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[2014] QSC 169
General information, not legal advice.
Supreme Court of Queensland
2014-08-06
Flanagan J
Original judgment source is linked above.
SUCCESSION - MAKING OF A WILL - TESTAMENTARY CAPACITY - LOSS OR LACK OF CAPACITY AND STATUTORY WILLS - where the applicant is the husband of an incapacitated testatrix of more than 55 years - where the applicant applies for leave pursuant to s 22 of the Succession Act 1981 to amend or vary the testatrix's 1998 will - where, under her 1998 will, the testatrix intended to bequeath to her son valuable real property - where the respondent is the testatrix's son's wife - where the son and the respondent have separated and intend to be divorced - where the respondent has initiated Family Court property settlement proceedings - where the applicant alleges the testatrix would have altered her will, were she to have testamentary capacity, to ensure her son's interest in the testatrix's real property would be protected from the reach of the property settlement proceedings - whether, pursuant to s 24(d) of the Succession Act 1981, the proposed alteration of the testatrix's will is or may be an alteration the testatrix would make were she to have capacity - whether, pursuant to s 24(e) of the Succession Act 1981, an order of the court authorising the proposed alteration of the testatrix's will is or may be appropriate to be made.
Doughan v Straguszi [2013] QSC 295, considered
Grace v Grace (1998) FLC 92-792, cited
Hausfeld v Hausfeld [2012] NSWSC 989, considered
McKay v McKay (2011) 4 ASTLR 429; [2011] QSC 230, applied
Re: Fenwick [2009] NSWSC 530; (2009) 76 NSWLR 22, considered
Re: JT [2014] QSC 163, applied
Re Matsis; Charalambous v Charalambous (2012) 8 ASTLR 361; [2012] QSC 349, distinguished
Re Will of Jane [2011] NSWSC 624, applied
Sadler v Eggmolesse [2013] QSC 40, applied
SPM v LWA [2013] QSC 138, cited
Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108, cited
Van der Meulen v Van der Meulen [2014] QSC 33, applied
[1] By originating application filed 27 May 2014 the applicant seeks an order pursuant to s 22 of the Succession Act 1981 (Qld) ("the Act") that he have leave to apply for an order pursuant to s 21 of the Act authorising the alteration of the Will dated 21 June 1998 of his wife, MWT ("the 1998 Will"). An order is also sought that pursuant to s 21 the 1998 Will be authorised to be altered in terms of a draft codicil.
[2] The application for leave and the application for authorisation were heard together.
[3] The applicant is the testatrix's husband of more than 55 years. The applicant acts as the testatrix's attorney under an Enduring Power of Attorney dated 29 August 1992.[1]
[4] The applicant and the testatrix have two children, MST aged 50 and IKT aged 45.
[5] The testatrix's son is married to the respondent and they have two children, both of whom are infants. There is no separate representation for the infants. The son is also appointed as an attorney under the Enduring Power of Attorney dated 29 August 1992. The son supports this application.
[6] The testatrix' daughter, IKT, was served with the application and has been independently advised concerning the application. Her solicitors raised a number of concerns she had in relation to the draft of the first codicil[2] which resulted in an amended proposed codicil.[3] In a letter from her solicitors dated 16 June 2014, the daughter has stated that she consents to the application to alter the 1998 Will but reserves her rights generally in respect of the Will.[4]
[7] The respondent opposes both the application for leave under s 22 and the orders sought pursuant to s 21 of the Act.
[8] It is common ground that the testatrix lacks capacity to change her Will. The primary reason for the bringing of the application is that since the testatrix made her 1998 Will there has been a change of circumstance in that her son, MST, in or about May 2014 separated from the respondent and they have decided to divorce.
[9] The testatrix, MWT, was born on 24 September 1933 and is now aged 80 years. She married the applicant, who is a retired surgeon, approximately 55 years ago. The testatrix is the only surviving child of EGR and MER. Upon their deaths, the testatrix inherited a sizeable estate which included properties in Mackay. She would refer to the wealth she had inherited from her parents as "old money".[5] She was described as an "astute lady who understood financial issues and financial matters very well."[6]
[10] The testatrix made the 1998 Will with the assistance of a solicitor, DPX, who was a family friend and had been the solicitor for the applicant and MWT since about 1991. According to the solicitor, at the time the testatrix made the 1998 Will she was very concerned that her son or daughter may at some time in the future divorce their respective spouses with a potential consequence that the assets the testatrix had inherited from her parents would not remain in the family:
"[the testatrix] was most concerned about this issue and made it clear to me that she intended always to protect and maintain these assets for the sake of her children and grandchildren, as and when they were born."[7]
[11] DPX clarified that the testatrix's primary concern, in terms of keeping her inherited wealth in the family, was in relation to several properties that she inherited which were located in Mackay.[8] She subsequently sold these properties after making the 1998 Will.
[12] DPX considered the testatrix to be a relatively astute client, who had no difficulty understanding the concepts of estate planning that he discussed with her.[9] He also gave oral evidence that the testatrix, at the time of making the 1998 Will, also discussed with him and appeared to understand the benefits of testamentary trusts.[10]
[13] I discuss the details of the 1998 Will and the proposed changes to it below.
[14] In or about 2000, the testatrix was diagnosed with the onset of Alzheimer's disease. Whilst the applicant initially cared for his wife, as the disease progressed it became necessary to place her in fulltime care at a residential care village. On or about 19 April 2011, the testatrix suffered a severe stroke that has rendered her immobile, unable to speak and in a vegetative state.
[15] On 1 July 2014 the testatrix's condition further deteriorated with a grand mal seizure which caused a dislocation of her right shoulder. Her physician gives the following prognosis:
"Her recent seizure and subsequent shoulder dislocation is an unsurprising development in a lady with profound neurological disease, approaching the end of her life. A further seizure may well be a terminal event. Even in the absence of further seizures I would be very surprised if she survives for as long as another six months ... her life expectancy is very limited and she is at risk of dying at any time."[11]
[16] The present application has therefore been brought on with some urgency. This is because a court may only make an order pursuant to s 21 if the person is alive when the order is made: s 21(2)(b) of the Act.
The reasons for the application (change of circumstances)
[17] Part of the information which the applicant is required to put before the court in support of an application for leave under s 22 is the reasons for the making of the application: s 23(a) of the Act.
[18] The son, MST, and the respondent, LRT, were married on 21 February 1998. They first discussed separating on 3 May 2014 and the respondent left the matrimonial home on 9 May 2014. At that time they had cohabitated for a period of approximately 17 years and had two children by the marriage. By at least 3 June 2014 they had decided to divorce. The present application was filed on 27 May 2014 and served on the respondent on 10 June 2014.
[19] Prior to being served with the application there were no proceedings on foot between the son and the respondent in the Family Court in relation to their financial or property arrangements. The son had, however, given to the respondent on 23 May 2014, an unsigned draft letter from his solicitors seeking in effect the respondent's agreement to a property settlement that was proposed to be the subject of consent orders in the Family Court. This draft letter made no reference to any expectancy that the son had under his mother's 1998 Will.[12] The applicant identifies that the primary reason for the application is because the son and the respondent have decided to divorce. The applicant explains it this way:
"In 2014, [our son] and [the respondent] separated and [our son] has told me that he and [the respondent] have decided to get divorced. I believe that this significant change in the family would have caused [the testatrix], if she still had the ability to do so, to review her Will in order to remove [the respondent] as a beneficiary and that [the testatrix] would take steps to put in place a trust under the Will to protect the assets that [our son] would otherwise receive outright, for the benefit of [our son] and his children and family (excluding [the respondent])."[13]
"As [the testatrix] shared a particularly close and affectionate relationship with [our son] and in light of [our son's] impending divorce from [the respondent] I believe that had [the testatrix] possessed the mental capacity at this time to form a view, she would not have wished any part of her estate to be bequeathed to [the respondent] under her Will and would have protected [our son's] interest under her Will by way of a trust arrangement."[14]
[20] The applicant confirmed in oral evidence that the impetus for the application was the breakdown of the marriage.[15] Prior to the marriage breakdown, the applicant had never been concerned about the terms of his wife's 1998 Will. Indeed, he was not even consulted by his wife in respect to the terms of her 1998 Will.[16] I accept the respondent's submission that the plainly expressed intention of the present application is to prevent the respondent from receiving any part of the testatrix's estate directly, and to the extent possible, "protect" the son's interest from the reach of property adjustment proceedings in the Family Court of Australia.[17]
[21] The 1998 Will is relatively complex because it deals with a number of interests in real estate, trust, corporations and partnerships. Many of those interests no longer form part of the testatrix's estate. The relevant clauses of the 1998 Will are clauses 5, 7, 15 and 20. Clause 5 provides:
(a) all right, title and interest in and to the share that I hold in MST Pty Ltd; and
(b) any interest I own in the properties at 100 and 104 Smith Street;
provided that if my son MST does not survive me for a period of 30 days,
(c) I give all right, title and interest in and to the share that I hold in MST Pty Ltd to my daughter-in-law, LRT; and
(d) I give any interest I own in the properties at 100 and 104 Smith Street to my husband, ADT."
[22] By clause 7, the testatrix gave and bequeathed to the respondent a sapphire ring and a string of pearls. By clause 15, the testatrix gave to the respondent two pieces of furniture. Clause 20 of the 1998 Will deals with the residual of the testatrix's estate and leaves it to her trustee on trust for her children who survived her for a period of 30 days, but on condition that if no person acquires a vested interest under the proceeding provisions of her Will then her trustee is to distribute her net residual trust estate to the respondent.
[23] Since the 1998 Will was made the property at 104 Smith Street has been sold in or about 2003/2004, to pay for the development of the lots next to it, being numbers 100 and 102 Smith Street. The Smith Street properties that are now held by the testatrix are 100 and 102 Smith Street. There may be a construction issue as to whether the reference in the 1998 Will to "100 Smith Street" means both 100 and 102 Smith Street. This is not a construction issue that is presently before the court.
[24] The applicant estimates a value of $2.5m for each of the two duplex units situated at 100 and 102 Smith Street, totalling $5m. He has also obtained a market appraisal which would suggest the total value is something in the order of $4m to $4.4m. In any event the Smith Street properties are significant assets.
[25] The proposed codicil[18] provides for clause 5 of the Will to be amended to:
(a) replace the outright gifts to the son of the share in MST Pty Ltd and of the interest in 100 and 102 Smith Street with a gift of that share and the testatrix's interest in 100 and 102 Smith Street to a testamentary discretionary trust in favour of the son, his children and other family members (but not including the respondent);
(b) deleting the gift to the respondent (in the event that the son does not survive the testatrox for 30 days) of the one-share in MST Pty Ltd; and
(c) amending the gift under clause 5(d) so that, in the event that the son does not survive the testatrix for 30 days, it is clear that the applicant is to receive the testatrix's interest in 100 and 102 Smith Street (rather than 100 and 104 Smith Street).
(a) the gifts of the two items of jewellery to the respondent under clause 7 to be deleted;
(b) the gifts of the two items of furniture to the respondent under clause 15 to be deleted; and
(c) the respondent to be removed as the ultimate long stop beneficiary under the clause 20 trust.
[27] The proposed changes in relation to clauses 7 and 15 are unnecessary because it is common ground between the parties that both the two items of jewellery and the two items of furniture are no longer owned by the testatrix. Further, as to the one share in MST Pty Ltd, the evidence reveals that the only reason that the testatrix acquired the share was because of the Corporations Law requirements at the time that there be two shareholders. Were it not for this requirement it is clear that the son would have acquired both shares in his own right. The applicant tendered in the course of the hearing a declaration of trust in respect to this share which demonstrates that it was held by the testatrix on a bare trust for her son.
[28] It follows that the only relevant change to the 1998 Will sought by the applicant is that upon the testatrix's death, her son no longer takes the properties at 100 and (perhaps) 102 Smith Street ("the Smith Street properties") as an absolute gift but rather they are vested in the trustees of a testamentary discretionary trust in favour of her son, his children and other family members excluding the respondent.
[29] On or about 12 June 2014 the respondent filed in the Family Court of Australia an initiating application together with a supporting affidavit.[19] By the initiating application the respondent sought final orders as follows:
"1. That the husband pay to the wife a sum to achieve a just and equitable division of their assets, liabilities, superannuation and financial resources, with the wife, after completion of disclosure and valuations, having leave to particularize:
1.1 the terms of any order she seeks under Section 106B of the Family Law Act, and
1.2 the terms of the order she seeks by way of property settlement."
[30] The respondent also sought interim relief both against the testatrix's son, MST, and the present applicant that they be restrained from taking any steps to prosecute or otherwise progress the present application before the Supreme Court.
[31] The respondent sought an urgent listing of the interim relief sought in the initiating application in the Family Court. This application for an urgent listing was heard by the Family Court on 21 July 2014. A copy of the transcript of proceedings before the Family Court of Australia was tendered as exhibit 2. Exhibit 4 is an agreed note of the Judge's reasons for refusing the urgent listing. In effect, his Honour was not satisfied that the respondent had demonstrated that there was a prima facie case for the granting of the injunctive relief sought. His Honour also expressed the view that if it was contended that the change to the Will was for an improper purpose, he was satisfied that that was a matter that could be raised and dealt with by the Supreme Court. In the circumstances his Honour made an order that the application for the urgent listing be refused.
[32] On or about 18 July 2014 the respondent instructed her solicitors to file a further amended initiating application in the Family Court of Australia. By this application the respondent seeks the same final orders but seeks further interim orders in paragraphs 4 and 5 of the further amended initiating application in the following terms:[20]
"4. That upon the making of the anti-suit injunctions in the previous paragraphs, or upon the dismissal of the Supreme Court proceedings, then, pursuant to s79(5) of the Family Law Act 1975, these proceedings be adjourned until the death of [the testatrix].
[33] The scheme of Pt 2, Div 4, Subdiv 3 of the Act requires a person who seeks an order under s 21 of the Act to first apply for leave under s 22. Section 22 provides:
(1) A person may apply for an order under section 21 only with the court's leave.
(2) The court may give leave on the conditions the court considers appropriate.
(3) The court may hear an application for an order under section 21 with or immediately after the application for leave to make the application."
[34] By s 21 the court is given a discretion to authorise a Will to be made, altered or revoked for a person without testamentary capacity. Section 21 provides:
"21 Court may authorise a will to be made, altered or revoked
(1) The court may, on application, make an order authorising -
(a) a will to be made or altered, in the terms stated by the court, on behalf of a person without testamentary capacity; or
(b) a will or part of a will to be revoked on behalf of a person without testamentary capacity.
(a) the person in relation to whom the order is sought lacks testamentary capacity; and
(b) the person is alive when the order is made; and
(c) the court has approved the proposed will, alteration or revocation.
(3) For the order, the court may make or give any necessary related orders or directions.
(4) The court may make the order on the conditions the court considers appropriate.
(5) The court may order that costs in relation to either or both of the following be paid out of the person's assets -
(a) an application for an order under this section;
(b) an application for leave under section 22.
(6) To remove any doubt, it is declared that an order under this section does not make, alter or revoke a will or dispose of any property.
(7) In this section -
person without testamentary capacity includes a minor."
[35] Pursuant to s 21(1)(a), the Court may make an order authorising a will to be made or altered in the terms stated by the Court. The Court is not restricted to approving or rejecting the proposed draft codicil and may require adjustments be made to the draft.
[36] Section 23 of the Act specifies various information which must be given to the court on an application for leave:
"23 Information required by court in support of application
On the hearing of an application for leave under section 22, the applicant must give the court the following information, unless the court directs otherwise -
(a) a written statement of the general nature of the application to be made by the applicant under section 21 and the reasons for making it;
(b) satisfactory evidence of the lack of testamentary capacity of the person in relation to whom an order under section 21 is sought;
(c) any evidence available to the applicant, or that can be discovered with reasonable diligence, of the likelihood of the person acquiring or regaining testamentary capacity;
(d) a reasonable estimate, formed from the evidence available to the applicant, of the size and character of the person's estate;
(e) a draft of the proposed will, alteration or revocation in relation to which the order is sought;
(f) any evidence available to the applicant of the person's wishes;
(g) any evidence available to the applicant of the terms of any will previously made by the person;
(h) any evidence available to the applicant of the likelihood of an application being made under section 41 in relation to the person;
(i) any evidence available to the applicant of a gift for a charitable or other purpose that the person might reasonably be expected to give by will;
(j) any evidence available to the applicant, or that can be discovered with reasonable diligence, of the circumstances of a person for whom provision might reasonably be expected to be made by a will by the person in relation to whom the order is sought;
(k) any evidence available to the applicant, or that can be discovered with reasonable diligence, of any persons who might be entitled to claim on intestacy;
(l) any other facts of which the applicant is aware that are relevant to the application."
[37] On hearing the leave application the court may give leave only if satisfied of the several matters specified in s 24:
"24 Matters court must be satisfied of before giving leave
A court may give leave under section 22 only if the court is satisfied of the following matters -
(a) the applicant for leave is an appropriate person to make the application;
(b) adequate steps have been taken to allow representation of all persons with a proper 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 an order under section 21 is sought;
(c) there are reasonable grounds for believing that the person does not have testamentary capacity;
(d) the proposed will, alteration or revocation is or may be a will, alteration or revocation that the person would make if the person were to have testamentary capacity;
(e) it is or may be appropriate for an order to be made under section 21 in relation to the person."
[38] No issues arise between the parties as to the sufficiency of the information required by s 23. Nor is there any dispute that the applicant is the appropriate person to make the application for leave. Nor does any dispute arise under s 24(b) and, as I have previously observed, it is common ground that the testatrix does not have testamentary capacity.
[39] The only two issues in relation to whether the discretion to grant leave should be exercised is first, whether the proposed codicil is or may be a codicil that the testatrix would make if she were to have testamentary capacity and second, whether it is or may be appropriate for an order to be made under s 21 in relation to the testatrix.
[40] The question raised by the first issue is whether the proposed codicil is or may be an alteration to the 1998 Will which the testatrix, if she now had testamentary capacity, would make so that the Smith Street properties, rather than being left to her son as an absolute gift, would be left to the trustees of the testamentary discretionary trust which excludes the respondent as a beneficiary.
[41] The test in s 24(d) is that the proposed alteration "is or may be a[n] ... alteration" that the testatrix would make were she to have testamentary capacity. On a natural and ordinary reading of the words of s 24(d) it is not necessary for the applicant to satisfy the court:
"that this is a codicil the testatrix 'would' make were she to have capacity, but rather that it 'may be' a codicil that she would make".[21]
[42] In determining whether the court is satisfied of the matter in s 24(d) one should "simply focus on the words of the section".[22]
[43] I accept the applicant's submission that there is ample evidence that the draft codicil at least in respect to the Smith Street properties is or may be an alteration that the testatrix would make if she were to have testamentary capacity. In this respect I give particular weight to the evidence of the applicant who has been the testatrix's husband for over 55 years. He believes that the significant change in the family would have caused the testatrix, if she still had the ability to do so, to review her Will in order to remove the respondent as a beneficiary and that she would take steps to put in place a trust under her Will to protect the assets that her son would otherwise receive outright, for the benefit of her son and his children and family (excluding the respondent).[23]
[44] The testatrix had told the applicant on many occasions over the years that she always intended that the money she had inherited from her parents should remain in the family and that all her assets and estate be passed down to members of her family.[24]
[45] The applicant was aware from discussions that he had with his daughter, IKT, that the testatrix had expressed the same intention to her. The applicant also gave evidence that his daughter had told him that "had Mum come to know what the respondent had done to the son she would have left the respondent nothing."[25]
[46] According to the applicant, the testatrix shared a particularly close and affectionate relationship with her son and in light of his impending divorce from the respondent the applicant believed that had the testatrix possessed the mental capacity at this time to form a view she would not have wished any part of her estate to be bequeathed to the respondent under her Will and would have protected her son's interest under her Will by way of a trust arrangement.[26]
"From what I know of my mother through my close relationship with her over the years, I would expect that if she did not have advanced Alzheimer's today and were able to amend her will, she would want to do so now and would make a Codicil in the terms that are proposed. I say this because:
(a) My mother has on many occasions mentioned to me her strong views on keeping the family wealth 'in the family'.
(b) Because of this, and my separation from [the respondent] and intended divorce, my mother would not now regard [the respondent] as part of the family or want [the respondent] to receive any property under my mother's will, and would instead want that property to pass to me, or for the benefit of my family."[27]
[48] DPX, the testatrix's solicitor for the 1998 Will, gave evidence that from his knowledge of the testatrix's wishes and given the fact of the son's separation from the respondent he is confident that if the testatrix still possessed the capacity to make a Will now, she would want to review her estate planning at this time.[28] DPX also gave evidence that at the time of the testatrix making her 1998 Will she evinced a strong desire to ensure that any inherited assets that she had received from her parents stayed in the family.[29]
[49] As to the intended use of a testamentary trust in the proposed codicil, DPX stated:
"I am also confident that, consistent with her statements to me about protecting and maintaining her inherited wealth, [the testatrix] would be amenable to the concept of including a testamentary trust for the benefit of [her son] and his children. I know, from taking instructions for the preparation of [the testatrix's] previous Wills, that she was familiar with the operation of trusts and in broad terms with the asset protection and estate planning opportunities that they offer."[30]
[50] The evidence of the testatrix's housekeeper for 26 years and the testatrix's accountant since about 1985 is also generally supportive of the testatrix's wish that she wanted to give all her assets to her son and daughter and their children so that all the assets "remained in the family" after her death.[31]
[51] From the evidence quoted above, I find that the testatrix upon learning that her son and the respondent intended to divorce may well have sought legal advice concerning her estate planning to ensure that her assets, including the Smith Street properties, were put beyond the respondent's reach in any anticipated Family Court proceedings. I further find that the testatrix may have accepted legal advice that a sensible estate planning step in the circumstances where her son and the respondent intended to divorce was the use of a testamentary discretionary trust.
[52] The respondent resisted such a finding primarily on the basis of the substantial differences between the first and second proposed codicil and the 1998 Will. The respondent points to the fact that the daughter had a substantial input, through her solicitors, in relation to the drafting of the second proposed codicil, whereas in relation to the drafting of the 1998 Will, the testatrix did not consult with any of her children as to its terms. The respondent also refers to the fact that the 1998 Will contains gifts of property which are no longer owned by the testatrix but still referred to in both the first and second proposed codicils. Specific reference was also made to what is described as the applicant's complete lack of understanding as to the effect of the codicils that he places before the court as reflecting the testatrix's intention.[32]
[53] These considerations identified by the respondent do not alter the finding that the testatrix would have sought legal advice in relation to the change of circumstance. It is not to the point that the applicant's understanding of the proposed codicils was imperfect. The applicant was clear that he relied on his solicitors to deal with the technical drafting of the codicil:
"[the testatrix's] intentions are for her inheritance to go to her children and children's children and I take my advice from my - from my solicitors and - in doing the second codicil I just took their advice."
Ms Treston QC: "All right. Is this the case, [ADT], that you have really not troubled yourself with the intricacies of the will or the codicil at all? You left that responsibility to your solicitors?--No. I've - I've been there and partaken. I've just taken their advice."[33]
[54] The respondent further submitted that the best evidence of the testatrix's wishes is contained in her existing Will, made in consultation with her solicitor DPX in 1998. The respondent submits that in spite of the testatrix's concern about the possibility of future divorce in respect to each of her children and her desire to protect assets which she had inherited from her parents she did nothing in her 1998 Will to effect any such protection for her children. This was in circumstances where the testatrix had been advised by DPX as to the availability of testamentary trusts:
"There is therefore no evidence as to the types of clauses or devices which the testator might have implemented in her draft will as she never sought to use any such device in previous testamentary instruments.
It becomes therefore speculation as to whether [the testatrix] would, firstly, in fact review her estate planning to create a trust structure in his favour when she did not do so at the time of her original will, and secondly as to the way in which such a proposed will or codicil might be drafted."[34]
[55] The respondent's submissions in this respect should be rejected. First, the terms of the 1998 Will make it clear that the testatrix sought to keep the properties at 100 and 104 Smith Street within the family. This is evidenced by clause 5(b) where she left to her son her interest in those properties. It is further evidenced by clause 5(d) whereby if her son did not survive her for a period of 30 days she left her interest in the properties to her husband, not to the respondent. Secondly, DPX gave an explanation as to why the testatrix did not include in her 1998 Will testamentary trusts to provide a degree of asset protection for her son and daughter. His evidence was that the testatrix understood the benefits of testamentary trusts but, at the time the 1998 Will was prepared, she and the applicant were going to retire the following year and they were selling up properties and changing assets, so she did not want to make the Will overly complicated when assets were changing.[35] The 1998 Will was not therefore intended to be in place for a lengthy period of time because of the proposed asset restructuring. In the interim however, the testatrix lost capacity within a few years of making the 1998 Will.
[56] I conclude therefore in relation to the first issue that at least in respect to the Smith Street properties the proposed codicil is or may be a codicil that the testatrix would make if she were to have testamentary capacity.
[57] Prior to the exercise of discretion to grant leave the court must be satisfied that it is or may be appropriate for an order to be made under s 21 in relation to the person: s 24(e).
[58] The respondent submitted that the requirement in s 24(e) had not been satisfied and therefore leave should be refused. This is because the discretion under s 22 should not be exercised when the stated purpose of the statutory Will application is to "protect" the son's interest under the testatrix's estate from the reach of property adjustment proceedings in the Family Court. The respondent therefore submitted:
"Whilst such a step might well be taken by a person with testamentary capacity, this Court would not lend its judicial imprimatur to such conduct. To do so would be unprecedented in Australia."[36]
[59] Family Court property proceedings are conducted by reference to s 79 (alteration of property interest) of the Family Law Act 1975 (Cth). The Family Court considers and makes findings at each of the relevant steps:
(a) whether, having regard to the breakdown of the marriage, it is just and equitable to consider the alteration of the parties' interests in their properties;
(b) to determine the assets, liabilities and financial resources of the parties to the marriage (establishing "the pool");
(c) weighing all relevant contributions of each of the parties, as required by s 79(4)(a)-(c);
(d) consideration of the parties' maintenance or future needs factors as set out in s 79(4)(d)-(g) and s 75(2); and
[60] In Grace v Grace (1998) FLC 92-792 at 84,888 the Full Court of the Family Court discussed the distinction between "property" and "financial resources":
"The Act draws a distinction between 'property' and 'financial resources'. The Court is able to make orders that settle the property of the parties but not their financial resources. Thus, in making orders that settle property, the Court is required to have regard to each party's financial resources but can only settle the property of the parties, which is in existence."
[61] As the testatrix is still alive, for the purposes of any property settlement under the Family Law Act 1974 (Cth), the properties which her son is to inherit under the 1998 Will constitute a financial resource or expectancy. The properties would not constitute part of "the pool" available for the property settlement as between the son and the respondent. The Family Court may however have regard to the son's expectancy under the 1998 Will for the purposes of assessing what constitutes a just and equitable division of the marital property.
[62] If this Court was to exercise its discretion under s 21 and authorise the proposed codicil this would have the immediate effect of altering the son's financial resources or expectancy under the 1998 Will from an absolute gift of the properties to a mere beneficial interest as one of a number of beneficiaries under a discretionary trust. Such an alteration may affect the valuation of the son's expectancy under the 1998 Will and impact upon the ultimate division of the marital property pool.
[63] Further, if the proposed codicil was made and the testatrix was to die then her son's inheritance is in effect placed outside the pool of assets able to be adjusted. The matrimonial pool, without the son's inheritance is approximately $1.1m. The properties that the son could inherit under the 1998 Will would increase the pool by an additional $4m-$5m. As submitted by the respondent, there is a fundamental difference between assets which form part of the matrimonial pool and thus can be the subject of a property adjustment pursuant to s 79 of the Family Law Act 1974 (Cth), and, financial resources which sit outside of the pool and cannot themselves be divided.[38]
[64] Mr Williams for the applicant submitted that where the test in s 24(d) has been satisfied (a test that he referred to as the "core test") then it would only be in exceptional circumstances that the requirement in s 24(e) would not be satisfied. Whilst Mr Williams properly conceded that there must be circumstances in which, despite the court having found the core test is met, it would be inappropriate for the proposed Will/codicil to be authorised, he nevertheless made the following submission:
"The 'appropriateness' requirement in s.24(e) has, in decisions to date, been dealt with as a subsidiary issue, and approached in the negative: if the Court determines that the core test is met, is it inappropriate for an order to be made authorising the proposed will/codicil?."[39] (emphasis in original)
[65] Before considering the relevant authorities one should have regard to the ordinary and natural wording of s 24. Section 24(e) constitutes one of a number of matters precedent that are necessary for the court to be satisfied prior to the exercise of the general discretion to grant leave. In determining whether it may be appropriate for an order to be made under s 21, one must have regard to the fact that s 21 gives to the court a discretion which is not expressly limited. If any of the matters precedent identified in s 24(a) to (e) are not satisfied then the court cannot give leave under s 22. As a matter of construction each matter precedent affects the grant of leave. There is no indication in s 24 as to the weight that a court is to give to each of the matters precedent identified in s 24(a) to (e). The requirement in s 24(d) is but one of a number of matters precedent of which the court needs to be satisfied in order for the court to grant leave under s 22. There is nothing in the wording of either s 24(d) or s 24(e) that supports the applicant's submission that where the core test is made out it is only in exceptional circumstances that it would be inappropriate to make an order under s 21. Such a requirement is not expressed nor does it arise by necessary implication.
[66] In speaking of a similar provision (s 22(c) Succession Act 2006 (NSW)) Palmer J in Re: Fenwick[40] observed:
"Section 22(c) gives no guidance as to what circumstances, in addition to those set out in the other paragraphs of the section, are to be taken into account in determining whether a final order, is 'appropriate'. Section 19(2) gives an indication of some such circumstances but the generality of s 22(c) makes it clear that s 19(2) is not intended to be an exhaustive check list."
[67] The Queensland equivalent to s 19(2) is s 23 of the Act. This section deals with the information that an applicant is required to place before the court in support of the application for leave. Mr Williams, in oral submissions, suggested that one could not import as a relevant consideration into s 24(e) the impact of the proposed codicil on the existing Family Court proceedings because neither s 24(e) nor s 23 makes any specific reference to other court proceedings. This submission should be rejected. First, the legislature could not possibly be expected to identify each and every circumstance going to the question of appropriateness. Further, s 23(l) requires the applicant on a hearing for an application for leave under s 22 to place before the court any other facts of which the applicant is aware that are relevant to the application. Clearly the existence of Family Court proceedings (and the potential impact that the making of the proposed codicil could have on those proceedings) are facts of which the applicant was aware and was required to place before the court.
[68] In Re Will of Jane [2011] NSWSC 624, [96] Hallen AsJ in considering s 22(c) of the New South Wales Succession Act stated:
"What may be described as the 'appropriateness' requirements involve the exercise of curial discretion. Thus, whilst relevant parties might consent to the terms of the proposed statutory will, that consent cannot be conclusive because the execution of a will for a person who lacks capacity is a decision to be made by the court."
[69] Whilst s 24(e) of the Act refers to the concept of appropriateness, the discretion to grant an order under s 21 is at large. As observed by Jackson J in Van der Meulen v Van der Meulen [2014] QSC 33:
"[50] In the search for answers in the application of the generally expressed discretionary power under s 21 to these circumstances, I have considered relevant cases under the Queensland legislation. There are some differences in the cases as to the approach to be followed in the application of the legislation that I need not consider.
(footnote omitted)
[51] In my view, there is no definitive principle to be applied here. In the application of a general discretion of this kind, against the background of the statutory qualifying factors, it is of no assistance to articulate factors which influence or decide this particular case as though they have a legal significance beyond the exercise of the discretion in the particular circumstances."
[70] No doubt appreciating the general discretion that is to be exercised under s 21 of the Act the respondent does not ask the court to find, as a matter of principle, that in every circumstance where there is a related Family Court issue (by way of proceeding or otherwise) that it will, in all the circumstances, be appropriate to refuse an application pursuant to s 21.[41]
[71] The particular factual matrix of the present application that the respondent submits results in it not being appropriate to make a statutory codicil include:
(c) the size of the potential inheritance for the son (approximately $5m);
(d) the date of the Will (21 June 1998) meaning it has been in existence virtually throughout the entirety of the marriage between the son and the respondent;
(e) the date of the marriage breakdown (3 May 2014);
(g) the respondent's uncontested evidence[42] that the son's decision to work throughout the course of the marriage, for a limited number of hours and days per week was in part contributed to by the son and the respondent's knowledge that the son, and by extension the respondent and their children, would inherit a substantial estate one day from both his parents, directly affecting the issue of not building a bigger family pool of assets;
(h) the express intention that the purpose of the application is to "protect" the son's interest under the Will;
(i) the expressed intention of the applicant to make sure that the respondent did not obtain any part of the son's inheritance.
[72] Mr Williams for the applicant submitted that the present case is similar to Re Matsis,[43] in which Ann Lyons J authorised the making of a codicil that provided for three testamentary discretionary trusts in place of absolute gifts to the testator's grandchildren. Her Honour considered the proposed estate planning and the evidence of the testator's solicitor, Mr Bowles as follows:[44]
"In my view it is significant that the incorporation of testamentary trusts into the will is entirely consistent with Mr Matsis' entrepreneurial approach, which is set out in the affidavit material. That approach was strongly instilled into his grandsons and he had a very strong emphasis on keeping the wealth within the family. I am also satisfied on the basis of Mr Bowles evidence that given the protection that a testamentary trust can give to a person who is self-employed, he would have been strongly supportive of the concept and would have wished to execute a codicil to introduce into his 2001 will basic testamentary trusts of the kind that are contained in the draft codicil."
[73] Whilst it is true that the present case and Re Matsis have elements of estate planning in common, Re Matsis is readily distinguishable from the present circumstances. First, the use of discretionary trusts as part of the estate planning in Re Matsis did not have any direct or indirect impact on property settlement proceedings in the Family Court of Australia. Secondly, the application in Re Matsis was unopposed. Thirdly, it was not an application to remove gifts from certain beneficiaries. In the present case the proposed codicil seeks on its face to remove a number of gifts from the respondent and to ensure that no distribution can be made to the respondent of the testatrix's residual estate.
[74] The applicant also relied on the decision of Henry J in Doughan v Straguszi.[45] In that case his Honour authorised the making of a Will containing testamentary discretionary trusts in circumstances where the broad thrust of the estate planning was to ensure that the family farm was retained for the benefit of future generations. His Honour found that the testator's son's risk of bankruptcy evidently had some influence on the timing of the statutory Will application. Nevertheless, his Honour was satisfied that the "actuating purpose" underlying the application was "to protect the broader family's beneficial interest, and interest which the testatrix plainly aspired would persist through the generations."[46]
[75] What is significant about the decision of Henry J is that his Honour was satisfied in terms of s 24(d) but was clearly of the view that s 24(e) had an independent operation. This may be discerned from His Honour's analysis of whether it was or may be appropriate for an order to be made under s 21:[47]
"The only issue of concern in reality is whether, against that background, there is some other reason why it would be inappropriate to make the order sought. The only potential reason could be an argument that the arrangement is being pursued to defeat the interests of Mr Straguszi's creditors.
There is no doubt that, if the testatrix had capacity, even if it was her intention to remove the prospect of the son inheriting property so it would not go to his creditors, she would have every right to make a will achieving that end. The question here is whether it is appropriate for the court to make the orders sought. In considering orders of this kind, the court places itself, in effect, in the position of the testatrix with a view to determining, by implication, the testatrix's likely wishes, a determination obviously made upon the known materials.
If there be a difference regarding the exercise in which the court is engaged in this context, it is whether, having regard to the requirement that that court must consider whether the orders appropriate, per s 21(iv) of the Succession Act 1981 (Qld), it is appropriate to make an order that might arguably have the effect of at some future time possibly defeating creditors."
[76] In the event his Honour found that there was no material to suggest that any part of the proposed testamatory arrangement was structured to allow someone else to provide for Mr Straguszi in the event he was made bankrupt. His Honour found:[48]
"To the contrary, the materials show, if there be any connection between the proposed new will and Mr Straguszi's problems, that the intention is to protect a much broader array of family members and their future potential interest. The intention is that part or all of the family farm not be lost to them because of Mr Straguszi's specific problems. That is, the actuating purpose, if it be connected at all with Mr Straguszi's present problems, is not to defeat his creditors but to protect the broader family's future beneficial interest ..."
[77] But for this specific finding the result may have been different had his Honour found that the proposed testamatory arrangement was one being pursued to defeat the interest of Mr Straguszi's creditors. In the present case the clear impetus for the use of testamentary discretionary trusts was the breakdown of the marriage and an attempt to place beyond any property settlement proceedings in the Family Court the assets that were to be gifted to the son absolutely. The considerations that may inform whether it is or may be appropriate to make an order under s 21 will vary with the particular circumstances of each case. Those considerations however must extend beyond the identified intentions of the person who is lacking testamentary capacity. This is because the authority to make a statutory Will or alteration to an existing Will is an exercise of curial discretion.
[78] The "appropriateness" test was considered by White J in Hausfeld v Hausfeld.[49] In that case his Honour considered that there were limits to the extent to which a court would go in order to protect inheritances from creditors of a beneficiary. The proposed testator's son was involved in litigation in the Federal Court and there was a prospect he could be found liable, potentially resulting in his bankruptcy. The proposed statutory Will provided for the son's share of the estate to pass instead to the son's wife.
[79] Whilst being satisfied that the Will was one that the testator might make if he had capacity, the court did not consider it was appropriate to make such a Will in those circumstances. His Honour stated:
"In my view it is not appropriate, nor might it become appropriate, for the court to authorise an alteration to Colin Hausfeld's will in order to defeat his son's creditors. Whilst I accept that Colin Hausfeld, if he were capable, could leave the share of his estate that would otherwise pass to his son to his son's wife in the expectation that she would provide for his son out of that share if his son were made bankrupt, I do not think that the court should condone such a course. The policy of the law is that people should pay their debts so far as they are able. It is not that they be sheltered in the way proposed."[50]
[80] Mr Williams submitted that White J gave undue weight to the considerations in s 24(e) and insufficient weight to the core test enacted in s 24(d). I do not accept this submission. As I have already stated s 24(a) to (e) identify separate matters precedent to the exercise of discretion. There is no indication either expressly or by necessary implication that one of these matters precedent is to be given greater weight than another. The court, prior to exercising any discretion to give leave under s 22, must be satisfied of each of those matters.
[81] As I have already noted, Mr Williams correctly conceded that there must be circumstances in which, despite the court having found that the core test is met, it would be inappropriate for the proposed Will/codicil to be authorised. The question is where is the line is to be drawn? Minds may differ in this respect. Ultimately the line must be drawn by reference to the circumstances of each individual case.
[82] Here the proposed codicil and the use of testamatory trusts has as its purpose protecting the assets the son was to inherit from pending Family Court proceedings. It cannot be assessed at this stage whether any such attempt to place the assets beyond the reach of the Family Court would be successful. Suffice to say that the proposed codicil may have a direct or indirect impact on the property pool available in the present Family Court proceedings. The proposed codicil does not offend "the policy of the law" in terms of seeking to defeat creditors or avoiding the operation of the Bankruptcy Act 1966 (Cth) as identified by White J in Hausfeld v Hausfeld.[51] The proposed codicil is intended however to impact pending Family Court proceedings in the ways I have identified above. In those circumstances, I find that I cannot be satisfied that it is or may be appropriate for an order to be made under s 21 in relation to the testatrix for the purposes of s 24(e) of the Act.
[83] I therefore refuse leave under s 22(1) for the applicant to apply for an order under s 21.
[84] I should further add that if I was minded to grant leave and authorise the making of a codicil, I would have required the proposed codicil to be redrafted so as to exclude any reference to the one share in MST Pty Ltd and any reference to gifts that are no longer in the possession of the testatrix.
[85] The applicant submitted that this is a case where it is appropriate that any reasons for judgment be published in de-identified form. In SPM v LWA [2013] QSC 138, Henry J made orders to that effect to protect the identity of the donor of a Power of Attorney, ostensibly to protect the individual's dignity and privacy. To similar effect is the decision of Ann Lyons J in Re: JT [2014] QSC 163 which concerned an application pursuant to s 21 of the Act. Her Honour stated:[52]
"I am cognisant of the importance of the principles of open justice as discussed by Fraser JA in the decision of Dovedeen Pty Ltd & Anor v GK [2013] QCA 116 at [34] - [37] and significantly this application was heard in open court. Whilst the publication of the factual background and the legal issues in this case accord with the principles of open justice I do not consider those principles require publication of the identity of JT in the circumstances of this case. I consider that JT's dignity, privacy and vulnerability should be recognised and respected by referring to her by de-identifying any reference to her."
[86] Having regard to the principles identified by both Henry J and Ann Lyons J, I will make an order that all references whereby the testatrix would or could be identified in these reasons be de-identified so as to protect the testatrix's privacy and dignity.
[87] Leave, pursuant to s 22(1) of the Act, for the applicant to apply for an order under s 21 is refused. I will hear the parties as to the appropriate order as to costs.
[1] Exhibit "ADT-3" to the affidavit of ADT sworn 3 June 2014.
[2] Exhibit "ADT-1" to the affidavit of ADT sworn 3 June 2014.
[3] Exhibit "SG-5" to the affidavit of SG sworn 13 June 2014.
[4] Exhibit "SG-7" to the affidavit of SG sworn 16 June 2014.
[5] Affidavit of APA sworn 3 June 2014, [6].
[6] Affidavit of WYN sworn 3 June 2014, [4].
[7] Affidavit of DPX sworn 4 June 2014, [6].
[8] Transcript of Proceedings 1-44, 1-7.
[9] Affidavit of DPX sworn 4 June 2014, [7].
[10] Transcript of Proceedings 1-44, 27-35.
[11] Exhibit "JIL-1" to the affidavit of JIL sworn 9 July 2014.
[12] Affidavit of LRT sworn 12 June 2014, [7(d)] and exhibit "LRT3".
[13] Affidavit of ADT sworn 3 June 2014, [27].
[14] Affidavit of ADT sworn 3 June 2014, [46].
[15] Transcript of Proceedings 1-12, 10-15; 1-20, 39-47.
[16] Transcript of Proceedings 1-14, 25-27.
[17] Submissions on behalf of the respondent dated 23 July 2014, [67].
[18] Exhibit "SG-5" to the affidavit of SG sworn 13 June 2014.
[19] Exhibits "LRT1" and "LRT2" to the affidavit of LRT sworn 12 June 2014.
[20] Exhibit "SMB-5" to the affidavit of SMB affirmed 22 July 2014.
[21] Submissions on behalf of the applicant dated 23 July 2014, [62].
[22] McKay v McKay (2011) 4 ASTLR 429; [2011] QSC 230, [79]. See also Re Matsis; Charalambous v Charalambous (2012) 8 ASTLR 361; [2012] QSC 349, [24] and Sadler v Eggmolesse [2013] QSC 40, 1-13.
[23] Affidavit of ADT sworn 3 June 2014, [27].
[24] Affidavit of ADT sworn 3 June 2014, [42].
[25] Affidavit of ADT sworn 3 June 2014, [44].
[26] Affidavit of ADT sworn 3 June 2014, [46].
[27] Affidavit of MST sworn 3 June 2014, [10].
[28] Affidavit of DPX sworn 4 June 2014, [10].
[29] Transcript of Proceedings 1-43, 32-38.
[30] Affidavit of DPX sworn 4 June 2014, [11].
[31] Affidavit of WYN sworn 3 June 2014, [6].
[32] Supplementary submissions on behalf of the respondent dated 24 July 2014, [10]; Transcript of Proceedings 1-25-1-28; 1-29, 34-38; 1-31, 17-35; 1-33, 1-3.
[33] Transcript of Proceedings 1-22, 40-45.
[34] Submissions on behalf of the respondent dated 23 July 2014, [52]-[53].
[35] Transcript of Proceedings 1-44, 30-45.
[36] Submissions on behalf of the respondent dated 23 July 2014, [6].
[37] See generally Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108, 116-117 [21]-[22], 120 [35].
[38] Submissions on behalf of the respondent dated 23 July 2014, [90].
[39] Further submissions on behalf of the applicant dated 24 July 2014, [16].
[40] [2009] NSWSC 530; (2009) 76 NSWLR 22, 60 [190].
[41] Supplementary submissions on behalf of the respondent dated 24 July 2014, [1].
[42] Affidavit of LRT sworn 12 June 2014, [10].
[43] Re Matsis; Charalambous v Charalambous (2012) 8 ASTLR 361; [2012] QSC 349.
[44] Re Matsis; Charalambous v Charalambous (2012) 8 ASTLR 361; [2012] QSC 349, [28].
[46] Doughan v Straguszi [2013] QSC 295, 4. See also submissions on behalf of the applicant dated 23 July 2014, [74].
[47] Doughan v Straguszi [2013] QSC 295, 4.
[48] Doughan v Straguszi [2013] QSC 295, 4.
[50] [2012] NSWSC 989, [13].
[51] [2012] NSWSC 989, [13].
[52] Re: JT [2014] QSC 163, [40].
ADT
LRT [2014] QSC 169
(2009) 76 NSWLR 22
(2012) 247 CLR 108