected person's family may be oppressive.
Where the size of an estate warrants it, and the NSW Trustee and Guardian has made a material contribution, an order that costs of the NSW Trustee and Guardian be paid out of the estate of a protected person can reasonably be anticipated on approval of a family settlement.
All things considered, at 7.54pm on 11 February 2015 I made orders and notations to the following effect:
1. ORDER that, pursuant to sections 18, 19, 22 and 23 of the Succession Act:
1. the applicants have leave to apply for an order authorising a will to be made for the defendant
2. a will for the defendant be made in the terms of the will annexed to the Court's formal orders.
1. the Registrar sign the authorised will and seal it with the seal of the Court.
2. ORDER, pursuant to section 95 of the Succession Act, that the releases by each of the plaintiff and the applicants (recorded in the deed dated 10 February 2015 made between them) of their respective rights to seek additional provision from the estate of the defendant be approved.
3. ORDER that the costs of the applicants of and incidental to their application for a statutory will, fixed at the sum of $40,000, and the costs of the plaintiff of and incidental to that application, assessed on the indemnity basis but capped at the sum of $40,000, be paid from the estate of the defendant.
4. ORDER that the costs of the NSW Trustee and Guardian of and incidental to the parties' application for approval of a family settlement be paid from the estate of the defendant on the indemnity basis.
5. DECLARE that nothing in these orders, in the will authorised by these orders to be made, or in the deed dated 10 February 2015 operates to bind the defendant or, in management of the estate or person of the defendant, the Court, the NSW Trustee and Guardian or the manager for the time being of the defendant's protected estate.
6. DECLARE that, subject to order 5, the deed dated 10 February 2015 made by the plaintiff and the applicants is binding on each of them inter se.
7. ORDER that the plaintiff, in her personal capacity, be released from all and any liability she has, or might but for this order have had, in relation to her management of the affairs of the defendant (as his enduring attorney, his enduring guardian or otherwise) prior to the making by the Court of management orders affecting his estate on 17 December 2014.
8. ORDER, subject to further order or any order or direction of the NSW Trustee and Guardian, that the plaintiff comply, no later than 20 February 2015, with directions of the NSW Trustee and Guardian that she submit to the NSW Trustee and Guardian a proposed management plan for the whole of the protected estate under management.
9. ORDER that the NSW Trustee and Guardian be at liberty, from time to time, to authorise the plaintiff to receive or retain from the protected estate under her management a reasonable living allowance for her own use and benefit.
10. ORDER that the NSW Trustee and Guardian be at liberty, from time to time, to authorise the plaintiff or any other member of the family of the defendant to expend, on the account of the defendant, such sums as may be reasonable for amelioration of the personal circumstances, or for the personal enjoyment, of the defendant.
11. RESERVE for further consideration all questions relating to management of the defendant's estate, including whether there should be a variation in the identity of the protected estate manager and all questions of accounting for the protected estate under management.
12. ORDER that these orders be entered forthwith.
A Registrar of the Court has since (on 12 February 2015) formally executed the authorised will as contemplated by the Succession Act, section 23.
Because the jurisdiction exercised by the Court on the making of a statutory will is protective in character, it must be understood by everybody that the terms of any will authorised to be made for a protected person may at any time be reviewed - whenever, and as, it may be in the interests, and for the benefit, of the protected person to do so. It is not necessary for there to be a formal reservation of liberty to apply for this to be done.
Multiple applications for a statutory will are not encouraged (Re Fenwick (2009) 76 NSWLR 22 at [197]-[199]) but, driven (as they must be) by what is in the interests, and for the benefit, of a person in need of protection, the frequency with which they are made or at least sought, may depend on the change in circumstances affecting his or her welfare or that of his or her family, broadly defined.
In allowing the parties costs of the order of $40,000 on each side of the record, I was mindful of:
1. the number of people (at least five lay people on the applicant's side of the record, and perhaps more than one on the plaintiff's side) likely to have been involved in case preparation;
2. the size and complexity of the defendant's estate and transactions effected by the plaintiff in her management of his affairs prior to her appointment as his protected estate manager;
3. the necessity for additional work on the part of the applicants' advisers occasioned by the plaintiff's early resistance to their participation in decision-making processes affecting the defendant's estate;
4. the comparative novelty (since publication of judgments in W v H [2014] NSWSC 1696, JPT v DST [2014] NSWSC 1735 and L v L [2014] NSWSC 1686) of applications for the approval of a family settlement in conjunction with an application for a statutory will; and
5. the fact that the terms of the costs order were negotiated by the parties, each with the benefit of advice.
It should not be thought that costs of the order here allowed will be permitted to represent a norm. Parties who invoke the Court's protective jurisdiction to advance their own interests remain exposed to personal risk as to costs: CAC v Secretary, Department of Family and Community Services [2014] NSWSC 1855 at [129]-[131].
An application for a statutory will, or an application for approval of a family settlement (with or without an application for a statutory will) should be able, and generally will, be dealt with summarily. A hallmark of the protective jurisdiction is that it is administered, without strife in the simplest and least expensive way, in the interests of the protected person: Theobald, The Law Relating to Lunacy (1924), pages 380 and 382; M v M [2013] NSWSC 1495 at [50] (f).
The requirement of the Succession Act 2006 NSW, section 18, that an applicant for a statutory will obtain (under section 19 of the Act) a grant of leave to make the application provides a mechanism for summary determination of statutory will proceedings, but the nature of the protective jurisdiction (of which statutory will legislation is an incident) itself demands a cost-effective, summary procedure.
In some cases, of which this is one, another imperative pressing for summary action is a reality that the death of the protected person (more accurately in this context, the person lacking testamentary capacity) may be imminent, not merely an ever-present risk. Section 18 (3) of the Succession Act mandates that the Court not make an order under section 18 authorising a will to be made for an incapacitated person unless the person is alive. Section 23 of the Act requires that a statutory will be signed by a Court Registrar and sealed with the seal of the Court. If the incapacitated person dies between the time a section 18 order is made and the time it is executed, the case may need to be reviewed afresh. A section 18 order, unattended by compliance with s 23 before the incapacitated person's death, is only provisionally effective: Estate of Scott; Re Application for Probate [2014] NSWSC 465 at [106]-[114].
If an application for a statutory will cannot properly be dealt with in a summary fashion that, of itself, may be a factor telling in favour of leaving parties to such, if any, entitlements they may have to apply for family provision relief after the death of the (protected) person whose estate is under consideration. Conversely, the adoption of a non-adversarial attitude, focused on the interests of a protected person is more likely to attract a favourable exercise of protective jurisdiction: e.g, Re Fenwick (2009) 76 NSWLR 22 at [193]-[199]; Scott v Scott (2012) 7 ASTLR 299; [2012] NSWSC1541 at [306]-[307]. By section 19(2)(i), the Succession Act specifically invites the Court to take into account the likelihood of family provision proceedings after the death of the incapacitated person when determining whether to grant leave for a statutory will application to be made.
The protective jurisdiction is not a "consent" jurisdiction. Thus, for example, an order for the appointment, removal or replacement of a particular protected estate manager is not made as of right. Nor does a manager of a protected estate have a legal entitlement to be, or to remain, manager of the estate: M v M [2013] NSWSC 1495 at [50] (a) and (k); Ability One Financial Management Pty Ltd and Anor v JB by his tutor AB [2014] NSWSC 245 at [151]-[153]. That is so, even though high importance is attached to consultation with a protected person (so as to ascertain his or her views so far as they can be known) and his or her family and carers: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 240D and 241E-243E; Marion's Case (1992) 175 CLR 218 at 237-239.
Families who are able to subordinate their own interests to those of a protected person (not necessarily to the exclusion of their own), proceeding in an open and orderly way, and in consultation with the NSW Trustee and Guardian, may escape, or at least minimise, the litigious minefields that have commonly beset incapacitated persons, their person and property, in anticipation of death or (as Shakespeare, in As You Like it, Act 2, Scene 7, would have it) during the last ages of man.
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Decision last updated: 19 February 2015