CCR v PS

THE THIRD RESPONDENTS 2012 WILL

1. On 26 April 2012 the third respondent executed a will which made provision, inter alia, for each of her children.
2. The gifts to her sons (the first and second respondents) took the form of gifts of property to testamentary trusts, established by the will, for their respective families. By clause 3(a) of the will, a gift to the applicant was charged with an obligation to pay a sum of money to those trusts. By clause 8, a gift of shares in a family company (the owner of land at Randwick) was given to the first respondent's testamentary trust. By clause 9, a gift of shares in another family company was given to the second respondent's testamentary trust. By clause 10, the same testamentary trust was given land at Spit Road, Mosman on condition of acceptance of responsibility for amounts due by the third respondent to the first mentioned company. By clause 11, after a direction for payment of the third respondent's debts and testamentary expenses, and a direction for transfer of specific gifts identified in clauses 3 - 10 inclusive, the first and second respondents' testamentary trusts were nominated as beneficiaries of the third respondent's residuary estate.
3. A primary focus for attention in the will was clause 3(a). It dealt with the third respondent's half share in a property at Stanley Avenue, Mosman. The property was owned by the third respondent (as to 50%), the applicant (as to 25%) and the applicant's husband (as to 25%) as tenants in common.
4. The third respondent proposed, by clause 3(a), to give her half share of the property to the applicant, charged with an obligation to pay $2 million if and when the applicant should sell the property, with the intent that, at that time, $1 million of that charged sum would go to each of the testamentary trusts of the first and second respondents.
5. By the scheme of the will, the third respondent evidently intended that each of her children would acquire, or obtain the benefit of, a particular piece of real estate, not merely that there be equality of financial benefits under the will. The "equal treatment" she had in mind did not translate into a plan for her entire estate to be realised, with an equal division of the net realised estate. There was a qualitative, as well as a quantitative, character to the provision made for each child, taking into account each child's connection with a particular piece of real estate and, possibly, inter vivos gifts generally.

THE FIRST (2013) CODICIL

1. On 24 July 2013 the third respondent executed a codicil to her will, the effect of which was that, if the Stanley Street property were to be sold for less than $20 million, the charge on the gift to the applicant under clause 3(a) of the will would be reduced to nil.
2. As it happened, the Stanley Street property was sold for $16 million in 2015, rendering the codicil of little practical significance. Such significance as it may have had appears to have been limited to: (a) confirmation of the 2012 will; and (b) possibly, confirmation of an intention on the part of the third respondent that her daughter could expect to receive provision under clause 3(a) of the will of the order of about $10 million.

THE SECOND (2014) CODICIL

1. On 4 July 2014 the third respondent executed another codicil (the second codicil) to her will. Omitting the formal parts, it was in terms to the following effect: "1. I confirm my Will dated 26 April 2012 and the first codicil dated 24 July 2013; 2. I hereby add the following words to the end of clause 3(a) of my Will dated 26 April 2012 and my codicil dated 24 July 2013: 'Notwithstanding anything herein contained, if the property at [Stanley Avenue, Mosman] is sold during my lifetime, then I GIVE & BEQUEATH an amount equal to ONE-HALF (1/2) of the sale proceeds to my daughter [the applicant] after deducting the amounts, if any, referred to in clause 3(a) of my Will as amended by the first codicil".

SALE OF THE STANLEY STREET PROPERTY

1. By a contract dated 1 September 2015, the Stanley Street property was sold for a gross price of $16 million.
2. The third respondent's half share of the net proceeds of sale ($7,841,171.04) was paid to her.
3. The effect of the sale was prospectively to adeem the gift for which clause 3(a) of the third respondent's will provided, and to render the third respondent's first codicil practically otiose.
4. In presentation of their case - resisting any orders for a court-authorised codicil - the first and second respondents suggested that, if she encountered any difficulty with the testamentary instruments executed by the third respondent, the applicant is the author of her own misfortune because she arranged for the Stanley Street property to be sold when she did, before their mother's death and at a price less than earlier anticipated.

PARAMETERS OF THE PROCEEDINGS

1. During the course of proceedings on the applicant's motion, each of the third respondent's children shifted their positions from time to time, with different interpretations of what their mother meant, or may have meant, by "equal treatment" of them. Those shifts, and the competing cases presented, appear to have been driven by adversarial conflict between the siblings rather than simply a concern for accommodation of the third respondent's intentions. The applicant abandoned her initial proposal for an equal division of the net realised value of the estate. Her brothers cautiously edged back from their reservation of a right to challenge the second codicil in other proceedings. Both sides maintained that there was an essential consistency in their respective cases. Both sides invited the Court to view the proceedings through their prism of the third respondent's testamentary intentions.
2. As expressed by her, two primary concerns of the applicant remained: 1. The possibility that her brothers might, after the third respondent's death, challenge the validity of the second codicil, contending that the third respondent lacked testamentary capacity at the time of its execution; and 2. The possibility of post-death litigation between the siblings about the proper construction of the second codicil, including disputation about whether the third respondent's gift in favour of the applicant was intended to be of the order of $8 million or only $4 million.
3. During the course of the hearing, the first and second respondents came but slowly to confront these concerns directly, maintaining that they did not arise for consideration on the applicant's motion - implicitly reserving a right to contest each point after the death of the third respondent and denying the applicant certainty in the meantime.
4. In closing submissions, as it seemed to me, the differences between the applicant on the one hand and, on the other, the first and second respondents were marginal. The brothers disclaimed any intention to challenge the validity of the second codicil. They agreed with the applicant that the amount of the provision intended to be made for her in the second codicil was an amount equal to the net proceeds of sale of the Stanley Street property received by the third respondent ($7,841,171.04), not half that amount. They took no substantive objection to clarification of the intention of the third respondent that, in the event of her residuary estate being insufficient to meet the gift to the applicant, then the gifts to her three children should bear unpaid liabilities rateably according to value, thereby circumventing any possibility of disputation arising (in the operation of section 46C of the Probate and Administration Act 1898 NSW and Part II of the Third Schedule to that Act) in administration of the third respondent's deceased estate.
5. Having advanced alternative forms of instrument in support of her motion, the applicant ultimately invited the Court to authorise the making of a codicil in terms substantially to the same effect as the second codicil, nevertheless addressing her underlying concerns about the second codicil. She submitted that the making of a court-authorised codicil would - as, I trust, it will - remove any possibility of post-death litigation about the validity of the second codicil. The same was said about resolving questions of construction about the amount of provision to be made for her, and about the order of application of assets in administration of the third respondent's deceased estate.
6. Although, in the end, there was substantive agreement between the siblings about the third respondent's intentions, the first and second respondents maintained that it was not open to the Court to authorise the making of a codicil because, it was contended, the statutory criteria for such a codicil had not been met.
7. I do not accept this submission. I will, in due course, address the criteria specifically.
8. At one point during submissions, the primary concern of the first and second respondents appeared to be a concern about the costs of the motion. That concern threatened to divert attention away from substantive questions for determination. Accordingly, I determined that, the most efficacious way of proceeding upon an exercise of jurisdiction intended to be protective of the third respondent, was to reserve the question of costs for consideration after attending to the substantive application for a court-authorised codicil.

THE LEGISLATION

1. Division 2 of Part 2.2 (sections 18-26) of the Succession Act is in the following terms (with emphasis added): "CHAPTER 2 - WILLS … PART 2.2 - WILLS MADE OR RECTIFIED UNDER COURT AUTHORISATION … DIVISION 2 - COURT AUTHORISED WILLS FOR PERSONS WHO DO NOT HAVE TESTAMENTARY CAPACITY 18. COURT MAY AUTHORISE A WILL TO BE MADE, ALTERED OR REVOKED FOR A PERSON WITHOUT TESTAMENTARY CAPACITY (1) The Court may, on application by any person, make an order authorising: (a) a will to be made or altered, in specific terms approved by the Court, on behalf of a person who lacks testamentary capacity, or (b) a will or part of a will to be revoked on behalf of a person who lacks testamentary capacity. Note : A person may only make an application for an order if the person has obtained the leave of the Court--see section 19. (2) An order under this section may authorise: (a) the making or alteration of a will that deals with the whole or part of the property of the person who lacks testamentary capacity, or (b) the alteration of part only of the will of the person. (3) The Court is not to make an order under this section unless the person in respect of whom the application is made is alive when the order is made. (4) The Court may make an order under this section on behalf of a person who is a minor and who lacks testamentary capacity. (5) In making an order, the Court may give any necessary related orders or directions. Note : The power of the Court to make orders includes a power to make orders on such terms and conditions as the Court thinks fit--see section 86 of the Civil Procedure Act 2005 . The Court also has extensive powers to make directions under sections 61 and 62 of that Act. (6) A will that is authorised to be made or altered by an order under this section must be deposited with the Registrar under Part 2.5. (7) A failure to comply with subsection (6) does not affect the validity of the will. . 19. INFORMATION REQUIRED IN SUPPORT OF APPLICATION FOR LEAVE (1) A person must obtain the leave of the Court to make an application to the Court for an order under section 18. (2) In applying for leave, the person must (unless the Court otherwise directs) give the Court the following information: (a) a written statement of the general nature of the application 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 18 is sought, (c) a reasonable estimate, formed from the evidence available to the applicant, of the size and character of the estate of the person in relation to whom an order under section 18 is sought, (d) a draft of the proposed will, alteration or revocation for which the applicant is seeking the Court's approval, (e) any evidence available to the applicant of the person's wishes, (f) any evidence available to the applicant of the likelihood of the person acquiring or regaining testamentary capacity, (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, or that can be discovered with reasonable diligence, of any persons who might be entitled to claim on the intestacy of the person, (i) any evidence available to the applicant of the likelihood of an application being made under Chapter 3 of this Act in respect of the property of the person, (j) any evidence available to the applicant, or that can be discovered with reasonable diligence, of the circumstances of any person for whom provision might reasonably be expected to be made by will by the person, (k) any evidence available to the applicant of a gift for a charitable or other purpose that the person might reasonably be expected to make by will, (l) any other facts of which the applicant is aware that are relevant to the application. 20. HEARING OF APPLICATION FOR LEAVE (1) On hearing an application for leave the Court may: (a) give leave and allow the application for leave to proceed as an application for an order under section 18, and (b) if satisfied of the matters set out in section 22, make the order. (2) Without limiting the action the Court may take in hearing an application for leave, the Court may revise the terms of any draft of the proposed will, alteration or revocation for which the Court's approval is sought. 21. HEARING AN APPLICATION FOR AN ORDER In considering an application for an order under section 18, the Court: (a) may have regard to any information given to the Court in support of the application under section 19, and (b) may inform itself of any other matter in any manner it sees fit, and (c) is not bound by the rules of evidence. 22. COURT MUST BE SATISFIED ABOUT CERTAIN MATTERS The Court must refuse leave to make an application for an order under section 18 unless the Court is satisfied that: (a) there is reason to believe that the person in relation to whom the order is sought is, or is reasonably likely to be, incapable of making a will, and (b) the proposed will, alteration or revocation is, or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity, and (c) it is or may be appropriate for the order to be made, and (d) the applicant for leave is an appropriate person to make the application, and (e) adequate steps have been taken to allow representation of all persons with a legitimate interest in the application, including persons who have reason to expect a gift or benefit from the estate of the person in relation to whom the order is sought. 23. EXECUTION OF WILL MADE UNDER ORDER (1) A will that is made or altered by an order under section 18 is properly executed if: (a) it is in writing, and (b) it is signed by the Registrar and sealed with the seal of the Court. (2) A will may be signed by the Registrar for the purposes of subsection (1) (b) even after the death of the person in relation to whom the order was made. 24. RETENTION OF WILL (1) Despite section 52 (Delivery of wills by Registrar), a will deposited with the Registrar in accordance with this Part may not be withdrawn from deposit with the Registrar by or on behalf of the person on whose behalf it was made unless: (a) the Court has made an order under section 18 authorising the revocation of the whole of the will, or (b) the person has acquired or regained testamentary capacity. (2) On being presented with a copy of an order under section 18 authorising the revocation of the whole of a will, the Registrar must withdraw the will from deposit. 25. SEPARATE REPRESENTATION OF PERSON LACKING TESTAMENTARY CAPACITY If it appears to the Court that the person who lacks testamentary capacity should be separately represented in proceedings under this Division, the Court may order that the person be separately represented, and may also make such orders as it considers necessary to secure that representation. 26. RECOGNITION OF STATUTORY WILLS (1) A statutory will made according to the law of the place where the deceased was resident at the time of the execution of the will is to be regarded as a valid will of the deceased. (2) In this section: 'statutory will' means a will executed by virtue of a provision of an Act of New South Wales or other place on behalf of a person who, at the time of execution, lacked testamentary capacity."

CONSIDERATION OF THE APPLICATION

1. There is no dispute, in these proceedings, about the current status of the third respondent as "a person who lacks testamentary capacity" within the meaning of the Succession Act, section 18(1).
2. In terms of the categorisation of cases found in Re Fenwick Application of JR Fenwick; Re "Charles" (2009) 76 NSWLR 22 at [154], this is a "lost capacity case". That is, a case in which the incapacitated person (the third respondent) is an adult, has formed family and other personal relationships, has made a valid will before testamentary incapacity occurred, and is now said to have expressed some testamentary intention in relation to the circumstances sufficient to warrant an application for a statutory codicil or new will.
3. The jurisdiction conferred on the Court by the Succession Act is essentially, in nature, protective of the incapacitated person.
4. Accordingly, upon an exercise of the jurisdiction, the Court must remain mindful that whatever is done, or not done, for or on behalf of the person in need of protection must be for the benefit, and in the interests, of that person: GAU v GAV [2016] 1 Qd R 1 at [48] and [52]; Re K's Statutory Will [2017] NSWSC 1711 at [19]-[21].
5. The applicant's application under section 19 of the Succession Act was supported by evidence directed to the topics identified in that section.
6. On the hearing of an application for leave under section 19, the Court may grant leave only if it is satisfied of the five matters specified in section 22 of the Succession Act. In determining to grant leave to make an application for a court-authorised codicil (and proceeding, under section 20, to engage section 18), I was satisfied on each of those topics.
7. First, there was reason to believe that the third respondent was incapable of making a will: Succession Act, section 22(a). That much was common ground. The third respondent has no knowledge, memory or understanding of the nature or extent of her assets. She has no understanding of the nature or effect of a will. She has no ability to remember, reflect upon or reason about competing claims on her bounty. She lives in a nursing home with a high level of care.
8. Secondly, the proposed codicil, so far as it mirrored the second codicil, had the imprimatur of the third respondent's signature, attested by two witnesses. Insofar as it addressed doubts about the proper construction of the second codicil, there was ultimately no substantive dispute between the parties about the third respondent's intentions: Succession Act, section 22(b).
9. Thirdly, in my opinion, it was "appropriate" for an order to be made for leave to apply for a court-authorised codicil: Succession Act, section 22(c). It was in the interests, and for the benefit, of the third respondent that clarity and certainty be brought to her testamentary arrangements in an endeavour to minimise friction within the family, upon whose continued support the third respondent continues to rely.
10. Fourthly, the applicant was "an appropriate person" to make an application for leave because she was the person directly, adversely affected by any lack of clarity in the third respondent's testamentary arrangements: Succession Act, section 22(d).
11. Fifthly, adequate steps had been taken to allow representation of all persons with a legitimate interest in the application (Succession Act, section 22(e)), in circumstances in which the third respondent's principal beneficiaries (her nearest relatives) were party to the proceedings; the third respondent's protected estate manager represented her on the hearing of the motion; and the few legatees who were not represented at the hearing had but a small, prospective interest in the third respondent's estate, which interest was able to be preserved in the making of the Court's orders.
12. In granting leave under section 19 of the Succession Act for the applicant to make an application to the Court for an order under section 18, the Court must be satisfied that it has been placed in a position to make the necessary, broad evaluative judgements about the personal, and family, circumstances of the incapacitated person: GAU v GAV [2016] 1 Qd R 1 at [50].
13. In my opinion, a proper exercise of discretion under section 19, favoured a grant of leave to the applicant.
14. The fact that the form of instrument ultimately promoted for the Court's approval was, in substance, confirmatory of the third respondent's own document was no impediment to a grant of leave under section 19 (or, indeed, to a grant of authority under section 18) in circumstances in which there was utility in the relief granted by the Court.
15. It is not necessary, as a matter of jurisdiction, for an authorised will or codicil to differ in terms from a testamentary instrument made without the intervention of the Court. Use of the expressions "made" and "altered" in section 18 of the Succession Act do not implicitly impose such a requirement. If it were beneficial to an incapacitated person to make a will or codicil which simply republished an existing will or codicil then the jurisdiction conferred by the Succession Act would extend to an order for that to be done. However, that is not precisely this case. The approved codicil substantially confirms the terms of the second codicil, but it does not simply republish that document. It is, in terms, different. Its execution pursuant to orders of the Court overcomes any controversy attaching to the validity (or proper construction) of the second codicil, and reduces any prospect of an application for family provision relief under Chapter 3 of the Succession Act.
16. In approving the specific terms of a court-authorised codicil for the third respondent, upon an exercise of the jurisdiction for which section 18 of the Succession Act provides, I was mindful of the third respondent's stated intention that her children be "treated equally"; the detailed scheme of the will in which she gave expression to that intention; the desirability of bringing certainty to her testamentary arrangements so as to minimise friction between her children at a time when, and in circumstances in which, she needs support from all of them; and the desirability of not interfering with the provision made by the third respondent for persons not represented in the proceedings.
17. The court-authorised codicil is calculated to give effect to the third respondent's testamentary intentions as expressed in her will, the first codicil and the second codicil, allowing for the fact of sale of the Stanley Street property and a need to bring clarity and certainty to her testamentary arrangements, minimising any prospect of future litigation involving her estate.

THE ORDERS MADE

1. It was in these circumstances that, having heard evidence and submissions for and against the applicant's motion, I made orders and notations to the following effect: 1. NOTE the amended notice of motion filed 8 June 2018. 2. ORDER, pursuant to section 19 of the Succession Act 2006 NSW, that the Applicant be granted leave to make an application for an order under section 18 of the Act on behalf of the Third Respondent. 3. ORDER, pursuant to section 18 of the Succession Act 2006, that a codicil be authorised to be made on behalf of the Third Respondent in terms of the instrument which is set out in the Schedule to these orders ("the approved codicil"). 4. ORDER that the Registrar be authorised and directed to sign and seal with the seal of the Court, pursuant to section 23 of the Succession Act, a codicil in the terms of the approved codicil. 5. RESERVE all questions of costs relating to the amended notice of motion. 6. RESERVE the Court's reasons for judgment for later publication. 7. NOTE that these orders have been made at 2.06pm on 19 June 2018. 8. ORDER that these orders be entered forthwith. Schedule THIS IS THE CODICIL TO THE LAST WILL AND TESTAMENT OF [THE PROTECTED PERSON]. This Codicil is made on 19 June 2018. 1. I revoke the first Codicil to my Will dated 24 July 2013. 2. I revoke the second Codicil to my Will dated 4 July 2014. 3. I omit clause 3(a) of my Will dated 26 April 2012 and substitute for it the following new clause 3(a): "I GIVE to my daughter [THE APPLICANT] a legacy of $7,841,171.04. In the event that the residue of my estate after payment of my debts, funeral, testamentary and administration expenses is insufficient to meet this gift to Julie in full, then this gift and the gifts in clauses 4, 8, 9 and 10 shall bear the unpaid liabilities rateably according to value." 4. IN ALL OTHER RESPECTS I confirm my Will dated 26 April 2012. SIGNED for and on behalf of [THE PROTECTED PERSON] as and for a Codicil to her last will by …………………………………, a Registrar of the Supreme Court of NSW and sealed with the seal of the Supreme Court of NSW as required by section 23(1)(b) of the Succession Act 2006 (NSW) ………………………… ("the Act") pursuant to an Order of Justice Lindsay, under section 18(1) of the Act, made on 19 June 2018

CONCLUSION

1. The fact that the codicil favoured by the Court differed, at least in form, from any of the drafts advanced by the applicant was no reason for withholding the Court's approval. Section 20(2) of the Succession Act authorises the Court to revise the terms of any draft instrument advanced by a party. The Court is obliged to give such judgment or make such order as the nature of the case requires: Civil Procedure Act 2005 NSW, section 90; Uniform Civil Procedure Rules 2005 NSW, rule 36.1. The parties were actively engaged in the process of formulating the terms of the codicil approved, with an opportunity to make submissions at each stage of the process. Ultimately, no objection was taken to the form of the document.
2. Following entry of the orders made authorising the making of the approved form of codicil, a Registrar of the Court signed and sealed the authorised codicil, a copy of which was then supplied to the parties.
3. As agreed at the time the Court's orders were made, the parties are invited to consider questions of costs in light of these reasons for judgment and, if adjudication of any costs questions is required, to arrange for the proceedings to be re-listed at a time convenient to all concerned.
4. There is no reason to suppose that the NSW Trustee cannot, in the ordinary course, have recourse to the estate of the third respondent for payment of its costs. The larger question is what, if any, orders for costs are to be made directly affecting the applicant and her siblings.
5. In accordance with the practice of the Court upon an exercise of protective jurisdiction, orders for costs do not routinely "follow the event" but are made, or not, in response to the question, "What is the proper order for costs to be made?". See Uniform Civil Procedure Rules 2005, rule 42.1; CCR v PS (No. 2) (1986) 6 NSWLR 622 at 640.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 June 2018