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Key decisions

  • The Estate of Yunupingu [2022] NTSC 4
  • English v Stewart [2022] NSWSC 268
  • Dodd v Dodd [2022] NSWSC 199
  • Gardner v Selby [2022] NSWSC 298
  • Forster v Forster [2022] QSC 30
  • Starr v Miller [2022] NSWCA 46
  • Makripoulias v Arhontovasilis [2022] VSC 53
  • Case 758577 (concerning Aware Super Pty Ltd)

Where construction of a will is needed before a grant can be made

Gurrumul Yunupingu died in 2017. He left a homemade will which didn’t appoint an executor and it gave ‘my income’ to his daughter and the Gurrumul Yunupingu Foundation, equally, but the will did not dispose of any other asset. The Court observed that: ‘depending on what assets the deceased owned as at the date of his death and precisely what is meant by “my income” there may well be a partial intestacy. Royalty income is generated by the intellectual property in the recordings made by the deceased. That property may have substantial value and it does not seem to have been dealt with in the will. Neither does the will deal with other personal property such as musical instruments owned by the deceased’ (The Estate of Yunupingu [2022] NTSC 4 (Kelly J) at [11]–[12]).

The Court observed that the gift to the daughter may be void for infringing the rule against perpetuities, and the question of whether the gift to the Foundation was charitable would need to be determined by evidence (at [24]). The Court considered these issues of construction would need to be dealt with before the grant as they went to the validity of the will (at [25]). The Public Trustee was appointed administrator pendente lite of the estate.

How an executor disputes a claim

In English v Steward [2022] NSWSC 268 (Hallen J), the Court pointed out that ‘the duty placed on the executor or administrator to pay the debts and liabilities of the estate is not an absolute one’ (at [45]).

The Court referred to sections 92 and 93 of the Probate and Administration Act 1898 (NSW)  ‘Section 92 is designed to enable an executor or administrator of an estate to distribute the assets of an estate to the beneficiaries leaving out of account any claims of which she, he, or it, does not have notice’ (at [47]). This section does not allow a legal personal representative (‘LPR’) to disregard a claim because the LPR believes that it is without substance (at [53]). This is where the procedure in s 93 operates. Section 93 states, where the LPR serves the claimant with a notice disputing a claim, and the claimant does not prosecute the claim within three months thereafter, the LPR may apply to the Court for an order barring the claim.

The Court explained that the application is usually made ex parte and the LPR must make frank disclosure of all relevant information. The application may be dealt with in chambers. The supporting affidavit should be made by the LPR and depose to the date of death, the grant, the s 92 notice, the history of the claim, the basis upon which it is disputed, service of the s 93 notice, the claimant’s notification of the application, the legal assistance available to the claimant, and the claimant’s explanation for not prosecuting the claim (at [64]).

When need trumps conduct in a family provision claim

The claimant for family provision in Dodd v Dodd [2022] NSWSC 199 (Slattery J) was the deceased’s only child. He had a ‘long and ugly criminal record’ including offensive conduct, assault, BE&S, contravening a DVO, offensive behaviour, assault causing actual bodily harm, malicious damage, PCA, use of prohibited drugs, driving unlicenced, driving whilst disqualified, stalking, and intimidating with intent to induce fear. He had served jail time. He was written out of the deceased’s will, and the deceased provided a s 100 statement explaining the reason.

The Court stated, in relation to the claimant’s ‘conduct’, the claimant had assaulted ‘the deceased more than once but the last incident was a long time ago, almost 20 years before the deceased died. It led the deceased to stay distant from [the claimant] out of caution’ (at [147]). ‘The fact the plaintiff has been to prison is not necessarily a factor precluding making an order in his favour’ (at [134]). The claimant ‘is not on trial for criminal conduct here. He was penalised for that conduct and suffered a range of penalties designed to serve individual and general deterrence against crime, including his serving several periods in prison’ (at [57]). The Court referred to the s 100 statement as being made more than 12 years before the deceased’s death.

The son was homeless and slept in his 1998 Nissan motor vehicle in a council car park. He had not worked full time for ten years, received a disability pension, and had debts far exceeding his assets. The net estate was worth $800,000 and the beneficiary was the deceased’s sister who was not an eligible person. The Court awarded the son $520,000 to be held on a protective trust for the benefit of the plaintiff so that it is not squandered (at [161]).

How relevant is the claimant’s domicile in a family provision claim?

In Gardner v Selby [2022] NSWSC 298 (Hallen J) the Court considered a strike out application for a family provision claim against the estate of a deceased who died domiciled in Queensland without real estate in NSW. The only alleged connection to NSW was the location of the life insurer for the deceased, against whom the plaintiff sought an order designating the proceeds of the policy as notional estate (although the insurer was not joined in the proceedings). Section 64 of the Succession Act 2006 (NSW) reads: ‘A family provision order may be made in respect of property situated outside New South Wales when, or at any time after, the order is made, only if the deceased person was, at the time of death, domiciled in New South Wales’.

The Court considered whether the NSW Supreme Court could make a family provision order in relation to the estate of a foreign domiciliary with or without assets in NSW. The Court referred to the Second Reading Speech and the Explanatory Notes, drew attention to the changes produced by an amendment in 2018, but ultimately decided not to determine the issue on an interlocutory application. The Court stated that, whilst a claim for a family provision order is not immune from the application of UCPR r 13.4 that it be summarily dismissed (at [99]), the interests of justice would best be served by allowing the plaintiff’s claim to proceed to trial (at [116]).

The solicitor who prepared the will sought the opinion of another doctor. The Court stated that the solicitor wishing ‘to seek confirmation of his opinion from [a doctor] did not negate its value. [The solicitor] simply took the prudent step that a careful solicitor would where the solicitor was aware that his or her client had been diagnosed with dementia’.

Consideration of a mutual will agreement

Tim Forster had three children from his first marriage, including James. His second wife, Annabel, had two children. Together they had none. They made wills partly benefitting the survivor and, on a gift-over, the five children and stepchildren equally. They entered into a mutual will agreement (‘MWA’). Pursuant to the terms of the MWA, the survivor was permitted to use the inherited estate to maintain their standard of living and pay for health and aged care, but they could not substantially diminish it by, for instance, making gifts to the survivor’s children. After a 24 year marriage to Annabel, Tim died. James applied to the Court for orders that Annabel disclose her financial position to him on a yearly basis.

The Court in Forster v Forster [2022] QSC 30 (Ryan J) observed that equity will intervene to prevent a fraud. ‘Fraud’ in this context means the survivor failing to adhere to the terms of the MWA, including (for example) by revoking the mutual will or by disposing of the property the subject of the MWA during the survivor’s lifetime contrary to it (at [201(e)]).

‘But if the survivor adheres to the MWA, there is no need for equitable intervention to ensure its performance (including by way of declaration of trust) because the terms of the contract will have been fulfilled’ (at [118]).

‘In the absence of fraud by Annabel, the obligation to which Annabel is subject, whilst the lawful absolute owner of the Combined Estate, even if she is properly described as a constructive trustee, is not the equivalent of a willing trustee’s obligation to the beneficiaries of an express trust’ (at [205]).

Accordingly, Annabel’s obligation did not include an obligation to account to James for the property during her lifetime.

NSW Court of Appeal on testamentary capacity, and knowledge and approval

Nancy Starr died in 2018 leaving four adult daughters (Belinda, Margo, Susan and Emma) surviving her. She left an estate of $8,674,379. By a will made in 2012 she left her principal rural interests and related assets to Margo, with the remainder to be divided equally between her three other daughters. Susan sought revocation of a grant of probate in common form which had been made in respect of the 2012 will. She alleged that the deceased lacked testamentary capacity at the time of executing that will, and the deceased’s knowledge and approval of the terms of the will were not established. That claim failed. Susan appealed.

In Starr v Miller [2022] NSWCA 46 (Macfarlan JA; Meagher and White JJA agreeing) the Court statedconsiderable significance can and should be given on the issue of knowledge and approval of the will, to the fact that the draft will was read out… before the deceased executed it, and that she expressed her approval of it’. However, that will not always be the situation. ‘In some circumstances, limited weight should be given to the reading out of a will before execution’(at [49]).

The deceased had seen a consultant psycho-geriatrician in December 2011. The doctor wrote that the deceased was ‘tearful, suffering labile mood, which is a common complication of Alzheimer’s disease’ and that she had a language problem (‘expressive dysphasia’) which is indicative of disordered thought and a possible lack of comprehension. The primary judge preferred the contemporaneous documentary material to the evidence of the doctor. The Court stated that this did not show error as the doctor ‘had… only seen the deceased on two occasions and had not at those times, in any event, been concerned with any issue as to her testamentary capacity… [He] was thus only able to give a retrospective opinion’ (at [61]).

The solicitor who prepared the will sought the opinion of another doctor. The Court stated that the solicitor wishing ‘to seek confirmation of his opinion from [a doctor] did not negate its value. [The solicitor] simply took the prudent step that a careful solicitor would where the solicitor was aware that his or her client had been diagnosed with dementia’ (at [62]). The Court remarked in relation to the provisions in the will that the farm was to go to Margo and the residue of the estate was to be divided equally between the deceased’s other three daughters that ‘the level of capacity necessary in order to understand these matters was not high’ (at [63]).

Court bars solicitor from acting for executor

The Court in Makripoulias v Arhontovasilis [2022] VSC 53 (Moore J) decided an application that the Court exercise its inherent jurisdiction to restrain a solicitor from acting for the executor in proceedings to revoke the grant of probate. The proceedings asserted a lack of testamentary capacity and alleged that the ‘will was made in suspicious circumstances’ (at [6]). The will was prepared by the solicitor and he was also an attesting witness. He filed an affidavit deposing to the circumstances surrounding the preparation of the deceased’s last will, including his reading of the will written in English to the testator in Greek and his suggestion that a medical assessment of the testator’s mental capacity be performed.

The Court considered that it was ‘overwhelmingly likely’ that the solicitor would be called as a witness. The Court stated ‘that there exist strong grounds to challenge the approach adopted by [the solicitor] to the determination of the deceased’s testamentary capacity’ (at [26]). That evidence would relate ‘to one of the central controversies for determination’ (at [37]).

The Court was ‘cognisant that, in contested probate proceedings, it is not unusual for instructing solicitors to give evidence about matters relevant to the execution of a will and a testator’s instructions’ (at [45]). However, the solicitor ‘will be called upon to defend his actions and advice in this matter concerning what evidence is relevant and admissible to determining the deceased’s testamentary capacity. In doing so, [the solicitor’s] personal and reputational interests as a solicitor of long standing will be enlivened’ (at [41]). ‘This places [the solicitor] in an unacceptable position of conflict between his duty to his client to prosecute her claim as to the validity of the will in accordance with law; his personal interest in defending his advice and the position he has adopted about the evidence which is relevant and admissible on the question of testamentary capacity; and his overriding professional duties as an officer of the Court’ (at [43]).

The restraining order was made.

Ensure superannuation fund trustees are joined to proceedings seeking notional estate orders for death benefit paid by the fund

In family provision proceedings, the Court made orders designating 55% of the deceased’s death benefit as notional estate and ordered that this be paid to the complainant. Although the trustee of the deceased’s superannuation fund was not a party to the proceedings and was not bound by the court’s order, the trustee paid the death benefit to the deceased’s legal personal representative (‘LPR’). AFCA determined that the trustee’s payment of the death benefit to the LPR was not fair and reasonable, and that the 55% ($31,934) plus interest be paid to the complainant directly.

To avoid hardship, the LPR paid $20,000 to the complainant. The trustee paid $12,016 to the complainant and treated the sum of $20,000 paid by the LPR as offset against the amount payable pursuant to AFCA’s determination. In the further application, AFCA determined that approach was fair and reasonable as the complainant was not entitled to a windfall gain of a second payment of $20,000 (Case 758577 (concerning Aware Super Pty Ltd)). The complainant argued she had incurred expenses in obtaining the interim payment of $20,000 but did not itemise those expenses. The trustee stated that it would not claim the wrongful payment of the death benefit from the LPR. AFCA stated that if the complainant received the further $11,934 from the LPR it would cover the complainant’s expenses.

Darryl Browne
is the Principal at BROWNE.Linkenbagh Legal Services, and Chair of the Law Council of Australia’s Elder Law and Succession Committee.