Hausfeld v Hausfeld

[2012] NSWSC 989

Supreme Court

New South Wales

Medium Neutral Citation:

Hausfeld v Hausfeld & Anor [2012] NSWSC 989

Hearing dates:

13 August 2012

Decision date:

30 August 2012

Before:

White J

Decision:

1. Order that the summons be dismissed.

2. Order that the plaintiff pay the defendants' costs as submitting defendants.

Catchwords:

WILLS, PROBATE AND ADMINISTRATION - statutory will - application for making of statutory will - application for order for alteration of will by beneficiary - where testator now lacks testamentary capacity - application to alter beneficiaries to prevent plaintiff from acquiring assets that would be available to satisfy judgment debt if unsuccessful in defending Federal Court proceedings against him - court to be satisfied of certain matters before making order - whether alteration reasonably likely to have been made by testator if he had testamentary capacity - additional requirement for order to be appropriate - consideration of policy of law - held not appropriate for court to authorise alteration of will in order to defeat creditors - Succession Act 2006 (NSW) s 22

PRACTICE AND PROCEDURE - procedural fairness - where application for statutory will - application for alteration of will where testator now lacks testamentary capacity - statutory requirement that adequate steps taken to allow representation of all persons with legitimate interest in the application - whether order would adversely affect interests of third party - Succession Act 2006 (NSW) s 18(e)

Legislation Cited:

Succession Act 2006
Fair Trading Act 1987

Cases Cited:

Re Fenwick; Application of J R Fenwick; Re Charles [2009] NSWSC 530; (2009) 76 NSWLR 22
BP Australia Limited v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322

Category:

Principal judgment

Parties:

Gregory John Hausfeld (Plaintiff)
Neil James Hausfeld (1st Defendant)
Susan Davey (2nd Defendant)

Representation:

Counsel:
J Taylor (Plaintiff)
Submitting appearance (Defendants)
Solicitors:
Addisons (Plaintiff)

File Number(s):

2012/227898

Judgment

1. HIS HONOUR: This is an application for leave to make an application for the making of a statutory will. Leave is sought pursuant to s 19 of the Succession Act 2006 for the making of an application for an order under s 18 of the Succession Act for the alteration of a will made by Colin Ross Hausfeld on 10 September 2004. The plaintiff is the son of Colin Hausfeld. Colin Hausfeld is now 91 years of age. He lacks testamentary capacity. His general practitioner reports that Colin Hausfeld is suffering from dementia and is totally disorientated with respect to person, place and time. He would not be capable of making a decision regarding his will.

1. Colin Hausfeld's wife died on 6 January 2010. He has three children, Gregory (the plaintiff), Neil and Susan. Gregory is married to Frances Mary Hausfeld. They have been married for 25 years.

1. The approximate current value of Colin Hausfeld's estate is about $340,000.

1. Colin Hausfeld made a will on 10 September 2004. In the events which have happened, namely the death of Colin's wife, the will leaves his estate to each of his children in equal shares. Gregory seeks an order that the will be altered by substituting his wife for himself as one of the beneficiaries.

1. The reason for this application is that Gregory Hausfeld is a respondent to litigation in the Federal Court in Victoria commenced by Gippsreal Limited. Those proceedings are unresolved. They have been set down for hearing later this year. Gippsreal Limited claims damages in respect of allegedly negligent property valuations on the basis of which it is said mortgage advances were made which have become irrecoverable. It is alleged that the valuations were provided by a company, Hausfeld Johnson Pty Ltd, and that Gregory Hausfeld was the author of the reports. It is alleged that he engaged in misleading or deceptive conduct, or conduct likely to mislead or deceive, in contravention of s 42 of the Fair Trading Act 1987.

1. Gregory Hausfeld denies liability to Gippsreal Limited, but says that there is a prospect he could be found liable in whole or part to the claims made against him, and that this could give rise to substantial damages that could result in his bankruptcy. He is now retired.

1. Colin Hausfeld had good relations with Gregory Hausfeld's wife, Frances. Gregory Hausfeld knows of no potential claimants to the estate other than himself and his siblings. He deposes:

"It is extremely likely that my father would not want my share of his estate to vest in a trustee in bankruptcy, or be appropriated by Gippsreal Limited (or any other creditor) if it succeeded in obtaining judgment against me in the proceedings. In those circumstances, he would want Frances to have the benefit of my proportionate share of his estate, with a view to ensuring that I am provided for, inter alia, by those moneys."

1. Section 22 of the Succession Act relevantly provides:

"22 Court must be satisfied about certain matters

The Court must refuse leave to make an application for an order under section 18 unless the Court is satisfied that:

...

(b) the proposed will, alteration or revocation is, or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity, and

(c) it is or may be appropriate for the order to be made.

...

(e) 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 gift or benefit from the estate of the person in relation to whom the order is sought."

1. In Re Fenwick; Application of J R Fenwick; Re Charles [2009] NSWSC 530; (2009) 76 NSWLR 22, Palmer J said (at [151] and [152]):

"[151] 'Reasonably' can, of course, mean 'in accordance with reason', as in the phrase 'acting reasonably in all the circumstances'. It can also be used to lessen the intensity of an adjective. For example, if I were asked: 'Is this action necessary', the answer 'it is necessary' would be stronger than 'it is reasonably necessary'. The second answer conveys that there is some latitude, or margin of judgment, available whereas the first answer does not.

[152] In the same way, if the Court were required to find whether a certain result is 'likely' for the purposes of s 22(b), it would have to make its judgment in a 'yes or no' or 'black or white' fashion. However, if the Court were asked whether the result is 'reasonably likely', it does not have to be persuaded of likelihood to the same degree. It may answer 'yes' if it considers that there is a fairly good chance that the result is likely. Alternatively, it may answer 'yes' if it recognises that other reasonable people could regard the result as likely, even if the Court itself would differ. Thus 'reasonably likely' can mean 'a fairly good chance that it is likely' or 'some reasonable people could think that it is likely' or 'some reasonable people could think that there is a fairly good chance that it is likely'. Such are the nuances of the English language."

1. Palmer J also observed (at [161]) that in a "lost capacity" case (such as the present):

"[161] ... the court may be satisfied as to what the incapacitated person is 'reasonably likely' to have done, in the light of what is known of his or her relationships, history, personality and the size of the estate."

1. I have no information as to Colin Hausfeld's personality. I do not know whether he is the kind of person who, if he had capacity, would want to protect his son by leaving a share of the estate to his son's wife to be applied for his son's benefit in a way which could not be attacked by creditors, or whether he is the kind of person who would expect his son to meet his just obligations so far as his assets permitted. Having regard to the approach taken by Palmer J to the meaning of the words "reasonably likely" in s 22(b) appearing from para [152] of his judgment in Re Fenwick quoted above, I accept that the proposed alteration to the will is one that it is reasonably likely would have been made by Colin Hausfeld if he had capacity.

1. However, s 22(c) imposes an additional requirement that the order is or may be appropriate. Subsection 19(2) sets out matters that are likely to be relevant to the determination to be made under s 22(c). None of the matters in s 19(2) is significant to the issue raised in the present case. In Re Fenwick, Palmer J observed (at [190]) that:

"...the generality of s 22(c) makes it clear that s 19(2) is not intended to be an exhaustive check list."

1. In my view it is not appropriate, nor might it become appropriate, for the court to authorise an alteration to Colin Hausfeld's will in order to defeat his son's creditors. Whilst I accept that Colin Hausfeld, if he were capable, could leave the share of his estate that would otherwise pass to his son to his son's wife in the expectation that she would provide for his son out of that share if his son were made bankrupt, I do not think that the court should condone such a course. The policy of the law is that people should pay their debts so far as they are able. It is not that they be sheltered in the way proposed.

1. Accordingly, I will refuse the relief sought. I could not in any event have granted the relief sought without Gippsreal Limited having been joined as a defendant and being given an opportunity to be heard. Section 22(e) provides that the Court must refuse leave to make the application for an order under s 18 unless it is satisfied that adequate steps have been taken to allow representation of all persons with a legitimate interest in the application. Whilst it is true that Gippsreal Limited does not have any interest in Colin Hausfeld's estate, nonetheless it has a legitimate interest in this application. The very reason for this application is the apprehension that Gippsreal Limited might be successful in the claim brought in the Federal Court and might become entitled to have recourse to the plaintiff's share of Colin Hausfeld's estate if Colin Hausfeld dies. Both pursuant to s 28(e) and pursuant to general principles, an order should not be made that may adversely affect the interests of a third party unless that party has the opportunity, before the order is made, to make submissions (BP Australia Limited v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322 at [134]).

1. Because I have concluded that an order should in any event be refused on the ground that s 22(c) has not been satisfied, I have not required the joinder of Gippsreal Limited. To do so would only increase costs and cause delay.

1. The plaintiff sought an order that the proceedings be determined in chambers. In Re Fenwick Palmer J observed (at [263] ff) that in straightforward and unopposed cases applications for the making of a statutory will can be dealt with on the papers by a judge in chambers without the need for publication of reasons. As it happened, this application was referred to me from the Registrar's list and was heard in open court. As the purpose of the application is to prevent the plaintiff from acquiring assets that would be available to satisfy a judgment debt if the plaintiff is unsuccessful in his defence of the proceedings brought against him in the Federal Court, it is not appropriate that the matter be dealt with otherwise than in open court. There need be no anonymisation of the proceedings as Colin Hausfeld is not a minor nor a protected person. In Re Fenwick the application in relation to the will of Mr Fenwick, an incapacitated person, was not anonymised, although the application in relation to the statutory will for a minor was.

1. For these reasons I order that the summons be dismissed. The only defendants to the application were the plaintiff's siblings who filed a submitting appearance. They are entitled to their costs of the submitting appearance.

1. For these reasons I make the following orders.

1.   Summons be dismissed.

2.   Plaintiff pay the defendants' costs as submitting defendants.

Decision last updated: 30 August 2012