Doughan v Straguszi & Ors [2013] QSC 295

No appearance for the first, second, third and fourth respondents

HENRY J: This is an application for orders pursuant to s 22 of the Succession Act 1981 (Qld) that the applicant have leave to apply for an order pursuant to s 21 of the Act that a will be authorised to be made for Rose Straguszi in terms of the draft will which is part of exhibit NDC1 to the affidavit of Naomi Rowan Lahara De Costa filed in these proceedings.

The applicant's mother, Rose Straguszi, the testatrix, suffers from dementia and is without capacity to make or revoke or alter her will.

There is a will in her name in existence. It is exhibited to the affidavit of Ms De Costa. As the affidavit of Ms De Costa highlights, that will creates a variety of uncertainties and complications borne of a failure to properly deal specifically and accurately with the various assets that, in effect, comprise the family farm, but in reality are a number of separate properties. I am persuaded that it is undoubtedly prudent for a testatrix acting on proper legal advice in the circumstances of this case to do as is proposed, which is to revoke the former will and to give rise to a new will.

The problem, of course, is that the testatrix lacks capacity.

There is another problem: the applicant's brother and the son of the testatrix is presently entangled in dealings with receivers of businesses loosely described as the H & S Vision Group of companies, in which he had an involvement. That group was placed in receivership in August 2013. It is hoped that with the considerable assets of the group, all outstanding debts will be met, but if there is a shortfall there arises the prospect that Mr Straguszi could become the subject of personal bankruptcy.

The evidentiary material before me acknowledges that feature of the matter as a matter of fact, but generally speaking, the evidentiary material identifies as the reason behind the application, the creation of a new will that, in a better way than the former will, deals with how the family farm is to be held by future generations. It is reasonable to infer that the timing of this exercise is connected with Mr Straguszi's business problems, however that connection arises more as a matter of focusing minds on the testatrix's future testamentary disposition and not as a matter of altering Mr Straguszi's present ownership of assets.

The proposed will would establish testamentary trusts primarily for the benefit of the applicant and the testatrix's grandchildren, including the grandchildren through Mr Straguszi's line, along with more remote potential beneficiaries in subsequent generations. The structure that is pursued through the proposed will represents a sound approach to planning in relation to the future ownership of what I have described as the family farm. The evidence before me demonstrates a long-standing history of family connection with the property and, I accept, an undoubted intention on the part of the testatrix and each of her children that it is a property which should remain for the benefit of future generations just as it has benefitted past generations.

Setting aside Mr Straguszi's creditors, who have no actual direct interest in the present matter, those parties who might conceivably have a potential beneficial interest under the old will, have been served and have indicated that they support the application.

So far as the lack of testamentary capacity is concerned, I am satisfied on the evidence before me that the testatrix does lack mental capacity to make a will and that she is unlikely to reacquire testamentary capacity in the future. I am satisfied, generally, that it was the family's intention, including the testatrix's intention, that the farm would be kept in the family for the benefit of future generations. I am satisfied of that, not merely by reason of express statements to that effect but by reason of the broader context also of the family's history in connection with this family farm, representing as it does, the work of three generations across two families. A statement by the testatrix to her granddaughter neatly summarises the testatrix's undoubted wishes. That statement was to the effect, "Your grandfather worked all his life so that you kids could have this farm."

The applicant undoubtedly has standing to make the application and, indeed, holds an enduring power of attorney of the testatrix. She can speak for and act in the apprehended interests of the testatrix.

If the testatrix had capacity I am satisfied, on the legal advice that has been given in relation to the problems with the old will and the advantages of the sound planning reflected in the proposed will, that the testatrix would make the proposed will, that is, that she would, for the purpose of preserving the farm for the benefit of succeeding generations, make a will establishing testamentary trusts of the very kind proposed.

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.

I have been referred to the decision of Hausfeld v Hausfeld & Anor [2012] NSWSC 989, a decision of White J, in which His Honour concluded it was not appropriate for the court to authorise an alteration to a will in order to defeat the creditors of the testator's son. The circumstances of that case are different than the present. What was proposed, in effect was rather than the testator leaving a share of the estate that was otherwise going to pass to his financially embattled son, that that share would instead pass to the son's wife in the expectation she would provide for the son out of that share if the son were made bankrupt. As His Honour put it:

"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."

What is proposed here is quite different. There is no material to suggest that any part of the proposed testamentary arrangement is structured to allow someone else to provide for Mr Straguszi in the event he is made bankrupt. 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, an interest which the testatrix plainly long aspired would persist through the generations.

A further distinction from the circumstances of Hausfeld in this case is that the direct evidence of the actuating purpose is to achieve a more effective testamentary disposition, applying a sounder structure to preserve the family farm for future generations and to avoid the drafting errors and complications in the existing will.

Further to these considerations, I emphasise the obvious point that even under the old will we are dealing with nothing more than a future theoretical interest that Mr Straguszi might potentially have acquired in the future. It is not, as it were, part of his current battery of assets to which creditors might potentially have access.

Against that background, whilst I perceive it is possible that a consideration as to whether an order is appropriate might include consideration of whether an arrangement is calculated at defeating creditors, I conclude that the proposed arrangement cannot fairly be categorised in that way and I do not characterise it in that way. There is, in my view, nothing at all improper about the proposed course of action and as already indicated it is entirely consistent with what I am persuaded would be the testatrix's intentions for the future.

Against that background and for those reasons, I propose to give the requisite leave for the making of the application and in turn to grant the application. I order as per the draft order signed by me and placed with the papers.