A paper presented for STEP Australia – NSW Branch
NSW Supreme Court, Banco Court, 19 August 2015
By Ramena Kako, TEP
Barrister-at-Law, 13 Wentworth Chambers, Sydney Australia Court Authorised Wills, Protected Estates and Family Provision Issues: A consideration of Re RB, a protected estate family settlement  NSWSC 70 The day has gone (if it ever existed so simply) when each person, personally and independently of others, managed his or her own affairs until death, accepting mortality and consigning the body to the elements, leaving a formal will (or trusting to intestacy laws) to govern the passing of property between generations. At several points, the process has changed. People are living longer, mostly in good health but often with disability bearing upon their capacity for self-management. More people have more wealth to manage and pass on. With higher education standards, and more substantial (public and private) infrastructure to assist in management of the person and property of individuals living in a welfare state, expectations of a good life and a managed death have grown”. 1 Introduction 1. The statistics are clear. Australians are living longer, the growth in the Sydney residential property market is exceptional, with Sydney ranking as the third least affordable housing market in the world2, and other than the family home, superannuation is the second largest asset for an average Australian. 2. With those figures in mind, let’s consider the following.
1 The Honourable Justice Lindsay, Protective and Probate List Judge of the Supreme Court of NSW, writing extra judicially for the College of Law, “Administration of Estates Demystified”, on 17 February 2015) at [11-12].
2 11th Annual Demographia International Housing Affordability Survey 2015, data as 3rd quarter 2014.
3. Dementia is the single greatest cause of disability in Australians aged 65 years or older. For those of you who may be unfamiliar with the term, dementia is a term used to describe the symptoms of a large group of brain disorders which cause a progressive decline in a person’s functioning. It causes loss of memory, intellect, rationality, social skills and physical functioning. Commonly known types of dementia include Alzheimer’s disease, Vascular dementia and Parkinson’s disease. 4. Worldwide, there are more than 44 million people with dementia, and 135 million are predicted by 2050. The number is expected to more than triple within the next 35 years. 5. Locally, there are more than 342,800 Australians living with Dementia. Without a medical breakthrough, that number is expected to be almost 900,000 by 2050. It is not only the elderly whom Dementia strikes. Currently, there are about 25,100 Australians living with Younger Onset Dementia, which is a diagnosis of dementia under the age of 65, including adults as young as 30. 6. Dementia is the second leading cause of death in Australia and currently, there is no cure.3 7. In this climate, the importance of estate planning for an ageing population is becoming more important than ever. Estate planning for such persons is not impossible. But extra care is required given their vulnerability. 8. A typical estate plan is well known to advisers. You might prepare a power of attorney and guardianship (possibly enduring, possibly not), a will, a binding death benefit nomination for a superannuation fund, and perhaps an advance care directive will be put in place. That is all fine if your client has the requisite mental capacity to put his or her affairs into order. 9. The Supreme Court of NSW, in the exercise of its protective jurisdiction, has long held the power to declare persons with a mental disability and who are incapable of
3 Statistics provided by Alzheimer’s Australia available at https://fightdementia.org.au/national/about-dementia-and-memory-loss/statistics, accessed 17 August 2015.
managing their affairs, a Protected Person. It has the power to appoint financial managers and/or guardians to the estate of such a person. This power is often used where a person has never made an enduring power of attorney or guardianship before the onset of a mental disorder. The need for someone to step in to make financial, health and living decisions for a protected person becomes an outright necessity. However, until 1 March 2008, the Supreme Court did not have the power to make a will for a person lacking testamentary capacity. This means that from an estate planning perspective, there are likely to have been many wills drafted for persons whose mental capacity to make a valid will is doubtful. A will drafter may have asked questions of the client to assess the client’s testamentary capacity within the meaning of the test in Banks v Goodfellow (1870) 5 QB 549, and probably even obtained a medical report validating a person’s capacity to make a will. However, those wills are not immune from litigious attack after the person’s death on the ground of invalidity for lack of testamentary capacity. It is not uncommon, post death, for the Supreme Court to refuse to admit a will to probate on the basis that it finds that at the time of its execution, the testator lacked testamentary capacity. Such a finding can be disastrous to the family of the deceased after much legal angst and expense. The doings of an estate planner are undone. 10. Whilst the Supreme Court was capable of declaring wills invalid, the Supreme Court had no power to authorise a will to be made for a person lacking testamentary capacity. This meant, for example, that a person who had never made a will and then lost the mental capacity to make a will, was left in NSW to die intestate and for the scheme of intestate distribution provided by parliament to apply to that estate. Often, in the absence of the statutory next of kin, the estate passed to the Crown, as bona vacantia. Often, there are people in the life of a person who cannot make a will who might have been the object of a legacy in the person’s will if the person had testamentary capacity, but does not fall within the identifiable classes for intestate distribution, and would therefore, miss out entirely from a share of the estate. An example of such a person tends to be a long term carer, housekeeper, friend or Godchild of the deceased. Further, certain categories of persons were left to bring a family provision claim on an estate, whether by reason of a will being declared
invalid for want of testamentary capacity, or by reason of an intestacy. The categories of persons who might bring a family provision claim are different to those who might succeed to the estate on an intestate distribution. Further, the legal costs and heartache following a family provision claim on an estate can be disastrous for a family and in particular, the estate of the deceased. 11. As Justice Palmer (the former Probate and protective List Judge of the Supreme Court) said in Re Fenwick; Application of J.R. Fenwick and Re Charles  NSWSC 530, the leading decision in NSW on statutory wills, at : Bearing in mind the hostility and ruinous expense which so often accompany family provision claims, the Court should endeavour to limit their occurrence to once only in the administration of the estate of anyone, alive or dead. 12. This void in NSW succession law was remedied by the NSW State Government in 2006 by its passing of the Succession Act. The Succession Act introduced for the first time in this State a statutory jurisdiction upon the Supreme Court to authorise a will to be made for a person lacking testamentary capacity, on and from 1 March 2008, being the date the relevant provisions of the Act commenced. Whilst it was a first for NSW, we were the last state in Australia to introduce such legislation. 13. Other than conferring jurisdiction on the Supreme Court to authorise a statutory will, the legislation does not specify procedural and administrative matters such as: in what division or list of the Supreme Court is the application for a statutory will filed? The Common Law division of the Supreme Court is often engaged in awarding damages to persons who, by reason of an injury, are left disabled and incapable of managing their estate, let alone their person. Such awards of damages are invariably subjected to management by a trustee. In such instances, the trustee should consider the estate plan (or lack thereof) of their living beneficiary, and consider whether an application for a statutory will is warranted. This requires an understanding of the Equity Division of the Supreme Court, which in turn, warrants an understanding of the Probate and Protective divisions within that division.
14. The history of the Supreme Court, its equitable jurisdiction and the probate and protective lists are subjects which warrant their own legal seminar. In having said that, I am indebted to the current probate and protective list judge of the Supreme Court, the honourable Justice Geoff Lindsay, who has, in a paper delivered to the College of Law earlier this year (“Administration of Estates Demystified” on 17 February 2015) traced and documented this legal history, and to which I have referred to in today’s presentation. 15. I appeared for the applicants in Re RB, the decision which is under review today, before Justice Lindsay, sitting as protective list judge. The Protective and Probate lists of the Supreme Court 16. As his honour put it so aptly in Re RB, “[t]he province of the Court’s protective jurisdiction is that of the living. The province of the probate jurisdiction is that of the dead: at . And I will add to that something that tends to be forgotten: the purpose of the general equity list is to construe wills. That is, to find out what wills mean. 17. The purpose of the protective jurisdiction of the Supreme Court is to protect (hence the word “protective”) the welfare and interests of a person incapable of managing his or her own affairs (whether those affairs be personal or financial), and whether the person is a minor or an adult. The incapacity tends to arise from a mental illness or disorder which affects the person’s capacity to make decisions for him or herself. The Court’s protective jurisdiction is concerned with whether or not something is in the best interests, and for the benefit of, the person in need of protection. 18. Prior to the taking effect in 1926 of the Law of Property Act 1925 in England and Wales, the Lord Chancellor alone and, from 1852 onwards, the Lords Justices of Appeal in Chancery, exercising the Lord Chancellor’s jurisdiction in lunacy (that is, the mentally ill), had used their prerogative in managing a lunatic’s affairs for his or her benefit to direct voluntary payments out of his or her income for the benefit of the lunatic’s children or for others who had moral claims.
19. By Clause XVIII of the Charter of Justice 1823 (Promulgated pursuant to Geo IV c.96) the Supreme Court of New South Wales had, from its inception, the same jurisdiction over the affairs of mentally incapacitated persons as had the Lord Chancellor in England: RAH v CAH  1 NSWLR 694. 20. Thus, the protective jurisdiction of the Supreme Court forms part of the inherent jurisdiction of the Court with respect to incapable persons (and minors). It is known as the parens patriae (the parent (father) of the nation) jurisdiction, where the best interests of the person are paramount. The statutory protective jurisdiction of the Supreme Court (to the extent that legislative intervention was needed) is presently embodied in s41 of the NSW Trustee & Guardian Act 2009 (NSW). 21. The probate jurisdiction of the Supreme Court looks at the due and proper administration of a deceased estate, having regard (where possible) to the validly expressed testamentary intentions of a deceased person. It is also concerned with establishing the deceased’s testamentary intentions. 22. Historically, the protective and probate jurisdictions of the Supreme Court were separate. Over time, this separation is eroding. 23. Justice Lindsay has observed, when writing extra judicially4: A symbol of the breakdown of historical divisions between those different types of jurisdiction is the modern concept of a “statutory will”. It does not neatly fit into one jurisdictional category or the other. It calls attention to a need to review the terms in which we think about the operation of the Court’s probate and protective jurisdictions. The Court has eschewed any suggestion that it can “make a will” for a deceased person in family provision proceedings. That remains a limit of the Court’s family provision jurisdiction.
4 Justice Lindsay, “Administration of Estates Demystified,” a paper presented for the College of Law on 17 February 2015
Nevertheless, now, it can be called upon to make a statutory will for any person lacking testamentary capacity. Whether to authorise the making of a statutory will in the lifetime of an incapacitated person or to leave parties to a family provision application after the person’s demise is one the questions entrusted to judicial discretion: Re Fenwick at  – ; Re RB at  – . [These areas of law tend to]… merge because the subject matter of both the probate and protective jurisdictions is ultimately management of the affairs of persons unable, by reason of death or incapacity, to manage their affairs”: at [20 - 21]. 24. As Justice Lindsay identifies, the concept of a statutory will may gel into both jurisdictions of the Court. The Court seeks to ascertain the testamentary intentions of a living person. 25. In addition, his honour has identified “a broad similarity in the character of both branches” of these jurisdictions. For example, in both jurisdictions, the “person” with whom the Court is concerned is ‘absent’ and this ‘absence’ requires the Court to tread carefully, in the interests of the administration of justice. In the probate division, the Court deals with a deceased estate. In the protective division, the Court deals with a person who is incapable of managing his or her own affairs. There is, in each instance, a public “interest in ensuring that deceased estates, and those of the living in need of protection, are duly administered”.5 Further, there is no real room for adversarial litigation in these jurisdictions as, for instance, is typical in the Common Law jurisdiction of the Court. The judge may also exercise an inquisitorial function and formalities and rules of evidence tend to be dispensed with or relaxed. The inquisitorial approach is, however, more so a product of the statutory wills provisions in NSW. In both divisions the Court tends to exercise a discretionary judgment governed by the purpose of the particular legislation being administered.
5 Ibid at .
History of Statutory Will Applications 26. The concept of a ‘statutory’ or ‘Court authorised Will’ is derived from the United Kingdom. 27. An extremely detailed review of the history of the “statutory will” is set out by Justice Palmer in the first and leading decision on statutory wills in New South Wales in Re Fenwick; Application of J.R. Fenwick and Re Charles  NSWSC 5306. 28. In Re Fenwick, Justice Palmer found that upon a review of the history behind the statutory will provisions, the law in the United Kingdom as to statutory wills had reached a “highly unsatisfactory state” at the time that Australian jurisdictions began incorporating similar statutory will provisions into their succession legislation: at . His Honour had found that in cases in which an incapacitated person had never been able to form even the most rudimentary testamentary intention, the English Courts were resorting to a legal fiction in purporting to ascertain what testamentary disposition that person subjectively would have intended to make. The Courts were attributing to him or her a new testamentary intention upon the basis whether the person having a lucid moment, would have changed his or her mind. As His Honour described, that fiction was employed to needlessly disguise what the courts are really doing in such cases, namely, making decisions, objectively based, and in the best interests of the incapacitated person and his or family, as the likely testamentary intentions of incapacitated persons. 29. Justice Palmer recognised that the idea that a judge should be empowered to “create” a will for anyone would have been “met with outrage in the mid-19th century, particularly from the judiciary itself” and said at : As was recognised by Cockburn CJ in Banks v Goodfellow (1870) LR 5 QB 549 at : … The power of disposing of property in anticipation of death has ever been regarded as one of the most valuable of the rights incidental to property.
6 The following paragraphs are sourced from the judgment.
30. The idea that the individual testator was the best person in all the world to dispose of his testamentary bounty was so strong that the exercise of the freedom of disposition had, by the mid-19th century, become not only a right but a duty which a testator could not delegate to anyone else, such as by a power of appointment of testamentary beneficiaries (other than charities): see b. Smith (1869) LR 1 P&D 717. 31. The unfettered discretion of a testator to make dispositions of all of his or her property which was judicially entrenched by the end of the 19th century was eroded at the commencement of the 20th. Parliaments began enacting legislation that provided for the immediate family of a testator in a manner in which, according to contemporary notions of fairness and morality, the testator should have done. One of the purposes behind the enactment of such legislation was to relieve the community of having to support those whom the testator’s estate should have supported: see for example Lieberman v Morris  HCA 13; (1944) 69 CLR 69 at  per Rich J, and at - per Williams J. Tension existed between the inalienable right of the individual to testamentary freedom and the socially imposed duty to make proper testamentary provision for one’s dependents. 32. It was New Zealand who pioneered in the area of family provision by passing the Testator’s Family Maintenance Act in 1900. Similar legislation followed in Victoria in 1906, New South Wales in 1908, Tasmania in 1912, Queensland in 1914, South Australia 1918, Western Australia in 1920 and England in 1938: See Bosch v Perpetual Trustee Company Limited  AC 463 at 466. 33. The New South Wales legislation was re-enacted in the Testator’s Family Maintenance and Guardianship of Infants Act 1916 (as amended). The Court was empowered to make adequate provision for the spouse and children of the deceased whether he or she had died testate or wholly or partially intestate. In 1982, the Testator’s Family Maintenance and Guardianship of Infants Act was succeeded by the Family Provision Act (NSW). At  Palmer J said: That legislation considerably broadened the category of persons who may apply to the Court for provision out of the estate. Once the Court has found that an “eligible person” has not received
adequate provision out of an estate, it must exercise its own judgment as to what is adequate in all the circumstances. The discretion which the Court is to exercise in making provision for a claimant is essentially guided by objective considerations. 34. Further at  His Honour said: The deceased may have been, in fact, fond and foolish, but the Court to making adequate provision for a claimant, is not to act likewise. This point is of some significance when one comes to consider what considerations guide the Court in determining whether a proposed statutory Will is “reasonably likely to be one that would have been made by the person if he or she had testamentary capacity”: section 22(b) Succession Act. 35. His Honour observed that whilst the family provision legislation in most cases afforded a remedy to those with an unsatisfied claim on the bounty of a deceased person, there were some difficulties in succession law with which it cannot deal adequately and in some cases where it cannot deal at all. For example, in the case in which a person, having made a will, loses testamentary capacity and cannot make a later will or codicil in order to deal with changed circumstances such as the death of a sole or major beneficiary, then in such a case, if there is no one who can make a successful claim under the family provision legislation to absorb a lapsed bequest, there must be total or partial intestacy. If there is no one to take on intestacy, then some or even the whole of the estate may escheat to the Crown as bona vacantia. Another similar situation is where a person, having testamentary capacity, loses it before making a will and a distribution on intestacy would produce a result which the person could never have intended. His Honour identified these categories as the “lost capacity cases”: . 36. Another category identified by Palmer J is a person who has never had testamentary capacity, usually because of mental illness from an early age. In some of these cases, the incapacitated person is possessed of considerable property but there may not be an eligible person who can make a claim under the family provision legislation on the death of such a person either because no one from his or her family survives the incapacitated person, or the person has been unable to form any relationship of a kind entitling a claim under the family provision legislation. For example, they may
have never married or had children and their parents may have predeceased them. Justice Palmer called this category of case as “the nil capacity cases”: at . 37. His Honour identified a third category of case in which a person, though still a minor and lacking testamentary capacity, was old enough to form relationships and to express reasonable wishes about property before losing testamentary capacity. For example, a teenager of 16 or 17 years who might suffer from severe and permanent brain injury as a result of a car accident, who is subsequently awarded large damages, is old enough to have established some relationships in life at a time when that person was possessed of testamentary capacity but, by reason of the brain damage, lacks testamentary capacity. His Honour categorised this class of case as “the pre-empted capacity cases”: at . 38. His honour traced the history and development of the making of court authorised wills in the UK in concluding that “Australian Courts should resist the temptation to be entangled by them”: at . 39. Palmer J, at , began with a consideration of the manner in which the Lord Chancellor alone, and from 1852 onwards, the Lord Justices of Appeal in Chancery, had used their prerogative in managing a lunatic’s affairs for his or her benefit to direct voluntary payments out of his or her income for the best interests of the lunatic’s children or those who had other moral claims. What was said to be ‘the guiding principle’ in such instances was for the court to “do for the lunatic what the lunatic would have done himself if of sound mind”: In re Darling (1888) 39 Ch D 208, at 211 per Cotton LJ; Re Hinde; ex parte Whitbread (1816) 2 Mer 99, at 102 per Lord Eldon (35 ER 88); In re Evans (1882) 21 Ch D 297, at 299 per Sir George Jessel MR. 40. That is, the Judges had regard to what the lunatic him or herself would have done, having regard to the evidence showed of his or her character and past dealings with the claimant for an allowance, rather than what a reasonable person in the situation of the lunatic would have done if of sound mind and aware of all the relevant circumstances: Re Fenwick at . That is, a subjective test was applied rather than an objective test.
41. Palmer J considered s171 of the Law of Property Act 1925, which conferred limited power on the Chancery Courts to make an inter vivos settlement of the property of a lunatic. The section provided:
(1) The Court may direct a settlement to be made of the property of a lunatic or defective, or any part thereof or any interest therein, on such trusts and subject to such powers and provisions as the Court may deem expedient, and in particular may give such directions
(c) where by reason of any change in the law of intestacy or of any change in circumstances since the execution by the lunatic or defective of a testamentary disposition, or of any absence of information at the time of such execution, or on account of the former management of the property or the expenditure of money in improving or maintaining the same or for any other special reason the Court is satisfied that any person might suffer an injustice if the property were allowed to devolve as undisposed of on the death intestate of the lunatic or defective or under any testamentary disposition executed by him.
(3) This section applies whether or not the lunatic or defective has executed a testamentary disposition and notwithstanding that it is not known whether he has executed such a disposition or not, but does not apply when he is an infant. 42. Section 171(1)(c) was described by Palmer J as:
the forerunner of the statutory will in that, although it empowers a settlement inter vivos, it is designed to alleviate the difficulties caused in a
‘lost capacity’ case, i.e. where a material change in circumstances has occurred after testamentary capacity is lost.7 43. The new power under s171 was first considered by the English Court of Appeal in In re Freeman  1 Ch 479. Prior to losing testamentary capacity the incapacitated person had made a will leaving all her property to her sisters. At the time of the application, she was 81 years of age and her sisters had predeceased her. The applicants were her second cousins and residuary legatees under her aunt’s will. The aunt had looked after the incapacitated person for many years. By a change in the law effected by the Administration of Estates Act 1925 (UK) the right of the applicants, as second cousins, to share in the estate of the incapacitated person on intestacy was defeated. 44. In approving the proposed settlement, the Lord Justices of Appeal differed in their approach. Lord Hanworth MR considered the test of “injustice” connoted “unfairness” ascertained in an objective sense: at 487. However, the Master of the Rolls applied the test under the old law governing the exercise of the Lord Chancellor’s jurisdiction in lunacy, as expressed in In re Darling: “…what is it likely the lunatic himself would do if sane?” (at 488) – seemingly, a search for subjective intention. 45. Sargant LJ however, did not apply the principles established in the old lunacy cases. His Lordship said at 489:
The section is based on somewhat different considerations from those on which settlements of the property of lunatics have hitherto been effected under the general jurisdiction in lunacy. Such settlements have depended upon their being considered to be for the benefit of the lunatics themselves, though a large view has been taken as to what is for the benefit of the lunatic and full play has been given to family considerations, such as the establishment of the legitimacy of children or the maintenance of the position of a successor to a title: see Theobald's Law relating to Lunacy, ch XLV(1). Sect 171, on the other hand, authorizes settlements not for the purpose of benefiting the lunatic, but for the purpose of preventing injustice that might be suffered by others, if property were allowed to devolve as on a total or
7 Re Fenwick, at .
partial intestacy. Such a purpose can hardly be considered as being even indirectly for the benefit of a lunatic ... [emphasis added]. 46. In approving the proposed settlement, his Lordship had primary regard to the fact that the applicants’ family had assumed responsibility for the incapacitated person for some forty-five years. In those circumstances, the applicants had a “moral claim” on the estate of the incapacitated person, which would be defeated upon her death intestate: at 492. His Lordship was applying an objective test: not what the incapacitated person herself would have done, if of sound mind, but what was necessary to avoid the defeat of a moral claim: Re Fenwick at . 47. Lawrence LJ approved the settlement but, like the Master of the Rolls, relied upon an imputed intention of the incapacitated person: at 494. 48. A shift of position emerged a year later, with the Court of Appeal applying an objective test as to what a reasonable person with capacity would do in the circumstances when considering whether provision inter vivos should made. Importantly in my view, Lord Hanworth, who was a member of the Court of Appeal in In re Freeman, said:
It is plain that the intention of the Legislature was to give power to the Court to act under s 171, where, in its discretion, it thinks it is wise or necessary to do so in the interest of those whose rights have been affected by the new law of intestacy.
Next it must be remembered that there is already, under s 117 of the Lunacy Act, 1890, power to deal with the property of a lunatic for the purposes therein defined, which include ‘payment of any debt or expenditure incurred for the lunatic's maintenance or otherwise for his benefit.’ Sect 171, therefore, must not be construed narrowly as giving powers to be exercised only in the interest of the lunatic, or as discharging his obligations; but also as including the interests of those for whom the intestate might reasonably have been expected to make provision, and those who might suffer an injustice in the sense given to those words in In re Freeman. [emphasis added]. 49. It seems his Lordship was propounding the test: for whom might the incapacitated person reasonably have been expected to make provision so that it would be “unfair”, in an objectively determined sense, if no provision were made under s
171(1)(c)? Having ascertained the persons for whom provision would be expected, what provision does the Court (not the patient) think “wise and necessary”?8 His Lordship was careful to remind himself of the purposes of the Lunacy Act, which had as its overarching consideration, what was for the benefit of the lunatic? To the contrary, s171 was not to be construed narrowly, as the language used in the Lunacy Act (benefit of the lunatic) did not find its way into the Law of Property Act 1925, and the Court could consider the interests of those for whom the intestate (the lunatic) might reasonably have been expected to make provision, and those who might suffer an injustice. 50. The power in s171(1)(c) was repealed by the Mental Health Act 1959 (UK) which came into force on 1 November 1960, and somewhat replaced by sections 102 and 103 of that Act. The Mental Health Act also repealed the Lunacy and Mental Treatment Acts, 1890 to 1930. 51. Subsection 102(1)(c) of the Mental Health Act provided: The Judge may, with respect to the property and affairs of a patient, do or secure the doing of all such things as appear necessary or expedient – … (c) for making provision for other persons or purposes for whom or which the patient might be expected to provide if he were not mentally disordered…”. 52. In 1967 a new subparagraph, 103(1)(dd), was introduced by section 17 of the Administration of Justice Act 1967 (UK), which expressly confirmed that the s102 power extended to: The execution for the patient of a Will making any provision (whether by way of disposing of property or exercising a power or otherwise) which could be made by a Will executed by the patient if he were not mentally disordered…. 53. The English Courts, in construing the provisions of the Mental Health Act, applied a highly artificial and counter-factual assumption. They assumed the patient was not
8 Re Fenwick at .
presently mentally disordered and had the ability to review his present situation and decide what he should do: In Re L (WJG)  1 Ch 135; or what would the patient do, if of sound mind and properly advised”: In re DML  1 Ch 1133. 54. In re Davey  1 WLR 164 Fox J applied an objective test by stating that “in the Court of Protection, the essential question in the end would have been what if anything would be reasonable provision in all the circumstances for the various contestants”: at 171 and cited by Palmer J in Re Fenwick at . 55. In Re D (J)  Ch 237 Sir Robert Megarry V-C rejected the objective test approach of Fox J. He applied the assumptions enunciated by Cross J in In re L (WJG) and took them even further. After a consideration of In Re D, Palmer J concluded that Megarry V-C had misapplied sections 102(1)(b) and 103(1)(dd) of the Mental Health Act 1959: see Re Fenwick at  – . 56. The approach of Cross J in In re L (WJG), as expanded by Megarry V-C in In re D (J), with respect to the application of ss102 and 103 of the Mental Health Act 1959 as to settlement inter vivos and as to statutory will cases, came to be known as the “substituted judgment” approach in In Re P  EWHC 163 (Ch). That is, Courts were required to perform “mental gymnastics”: Re P  EWHC 163(Ch) per Lewison J at , a decision under the Mental Capacity Act 2005 (UK). 57. The relevant provisions were subsequently re-enacted in Part VII of the Mental Health Act 1983 (UK). Sections 95 and 96 of that Act were in very similar terms to sections 102 and 103 of the 1959 Act. 58. In In re C (a patient)  3 All ER 866, Hoffman J considered an application for a statutory will under the new Act. Hoffman J adopted the propositions enunciated by Megarry V-C in In re D (J) and in particular, that “the Court must seek to make the will which the actual patient, acting reasonably, would have made if notionally restored to full mental capacity, memory and foresight”: at 869. However, there seems to have been some muddying of the waters with respect, because Hoffman J then considered the position as what a person in Miss C’s position would have wished to
be done; that is, an objective test of a reasonable person, not an imputed actual intention of Miss C was applied. 59. The Mental Capacity Act 2005 (UK) came into force on 1 October 2007. It provides for a structured decision-making process on behalf of a protected person in place of the “substituted judgment” approach. The focus is firmly on ascertaining the person’s best interests. The decision-making process is subject to various overarching principles stated at section 1. These include “an act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests”: section 1(5). The process by which a person’s best interests are to be determined are set out in section 4. However, the “goal of the enquiry is not what P ‘might be expected’ to have done; but what is in P’s best interests”: per Lewison J at . The best interests are to be ascertained objectively and with regard to the wishes of the patient, if known. 60. As a result of the significant change of direction in the terminology of the UK mental health legislation, Justice Palmer concluded that the post-2005 Act decisions in England and Wales provided “limited assistance in determining how the core test in s22(b)” of the Succession Act (whether 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). His Honour concluded that when construing s22(b) of the Succession Act we should start with a “clean slate”, without resorting to guidance from the decisions of England or Wales: Re Fenwick at . 61. As you can see, the Australian statutory wills legislation is quite new as compared with the history of statutory wills in England and Wales. Unlike the English legislation, the statutory will provisions have been introduced directly into the succession legislation of the States and Territories, rather than being located within the metal health or guardianship legislation. In NSW, the provisions are set out in Chapter 2 (Part 2.2 Division 2) of the Succession Act 2006. Chapter 2 deals with wills. Specifically, Divisions 1 and 2 of Part 2.2 deal with court authorised wills for minors (Division 1) and adults (Division 2). The incorporation of the court authorised will provisions for persons lacking testamentary capacity in the Succession Act as
opposed to the NSW Trustee & Guardian Act 2009, Guardianship Act 1987 or Mental Health Act 2007, must be viewed as a deliberate step by the legislature. 62. It is important to note that in the UK, the ‘statutory will’ provisions are set out in the Mental Capacity Act (UK) 2005, which, as I identified above, speaks of the “best interests” of the patient or protected person. In NSW, similar language is found in s39 of the NSW Trustee & Guardian Act 2009 (NSW) and s4 of the Guardianship Act 1987 (NSW): the welfare and interests of such persons should be given paramount consideration, but similar ‘paramount considerations’ are not found in the Mental Health Act 2007 (NSW) or the Succession Act 2006 (NSW). The Australian Reform – Victoria Leads the Way 63. The introduction of the statutory will into Australian succession law began in 1985 with the “Report on Wills for Mentally Disordered Persons” issued by the Chief Justice’s Law Reform Committee (Victoria). That Report was followed by a Discussion Paper published by the New South Wales Law Reform Commission in 1989, “Discussion Paper 20 – Wills for Persons Lacking Will-making Capacity”. The issues that prompted the reference to the Commission from the New South Wales then Attorney-General were identified as follows: As the law stands, the requirement of testamentary capacity means that many persons lacking will-making capacity are unable to make a Will, or if they do, the validity of their dispositions will be in doubt. This may result in an expensive trial at the time probate is sought in order to ascertain capacity. 64. The scheme for statutory will legislation that was proposed in the Discussion Paper was based on sections 102 and 103 of the UK Mental Health Act 1959. 65. In 1992 the New South Wales Law Reform Commission issued its Report: “Wills for persons lacking will-making capacity” (Report 68). The Report recommended that a Will-making scheme should be introduced in New South Wales for persons who had lost testamentary capacity and also for those who have never had it, including minors: para 2.131. The Report set out the structure for a statutory will application
which is now largely embodied in the Succession Act. Unlike the UK model, there is a two-stage process in NSW for a statutory will application: an application for leave to apply for a statutory Will and, if that application is successful, an application for final order for a will to be made. 66. The Commission recommended that the “guiding principle” for the Court in determining the provisions of a statutory will shall, so far as is possible, be to make a statutory will in the terms in which a will would have been made by the person lacking will-making capacity if the person had the capacity to make a will at the time of the hearing of the application”.9 The Commission recommended however that in suggesting that the Court make a will which the person would have made had he or she had testamentary capacity, the Commission intended to direct the Court’s attention to the actual person at the time the application is being considered and not some hypothetical person, and cited Sir Robert Megarry V-C in In re D(J) that “…the Court must seek to make the will which the actual patient, acting reasonably, would have made if notionally restored to full mental capacity, memory and foresight”: at 5. The Commission agreed with the approach of Megarry V-C. 67. The Commission recommended that the Court, in seeking to make a will for a “person lacking will-making capacity”,10 should consider: … e. the likelihood of an application being made under the Family Provision Act 1982 for or on behalf of an eligible person (within the meaning of that Act) in respect of the property of the person for whom the will is to be made and the provision that the Court might order to be made for the eligible person under that Act; [emphasis added]. 68. It stated that factor (e) “is intended to avoid duplication of proceedings caused by eligible persons applying under the Family Provision Act for provision out of the
9 Para 2.20 of the Report.
10 Clause 32FH of the Report.
estate after a statutory will has been made.”11 The wishes, if known, of the person, should also be taken into account by the Court.12 69. The Commission’s report did not recommend that the Court take into account the “best interests of the person” as a factor for its consideration in making a statutory will. Nor did such language find its way into the statutory will provisions in Part 2.2, Division 2 of the Succession Act. 70. It took 14 years until the recommendations of the New South Wales Law Reform Commission were enacted in the Succession Act which commenced on 1 March 2008. During that time, all other Australian states had introduced statutory will-making provisions into their succession legislation. There are, however, some variations in the wording of the other State legislation and that difference in wording means that one cannot follow the decisions of the other Courts in that regard: per Palmer J at . The New South Wales Legislation 71. Section 18(1) provides that the Court may, on an application by any person, make an order authorising: (a) a will to be made or altered, in specific terms approved by the Court, on behalf of a person who lacks testamentary capacity; or (b) a will or part of a will to be revoked on behalf of a person who lacks testamentary capacity. 72. An order under section 18 may authorise the making or alteration of a will that deals with the whole or part of the property of the person making testamentary capacity or the alteration of part only of the will of the person: section 18(2). Importantly, the Court is not to make an order under section 18 unless the person in respect of whom the application is made is alive when the order is made: section 18(3). If the
11 Para 2.21 of the Report.
12 Factor (a) identified by the Commission in its Report at para 2.21.
person is not alive at the time the order for a statutory will is to be made, the Court has no jurisdiction to make the order authorising a will. In the event of the death of a putative testator before an order for a statutory will is made, any ‘eligible persons’ (as defined in s57 of the Succession Act) are left to resort to bringing a family provision claim on the estate and/or notional estate of the deceased pursuant to s59 of the Act. 73. The leave of the Court must be obtained to make an application to the Court for an order under section 18: section 19(1). Hence, the process in NSW (unlike the UK or Victoria) is a 2 stage process, often which tends to be done in the one hearing.13 The information required in support of an application for leave is set out in section 19(2). Those matters are: (a) a written statement of the general nature of the application and the reasons for making it; (b) satisfactory evidence of the lack of testamentary capacity of a person in relation to whom an order was sought; (c) a reasonable estimate of the size and character of the estate of the person; (d) a draft of the proposed will, alteration or revocation; (e) any evidence available of the person’s wishes; (f) any evidence available of the likelihood of the persons acquiring or regaining testamentary capacity; (g) any evidence available to the applicant of the terms of any will previously made by the person;
13 The Final Report of the Victorian Law Reform Commission on Succession Laws published on 15 October 2013 recommended that the 2 stage process in Victoria be abolished: at[3.34] - [3.35]. That recommendation was implemented by the Victorian Government in 2014 by Act 80/2014 s28, which inserted a new s21A.
(h) any evidence available to the applicant or that can be discovered with reasonable diligence of any persons who might be entitled to claim on intestacy of the person; (i) any evidence of the likelihood of an application being made under Chapter 3 of the Act in respect of the property of the person (that is, a family provision application); (j) any evidence available to the applicant, or that can be discovered with reasonable diligence, of the circumstances of any person for whom provision might reasonably be expected to be made by the will by the person; (k) any evidence available to the applicant of a gift for a charitable or other purpose that the person might reasonably be expected to make by a Will; (l) any other facts of which the applicant is aware that are relevant to the application. 74. On hearing an application for leave, the Court may give leave and allow the application for leave to proceed as an application for an order under section 18 and, if satisfied with the matters set out in section 22, proceed to make the order: section 20(1). 75. The Court has the power to revise the terms of any draft of the proposed Will, alteration or revocation in hearing an application for leave: section 20(2). 76. In hearing an application for an order under section 18, the Court may have regard to any other information given to the Court in support of the leave application and it may inform itself of any other matter in any matter it sees fit and is not bound by the rules of evidence: section 21. 77. Section 22 is a crucial section. All elements of s22 must be established to the Court’s satisfaction before an order may be made. It provides that the Court must refuse leave to make an application for an order under section 18 unless the Court is satisfied that:
(a) there is reason to believe that the person in relation to whom the order is sought is, or is reasonably likely to be, incapable of making a will; and (b) the proposed will, alteration or revocation is, or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity; and (c) it is or may be appropriate for the order to be made; and (d) the applicant for leave is an appropriate person to make the application, and (e) adequate steps have been taken to allow representation of all persons with a legitimate interest in the application, including persons who have reason to expect a gift or benefit from the estate of the person. 78. What is important to bear in mind is that in an application for leave, the Court must only be satisfied that “there is reason to believe that [the incapacitated person] is, or is reasonably likely to be, incapable of making a Will”: section 22(a). On the other hand, the Court can make a final order under section 18(1) only in respect of a person “who lacks testamentary capacity”. Hence, in the leave application, it is sufficient to demonstrate the reasonable likelihood of testamentary incapacity but in order to obtain a final order a jurisdictional fact must be proved. That is, that the person actually lacks testamentary capacity. The test in Banks v Goodfellow (1870) 5 QB 549 applies in this regard: Re Fenwick at . 79. Further, whilst the Court has a discretion in a leave application as to what information in subsection 19(2) it will require (as it has the power to dispense with the requirement for an applicant to provide any further information), it has no discretion in relation to the information required by section 22. All categories of information in section 22 must be addressed however, within some of those categories, the Court will require as a matter of discretionary assessment: Re Fenwick at .
80. After addressing the type of evidence that would be considered as satisfactory to prove the lack of testamentary capacity depending on the urgency of the case, Justice Palmer considered what he considered to be the objects of the jurisdiction which the Court exercises under Part 2.2 of Division 2 of the Act (the statutory will provisions). His honour identified those ‘objects’ as: “the best interests of an incapacitated person” and “of those having a proper claim on his or her testamentary bounty”.14 Unfortunately, his Honour cited no authority for this proposition and nowhere in Part 2, Div. 2.2 of the Succession Act 2006 are the objects of that Part or Division set out. 81. It might, with great respect to Palmer J, be going beyond what was envisaged by the legislator in stating that the objects of the jurisdiction being exercised by the Court in Division 2 of the Act are the best interests of the incapacitated person and the best interests of those having a proper claim on the person’s bounty. 82. Justice Lindsay, sitting as Protective List Judge in Re RB15 considered that “[t]he language of section 22 of the Succession Act is compatible with the general principles governing an exercise of the Court’s inherent, protective jurisdiction”.16 It seems his honour was referring to the welfare and interests of the protected person as a, if not the, paramount consideration (generally yielding only to public safety considerations).17 83. Nowhere in his honour’s judgment in Re RB is reference made to the so called ‘other object’ of Part 2.2 Div. 2 of the Act, identified by Palmer J in Re Fenwick, namely, the best interests of those having a proper claim on the person’s bounty. 84. No doubt, when the Court is exercising its protective jurisdiction, it is correct to say that the paramount consideration is the ‘welfare and best interest of the person’.
14 Re Fenwick (supra) at .
15 Although the case details published on Caselaw NSW state the court was exercising Common law jurisdiction, that seems unlikely, given the nature of the orders that were made on 11 February 2015.
16 Re RB at .
17 Ibid at .
The Court of Protection is merely seeking to uphold those “paramount considerations” as they are enshrined in the NSW Trustee & Guardian Act 2009 and the Guardianship Act 1987. 85. What is important though is the absence of those ‘paramount considerations’ from the Succession Act and, in particular, Part 2.2, Division 2 of the Act. What, if any, role do such considerations play in statutory will applications? Much will depend, in my view, on whether the application for a statutory will is made in the Probate List or Protective List of the Supreme Court. In exercising its Probate jurisdiction, the Supreme Court is not required by the statute to take into account the ‘best interests or welfare of the person’. It is required however to take into account the wishes of the person, if they are known or can be ascertained, and, amongst other things, any evidence as to the circumstances of any persons for whom provision might be made in the statutory will, the persons entitled on an intestacy and the likelihood of a family provision claim on the estate, in seeking to ascertain a person’s testamentary intentions: s19(2)(e),(h),(i),(j) Succession Act 2006. 86. The making of an application for a statutory will in the protective list of the Supreme Court is novel. To date, I am aware of only 3 such decisions, of which Re RB is one.18 87. It would seem that the majority of statutory will applications are filed in the Probate List. 88. It is possible that the concept of the ‘welfare and interests of the person’ might not find its way into the Probate Court’s decision making process when considering an application for a statutory will upon an exercise of its probate jurisdiction. If the ‘welfare and best interests of the person’ were a factor to be taken into account by the Court (possibly under s19(2)(l) of the Succession Act) on a statutory will application, it might be impossible to persuade the Court that the making of a will is in that person’s best interests.
18 See also W v H  NSWSC 1696 and Scott v Scott  NSWSC 1541.
89. Quite frankly, one must ask: what is in the best interests of an incapacitated person for a will to be made for that person, rather than allowing the status quo to remain? A will governs the disposition of property upon death. It is generally used as a vehicle (in addition to trusts) to provide for a person’s beneficiaries. The making of a will does not prevent a family provision claim, a construction claim, a rectification claim, or a lack of testamentary claim, after the death of the testator. Whilst the making of a will might provide some certainty to family members or others who may have a claim on the deceased’s bounty, it does not prevent the estate’s exposure to litigation and costs. But, can it really be said that it is in the best interests of the person to make a statutory will? What’s in it for the person? 90. A similar, albeit different, type question was posed by Lindsay J in Re RB in the context of approving a family settlement concerning a protected person, which is addressed below. Family Provision Claims – Putative or Pointless? 91. In all Australian jurisdictions, the court has statutory jurisdiction to make a family provision order that provision, or further provision, be made for an eligible person out of the estate of a deceased person, for the person’s proper maintenance, education and advancement in life. NSW is the only jurisdiction that allows the court to make a family provision order out of the notional estate of a deceased person. 92. In an application for a statutory will the court must be provided with evidence as to the possibility of a family provision claim being made against the estate of the proposed testator. Its role, however, in a statutory will application, is not to determine an actual family provision claim, but to consider the possibility of a claim. 93. The possibility of a family provision claim being made on the estate of a person after death was one of the factors recommended by the NSW Law Reform Commission in 1992. That recommendation found its way into s19(2)(i) of the Act. As I mentioned above, the consideration of this factor by the court “is intended to avoid duplication of proceedings caused by eligible persons applying under the Family Provision Act for provision out of the estate after a statutory will has been made.”
94. With that in mind, and given Parliament enacted that recommendation, is it possible that Parliament intended for the Supreme Court to, in effect, consider ‘putative’ family provision claims in a statutory will application so as to ‘quell’ family provision litigation after the death of the person, by providing for eligible persons in the statutory will? 95. In Re Fenwick, Palmer J said at  – : It would produce needless and and wasteful litigation to authorise a statutory will which was bound to provoke a successful claim under the family provision legislation. In such a case, to grant leave under s 19(1) or to make a final order under s 18 would not be appropriate, within the meaning of s 22(c). The policy of the law is to quell disputes, not to create them. A complication in hearing such a putative family provision claim at the time of hearing the statutory will application is that in a family provision claim the Court’s decision is founded upon circumstances as they exist after the death of the testator and as at the time of the trial. In a contested statutory will case, the incapacitated person may live for many years to come, during which time the circumstances of those now postulating a successful family provision claim may change in a way which either defeats, or increases, the claim. There is no express restriction in the Succession Act on the frequency of applications for a statutory will made by the same person. However, it would be disastrous to encourage the attitude that a statutory will can be made giving expression to putative family provision claims and that applications to vary the statutory will can be made as and when changes in the circumstances of the applicant occur throughout the lifetime of the incapacitated person.
Accordingly, if an application for a statutory will is made in respect of an incapacitated person who clearly has not much time to live, the Court may consider it desirable to hear a contested putative family provision claim in the course of the leave application in order to decide whether the terms of the statutory will are appropriate, within the meaning of s 22(c). The Court may take the view that the circumstances of the putative claimant, and the other relevant circumstances, are not likely to change materially between the making of the statutory will and the time that a family provision claim would be heard in the normal course of events.
On the other hand, however, when the incapacitated person is likely to live for some time, as in many nil capacity and pre-empted capacity cases, the Court should be very slow to hear a contested
family provision claim in the course of the statutory will application. The putative family provision claimant should normally be left to make his or her application for a statutory will provision when and if the relevant circumstances warranting such an application have reached a state of immutability during the life of the incapacitated person. If that does not happen, he or she should be left to pursue a family provision claim as such under Ch 3 Succession Act. 96. In Scott v Scott (2012) 7 ASTLR 299;  NSWSC 1541, Lindsay J dealt with an application for a court authorised will to be made for Dr Scott. His honour said at  – :
An application for family provision relief must, generally, be made within 12 months after the death of the person from whose estate, or notional estate, relief is sought: Succession Act, s 58. The availability, and quantum, of such, if any, relief of that nature as may be granted depends upon an assessment, made at the time of the hearing of an application for relief, as to the adequacy of "provision for the proper maintenance, education or advancement in life" of the applicant made by the will of the deceased person or by the operation of the intestacy rules in relation to the estate of the deceased person: ss 59(1)(c) and 59(2).
The prospect of the Scott family becoming embroiled in family provision litigation after the respective deaths of the Scotts senior is a real one, not readily excluded from consideration. One or both of Susan and Jamie may well survive one or both of Marjorie and Dr Scott. Both sides of the record have made submissions referable to the prospect of Jamie, at least, making an application for family provision relief in relation, at least, to Marjorie's deceased estate. Dr Scott, Susan and Susan's daughters generously invited the Court to make a statutory will for Marjorie, for the benefit of Jamie, on the basis that they would not seek to disturb the effect of such a will via subsequent family provision proceedings. As an actual and prospective benefactor of his children, Dr Scott must have ch 3 of the Succession Act prominently in mind in his "estate planning" calculations.
All parties must also have had in their minds, at least for a time, the possibility that, if a family settlement could be agreed upon for the purpose of bringing to an end not only the current proceedings, but prospective family provision proceedings, the Court might be invited: first, to approve a release of rights under ch 3 of the Succession Act (pursuant to s 95 of the Act) in anticipation of the death, at least, of Dr Scott; and, secondly, to approach the application for a court authorised, "statutory will" for Marjorie (pursuant to ss 18-26 of the Succession Act) with greater certainty than might otherwise be available about the prospect that orders made for the final determination of these proceedings will bring to an end litigation
between Susan, Jamie and Dr Scott about the family inheritance of the younger generation of the Scott family.
The Court is in no position to know to what extent the parties' negotiations for an overall family settlement have been pursued in the course of the discussions that have taken place during the life of the current proceedings.
What can be known, though, is that, in the absence of court approval of a release of Susan's and (perhaps more importantly) Jamie's prospective rights to apply for family provision relief in relation to the deceased estates of Marjorie and Dr Scott, there is a live issue about the utility of any order that might be made in these proceedings for a statutory will to be made in Marjorie's name: see Re Fenwick; Application of Jr Fenwick; Re "Charles"  NSWSC 530;(2009) 76 NSWLR 22 at 60-61 - . What's the point in making an order for a statutory will that is unlikely to settle any controversy and may, indeed, serve only to distort a relatively simple family provision application, able to be based upon an assessment of Jamie's then needs, after Marjorie's death? [emphasis added].
97. In Re Will of Jane  NSWSC 624 Hallen AsJ (as his Honour then was) observed that in that matter, whatever the outcome of the statutory will application, an application for a family provision order in respect of Jane would be made: at  – . His honour also proceeded to consider the circumstances of the persons for whom provision might be made in the will (under s19(2)(j). Those circumstances would also be relevant upon a consideration of a family provision claim. 98. Ultimately, in Re Jane, Hallen AsJ dismissed the application for a statutory will as his honour was not satisfied that the requirements of s22(b) was met. That is, he was not satisfied that the proposed will was “an accurate reflection of Jane’s testamentary intentions, or likely testamentary intentions, and, that the proposed statutory will [was] reasonably likely to be one that Jane would have made if she had testamentary capacity”: at . In Re Jane, the applicant (a child of Jane) sought to make a will omitting 2 of her other children from the will. His honour considered there were a range of possible outcomes whereby the Court could not say with some degree of certainty as to what whether the proposed will was reasonably likely to be one that would have been made by the testator. But see the approach taken by Black J in Burns v The Estate of Troy Mitchell Burns, a Protected Person 
NSWSC 1550, where his Honour approved a will despite there having been a number of possible probabilities as to the contents of the will. 98. Importantly, NSW is the only Australian jurisdiction that allows a person to ‘contract out’ of family provision by releasing their rights to apply for a family provision order, with the approval of the court: s95 Succession Act 2006 In all other Australian jurisdictions, an agreement to release family provision rights or not to pursue a family provision claim is ineffective, on the grounds of public policy: Lieberman v Morris (1944) 69 CLR 69; Burns v Burns (2003) 214 CLR 169. 99. In Re RB, Lindsay J, sitting as protective list judge, approved a family settlement and a statutory will to be made for a protected person. In considering the provision to me made for the wife of the person, the parties, and the Court, agreed that the principles in Luciano v Rosenblum (1985) 2 NSWLR 65 would be analogous to the facts at hand. Luciano is a family provision case under the now repealed Family Provision Act 1982, in which Powell J set out some ‘principles’ as to the nature of adequate provision for a widow of many years. 100. In addition, as part of the settlement, the parties agreed to a release of their rights to make a family provision claim against the estate. The Court approved that release of rights pursuant to s95 of the Succession Act. In order to approve a release of family provision rights, the Court must surely be exercising its mind not only in relation to the possibility of a family provision claim being made, but also, the prospects of success of that claim and its likely outcome? How else will the Court satisfy itself that the release is to the advantage of the releasing party for the purposes of s95(4)(a) of the Succession Act? 101. By granting the releases of family provision rights in the context of a statutory will application, is the Court not seeking to quell disputes?
Re RB, a protected estate family settlement  NSWSC 70 102. Re RB was an application for approval of a family settlement in relation to the protected estate of an 80 year old male RB, which included orders authorising the making of a statutory Will. RB was a retired solicitor living with Alzheimers. 103. The applicants for the statutory Will were 4 surviving daughters of RB. The application for a statutory Will was made upon an exercise of liberty granted by Justice Lindsay, sitting as Protective List Judge, to the daughters to apply to the Court in relation to any matters arising from the making of a declaration that RB was incapable of managing his affairs and subjecting his estate to management under section 41(1)(a) of the NSW Trustee and Guardian Act 2009, on 17 December 2014. The plaintiff in the protective proceedings who sought the declaration in respect of RB’s incapacity was his second wife, ‘A’. The daughters were the daughters of RB’s first marriage. 104. At the time of the application ‘A’ was about 72 years. They had commenced a relationship in 1993 and married in 2008. In essence, she was regarded by the Court as a wife of about 20 years standing. They had no children together but each of them had children by their earlier marriages. 105. RB had five daughters by his first marriage, however one had predeceased him leaving a daughter. The daughters moved the Court for orders authorising the making of a statutory Will on behalf of their father. The proposed Will made provision for themselves and their niece, a grand-daughter of RB. The daughters were aged between 47 – 53 years and each had a family of their own. The granddaughter was aged about 15 years. 106. The evidence revealed that the persons who might be regarded as eligible persons to bring a family provision claim against the estate of RB upon his death, were his four daughters (the applicants); his current wife (‘A’) and his former wife. In relation to his granddaughter, it was accepted by the parties that she had never been dependent upon RB and was not an eligible person. The former wife had entered into property settlement was under the Family Law Act 1975 (Cth) at the time of
their divorce in 1991. If she was to bring a family provision claim, she would have been required to show factors warranting the making on an application for family provision. The chance of her bringing a family provision claim was regarded as a remote possibility. In any event, there was evidence before the Court that the former wife consented to the making of the orders sought in respect of approving the family settlement and Will. The father of the granddaughter was given notice of the proceedings by the applicants but did not appear at the hearing to oppose the relief sought. 107. In the course of the proceedings, the daughters and the wife entered into a Deed whereby they consented to an order authorising a Will to be made for RB in terms put forward by the daughters and after some revision. It also provided for releases proffered by the daughters and the wife of their rights to apply for family provision order out of the estate of RB pursuant to section 95 of the Succession Act 2006. The Deed, and the releases contained therein, required the Court’s approval. 108. Each of the daughters had sworn an Affidavit setting out her financial and material circumstances to the Court and addressed each of the criteria set out in section 95(4) of the Succession Act. Justice Lindsay considered that a grant of approval of each of the releases was appropriate and was satisfied that it was to the advantage of each of the parties to release their rights to apply for a family provision order; it was prudent for them each to grant a release; the provisions of the Family Settlement Deed were fair and reasonable and each of the parties had taken independent advice in relation to the release and given due consideration to that advice before entering into the Deed. 109. His Honour had to consider whether in the management of the protected person’s estate and in the exercise of discretionary powers upon the making of the statutory Will, it was in the interests, and for the benefit, of RB as a protective person, to approve the proposed family settlement and, whether, the statutory criteria for the making of a statutory Will (including, the specific criteria for which section 22 of the Act provides) had been satisfied by the applicants.
110. His Honour considered that the language of sections 22(b) and (c) of the Succession Act is compatible with the general principles governing an exercise of the Court’s inherent, protective jurisdiction. 111. It must be remembered that sections 22(b) and (c) provide that the Court must refuse leave to make an application for a statutory Will unless it is satisfied, inter alia, that: (a) the proposed Will “is, or is reasonably likely to be, one that would have been made by (the person lacking testamentary capacity) if he or she had testamentary capacity” (section 22(b)); and (b) “it is or may be appropriate for” an order granting leave to be made (section 22(c)). 112. His Honour said at :
This language is reminiscent of that used by Lord Eldon in Ex Parte Whitbread In the matter of Hinde, a Lunatic  EngR 868; (1816) 2 Mer 99 at 101-103;  EngR 868; 35 ER 878 at 879 (extracted in W v H  NSWSC 1696 at  and JPT v DST  NSWSC 1735 at - ), a seminal judgment about the principles to be applied in determining whether a voluntary allowance might be made out of a protected estate:
‘The Court does nothing wantonly or unnecessarily to alter [a protected person’s] property, but on the contrary takes care for his [or her] sake, that, if he [or she] recovers, he [or she] shall find his [or her] estate as nearly as possible in the same condition as he [or she] left it, applying the property in the meantime in such manner as the Court thinks it would have been wise and prudent in the [protected person] himself [or herself] to apply it, in case he [or she] had been capable.
... if we get to the principle [governing whether a voluntary allowance should be made out of a protected estate], we find that it is not because the parties [for whom an allowance was sought] are next of kin to [the protected person], or, as such, have any right to an allowance, but because the Court will not refuse to do, for the benefit of [the protected person], that which it is probable [the protected person] himself [or herself] would have done. [Emphasis added] 113. With great respect to his Honour, it is difficult to see how the language of ss 22(b) and (c) of the Succession Act in 2006 is ‘reminiscent of the language used by Lord
Eldon’ in 1816 in determining whether an inter vivos voluntary allowance should be made out of a protected estate. The authorities cited by his Honour, and the quote from Ex Parte Whitbread in the matter of Hinde, refer to the power of the Protective Court to make an inter vivos settlement with respect to the property of a lunatic. Lord Eldon, the Lord Chancellor of Great Britain in 1816, was not dealing with the making of a court authorised will for a lunatic in in the matter of Hinde. A consideration of the question of whether a voluntary allowance should be made out of a protected estate does have as its governing principle, the benefit of the protected person, given the language of the NSW Trustee & Guardian Act 2009 and its guiding objects. As I indicated earlier, the statutory will provisions in the Succession Act do not have, as one of the guiding principles, whether the making of a statutory will is in the best interests of the proposed testator. 114. The legal and historical analysis conducted by Palmer J in Re Fenwick demonstrated the unsatisfactory state of the English authorities. As outlined above, his Honour considered in the matter of Hinde, and the other authorities travelling along the in re Darling line, which preceded the Law of Property Act 1925 (‘the old lunacy cases’) and concluded they were un helpful in construing the provisions of the 1925 Act (as opposed to, perhaps, the Lunacy Act 1890). 115. In in the matter of Hinde, Lord Eldon was doing for the lunatic what the lunatic would have done himself if of sound mind. That is, there was a search for subjective intention on the part of the lunatic in considering if a voluntary allowance would be made out of his or her estate. This principle was established in “the old lunacy cases”, and as Sargant LJ realised in 1927 in In re Freeman  1 Ch 479, it had no real role to play in the construction of s171(1)(c) of the Law of Property Act 1925, a provision which Palmer J described as “the forerunner of the statutory will”19. Sargant LJ said at 489: …the section was based on different considerations from those on which settlements of the property of lunatics have hitherto been effected under the general jurisdiction in lunacy. Such settlements
19 Re Fenwick (supra) at .
have depended upon their being considered to be for the benefit of the lunatics themselves…Sect 171, on the other hand, authorizes settlements not for the purpose of benefiting the lunatic, but for the purpose of preventing injustice that might be suffered by others, if property were allowed to devolve as on a total or partial intestacy. Such a purpose can hardly be considered as being even indirectly for the benefit of a lunatic…” [emphasis added]. 116. Palmer J reasoned that in construing s22(b) of the Succession Act we should start with a ‘clean slate’ without recourse to English authorities. 117. If, in the 21st Century, we are to resort to any English authorities when construing s22 (b) of the Succession Act, I consider the closest we can get to are the cases which considered s171(1)(c) of the Law of Property Act 1925, which specifically dealt with the Court’s power to direct a settlement to be made of the property of a lunatic, where by reason of any change in the law of intestacy or circumstances since execution by the lunatic of a testamentary disposition, any person might suffer an injustice if the property were allowed to devolve as undisposed of upon death. For example, the position taken by Sargant LJ in in re Freeman, and by the Court of Appeal in In re Green  Ch 528, in seeking to apply an objective rather than a subjective standard in seeking to ascertain the incapacitated person’s testamentary intentions, might be more on point then the old lunacy cases, in construing s22(b) of the Succession Act. 118. Thus, in the exercise of its Probate jurisdiction, does the Supreme Court, in seeking to answer the question posed by s22(b), of whether the will is, or is reasonably likely to be, one that would have been made if the person had testamentary capacity (in the sense of is there a ‘fairly good chance’20), apply an objective test, or a subjective, imputed intention, on the person? The question might have to be resolved by the NSW Court of Appeal. 119. It would seem however that the appropriate test is the objective test, of a reasonable person in the circumstances of the person. The question of whether the statutory will is in the best of interests of the person does not, in my opinion, come
20 Re Fenwick (supra) at .
into the equation. The Court is required to consider the possibility of a family provision claim being made on the estate and the circumstances of any person for whom provision might be made when considering whether leave should be granted for an application for a statutory will to be made. The policy of the law is to quell disputes. A statutory will is intended to be a remedial device available to the Supreme Court to “rectify a problem which is affecting people’s lives”.21 The interests of those who have a claim on the bounty must be considered in the exercise of this statutory jurisdiction. Back to Re B 120. The evidence (which was the medical evidence filed by ‘A’ in support of her application for a management order) established that RB did not have testamentary capacity and was unlikely to regain testamentary capacity. At the time of the application RB was living in a nursing home and was on an end of life program with a life expectancy of about 6 moths. Justice Lindsay categorised the case as a “lost capacity case”, using that phrase as established by Palmer J in Re Fenwick. That is, that RB once had, but at the time of the application, has lost testamentary capacity. 121. Justice Lindsay emphasised that in the protective jurisdiction of the Supreme Court, the Court is generally required to pay due regard to the views of the protective person if they are known or if, reasonably, they can be ascertained or presumed. Of course, these matters must be considered in a statutory Will application and particularly so in the context of s22(b) in seeking to establish the “testator’s” likely intentions. 122. Evidence was adduced by the daughters and the wife about RB’s expressions of testamentary intention, whether formal or informal, made before he lacked testamentary capacity. The last Will known to have been made by RB was dated 26 June 2000. It was made at a time still early in his life of cohabitation with his second wife, and before his marriage to her in 2008. Under the 2000 Will, modest provision for ‘A’, and the bulk of his estate was left to his (at the time) five “beloved
21 Re Fenwick (supra) at .
daughters” with gift overs to his grandchildren in the event that any of his daughters predeceased him with issue. The effect of RB’s marriage to ‘A’ in 2008 was to partially revoke that Will save for the modest provision made for ‘A’: section 12 of the Act. That is, the gift to his daughters was revoked, meaning in the absence of a statutory Will, his estate would largely pass on an intestacy, largely to ‘A’, but with some interest passing to the daughters. The Court considered that RB “could hardly have been unaware of the effect of the marriage” because at the time of his marriage, he was a solicitor of many years standing. 123. In 2003, ‘A’ sold her own house and gifted the proceeds to her daughters. Meanwhile, share remained living in a property owned solely by RB. 124. The daughters adduced evidence about attempts made by RB to make a fresh will following his marriage. The evidence provided that their father had made repeated statements that he intended to made a Will dividing his estate, or a substantial part of it, between his five daughters equally and with modest provision for his wife. His wife however, deposed that he had told her he wished to die intestate. Also in evidence was the fact that at the time of his marriage to his second wife in 2008, RB was suffering from Alzheimer’s disease and his daughters were not notified of the marriage. 125. In 2009, RB appointed ‘A’ as his enduring power of attorney. Two months later a draft Will was prepared by a solicitor for RB. That draft Will made greater provision for his wife and also made some provision for his daughters. The draft Will also provided a gift over in favour of any grandchildren. In other words, should a daughter predecease him but leave children who survive him, then the children of that daughter would take her share. 126. Given the parties had reached a proposed settlement, the Court was not required to undertake any examination of the competing versions of imputed testamentary intentions on RB. His Honour stressed (in line with similar observations made by Justice Palmer in Re Fenwick) that statutory Will applications should, so far as is possible, be made in a summary fashion and with a non-adversarial approach with
the interests of the protective person being the overriding consideration. As His Honour said at : Although evidence of statements of testamentary intention may be desirable in support of or in opposition to an application for a statutory Will, the Court may be required to rise above such evidence in the proper disposition of an application. Beyond a point governed by what is reasonable, an application for a statutory Will generally provides no practical opportunity for a detailed judicial determination of the authenticity, and veracity, of competing statements of testamentary intention attributed to a protective person. 127. At the time of the application, the estate of the protected person was in the order of $2.9 million. Prior to the making of an order subjecting his estate to management, the wife had been managing his affairs using an Enduring Power of Attorney and Enduring Guardianship made in 2009. The wife had used the Enduring Power of Attorney to sell RB’s residential unit and applied part of the sale proceeds to purchase an interest in a retirement village for herself absolutely. The wife had also used the Power of Attorney to make a binding death benefit nomination of RB’s superannuation in her favour on behalf of RB. These transactions were of quite some concern to the daughters and it became quite clear in the course of the proceedings that if a settlement was not reached between the parties, litigation was likely to ensue with respect to these transactions. There was a real likelihood of family provision claims being made against his estate by potentially five people. His Honour said at [59(a)]: “absent a statutory Will, duly made, the defendant’s family was manifestly, a multi-party family provision case waiting to happen”. 128. The proposed settlement envisaged an outcome which upon the death of RB, a pool of assets including his superannuation and life insurance entitlements, to the order of $2.9 million, would be divided so that:
(a) his wife would have the benefit of cash or other liquid assets valued at about $1.4 million, together with a secure right of residence for life in the retirement village in which she resides; (b) each of the four daughters and his granddaughter will received about $300,000 ($1.5 million in total). 129. The figures were estimates and the parties recognised the possibility that there may be a further reduction in the size of the estate by virtue of expenditure for the benefit of RB and his wife during the course of his life. However the outcome was regarded as a better outcome for the daughters and granddaughter if the estate was to pass on a partially intestate basis. 130. In arriving at the proposed settlement, the parties agreed that in the context of any application for family provision relief by the wife, a guiding statement as to what might be considered as adequate provision for her proper maintenance, education or advancement in life would be to ensure that she was secure in her home, to ensure that she sufficient income to permit her to live in the style to which she was accustomed to and to provide her with a fund to enable her to meet any unforeseen contingencies. Some of you may recognise that as the classic statement made by Justice Powell in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69G-70A. Justice Lindsay agreed that this approach was “a sound guide to the measure of a testator’s “moral duty” to a wife or partner of 20 years’ standing” at . 131. Despite the fact that his wife was appointed financial manager, she could not, to put it bluntly, strip the estate of the protected person so as to defeat the provision made for the daughters in his Will because her fiduciary obligations as manager of the protected estate are supervised by the New South Wales Trustee and Guardian and the Supreme Court. 132. In what appears to be a consideration of whether to make an order for a statutory Will, His Honour said at :
Put bluntly, what is in it (the family settlement) that can be said to be in the interests and for the benefit, of the defendant? Why should not his protected estate be managed simply on the basis that he will die, substantially, intestate, and those who may be eligible to do so can be left to institute family provision proceedings after his death? 133. As you can see, the ‘best interest of the person’ consideration found its way in his Honour’s reasoning, understandably so to an extent given his Honour was considering an exercise of protective jurisdiction. 134. His Honour was specifically addressed in relation to his concern as to why the status quo should not remain and the parties should not be left to commence family provision claims against his estate upon his death. One of the most obvious things, as was submitted and accepted by His Honour, was that it was not in the best interests of the protected person to subject his estate to costly litigation post his death. There were simmering issues in dispute between his daughters and their step-mother. The settlement was intended by the parties to resolve all these simmering questions in dispute and was calculated to bring peace to the task of managing his affairs during his life and also, to his estate. 135. It was submitted, and accepted by His Honour, that the settlement would bring certainty to the lives of his wife and daughters, who were all recognised as persons having a call on his bounty. This certainty would be cemented if the Court approved the release of all rights to apply for family provision relief under section 95 of the Act. The Deed also invited the Court to order that the wife be released from any claims that could otherwise have been made against her arising out of the management of RB’s affairs before the management order was made by the Court on 17 December 2014. That is, the transactions entered into under the Enduring Power of Attorney. It was also submitted, and accepted by His Honour, that if the status quo was maintained so that the protected person would largely be left to die intestate, his granddaughter would not have standing to apply for family provision
relief because she was not regarded as having ever been dependent on him.22 His Honour accepted that by means of the statutory Will, provision could be made for a grandchild prospectively without standing to apply for family provision relief and so provision could be made for the next generation of the protected person’s family and the amount of provision could be defined without “reference to the vagaries of an award of discretionary family provision relief” at [59(c)]. The settlement was designed to ensure that reasonable provision would be made for all members of his family including, importantly, his wife and provide for a reasonable and practical opportunity for his family members to participate in estate planning decision-making. It should be remembered that in the context of estate planning for a client who has capacity, there are times where there is no room for any intervention by family members in relation to that person’s estate planning measures. 136. The further benefit identified to RB of the Court approving the family settlement and making the statutory Will was that the proceedings for the approval of a family settlement within the context of an exercise of protective jurisdiction, can be dealt with summarily, informally and without the constraints of rules of evidence that may constrain the conduct of family provision proceedings, with cost consequences for the estate of RB and those who make the claims on his estate. 137. A further factor identified by his Honour was that because protective proceedings are governed by their purposive character (that is, upon an exercise of that jurisdiction, judicial directions have to be made by reference to purpose served by the jurisdiction being exercised)23 and where the usual criterion for the making of costs orders in protective cases is that the Court makes such orders as “in all circumstances seems proper” (CCR v PS (No2) (1986) 6 NSWLR 622 at 640; CAC v Secretary, Department of Family and Community Services  NSWSC 1855 at -), and no party has a “presumptive right to costs out of the estate of the
22 Whilst His Honour found that the granddaughter would have been left without any provision from his estate upon an intestacy, with respect to His Honour that conclusion was incorrect because section 127(4) of the Succession Act provides for a distribution of a presumptive share to issue of a predeceased child.
23 Justice Lindsay, “Administration of Estates – Deconstruction And Synthesis in Changing Times” Paper delivered for the College of Law, 17.2.15, at .
defendant, … the Court may be better placed to limit any prospective cost burden on the estate.”24 138. His Honour considered that an application for approval of a family settlement in the context of an exercise of protective jurisdiction also enables the Court to call upon the office of the NSW Trustee and Guardian for its expertise and objectivity in moving parties towards a constructive outcome, both in management of a protected estate and estate planning. His Honour noted the availability of the NSW Trustee and Guardian as an amicus curiae as an “important safeguard against the possibility that unreasonable demands upon a protected estate or upon a vulnerable member of a protected person’s family may be oppressive”. In that sense, His Honour commented that where the size of an estate warrants it, and the NSW Trustee and Guardian has made a material contribution, then an order for costs in favour of the NSW Trustee and Guardian out of the estate of the protected person, can reasonably be anticipated on approval of a family settlement. 139. After considering the evidence on the leave application and on the final application, His Honour granted leave to the daughters to apply for an order authorising a Will to be made for their father and authorised a Will in the terms of the proposed by the parties. An order was made that the Registrar of the Court sign the authorised Will and seal it with the seal of the Court. His Honour also approved, pursuant to section 95 of the Act, the releases by each of the wife and the daughters as recorded in the deed of their rights to seek additional provision from the estate of RB. His Honour made costs orders (daughters’ capped at $40,000) and (wife capped at $40,000) payable from the estate of RB. The costs of the NSW Trustee and Guardian were also ordered to be paid from the estate on an indemnity basis. 140. His Honour made some observations with respect of the wife’s attempt to enter into the deed of settlement in her capacity as manager for the protected person. His Honour observed that she had no authority to sign the deed in her capacity as protected estate manager as the deed does not bind the defendant nor his estate: at
24 Re B at (59(e)).
. Without the Court’s sanction, the deed could bind the wife only in her personal capacity. In any event, His Honour made declarations to the effect that although the parties’ family settlement deed may be binding on each of them inter se, nothing in the orders of the Court approving the settlement, or in the statutory Will authorised by the Court, or in the parties’ deed, operates to bind the protected person or, in the management of his estate or person, the Court, the NSW Trustee and Guardian or the manager for the time being of the protected estate: at . 141. In making the order for the statutory Will, His Honour emphasised that given the Court was exercising protective jurisdiction on the making of the statutory Will, the terms of any Will authorised to be made for a protected person may at any time be reviewed, whenever and as it may be in the interests and for the benefit of the protected person to do so. Whilst noting that multiple applications for a statutory Will are not encouraged and citing in Re Fenwick for this proposition at -, but considering “they are driven (as they must be) by what is in the interests, and for the benefit,” of a protected person, the frequency with which they are made or at least sought may depend on the change in circumstances affecting the welfare of the person or that of his family: at . 142. In making the costs orders, His Honour was mindful of the number of people who were involved in the case preparation, namely at least five laypeople on the applicants’ side and at least one and perhaps more than one on the wife’s side, the size and the complexity of his estate and the transactions effected by the wife in the management of his affairs pursuant to the Enduring Power of Attorney, the need for additional work on the part of the applicants’ legal advisors given the wife’s early resistance to their participation in any decision-making process affecting his estate; the comparative novelty of applications for the approval of the family settlement in conjunction with an application for a statutory Will. Since publications of judgments in W v H  NSWSC 1696, JPT v DST  NSWSC 1735 and L v L  NSWSC 1686); and the fact that the terms of the costs order were negotiated by the parties each with the benefit of advice. His Honour observed that it should not be thought that costs orders would be permitted to represent the norm and reminded that parties who invoke the Court’s protective jurisdiction to advance their own interests
remain exposed to personal risk as to costs: CAC v Secretary, Department of Family and Community Services (2014) NSWSC 1855 at -. 143. Despite the parties coming to an agreement about the terms of the proposed will, the Court still had to be satisfied of the factors set out in sections 18, 19 and 22 of the Act. This is in line with the principle of a ‘no consent’ jurisdiction. 144. What the decision in Re RB demonstrates is the possibility of families seeking to come an agreement as to the terms of a statutory will for a family member (but would still need to satisfy the Court that the matters in s22 and especially, s22(b)) and, in the context of such an application, give a release of their rights to make a family provision claim. This seems to be within the spirit of what the Law Reform Commission had in mind in 1992, and what Parliament intended. Such a settlement can bring certainty to the lives of those with a claim on the persons’ bounty. By a combination of the statutory jurisdictions (and in the case of protected estates also inherent jurisdiction) the court is able in the one case to quell potentially numerous future litigation and bring certainty to the lives of the protected person and his family. 145. With this approach, however, and as identified by Lindsay J, there seems to be a blend of the probate and protective jurisdictions in some statutory will applications. This blending is leading to uncertainty as the nature of the test to be applied when seeking to ascertain whether the proposed will is one that is, or is reasonably likely to be, one that the person would make if he or she had testamentary capacity. It may be that statutory will applications are best placed in the Probate List, rather than the Protective List, as it might be impossible, depending on the facts a of a case, to persuade the Court that the making of a will is in the best interests of the person. This seems to be an extra hurdle for an applicant to jump over and which ordinarily would not exist if the application was made in the Probate List. It may be that we need to resist such crossing over of the two jurisdictions. ******
Ramena Kako, TEP Barrister-at-Law 13 Wentworth Selborne Chambers Level 13, 174-180 Phillip Street Sydney NSW Australia 2000 Ph: +61 2 9232 7750 E: firstname.lastname@example.org W: www.13wentworthselbornechambers.com.au/barristers/ramena-kako/