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[2014] QCA 308
General information, not legal advice.
Court of Appeal (Qld)
2014-11-28
Muir, Gotterson and Morrison JJA, Judgment of the, Court
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Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: GAU v GAV [2014] QCA 308
PARTIES: GAU (appellant) v GAV (respondent)
FILE NO/S: Appeal No 8257 of 2014 / SC No 4919 of 2014
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane
DELIVERED ON: 28 November 2014
DELIVERED AT: Brisbane
HEARING DATE: 17 October 2014
JUDGES: Muir, Gotterson and Morrison JJA / Judgment of the Court
ORDERS: Orders 1, 2, 3, 4 and 6 delivered ex tempore on 17 October 2014. Order 5 delivered 28 November 2014.Appeal allowed.Set aside the order made on 6 August 2014.Grant leave to the Appellant, GAU, pursuant to s 22 of the Succession Act 1981 (“the Act”) to apply for an order pursuant to s 21 of the Act authorising the alteration of the will of GM dated 21 June 1998.Alteration of the said will of GM in terms of the form of codicil marked “A” attached to this order is authorised pursuant to s 21 of the Act.The appellant’s costs of the appeal and the respondent’s costs of the appeal each be assessed on an indemnity basis and be paid out of the assets of GM.Liberty to apply.
CATCHWORDS: SUCCESSION – MAKING OF A WILL – TESTAMENTARY CAPACITY – LOSS OR LACK OF CAPACITY AND STATUTORY WILLS – where the testatrix had lost testamentary capacity – where the testatrix’s will bequeathed property to her son and daughter-in-law (the respondent) – where the son and respondent have separated – where divorce and property settlement proceedings are pending in the Family Court – where the testatrix’s husband of more than 55 years filed an application to amend the will by way of a codicil pursuant to s 21 of the Succession Act 1981 (Qld) – where the learned primary judge concluded that the testatrix would have made the proposed codicil if she had testamentary capacity – whether it was appropriate for the Court to make an order pursuant to s 21 / Acts Interpretation Act 1954 (Qld), s 32CA(1) / Succession Act 1981 (Qld), s 21, s 22, s 23, s 24, s 24(e), s 25 / Boulton v Sanders (2004) 9 VR 495; [2004] VSCA 112, cited / Doughan v Straguszi [2013] QSC 295, cited / Hausfeld v Hausfeld [2012] NSWSC 989, cited / Hoffman v Waters (2007) 98 SASR 500; [2007] SASC 273, cited / Re Fenwick (2009) 76 NSWLR 22; [2009] NSWSC 530, cited / Re Matsis; Charalambous v Charalambous & Ors (2012) 8 ASTLR 361; [2012] QSC 349, cited / Saunders v Pedemont [2012] VSC 574, cited / Secretary, Department of Family and Community Services v K [2014] NSWSC 1065, cited
COUNSEL: W Sofronoff QC, with R D Williams, for the appellant / R M Treston QC, with J Brasch, for the respondent
SOLICITORS: Merthyr Law for the appellant / Phillips Family Law for the first respondent
THE COURT: Mrs GM (“the testatrix”) is now 81 years old. She and her husband, GAU, who is the appellant in this appeal, were married about 55 years ago. He is now 82 years old. They have two children, GK born in 1963 and GL born in 1968. GK married GAV in February 1998. Mrs GAV is the respondent to the appeal. She and GK have two sons now aged 13 and 10 years respectively.
The testatrix made a will on 21 June 1998 some four months after GK and the respondent married. It was prepared by Mr Derek Sutherland, solicitor. Under that will certain gifts were made to the respondent. Some are to take effect immediately upon death of the testatrix; others provisionally thereafter. The will has never been revoked.
By clause 5 of the will, a share in a private company, GK Dentist Pty Ltd,1 and two properties at White Street, Currumbin, were given to GK with provision for the share to go to the respondent and the land to go to the appellant in the event that GK not survive the testatrix for a period of 30 days. Certain jewellery, being a sapphire ring and a string of pearls, and certain furniture, being a bow front dresser and mirror and an antique rocking chair, were given to the respondent by clauses 7 and 15 respectively. Under clause 20, the residuary estate was to be held in trust for GK and GL (or their adult children if either predeceased the testatrix) and in default of taking by any of them, for the respondent.
The properties referred to in clause 5 are those at “43 and 47 White Street”. As the learned primary judge noted, since the will was made, 47 White Street was sold to finance the development of the adjacent 43 and 45 White Street. As a result there are now duplex units of an approximate value of $2.5 million on each of 43 and 45 White Street. They are worth, in total, about $5 million. The testatrix is the owner of Lots 43 and 45.2 The litigation at first instance proceeded on the footing that the gift of properties in White Street in clause 5 of the will was open to the construction that it was a gift of the improved Lots 43 and 45 (the “Currumbin properties”).
In 2002, the testatrix was placed in full-time care on account of her progressing Alzheimer’s disease which was first diagnosed in 2000. She has continued to reside in a nursing home. In 2011, she suffered a severe stroke that rendered her immobile, unable to speak and in a vegetative state. In July 2014, she suffered a generalised seizure. Specialist medical opinion is that her life expectancy now is a matter of months and that a terminal event may occur at any time.
The appellant has acted for the testatrix during her incapacity under an Enduring Power of Attorney made under the provisions of s 175A of the Property Law Act 1974 (Qld) on 29 August 1992. She thereby appointed the appellant and GK as her joint and several attorneys.
On 9 May 2014, the respondent and GK separated when the former left the matrimonial home. On 23 May 2014, GK gave the respondent an unsigned draft letter from his solicitors seeking, in effect, her agreement to a property settlement. The letter did not make reference to any expectancy he may have had under the testatrix’s will.
Shortly afterwards, on 27 May 2014, the appellant filed an originating application in the Supreme Court seeking relief under Part 2 Division 4 Subdivision 3 (ss 21-28) of the Succession Act 1981 (Qld) (“the Act”). The respondent to this appeal was named as the respondent to the application. The orders sought included a grant of leave under s 22 of the Act to apply for an order under s 21 thereof and an order under s 21 authorising the alteration of the testatrix’s will in terms of a draft codicil which was exhibited to the appellant’s affidavit sworn on 3 June 2014.3
The draft codicil was amended to accommodate concern of solicitors acting for Ingrid. In its amended form, the draft is Exhibit SG-54 to the affidavit of Mr Steven Grant, the solicitor who is acting for the appellant in these proceedings. It provided for the deletion of clause 5 of the will and the replacement of it by a clause 5 by which the share in the private company and the Currumbin properties are given to trustees of a testamentary discretionary trust of which the primary beneficiaries are GK and the testatrix’s grandchildren and great grandchildren. Under the terms of this trust, the respondent could never qualify as a beneficiary of it. In the event that GK fails to survive the testatrix for a period of 30 days, the Currumbin properties are to go to his father, the appellant5. Other alterations for which the draft provided were the deletion of clauses 7 and 15 which had become surplusage,6 and the deletion of the gift over of the residuary estate to the respondent from clause 20.
The learned primary judge accepted a submission made by the respondent that the plainly expressed intention of the application before him was “to prevent the respondent from receiving any part of [the testatrix’s] estate directly, and to the extent possible, “protect” GK’s interest from the reach of property adjustment proceedings in the Family Court of Australia”.7 There is no challenge on appeal to his Honour’s having accepted that submission.
By 3 June 2014, GK and the respondent had decided to divorce. On 12 June 2014, the respondent commenced proceedings against GK in the Family Court for property settlement orders.8
The application was heard on 23 and 24 July 2014. Both the appellant and the respondent were represented by counsel at the hearing. GK and GL supported the application but neither was separately represented. Reasons for judgment were delivered on 6 August 2014 and on that date judgment was entered refusing leave to the appellant to apply for an order under s 21. Later, on 18 August 2014, orders were made that both the applicant’s and respondent’s costs of the application be assessed on an indemnity basis and paid out of the testatrix’s assets.
On 2 September 2014, the appellant filed a notice of appeal against the judgment dated 6 August 2014. The appeal was heard on 17 October 2014. At the conclusion of the hearing of the appeal that afternoon, orders were made allowing the appeal, setting aside the judgment under appeal, granting leave under s 22 of the Act to the appellant to make the application, and authorising pursuant to s 21 of the Act alteration of the testatrix’s will in terms of an attachment to those orders. The attachment is a draft codicil which modified the exhibit “SG-5” document slightly in order to accommodate uncontroversial drafting matters.9 Costs of the appeal were reserved. The Court stated that reasons would be delivered at a later date.
Subdivision 3
Part 2 of the Act is concerned with wills. Upon enactment in 1981, Part 2 did not contain provisions comparable with those which now comprise Subdivision 3 of Division 4. Part 2 was omitted and replaced in 2006.10 It was at that point that Subdivision 3 was enacted.
Section 21 thereof confers a discretion on the Supreme Court of Queensland to authorise inter alia the alteration of a will in terms stated by the court on behalf of a person without testamentary capacity. It does so in the following terms:
“21****Court may authorise a will to be made, altered or revoked for person without testamentary capacity
(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.
(2)The court may make the order only if—
(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.”
The leave of the Supreme Court is required for a person to apply for an order under s 21. This requirement, and the discretion to grant leave, are enacted in s 22 as follows:
“22****Leave to apply for s 21 order
(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.”
Section 23 requires certain information to be given to the court at the hearing of an application for leave. This section states:
“23****Information required by court in support of application for leave
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.”
The exercise of the discretion to grant leave under s 22 is conditioned by a requirement that the court first be satisfied as to five matters. The condition is enacted in s 24 which provides:
“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.”
It remains to mention s 25, the provisions of which are:
“25****Hearing an application for leave or for an order
On the hearing of an application for leave under section 22 or for an order under section 21, the court—
(a)may have regard to any information given to the court under section 23; and
(b)may inform itself of any other matter relating to the application in any way it considers appropriate; and
(c)is not bound by the rules of evidence.”
Section 24: matters (a), (b) and (c)
After setting out the statutory framework for Subdivision 3, the learned primary judge moved to a consideration of the leave application. It was appropriate for him to have done so. He noted that, before him, there was no issue between the parties that the appellant was an appropriate person to make the application; that adequate steps to allow representation of all parties with a proper interest in the application had been taken; and that the testatrix did not have testamentary capacity. Accordingly, he was satisfied of the matters set out in (a), (b) and (c) of s 24.11
Section 24: matters (d) and (e)
Accordingly, his Honour then proceeded upon the footing that only two issues needed to be resolved in order for him to determine whether the condition in s 24 was fulfilled. One of them (the “first issue”) was whether he was satisfied that the proposed alteration to the will is or may be an alteration that the testatrix would make if she had testamentary capacity: matter (d). The other of them (the “second issue”) was whether he was satisfied that it is or may be appropriate for an order to be made under s 21 in relation to the testatrix: matter (e).
His Honour resolved the first issue in favour of the appellant, but not the second. As he had, on that account, not been satisfied with respect to all of the matters listed in s 24, he concluded that the condition for exercise for the discretion to grant leave under s 22 had not been fulfilled. For that reason, he refused the application for leave. Consistently with the refusal of leave, his Honour was not required to, and did not, decide upon the exercise of the separate discretion under s 21.
Findings on the first issue
The learned primary judge concluded that at least in respect of the Currumbin properties, the proposed codicil is or may be one that the testatrix would make if she were to have testamentary capacity.12 His Honour referred principally to the evidence of the applicant, GK and Mr Sutherland as justification for the following findings:
“From the evidence quoted above, I find that GM upon learning that GK and the respondent intended to divorce may well have sought legal advice concerning her estate planning to ensure that her assets, including the Currumbin properties, were put beyond the respondent's reach in any anticipated Family Court proceedings. I further find that GM 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.”13
The evidence of those witnesses on which these findings were based was set out by his Honour as follows:
“[43]… In this respect I give particular weight to the evidence of the applicant who has been GM’s husband for over 55 years. He believes that the significant change in the family would have caused GM, if she still had the ability to do so, to review her Will in order to remove the respondent as a beneficiary and that GM would take steps to put in place a trust under her Will to protect the assets that GK would otherwise receive outright, for the benefit of GK and his children and family (excluding GAV).
[44]GM 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.
[45]The applicant was aware from discussions that he had with his daughter GL that GM had expressed the same intention to GL. The applicant also gave evidence that GL had told him that ‘had Mum come to know what GAV had done to GK she would have left GAV nothing.’
[46]According to the applicant, GM shared a particularly close and affectionate relationship with GK and in light of GK's impending divorce from the respondent the applicant believed that had GM 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 GAV under her Will and would have protected GK's interest under her Will by way of a trust arrangement.
[47]GK's evidence is to the same effect:
‘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 GAV and intended divorce, my mother would not now regard GAV as part of the family or want GAV 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.’
[48]Mr Sutherland gave evidence that from his knowledge of GM's wishes and given the fact of GK's separation from the respondent he is confident that if GM still possessed the capacity to make a Will now, she would want to review her estate planning at this time. Mr Sutherland also gave evidence that at the time of GM 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.
[49]As to the intended use of a testamentary trust in the proposed codicil, Mr Sutherland stated:
‘I am also confident that, consistent with her statements to me about protecting and maintaining her inherited wealth, GM would be amenable to the concept of including a testamentary trust for the benefit of GK and his children. I know, from taking instructions for the preparation of GM'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.’” (footnotes omitted)
His Honour also rejected submissions for the respondent, the tenor of which appears from the following reasons that his Honour gave for the rejection of them:
“[55]The respondent’s submissions in this respect should be rejected. First, the terms of the 1998 Will make it clear that GM sought to keep the properties at 43 and 47 White Street, Currumbin within the family. This is evidenced by clause 5(b) where she left to GK her interest in those properties. It is further evidenced by clause 5(d) whereby if GK 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, Mr Sutherland gave an explanation as to why GM did not include in her 1998 Will testamentary trusts to provide a degree of asset protection for GK and GL. His evidence was that GM 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. 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, GM lost capacity within a few years of making the 1998 Will.” (footnote omitted)
In the appeal proceedings, the respondent had filed a notice of contention on 16 September 2014 in which the findings on the first issue were challenged. However, in written submissions the respondent stated that the contention was not pressed. No oral submission in support of it was advanced by the respondent at the hearing of the appeal. In these circumstance, it is unnecessary to give any consideration to it. It remains to note that in written submissions on the appeal, the appellant implied that the learned primary judge had found that the Currumbin properties were “the vestige of the testatrix’s own inheritance from her parents.”14 His Honour made no such finding and the evidence indicates that the properties inherited from the testatrix’s parent were sold after the land constituting the Currumbin properties was purchased.
Findings on the second issue
The learned primary judge commenced his consideration of the second issue with the respondent’s submission that the court could not be satisfied that it is or may be appropriate that the order sought here under s 21 authorising the alteration of the will be made. As summarised by his Honour, the reason why the respondent submitted that the court could not be so satisfied was that the discretion under s 21 should not be exercised “when the stated purpose of the statutory Will application is to ‘protect’ GK’s interest under his mother’s estate from the reach of property adjustment proceedings in the Family Court”.15
His Honour then referred to alteration of property interest provisions in the Family Law Act 1975 (Cth). He observed that GK’s expectancy under the will was a financial resource of his of which regard could be taken for the purpose of assessing what constitutes a just and equitable division of marital property, although it was not, of course, property which itself was amenable to a property adjustment order. Elaborating upon that observation, his Honour said:
“[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 GK’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 GK’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 GK’s mother was to die then GK’s inheritance is in effect placed outside the pool of assets able to be adjusted. The matrimonial pool, without GK’s inheritance is approximately $1.1m. The properties that GK 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.” (footnote omitted)
The accuracy of these observations is not challenged by the appellant on appeal.
Next, the learned primary judge turned to consider a submission made before him on behalf of the appellant that accorded primacy to matter (d).16 According to this submission, once the court was satisfied as to matter (d), only in exceptional circumstances would it not be satisfied as to matter (e) also. His Honour rejected the submission as one that was without support either expressly or by necessary implication from the provisions in subdivision 3.17
His Honour also rejected a further submission made on behalf of the appellant that he could not have any regard for the existence of the Family Court proceedings and the potential impact upon them of the proposed alterations. The basis of the submission was, it appears, that neither s 24(e) nor s 23, the provision which sets out the information to be given to the court for a leave application, refer specifically to other court proceedings. In his Honour’s view, neither provision was intended by the legislature to state exhaustively the circumstances to be considered relevant to the question of appropriateness. In any event, he considered that the proceedings and their potential impact were matters that fell within s 23(l).18
Neither of these rejected submissions was renewed by the appellant in support of the appeal.
The learned trial judge observed that the respondent did not propose, as a matter of principle, that in every case “where there is a related Family Court issue… it will, in all the circumstances, be appropriate to refuse an application pursuant to s 21”.19 He then noted the particular factual matrix which the respondent submitted resulted in it not being appropriate to authorise the proposed alterations in this case. He said that they included:
“ …
(a)the long marriage, 17 years;
(b)GM’s short life expectancy;
(c)the size of the potential inheritance for GK (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 GK and the respondent;
(e)the date of the marriage breakdown (3 May 2014);
(f)the date of this application (4 June 2014);
(g)the respondent’s uncontested evidence that GK’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 GK and the respondent's knowledge that GK, 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’ GK’s interest under the Will;
(i)the expressed intention of the applicant to make sure that the respondent did not obtain any part of GK’s inheritance.”20 (footnote omitted)
The learned primary judge then referred to two decisions at first instance in Queensland relied on by the appellant where alteration of wills had been authorised under subdivision 3, namely, Re Matsis; Charalambous v Charalambous21 and Doughan v Straguszi.22 He regarded each as distinguishable on its own facts and as illustrative of the truism that 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.23 To that, he added the following qualification:
“Those considerations however must extend beyond the identified intentions of the person who is lacking testamentary capacity. That is because the authority to make a statutory Will or alteration to an existing Will is an exercise of curial discretion.”24
After a brief reference to the decision at first instance in New South Wales in Hausfeld v Hausfeld,25 where leave to apply for authorisation of an alteration of a will of a father who lacked testamentary capacity was refused on the footing that the court was not satisfied that it is or may be inappropriate so to authorise, the objective of the alteration being to defeat the creditors of the son who was involved in litigation, his Honour returned to the broad question of distinguishing between circumstances where it is or may be appropriate for an order to be made under s 21 and those where it is not, or may not be, appropriate to do so. He observed:
“The question is where is the line to be drawn? Minds may differ in this respect. Ultimately the line must be drawn by reference to the circumstances of each individual case.”26
In the paragraph which immediately follows, paragraph [82], his Honour set out his reasons for not being satisfied as to matter (e). He said:
“Here the proposed codicil and the use of testamatory (sic) trusts has as its purpose protecting the assets GK 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.27 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 GM for the purposes of s 24(e) of the Act.”
Having so found, his Honour then refused leave under s 22(1) to apply for an order under s 21.28
The grounds of appeal
The following grounds of appeal are set out in the appellant’s notice of appeal:
“1.The learned judge erred in law in failing to give reasons why a codicil which, as his Honour found, was ‘intended … to impact pending Family Court proceedings’, but which his Honour did not find would have any effect, was a reason to decline to make the order to amend the will.
His Honour erred in the exercise of his discretion in:
(a)relying upon the fact that the proposed codicil ‘may have a direct or indirect impact on the property pool available in the present Family Court proceedings’ as a basis upon which he could not be satisfied that ‘it is or may be appropriate for an order to be made under s.21’ of the Succession Act 1981 when, as his Honour found, ‘[i]t cannot be assessed at this stage whether any such attempt to place the assets beyond the reach of the Family Court would be successful’;
(b)omitting to consider whether the fact that the testatrix wished to exclude the respondent as a beneficiary (as his Honour found) overrode, as a factor in the exercise of the discretion, the possible effect upon the respondent’s prospects as the wife of a beneficiary under the will (however poor they might be and without finding what they actually were) in the Family Court proceedings in order to consider whether, if that fact did override the respondent’s prospects, it was appropriate to make the order;
(c)omitting to take into account the fact that the precise change in the will which his Honour found was desired by the testatrix, namely to exclude the respondent as a beneficiary, required that the respondent would lose the benefit of the bequests in the current will;
(d)omitting to consider how to balance the wishes of the testatrix to exclude the respondent as a beneficiary (as his Honour found) against the wish of the respondent to retain the benefit she enjoyed under the current will and, instead, considering the respondent’s position in isolation;
(e)omitting to make any finding concerning whether the making of the order would have any effect at all upon the respondent’s case in the Family Court and, without making any such finding, declining to make the order upon the footing that the proposed codicil ‘is intended however to impact pending Family Court proceedings’.”29
The appellant’s written and oral submissions did not address each ground separately in the order they are set out. Some were addressed together. Broadly, they were all directed towards challenging his Honour’s findings with respect to s 24(e). Each party contended for a different approach to the scope of operation of that provision and devoted time in oral submissions to the issue. Although it is strictly not necessary to decide if either of those approaches is correct in order to determine this appeal, some attention to those submissions by this Court is warranted.
The scope of operation of clause 24(e)
The difference in approach to the scope of operation of clause 24(e) ventured by each party is attributable in large measure to a difference between their respective submissions as to the role that the leave requirement in s 24 has. The leave requirement is a composite of the requirement for leave in s 22(1) and the constraint on granting leave in s 24. This requirement has analogues in the statutory wills legislation in other jurisdictions within Australia. Overall, that legislation has its origins in the work of certain state law reform commissions and the National Committee for Uniform Succession Laws for the Australian States and Territories.
The appellant referred the court to a 1992 report of the New South Wales Law Reform Commission30 which described the intended purpose of a leave requirement which it included in draft statutory will legislation31 as being “to screen applications and allow only adequately founded applications to proceed”. It would address a concern for frivolous or vexatious applications.32
It appears that the statutory will provisions proposed for New South Wales in 1992 were not enacted at that point. Developments in other states occurred: in 1994 draft statutory will provisions were prepared by the Victorian Law Reform Committee33 and the statutory will provisions to which reference has been made were enacted in South Australia in 1996. Both contained a leave requirement. A report in late 1996 by the National Committee lead to a Consolidated Report about a year later which included a draft for a model Wills Bill 1997. The leave requirement in it was substantially in the form of that contained in clause 6 of the Victorian draft.
In December 1997, the Queensland Law Reform Commission (“QLRC”) published a report on the law of wills to which the respondent referred the Court.34 It recommended35 the adoption in Queensland of the statutory will provisions in the model draft Wills Bill which was Appendix 2 to its report. Specifically, the QLRC expressed a preference for the clause 6 draft insofar as it required that the information to be furnished to the court be furnished at the leave stage rather than later at the authorisation stage.36 In support of the preference the QLRC commented that a court would be unlikely to grant leave without having most of that information and that if that information was available to the court at that stage and leave was granted, the court could move directly to the authorisation stage in a straightforward case where no further evidence or substantial argument was required, thus saving time for both the parties and the court.37
The appellant submitted for a “screening” role for the leave requirement. Reference was made to a number of authorities from other states in support of the submission. In Boulton v Sanders,38 Dodds-Streeton AJA (with whom Ormiston and Charles JJA agreed) observed that the leave requirement was one that permits baseless and unmeritorious applications to be screened out at an early stage. To similar effect, in 2007, Debelle J in Hoffmann v Waters39 attributed to the leave requirement in s 7(1) of the Wills Act 1936 (SA) a role of providing “a process by which to screen out baseless or unmeritorious applications”. His Honour’s observations were cited by Palmer J of the New South Wales Supreme Court in Re Fenwick40 in 2009 in the course of discussing the leave requirement in s 19(1) of the Succession Act 2006 (NSW).
By contrast, the respondent submitted for a much more significant role for the leave requirement, a role which would make the authorisation application all but redundant. In support of that submission, reference was made to the observations at first instance of Habersberger J in Saunders v Pedemont.41 After referring to the observation of Dodds-Streeton AJA in Boulton v Sanders mentioned earlier in these reasons, his Honour said:
“With the greatest respect, I doubt that this observation is accurate. In order to obtain leave an applicant must satisfy the Court of the three critical requirements in s 26 and, if required by the Court, give the information set out in s 28, which means putting all relevant evidence before the Court. Leave should only be refused after all of these matters have been taken into account. On the other hand, once leave has been given, it is extremely unlikely, in my opinion, that an order authorising a will to be made would be refused by the Court. It is, therefore, very hard to see why the second step was thought to be necessary as it seems to me that it serves no useful purpose.”
Each of these two versions of the role of the leave requirement needs to be viewed cautiously as a reliable informant of the role of the leave requirement in the Act. On the one hand, there is nothing in the text or context of the provision enacting the requirement which limits its role to screening out vexatious or unmeritorious claims. Moreover the comments of the QLRC suggest a role broader than that. On the other hand, the terms of the leave provision in the Victorian legislation considered by Habersberger J compel a considerably more comprehensive examination by the court of what is proposed at the leave stage, than do the terms of s 24 of the Act. Under s 26(c) of the Victorian legislation, in order to grant leave, the court must be satisfied that it is reasonable in all the circumstances for the court to authorise what is proposed. By contrast, under s 24(e) of the Act the court must be satisfied that it is or may be appropriate to make an order authorising what is proposed.
The role of the leave requirement in the Act is best ascertained from the words of the provision itself and its statutory setting. Leave of the court is necessary for a person to apply for an order under s 21: s 22(1). The court “may” give leave: ss 22(2); 24. Power to grant leave is thereby given to the court to be exercised or not exercised, at discretion42 but in accordance with the provisions of the Act. By virtue of s 22(2), leave may be given on the conditions the court considers appropriate. Section 24 imposes a substantial constraint upon the exercise of the discretionary power to grant leave. The court may exercise the power to grant leave only if it is satisfied of the five matters listed in the section. Unless so satisfied as to each of them, the court may not grant leave.
It is clear from the structure of subdivision 3 that the discretionary power to grant leave is distinctly separate from the discretionary power conferred under s 21 by which the court may authorise, inter alia, the alteration of a will on behalf of a person without testamentary capacity. The exercise of that power is constrained by the provisions of s 21(2).
Both discretionary powers are contained within subdivision 3. It confers a jurisdiction which is protective in nature and is informed by the protective jurisdiction historically exercised by the court over persons without testamentary capacity. As Lindsay J of the New South Wales Court of Appeal observed recently in Secretary, Department of Family & Community Services v K,43 that jurisdiction is purposive; the purpose being, at its highest level of abstraction, protection of a person in need of protection. So grounded, the jurisdiction is broad in scope and flexible in nature. Its guiding principle is that whatever is done, or not done, for or on behalf of the person in need of protection must be for the benefit, and in the interests, of that person.
The scope of operation of clause 24(e) is to be discerned against that background and by reference to the words of the provision itself. It is clear from those words that the court need be satisfied that an order under s 21 is, or may be, appropriate, and no more. The court need not be satisfied that such an order is appropriate; satisfaction that it may be appropriate will suffice. The nature and extent of the enquiry the court need undertake is so informed: the enquiry need only be one that is sufficient for the court to be satisfied as to appropriateness of making an order under s 21, at either level. Where the court is not satisfied at either level, it may not give leave.
The court undertakes the enquiry with regard to the information provided to it pursuant to s 23. As Lindsay J also observed,44 that information is designed to allow the court to be placed in the position to make broad evaluative judgments about the personal, and family, circumstances of the person alteration of whose will is sought.
Speaking of those specified matters in the context of the New South Wales legislation, Palmer J noted in Re Fenwick:45
“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.
Some of the requirements of s 19(2) are so obvious that they need no elaboration; others require a little examination.
Paragraphs (e) and (g) in s 19(2) provide the Court with the means of taking into account the incapacitated person’s wishes, if known. However, as I have earlier remarked, the Court must, under s 22(c), assess objectively whether, and to what extent, it is ‘appropriate’ to accede to those wishes. The Court must be sure that the incapacitated person’s expressed wish is not irrational or the product of pressure or influence.”
Thus, the assessment at the leave stage of appropriateness of making an order under s 21 is made objectively with reference to the matters given to the court pursuant to s 23 and such other matters as the court considers relevant. Importantly, it is undertaken with conscious regard for the fact that making an order under s 21 is an exercise of a jurisdiction which is protective in nature and informed by what is for the benefit, and in the interests, of the person who requires protection.
The challenge to the decision on the s 24(e) matter
The appellant submitted that paragraph 82 of the reasons for judgment express the totality of the reasoning of the learned primary judge as to why he could not be satisfied that it is or may be appropriate for an order to be made under s 21 in this case. In that paragraph his Honour repeated what he had found was the asset-protection purpose of the application. He observed that while it could not be assessed at that point whether the purpose would be fulfilled or not, it could be said that the proposed codicil may have a direct or indirect impact on the property pool available in the Family Court proceedings. Next, he noted that the proposed codicil did not offend the policy of the law as was the case with the perceived purpose in Hausfeld. He again referred to the purpose here and then concluded with the finding that he could not be satisfied as s 24(e) requires as a condition for exercise of the power to grant leave.
The submission made by the appellant that paragraph 82 exhaustively states the consideration that informed the finding is an accurate one. The criticisms on legal grounds of the finding made by the appellant have several bases.
At the level of failure to have regard to relevant considerations, the appellant first submits that in considering whether he was satisfied for the purposes of s 24(e), his Honour had regard only to the purpose that he had found was behind the application. This was a purpose which, if achieved, would be to GK’s advantage in the Family Court proceedings. His Honour did not refer to, nor apparently have regard for, the compelling evidence that went well beyond establishing that the codicil is not merely one that the testatrix is or may make if she had testamentary capacity. On that evidence, it is highly likely that the testatrix would make it, and make it rationally and without pressure.
A second criticism is the failure of his Honour to explain whether, or how, he balanced the one other factor that he did mention – that the proposed codicil did not offend the policy of the law – against the purpose he had found. The structure of the paragraph is apt to suggest that the factor, though identified, may not have then been taken into account meaningfully as a balancing consideration.
The criticisms that the appellant makes are valid ones. Most tellingly, there was a failure by the learned primary judge to have regard to the likely wishes of the testatrix and to the resolve with which she herself would likely act to see to it that they were carried out, had she testamentary capacity now. As a consequence, in the consideration of the s 24(e) matter, primacy was given to the competing interests of the testatrix’s son and daughter-in-law as between themselves in the Family Court proceedings. Her interest as testatrix in how her testamentary power over her own property fell to be exercised in the circumstances appears to have been quite overlooked. There was therefore a failure to have regard to relevant considerations.
That is not to say that the purpose as found was an irrelevant consideration. It does have some relevance to the matter. However, its relevance is towards the margins, given that the competing claims of the testatrix’s son and daughter-in-law in the Family Court proceedings are over their marital property. They are not claims made upon the testatrix’s bounty.
Conclusion on this challenge
For these reasons, the finding by the learned primary judge with respect to the s 24(e) matter is legally flawed. That flaw has infected the refusal of leave to the appellant to apply for an order under s 21 for authorisation of the making of the proposed codicil. It follows that the appeal against the refusal of leave must be allowed and the decision to refuse leave be set aside.
Disposal of the applications
When an appeal is allowed, r 766(1)(b) of the Uniform Civil Procedure Rules permits this Court to draw inferences of fact and make any order the nature of the case requires. In this case, that rule will allow the Court to make orders on both the application for leave pursuant to s 22(1) and the application for authorisation pursuant to s 21(1).
As to leave, the unchallenged findings of the learned primary judge as to the matters in s 24(a) to (d) may be accepted. With regard to the s 24(e) matter, the evidence, especially that summarised by his Honour and repeated at paragraph 24 of these reasons, warranted the finding that was made 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”. That evidence went so far as to justify further findings, firstly, that in seeking and accepting such advice, the testatrix would be acting both rationally and free of pressure from others, and, secondly, that it was very likely that the testatrix would give instructions for the implementation of that advice. Those further findings should be made by this Court.
The totality of findings on the s 24(e) matter referred to in the immediately preceding paragraph sufficiently indicate that, at least, it may be appropriate to make an order under s 21(1) in relation to the testatrix. There should therefore be an order pursuant to s 22(1) of the Act granting leave to the appellant to apply for such an order.
With regard to the application under s 21(1), those same findings also support the making of an order under that section in this case. To them may be added further considerations of significance. First, authorisation of the proposed alteration of the will by codicil would be in the interests of the testatrix because it would facilitate the taking of a step that she herself would most likely take were she able to do so. Secondly, it is a step that she would be freely able to take herself in organising the testamentary fate of her own property were she able to do so. Thirdly, as senior counsel for the respondent conceded in argument, for her to take such a step would neither offend the policy of the law nor exhibit moral obloquy on her part.46
The factors addressed by these findings and considerations combine forcefully in favour of exercising the discretionary power in favour of the application.
Against exercise of the power is the consideration to which his Honour did have regard in refusing leave. As explained, the relevance of that consideration is, in the circumstances, towards the margins. It does not by any means balance the combined weight of the factors and considerations in favour of its exercise.
For these reasons, an order under s 21(1) of the Act is warranted authorising alteration of the will of the testatrix dated 21 June 1998. The authorised alteration of the will ought to be by way of a codicil substantially in the form of the exhibit “SG-5” document with the modification described in paragraph 13 of these reasons. The modified document is referred to in the orders made on 17 October 2014 as “the form of codicil marked “A” attached to this order”.
Costs
There is no appeal by either party from the costs order made on 18 August 2014. As to the costs of this appeal, the Court is of the view that a similar order should be made. To this point, the meaning and application of these significant statutory provisions had not been considered by this Court. There was no decision of this Court to provide guidance to the parties in that regard. In view of the order made and reasons given below, the respondent was justified in actively defending this appeal.
Orders
For the reasons now given, Orders 1, 2, 3, 4 and 6 were made on 17 October 2014 and Order 5 is now made. The orders of the court are:
Appeal allowed.
Set aside the order made on 6 August 2014.
Grant leave to the Appellant, GAU, pursuant to s 22 of the Succession Act 1981 (“the Act”) to apply for an order pursuant to s 21 of the Act authorising the alteration of the will of GM dated 21 June 1998.
Alteration of the said will of GM in terms of the form of codicil marked “A” attached to this order is authorised pursuant to s 21 of the Act.
The appellant’s costs of the appeal and the respondent’s costs of the appeal each be assessed on an indemnity basis and be paid out of the assets of GM.
Liberty to apply.
This company conducts the dental practice in which GK practises. The share was issued to the testatrix for the purpose of compliance with provisions of the Corporations Law which at that time required a private company to have at least two shareholders. ↩
Reasons [23], [24]. ↩
Exhibit 4 to Affidavit: AB153-167. ↩
AB231-245. ↩
There was no similar provision for the share in the private company. There is uncontested evidence that the testatrix holds it as trustee for GK absolutely. ↩
After the will was made, the testatrix disposed of both the jewellery and the furniture to which these clauses relate. ↩
Reasons [20]. ↩
An application for an urgent listing of an application for an interim injunction also sought in those proceedings, restraining the appellant (and GK) from prosecuting the application in the Supreme Court was refused by a judge of the Family Court on 21 July 2014. ↩
The principal modification was to delete any reference to the share in the private company from the substituting clause 5 in the draft codicil. ↩
Succession Amendment Act 2006 s 6. ↩
Reasons [38]. ↩
GAU
GAV [2014] QCA 308
(2004) 9 VR 495
(2007) 98 SASR 500
(2009) 76 NSWLR 22
Reasons [56]. ↩
Reasons [51]. ↩
Outline para 3, referring to Reasons [9]. ↩
Reasons [58]. ↩
For the purposes of discussion, his Honour adopted the terminology used by the appellant’s counsel that satisfaction as to matter (d) was the “core test” in s 24. ↩
Reasons [65]. ↩
Reasons [67]. ↩
Reasons [70]. ↩
Reasons [71]. ↩
[2012] QSC 349; (2012) 8 ASTLR 361. ↩
[2013] QSC 295. ↩
Reasons [77]. ↩
Ibid. His Honour had previously cited a statement in Re Will of Jane [2001] NSWSC 624 at [96] to the effect that the consent of all interested parties to an alteration of a will in this jurisdiction was not conclusive as to appropriateness: Reasons [68]. ↩
[2012] NSWSC 989. ↩
Reasons [81]. ↩
At [13]. ↩
Reasons [83]. ↩
AB896-897. ↩
Report 68 (1992) – Wills for Persons Lacking Will-making Capacity. ↩
Appendix A. The requirement was contained in a proposed s 32FF for the Wills, Probate and Administration Act 1898 (NSW). ↩
At para 2.14. ↩
Clause 6 of a draft Wills Act 1994 (Vic). ↩
Report No 52, The Law of Wills. ↩
At p 71. ↩
That is to say, the information that now is to be provided under s 23 of the Act. ↩
As s 22(3) of the Act envisages may happen. ↩
(2004) 9 VR 495 at [11]; [2004] VSCA 112. ↩
(2007) 98 SASR 500; [2007] SASC 273 at [10]. ↩
(2009) 76 NSWLR 22 at [119]; [2009] NSWSC 530. ↩
[2012] VSC 574 at [9]. ↩
Acts Interpretation Act 1954 (Qld) s 32CA(1). ↩
[2014] NSWSC 1065 at [60], [61]. ↩
Ibid at [73]. ↩
Supra n40 at [190]-[192]. ↩
Tr1-27 LL7-10. ↩