Court of Appeal rejects dubious applicants estoppel claim

Jason Gill challenged the dismissal of his action seeking a declaration that the executors of the late William Garrett held certain property on trust for him, and in the alternative, sought family provision under s 59 of the Succession Act 2006 (NSW) out of the estate. He also challenged the primary judge’s findings in favour of the executors under a cross-claim filed against the appellant.

Jason and William had met in 1996 and commenced a friendship that developed into one of greater mutual dependence. William loaned money to Jason and covered other expenses. In late 2003, Jason moved into William’s home where he continued to reside until after he died in 2015. William paid for the storage of Jason’s property and continued to loan him money and provide other financial benefits.

Jason looked after William by driving him to appointments, cooking meals and undertaking other household tasks. Contributing to William’s increased medical care needs. Under the Will, Jason was to receive $200,000 less unpaid loans of  $98,000.

Jason claimed that, in 2009, William said he would give him the Paddington property in exchange for living with him as a companion and carer. On that basis, Jason claimed the executors were estopped from denying his claim to the home.

Although William left Jason a significant legacy in his will dated 20 June 2008 (the Will), the residue of his estate, including the Paddington Property, was left to his three children, who are the executors of the Will (the Executors).

The primary hearing

At first instance, the court found that as William lacked capacity by 2009 no such representation occurred; additionally rejecting the family provision claim on the basis that Jason had consciously misused Williams position of special disadvantage.

The executors made a cross-claim, seeking equitable compensation for Jason’s unconscionable conduct in respect of cash withdrawals retained by Jason for his personal use since November 2008 in breach of fiduciary obligations, and for the storage fees incurred by William from the same time.

The Appeal

The NSW Court of Appeal held that:

as there were no direct witnesses, Jason’s credibility was dubious and William had failed to raise the matter with his family and advisors – the primary judge was correct in finding that no representation was made to give rise to a proprietary estoppel.

the medical evidence, coupled with Williams dependence on Jason, supported the primary judge finding that William was in a position of special disadvantage concerning Jason.

Jason had received financial benefits from William, therefore the primary judge was correct in finding no factors warranting his family provision application.

Jason derived a benefit from William making payments for keeping his possessions in storage; refusing to remove his possessions when he had the opportunity after November 2008 was unconscionable. There was no error ordering equitable compensation for storage fees of $43,155.64.

Similarly, as Jason had a fiduciary relationship in respect of the access to Williams bank accounts and PINs, orders for equitable compensation in respect of the unauthorised cash withdrawals made by the primary judge were appropriate. The appeal was dismissed with costs.

 

Eddie Mabo

June 3 is Mabo Day, marking the anniversary of the historic Mabo decision. On 3 June 1992, the High Court of Australia rejected the doctrine that Australia was terra nullius (land belonging to no-one) at the time of European settlement.

Eddie Koiki Mabo was the son of Robert and Poipe Sambo. Shortly after his birth, his mother died, and Eddie was adopted, by his maternal uncle, Benny Mabo, and his wife, Maiga under ‘Aislan Kustom’.

He was raised on Mer as a member of Benny Mabo’s family and, it was through his adopted parents he inherited traditional land.

Murray Islander’s, according to Eddie, inherited land as male descendants. Women inherited land only in cases where the family had no male children. A father makes it known during his lifetime his wish as to which one of his sons would be the heir to his land.

“… it was handed down from generation to generation, they knew by the boundary lines and markers. There was a certain tree, or stones, heaps of rocks, different trees. They knew exactly where the place was.”

In the extended land rights litigation that culminated in the High Court decision known as Mabo, these portions of land were claimed under customary law.

‘Whether Eddie Mabo was adopted by Benny and Maiga Mabo with the consequence that he became their heir is very much in issue in the proceedings.’

Benny Mabo died intestate; it is not uncommon for Aboriginal and Torres Strait Islander people to not make Wills, however the cultural construction of kinship including the fact that the pattern of family on which the common law and the intestacy rules are based does not fit with that of Indigenous peopleenabled the State of Queensland to argue Eddie Mabo was not, adopted by Benny.

Eddie had lived with his uncle informally for a number of reasons including to claim social security payments to which they were not entitled.

The court accepted that some Murray Islanders recognized the existence of Mabo land on the Islands, however, Eddie was not a credible witness; was not adopted as heir by Benny and Maiga, nor did Benny transfer land to him during his lifetime.

If Benny had made a Will formalising his intention to leave his land Eddie would have less trouble in establishing, his right to portions of Mabo family lands, fish traps, fringing reefs, and seas.

In the early stages of the case, the Queensland Parliament passed the Torres Strait Islands Coastal Islands Act that stated

‘Any rights that Torres Strait Islanders had to land after the claim of sovereignty in 1879 is hereby extinguished without compensation’.

this legislation was challenged in the High Court and the Act was found to be invalid under the Commonwealth Racial Discrimination Act 1975. In a second case, the High Court rejected the notion that Australia was terra nullius holding that the Mer people had owned their land prior to the establishment of the colony of Queensland

Family provision claim by a secret De facto partner

George Sclavos (the deceased) died suddenly on 13 August 2013 at the age of 65, leaving an estate of approximately $6 million. The deceased had never married, had no children and no surviving siblings or parents.

In December 2013 probate of an informal will dated 16 October 2012 was granted leaving the whole of his property to his closest living relatives, being his two nieces Cleopatra Calokerinos and Anna Sclavos-Lahana; appointing Cleopatra his executrix.

Okan Yesilhat ( the plaintiff ) brought proceedings against the estate, claiming that he and George were in a secret same-sex relationship for 14 years that is sufficient to qualify him as his de facto partner.

Additionally, the plaintiff claims that the executrix (or someone associated with her) destroyed a will made in his favour; fabricated the October 2012 informal will – which should now be revoked; and, as the deceased’s long-standing de facto partner, the plaintiff is entitled to a grant of administration, and to the benefit of the whole of, the deceased’s intestate estate.

Alternatively, if probate of the informal will were not revoked, the plaintiff claims that as an “eligible person” he is entitled to claim against the deceased’s estate: either as a de facto spouse, or as a dependent who lived with the deceased for a period, or as someone in a close personal relationship living with the deceased.

The payments

In November 2013 the executrix commenced proceedings seeking the return of $380,000 transferred from the deceased’s bank accounts to the plaintiff before and after the deceased’s death on the basis that they are held on constructive trust for, or in the alternative, are owed as a debt to the estate.

The executrix alleges the withdrawals made just before the deceased’s death were not authorised by the deceased. Similarly, the withdrawals after the deceased’s death were all fraudulent misappropriations of funds from the deceased’s estate.

The decision

At first instance, the Court upheld the validity of the informal will, dismissed the plaintiffs family provision claim and entered judgment against him on the executrix’s payment claims.

The appeal

Upholding the primary judgment the New South Wales Court of Appeal held that the plaintiff was not an actual or potential beneficiary in respect of the deceased’s estate nor eligible to claim a family provision order, and had no standing to challenge the informal will.

The court held that the three categories of eligibility claimed involves a requirement that the person be “living with” the other person; a concept which involves mutual living in a common residence, at least to some extent, though not necessarily exclusively or on a full-time basis: from the evidence, the secret relationship did not meet this requirement and therefore did not amount to common residence.

As a corollary, there was no de facto relationship; dependent household membership; or close personal relationship.

Additionally, the Court held there was no error in finding that the payments constituted loans that the plaintiff was obliged to repay.

Constitutional protection of non-resident Aboriginal rights in Canada

Richard Desautel shot and killed an elk without a hunting license in the Arrow Lakes region in British Columbia in October 2010. He was charged with hunting without a license and hunting big game while not being a resident of British Columbia.

Richard admitted that he shot the elk, arguing he was exercising his Aboriginal right to hunt in the traditional territory of his Sinixt ancestors under s35 of the Constitution Act, 1982 (Canadian Constitution).

A U.S. citizen Richard is a member of the Lakes Tribe of the Colville Confederated Tribes and lives on reserve in Washington State; claiming that where he shot the elk was within the traditional territory of the Sinixt people – a predecessor to the Lakes Tribe.

The lower courts agreed that Richard was exercising his Aboriginal right to hunt for ceremonial purposes in the traditional territory -which happened to be in Canada – of his Sinixt ancestors.

The BC Court of Appeal held that members of a present-day Indigenous community situated in Washington State are entitled to exercise constitutionally protected Aboriginal rights within Canada.

The Supreme Court of Canada addressed whether the Canadian Constitution protects the Aboriginal rights of people who aren’t Canadian citizens, and do not reside in Canada; the Court interpreted “Aboriginal peoples of Canada” as expressed in s35 of the Canadian Constitution for the first time.

The majority of the Court held that a fundamental purpose of s35 was the recognition of the prior occupation of Canada by organised, autonomous Aboriginal societies. Therefore “Aboriginal peoples of Canada” includes the modern-day successors of Aboriginal societies that occupied Canadian territory at the time of European contact, even if such societies are now located outside Canada. To exclude Aboriginal peoples who moved or were forced to move, or whose territory was divided by a border, would add to the injustice of colonialism.

The Court concluded that s35 provides that groups whose members are neither citizens nor residents of Canada can be considered part of the “Aboriginal peoples of Canada” and may claim an Aboriginal right.

The majority of the Supreme Court accepted the trial judge’s finding that that the Lakes Tribe, is a successor group of the Sinixt people. At the time of contact between the Sinixt and Europeans, their territory extended north into what is now British Columbia and as far south into what is now Washington State.

In 1846 an international border was created, by 1872, members of the Sinixt were living for the most part in Washington State, but travelled to British Columbia for hunting purposes. A majority of the Supreme Court agreed that this did not prevent the Lakes Tribe from being a successor group to the Sinixt, and they could be considered part of the “Aboriginal peoples of Canada” under s35 of the Canadian Constitution.

After establishing the Lakes Tribe as part of the “Aboriginal peoples of Canada”, the Supreme Court had to determine if s35 provided the group with Aboriginal rights; holding that the test to determine rights must be applied equally to groups outside Canada as for groups in Canada.

The court agreed with the trial judge, that the right to hunt, continued a historical practice that existed prior to European contact with no significant difference between the pre-contact practice and the modern one.

As a result, the Supreme Court of Canada (SCC) upheld the Court of Appeal for British Columbia decision that Richard was exercising an Aboriginal right and had been properly acquitted of all charges by the trial judge.

A Musician & a Supermodel; is separation abandonment

Ric Ocasek died on September 15 2019 aged 75 while recovering from heart surgery. An American singer-songwriter-musician and record producer born Richard Otcasek in Baltimore, he is best known for being a lead vocalist, rhythm guitarist, songwriter, and frontman for the rock band the Cars.

Reportedly expelled from a catholic school in the fifth grade – Ric couldn’t remember why – his grandmother gave him his first guitar, following an obsession with the Crickets’ “That’ll Be the Day”. A rebellious teen, his family relocated to Cleveland where he decided to focus on school, after graduating, Ric enrolled in two Ohio colleges, Bowling Green and Antioch, but dropped out and started leading the peripatetic life of a musician before forming the Cars in 1976.

The Cars disbanded in 1988 with Ric releasing seven solo albums from 1982 through 2005, though none achieved the popularity of his Cars catalogue.

Ric’s first wife Constance divorced him in 1971, the same year he married his second wife Suzanne; they divorced in 1988. In 1984, Ric met the 18-year-old supermodel Paulina Porizkova on the set of a music video; they married in 1989 and separated in 2017 – although continued to share a house. Ric had two sons with each of his wives: Christopher (b.1964), Adam (b. 1970), Eron (b. 1973), Derek (b. 1981), Jonathan Raven (b. 1993), and Oliver (b. 1999).

It has been reported that Ric’s estranged third wife Paulina found him unconscious and unresponsive when she brought him his morning coffee. Ric had executed a new will a few weeks before he died, stating

“I have made no provision for my wife … as we are in the process of divorcing. Even if I should die before our divorce is final … Paulina is not entitled to any elective share … because she has abandoned me,”

New York law provides spouses with a right to elect to receive a share of the estate, even when they are disinherited. Porizkova would be entitled to one-third of all estate assets. However, where a spouse is found to have “abandoned” the person who died, they may not be entitled to any elective share.

A probate judge will decide if Paulina did “abandon” Ric. The New York Court of Appeals held that the spouse claiming abandonment must show in addition to “a mere departure from the marital abode and a consequent living separately” that the abandonment was unjustified and without the consent of the other spouse.

Ric’s estate reportedly consists of $5 million in copyrights and another $115,000 in personal property and cash. Paulina would be entitled to $1.7 million. However, there are likely to be assets held in trust, joint accounts with others, and insurance policies that are not considered to be part of the deceased estate.

Informal Wills in the time of Covid

Gordon Logan died on 5 August 2020, leaving a will prepared by his solicitor and executed in compliance with s 7 of the Wills Act 1997 (‘the Act’) on 26 July 2011 (‘the will’) and a copy of the will, which Gordon had amended and signed dated 17 April 2020 (‘the informal will’).

The informal will

The practice of Gordon’s solicitors with regards to the storage of wills prepared by them was to provide the client with a copy of the unexecuted will and retain the executed original will. Since the date of the will, Gordon had sold property, his named executor and several beneficiaries had died and a great-niece has been born.

In February 2020, Gordon stated that he needed to update his will and powers of attorney; he was 93 and living in an aged care facility. As a result of the first COVID-19 shutdown in Victoria from March 2020, Gordon was not able to see his solicitors, nor arrange for his solicitors to amend his will and post it to him. Additionally due to the social distancing requirements it would have been difficult to meet the usual requirements for witnesses and assessment of the deceased’s testamentary capacity as the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 had not yet been enacted.

Shortly after Gordon’s death, his son Gregory received plastic containers from the nursing home containing Gordon’s belongings. The informal will was kept separately within one of the containers in a folder with Gordon’s solicitors’ firm name on it. It appears that Gordon amended the unexecuted copy of the will using a pen and subsequently signed the document in the absence of any witnesses after making the amendments.

The case

In October 2020, Gordon’s children Anne and Gregory (“the plaintiffs”) sought probate of the informal will, under s 9 of the Act.  

The informal will commences with the words ‘My updated will as from 17 April 2020’, appoints new executors and deals with the whole of the deceased’s estate. The Court found that the changes were

 ‘complete, rational and logical, with an explanation on the relevant page such as ‘dec’ next to a predeceased beneficiary and ‘SOLD’ next to the deceased’s property which had been sold by him.’ at [23]

The handwritten changes were identified by the plaintiffs as being in Gordon’s handwriting. Gordon had signed at the bottom of each page and on the signature line at the end of the document.

The court was satisfied the informal will is a document that clearly contains Gordon’s testamentary intention, disposes of all of his assets and has been signed by him at the end of each page and at the signature clause.

The terms of the document show a clear intention that the document should take effect as Gordon’s final will. Similarly, the careful filing of the informal will with his other important documents separately from his other possessions and in a folder labelled with the name of his solicitors’ firm, demonstrates the importance with which Gordon held the informal will.

Additionally, the Court accepted the plaintiff’s medical evidence that Gordon showed no signs of confusion, delirium or evolving dementia, and that the handwritten amendments made by the deceased reflect his changed circumstances and are rational. Accordingly, the Court was satisfied that the deceased had testamentary capacity when he made the informal will and that he intended it to stand as his final will.

 

 

 

 

 

Probate of Informal Wills in the time of Remote Witnessing

Wills in Queensland

Section 10 of the Succession Act, provides that a will must be in writing and signed by the testator in the presence of two witnesses. On 23 April 2020, the COVID-19 Emergency Response Act 2020 (Qld) came into force containing a regulation-making power where an Act (in this case the Succession Act) requires or permits the signing and witnessing of documents.

The Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Regulation 2020 (Qld) (”the regulation”) commenced on 15 May 2020 modifying the requirements or arrangements about signing or witnessing of wills. Under the regulation a document can be signed while a special witness observes in real time over video link. As protection against fraud, only a small group of special witnesses – including legal practitioners – can endorse documents.

Following the preparation of a paper version of the document, the testator must sign each page as the special witness observes via a video link to ensure that the testator is freely and willingly signing the document.

Once signed the testator must send either the actual document (or a scanned copy) to the special witness; who must sign each page and complete the special witness certificate confirming that the document was signed and witnessed using the modified arrangements, outlining the steps taken to verify the testator and the process followed for signing and witnessing the document.

The document is then returned to the testator or forwarded to other witnesses if they are also signing the document.

The Case

Re Sheehan [2021] QSC is an application for probate of an informal will or, a document that expresses the testamentary intention of its maker but the execution does not meet the formal requirements of the governing legislation.

Stan Sheehan, ( the deceased) died at the Gold Coast University Hospital on 1 December 2020. Having prepared wills on three occasions throughout his life, on 2 November 2020, Stan attempted to execute a will from his hospital bed under the regulation.

Despite the best efforts of Stan’s solicitor who had provided advice, taken instructions, prepared the Will and supervised its execution (including making audio-visual recordings of Stan’s understanding and intent) Stan failed to sign one of the pages of the will as well as an accompanying schedule. Although Stan’s solicitor alerted him of this he died without signing the page.

Because the instrument did not comply with the formal requirements for the making of a will, the persons named as executors applied for probate under s 18 of the Succession Act 1981 (Qld).

As the document was an informal Will the Court also had to consider whether Stan had the testamentary capacity to make such a Will. The applicants were also required to serve all 41 interested beneficiaries with the proceedings.

The Court held that there was a document that purported to embody the testamentary intentions of the deceased, it was accepted that the deceased intended the document to take immediate effect as his last will.

Following the execution of the will but before it was witnessed the solicitor told Stan that the will was valid; following the witnesses signing the document and the solicitor preparing a certificate confirming that it’s all been done properly Stan replied:

“… that’s great and, as you say, it is all being recorded anyway…”

Importantly, the clarity of the audiovisual recordings of the relevant meeting displayed that Stan had testamentary capacity; he understood what was being discussed, and gave precise instructions regarding the distribution of his assets in the event of his death.

The court granted probate of the document executed by Stan on 2 November 2020.

Ironically, there is no requirement to sign every page of a will under s 10 of the Succession Act. Therefore, had the document been signed by Stan in the physical presence of the witnesses, it would have been duly executed and there would have been no need for this application.

Family Provision & the Deceased Estate in the UK

The Inheritance (Provision for Family & Dependants) Act 1975 (“the Act”) provides where the deceased has not made ‘reasonable financial provision’ under their will or on intestacy to a spouse or civil partner, ex-spouse or ex-civil partner, a child of, or someone treated as a child of the family by the deceased; a person who has lived with the deceased ‘as husband and wife’ for two years before the deceased’s death and a person who was financially dependent on the deceased. That person may bring a claim against the estate.

The Act limits ‘reasonable financial provision’ for adult children to what would be reasonable for their maintenance. The Court affirmed the definition provided in Ilott v The Blue Cross & Ors [2017] UKSC 17 that maintenance

… cannot extend to any or everything which it would be desirable for the claimant to have. It must import provision to meet the everyday expenses of living.” at [14]

The Test

The court will apply the following test:

(1) has there been a failure to make reasonable financial provision for the applicant, and if so,

(2) what order should be made.

Section 3 (1) of the Act sets out several factors that the court should consider when applying the two-stage test including ( but not limited to):

  • the financial resources and financial needs which the claimant has or is likely to have in future;
  • the financial resources and financial needs which any beneficiary of the estate has or is likely to have in future;
  • any obligations or responsibilities which the deceased had towards any claimant or beneficiary of the estate of the deceased;
  • the size and nature of the net estate of the deceased;
  • any physical or mental condition of any claimant or any beneficiary of the estate of the deceased; and
  • any other matter, including the conduct of the claimant or any other person.  

The Case

In Miles & Shearer v Shearer [2021] EWHC 1000 (Ch) a claim was brought against the estate of the former chief executive of the merchant bank Singer and Friedlander (“the Deceased”). Neither the Deceased’s adult daughters (”the claimant’s) from his first marriage nor their children benefitted under his Will. The claimants sought reasonable financial provision from their father’s estate under the Act. The defendant and principal beneficiary of the estate was the Deceased’s second wife.

In 2008, the Deceased made separate gifts of £177,000 and £185,000 to the claimants and clearly expressed to them that he would not provide them with any further financial assistance. Despite further requests, neither claimant received financial support from the Deceased after the gifts in 2008. In the last decade of his life, the Deceased and both claimants underwent periods of estrangement.

The Deceased had no legal obligation to maintain the claimants after they reached 18 years old. To rely on s.3 (1) (d), the claimants needed to show that the Deceased had an obligation or responsibility for them at the time of his death.

The Decision

The Court was critical of the basis that one of the claimants’ calculated their alleged financial needs on her current living standard, and not the far less luxurious lifestyle that she had accepted when she was married. The judge concluded that her financial needs should be assessed on that lower standard of living.

Similarly, the claimant had sought costs relating to her youngest daughter who suffers from a disability as part of her financial needs. Under s3(1)(f) of the Act an applicant’s disabilities can be taken into account however this does not extend to any disability of the applicant’s dependant. However, the Court took the impact of the applicant’s caring responsibilities for her daughter when assessing her earning capacity.

The other claimant sought £244,000 to enable the conversion of an existing interest only mortgage on her property to a repayment mortgage and £105,000 to buy out her ex-husband’s 11% equity in the property, which she was due to pay in 2034. The court found that this obligation did not fall within the claimant’s financial needs that she ‘has or is likely to have in the foreseeable future’, which was the requirement under s.3 (1) (a). The Court held that it was unlikely that the sum would fall within the ‘maintenance’ requirement under the Act.

In dismissing the claims under the Act the Court found that after applying the test outlined above the Deceased’s Will did not fail to make a reasonable financial provision for the claimant’s maintenance in the circumstances; therefore the second question does not arise.

A Will, Real Property & CGT

Joan Todd (“Joan”), a widow, died on 2 April 2018, leaving a will dated 11 September 2006 (“the Will”) appointing her four children, Alexander, Wendy, Bronwyn and Yvonne as her executors (“the executors”). Probate of the Will was granted to the executors on 7 November 2018

The following real estate assets were gifted under case 8 of the Will

(1)          A property at Clarence Gardens (“the Clarence Gardens property”) to Wendy

(2)          A property at Hawthorn (“the Hawthorn property”) to Yvonne

(3)          A property at Goolwa Beach (“the Goolwa property”) to Bronwyn  and Alexander as tenants in common and

(4)          A property at Millswood (“the Millswood property”) to Alexander, Wendy, Bronwyn, and Yvonne, in such a manner so as to ensure that as at the finalisation of the administration of my estate all of my said children have received an equal value of bequests under the Will

The Will distributed the residuary estate  equally amongst Joan’s  grandchildren and clause 11(1) of the Will provide that all gifts shall be:

“… free from all duties whatsoever which (whether presently or presumptively or prospectively payable) shall be paid out of my estate in the same manner as my funeral and testamentary expenses and debts shall be payable so that there shall be no subsequent adjustment or apportionment thereof as between any of the beneficiaries.”

The proceedings

Yvonne as executor sought the transfer of the Hawthorn property under the Will; the executors sought advice or directions under s 69 of the Administration and ProbateAct 1919 (SA) in respect of the proper construction of clause 8 of the Will, particularly with respect to the following issues (“the application”):

Whether the accumulated capital gains tax liability attached to each of the properties gifted referred to in the Will should be apportioned to each of the parties in their capacity as beneficiariesunder clause 8, or alternatively under clause 11 of the Will; if so from what date, and whether the net amount of the income and expenses relating to each property should be adjusted pursuant to the Adjustment Clause or alternatively under clause 11 of the Will.  

Yvonne submitted that the values of the three properties should be determined by reference to the Valuer-General’s value at the date of Joan’s death. Providing for potential CGT liabilities under clause 11(1) is misguided and would result in the finalisation of the estate being delayed, potentially indefinitely.  As such potential capital gain or loss based on hypothetical future disposal of the property should have no bearing on the “value” of a bequest made under Joan’s will. 

Wendy and Bronwyn (as executors) argued that the approach of “value received” is commonly applied in the Family Court in substantially identical circumstances where property which is subject to CGT is distributed to one spouse under a property settlement.  Furthermore, they submitted that the same approach to valuing assets is commonly undertaken in commercial cases.

Yvonne, in her capacity as a beneficiary of Joan’s estate on the hearing of the application, submitted that the issue for consideration is the meaning of the phrase “an equal value of bequests under this my will” in clause 8 and how that equal value is to be calculated in the circumstances. 

Conclusion

The Court held that “Value” in clause 8 is to be interpreted as market value, being

“the price agreed between a willing but not anxious purchaser and vendor, both of whom are aware of the circumstances affecting the value of the land and current market conditions”

Joan’s children acquired the properties under the Will; for the purposes of the Income Tax Assessment Act 1997 (Cth) the properties are CGT assets. However, as the transfer is not a CGT event CGT was not payable at the time the beneficiaries acquired the properties.

As CGT liability in respect of a property shall only arise when (and if) that property is disposed of, and only then will the resultant tax payable (if any) be able to be determined.

The Court held that the value of the properties should not depend on the tax affairs of the person to whom they are bequeathed, similarly it is incorrect to say a property bequeathed to a person in the highest bracket of income tax payable for a given year would have a higher value had it been bequeathed to a person who had nil taxable income. Valuation of a property on this basis would present a nearly impossible task, as such a hypothesis would involve too many variables (including events occurring that cannot be discerned on the evidence).

The Notorious Executor

David Rofe was a prominent NSW barrister, former mayor of Woollahra and a conservative political activist. Admitted to practice as a barrister in 1954, appointed Queen’s Counsel in December 1974, David retired from the Bar following surrender by his then Guardian (Brendan Hull, the first defendant) of his practising certificate in December 2012. In May 2014 following the intervention of another long time friend and fellow barrister, David informed the NSW Bar Association of his intention to retire from the Bar and withdrew his application for restoration of his practising certificate.

The Estate

David died in July 2017, aged 85 years, leaving an estate estimated at approximately $27 million; including twelve known testamentary instruments (comprising 10 wills and two codicils); he had never married and had no children.  During his life, David had relationships, with Gregg Hele and Nick Llewellyn and, in his later years a close personal friendship with Kathy Jackson and her partner, Michael Lawler.

Between 2010-2014 David executed several testamentary instruments, culminating in a will dated 17 December 2014 (”the Will”). The validity of each of those instruments was challenged principally on the basis that David lacked testamentary capacity or knowledge and approval of the nature of his estate. Some instruments but not the Will were said to have been invalid because Nick had procured their execution through undue influence.

Guardianship

Following medical assessments from late 2009 onward, concerns were raised regarding Davids testamentary capacity, including his knowledge and approval of several testamentary instruments signed by him, as he was suffering from vascular dementia, aggravated by a lifetime of heavy alcohol intake. In addition David’s friends became concerned with Nick’s eccentric behaviour and increasingly large demands; this led many of David’s friends to believe that Nick was abusing David’s generosity.

Between 2012-2014, a dispute arose between Micheal Lawler (David’s then enduring attorney) and Nick about management of David’s affairs – which had been the subject of protective orders made by the Guardianship Tribunal an its successor, NCAT’s Guardianship Division in December 2012, May-June 2013 and August 2014. At a hearing in August 2014 (”the hearing”) NCAT made a financial management order in favour of Robert Horder (David’s accountant), and continued a guardianship order in favour of Ruth Coleman (David’s former secretary).

In the lead up to the hearing Ruth (as guardian) engaged Gregg Helle – who had recently completed training as a nurse – to be David’s full-time carer and companion. Under Gregg’s supervision, David’s lifestyle improved; his excessive drinking was curtailed and his medication was adjusted. In her role as guardian, Ruth limited Nick’s access to David and, with the assistance of his close friends organised a family reunion in October 2014.

The Named Executors

The Will named Jonathon Rofe, Kathy Jackson and Robert Horder as executors and trustees and following gifts of family heirlooms, pecuniary legacies to family members and  properties to Gregg and Nick, the deceased’s residuary estate was divided into ten parts and distributed among nine people (including two parts to Gregg and one part to Kathy and Nick)

The Court held that David’s choice of executors and trustees should be respected unless there is a strong reason for not doing so. Accepting that David was acutely aware of Kathy Jackson’s controversial reputation and that she has the support of those with a greater beneficial entitlement to the estate the Court refused to decline her appointment as a co-executor, (and in effect, re-write David’s Will) where there are no grounds to reasonably do so.

  “One does not have to be a saint to serve as an executor”.

The Court found that as a discharged bankrupt, Kathy has no legal impediment to her occupation of the office of executor. A criminal conviction is not, of itself, an impediment to the performance of an executors duties.

The Decision

In finding that David had testamentary capacity when he executed the Will and knew and approved of its contents the Court accepted the submissions from the following:

a psychiatrist who witnessed David executing the Will:

Kathy who accompanied David to his appointment with the psychiatrist – but not the examination;

Gregg who drove David, Kathy and a carer to and from the appointment and who spoke with David about the contents of the Will upon his return home;

Others who had dealings with David in the latter part of 2014.

The Court reserved for further consideration ancillary questions whether Nick has any (and, if so, what) liability for debts owed and the enforceability or otherwise of those debts.