GAU v GAV [2014] QCA 308

This recent decision of the Queensland Court of Appeal deals with the power of the Court to authorise the alteration of a valid Will where the Willmaker has lost testamentary capacity. In this case, by her existing Will made in 1998 (the Will) the Willmaker had bequeathed property to her son and should he not survive her by 30 days to his wife. The son and daughter- in-law separated in 2014 and divorce and property settlement proceedings were pending in the Family Court.

Facts

GM (the Willmaker), was 81 years old and in 2002 had been placed in full-time care on account of her progressing Alzheimer’s disease. She later suffered a severe stroke that rendered her in a vegetative state. She no longer had testamentary capacity and medical opinion was that her life expectancy was a matter of months and that a terminal event may occur at any time. The appellant, GAU, was the Willmaker’s husband of 55 years.

By clause 5 of the Will, substantial assets of about $5 million were given to her son GK with provision for those assets to go to the respondent daughter-in-law and the appellant in the event that GK did not survive the Willmaker for a period of 30 days.

In May 2014, the respondent and GK separated. The appellant soon after filed an application to amend the Will by way of a codicil pursuant to section 21 of the Succession Act 1981 (Qld) (the Act). To make such an application leave is required from the Court under section 22 of the Act. There is equivalent legislation in all states and territories of Australia.

The Codicil provided for the deletion of clause 5 of the Will and the replacement of it with a new clause 5 by which the assets were given to trustees of a testamentary discretionary trust of which the primary beneficiaries were GK and the Willmaker’s grandchildren and great grandchildren. Under the terms of this trust, the respondent could never qualify as a beneficiary.

By 3 June 2014, GK and the respondent had decided to divorce and later that month the respondent commenced proceedings against GK in the Family Court for property settlement orders.

The primary judge accepted the respondent’s submission that the intention of the application before him was:

“…to prevent the respondent from receiving any part of [the Willmaker’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.”

In the first instance, the primary judge found that he could not be satisfied that it is or may be appropriate for the Court to make an order under section 22 of the Act and therefore refused to grant leave under section 21 of the Act for an alteration to the Willmaker’s will.

Outcome

On appeal, the Court agreed with the Appellant’s submissions that the purpose of the alteration was not contrary to the policy of the law and that there was a failure to have regard to the likely wishes of the Willmaker. It allowed the appeal and set aside the decision on the basis that regard was only had to the purpose of the application and not the compelling evidence and that this had “infected the refusal of leave to the appellant to apply for an order under section 21 of the Act for authorisation of the making of the proposed codicil”.

The Court considered that the Willmaker 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. It also found that in seeking and accepting such advice, the Willmaker would be acting both rationally and free of pressure from others and, that it was very likely that the Willmaker would give instructions for the implementation of that advice.

The combination of these findings under section 24(e) indicated that, at least, it may be appropriate to make an order under section 21(1) of the Act in relation to the Willmaker, satisfying the test for the Court to grant leave.

It considered that those same findings also supported the making of an order under that section 21 of the Act. Further, the Court found that authorisation of the proposed alteration of the Will by codicil would be in the interests of the Willmaker because it would facilitate something that she herself would most likely do herself were she able to do so. Secondly, it was a step that she would be freely able to take herself in organising the testamentary affairs were she still to have capacity. For her to take such a step would neither offend the policy of the law nor be morally corrupt on her part.

As such, the Court ordered that the appeal be allowed and the previous order be set aside. It granted leave to the appellant, pursuant to section 22 of the Act and authorised the alteration of the Will pursuant to section 21, in terms of the form of codicil.

Comment

There have been an increased number of cases of this nature in recent years nationally and as the Australian population ages we can only conclude that the frequency will continue to rise. It demonstrates the importance of the consideration of estate planning at all stages of life whether the Willmaker has testamentary capacity or not. While not all circumstances will result in the conclusion made by the Court in this case on appeal, advisers should not disregard the possibilities.