TASCAT, nil capacity & the statutory will

In Tasmania, a statutory will can be made by the Supreme Court of Tasmania or by the Tasmanian Civil and Administrative Tribunal, Guardianship stream (Tribunal ) where a person lacks capacity to make a valid will under division 3 Of part 3 of the Wills Act 2008

The person applying for a statutory will must satisfy the tribunal that:

  • (a) the proposed testator is incapable of making a will; and
  • (b) having made reasonable enquiries, that the proposed testator has not made a will or any purported will; and
  • (c) 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 benefit from the estate of the proposed testator; and
  • (d) it is appropriate to make an order for the execution of a will for a proposed testator; and
  • (e) the proposed will is or is reasonably likely to be one that would have been made by the proposed testator if he or she had had testamentary capacity

The grounds for making statutory wills differ in each Australian jurisdiction; in Tasmania the tribunal must be satisfied that the proposed will is, or is reasonably likely to be, one that would have been made by the person if they had testamentary capacity.

Capacity

The common law test for testamentary capacity established in Banks v Goodfellow, was restated and endorsed in Timbury v Coffee, by Dixon J:

“Before a will can be upheld it must be shown that at the time of making it the testator had sufficient mental capacity to comprehend the nature of what he was doing, and its effects; that he was able to realise the extent and character of the property he was dealing with, and to weigh the claims which naturally ought to press upon him. In order that a man should rightly understand these various matters it is essential that his mind should be free to act in a natural, regular, and ordinary manner.”

Background

EI is a 25 year old man diagnosed with severe cerebral palsy from injuries sustained at birth; EI is globally disabled, non-verbal, and is fed by means of a PEG tube. A report prepared in 2008 predicted a 95% probability that EI will survive to between 26 and 34.1 years of age.

In July 2021 EI’s general practitioner provided an opinion that EI does not have the capacity to understand the extent of his personal estate, nor the ability to make decisions about the appropriate distribution of that estate under a will.

Following the settlement of a claim brought against the State of Queensland to compensate for his injuries EI was the recipient of a significant settlement and is a beneficiary of a court-appointed Trust (the Trust).

EI lives in Tasmania with his mother, BI (the Applicant) in a house (the Property) which was purchased by the Trust in March 2020.

EI’s parents separated in 1998. His father OI moved to another state in 2003 while EI and his mother BI remained in Queensland. After OI’s departure, BI became the primary carer for EI, with OI providing care on an intermittent basis.

EI relies entirely on others for his daily needs and ongoing care. The majority of EI’s care needs are attended to by BI together with support providers funded by the National Disability Insurance Scheme (NDIS). OI also provides an estimated 60 days of care to EI annually to provide respite to BI.

The application

The applicant sought an order from the Tasmanian Civil and Administrative Tribunal,  under  s 32 of the Wills Act 2008  to authorise the making of a statutory will for EI. The following draft will before the tribunal proposed:

  • (i) BI and OI be appointed the joint Executors and Trustees;
  • (ii) in the event that BI survives EI, the Property (or any substitute property) is gifted to BI;
  • (iii) charitable gifts, each in the form of $10,000, are to be given to the Epilepsy Foundation, the Cerebral Palsy League and Variety Australia Ltd; and
  • (iv) the residual estate to be divided between BI and OI, with BI to receive a 2/3 share and OI to receive a 1/3 share

The Tribunal was satisfied the Applicant has standing to make the application under s 33(a)

EI never had testamentary capacity, and due to the nature of his disability, there is no prospect of him acquiring such capacity; ss 33(b) and s 33(c)

EI’s estate is valued approximately $6.7 million. The presumption favours the making of a statutory will unless the distribution of the estate upon intestacy would provide adequately for all claims upon the estate.

BI has been the primary carer of EI from 2003; has made contributions toward, (and intends to make further contributions) to the maintenance and upgrading of the Property.

The decision

The tribunal believed it was reasonably likely that a testator in EI’s position would have included provisions in their will to provide security of accommodation for their primary carer, provide a benefit to their father who continues to be in a close and continuing relationship with them, and provide gifts to charitable organisations that have historically provided assistance.

However, EI’s estate under intestacy would not reflect the contributions BI has made towards EI or sufficiently provide for her. Additionally the tribunal held that a person in EI’s position would provide for OI in his will. The Tribunal was satisfied that if EI died intestate his estate would not provide adequately for all reasonable claims.

Importantly the tribunal placed significant weight that OI supported BI’s application and consented to the proposed terms of the will.

The Tribunal must objectively assess whether there is a fairly good chance that a reasonable person in the circumstances of EI would have made a similar will.

the estate…being so large that his mother can comfortably be provided for, that a person of testamentary capacity…would likely have made some provision for his father, bearing in mind his father’s disabilities and his situation in life.

Elayoubi, application of Wosif [2010] NSWSC 1004 at [8]

Finding no dispute that BI’s contribution to EI’s care is significantly larger than OI the tribunal believed it was appropriate to make an order for the execution of a will for a proposed testator; and the proposed will, is or is reasonably likely to be one that would have been made by the proposed testator if he or she had had testamentary capacity; ss 33(e) and s 33(f) of the Wills Act .

In authorising a will for EI in the terms outlined above the Tribunal was satisfied that

  1. the application met the requirements of s 32 of the Wills Act;
  2. all of the mandatory threshold tests provided in s 33 of the Wills Act were met;
  3. following enquiry, EI has not made a will or any purported will s 30(4);and
  4. EI is alive as at the time the order is to be made s 30(6).

Intestate polygamists in the UK

John Hyde was ordained as a priest of the Mormon Church in 1847. He was married in Salt Lake City in April 1853, but later became disillusioned with and left the Church. He was excommunicated for writing and publishing anti – Mormon material.

John’s wife Lavinia left him, and subsequently remarried in what was then known as Utah Territory. John brought an action of divorce against his wife, for adultery.

English law could not recognise polygamy as marriage as it didn’t resemble the equivalent English institution. Notably, in dismissing the claim Lord Penzance pronounced:

“I conceive that marriage, as understood in Christendom, may for this purpose be defined as the voluntary union for life of one man and one woman, to the exclusion of all others”

which became the accepted definition of marriage in many common law countries, and was included in introduction to the civil marriage ceremony in England until the passage of the Marriage (Same Sex Couples) Act 2013.

Official Solicitor

The Official Solicitor is an individual, appointed by the Lord Chancellor who can act directly as solicitor for an individual in certain circumstances. The Official Solicitor has two principal functions;

  • represent children and adults who are incapable of representing themselves in various courts, as a last resort litigation friend; including as legal personal representative of last resort for the deceased estate, or trustee of a trust.

In most cases when acting as litigation friend the Official Solicitor instructs a firm of solicitors to act on the individual’s behalf. Notably, the Official Solicitor will only make decisions on behalf of that individual in relation to the specific issues before the court, and not in other decisions in that individual’s life.

A litigation friend ensures that those who do not have capacity to conduct their own court cases are heard before the court. The court can appoint anyone to be a litigation friend, however the court must confirm that a person is able to make fair and competent decisions about the case , and not have any adverse interests to the person on whose behalf they are acting as litigation friend.

The modern role of the Official Solicitor can be traced back to the 18th century when the Office of the Six Clerks assisted destitute litigants, lunatics and infants in Chancery suits. In 1981, the Official Solicitor became a statutory officer of the Supreme Court of England and Wales appointed by the Lord Chancellor as Official Solicitor to the Supreme Court under s.90 of the Senior Courts Act 1981.

Where an intestate leaves a surviving spouse and issue, under s 46(2) of the Administration of Estates Act 1925 the surviving spouse is entitled to a statutory legacy and a life interest in half the residue.

“(b) as to the other half, on the statutory trusts for the issue of the intestate.”

In Official Solicitor to the Senior Courts v Yemoh [2010] EWHC 3727 (Ch) the intestate was party to several polygamous marriages under Ghanaian customary law. The court was asked to consider intestacy rules concerning polygamous marriages given that the deceased had eight customary polygamous marriages, with associated numbers of children.

The court held that any spouse who had been lawfully married in accordance with the law of the place of an intestate’s domicile was entitled to be recognised in England as a surviving spouse for this purpose.

Benjamin Kodzo Yemoh died intestate on 20 September 1981 in Ghana. At the date of his death he owned real property in England (“the properties”) and personal property, primarily some cash in bank accounts.

Letters of administration were granted for the deceased’s English estate to Edmund Yemoh and Patience Frimpong on 17 May 1985. Several beneficiaries commenced proceedings against the administrator of the estate in 1996. The court appointed the Official Solicitor as Judicial Trustee of the deceased estate on 29 February 2000.

The properties have been sold and the value of the net residuary estate was £388,725.94, – subject to costs.

The Official Solicitor sought guidance from the court under s1(4) of the Judicial Trustee Act 1896 to assist conclusion of the administration of the estate.

The Official Solicitor obtained expert evidence that marriages in accordance with Ghanaian Customary Law are recognised in Ghana. Eight women, two through their estates, claimed they had such marriages with the deceased. The Official Solicitor has no reason to doubt seven of theses claimed Customary Law marriages.

The first defendant is a child of the deceased who has helped the Official Solicitor identify his full or half brothers and sisters. The Official Solicitor has created a schedule of those claiming to be widows and children of the deceased. The Court has doubts as to the veracity of the Ghanaian birth certificates and agrees the Official Solicitor can reasonably rely on the evidence he has already obtained about the scheduled children and treat and proceed on the basis that the schedule is accurate and reasonably identifies the many children of the deceased.

Section 1(1)(a) of the Inheritance (Provision for Family and Dependants) Act 1975 provides that a surviving spouse may bring a claim against a deceased’s estate if their will or intestacy failed to make reasonable financial provision for them.

In Re Sehota (Deceased) [1978] 3 All ER 385 the court considered historical public policy objections to polygamy in Hyde v Hyde and Woodmansee (1866) LR 1 P&D 130 and held that the wife of a polygamous marriage was to be treated as the deceased’s wife under the Act.

 Section 47 of the Matrimonial Causes Act, 1973 effectively abolished the common law rule with all forms of matrimonial relief available in the case of polygamous marriages.

 

Loans, limitations & the deceased estate

Limitation periods protect the rights of defendants by facilitating a resolution within a ‘reasonable’ amount of time. Importantly they prevent the Court from having to preside over cases that are unlikely to succeed.

The limitation periods after which legal action for civil causes of action cannot be brought are legislated by the Limitation Act 1969 (NSW).

For breaches of contract, claims must be brought within 6 years of the breach. However, applications to extend the limitation period may be made.

Background

Ida Wolff loaned her nephew Ronald Binetter $1 million in September 2010. In May 2018, she commenced proceedings by her tutor, to recover the loan. Steven Binetter, as legal representative of her estate, continued the proceedings following Ida’s death in September 2018.

The six-year limitation period for the recovery of debts expired in September 2016 under ss 14 and 63 of the Limitation Act 1969 (NSW). However, her estate submitted that as Ida had been under a disability for some years before commencing proceedings the running of the limitation period had been suspended under s 52(1)(d) for the duration of her disability,

Three categories of evidence were relied on to prove that Ida had suffered disabling confusion and delusions:

•          contemporaneous evidence of Suzanne Binetter, a trusted member of the family, who spent significant time with Ida during the decade before her death.

•          medical and hospital reports available concerning Ida’s treatment for various ailments in the same period before her death; and

• a report by a rehabilitation physician, prepared for the proceedings.

The decision

At first instance the Court accepted that Ida had made a loan to Ronald which had not been repaid however the evidence did not establish that Ida was incapable of, or substantially impeded in, managing her affairs concerning the recovery of the loan.

On appeal, the Court held that Ida would have been under a disability as defined by s 11(3)(b) of the Limitation Act 1969 if

(i)         her physical or mental condition was impaired, 

(ii)        the impairment was for a continuous period of at least 28 days, and 

(iii)       the incapacity or substantial impediment related to the commencement of legal proceedings for recovery of the debt. 

The rehabilitation physician’s report did not specifically address Ida’s capacity to give instructions about commencing these legal proceedings. Finding that Ida would have had a hindered understanding of “complex legal issues” did not assist because the legal issues involved in recovering the loan were not complex.

Suzanne’s evidence also supported the findings at first instance that, between 2010 and 2016, Ida could give instructions to recover the loan as she had asked about its repayment and sought legal advice about the loan. 

The Court of Appeal held that the primary judge did not err in finding that the evidence, in its entirety, did not prove that Ida was under such a relevant and sufficient disability; the limitation period had expired.

Although the evidence showed that Ida had suffered bouts of confusion, forgetfulness and delirium and physical impairments, it did not establish that she was incapable of, or substantially impeded in, managing her affairs concerning the recovery of the loan.

Intestacy, polygamy & letters of administration in the U.K.

In the United Kingdom when a person dies intestate the Administration of Estates Act 1925, prioritises and creates a hierarchy of beneficiaries who will inherit the estate.

Similarly, the Non-Contentious Probate Rules 1987 (“the Rules”) provides a hierarchy list for those able to obtain Letters of Administration.

In Kelly-Lambo v Lambo [2022] EWHC 2672 (Ch), two applicants claiming to be the deceased’s spouse applied for letters of administration; in England and Wales, it is illegal under the Matrimonial Causes Act 1973 to be married to more than one person at a time, the Court cannot recognise a deceased individual having more than one spouse.

Rule 22 sets out the priority order in which letters of administration are to be granted on intestacy. Additionally, s 116 of the Senior Courts Act (”the Act”) enables the court to pass over prior claims to a grant.

Polygamy

Where an intestate leaves a surviving spouse and issue, under s 46 of the Administration of Estates Act 1925 the surviving spouse is entitled to a statutory legacy and a life interest in half the residue.

Notably polygamous marriage while illegal in England and Wales are legal in some countries so a person can enter into polygamous marriage outside of England and Wales and then return, albeit the marriage will not be entirely recognised.

In Official Solicitor to the Senior Courts v Yemoh [2010] EWHC 3727 (Ch), the intestate was party to several polygamous marriages under Ghanaian customary law. The court was asked to consider how the intestacy rules worked concerning polygamous marriages. The court held that any spouse who had been lawfully married under the law of the place of an intestate’s domicile was entitled to be recognised in England as a surviving spouse for this purpose.

The matter

In Kelly-Lambo v Lambo [2022] EWHC 2672 (Ch), the deceased died intestate in 2017. The claimant sought an order for a grant of letters of administration in the High Court in February 2021.

The claimant submitted that she married the deceased in Nigeria in 1993 before travelling to live with him in the UK in 2006 and continued to live with him until he died in 2017. The claimant became aware of the defendant in 2008/09 but had never met her. The deceased told her he had been married before but had divorced.

The defendant submitted that she married the deceased in a Muslim ceremony in Nigeria in 1962. While the defendant accepted that the claimant and the deceased had married it was her position they had divorced in 2000. The defendant also submitted that one of her children had served divorce papers upon the claimant.

The defendant produced a decree absolute of divorce to the court which she claimed to have obtained from papers the deceased produced to the Home Office for permission to remain in the United Kingdom. The claimant alleged that the document was a forgery and denied that she and the deceased had been divorced.

The decision

From the evidence submitted by the parties, the court held that the claimant was living with the deceased as his wife at the date of his death and can therefore be considered a surviving spouse who is entitled to a grant of letters of administration under r 22.

The court then turned to the defendants standing; was she too a surviving spouse? The court held it turned on a 60-year-old memory; with no evidence of an original marriage certificate, only a certified copy with no evidence of how it came to be certified and no evidence from a Nigerian lawyer confirming the validity of the marriage.

The issue to be resolved by the High Court was whether a grant of letters of administration should be made to the defendant alongside the claimant. Having regard to the evidence, the court considered it both just and expedient to appoint the claimant as administrator under s 116 of the Act, and pass over any claims that the defendant may have concerning the issue of a grant.

Presumptions of resulting trust and advancement – anomalous, anachronistic, and discriminatory?

In Bosanac v Commissioner of Taxation [2022] HCA 34 the High Court of Australia examined the equitable presumptions of resulting trust and advancement.

A declaration of trust may be presumed where two parties contribute to the purchase price of property, but legal title to the property is put only in the name of one of them. Equity presumes it was intended that the person holding legal title would do so for both contributors – or that the purchaser did not intend to gift their contribution to the other person.

Where it applies, the presumption of advancement operates to prevent a resulting trust from arising due to the relationship between the two parties. The benefit provided by one party to the other at the cost of the first was intended to be provided by way of “advancement”; absent evidence to the contrary, the relationship supplies a reason for why a gift was intended.


In a discussion of the presumption the Court expressed that

The presumption of advancement, understandably, is especially weak today

[2022] HCA 34 at [22]

Background

In 2006, Ms Bosanac purchased a property (”the property”) for $4,500,000 with a $250000 deposit paid out of Mr and Ms Bosanac’s joint loan account. The balance of the purchase price was paid from joint borrowings and $4,500,000 of bank loans jointly in the names of Mr and Ms Bosanac.

Federal Court

In 2015, the Commissioner of Taxation issued Mr Bosanac notices of amended assessment for the financial years ending 30 June 2006 to 30 June 2013. Mr Bosanac was liable for a substantial tax debt. To satisfy Mr Bosanac’s outstanding tax liabilities the Commissioner of Taxation sought a declaration that Ms Bosanac held 50 per cent of her interest in the Property on trust for Mr Bosanac.

This declaration was sought to satisfy Mr Bosanac’s outstanding liabilities for the amended income tax assessments, shortfall charges, administrative penalties and interest charges.

At first instance, Justice McKerracher held that a presumption of advancement arose and that it had not been rebutted by the Commissioner: [2021] FCA 249.

Federal Court of Australia – Full Court

On appeal the Full Federal Court held that as the Bosanacs

  • bought the property for their joint use;
  • intended the property to be their matrimonial home;
  • paid the deposit from a joint loan account;
  • and balance of the purchase price was borrowed jointly

the property was held on resulting trust:

“the objective facts together with the inferences properly drawn from those facts, lead to the conclusion that Mr Bosanac did not intend that his contribution to the purchase of their matrimonial home at Dalkeith be by way of gift to Ms Bosanac for her ‘advancement’. Rather, it should be inferred from the facts as found that both he and Ms Bosanac intended that Mr Bosanac would have a 50% beneficial interest in the Dalkeith Property.”

[2021] FCAFC 158 at [22]

High Court of Australia

The High Court of Australia granted Ms Bosanac leave to appeal the decision of the Full Federal Court on 12 April 2022.

The Commissioner sought to take advantage of the presumption of resulting trust, where a person who advances purchase monies for property, held in the name of another person, intends to have a beneficial interest in the property: Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 246.

The presumption of resulting trust is subject to an exception that, in the case of purchases by a husband in the name of a wife, or a parent (or in loco parentis), there is a presumption of advancement or, in other words, a presumption that the purchaser intended that the beneficial interest would pass with the legal interest: Nelson v Nelson(1995) 184 CLR 538 at 547-548.

The Commissioner contended that the presumption of advancement of a wife by her husband, which operates to preclude a resulting trust from arising, is no longer part of the law of Australia in relation to the matrimonial home following Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278 at 302-303.

The High Court distinguished Cummins:

“the objective facts in that case established that the intention of both parties was that they would hold the property jointly”

At [119]

despite the greater financial contributions to the purchase price made by Mrs Cummins. Mr Cummins was registered as a joint proprietor when the Hunters Hill property was purchased, whereas Mr Bosanac never had a legal interest in the property.

Further, in Cummins, the husband was not lodging tax returns when the transfer occurred and under s 121(1)(b) of the Bankruptcy Act 1966 transfers of property in an attempt to delay or defraud the creditors or the creditors trustee may be a voidable transaction.

Additionally Mrs Cummins was unsuccessful in establishing a resulting trust in her favour of a tenancy in common in unequal shares. Therefore, the joint tenancy established when the purchased the Hunters Hill property stood.

In Bosanac there was no question at the time of the purchase of the property that Mr Bosanac was in a solid financial position, which meant that it could not be inferred that the property was bought in the sole name of Ms Bosanac so that Mr Bosanac could avoid creditors.

The High Court considered that the primary judge’s findings support an inference on the balance of probabilities of an intention on the part of Mr Bosanac and Ms Bosanac that Ms Bosanac was to be the sole legal and beneficial owner of the property: at [71]-[77]

The Commissioner submitted that the Court abolish the presumption of advancement as having no acceptable rationale and being anomalous, anachronistic, and discriminatory. The Court refused, observing at 95

“the presumption is “too well entrenched as [a] ‘land-mark[]’ in the law of property to be simply discarded by judicial decision”

Will kit, rectification, intestate, removal of executor

In Queensland s 33(1) of the Succession Act 1981 provides that the court may make an order to rectify a will if it is satisfied that the document does not carry out the testator’s intentions due to a clerical error, or does not give effect to the testator’s instruction.

Background

Trevor William McMahon ( the testator) died on 18 August 2021. The testator prepared his last will by filling in a will form dated 22 July 2021 (the will) There has been no grant of probate or letters of administration.

Clause 1 of the will revoked all previous wills and testamentary dispositions.

Clause 2 of the will appoints Michelle Ochea (”the applicant”) as executor of the will and trustee of the deceased estate. At the time the testator executed the will, he and the applicant had been in a domestic relationship for approximately 13 years. They were married on 16 August 2021.

Neither clause 4 nor 5 of the will names a beneficiary; these clauses are the subject of the rectification application. The applicant must establish the testator’s intention concerning the clauses to be rectified.

Extension of time

The applicant filed the originating application outside the period of six months from the testator’s death prescribed by s 33(2) of the Act.

The applicant submitted that it was appropriate to extend the time for making the application under s 33(3) of the Act as the second respondent has brought a family provision claim against the estate in the District Court. The outcome of the applicant’s rectification application is likely to impact the parties’ positions in `that family provision proceeding.

The court accepted that it was appropriate to extend the time for the applicant’s rectification application as the final distribution of the estate had not been made and the respondents did not oppose the extension of time.

The applicant

The applicant sought orders under s 33 of the Succession Act 1981 (Qld) (the Act) for rectification of the will and a grant of probate of the rectified will.

Alternatively, an order under s 18 of the Act that a statutory declaration sworn by the testator on 10 March 2016 is his last will.

The alternative claim for relief was abandoned as no party disputed the validity of the will made on 22 July 2021.

The respondents

The first and second respondents are adult children of the testator’s earlier marriage.

The first respondent – supported by the second respondent – sought a declaration that the estate be distributed under the rules of intestacy; that the applicant be passed over as executor of the will; that he be granted letters of administration with the will annexed.

Rectification

Rectification under s 33(1) requires that the court be satisfied that the will does not carry out the testator’s intentions based on either

  • a clerical error was made or
  • the will does not give effect to the testator’s instructions

The effect of the rectification would be to bequeath the whole of the estate to the applicant. The applicant submits that this was the testator’s intention when executing the will and that the will as executed fails to give effect to that intention.

Clerical error

A clerical error may occur when someone writes something in the will that they did not intend to insert or omits something which they intended to insert. The introduction of a clause that is inconsistent with the testator’s intentions in circumstances in which the person drafting the will fails to apply his or her mind to its significance or effect may also be a clerical error.

What must be shown is the actual intention, not what the intention probably would have been had the testator thought about the matter.

Rose v Tomkins [2017] QCA 157 at [35]

Instructions

As the testator prepared the will himself he gave no instructions as to the content of the will.

Instructions are, of their nature, communicated by one person to another with a view to compliance or obedience by that other person. It seems to follow that s 27(1)(b) cannot apply to a will composed and written by the testator personally.

Vescio v Bannister [2010] NSWSC 1274 at [12].

In dismissing the application to rectify the Will the court held that there was no evidence to support the intention that when the testator executed the will he intended to leave his entire estate to the applicant. Accordingly, the court has no power to make an order to rectify the will in the terms sought by the applicant.

The applicant accepted that if the will was not rectified then the rules on intestacy would apply and she will seek greater provision from the estate than she would receive under the intestacy formula. On that basis, the first respondent submits that the applicant is in a position of conflict.

Removal of executor

The court held that not every conflict of duty and interest should result in removal of an executor. However, removal may be warranted where the conflict will involve an executor having to decide whether to accept or reject his or her claim against the estate.

Similarly, the testator’s intention that the executor be a particular person should not lightly be set aside – whether before or after the grant [at 44]. However, the Court held that in the present case removal may be warranted as the conflict involves an executor having to decide whether to accept or reject her claim against the estate.

The court was satisfied in the circumstances to order that the grant of letters of administration be made to the first respondent` as administrator.

As one of the intestacy beneficiaries, the first respondent is next entitled in the descending order of priority of persons to whom the court may grant letters of administration with the will: r 603 of the Uniform Civil Procedure Rules 1999 (Qld),

Importantly the first respondent is willing to administer the estate and has no conflict that would lead to their removal as administrator. The second respondent, also an intestacy beneficiary, supports the first respondent’s appointment as administrator.

Costs

The Court ordered that the administrator’s costs be reimbursed from the estate on an indemnity basis and the administrator’s costs are to be paid by the applicant to the estate on the standard basis.

Although a will can be prepared using a Will Kit, it is important to exercise caution. A Will Kit may not be suitable for your affairs as it can be highly contestable in Court. It also may not distribute your estate in the way you wish.

Parents’ breach of fiduciary duty to adult children

In New Zealand the Family Protection Act 1955 allows children to make claims against their parent’s estate. If proper provision is not made the following people can claim provision out of the deceased estate. Section 3 of the Act provides an extensive list of who may apply.

Section 4(1) of the Act provides that if adequate provision is not available from the deceased’s estate for the proper maintenance and support of the persons who can claim under the Act, the Court may, at its discretion, order any provision it thinks fit to be made out of the deceased estate.

Maintenance and support

The Court interprets proper maintenance and support broadly to include emotional support – among other things. Proper maintenance tends to look at the financial provision, while support reflects the importance that the claimant played in the deceased’s life and connection to the family.

The court considers a wide range of factors when determining whether the deceased breached their moral duty to provide for an adult child including but not limited to:

  • whether the child has been left anything; 

  • what the deceased’s opinions and wishes were –   this is often expressed separately in a memorandum of wishes.
  • the size of the estate; 

  • the character and conduct of the child, including the relationship between the child and the deceased; and 

  • what moral duty the deceased had to provide for others. 


Adult children without any particular financial need who are left out of a parent’s will are typically awarded 10-15 per cent of the value of the estate as recognition of their place in the family.

Typically the Court reduces the significance of a deceased’s moral duty when they were estranged from their child.

Claims must be brought within twelve months from the date of the grant of probate or letters of administration. However, the court has broad discretion to extend the timeline depending on the circumstances.

Similarly, executors may distribute the estate six months after probate however if they distribute the estate to the beneficiaries within the six months, they may be personally liable should a subsequent claim occur.

The High Court

The claimants were the estranged children of the deceased and victims of sexual and physical abuse committed against them by him throughout their childhood.

The deceased moved his assets into a trust excluding his children from making a claim against his estate under the Act. He then left his children out of his will.

The deceased’s children filed a claim in the High Court following his death asserting that their father owed them a fiduciary duty which was breached when he transferred his assets into the trust. As assets held in trust are not part of the parent’s estate and may be protected against claims under the Act.

A fiduciary is someone placed in a position of trust to act in a person’s best interests with legal consequences if a fiduciary breaches their duties and obligations.

The decision

In the notable matter of A v D and E Limited as Trustees of the Z Trust [2021] NZHC 2997 the High Court ordered that the Trustees of the Z Trust held the trust property on constructive trust for the plaintiffs as the transfer of the assets to the trust

“was in breach of the fiduciary duties…owed to the plaintiffs”.

At [174]

the claimants could claim against the trust as

  • The deceased breached his fiduciary duty to his children to not physically and sexually assault them when they were children.
  • the long-term consequences of the abuse were that a fiduciary relationship and the accompanying duty continued into the children’s adulthood.
  • This fiduciary duty existed when the deceased transferred his assets into the trust. Robert breached this fiduciary duty.
  • As a result of the deceased’s breach of this fiduciary duty, the trustees of the trust knowingly received the assets and therefore held the assets on constructive trust for the estate.

The Appeal

The trustees appealed the High Court’s decision. The Court of Appeal held in D and E Limited v A, B and C [2022] NZCA 430 that there was no fiduciary relationship or duties owed by the deceased to any of his adult children when he transferred his assets into the trust.

The Court accepted that the deceased had a fiduciary relationship with his children when they were young and had breached that relationship and his duties to his children when he abused them.

However, when the deceased was dealing with his assets, he was not exercising the power to protect his children’s interests. The deceased could deal with his personal property as he wished, without the constraints of fiduciary obligations.

The deceased’s fiduciary obligations were defined narrowly by particular powers and did not extend to any actions the deceased chose to take concerning his assets. Further, the transfer of the deceased’s assets affected a future possible claim under the Family Protection Act 1955 and not the children’s interests.

Similarly, there was no obligation on the deceased to hold or deal with his assets for the benefit of his children. The assets were acquired by the deceased without the children’s contribution several years after they had entered adulthood.

The decision on appeal

There was no breach of fiduciary duty when the deceased transferred his assets into the trust as the deceased’s fiduciary duty to his children ended when he no longer lived with or cared for them as there was no longer a relationship of trust.

The Court of Appeal held that there could be no basis in this case to impose a constructive trust. The children would only be able to claim under the Family Protection Act 1955 against the small number of assets in the deceased’s estate.

 

Tardy English executor jailed for contempt

Executors are responsible for administering the deceased’s estate in line with the terms of the will. They have a fiduciary relationship with the estate and are legally bound to act in the beneficiaries’ interests

Additionally, the Trustee Act 2000 provides that executors exercise such care and skill as is reasonable in the circumstances.

Generally, the executor has a year to ensure that assets and liabilities are properly identified and that all taxes, debts, and administration costs are settled before any distribution takes place. If any are overlooked, then the executor is personally liable: s25 of the Administration of Estates Act 1925.

Additionally, beneficiaries are entitled to interest on any outstanding legacies if the executor takes longer than a year to administer the estate.

Background

In Totton & Anor v Totton [2022] EWHC 2304 (Ch) and Totton & Anor v Totton [2022] EWHC 2345 (Ch) Hollie Totton and Daniel Washer (the “Claimants“) are the grandchildren of Hazel Totton (the “Deceased“). Mark Totton (the “Defendant “) is the Claimant’s uncle and the sole executor and trustee of the estate.

The Deceased died on 25 July 2019 leaving three pecuniary legacies of £10,000 each with the balance of the estate being split between the Executor and the Claimants.

The executor received a grant of probate in November 2019; selling the property comprising the bulk of the estate for £425,000 in April 2020.

The Claimants wished to terminate the trust and receive their share of the estate.

On several occasions, the claimants made attempts to contact the executor requesting information regarding the assets of the estate and their distribution. The executor didn’t responded to any of the claimant’s requests.

The court order

On 10 March 2022, following an application from the claimants the Court made an order under Part 64.2 of the Civil Procedure Rules that the defendant provide a full inventory warning that

‘Wrongful refusal to provide the information is contempt of court and may render the respondent liable to be imprisoned, fined or to have his assets seized.’

The Court also granted a freezing injunction in favour of the claimants.

The defendant did not comply with the order and on 31 August 2022, the Court held that the defendant had breached, and remained in breach of the Order.

Contempt

The reason the court gave the executor a four-month custodial sentence for the

“serious, contumacious flouting of orders of the court

include:

  • The claimants had not received their share of the estate for over three years and over two years after the principal asset was sold.
  • There was no evidence that the defendant had acted under pressure from third parties to commit the breaches of the Order.
  • The defendant did nothing to remedy the position; the breaches were serious.
  • The defendant deliberately failed to comply with his duties as an executor.
  • The defendant was solely responsible for the breach of the Order. (he had not, for example, engaged solicitors to deal with the administration).
  • The defendant made no effort to cooperate or mitigate his position.

The court applied the principles set out in Solicitors Regulation Authority v Soophia Khan & ors [2022] EWHC 45 (Ch) where a solicitor was sentenced to six months imprisonment for failing to comply with two court orders to provide court documents to her regulator following intervention into her law practice.

At his sentencing, the defendant admitted that he had breached the order and had

“buried his head in the sand and received a number of envelopes which he just left unopened’

concerning the proceedings. The court reduced the sentence by one month to reflect the defendant’s admission and apology to the Court and ordered he pay the claimant’s costs.

Deed creates contractual right, not severance

In most instances where two or more people take an interest in land, they must register whether they hold as joint tenants or tenants in common. Additionally, if they register as tenants in common they must state the share each person holds.

The interest of a deceased joint tenant passes to the surviving joint tenant(s) via a right of survivorship. Essentially, a joint tenant cannot transfer an interest in the land through a will unless all other joint tenants predecease them.

Tenancy in common occurs in circumstances where two or more people own an asset in defined shares which may or may not be equal.

The interest of a tenant in common forms part of their estate and can be transferred according to their will; the tenancy continues, with a new tenant in common. If a tenant in common dies without a will, their estate is distributed under the rules of intestacy

Background

Catherine Whitty and her husband, Mario Caruso, were the registered joint tenants of their marital home. Mario borrowed money to purchase the property from his brothers and sister-in-law. At the same time, he and Catherine signed a deed appointing Mario as her agent if a ‘trigger event’ were to occur. The deed also gave Catherine a right of first refusal.

One ‘trigger event’, was a default by Mario in making payments owing under the loan agreement with his siblings. Under the arrangements between the parties, if Mario were to die, the amount he had borrowed from his siblings would become immediately payable, and his estate would obtain the right to sell the marital property with Catherine having a right of first refusal.

These matters indicate an intention that the parties would hold the marital property as tenants in common, rather than as joint tenants. Catherine and Mario intended that Mario would retain an interest in the marital property after his death. Accordingly, notwithstanding their registration as joint tenants, in equity, the parties are to be treated as tenants in common.

The deed

The arrangement set out in the deed makes sense if the parties are tenants in common. Mario’s estate would be entitled to half the sale proceeds to repay its liabilities, and the right of first refusal would allow Catherine to purchase Mario’s interest in the marital home from his estate.

However, as joint tenants, Mario’s estate ceases to have any interest in the marital property as by right of survivorship it would be held by Catherine absolutely. Similarly, Catherine’s right of first refusal, with the deed anticipating that Mario’s estate would act as Catherine’s agent offering to sell the property that she would already own.

Mario died intestate unexpectedly after falling into arrears under the loan agreement.

The matter

In Re Caruso [2022] VSC 242 the administrator ad litem sought to address whether equity should treat Mario and Catherine as tenants in common, rather than as joint tenants.

Although Catherine and Mario agreed to have their interests recorded in the register as joint tenants, they will be treated as tenants in common, in equity, if there is

‘a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.’

Corin v Patton (1990) 169 CLR 540,547

Mario’s estate had insufficient assets to pay the money owed to his siblings. His siblings submit that Mario and Catherine held the marital property in equity as tenants in common. If correct, that would mean that Mario’s estate’s half interest would then be available to meet the estate’s obligations to his siblings.

Catherine, on the other hand, contends that the marital property hers absolutely due to the right of survivorship. Mario’s siblings will not be able to recover the moneys owed to them out of the proceeds of any sale of the marital property.

The decision

The Court noted that, whilst equity favours tenancies in common, that principle does not apply in the circumstances of a matrimonial relationship at [4]. The fact that Catherine and Mario contributed different amounts to the purchase price of the property is no reason to consider that they intended anything other than a joint tenancy.

Similarly, if the court were to conclude that the parties held the marital property as tenants in common, then they would hold it in equal shares, even though they had contributed different amounts to the purchase price.

The Court held that read in context the deed reveals an intention that Mario retain an interest in the home after his death and this was consistent with owning the property as tenants in common. Accordingly, in equity, the parties were to be treated as tenants in common, notwithstanding their registration as joint tenants at [9].

The relevant right that Mario obtained under the deed was a contractual right to sell the marital property in certain circumstances. It did not amount to an interest in the property itself and did not differ in any relevant way from Catherine’s interest in the property.

Family provision, addiction and the deceased’s grandson

Melville William Gooley (“the deceased”) died on 23 December 2017 aged 92 years, leaving a will dated 1 February 2010 probate of which was granted to the defendant, his son and the father of the plaintiff, on 13 May 2021.

The defendant remains engaged in legal proceedings with his sisters who had managed the deceased’s financial affairs; no distributions had been made from the estate. The estate has an estimated value of about $28 million, with the residuary estate having a value of approximately $16.98 million.

Sean Gooley (“the plaintiff”) is an adult grandson of the deceased and the only child of the defendant’s first marriage. In Estate Gooley, Deceased [2022] NSWSC 734 the plaintiff made an application for family provision under Chapter 3 of the Succession Act 2006.

The Court held the plaintiff’s long-term drug addiction and the breakdown of his parent’s marriage left him dependent upon the deceased for emotional, if not also financial, support.

Time limit

Although a family provision claim must be filed with the court within 12 months of the deceased’s date of death, the Court didn’t consider it a significant problem that the plaintiff had not applied to extend that time limit under s58(2) of the Succession Act.

The Court held that s90 of the Civil Procedure Act 2005 and rule 36.1 of the Uniform Civil Procedure Rules 2005 each empower the Court, in any event, to make such orders as the nature of a case might require. UCPR rule 36.1 provides the Court with the power to make such orders

“whether or not a claim for relief extending to that … order is included in any originating process or notice of motion.

[2022] NSWSC 734 at 65

The Courts discretion

The Court has broad discretion to determine the strength of the applicant’s claim. However, the onus lies on the applicant to establish sufficient cause. It will be for the court to determine the strength of the applicant’s claim. What constitutes “sufficient cause” depends on all the circumstances of the particular case, unconstrained by any rigid formulae.

The principles governing the exercise of discretion include:

  • the reason(s) for the lateness of the claim
  • whether beneficiaries under the Will would be unacceptably prejudiced if time were to be extended;
  • whether there has been any unconscionable conduct by either side; and,
  • what is the strength of the claim made by the party seeking an extension of time.

Uncertainty in the administration of the deceased’s estate, the estate’s size and the ongoing court action has led to a lack of its distribution which heavily favours granting an extension of time.

Additionally, no party to the proceedings has engaged in any form of unconscionable conduct, and there is sufficient strength in the plaintiff’s case for the family provision order offered by the defendant

The background

The plaintiff must establish factors that warrant the making of his application for a family provision order under s 59(1)(b) of the Succession Act 2006 that once proven will give the applicant the status of

“a person who would generally be regarded as a natural object of testamentary recognition by the deceased

Re Fulop Deceased (1987) 8 NSWLR 679 at 681.

The Court accepted that the relationship between the plaintiff and the deceased was stronger than the ordinary relationship between a grandparent and a grandchild. The plaintiff looked to the deceased as a surrogate father and remained in contact with him as an adult. The plaintiff was the only grandchild of the deceased who spoke at the deceased’s funeral.

Similarly, the court accepted that any misgivings the deceased had about the plaintiff’s drug addiction, did not completely absolve the deceased from a moral duty to make provision for the plaintiff in his will.

The Court held it was inadequate that the deceased made no testamentary provision for the plaintiff even though he continued to recognise him as his grandchild. The “factors which warrant the making” of the plaintiff’s application for a family provision order under s59(1)(b) are his relationship with the deceased, coupled with his poverty and the need for special assistance due to his long-term drug addiction.

The decision

The Supreme Court has a discretion to make an order that a person’s estate be subject to management if it is satisfied that the person is incapable of managing their affairs under s 41(1) of the NSW Trustee and Guardian Act 2009 (NSW).

The Court held that the plaintiff is a person incapable of managing his affairs within the meaning of section 41 of the NSW Trustee and Guardian Act 2009: CJ v AKJ[2015] NSWSC 498 at [27][42]. He is barely employable; dependent upon a disability pension; living in public housing and without substantial prospects. The plaintiff has few substantive assets.

Additionally, the plaintiff is unaccustomed to dealing with large sums of money; and likely, if funded, liable to be exploited and the defendant fears, buy drugs exposing himself to the risk of an overdose.

The defendant has made a series of offers that the estate would pay the costs of an inpatient rehabilitation programme, nominated by the defendant for up to six months. The plaintiff believes that such offers of rehabilitation assistance are impractical because they have not been accompanied by financial support, or somewhere to live, following the completion of a rehabilitation programme.

The Court held that the plaintiff’s belief that he should receive a legacy sufficient to acquire a residence of his own, with financial support beyond that was utterly unrealistic and, reflected his drug-fuelled envy of the material success of the defendant’s second family.

Acting on the defendant’s proposal that the plaintiff undertakes a rehabilitation programme the Court ordered provision be made for the plaintiff out of the estate of $250,000; $130,000 be set aside for the plaintiff’s participation in a process of rehabilitation, independent of the defendant, with other $120,000 available to provide for the plaintiff’s general maintenance, education or advancement in life.

If the plaintiff establishes his sobriety, he can apply for a declaration that he is capable of managing his affairs and seek an order that the management orders affecting him be discharged under s 86 of the NSW Trustee and Guardian Act 2009 NSW.

The Court allowed the plaintiff an opportunity to obtain independent legal advice concerning the orders and the implications for his public housing and disability pension before pronouncing the orders.