Succession Law Reform in NSW – 2011 update

Speech by Rosalind F Croucher^*, Succession Law Conference, Blue Mountains Annual Law Conference, 17 September 2011

1. Introduction

Last year I had the chance to speak at this conference about the implementation of the uniform succession laws project, driven by a National Committee. Rather than do an ‘update on an update’, I thought I would concentrate in today’s presentation on some of the knottier and more frequently litigated areas of succession law.

I am assuming a reasonable familiarity with the basics in the areas and an appreciation that the various statutes have been consolidated into the Succession Act 2006 (NSW), although the old law remains largely relevant, particularly in relation to wills and family provision.

2. Wills

Under this heading I will cover the following topics: dispensing powers, rectification of wills and statutory wills. I will also mention the right to inspect wills.

2.1 Dispensing powers

From the mid 1970s, when South Australia first introduced one, powers to dispense with strict compliance in the area of wills formality have become part of the law in all states and territories.^[1] In New South Wales the dispensing power is now found in s 8 of the Succession Act 2006. They are generally quite straightforward now after over 20 years of experience with the power in NSW. In a paper given to the Society of Trusts and Estate Practitioners in late July this year, Hallen AsJ remarked that he considered the law to have developed to the point that ‘they now rarely progress to a contested hearing’.^[2] I will give you a couple of recent examples: Estate of Johnston [2010] NSWSC 382, Slattery J and National Australia Trustees Ltd v Fazey; Estate of Nancy Elaine Lees [2011] NSWSC 559, Windeyer J.

The requirements in s 8 are essentially those of the old s 18A of the WPAA. There must be a document which purports to state the testamentary intentions of the deceased and the Court must be satisfied that the deceased intended the document to form his or her will. The intention can be formed after the document was prepared.

Johnston concerned an unwitnessed testamentary document, headed ‘the Last Will and Testament’ etc. Throughout the document is described with the words ‘this my will’. He also prepared a ‘memorandum of wishes’ with respect to a trust. The testator spoke and gave instructions to his financial advisers to create the documents. On the day of execution a Mr Langsford was called in to witness the signing of the wills of Mr and Mrs Johnston. Mr Langsford witnessed the Memorandum of Wishes, but there were no witnesses to the will.

Slattery J compared the language of the old s 18A and s 8 and considered that there was no difference in the structure of them, so the old authorities were relevant.^[3] The key questions are, therefore, the same:

•  Is there a document? 
• Does the document embody the deceased’s testamentary intention? 
• Did the deceased intend the document, without more, to operate as a will or codicil?^[4]

The approach to be taken is also to be continued, namely, that the section ‘should not be applied with too stringent a requirement of proof that a propounded document otherwise clearly embodying the testamentary intentions of the deceased does constitute his will’.^[5]

In this case what was particularly telling was the ‘joint execution ceremony’, which was ‘difficult to explain … other than as to make their wills’.^[6]

The Lees case concerned a notepad. Mrs Lees made an appointment to see a lawyer, Mr Sharpe, about her will on 19 August 2009. She wrote a note to this effect on the notepad. On the same piece of paper she wrote notes about ‘My will’ with a page with a list of names of people who had written to her after her husband’s death. A separate page had a clear list of what she intended in her will, headed “Mr Sharpe—My Will”. On 16 August 2009 Mrs Lees was admitted to hospital. She had the notepad with her. A conversation is reported in which Mrs Lees said:

You have to make sure that you don’t tear any pages off it and it remains intact. These are my final wishes and you have to keep my appointment with the lawyer, David Sharpe, on Tuesday. …

You need to take the notebook to David on Tuesday and tell him that these are my final wishes. He will know what to do. You must keep my appointment.^[7]

Mrs Lees got progressively worse that day. By the evening another conversation is reported in which she said, ‘In my bag there is a notebook stating my wishes which must be carried out. This cannot be contested. I have made and appointment with David Sharpe, he is the solicitor I rang you about.’^[8]

The difficult issue in cases of draft wills, or notes for wills, such as these, is whether the deceased intended the document without more to form her will. As Windeyer J observed,

Great care must be taken in determining this question. Many people write out proposals for their wills on pieces of paper headed ‘will’ but often these are no more than present thoughts not testamentary intentions and certainly not intended to be wills.^[9]

Windeyer J considered that the document in question here was written as a list of instructions to her solicitor for the preparation of a new will. Mrs Lees was familiar with wills, as she had made one before, and she had made an appointment with her solicitor to make the new will. The note was addressed to him. Did this position change after that? When she knew she was not going to be leaving the hospital and was not going to be able to make the appointment with Sharpe, did her intentions with respect to the document change? Did it have the effect ‘of turning a document containing last wishes to be given to Mr Sharpe for his further attention into a document intended to be a will’?^[10]

Windeyer J took into account the fact that the document was not signed, although, as he observed, Mrs Lees may not have been able to sign at the relevant time. He concluded that when she said ‘in my bag there is a notebook stating my wishes which must be carried out. This cannot be contested’, she did at that stage have that intention.^[11]

2.2 Rectification

The power to rectify a will is now found in s 27, which provides that:

(1) The Court may make an order to rectify a will to carry out the intentions of the testator if the Court is satisfied that the will does not carry out the testator’s intentions because:

1. a clerical error was made, or
2. the will does not give effect to the testator’s instructions.

(2) A person who wishes to make an application for an order under this section must apply to the Court within 12 months after the date of the death of the testator.

This provision constitutes what the National Committee described as ‘the middle ground’^[12]—between the broad provision in the ACT, permitting the court to rectify a will to accord with the ‘probable intentions’ of the testator;^[13] and the Queensland provision, which was confined to cases where material was ‘accidentally or inadvertently omitted from the will’.^[14] For New South Wales, however, this provision actually winds back the rectification power previously in place. The old provision—s 29A of the Wills, Probate and Administration Act 1898—went beyond cases where the will does not give effect to the testator’s instructions, to cases where the will did not give effect to the testator’s intentions. The model clause is much narrower, confining the cases of failure to give effect to intentions only to where there was a clerical error or a failure to give effect to instructions (ie that instructions must have been given in the first place). Although it remains to be seen whether this difference is more apparent than real, there would clearly be a difference in the context of homemade wills, where there are no instructions to rectify.

In Estate of Davis; Application of May [2010] NSWSC 989, Palmer J held in a very brief ex tempore judgment that the testator’s intention ‘clearly miscarried by a typographical error when the will was finally prepared’. The case concerned the will of the late Mary Juletta Davis. The affidavit of the solicitor who took instructions for the will and drafted it revealed ‘the clearest case of error in complying with the intentions of the deceased’.

It is very clear from that affidavit that the deceased intended to divide her residuary estate into six portions and that one of those portions was to go to her son, Justin, and his then wife, jointly. That intention clearly miscarried by a typographical error when the will was finally prepared because Justin’s name was included twice. The error was not detected by the solicitor prior to the execution of the will by the deceased.^[15]

The Plaintiff sought rectification by the deletion of the name of Mr Justin Davis from this clause. That rectification would have the effect of dividing the estate into six, rather than seven, parts, and the last of the six parts would be given to Mr Justin Davis jointly with his then wife. It was easily sorted. There was clearly a ‘clerical error’ within s 27(1)(a).

In Estate of Betty Tait; Vesco v Bannister [2010] NSWSC 1274 other problems arose. The case concerned Betty Tait’s will, executed on 30 October 2007. One gift to her daughter, Sandra Vescio, included ‘my entire interest and estate in my home known as 11 Grevillea Street, Collaroy Plateau together with all the furniture and contents therein’. Sandra sought to have this rectified to ‘my entire interest and estate in my home at the time of my death including any accommodation bond refund from a retirement unit’.

The problem on the facts was ademption—that the will as drafted did not take into account changes in the property that might occur. It’s in the list of things to look out for in ‘Will-drafting 101’. The testator might have been quite clear, that it was that property, but it’s the kind of thing that needs to be explored in taking instructions. Sandra obviously wants the effect of the gift by a transposition to the equivalent asset at the date of her mother’s death. Can rectification get her there?

It was not a typographical error. But was it not giving effect to the testator’s ‘instructions’? Barrett J made a number of observations about s 27. First, because of the reference to ‘instructions’ it seemed to follow that s 27(1)(b) ‘cannot apply to a will composed and written by the testator personally’.^[16] In this case the will was drawn by a solicitor and there is evidence about the communication of instructions, ‘in the sense of expression by her of her wishes as to how her estate should be disposed of by the will the solicitor was asked to prepare’.^[17] What then of the relationship to ‘intentions’?

Having ascertained ‘the testator’s instructions, the court must construe the will as executed and compare its effect, according to its proper construction, with those ‘instructions … . Only if some discrepancy appears can an order be made under s 27; and the only permissible order is one that causes the will to be in a form that carries out the testator’s ‘intentions’.

It follows that the court must also make findings about the ‘intentions’ of the testator—necessarily, of course, the ‘intentions’ existing when the will was made. It is those ‘intentions’ that any rectifying order must reflect. Although the legislation does not expressly say so, it must, I think, be inferred that the ‘intentions’ of the testator correspond, as to content, with the ‘testator’s instructions’. I say this because, in the ordinary course, a testator’s intention is that his will should implement the instructions he gives for its preparation. It is with that intention that s 27(1)(b) is concerned.^[18]

The focus was therefore upon the instructions and the notes of these in the file of the solicitor who prepared the will. Barrett J identified one passage of key relevance in a note dated six days before the will was executed: ‘If the house has been sold to fund a retirement unit, then the residue is to be divided’. There was also an undated note in the file to the effect that ‘Name down for Anglicare unit at Warriewood’ and notes of the deceased’s wish to benefit Sandra more than her son, Christopher. What was not clear from the notes was ‘the fate or destination of the contemplated retirement unit itself’, although a range of possibilities presented themselves.

There was also other evidence to consider. When the Grevillea St property was sold, the same solicitor acted. He recorded in notes at the time that the will needed to be changed respecting the property. A new will was prepared in May 2009 changing the reference to the house to ‘all of the monies which will be refunded from RSL Lifecare for the residency agreement that I am a party to for Villa 1 …’. The testator was very ill and died without executing this new will.

Barrett J considered the instructions given at the time of the first will and concluded that they had dealt expressly with the disposition of any residue or balance remaining after the sale of the Grevillea St property and its replacement in the form of a retirement unit. The inference was that any replacement was ‘to be treated in the same way as that house’.

The inference to this effect is strengthened by the fact that, after completion of the transactions of early 2009, there was express reference by the deceased to a need to make specific provision regarding the replacement or substitute and thereby to make explicit what was already implicitly part of the deceased’s intentions at the time she made her will.^[19]

The order made was not in the precise form sought. Barrett J ordered that the will be rectified by adding to the relevant clause concerning the Grevillea St property ‘(or in any retirement unit acquired with proceeds of the sale of that home, whatever may be the form of ownership of that unit)’.

What is interesting about this judgment is that what became crucial was evidence of transactions after the date of the will and the terms of a subsequent will, which were admitted to assist in finding the intentions of the testator with respect to the original will. This looks to be a bit of a stretch, but it did bridge some of the gap in the alteration of the legislation effected by the 2006 Act.

From a practitioner’s point of view the case reiterates the importance of keeping clear notes of instructions, as they may be called upon to assist in explaining aspects of the will and are clearly admissible in a rectification matter. The case is also important in reminding us about the need to think carefully about changes in property and also the possibility of beneficiaries predeceasing the testator—and to build this into the drafting.

2.3 Wills for those lacking capacity

New South Wales already included the jurisdiction to make a will for a minor, now in
ss 16–17 of the Succession Act, based on the minor’s understanding of the proposed will, but the new statutory will provision goes much further, allowing the court to make a will for a person who has no understanding at all.^[20] Such a power was introduced in the United Kingdom in 1969—through an amendment to the mental health legislation^[21]—sitting within the overall parens patriae jurisdiction of the court and as part of the regime for the protection and management of the property and affairs of persons under disability. I refer you to a study I made of the background to the introduction of the provision and its application in Australia, published in the University of New South Wales Law Journal in 2009.^[22]

Under s 22 of the Succession Act, the court needs to be 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.

The key passage is that the will is one that would have been made or is reasonably likely to have been made—s 22(b).

In New South Wales, Palmer J provided an excellent foundation for the application of the statutory will provisions in his landmark decision in Re Fenwick; Application of Fenwick & Re Charles [2009] NSWSC 530. (I talked about this case last year). Palmer J distinguished between three categories of people on whose behalf an application for a statutory will might be made:

•  adults with prior testamentary capacity (‘lost capacity’ cases)
•  persons who have never obtained testamentary capacity (‘nil capacity’ cases)
•  minors with prior testamentary capacity (‘pre-empted capacity’ cases).^[23]

The differences between the jurisdictions are irrelevant in cases where a person never had capacity. In categories of ‘lost capacity’ there may be well be differences. For New South Wales, Palmer J suggested that the question to ask is whether there is ‘a fairly good chance’ that the proposed will would represent the actual intentions of the person in question if the person were now of testamentary capacity and aware of the circumstances.^[24] In a case where a person has made a valid will but, since lost it:

… the Court may be satisfied as to what the incapacitated person is “reasonably likely” to have done, in the light of what is known of his or her relationships, history, personality and the size of the estate. The previous will may give a very good indication of the incapacitated person’s testamentary choices and preferences such as to provide evidence of what it is likely he or she would now do in the changed circumstances.

For example, the will, coupled with family history, may show that it would be highly unlikely that the incapacitated person would have intended failure of a residuary bequest to create an intestacy because intestacy would benefit relatives with whom the person was not on good terms. In such a case, the Court would be satisfied that the incapacitated person would likely have made another residuary bequest; the question then is: does the proposed codicil confer the bequest on a person or charity whom or which the incapacitated person is reasonably likely to have chosen?^[25]

In contrast, where the person never made a will:

… the Court ought not to start with a presumed intention against intestacy. The Court must be satisfied by the evidence that it is “reasonably likely”— in the sense of “a fairly good chance”— that the person would have made a will at some time or other, had not testamentary incapacity supervened.^[26] …

The point I wish to make is that in a lost capacity case where no will has ever been made, there will generally be some evidence which, even though it may be slight, will satisfy the Court that there is a fairly good chance that the incapacitated person either intended at some stage to make a will or else intended to die intestate. In the latter case, of course, the Court will not approve a statutory will. If there is insufficient evidence for the Court to form any view one way or the other, then the applicant will have failed to discharge the burden of proof which he or she bears under s 22(b) and the application must be dismissed.

In summary, in a lost capacity case, the Court’s concern under s 22(b) is with the actual, or reasonably likely, subjective intention of the incapacitated person. ^[27]

Re Will of Jane [2011] NSWSC 624 is an example of ‘lost capacity’. The relevant person, dubbed ‘Jane’ in the case, suffered dementia. She had made wills before and has three children, benefited equally under the last relevant will as they would also if she were to die intestate. The report occupies some 74 pages. It is carefully analysed and presented by Hallen AsJ, so provides an instructive example of how these matters are considered under the relevant sections.

Jane’s son sought the making of a statutory will for his mother, in terms which appointed the Public Trustee as executor and left the whole estate to the son absolutely. If he were not to survive his mother, there was proposed a substitutional gift to three charities.^[28] The estate at the time of the application was about $2 million. The plaintiff was born in 1962. He and his father cared for his mother, and he continued to do so after his father’s death in 2007. From the end of 2008 Jane was in a nursing home. She is now 86.

The plaintiff’s siblings oppose the application. I will leave you to read through the tortured details yourself. Suffice it to say that the application was dismissed. A key message is that ‘[i]t is a serious matter for the Court to appropriate to itself the will-making power of the citizen’.^[29]

Hallen AsJ provides a succinct analysis of the relevant law, referring extensively to Re Fenwick. In describing the statutory prerequisite for the making of the statutory will, he said:

If an actual intention cannot be established, the sub-section speaks in the chameleon-like language of reasonable likelihood. The degree of satisfaction that the phrase ‘reasonably likely’ contemplates is difficult to discern. The phrase has a different connotation from the single word ‘likely’. The qualifying adverb ‘reasonably’ requires that the word ‘likely’ be given a meaning less definite than ‘probable’. It is that word (‘reasonably’) which governs the standard of likelihood. It lessens the intensity of the word ‘likely’. In other words, quantitative guidance is suggested by the word ‘reasonably’ whilst the ‘likely’ requires a qualitative judgment.^[30]

So, what if you can find a number of possibilities of testamentary plans for the relevant person, based on previous wills and whatever other evidence can be drawn together?

The question is not whether he, nor she, would likely have preferred the proposed statutory will to intestacy, or to his or her prior will. Nor is it whether the proposed statutory will is one of a number of possible proposed wills, all of which might be equally likely to be one that he, or she, may have made if he, or she, had testamentary capacity. If the proposed statutory will does no more than reflect one of a number of other possible dispositions … the requirements of s 22(b) will not be satisfied since it would not be ‘reasonably likely’ to be a will that he, or she, would have made had he, or she, had testamentary capacity.^[31]

One matter of concern in this case was also that the plaintiff was the sole beneficiary under the proposed will. Hallen AsJ pointed to the approach in probate matters in such circumstances:

In probate suits, where there is an issue about the validity of a will, the court regards as a circumstance exciting suspicion, a will prepared by a person who takes a benefit under it, or if the beneficiary is instrumental in having it prepared, and calls for the vigilant and anxious examination of the evidence as to the testator’s appreciation and approval of the contents of the will.^[32]

He also noted that s 22(b) has a countervailing requirement that the court be satisfied that the proposed will is really one that the person would have been likely to make. This suggests similarly ‘a vigilant and anxious examination of the evidence as to the incapable person’s actual, or reasonably likely, intentions’.^[33]

In finding against the plaintiff, Hallen AsJ noted the following:

• the plaintiff’s evidence is inconsistent with a proposed will that excludes his siblings;
• Jane’s prior will, dated 1962, was never altered, despite ample opportunity to do so;
• the 1962 will clearly indicated an intention to benefit her children equally;
• the plaintiff received significant financial benefits from his parents, which was invested in a business;
• the plaintiff received about $400,000 in challenging his father’s will, which otherwise would have gone to his mother;
• there was no ‘objectively provable evidence’ of any disentitling conduct on the part of the plaintiff’s siblings ‘that would lead to the conclusion that Jane would wish to reduce her, or his, equal share of her estate’.^[34]

What is really sad about this case is the costs. There were several claims against the plaintiff as well as his claims against his father’s estate and the present application for the statutory will. All of this has a significant toll on any available estate now, or in the future.

Re DH: Application by JE and SM [2011] ACTSC 69 is the first example of use of power in the ACT. The application concerned a man in his late sixties. He never married, nor had any children. In 1990 he commenced a de facto relationship with the applicant, a woman a few years younger than he and with three children. They had been living together for not much more than a year when he had a heart attack while jogging, aged 50, resulting in permanent brain damage.^[35] He had retired from the public service and was managing some rental properties that he owned. For the next twelve years the respondent cared for him. They would most likely have married were it not for his accident.

As noted by Master Harper:

he became incapable of managing his personal and financial affairs, with no decision-making capability. He has a complete lack of understanding of the value of his assets, no knowledge of any relatives, and a complete inability to comprehend future events or possibilities.^[36]

For the last seven years he was in a secure dementia ward, where the applicant visits him. The present application concerns a statutory will in her favour, appointing the applicant and her daughter as executors, and leaving the estate to the applicant, or, if she fails to survive him, to her children in equal shares with gifts over to her grandchildren if any of her children not survive him.

The applicant engaged a genealogist in England, as the applicant was born in the UK, migrating to Australia in 1964, to construct a family tree. No living relatives who might take on intestacy were found.

Master Harper concluded that, if the respondent had had capacity, he would have made a will in favour of the applicant.

If such a case were to arise in New South Wales, while the applicant would likely to be able to claim as the next of kin and entitled to the whole estate on that basis, the making of the statutory will certainly simplifies matters. The need to make out her claim as a de facto spouse; to undertake lengthy searches for next of kin; and, if there are other relevant kin to obtain their consent to the appointment of the applicant as administrator, all takes time. And time costs money in estate terms. The granting of an application for a statutory will is very ‘tidy’ in such contexts as these and certainly to be commended as an estate planning strategy.

2.4 Right to inspect wills

Section 54 of the Succession Act 2006 sets out the right of certain persons to be able to see a will, including a revoked will, a document purporting to be a will, as well as a copy of a will. Section 54(2) provides that:

A person who has possession or control of a will of a deceased person must allow any one or more of the following persons to inspect or be given copies of the will (at their own expense):

(a) any person named or referred to in the will, whether as a beneficiary or not,

(b) any person named or referred to in an earlier will as a beneficiary of the deceased person,

(c) the surviving spouse, de facto partner (whether of the same or the opposite sex) or children of the deceased person,

(d) a parent or guardian of the deceased person,

(e) any person who would be entitled to a share of the estate of the deceased person if the deceased person had died intestate,

(f) any parent or guardian of a minor referred to in the will or who would be entitled to a share of the estate of the testator if the testator had died intestate,

(g) any person (including a creditor) who has or may have a claim at law or in equity against the estate of the deceased person,

(h) any person committed with the management of the deceased person’s estate under the Protected Estates Act 1983 immediately before the death of the deceased person,

(i) any attorney under an enduring power of attorney made by the deceased person,

(j) any person belonging to a class of persons prescribed by the regulations.

The section is mandatory in its terms, so, for example, even if an executor or administrator does not want a person to see the will, the person having possession or control of the will must oblige. While there is no penalty set out in the Act, s 54(3) states that a person who has possession or control of a will of a deceased person must produce it in a court if the court requires the person to do so. So if a person refuses to provide the copy and the person who wants it applies to the court to force this outcome, the person withholding the will may have to pay costs.

In a paper prepared by Therese Catanzariti in March this year, she made the following constructive suggestion in relation to responding to requests to see clients’ wills under s 54:

It may be prudent for persons who hold their client’s wills to set up a process to confirm that a person applying for inspection of a deceased client’s will is entitled to do so – for example, requiring the person to produce identification such as a drivers licence, birth certificate or passport, and requiring the person to sign a statutory declaration confirming that they are a person entitled to inspect the will.^[37]

3. Family Provision

There are two broad areas to consider here, as ever—people and property, namely eligibility and notional estate.

3.1 Eligibility

In New South Wales the list of eligible persons remains essentially the same as before, in s 57:

(a) a person who was the wife or husband of the deceased person at the time of the deceased person’s death,

(b) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person’s death,

(c) a child of the deceased person or, if the deceased person was, at the time of his or her death, a party to a domestic relationship, a person who is, for the purposes of the Property (Relationships) Act 1984 , a child of that relationship,

Note: A stepchild or foster child is not a child of a domestic relationship-see section 5(3) of the Property(Relationships) Act 1984.

(d) a former wife or husband of the deceased person,

(e) a person:

(i) who was, at any particular time, wholly or partly dependent on the deceased person, and

(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,

(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.

Let’s look at some particularly relevant contemporary issues: carers and adult children.

(a) Carers

The key differences are that: de facto partners are listed as a distinct category, as are persons living in a ‘close personal relationship’. Applicants in categories (d), (e) and (f) need to establish ‘factors warranting the making of the application’: s 59(1). Let’s explore some aspects of eligibility.

The idea of being in a ‘close personal relationship’ is defined in s 3(3), as supplemented by s 3(4):

(3) For the purposes of this Act, a close personal relationship is a close personal relationship (other than a marriage or a de facto relationship between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.

(4) For the purposes of subsection (3), a close personal relationship is taken not to exist between two persons where one of them provides the other with domestic support and personal care:

(a) for fee and reward, or

(b) on behalf of another person or an organisation (including a government or government agency, a body corporate or a charitable or benevolent organisation).

The latter qualification is particularly important in ruling out carers. How many of you are familiar with the scenario of a paid carer becoming particularly ‘close’ to a vulnerable and increasingly frail older person? This is a particular area that, in my view is ripe for abuse. One illustration of this which, however, stepped over another line and strayed into the area of alleged forgery is Burnside v Mulgrew; Estate of Doris Grabrovaz [2007] NSWSC 550.^[38] I looked at this last year.

Doris Miriam Ivy Grabovaz died on 27 August 2005, aged 90. Her estate, comprising property in New South Wales, was worth about $2.5 million. On 13 December 2004 Ms Grabovaz had made a will appointing her lifelong friend, June Eveline Burnside, as executor and gave her such furniture, contents and effects as she might choose. Ms Grabovaz then divided her residuary estate equally between June and Doris’s niece, Olive Brown. However another will, dated 1 July 2005, was propounded as Ms Grabovaz’s last will by the person who had been her carer in her last years. The carer was employed by a community care service agency to provide personal care for Ms Grabovaz from October 2004 until her death in August the following year. This later will left all of Ms Grabovaz’s estate to the carer. The issues focused on whether the signature on the 2005 will was really that of Ms Grabovaz, or was it forged. If the signature was genuine, did she know and approve of the will? Another possible issue, though it was not pressed, involved the circumstances in which the will was allegedly signed: was there undue influence?^[39]

As the proponent of the later will, the carer bore the onus of proving it.^[40] The matter was resolved on the basis of the onus of proof. The conclusion that Brereton J reached was as practical as it was simple: ‘it is unnecessary that I find affirmatively that there is a forgery; I am simply not satisfied that the signature on the questioned will is that of the deceased’.^[41] So it was unnecessary to consider the further question of knowledge and approval of the will, which would have been a serious matter in the circumstances of, in particular the deceased’s extreme age; her dependence on the carer; her limited contact with the carer prior to that date; the fact that the carer had filled out the will and selected both the attesting witnesses; and that the will made no provision for Ms Grabovaz’s only surviving relative, Ms Brown, nor the Burnside family.^[42] Simply ‘not satisfied’ on the evidence was the answer. There was enough doubt around the instrument, even without a positive finding that the document was forged, for it not to be admitted to probate.

Someone in the position of the carer has to take under the will or not at all. The terms of eligibility to apply for family provision would exclude her, unless she came within some other category under s 57.

(b) Adult children

In 1997 the National Committee recommended that adult children should not be automatically eligible, but would have to fall within a broad category of persons ‘for whom the deceased person had a responsibility to make provision for the person’s maintenance, education or advancement in life’.

Exactly what should be the right approach has troubled law reformers ever since TFM legislation was first proposed. Solicitors have their own collections of horror stories in this arena. The initial proponents of TFM in New Zealand were greatly concerned for wives, heartlessly omitted from their husbands’ wills, and many personal stories were clearly in the background.^[43] Such stories continued to fill in the narrative of family provision reform, such as the work that led to the introduction of the Family Provision Act 1982 (NSW).^[44] Adult children continue to fill the cases—reported and unreported. So who should be eligible to apply?

While family provision legislation began as a modest intrusion upon testamentary freedom, it has been subject to great pressure for expansion, both through the interpretation of the legislation, particularly in relation to adult children, and through specific legislative amendment. It is notable that the National Committee reversed the pattern in relation to adult children by moving them out of the status-list and into the circumstances list. (This is consistent with recommendations I put to the Victorian Attorney-General in an Expert Report I wrote for the Law Reform Advisory Council in 1994, that the legislation in relation to children ought to be restricted principally to the case of dependency during minority or to the completion of education.)

But the amendments didn’t do this. Section 57 keeps children in as a status category—as set out above. So we will continue to get cases of independent, self-sufficient 50 and 60 year olds wanting to get more of the pie from their parents, notwithstanding that the parent had made a conscious decision that they had already had enough and/or did not deserve more (or even anything).

Let’s look at a couple of recent examples. They can be described as falling into broad patterns, which I suggest as very rough stereotypes. First there is the dutiful child rewarded under the will, facing a claim by an estranged/undutiful child. Second there is the needy child rewarded under the will facing a claim by siblings who are not needy.

In Andrew v Andrew [2011] NSWSC 115, Hallen AsJ dismissed a claim by an adult daughter who had been estranged from her deceased mother, Rita Andrew, for 35 years. The executor of the estate was Mrs Andrew’s son, Michael, the brother of the applicant, Lynne Andrew, the eldest daughter of four sisters.

Rita died in March 2009, aged 83 years. She left a will leaving 40% of the value of a property to Michael; a legacy of $10,000 to Lynne; and the residue of the estate to be divided between Michael and the three other sisters—ie not Lynne. The net estate was approximately $800,000. Estimates of costs of Michael and Lynne, assuming that she were successful, amounted to approximately $100,000.

As Hallen AsJ remarked, Rita ‘was not silent as to the reasons for the dispositions in the will’.^[45] She left two handwritten documents explaining why she had only left Lynne a relatively small legacy: that she had ‘not acted as a daughter should’ and should therefore ‘not be remembered’ like the other children in relation to the disposition of assets in her will.

Such notes are helpful to give insight into a testator’s thinking, but, as Hallen AsJ noted,

While the Court will consider any explanations given by the deceased in the will, or elsewhere, for excluding a particular person as a beneficiary, such explanations do not relieve the court from engaging in the enquiry required by the Act: Slack-Smith v Slack-Smith [2010] NSWSC 625 at [27]. What an explanation may do is cast light on the relationship between the deceased and that person, at least from the deceased’s perspective.^[46]

The process of assessing an applicant’s needs for proper maintenance, education and advancement in life are considered carefully. I commend Hallen AsJ’s judgment to you for his consideration of these elements. They have an established history. The first step in the two-stage process of evaluating a claim is to consider the ‘jurisdictional question’, whether the court can make an order. The second stage is the ‘discretionary question’ and concerns whether the court should make an order, taking into account the matters now set out in s 60.

The first stage requires an examination of the applicant’s needs. It is given a reasonably wide construction, to include, for example ‘present and future needs including the need to guard against unforeseen contingencies’.^[47]

Hallen AsJ reiterated some of the key family provision rules:

•  the statutory jurisdiction is a ‘limited disturbance of the right of testamentary disposition’;^[48]
• it is not appropriate to endeavour to achieve a ‘fair’ disposition of the estate—it is not part of the court’s role to achieve some kind of equity between the various claimants;^[49]
• the court’s role is not to reward or to distribute according to notions of fairness and equity;^[50]
• the court’s role goes no further than the making of ‘adequate’ provision for the ‘proper’ maintenance, education and advancement in life of an applicant;
• the court’s job is not to rewrite the testator’s will, only to ensure that adequate provision has been made for proper maintenance, etc;^[51]
• the court cannot transgress unnecessarily upon the deceased’s freedom of testation;^[52]
• the nature and content of what is adequate provision for proper maintenance etc is not fixed or static and reflects contemporary accepted community standards.^[53]

With respect to adult children, he noted the following matters:

• although the relationship between parent and child changes, a child ‘does not cease to be a natural recipient of parental ties, affection or support’;^[54]
• the community expects parent to raise and educate their children ‘to the very best of their ability while they remain children’; probably to assist with tertiary education, ‘where that is feasible’; and to provide them ‘with a start in life’, ‘where funds allow’—such as a deposit on a home, ‘although it might well take a different form’;^[55]
• the community does not expect a parent, in ordinary circumstances, ‘to provide an unencumbered house, or to set their children up in a position where they can acquire a house unencumbered’, although there might be such an obligation ‘where assets permit and the relationship between the parties is such as to justify it’;^[56]
• the community does not expect a parent to look after a child ‘for the rest of the child’s life and into retirement, especially when there is someone else, such as a spouse, who has the prime obligation to do so’;^[57]
• where an adult child is still a dependant the community ‘usually expects the parent to make provision to fulfil that ongoing dependency after death’;^[58]
• where an adult child ‘falls on hard times’—and where there are assets available—the community ‘may expect a parent to provide a buffer against contingencies;^[59]
• where an adult child has been ‘unable to accumulate superannuation or make other provision for his, or her, retirement, something to assist in retirement where otherwise he, or she would be left destitute’;^[60]
• there is no obligation to treat children equally;^[61]
• there is no need for an adult to show a ‘special claim’.^[62]

The sense of wanting ‘equal’ treatment is a regular theme. It’s what I have referred to as ‘gut instinct’—a gut sense of ‘entitlement’, an almost dynastic assertion of right to inherit and to inherit equally with other siblings. But that is not what family provision is all about. Hallen AsJ refers^[63] to Palmer J’s remarks in Carey v Robson [2009] NSWSC 1142 that reflect neatly the court’s approach:

One can understand the sense of grievance which one child may have at being treated by a parent differently from another child. Some may be tempted to think that great disproportionality of testamentary treatment in itself indicates some essential error in the testamentary process which requires amelioration under the Family Provision Act so as to achieve approximate equality between a testator’s children.

That is not, of course, a position from which one can begin in this, or in any other case under the family provision legislation.^[64]

Estrangement/good conduct

The fact of distancing in a relationship often arises in the family provision context—and also the issue of dutiful conduct. Section 60 spells out the matters to be considered by the court when determining whether to make a family provision order. This includes matters such as the applicant’s contribution to the estate or welfare of the deceased (‘dutiful conduct’ captures this idea);^[65] and the character and conduct of the applicant before and after the deceased’s death (captured in the first Act in the idea of ‘disentitling conduct’).^[66] In this particular case there had been a long ‘estrangement’ of over three decades. Hallen AsJ makes an excellent analysis of the role of this element in assessing the strength of an applicant’s claim. In introducing the subject he refers to remarks in Hampson v Hampson [2010] NSWCA 359, by Campbell JA (with whom Giles JA and Handley AJA agreed):

The requirement to have regard to the totality of the relationship can in many cases be satisfied by considering the overall quality of the relationship assessed in an overall and fairly broad-brush way, not minutely. Consideration of the details of the relationship is ordinarily not called for except where there is an unusual factor that bears on the quality of the relationship, such as hostility, estrangement, conduct on the part of the applicant that is hurtful to the deceased or of which the deceased seriously disapproves, or conduct on the part of the applicant that is significantly beneficial to the deceased and significantly detrimental to the applicant, such as when a daughter gives up her prospects of a career to care for an aging parent. Neither entitlement to an award, nor its quantum, accrues good deed by good deed. Indeed it is a worrying feature of many Family Provision Act cases that the evidence goes into minutiae that are bitterly fought over, often at a cost that the parties cannot afford, and are ultimately of little or no help to the judge.^[67]

When it comes to the issue of estrangement, Hallen AsJ remarked that it is not descriptive of conduct but rather reflects a consequence—‘the condition that results from the attitudes, or conduct, of one, or both, of the parties’. Its impact on a family provision claim, ‘whether the moral claim of the plaintiff on the deceased is totally extinguished, or merely reduced, and the extent of any reduction’, must be assessed in the context of all the circumstances of the case.^[68] So how is this assessment made? Hallen AsJ suggested the following relevant points:

•  the court has to look at the nature of the estrangement and the underlying reason for it;^[69]
• there is no rule that estrangement means you get nothing, nor that you may not get ‘ample’ provision—the needs of a plaintiff, the size of the estate and the existence or absence of other claims must be considered;^[70]
• the deceased is entitled to make no provision for a child—particularly in the case of one ‘who treats their parents callously, by withholding, without proper justification, their support and love from them in their declining years. Even more so where that callousness is compounded by hostility’.^[71]

Should an order be made?

In the particular case there had been virtually no contact between the applicant and her mother for over 35 years. The applicant attributed the breakdown in the relationship to ‘her sexuality’,^[72] although other evidence suggested that her mother never asked anything about such matters.^[73] It seems that the deceased was very upset and confused about her daughter’s lack of contact.

In contrast, the deceased had an ‘extremely close and loving relationship’ with her son and her other daughters. The son lived with his parents for many years and assisted them. His mother assumed some responsibility for him even though he was an adult and employed.

The applicant sought a home—as the only eligible person not to have her own stable home; a car; money for medical things for herself and her son; and a sum for contingencies. All in all, in excess of $260,000.^[74] The defendant executor (the son) submitted that the claim should be dismissed, or no more than $40,000 be awarded. He and his other sisters agreed that this should be borne by his share of the estate.

Hallen AsJ went through each of the other siblings’ assets. He also noted the clear intention of the testator to give her son an extra reward of $50,000 ‘to compensate him for the work done and any money spent on the creation of a separate unit’ at the deceased’s property.^[75]

Other evidence of the testator’s intentions suggested that she had not wanted to leave the applicant anything at all from her estate, ‘because of the way she treated’ both the testator and her husband,^[76] but that it was her solicitor who advised that she should include a legacy with an explanation—which is what she did.^[77] I must say that I think this was very sensible advice—both the legacy and the explanation. As Hallen AsJ explained:

Because of this evidence, the comment, made in some other cases, that the deceased having made some provision by her, or his, Will, for the Plaintiff, provides an acknowledgment by him, or her, that there was an ongoing relationship between them, does not assist the Plaintiff in this case.^[78]

Assessing the claim, Hallen AsJ, he held that ‘judged by quantum and looked at through the prism of her financial and material circumstances, adequate provision for her proper maintenance or advancement in life’ had not been made by the will. And, while an additional sum would have been nice, that was not all that he was required to assess at the first stage:

The totality of the relationship of the Plaintiff and the deceased, the age and capacities of the other beneficiaries, and the claim of each on the bounty of the deceased are very relevant factors in determining the answer at the first stage.^[79]

His conclusions was, therefore that there was no failure to make adequate provision. The plaintiff therefore failed at the jurisdictional stage. Even if he were wrong, Hallen AsJ stated that the same considerations would produce the result that, as a matter of discretion, he would not have been satisfied that a family provision order ought to be made.^[80]

The key elements in this latter finding were that:

• there was no suggestion that the estrangement was caused by the deceased;^[81]
• the relationship with the other siblings continued;^[82]
• the estrangement was not of short duration, but more than half of the plaintiff’s life;^[83]
• the testator is entitled, in certain circumstances, to make no, or virtually no, provision for an adult child—‘particularly so in respect of a child who withholds, without proper justification, her, or his, support and love, from that parent over many years’;^[84]
• there is an interrelationship between the conduct said to disentitle an applicant to relief and the strength of the need for provision out of the deceased’s estate—‘the stronger the applicant’s case for relief, the more reprehensible must have been that person’s conduct to disentitle them to the benefit of any provision’;^[85]
• the estrangement in this case was self-imposed by the Plaintiff and, on the evidence, ‘appears to have been unjustified’;^[86]
• there were no sacrifices for the deceased but a complete severance of ties, by the plaintiff, and she withheld her love and support.^[87]

The plaintiff daughter’s claim was dismissed.

A contrasting decision is Bourke v Keep [2011] NSWSC 88, which was decided just before Andrew v Andrew. That case also concerned a daughter and defendant siblings. The testator made no provision for her daughter ‘because of her complete lack of concern or contact with me and other members of my family over a long period of time’. So there was a factual similarity to Andrew. One difference is the reason for the estrangement. In Bourke the plaintiff’s parents opposed her marriage and said that if she wished to marry the man who became her husband she would have to leave the family home. Macready AsJ described the relationship as one in which the plaintiff and her mother ‘had mutually turned their back on the relationship’.^[88] In such circumstances he concluded that while she should not be barred from making a claim, her conduct ‘means that her moral claim on the testator’s bounty is reduced’.^[89] He awarded the applicant $200,000 from an estate valued at about $620,000.^[90]

In reflecting upon the two cases in a paper he delivered to the Society of Trusts and Estates Practitioners in Sydney on 20 July 2011, Hallen AsJ commented that:

The principal distinguishing feature between the two cases appears to have been the explanation for the estrangement that was established in Bourke. It is plain that the deceased refused to approach the applicant to reconcile even though she knew of the existence of her grandchildren. As his Honour found, once the applicant was married, there was arguably no other reason for the deceased to continue the estrangement from her.

Another distinguishing feature may have been that the applicant did make contact with her family four times and she was either treated with hostility or ignored on those occasions.^[91]

These are excellent illustrations of the increasing scenarios of octogenarian and older parents and adults in their middle and later middle age seeking a ‘share’ of a parent’s estate, in circumstances of distinct disaffection of a parent. As Hallen AsJ concluded, ‘[i]t will be interesting to read the conclusions of the Court of Appeal in due course on Andrew and in Bourke’.

3.2 Property

The National Committee also recommended the introduction of claw-back provisions, based on the Family Provision Act 1982 (NSW), to enable the court to designate certain property as part of the ‘notional estate’ of the deceased—property acquired without full valuable consideration—and to order that provision be made out of the property so designated.

The wording of the notional estate provisions has been clarified. One particular example is in relation to jointly owned property. The new provision that gives examples of relevant property transactions is s 76, replacing s 22(4) of the Family Provision Act. Jointly owned property is now an express example in s 76(2)(b):

(b) if a person holds an interest in property as a joint tenant and the person does not sever that interest before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that, on the person’s death, the property becomes, by operation of the right of survivorship, held by another person (whether or not as trustee) or subject to a trust,

A further provision was included to deal with the problem of what amounts to full valuable consideration in the context of joint tenancy, for the purposes of considering whether the property should be designated as notional estate:^[92]

(4) For the purposes of this Chapter, in the circumstances described in subsection (2) (b), a person is not given full or any valuable consideration for not severing an interest in property held as a joint tenant merely because, by not severing that interest, the person retains, until his or her death, the benefit of the right of survivorship in respect of that property.

The property reach of the notional estate provisions remains pretty much as introduced in 1982, in the Family Provision Act. Tactically, the only way of avoiding them is to dispose of property beyond the three-year zone of notional estate.^[93] This may get away from a notional estate argument, provided the testator survives for the three years, but may involve pension issues, and won’t avoid a family dispute that may be brewing in any event. But it may give some satisfaction to the testator in his or her lifetime—and that is probably the key to it all.

If the testator does not survive the magical three years then property that has been disposed of may be within the notional estate zone if disposed of:

• within one year of death and there was a moral obligation to make provision for a person;
• within three years of death if the deceased intended wholly or partly to deny or limit provision for a person.^[94]

Then there are several things the court must consider. Under s 87, for example, the Court must not make a notional estate order unless it has considered the following:

(a) the importance of not interfering with reasonable expectations in relation to property,

(b) the substantial justice and merits involved in making or refusing to make the order,

(c) any other matter it considers relevant in the circumstances.

And, under s 88, the Court must not make a notional estate order unless it is satisfied that:

(a) the deceased person left no estate, or

(b) the deceased person’s estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or

(c) provision should not be made wholly out of the deceased person’s estate because there are other persons entitled to apply for family provision orders or because there are special circumstances.

In other words, it is far from straightforward to make a claim that is based upon bringing in notional estate.

A recent ‘celebrated’ example involving a notional estate argument arises from the estate of the late Richard Zelman Pratt, the ‘cardboard king’. I mentioned this one in my presentation last year but again it is illustrative of the way claims arise, and since last year’s presentation there has been one judgment in the chain: Hitchcock v Pratt [2010] NSWSC 1508. Pratt died in Melbourne and his major beneficiary was his wife of 49 years, Jeanne. In his will Pratt also left $22.8 million, mostly in shares, to his 12 year old daughter, Paula Hitchcock, which she can access when she turns 21. Paula was ‘the love-child’ of Pratt’s relationship with a Sydney woman, Shari-Lea Hitchcock. The will also confers a further $5.7 million in shares to be controlled by a trust company named SLH which is understood to benefit both Paula and her mother Shari-Lea.

On 27 April 2010 Shari-Lea instituted proceedings in New South Wales for a family provision order, claiming standing as a de facto spouse. On the same day her daughter also instituted proceedings in her favour, claiming standing as a child. On 13 and 17 May 2010 Shari-Lea and Paula applied for provision from Pratt’s estate under the Victorian legislation on the basis that she was his ‘domestic partner’ extending for a period of over 18 years.

On 6 July 2010 the executrix of Pratt’s estate, his widow, Jeanne, sought summary dismissal of the New South Wales proceedings.

In his lifetime Pratt is reported to have given Shari-Lea ‘a luxury $5 million Watsons Bay home, a South Coast farm, paid for her law degree and lavished her with trips and gifts’.^[95] This will be an interesting one to observe from north of the border. Unless Ms Hitchcock can pitch her claim as on the same basis as a de facto wife, she appears to have received more than enough for her ‘proper maintenance and support’ under s 91 of the Administration and Probate Act 1958 (Vic).

The application was lodged just two days before the anniversary of Pratt’s death. In New South Wales applications must be made with 12 months of the date of death, so this would have been an ‘in time’ application here. In Victoria, applications have to be within six months after the date of the grant of probate of the will.

There are several interesting issues. A principal one is the question of the reach of orders. Mrs Pratt (through her counsel) argued that, to the extent that s 64 purported to authorise a NSW court to make family provision orders with respect to assets outside of NSW, it was beyond the constitutional competence of the NSW parliament. On this line of argument, it was also argued that, to the extent that the NSW legislation purported to authorise family provision orders in respect of the estates of persons who died domiciled in another state, it was inconsistent with the laws of other states, pursuant to s 118 of the Commonwealth Constitution. Further, it was argued that s 64 could only apply to real estate in NSW where a person dies domiciled in another state, and that, on the facts, the deceased left no real estate in NSW nor could any property be likely to designate any property as notional estate in NSW.

Brereton J gave careful consideration to each of these issues. They raise really interesting conflict of laws propositions. The first was the constitutionality of s 64.

Constitutionality of s 64

A family provision order concerns provision for claimants out of the remainder of the estate, after debts have been paid. It is not a question of the payment of debts, as such. So, it concerns a fundamental question of succession. This is classic conflicts territory. Succession to movable property is governed by the lex dommicilis; succession to immovable property is governed by the lex situs.^[96]

Section 64 sought to dislodge this somewhat, by providing that a family provision order may be made in respect of property situated in or outside New South Wales. But, as Brereton J said,

For a state law to have extra-territorial operation, there must be a relevant connection between the persons or circumstances on which the legislation operates and the state, and while this test is to be liberally applied and legislation should be held valid if there is any real connection, even a remote or general one, between the subject matter of the legislation and the state, there must nonetheless be some such connection.^[97]

When introduced in the Family Provision Act 1982 the provision allowed the court to order provision out of the estate or notional estate in New South Wales, whether or not the deceased was domiciled in New South Wales.^[98] In 1989 the provision was amended to give it an even wider reach: to property in or outside New South Wales, regardless of the deceased’s domicile.^[99] The effect of this provision was subject to consideration, most particularly in Balajan v Nitikin (1994) 35 NSWLR 51, where Windeyer J held that a law with respect to family provision that applied to property outside the state of a testator who had died outside the state had no sufficient connection and was therefore unconstitutional.

Brereton J analyses the movement of this provision into the Succession Act and notes that ‘it seems that the provision was re-enacted without adverting to the circumstance that it had been held to be unconstitutional. He concludes that, to the extent that s 64 purports to apply to property outside the state of a testator who dies domiciled outside the state has no sufficient connection with the state to be a valid exercise of the state’s legislative power, it is invalid.^[100] Therefore the section could only apply to extend the reach of the Act, with respect to testators who die domiciled outside New South Wales, to movables in New South Wales; and, with respect to testators who die domiciled in New South Wales, to immovables outside of New South Wales.^[101]

Pratt left no actual estate in New South Wales. However, the presence of property that could be designated as notional estate was ‘sufficient to attract jurisdiction, since once designated it assumes for practical purposes equivalence to actual estate’.^[102]

Notional estate

Has there been a ‘relevant property transaction’ within ss 75 and 76? The sections identify a number of transactions that attract consideration and may bring property into the notional estate orbit if ‘full valuable consideration’ is not given. One such transaction concerns ‘a power to appoint, or dispose of, property that is not in the person’s estate’, and that power is not exercised before death so the property is now held by someone else. A good example of such a transaction is jointly owned property. Each joint tenant has a power to sever the joint tenancy, a result of which may be that the now severed share forms part of the deceased person’s estate. If they do not sever their notional share, the property, by survivorship, belongs entirely to the survivor.

Four properties were in issue: an apartment in Phillip Street, Sydney, a property in Tumut and two properties in Smithfield—all held in the names of companies. Hitchcock argued that Pratt had sufficient de facto control over the registered proprietors of the four properties in question. Did a company director have the relevant capacity to control the company’s property to bring it within the notional estate provisions? This matter had arisen in at least one other case to which Brereton J referred. In Estate of Thiess; Brinkman v Johnston NSWSC, Hodgson J, 4 February 1994, Hodgson J commented that:

It might be possible infer that the deceased had power, as a governing director or perhaps managing director [of a company], to dispose of that company’s real estate in New South Wales and that he omitted to do so prior to his death. But that power would been subject to the fiduciary duties of a director; so that in respect of the real estate in New South Wales, it would not seem that the requirement … that there be an omission to benefit the deceased or an eligible person, would be satisfied in respect of the New South Wales real estate.^[103]

Hence, for the purposes of s 76(2)(a), a director’s power to dispose of property of a company is not a power of the kind within the section, because it is constrained by fiduciary obligations. Brereton J concluded:

An omission to exercise such a power in favour of the director or an eligible person … , because the power could not lawfully have been exercised in favour of the estate or eligible person. In my view, a director cannot be said to be ‘entitled’ to exercise a power to dispose of a company’s property to himself or to an eligible person other than for valuable consideration.^[104]

On the basis of such reasoning, he concluded that there was ‘no apparent arguable basis on which the court could make a notional estate order in respect of the four New South Wales properties to himself or either plaintiff save for full valuable consideration’^[105].

The order was to dismiss the proceedings with costs.^[106]

Ms Hitchcock is not the only claimant against the Pratt estate. At the end of May the ‘adult entertainer’ Madison Ashton (a.k.a. Christine McQueen) emerged—‘burst onto the national radar’^[107]—to stake a claim against Jeanne Pratt, as the executor of her late husband’s estate. This is not a family provision claim, but one essentially in contract. Ashton claims that in 2003 Pratt asked her to stop providing escort services for other clients and become his personal mistress. She alleges that Pratt was to establish a $2.5 million trust fund for each of her two children, pay her a $500,000 a year retainer, buy her a $100,000 Mercedes Benz, pay her 36,000 for rent and $30,000 in annual travel expenses. Mrs Pratt is reported to have said that Ashton was paid in two separate settlements in 2005 as well as a Mercedes and that this was in settlement of any claim she had on Pratt. One instalment of this litigation is Ashton v Pratt [2010] NSWSC 1376, an ex tempore judgment of Brereton J on 22 October 2010 in relation to discovery and interrogatories.

4. Probate

4.1 Revocation of grant

One case that involved a probate matter, namely the revocation of a grant in common form, is Virginie-Pitel v Campbell [2010] NSWSC 1440. There were no particular issues of principle, but Slattery J makes some helpful summary observations about the relevant law.

The testator, Edith Fulton had three daughters: Kathleen, Julie and Suzanne. There were two wills in question. The June 1999 will appointed Kathleen as executor and gave her substantial benefits.^[108] The December 2004 will appointed Suzanne as executor and left the whole estate to Julie and Suzanne.^[109] Suzanne obtained a grant of probate in common form of the 2004 will in August 2006. Eventually there was a settlement between Suzanne and Kathleen that the probate of the later will be revoked and that the 1999 will should be admitted. The settlement also involved Suzanne brining a claim out of time under the Family Provision Act and Kathleen settling that claim as the executor under the 1999 will. Since April 2009 Julie had not taken any active part in the proceedings.^[110] The estate was valued at approximately $175,000.

Slattery J identified the issues as whether:

• Julie has been given proper notice of these proceedings and the settlement;
• the court is justified in making the orders provided for in the settlement with respect to the probate; and
• the court is justified in making the Family Provision order.^[111]

Revocation of grant

Slattery J summarises the law with respect to the revocation of a grant of probate in common form:

The law that applies to the revocation of grant of probate in common form may be clearly stated. The court has a discretion to revoke grants of probate and letters of administration which are valid until they are set aside in exercise of that discretion: Ex Parte Keegan (1907) 7 SR (NSW) 565. There are a number of common circumstances in which a grant of probate may be revoked: where a false suggestion has occurred, whether fraudulently or ignorance of the truth which obscures a defect in title of the grant (such as for example where the testatrix does not know and approve certain words which appeared in the will, Re Fenwick (deceased) [1972] VR 646; where the will has been discovered after a grant of letters of administration or a later will after a grant of probate, Re Estate of Wilson (1991) 24 NSWLR 334; where executors or administrators become incapable of acting, Bates v Messner (1967) 67 SR (NSW) 187; where it appears to the court that a grant of probate or administration ought not to have been granted or that it contains an error, if the court is satisfied that the grant would be revoked at the instance of a party interested. The executor under a revoked grant is still bound to account, and to pay and transfer money and property received in his or her capacity as executor and to be appropriately reimbursed by a subsequent executor: Probate and Administration Act 1898, ss 40D and 90.^[112]

Even though Kathleen and Suzanne had reached a settlement about the 2004 will, Slattery J said that it was still necessary for the court to determine the matter as between Kathleen and Julie—as she was not bound by the settlement ‘and against whom the invalidity of the will must be independently established’. A Slattery J noted, ‘although Suzanne is executor of the will Kathleen has appropriately joined Julie as a person interested in opposing the revocation, given her entitlement to half the estate under the 2 December 2004 will’.^[113] 

Neither Kathleen nor Julie filed a general caveat under pt 78 r 61; or a caveat for proof in solemn form under pt 78, r 62. If an interested person wants to raise a ground of invalidity other than want of proper execution, then the general caveat is the correct one to use.^[114]

Julie was served notice of the hearing and Slattery J considered that it was adequate in the circumstances. Kathleen’s solicitor sought to serve Julie personally, but she declined to communicate with him. She made it clear through her husband that she did wish to come to the door to receive the letter or to have anything to do with the proceedings. After ‘a conversation of some length and a continuing refusal on Julie’s part to take the letter, Mr Kent left it in the post box adjacent to the front door’.^[115] It was also sent to her email address. The letter provided ‘a full and fair account of the current state of the proceedings, of her rights to make a claim against the estate of the Family Provision Act, of the proposed terms of settlement and of the course of proceedings before the Court’.^[116] In these circumstances, Slattery J held that Julie had been given notice. But should the orders be made?

Capacity

The case against the 2004 will was one based on lack of capacity. In 2000 Edith was diagnosed with a benign but inoperable brain tumour. In September 2004 her condition began to decline. She was in and out of hospital and ultimately into nursing homes. During a brief period in 2004 she made the will. Expert evidence was introduced, as well as lay evidence.

Slattery J set out the way that these matters are to be approached, noting that the applicable onus of proof was explained in Bailey v Bailey (1924) HCA 21; (1924) 34 CLR 558 and Estate of Hodges (dec’d); Shorter v Hodges (1988) 14 NSWLR 698:

Where a doubt as to testamentary capacity is raised satisfying the evidentiary onus on the defendant, the onus passes to the propounder of the will to satisfy the court that the will being propounded is valid; but this does not mean that a doubt is enough; the doubt must be such that the court considers it sufficient, as a court of conscience, to prevent it finding for the will propounded: Worth v Clasohm [1952] HCA 67; (1952) 86 CLR 439 and Re Estate of Hodges (dec’d); Shorter v Hodges (1988) 14 NSWLR 698.^[117]

Importantly, Slattery J reminds us that ‘a cautious approach’ is to be taken, citing the remarks of Gleeson CJ Re Estate of Griffith (dec’d); Easter v Griffith (1995) 217 ALR 284, at 290:

This formulation of the onus of proof, well established by authority and not in dispute in the present case, invites caution. The power freely to dispose of one’s assets by will is an important right, and a determination that a person lacked (or, has not been shown to have possessed) a sound disposing mind, memory and understanding is a grave matter. Where a testatrix exhibits florid symptoms of psychotic disturbance, such a conclusion may be reached relatively easily. However where, as in the present case, what is claimed is that the woman who presented to the world an appearance of intelligence and rationality, had formed an aversion to her child so unfounded and unreasoning that if the evidence of an unsound mind, the decision may be very difficult.^[118]

On the basis of the evidence provided Slattery J considered that there were suspicions raised as to Edith’s testamentary capacity. The 2004 will revoked the 1999 will with ‘an entirely different disposition during a period of mental enfeeblement’. It was also ‘inofficious’ in making no provision for Kathleen, who should have been an object of her bounty. Hence, ‘fuller and clearer evidence of capacity is required’.^[119] He found against the 2004 will.

So next was the family provision issue.

Family provision

Just because Kathleen and Suzanne had come to an agreement was not enough. Kathleen was executor of the 1999 will, which meant that she had obligations—in particular to consider the range of possible eligible persons. The court ‘was left in a complete vacuum’ about evidence in relation to eligible persons.^[120] It was up to Kathleen and Suzanne to fill it ‘if they wish to persuade the Court to make orders they wish under the Family Provision Act in Suzanne’s favour’.^[121] More needed to be done in this respect.

Another case that had the ‘combo’ of revocation of grant and a family provision claim is Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81. This is one of Brereton J’s judgments.

Lily died aged 81 in November 2005. Her husband, Abraham, had predeceased her. They were survived by two sons and two daughters. By her will, Lily left their house in Bondi to the two sons equally.

The daughters seek revocation of the grant of probate of the will on the basis of lack of capacity. They also alleged that the will was made through the undue influence of their brother Albert. In the alternative they made a family provision claim.^[122] As Brereton J commented, the case ‘involved a thorough and sustained attack on the credit of the sons’.^[123]

In the end, and in a judgment extending to 62 pages, Brereton J held that Lily had capacity; that there was no undue influence; that Lily knew and understood her will; and that the girls should fail in their quest for more. Nonetheless he also said that the sons were ‘utterly unreliable witnesses’ and that it was ‘one of those rare occasions on which it is possible and appropriate to go so far as to say that they have given evidence dishonestly’. This is strong stuff in a probate case. However, notwithstanding such conclusions, he said that ‘it does not serve to establish the opposite of their evidence, particularly where the daughters bear the onus of proof’.^[124] And, with respect to the daughters, Brereton J also considered that not everything they said had to be accepted either, as they were ‘very interested witnesses, who held strong views as to the unlikelihood of their mother having voluntarily made the will, and as a result lacked objectivity’.^[125]

The things Brereton J noted about the will were these:

• it was not irrational on its face—it left her only substantial asset, her house, to her husband and to her sons on his death (as Brereton J noted, ‘Lily is no rarity amongst testators in attempting to make testamentary provision in respect of property held in joint tenancy’);
• the daughters weren’t ignored, if Albert predeceased his mother the property would go to her children equally;
• the sons were needier than the daughters, who were in a better financial position;
• Albert had always resided at the house and he could likely live there with his brother, but not his sisters;
• Lily said to her Rabbi that she had taken care of the girls and now she had to take care of Albert—he thought she was ‘the same Mrs Ezekiel’, and this was some years after the will was made;
• the solicitor and attesting witnesses supported the evidence of capacity for the mirror wills that Lily and her husband made;
• Lily’s GP said she was mentally well and normal;
• psychiatrists retained by each of the parties provided a joint report, after a conclave, in which they agreed that ‘there was insufficient medical evidence to conclude that Lily lacked testamentary capacity’.

With respect to undue influence, Brereton J usefully points out the differences between the inter vivos doctrine and the probate doctrine in this respect, and that in the law of wills, undue influence means

coercion, by actual force or threats—but not by appeals to sentiments of affection, gratitude, pity or ties of kindred, which may legitimately be pressed on a testator. Influence generally in the form of persuasion or moral pressure to favour a person by will, whatever its degree, is not invalidating in probate unless it produces a will contrary to the will of the testator.^[126]

The burden of proving undue influence is also borne by those who impugn the will. It is a very serious allegation. Brereton J will take you through all the ins and outs of the allegations. As I noted above, the daughters failed.

They also failed in their family provision claim. They only asset of value was the house. It had already been transferred to the sons, so it was now notional estate if it was going to be anything.

The daughters based their claims on three main arguments:

•  that a will leaving everything to the children equally would have been ‘a moral and fair will’, as all four children had a legitimate expectation of benefit under their mother’s will, arising from ‘a culture of mutuality and cooperation in financial matters and equality, and there was no good explanation for leaving them out;
• why should Albert have a particular claim to accommodation at the expense of his siblings—and the house is going to have to be sold to pay costs in any event so should be considered ‘liquid’;
• their brothers were not truthful nor accurate about their own circumstances.

That first argument is the gut instinct dynastic claim, that I referred to above. It reveals a complete lack of comprehension about the nature of the family provision jurisdiction and the basis upon which a claim can be brought and the discretion of the court exercised.

Brereton J’s response was spot-on in this respect:

the daughters’ submission overlooks that, under our system of succession, including the FPA, equality is not a starting point—it is the will that is the starting point, and it is unnecessary to justify or explain a departure from equality.^[127]

Recalling observations of Young J in his 1987 decision in Stewart v McDougall, Brereton J emphasised that the court’s role was limited to making adequate provision for an eligible person’s proper maintenance and advancement, and not asking whether the will was fair, or why it did not deal with beneficiaries equally.^[128] Besides which, even where an eligible person shows that he or she ‘reasonably needs more assistance’, that does not mean necessarily that the claimant has been left without adequate provision in the required family provision sense—‘let alone that an order for provision must be made’.

a full investigation of all circumstances must be undertaken to ascertain whether a wise and just testator ought to have made greater provision (or, which amounts to the same thing, that the community would expect that greater provision should have been made).^[129]

With respect to the second argument, Brereton J pointed to the fact that only Albert was dependent on his parents and had been all his life and ‘[t]estators are usually expected to make provision for their dependents’. The need was for accommodation and allowing him to continue to live in his mother’s house, where he had always lived, ‘was in accordance with Lily’s and Abraham’s moral duty, and with what the community would have expected of them’.^[130]

What about the sisters’ point that this was all rendered pointless as the house had to be sold anyway because of the cost of all the litigation? So Albert couldn’t live there anymore after all. Brereton J said that even if this ‘may defeat achievement of the purpose … that would not warrant expunging the provision made for a dependent’.^[131]

Now, as for the third argument, while Brereton J viewed the sons’ arguments ‘with great suspicion’, this was no obstacle to making ‘whatever family provision order would otherwise be appropriate in favour of the daughters’. Even if they had some additional undisclosed income—which was being suggested—it wasn’t so large as to make a material difference.

What mattered, ultimately was that

all interested parties are adult children of the deceased, and although many other factors were adverted to, two considerations dominate all others: the first is the relative financial positions of the siblings; and the second is that one of them has always been, and remained, dependent on his parents for accommodation.^[132]

The net result would be that any adjustment in favour of the daughters would leave the sons in a worse-off position. Therefore it was ‘impossible to see how it could be said that the testator was not entitled to provide for her sons rather than her better, if only moderately, resourced daughters. To do so would have taken from those who had least, to give to them who had most’.^[133]

Putting it all together, because the will was not irrational on its face, Lily was regarded, at least prima facie, as having testamentary capacity. While she had physical health issues, none of it pointed to a cognitive defect. The mere absence of provision for her daughters did not, of itself, raise a doubt as to capacity—especially in view of what she said to her rabbi. There was not enough, therefore, to shift the evidentiary onus to the sons. Even if there were a doubt, ‘any such doubt is not sufficiently substantial to prevail over the evidence that tells in favour of Lily being of sound mind, memory and understanding at the time of execution of the Will’.^[134]

And when it came to the undue influence assertion, as there was not sufficient evidence to prove coercion—and it required proof, as distinct from issues going to knowledge and approval—‘the daughters cannot by a side-wind cast the onus of proof of knowledge and approval on the sons by raising a suspicion of undue influence’.^[135]

Just because you change your will is not necessarily suspicious. In this case the sons were not present when the wills of their parents were made. It was managed by a solicitor, quite correctly, in their absence, and they read and executed them. All very regular.

Then, as for the family provision proceedings, the issue is not whether the will ‘is just or moral’. Even if the daughters in this case had been able to demonstrate that they were left with inadequate provision for their proper maintenance, ‘it would not have been appropriate as a matter of discretion to make an order that reduced provision for the worse-off sons in favour of the better-off daughters’.^[136]

The bottom line is that it is not about what a child thinks is fair. So it is a little troubling to find websites that say this:

If you’ve been left out of a Will, or treated unfairly in a Will, you can most certainly do something about it…

The law does require that certain people be fairly and properly provided for in a Will, and we are experts in helping people get what they are fairly entitled to…

Our long experience shows that many Wills are not legally binding. A court can make orders to redistribute the Estate to pay moneys where people have been unreasonably left out, or are named in a Will but not properly provided for in the circumstances…

It’s a good selling point, but obscures the real picture behind the overuse of the word ‘fair’. Adult children should be discouraged in most cases from making claims. To many of them what is ‘fair’ is entirely different from what their mother or father might consider ‘fair’—and in many cases the court agrees with the parent, but after considerable expense to the claimant and, what is saddest of all, to the estate.

5. Intestacy

5.1 Next of kin

I include a very ‘quick quiz’ here as to next of kin, only because I heard something recently that I found gob-smacking—namely the lack of knowledge about the hierarchy of next of kin.

So here is a quick reminder:

•  spouse first—and this includes a person who is lawfully married to the deceased or in a ‘domestic partnership’ (essentially a de facto relationship of more than two years, unless there is a child born), and this includes same sex relationships and multiple partners;^[137]
•  issue next;
•  then parents
•  from there we go to: 
  •  siblings (including their children by substitution) 
  • grandparents 
  •  uncles and aunts (including their children by substitution).^[138]

5.2 Per stirpes

The distribution is per stirpes not per capita, when it comes to substitutional gifts. Section 127(4) spells out the position with respect to children, using the language of ‘presumptive share’:

(4) If one or more of the intestate’s children predeceased the intestate leaving issue who survived the intestate:

(a) allowance must be made in the division of the entitlement between children for the presumptive share of any such deceased child, and

(b) the presumptive share of any such deceased child is to be divided between that child’s children and, if any of these grandchildren (of the intestate) predeceased the intestate leaving issue who survived the intestate, the deceased grandchild’s presumptive share is to be divided between the grandchild’s children (again allowing for the presumptive share of a great grandchild who predeceased the intestate leaving issue who survived the intestate), and so on until the entitlement is exhausted.

That’s probably enough of an update from me today. Thanks for inviting me to speak again this year.

^* President, Australian Law Reform Commission; Professor of Law, Macquarie University. The views expressed in this paper are those of the author and do not represent views of the Australian Law Reform Commission.