Hitchcock v Pratt

[2010] NSWSC 1508

CITATION:	Hitchcock v Pratt [2010] NSWSC 1508
HEARING DATE(S):	13 December 2010
JUDGMENT DATE :	23 December 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
DECISION:	Statute is invalid to extent it purports to authorise family provision order in respect of property outside NSW of testator who dies domiciled outside NSW. Statute can be read down to authorise family provision order in respect of immovable as well as movable property outside NSW of testator who dies domiciled in NSW, and movable as well as immovable property in NSW of testator who dies domiciled outside NSW. Testator’s power to control trustee company did not equate to power to dispose of its subsidiaries’ property. Testator’s power as director of subsidiary was not a power to dispose of subsidiary’s assets at least except for full valuable consideration. No arguable case that testator left potential notional estate in NSW. Proceedings summarily dismissed.
CATCHWORDS:	SUCCESSION – Family provision and maintenance – jurisdiction – extra-territoriality – whether statute purporting to authorise family provision order in respect of property outside NSW of testator who dies domiciled outside NSW is valid exercise of state’s legislative power – whether statute can be read down – summary disposal - whether testator arguably left potential notional estate in NSW – whether de facto control of trustee company whose subsidiaries hold real estate in NSW amounts to power to dispose of that real estate within (NSW) Succession Act, s 76(2)(a) – whether director a company has power to dispose of company’s assets with s 76(2)(a)
LEGISLATION CITED:	(CTH) Constitution, s 118 (NSW) Family Provision Act 1982, s 7, s 11, s 22 (NSW) Interpretation Act 1987, s 31 (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) Succession Act 2006, s 59, s 64, s 65, s 66, s 73, s 76, s 78, s 83 s 88, s 89 (NSW) Uniform Civil Procedure Rules r 13.4 (NSW) Wills, Probate & Administration Act 1898, s 41A
CATEGORY:	Principal judgment
CASES CITED:	Balajan v Nikitin (1994) 35 NSWLR 51 Estate of Thiess; Brinkman v Johnston NSWSC, Hodgson J, 4 February 1994, BC9405349 Pearce v Florenca (1976) 135 CLR 507 Heuston v Barber (1990) 19 NSWLR 354 In re Dalglish [1889] NSWR 256 Kavalee v Burbidge; Hyland v Burbidge (1998) 43 NSWLR 422 Leue v Reynolds (1986) 4 NSWLR 590 Mobil Oil Australia Pty Ltd v State of Victoria (2002) 211 CLR 1 Pain v Holt (1919) 19 SR (NSW) 105 Port MacDonnell Professional Fishermens Association v South Australia (1989) 168 CLR 340 Re Butchart (decd) [1932] NZLR 125 Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 Stern v Sekers; Sekers v Sekers [2010] NSWSC 59 Sweedman v Transport Accident Commission (2006) 226 CLR 362 Taylor v Farrugia [2009] NSWSC 801 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1
PARTIES:	2010/103339 Paula Sarah Hitchcock bht Geoffrey Evans (plaintiff) Jeanne Pratt (defendant) 2010/103357 Sharilea Hitchcock (plaintiff) Jeanne Pratt (defendant) Attorney General of NSW (intervening) 2010/391466 Sharilea Hitchcock (plaintiff) Jeanne Pratt (defendant)
FILE NUMBER(S):	SC 2010/103339; 2010/103357; 2010/391466
COUNSEL:	M A Robinson (S Hitchcock) SS Shotter (sol) (P Hitchcock) P M Wood w K J Kirk (J Pratt) M G Sexton SC W Ms AM Mitchelmore (AG of NSW)
SOLICITORS:	Butlers Will Dispute Lawyers (S Hitchcock) Shotters Lawyers (P Hitchcock) Arnold Bloch Leibler (J Pratt) Crown Solicitor (AG of NSW)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday, 23 December 2010

2010/103339 Paula Sarah Hitchcock bht Geoffrey Evans v Jeanne Pratt; Estate Late Richard Zelman Pratt

2010/103357 Sharilea Hitchcock v Jeanne Pratt; Estate Late Richard Zelman Pratt

JUDGMENT

1 HIS HONOUR: The deceased Richard Zelman Pratt died on 28 April 2009, domiciled in Victoria, leaving a will dated 14 November 2007 probate of which was, on 18 November 2009, granted in the Supreme Court of Victoria to his widow the defendant Jeanne Pratt, who was the executrix named in the will. His estate comprised no real estate, and all his personal estate – which was mostly shares in companies taken to be registered in Victoria and the share registers of which were kept in Victoria - was situated in Victoria. None of his estate was situated in New South Wales.

2 On 27 April 2010, the plaintiff Sharilea Hitchcock instituted proceedings in this court for a family provision order pursuant to (NSW) Succession Act 2006, s 59, in her favour out of the estate, claiming standing as a de facto spouse of the deceased. On the same day, Sharilea Hitchcock’s daughter, the plaintiff Paula Sarah Hitchcock, by her tutor Geoffrey Evans, also instituted proceedings in this court for a family provision order in her favour out of the estate, claiming standing as a child of the deceased. Subsequently, on 13 and 17 May 2010 respectively, Ms Sharilea Hitchcock and Ms Paula Hitchcock commenced family provision proceedings in the Supreme Court of Victoria. By motions filed in each of the New South Wales proceedings on 6 July 2010, the executrix seeks summary dismissal of the New South Wales proceedings.

3 Although the formal granting of leave to amend was deferred pending the outcome of the present applications, they have been conducted on the footing that the plaintiffs proposed to seek, in addition to provision out of the estate, designating orders pursuant to Succession Act, s 80, in respect of four properties in New South Wales, namely:

• An apartment in The X, X Phillip Street, Sydney, of which the registered proprietor is Gosforth Pty Ltd;

• XXX Gadara Road, Tumut, of which the registered proprietor is Visy Packaging Properties Pty Ltd;

• XXX – XXX Gipps Road, Smithfield, of which the registered proprietor is Visy Packaging Properties Pty Ltd; and

• X Herbert Place, Smithfield, of which the registered proprietor is McCredie Road Properties Pty Ltd.

4 For the executrix, Mr PM Wood of counsel contends that:

• At least insofar as Part 3 of the Succession Act, and in particular s 64, purports to authorise family provision orders in respect of assets outside of New South Wales of estates of persons who died domiciled outside New South Wales, it is beyond the constitutional competence of the New South Wales legislature.

• Insofar as Part 3 of the Succession Act purports to authorise family provision orders in respect of the estates of persons who died domiciled in another State, it is inconsistent with the laws and judicial proceedings of such other States, contrary to (CTH) Constitution, s 118, and invalid.

• Insofar as the operation of Part 3 – and in particular s 64 – can be read down so as to apply to real property in the State of a person who dies domiciled in another State, the deceased left no real estate in New South Wales and there is no prospect that the court could designate as notional estate any real estate in New South Wales.
• The Victorian grant of probate not having been resealed in New South Wales, the defendant cannot be sued in New South Wales in her capacity as executrix, so that the suit is not properly constituted.

5 In my view, the defendant is entitled to succeed on the third issue, which is dispositive. Nonetheless, I have found it preferable to address the other issues, in deference to the arguments that have been presented on them, and because at least the first issue affects the outcome on the third.

Constitutionality of s 64

6 Because provision for claimants is made out of the remainder of the estate after debts have been discharged, and accordingly affects the substance of succession to property, laws with respect to testator’s family maintenance are regarded as laws relating to succession to property, as distinct from laws relating to the administration of assets [Pain v Holt (1919) 19 SR (NSW) 105; Re Butchart (decd) [1932] NZLR 125; Heuston v Barber (1990) 19 NSWLR 354, 360]. Whereas succession to movable property is governed by the lex domicilis, succession to immovables, including land, is governed by the lex situs. These principles have informed the conventional view of jurisdiction in family provision matters, as enunciated by Sholl J in Re Paulin (at 465) [see also Taylor v Farrugia [2009] NSWSC 801], namely:

• The courts of the testator’s domicile alone can exercise the discretionary power given by the testator’s family maintenance legislation of the domicile so as to affect succession to movable and immovable property in the territory of the domicile;
• The courts of the testator’s domicile alone can exercise those powers so as to affect movables outside the territory of the domicile; and
• The courts of the situs alone can exercise such powers, and then only in the accordance with the testator’s family maintenance legislation (if any) of the situs, so as to affect immovables of the testator outside the domicile, and the courts of the domicile cannot affect such immovables.

7 In New South Wales this position has been affected by statute, currently Succession Act, s 64, which provides as follows:

A family provision order may be made in respect of property situated in or outside New South Wales when, or at any time after, the order is made, whether or not the deceased person was, at the time of death, domiciled in New South Wales.

8 For a state law to have extra-territorial operation, there must be a relevant connection between the persons or circumstances on which the legislation operates and the State, and while this test is to be liberally applied and legislation should be held valid if there is any real connection, even a remote or general one, between the subject matter of the legislation and the State, there must nonetheless be some such connection [Pearce v Florenca (1976) 135 CLR 507, 518; Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1, 14; Port MacDonnell Professional Fishermens Association v South Australia (1989) 168 CLR 340, 372; Mobil Oil Australia Pty Ltd v State of Victoria (2002) 211 CLR 1 [48]].

9 When originally enacted in 1982, (NSW) Family Provision Act 1982 included provisions as follows:

11. (1) An order for provision out of the estate or notional estate of a deceased person (whether or not an order made in favour of an eligible person) may:
…

(b) be in respect of property which is situated in New South Wales at the time of, or at any time after, the making of the order, whether or not the deceased person was, at the time of his death, domiciled in New South Wales.
(2) Subsection (1) (b) does not limit any power of the Court in
relation to any part of the estate or notional estate of a deceased person which is situated outside New South Wales.

10 The effect of this enactment was to expand the property over which the court could make an order to include personal property situated in New South Wales notwithstanding that the deceased was not domiciled in New South Wales at the date of his death [Balajan v Nikitin (1994) 35 NSWLR 51, 57]. However, it did not authorise orders in respect of real estate outside New South Wales, even in the case of a New South Wales domiciliary [Balajan v Nikitin, 57]. Although inconsistent with the Re Paulin rules, it seems indisputable that the New South Wales legislature could if it wished make laws with respect to succession to movable property in New South Wales, regardless of where the testator might be domiciled. The applicability of those laws in a particular case would then be a matter for the private international law rules of the relevant forum.

11 In 1989, however, Family Provision Act, s 11, was amended, by inserting in sub-s (1)(b) the words “or outside”, and omitting sub-s (2). The consequence was that 11(1)(b) read:

(b) be in respect of property which is situated in or outside New South Wales at the time of, or at any time after, the making of the order, whether or not the deceased person was, at the time of his death, domiciled in New South Wales;

12 In Balajan v Nikitin, Windeyer J suggested that, on its face, s 11(1)(b) as so amended would empower the court in any action commenced in New South Wales to make an order in respect of property outside New South Wales, whether or not there were any link with New South Wales other than that the proceedings were commenced in this State - a position which his Honour regarded as extraordinary, given that it would purportedly empower the New South Wales court to make an order in respect of property in England, forming part of the estate of a deceased person who died domiciled in England, and who had no property whatever in New South Wales [Balajan v Nikitin, 56]. Having considered the Law Reform Commission Report which preceded the 1989 amendment [NSWLRC 63, Jurisdiction of Local Courts Over Foreign Land (1988)] and the Second Reading Speech [NSW Parliamentary Debates, Legislative Assembly, 14 November 1989, p12278, pp12280-81], his Honour concluded that the legislative intention was that the jurisdiction of the court should be extended to real estate outside New South Wales in the case of a deceased domiciled in New South Wales, and that the enactment did not carry into effect the legislative intention but over-reached it. Having regard to well-established authority on the power of State legislatures to make laws with extra-territorial operation, his Honour concluded that the requisite nexus with the state was absent, insofar as the section purported to give power to make orders affecting property outside New South Wales of a deceased person domiciled outside New South Wales, and to that extent the law was not within the competence of the New South Wales legislature, but pursuant to (NSW) Interpretation Act 1987, should be read down to operate as it was intended to operate [Balajan v Nikitin, 60-61]. In my respectful view, Windeyer J was right to hold that a law with respect to family provision that applied to property outside the State of a testator who died outside the State had no sufficient connection.

13 Notwithstanding Balajan v Nikitin, the report of the National Committee for Uniform Succession Laws to the Standing Committee of Attorneys General on Family Provision (QLRC MP28, December 1997) recommended that the model family provision legislation include a provision to the effect of s 11(1)(b) as amended [QLRC MP28, p114]. In the Supplementary Report [QLRC 58, July 2004], the model legislation included such a provision [clause 15], so far as I can ascertain without comment. The report of the NSW Law Reform Commission [NSWLRC 110: Uniform Succession Laws: Family Provision (May 2005)], simply commented:

2.72 Clause 15 is based on Family Provision Act 1982 (NSW)
s 11(1)(b).

14 The Attorney General’s Second Reading Speech upon the Succession Amendment (Family Provision) Bill 2008 (26 June 2008) - which repealed the Family Provision Act and inserted Part 3 into the Succession Act – did not comment on this provision. In short, it seems that the provision was re-enacted without adverting to the circumstance that it had been held to be unconstitutional.

15 If anything, the lack of sufficient connexion is more clearly apparent under the current legislation than it was under the Family Provision Act. Under the Family Provision Act, a family provision order could be made only on an application “in relation to a deceased person in respect of whom administration has been granted” [s 7]. For that purpose, “administration” meant probate or letters of administration granted in New South Wales, or granted outside New South Wales but resealed within New South Wales. That had the effect that the testator would necessarily be domiciled, or at least have property, in New South Wales. Admittedly, (NSW) Wills, Probate & Administration Act 1898, s 41A, provided for the court to grant administration in respect of a deceased person in order to permit an application to be made under the Family Provision Act, “where it is satisfied that it is proper to make the grant, whether or not the deceased person left property in New South Wales”. That would override the ordinary requirement for a grant of administration that a deceased person have left property in the jurisdiction, but would not have been construed to provide for a grant in respect of a person who was neither domiciled nor left property in New South Wales.

16 Although Part 3 of the Succession Act continues to define administration as probate or administration granted in New South Wales, or granted elsewhere but resealed in New South Wales, there is no longer any requirement that there be a grant of administration before or in connection with a family provision order. This appears to have been a deliberate departure from the previous requirement that there be a grant of administration, to cover situations where it may not be necessary to obtain a grant to administer an estate [NSWLRC 110, paragraph 1.13-1.15 – Commentary on Clause 4 of the Model Legislation; see also Succession Act, s 58]. Accordingly, there is no longer a requirement for a grant or reseal in New South Wales as a precondition to the exercise of family provision jurisdiction. However, that was not for the purpose of broadening the territorial reach of the Act, but of permitting application to be made in respect of estates where administration was not otherwise necessary.

17 Accordingly, in my view, a law with respect to family provision that purports to apply to property outside the State of a testator who dies domiciled outside the State had no sufficient connection with the state to be a valid exercise of the state’s legislative power. To that extent, s 64 is invalid.

18 Mr Wood argued that s 64 could not be “read down” pursuant to Interpretation Act, s 31, so as to apply only to extend jurisdiction to immovables outside New South Wales of a testator domiciled in New South Wales. Interpretation Act 1987, s 31, relevantly provides as follows:

(1) An Act or instrument shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament.
(2) If any provision of an Act or instrument, or the application of any such provision to any person, subject-matter or circumstance, would, but for this section, be construed as being in excess of the legislative power of Parliament:

(a) it shall be a valid provision to the extent to which it is not in excess of that power, and

(b) the remainder of the Act or instrument, and the application of the provision to other persons, subject-matters or circumstances, shall not be affected.

19 I also respectfully agree, with Windeyer J, that to the extent that s 64 extends the reach of the Act to movables in New South Wales of testators who died domiciled elsewhere, and to immovables outside New South Wales of testators who died domiciled in New South Wales, it is not in excess of power. To that extent, pursuant to Interpretation Act, s 31(2)(a), it is valid. Although Mr Wood argued that there was, in the Succession Act, no indication of a standard or test that could be applied for the purpose of limiting and thereby preserving the validity of the law [cf Re Dingjan; Ex parte Wagner (1995) 183 CLR 323, 339], in my view the legislative history, the common law background provided by the Re Paulin rules, and the extrinsic material referred to above, reveals that the purpose of s 64 and its predecessor was not to define the circumstances in which the court had jurisdiction to deal with an application, but to clarify the reach of the orders that the court could make: it validly extended that reach, in respect of a New South Wales domiciled testator, to immovables (as well as movables) outside the jurisdiction, and in respect of a foreign domiciliary, to movables (in addition to immovables) within the jurisdiction - but not otherwise.

20 Accordingly, there will be jurisdiction in this case only if the deceased, having died domiciled in Victoria, left property in New South Wales. It is uncontroversial that he left no actual estate in New South Wales. However, the presence in New South Wales of property which could be designated as notional estate is sufficient to attract jurisdiction, since once designated it assumes for practical purposes equivalence to actual estate. Accordingly, if it were arguable that there was in New South Wales property capable of being designated as notional estate of the deceased, it would be inappropriate summarily to dismiss the proceedings.

21 Mr MA Robinson, for Ms Hitchcock, accepted that only the four above-mentioned properties were the target of any proposed designating order, and indicated that, in the New South Wales proceedings, provision was sought only out of them, so that no extra-territorial operation of the Act, pursuant to s 64, was invoked. Mr Wood submitted that the extra-territoriality issue could not be avoided in that way – because, pursuant to s 78(1), the court could make a notional estate order only for the purposes of a family provision order or a costs order, and pursuant to s 88, the court could not make a notional estate order unless satisfied that the deceased person left no estate or the estate was insufficient for the making of an appropriate family provision or costs order (to which might be added s 89(3) providing that the court must not designate as notional estate property exceeding that necessary to allow appropriate provision to be made (or costs)). However, apart from the operation of s 64, the court would have had jurisdiction to make orders in respect of, and only in respect of, real estate in New South Wales of a person who died domiciled in Victoria [In re Paulin [1950] VLR 462, 465]. Under s 65(2)(c), a family provision order may require provision to be made by application of specified existing or future property. Thus, having designated property as notional estate, the court could require application of that specific property to make provision for a claimant. Under s 66(1)(a), for the purposes of giving effect to such an order, the court can order the transfer of estate property to the claimant; by operation of s 73(2), that includes property designated as part of the notional estate. Thus the purpose of a designating order is not limited to “topping up the estate” for the purposes of making provision out of the whole estate; a designating order is nonetheless made “for the purposes of family provision order within s 78(1)(a)” if it is made for the purpose of an order that requires the application of the designated property by way of provision to the claimant. So far as concerns s 88, the references to a deceased person leaving no or insufficient estate should be read as referring to estate amenable to the jurisdiction of the court (which, at least in the absence of s 64, would, in the case of a person who died domiciled elsewhere, be limited to real estate in New South Wales). In any event, if the court were of the view that an appropriate family provision order were the transfer of a particular New South Wales property to the claimant, and that property was potential notional estate, the estate would be insufficient for the making of that order, within s 88(b). Alternatively, the circumstance that the actual estate was beyond the reach of the court’s jurisdiction, so that only notional estate was available, would at least potentially amount to “special circumstances” within s 88(c).

22 It might therefore have been possible to resolve the present dispute without resolving the extra-territoriality issue. Nonetheless, I have found it preferable to consider the extra-territorial issues, not only out of deference to the arguments that have been presented, and because it is desirable that any constitutional problem with s 64 be elucidated so that it can, if desired, be remedied, but also because the validity and construction of s 64 in respect of a deceased who dies domiciled outside the state – and in particular, whether it can be read down – is relevant to the outcome of the present applications.

Inconsistency of state laws?

23 Before addressing that issue, I will briefly touch on Mr Wood’s second submission, to the effect that the New South Wales legislation was invalid for inconsistency with the laws of Victoria. The rules governing inconsistency of the laws of the States are not clearly established [Sweedman v Transport Accident Commission (2006) 226 CLR 362, [47]-[52]]. The fact that two States make laws governing the same subject matter that are inconsistent does not necessarily mean that one must be valid and the other invalid. It is precisely for the purpose of reconciling, in such circumstances, which law is to apply, that the rules of private international law exist. In this case, consistent with Re Paulin, the New South Wales laws can affect only succession to immovables in New South Wales, and the Victorian laws cannot do so. If it were sought to invoke the New South Wales law in respect of movables in New South Wales, then there might be a potential conflict. The practical resolution then might well be to transfer the New South Wales proceedings, under the (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987, to the Supreme Court of Victoria. However, no relief in respect of movables in New South Wales is sought - indeed, the evidence is that there are no movables in New South Wales. Accordingly, no actual conflict arises.

Notional estate?

24 I turn then to whether it is arguable that there is notional estate in New South Wales. For this purpose, I set aside any question affecting the discretion to make a notional estate order, and assume that any discretion would be exercised in favour of the plaintiffs. The sole question is whether there has arguably been a “relevant property transaction”, within s 75 and s 76, in respect of which the court could make a notional estate order having regard to s 83. The current provision is as follows:

(1) The circumstances set out in subsection (2), subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of section 75.
(2) The circumstances are as follows:
(a) if a person is entitled to exercise a power to appoint, or dispose of, property that is not in the person’s estate and does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that the property becomes held by another person (whether or not as trustee) or subject to a trust or another person (immediately or at some later time) becomes, or continues to be, entitled to exercise the power,
…

25 The plaintiffs’ case was that it was arguable that the deceased had sufficient de facto control over the registered proprietors of the four properties in question that it could be said that, for the purposes of s 76(2)(a), he had not exercised a power to appoint or dispose of those properties with the result that another person (presumably, the defendant) continued to be entitled to exercise that power. (In the course of argument, reference was also made to s 76(2)(e), but counsel was unable to identify any relevant body, association, scheme, fund or plan of which the deceased was a member, or how because of his membership or participation, his death or the occurrence of any other event, property became held by any and if so what other person.)

26 In Kavalee v Burbidge; Hyland v Burbidge (1998) 43 NSWLR 422, the Court of Appeal considered the predecessor of s 76(2)(a), namely Family Provision Act, s 22(4)(a), which in terms was immaterially different to the present provision, and held (Mason P, Meagher JA concurring, Handley JA contra) that the reference in the section to “a power to … dispose of property” was not a technical term of law, but meant something more than a traditional power of appointment and may exist where a person had “capacity to control”. On the facts of the case, Mr Hyland had until his death an entitlement to exercise a power to dispose of property which was not in his estate, being property of the Gartner Foundation, because of a legally enforceable chain of control over the Foundation. Of utmost significance, Mason P found:

• That the founder (the deceased Mr Hyland) retained the right to control the organisation and administration of the Gartner Foundation, and thereby to direct it in its dealings in favour of beneficiaries as determined by the founder from time to time. “Expert evidence revealed that this was a normal incident of founder's rights” [429A];
• Examples given by Handley JA in his dissenting judgment (pertaining to a wife who complied with her husband’s requests, an accommodating grandparent, superannuation trustees who responded to an employee’s wishes, and trustees of a discretionary trust who choose to meet the settlor’s wishes) did not involve situations in which the deceased had the capacity in law to compel the requested disposition, and thus did not involve prescribed transactions [447B];
• But the situation in Kavalee v Burbidge was different, because “if push came to shove” the deceased had the legal capacity to compel a particular disposition to be made by a third party [447C].

27 This illustrates that while the concept of “a power to … dispose of property” in s 76(2)(a) extends to capacity to control, that means legal capacity to control, not merely de facto control without legal control. The significance of legal capacity to compel a disposition in this respect was also adverted to by Ward J in Stern v Sekers; Sekers v Sekers [2010] NSWSC 59, at [188].

28 As to whether company directors have the requisite “control” of a company’s property to fall within s 76(2)(a), the existence of fiduciary duties impacts on the ability or capacity to exercise a power to dispose of a company’s property. In The Estate of Thiess; Brinkman v Johnston NSWSC, Hodgson J, 4 February 1994, BC9405349), Hodgson J, as his Honour then was, observed (at 18):

It might be possible to infer that the deceased had power, as a governing director or perhaps managing director of Drayton Investments Pty Ltd, to dispose of that company's real estate in New South Wales, and that he omitted to do so prior to his death. But that power would have been subject to the fiduciary duties of a director; so that in respect of the real estate in New South Wales, it would not seem that the requirement of s26, that there be an omission to benefit the deceased or an eligible person, would be satisfied in respect of the New South Wales real estate.

29 Accordingly, for the purposes of s 76(2)(a), a director’s power, with other members of the board, to dispose of property of a company is not “a power to appoint, or dispose of, property” within s 76(2)(a), because it is constrained by fiduciary obligations. An omission to exercise such a power in favour of the director or an eligible person could not be disadvantageous to the estate or an eligible person for the purposes of s 80, because the power could not lawfully have been exercised in favour of the estate or eligible person. In my view, a director cannot be said to be “entitled” to exercise a power to dispose of a company’s property to himself or to an eligible person other than for valuable consideration.

30 I turn now to the evidence as to the ownership and control of the four relevant properties.

31 The X Apartment was purchased on 24 May 1985 by Gosforth Pty Ltd for $1.7 million and remained held by Gosforth at the date of Mr Pratt’s death. The directors of Gosforth were the deceased and the defendant. All the shares in Gosforth were beneficially owned by J Gadsden Pty Ltd. The deceased and the defendant were the directors of Gadsden. All the shares in Gadsden were beneficially owned by Pratt Holdings Pty Ltd. The deceased and the defendant were the directors of Pratt Holdings. All the shares were beneficially owned by Pratt Consolidated Holdings Pty Ltd. The deceased and the defendant were the directors of Pratt Consolidated Holdings, all the shares in which were owned by Pratt Group Holdings Pty Ltd, as trustee of the Pratt Family Holdings Trust. It will be necessary to return to the terms of this trust.

32 The property at X Herbert Place, Smithfield was and is owned by McCredie Road Properties Pty Ltd, the directors of which were at the date of his death the deceased and the defendant, and the shareholding in which was owned beneficially by Visy Packaging Properties Pty Ltd. The properties at XXX Gadara Road, Tumut, and XXX- XXX Gipps Road, Smithfield, were also owned by Visy Packaging Properties. As at the date of his death, the deceased and the defendant were the directors of Visy Packaging Properties, the share capital in which was beneficially owned by Visy Industries Holdings Pty Ltd. The deceased and the defendant were the directors of Visy Industry Holdings, all the shares in which were beneficially owned by Pratt Holdings Pty Ltd – the ownership and control of which is explained in the preceding paragraph.

33 The Pratt Family Holdings Trust was constituted in Victoria and is governed by the law of Victoria. The trustee Pratt Group Holdings Pty Ltd at all relevant times had two directors, Mr Naphtali and Mr Leibler, and the two shares in it were held, one each by ABL Finance Pty Ltd and Applebay Pty Ltd, on trust for Mr Pratt. All the shareholding in Applebay was held by one David Freeman, who was Mr Pratt’s solicitor, and who was also the sole director of Applebay. The shares in ABL Finance were held by Mark Leibler and 19 others (not Mr Pratt), who were also the directors of ABL. The appointor of the trust, and the guardian, was Deansworth Pty Ltd, a company incorporated and with its share register in Victoria. Deansworth had seven directors, and Mr Pratt was not one of them. The shares in it were held by ABL & Co Custodians Pty Ltd, of which Mr Pratt was neither a director nor a shareholder. ABL & Co Custodians held its shares in Deansworth on trust for members of the Pratt family under deeds dated 5 December 2005, pursuant to which Mr Pratt held a joint life interest with his wife, including a joint power during their lifetimes to appoint the shares absolutely to Mr Pratt, his wife, or both. It follows that during his lifetime Mr Pratt could have exercised that power to appoint the shares in Deansworth to himself, and thus obtain control of Deansworth. With control of Deansworth, he could remove and replace the trustee of the trust, so as effectively to exercise control of the trust. Through his beneficial ownership of the shares in the trustee, he controlled the existing trustee, and could have removed and replaced its directors.

34 By clause 3 of the trust deed, the trustee is given a discretion to distribute or accumulate all or part of the nett income of the trust fund for any accounting period, to the “general beneficiaries” or to charitable purposes. “General beneficiaries” are defined to mean and include “specified beneficiaries” and various relations of them, and certain other persons (not including Richard Pratt). “Specified beneficiaries” are defined as persons described in the schedule, namely the children of Richard and Jeanne Pratt. Clause 1(2) provides that “every member of the excluded class shall be excluded from the class of general beneficiaries notwithstanding that he may otherwise be or be qualified to be included in the class of general beneficiaries”. “The excluded class” is defined in clause 1(3) to include the settlor, the trustees, every corporation and the trustees of every trust or settlement in or under which any other member of the excluded class has an interest, and such other persons named in the schedule as additional members of the excluded class. Richard Pratt and Jeanne Pratt are identified in the schedule as additional members of the excluded class. While clause 31 of the trust deed authorises the trustee to vary the terms of the trust, that is subject to the limitation that any such alteration is not in favour of or result in any benefit to any member of the excluded class. A Deed of Exclusion dated 4 June 2001 added Paula Sarah Hitchcock to the class of excluded persons, together with any person or persons who may be related in any way by blood or marriage to the mother of Paula Hitchcock. Clause 4 provides for the distribution of the trust fund and income from the vesting date to such charitable purposes or for such beneficiaries as the trustee may appoint. Clause 6 gives the trustee a discretion, before the vesting date, to transfer the whole or part of the trust fund to any beneficiary (meaning any of the general beneficiaries). The role of the guardian is not relevant for present purposes. However, by clause 22, the appointor may remove and replace the trustee.

35 Significantly, because he is a member of the excluded class, Mr Pratt could not receive a distribution of income or capital from the trust. For the same reason, any amendment of the trust could not be in his favour or result in any benefit to him.

36 The trust property was the shares in Pratt Consolidated Holdings Pty Ltd. The New South Wales real properties held by various subsidiaries of Pratt Holdings were not themselves assets of the trust: ownership or control of shares in a company does not equate to ownership or control of all property belonging to the company, nor confer on the shareholder an interest in that property [In re Dalglish [1889] NSWR 256, 257, 259].

37 I would accept that it is at least arguable that Mr Pratt had the legal capacity to control Pratt Group Holdings, as trustee of the Pratt Family Holdings Trust. As such, he was, indirectly if not directly [cf Succession Act, s 75(1)], entitled to exercise the discretions to distribute income and capital given by the trust deed to the trustee. However, such entitlement was in respect of the income of the trust, and its capital, which (relevantly) were the shares in Pratt Consolidated Holdings. As already indicated, those shares are personalty, situated in Victoria. He did not have the entitlement, through his ability to control the trustee of the trust, to appoint or dispose of the real estate assets of the trustee’s subsidiaries.

38 I also accept that it is at least arguable that, by reason of his not having exercised directly or indirectly the power to appoint income or capital before his death, another person or persons, in particular Pratt Group Holdings, continued to be entitled to exercise that power. However, it must be borne in mind that because Mr Pratt and Paula Hitchcock were excluded, and Sharilea Hitchcock was not a member of any class of beneficiaries, any such distribution could not have been in favour of any of them. It thus cannot be said that the omission to exercise such power was one that could immediately prior to Mr Pratt’s death have been exercised by him (or anyone else) so as to result in a benefit to his estate, or to an eligible family provision applicant. Section 83 could not therefore be satisfied.

39 Accordingly, in my view, the deceased had no relevant power to appoint or dispose of any of the four New South Wales real properties in a way which would be amenable to a designating order having regard to s 83. First, assuming he could control the trustee, any indirect power of appointment or disposition related to assets and income of the trust, relevantly the shares in Pratt Consolidated Holdings, and not in the real property held by companies much lower down the pyramid. Secondly, any such power could not be exercised in favour of himself, or of either of the plaintiffs, who were not qualified beneficiaries. Thirdly, to the extent that with his wife he had control as a director of the land holding companies, he was not entitled to dispose of the properties to himself or either plaintiff save for full valuable consideration.

40 It follows that in my opinion there is no apparent arguable basis on which the court could make a notional estate order in respect of the four New South Wales properties. That being so, there is no basis upon which the New South Wales family provision proceedings can succeed. They are doomed to fail, and ought be summarily dismissed.

41 Mr Robinson argued that such a conclusion and course was premature, in that investigations were still under way. When pressed, he eschewed any suggestion that further or other property potentially the subject of a designating order might be identified, but argued that the plaintiffs wished to adduce further evidence of the deceased’s de facto control of the company group. However, there are several answers to this. First, the plaintiffs had if they wished ample opportunity and time to adduce evidence on these applications. Secondly, and much more significantly, no amount of evidence of de facto control would overcome the necessity to establish, through the trust documentation and articles of association, a legal entitlement to control. While de facto control coupled with legal entitlement sufficed in Kavalee v Burbidge, that was only because the de facto control was supported if need be by a legal entitlement. Let it be accepted that Mr Pratt had a legal entitlement to control the trustee: he did not have a legal entitlement to procure an appointment in his favour or in favour of either of the plaintiffs, because they were either “excluded” or not qualified; moreover, any such entitlement did not extend, beyond the trust property and income (being the shares in Pratt Consolidated Holdings) to real property held by subsidiaries of Pratt Consolidated Holdings.

42 Accordingly, nothing advanced in the plaintiffs’ arguments supports the proposition that the present application or determination is premature.

No grant in NSW?

43 As to Mr Woods’ fourth contention, I would not have dismissed the proceedings on the ground that there was no relevant grant in New South Wales. A grant was not previously a precondition to the institution of proceedings, although one had to be obtained before an order was made [Leue v Reynolds (1986) 4 NSWLR 590]. Under the current legislation, not even that is necessary. And even if it were, a grant under s 91 could be made prior to any family provision order. It was appropriate to join Mrs Pratt as a defendant as the most suitable contradictor, rather than that the proceedings be ex parte.

Conclusion

44 For the foregoing reasons, I have reached the following conclusions.

45 (NSW) Succession Act 2006, s 64, is beyond the constitutional competence of the New South Wales parliament insofar as it purports to confer power on the court to make a family provision order affecting succession to property outside New South Wales of a testator who dies domiciled outside New South Wales. It is effective, pursuant to Interpretation Act, s 31, to extend the power of the court to make a family provision order affecting succession to immovable property outside New South Wales of a testator who dies domiciled in New South Wales, and movable property in New South Wales of a testator who dies domiciled elsewhere.

46 As the plaintiffs claim in these proceedings only provision out of (notional) real estate in New South Wales of the testator, there is no relevant conflict with the laws of Victoria (which do not regulate succession to immovables outside that State of testators who die domiciled within it).

47 While it may be accepted that the deceased is entitled, indirectly if not directly, to control decisions of the trustee of the Pratt Family Holdings Trust, any power of appointment that he has in that capacity is of the trust income and property (being the shares in Pratt Consolidated Holdings) and not of the real property assets of subsidiaries of Pratt Consolidated Holdings; and the omission to exercise it could not found a notional estate order because it could not have been exercised so as to benefit himself or either of the plaintiffs (so as to satisfy s 83(1)). And although the deceased was, with the defendant, a director of the companies that held the relevant real properties, he could not have disposed of the companies’ real properties, other than for full valuable consideration, in particular to himself or to either of the plaintiffs, because as director he was bound by fiduciary obligations to the companies. Accordingly, there is no arguable basis for designating as notional estate any relevant New South Wales real property. As evidence of “de facto control”, in the absence of a legal entitlement to control, could not have established that there was a relevant power to appoint or dispose of property for the purposes of s 76(2)(a), it is not premature to reach that conclusion.

48 It follows that there is no arguable basis for this court to make a family provision order, the deceased having died domiciled in Victoria, leaving no actual estate real or personal in New South Wales, and the proceedings ought to be summarily dismissed.

49 The absence of a grant or reseal in New South Wales would not have been an obstacle to continuation of the proceedings if there were otherwise a basis for them.

50 In each matter, my order is that pursuant to (NSW) Uniform Civil Procedure Rules, r 13.4, the proceeding be dismissed with costs.

51 It also follows that, in probate proceedings 2010/391466, there is no utility in making a grant pursuant to (NSW) Succession Act 2006, s 91, for the purposes of a family provision application under Succession Act, s 58. Accordingly, in those proceedings, I order that the summons be dismissed with costs.

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