Re SB; Ex parte AC

This matter concerned an application for authorisation of a statutory will under s 21 of the Succession Act 1981, and for related orders. In authorising the making of the statutory will, the Court held that the lack of testamentary capacity that had to be shown to obtain such an order encompassed an inability to convey testamentary intentions. Furthermore, the Court held that a person’s financial administrator was permitted to make a non-lapsing nomination in respect of a death benefit under a superannuation trust deed, as such an act was not a testamentary act. It came within the financial administrator’s authority under s 33(2) of the Guardianship and Administration Act 2000.

Martin J

29 May 2020

SB came to Australia in 2009. [1] In 2015, she was almost totally paralysed in a motor vehicle accident. [1]. Among other disabilities, SB was unable to communicate effectively. [1], [24]–[25]. Following the accident, SB brought a personal injury claim that was compromised for $10 million and costs. Perpetual Trustee Company Ltd was appointed as administrator in respect of her damages award. One of her sons was appointed as administrator for all other financial matters. [8]–[9]. Using the damages, Perpetual Trustee: bought land and had a purpose-built dwelling constructed on it; invested $6.75 million in a superannuation fund for SB; and, held the balance in cash on SB’s behalf. [10].

Appropriateness of Making a Statutory Will

The applicant, SB’s litigation guardian, applied for an order that the Court make a statutory will under s 21 Succession Act 1981 on the ground that she is a “person without testamentary capacity”. [6].

As Martin J observed, the Succession Act does not define “testamentary capacity”. [19]. Despite its age and the advances in medical knowledge since it was decided, the test for testamentary capacity remained that in Banks v Goodfellow (1870) LR 5 QB 549. [19]–[21]. His Honour accepted the applicant’s submission that the concept of “testamentary capacity” included “not only the mental acuity necessary, but also the ability to convey the testamentary intentions”. [22]. SB was unable to communicate intentions of that complexity. [22]. On the evidence ([22]–[26]), Martin J accepted that SB did not have the necessary capacity to make a will. 

Justice Martin was satisfied on the evidence that the will proposed by the applicant was a will which SB would, or might, make if she had testamentary capacity. [28]–[32]. His Honour was satisfied leave should be granted and that a statutory will in the form proposed by the applicant should be made. [33]–[34].

Death Benefit Declaration

The applicant also sought a declaration allowing for execution of a nomination under the trust deed relating to the superannuation fund that Perpetual had paid $6.75 million of the damages award into. [1], [35]. Under the trust deed, in the absence of a non-lapsing nomination, the benefit payable upon SB’s death was to be paid to her dependents and personal representative in proportions determined by the trustee under the fund. [35]–[37]. SB had not made a nomination, nor could she. [39]. The applicant submitted that, upon proper construction of the trust deed, and s 33(2) of the Guardianship and Administration Act 2000, SB’s son, as financial administrator, could execute a death benefit nomination on SB’s behalf. [40]. Justice Martin accepted this submission, and held that in order to give proper effect to the statutory will it was appropriate to make the declaration sought. [46].

Section 33(2) of the Guardianship and Administration Act empowered the financial administrator to do anything in relation to a “financial matter” that SB could have done. [41]. If executing a non-lapsing nomination was a “financial matter”, the administrator could do so. [42]. The difficulty was that a “financial matter” did not include a “special personal matter”, which included “making or revoking [an] adult’s will”. [42].

If the non-lapsing nomination was a revocable disposition of property intended to take effect at death, then the financial administrator could not execute it. His Honour held, however, that a non-lapsing nomination should not be characterised as such – its execution was not a testamentary act. It was a power of inter vivos reserved or given by a trust instrument. Making a non-lapsing nomination was an act pursuant to a contract between the trustee and SB. SB’s interest in the trust fund terminated on her death. The nomination did not dispose of property but, by exercise of a contractual right, directed the trustee how the death benefit should be dealt with. [43]–[46].

In the result, orders were made granting leave to apply for a statutory will, making a statutory will in terms of the draft provided, and declaring that the financial administrator may execute a non-lapsing nomination under the trust deed. [46]. 

S Walpole