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Court of Appeal (Muir, Gotterson and Morrison JJA)
28 November 2014
(This summary contributed by Mr Richard Williams of Counsel)
This decision marks the first occasion on which the Court of Appeal has considered the provisions of the Succession Act that provide for the authorisation of the making, alteration or revocation of a will on behalf of a person who lacks testamentary capacity (ss 21 to 28 of the Act). Such wills are referred to as ‘statutory wills’ or ‘court-authorised wills’. This decision is of particular interest because there has been only one other Australian appellate decision to date in respect of statutory will applications, Boulton v Sanders (2004) 9 VR 495.
The decision at first instance, ADT v LRT  QSC 169, was previously mentioned at  31 QLR 6, and the facts are stated there. By way of a brief summary, an application was made by the testatrix’s husband of more than 55 years, seeking authorisation of the making of a codicil to alter her will. The codicil would have the effect of removing as a beneficiary under the will the testatrix’s daughter-in-law, who had recently separated from the testatrix’s son, and of placing real property that the son would otherwise have received as an outright gift into a testamentary discretionary trust for the benefit of the son and other family members, but excluding the daughter-in-law.
A two-stage process applies under the Act: leave must first be sought under s 22, to make the substantive application under s 21. At the leave stage, the Court must be satisfied of various matters, including that the proposed alteration ‘is or may be’ one that the person would make if they were to have testamentary capacity (s 24(d)) and that ‘it is or may be appropriate for an order under s 21 to be made in relation to the person’ (s 24(e)).
At first instance, Flanagan J found that the s 24(d) requirement was met (at least in respect of the alteration of the gift of the real estate) but s 24(e) was not. Accordingly, leave was refused. The basis on which the s 24(e) requirement was found not to be met was (at ) that the proposed codicil and the use of testamentary trusts had as its purpose protecting the assets the testatrix’s son was to inherit, from pending Family Court proceedings. While it could not be assessed at that stage whether any such attempt to place the assets beyond the reach of the Family Court would be successful, his Honour found that the proposed codicil ‘may have a direct or indirect impact on the property pool available in the present Family Court proceedings’. It was further found that the proposed codicil did not offend ‘the policy of the law’ in terms of seeking to defeat creditors or avoiding the operation of the Bankruptcy Act, as identified in Hausfeld v Hausfeld  NSWSC 989, but it was intended to impact pending Family Court proceedings. In those circumstances, his Honour was not satisfied that ‘it is or may be appropriate’ for an order to be made under s 21.
On appeal, the Court of Appeal considered in particular the function of the s 22 leave requirement. The appellant submitted that s 22 served as a ‘screening’ role, to prevent baseless or unmeritorious applications from proceeding. The respondent, on the other hand, argued that s 22 performed a more significant role, and that once leave was given, it was extremely unlikely that an order under s 21 would be refused by the Court. The Court of Appeal determined that the role of the leave requirement is best ascertained from the words of s 22 itself and its statutory setting. The discretionary power to grant leave is distinctly separate from the discretionary power conferred by s 21. Both powers are contained within a subdivision of the Act that confers a jurisdiction that is protective in nature and is informed by the protective jurisdiction historically exercised by the court over persons without testamentary capacity. That jurisdiction is purposive; the purpose being at its highest level of abstraction, protection of a person in need of protection: Secretary, Department of Family & Community Services v K  NSWSC 1065 at ,  per Lindsay J. The nature and extent of the enquiry that the court needs to undertake at the leave stage, in relation to s 24(e), is discerned by reference to the words of that sub-section: the enquiry need only be one that is sufficient for the court to be satisfied that it ‘is or may be’ appropriate to make an order under s 21. The assessment, at the leave stage, of the appropriateness of making an order is made objectively with reference to the information provided to the court under s 23 and such other matters as the court considers relevant. Importantly, it is undertaken with conscious regard for the fact that making an order under s 21 is an exercise of a jurisdiction which is protective in nature and informed by what is for the benefit, and in the interests, of the person who requires protection.
The Court of Appeal found that the primary judge had failed to have regard to the likely wishes of the testatrix and to the resolve with which she herself would likely act to see to it that they were carried out, if she had testamentary capacity. At first instance, primacy had been given to the competing interests of the son and daughter-in-law as between themselves in the Family Court proceedings. The testatrix’s interest in how her testamentary power over her own property fell to be exercised in the circumstances appeared to have been overlooked. The purpose of the application for the statutory codicil, as found at first instance, had some relevance, but such relevance was ‘towards the margins’, given the competing claims of the testatrix’s son and daughter-in-law in the Family Court proceedings were over their marital property, not claims upon the testatrix’s bounty.
The husband’s appeal was allowed. The decision to refuse leave was set aside. The Court of Appeal proceeded to grant leave under s 22. In considering the application under s 21, the Court observed that the making of the proposed codicil was a step that the testatrix would be freely able to take herself in organising the testamentary fate of her own property, were she able to do so. As had been conceded behalf of the respondent (the daughter-in-law) in argument, for the testatrix to take such a step would neither offend the policy of the law nor exhibit moral obloquy on her part. An order was made authorising the alteration of the will, pursuant to s 22, in terms of a codicil substantially in the form of the one that had been proposed at first instance, but with a minor modification.