Judith Evelyn Hockey v Richard Matthew Hockey and Lorraine Frances Hockey as executors and trustees of the Estate of Lloyd Roland Hockey

[2016] NSWSC 426

Supreme Court

New South Wales

Medium Neutral Citation:	Judith Evelyn Hockey v Richard Matthew Hockey and Lorraine Frances Hockey as executors and trustees of the Estate of Lloyd Roland Hockey [2016] NSWSC 426
Hearing dates:	Friday, 12 February 2016
Date of orders:	12 February 2016
Decision date:	12 February 2016
Jurisdiction:	Equity - Family Provision List
Before:	Brereton J
Decision:	Beneficiaries joined as third and fourth defendants to enable them to cross-apply for a family provision order
Catchwords:	SUCCESSION – family provision – approval of compromise - where beneficiaries affected by proposed orders are disable persons – where interest of disable persons under will is proposed to be converted into cash to be held on trusts and by trustees different from those created and appointed under will – whether such orders can be made as ancillary orders under (NSW) Succession Act s 66(2) – held, they cannot – where proposed trustee is parent of beneficiary - whether court would appoint parent as trustee for child – held, as a matter of general policy it would not but appointment of a co-trustee might resolve this – necessity for evidence that proposed trustee understands role of trustee and purpose of trust
Legislation Cited:	(NSW) Civil Procedure Act 2005, s 76 (NSW) Succession Act 2006, s 66(2), s 95
Category:	Procedural and other rulings
Parties:	Judith Evelyn Hockey (plaintiff) Richard Matthew Hockey and Lorraine Frances Hockey as executors of the Estate of Lloyd Roland Hockey (defendants)
Representation:	Counsel: S O’Brien (plaintiff) P Strasser (defendant) K Morrissey (by leave for disabled beneficiaries)   Solicitors: Steele + Co (plaintiff) Burke and Baker Lawyers (defendants)
File Number(s):	2014/348829

Judgment (EX TEMPORE)

1. HIS HONOUR: Before the court is an application for approval, pursuant to (NSW) Succession Act 2006, s 95, and (NSW) Civil Procedure Act 2005, s 76, of the settlement of family provision proceedings brought by the plaintiff Judith Evelyn Hockey for provision out of the estate of her late husband Lloyd Roland Hockey, which is contained in a deed dated 16 December 2015. The matter is not ready to proceed today in any event, because it has not been possible for arrangements to be completed for two infant beneficiaries – whose interests under the will are affected by the proposed orders – to be independently advised. However, that is not necessarily unfortunate, as the necessity for an adjournment may permit a number of other issues and complications to be addressed in the meantime.

2. The first issue is the mechanism by which it is proposed that the interests of two beneficiaries (“the disable beneficiaries”) be held. Jessica Elizabeth Hockey, although born on 9 December 1996, is an incapable person by reason of suffering from Down syndrome. Annabelle Rose Hockey, who was born on 3 September 2000, is an infant. Under the will, each was left a one quarter interest as tenant-in-common with the other and the deceased’s two adult children, in the family farming companies. Under the settlement, that interest is to be converted into a cash sum, to be held upon trust for them by their mother the plaintiff Judith Evelyn Hockey: in the case of Jessica, indefinitely, to be applied to Jessica’s education, maintenance or advancement; and in the case of Annabelle, until Annabelle attains twenty-five years of age.

3. The settlement also provides for a family provision order to be made in favour of the plaintiff Judith Evelyn Hockey so that she will receive a lump sum legacy from the estate. The amount of that legacy is such that in order to fund it, it will be necessary to realise the deceased’s interest in the family farming companies and convert it into cash. In those circumstances, an order that had the practical effect of converting the entitlements of the disabled beneficiaries into their cash equivalent would be authorised as an ancillary order under (NSW) Succession Act 2006, s 66(2).

4. However, the difficulty is that what is proposed goes further than practically converting their entitlements into cash as a consequence of the family provision order to be made in favour of the plaintiff; in addition, it would also change the trustees from the executors to, at least in the first instance, the plaintiff (who is the mother of the disable beneficiaries), and alter some of the terms of the trusts. In those respects, the proposed orders cannot be supported as ancillary orders adjusting interests under s 66(2) consequent upon making a family provision order in favour of the plaintiff, but are in substance orders in favour of the disable beneficiaries - who are not parties to the proceedings, and who have not made a claim.

5. If the matter involved only a s 66(2) order substituting a cash sum for the interests under the will of the disable beneficiaries, then, as presently advised, I think the defendants (as executors with responsibility for the conduct of the proceedings on behalf of the estate) could consent to such an order, and the consent of the disable beneficiaries would not be required by the court. Of course, if the defendants in so consenting acted in breach of their duty to the beneficiaries, they might incur liability to them; but, at least prima facie, that does not appear to be a significant risk in this case, as the proposals appear beneficial to those beneficiaries.

6. However, because what is involved exceeds what is authorised by s 66(2), and includes in substance family provision orders in favour of the disable beneficiaries, the preferable course in this case, in order to put the matter beyond doubt, is that they be joined as parties. Once joined it will be open for a person to act as their tutor, and the evidence indicates that there are two uncles, at least one of whom is likely to be prepared to so act. I do not consider it necessary that the disable beneficiaries institute separate proceedings for a family provision order; it will suffice that they be joined as defendants in these proceedings, with a view to enabling them to bring a cross-claim for the proposed orders.

7. Accordingly, I will order that the disable beneficiaries be added as defendants, for the purpose of enabling them to bring a cross-claim for family provision orders in the proceedings.

8. The second issue concerns the proposal to appoint the plaintiff as the trustee for the disable beneficiaries. The court is usually reluctant to appoint a parent – at least alone – as trustee for her or his child. This is no reflection on the plaintiff personally, but it reflects a course taken by the court as a matter of general policy to avoid the potential for conflict of interest and duty, for the protection not only of the interests of the child, but also of the parent.

9. In this respect, although the court would ordinarily appoint the NSW Trustee (or a trustee company), the relevant concerns might well be sufficiently addressed if there were joint trustees – one of whom might be one of the uncles to whom I have referred.

10. The third issue is that insofar as, in Annabelle’s case, the terms of the trust purport to preclude her from calling for the capital until she is 25, they are of dubious utility (as she is likely to be entitled to call for the capital on attaining 21, if not 18). And in circumstances where the will provides a power to make advances, before the vesting date, for her maintenance, education and advancement in life, there seems no good reason for excluding such a power from the revised version of the trust.

11. The fourth issue is that I would need to see evidence from the proposed trustees that makes clear that they understand the purpose of the trust and their role as trustees and, in particular, their duties to keep the trust funds separate, to apply the funds only for the benefit of the beneficiary, and to account to the beneficiary and provide the beneficiary with information and documents concerning the trust.

12. Finally, as I have observed in the course of discussion, although Christopher David Hockey deposes to understanding the terms of the deed, he says that he understands that it is to his financial advantage to enter into the deed. The fact that it is manifestly not to his financial advantage (although he might perceive it as advantageous in other respects) casts considerable doubt on whether he does in fact understand its terms. It would be desirable for there to be evidence which more clearly demonstrates his understanding of the deed and the consequences of approval of the release, and that he be present at the hearing so as to be able to confirm his understanding.

13. The Court orders that:

1. Jessica Elizabeth Hockey and Annabelle Rose Hockey be joined as third and fourth defendants respectively, in order to permit them to cross-apply for a family provision order in these proceedings as contemplated by clause 1(b) and (c) of the deed dated 16 December 2015.

2. The proceedings to be adjourned to 3pm on 26 April 2016 for hearing of the application for approval of the deed.

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Decision last updated: 13 April 2016