Re O'Hara-Tucker
[2022] VSC 572
•28 September 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2021 01550
| IN THE MATTER of the will and estate of PATRICIA MARY O’HARA-TUCKER, deceased | |
| -and- | |
| IN THE MATTER of an application pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) for an order approving a deed | |
| APPLICATION BY: | |
| JANICE GLYN GROSS and THERESE MARIE WHITING (as executors of the will and estate of PATRICIA MARY O’HARA-TUCKER, deceased) | Plaintiffs |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 November 2021 |
DATE OF RULING: | 28 September 2022 |
CASE MAY BE CITED AS: | Re O’Hara-Tucker |
MEDIUM NEUTRAL CITATION: | [2022] VSC 572 |
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WILLS AND ESTATES – Application for approval of deed – Where deed purports to distribute testamentary bequest to discretionary trusts instead of beneficiary – Purpose to avoid United Kingdom inheritance tax – Where deed executed by beneficiary’s administrator appointed by the Victorian Civil and Administrative Tribunal – Whether deed intended to assign beneficiary’s interest under will – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 54.02 – Guardianship and Administration Act 2019 (Vic) ss 3, 30, 46, 50, 51, 57, 58 – Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M T Flynn KC | Rosemarie Ryan Lawyers |
| For the Contradictor | Mr R R Boaden |
HER HONOUR:
Introduction
Patricia Mary O’Hara-Tucker died on 4 October 2019. She was a pioneering woman and a popular member of the Victorian Bar, where she was known as Patsy O’Hara (‘Patsy’).
Patsy’s will dated 25 October 2012 (‘the will’) appoints the first plaintiff and Noel Whiting as executors of her estate, and the second plaintiff as substitute executor. Noel renounced probate, and on 29 April 2020, probate of the will was granted to the plaintiffs.
Clause 4 of the will provides that following payment of debts and testamentary expenses, and some specific gifts, the residue of Patsy’s estate is to be divided in equal shares between such of Patsy’s brother, Alan O’Hara, and her three sisters, Maeve O’Donnell, Vivien Callaghan (‘Vivien’) and Eva Maguire, who survive her by 30 days. As each of the residuary beneficiaries survived Patsy by 30 days, each will inherit an amount of approximately $3,150,000.
Vivien lives in the United Kingdom and is 87 years old. Her husband died in 1993. She has eight adult children and a number of grandchildren and great-grandchildren. In September 2016, Vivien was diagnosed with dementia. Her condition has since deteriorated, and her life expectancy is poor. Vivien is no longer capable of managing her own affairs, and she executed a lasting power of attorney in respect of her property and financial affairs on 8 August 2013 (‘the power of attorney’). The power of attorney jointly and severally appoints Vivien’s daughter Siobhan Haley (‘Siobhan’), Vivien’s son Desmond Callaghan (‘Desmond’) and Siobhan’s husband Timothy Haley (‘Timothy’) as Vivien’s attorneys.
The plaintiffs depose that inheritance tax is payable by any individual domiciled in the United Kingdom on their worldwide assets, which also takes into account lifetime transfers for seven years prior to death. Each individual has a nil band rate, currently £325,000, on which inheritance tax is not payable. The rate of inheritance tax in the United Kingdom is currently 40 per cent.
If Vivien receives her inheritance on the terms under the will, it will be added to her capital and will eventually come to be distributed as part of her estate on which inheritance tax will be payable. The plaintiffs depose that the quantum of this tax liability will exceed £450,000.
The plaintiffs propose that rather than being distributed to Vivien, Vivien’s entitlement under the will be distributed equally between eight newly settled discretionary trusts (collectively, ‘the Vivien Callaghan settlements’) corresponding to Vivien’s eight adult children. The plaintiffs depose that a discretionary trust in the United Kingdom also has a nil band rate of £325,000, and provided that the distribution to each of the Vivien Callaghan settlements is less than this amount, no inheritance tax will be payable.
Siobhan is the administrator of Vivien’s estate in Victoria, which consists of Vivien’s chose in action arising under the will. On 5 May 2021, Siobhan and the plaintiffs entered into a deed (‘the deed of variation’) which, subject to the Court’s approval, purports to vary the will such that it ‘shall be read and construed as if [Patsy] had given a one quarter share of her residuary estate equally between the eight Vivien Callaghan settlements’.
Plaintiffs’ application
By originating motion filed 11 May 2021, the plaintiffs seek an order pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’) that it is proper for them to enter into and give effect to the deed of variation.
On 30 July 2021, an order was made appointing Mr Richard Boaden of counsel as contradictor in the proceeding.
In support of their application, the plaintiffs rely on an affidavit sworn by the first plaintiff dated 5 May 2021, three affidavits sworn by Siobhan dated 8 June 2021, 30 June 2021 and 23 September 2021 and two affidavits sworn by the plaintiffs’ solicitor, Rosemarie Ryan (‘Ms Ryan’), dated 5 October 2021 and 26 November 2021.
The plaintiffs also rely on an expert report of Stephen Marriott (‘Mr Marriott’) dated 13 May 2021 (‘the Marriott report’); an addendum to the Marriott report dated 20 September 2021 (‘the Marriott addendum’); and a correction to the Marriott report dated 30 September 2021 (‘the Marriott correction’). Mr Marriott is a barrister at the law practice of Portfolio Legal Limited in the United Kingdom, specialising in private client work and capital taxes planning.
The plaintiffs and the contradictor each provided the Court with two sets of written submissions, and the plaintiffs’ application was heard on 30 November 2021.
Factual background
Siobhan deposed that she was notified of Patsy’s death and made aware that Vivien was a beneficiary of one quarter of the residue of Patsy’s estate under the will in or around mid-October 2019. On 12 May 2020, Siobhan was notified by email from Ms Ryan that the inheritance would be in the order of $3,150,000.
On 16 July 2020, Siobhan sent an email to Ms Ryan seeking confirmation as to whether execution of the deed of variation would be appropriate under Australian law. The email relevantly provided as follows:
Myself and Desmond together with our brother Austin have carried out a financial review and we are satisfied that [Vivien’s] monthly income is more than sufficient to cover her care home fees plus extras with additional capital available should it be needed, in the form of savings in the UK and Ireland, together which [sic] three properties … [t]hat are also being let.
With inheritance tax of 40% we are sure that our mother, a former solicitor herself, would have wanted us to protect her assets for the benefit of her eight children and their dependent [sic].
In the UK we have the option to execute a Deed of Variation that requires the consent of all the beneficiaries and executors. We understand that this option is available in Australia.
Before we discuss this matter with [the beneficiaries] … we obviously want to make sure that our understanding is correct under Australian law, and if this option is available would the executors have any objection?
On 22 July 2020, Ms Ryan responded, advising that subject to Siobhan and Desmond obtaining independent legal and financial advice in the United Kingdom in their capacity as Vivien’s attorneys, ‘the executors will to [sic] whatever is required to assist with the arrangement providing that there is no cost to the estate’. Ms Ryan instructed Siobhan to request that her solicitor prepare a deed for the plaintiffs to consider, and noted that ‘usually such deeds go through the Supreme Court [of Victoria] here and I am assuming Court approval will [be] required in England as well’.
On 6 September 2020, the solicitor acting on behalf of Siobhan, Desmond and Timothy, Jeanette Berry (‘Ms Berry’), sent an email to Ms Ryan advising of the inheritance tax liabilities which might be associated with the bequest and seeking the plaintiffs’ approval of the payment of Vivien’s share of the residuary estate into eight discretionary trusts. This email relevantly provided as follows:
Our proposal, therefore, is that rather than paying the bequest directly to [Vivien] that it is paid to one or more discretionary trusts (dependent upon value). The trustees of this trust/s will be [Vivien’s] attorneys and the potential beneficiaries will be [Vivien], her children and remoter issue. If [Vivien] is ever in need of monies held in the trust/s then the trustees can make payment to her. The benefit of this proposal for [Vivien] and her family is that assets held in a discretionary trust where a person [who] is receiving care is a potential beneficiary cannot be called upon by the state to pay care fees and assets held in a discretionary trust are not assessable to Inheritance Tax when a potential beneficiary of the trust dies.
This proposal will only work if the executors of [Patsy’s] estate are minded to and are able to make the payment to the trust/s. We are sure that you will appreciate that we do not know whether this is permissible under Australian law but in England and Wales [it] could be achieved by the executors and [Vivien’s] attorneys entering into a Deed of Variation to redirect the bequest to the proposed trust/s. In England/Wales the approval of the other beneficiaries of the estate to such a deed would not be required.
If the executors were minded to agree with this proposal then the only action required in England/Wales would be for us to set up the trust/trusts for the attorneys to which the monies would be paid. This is a relatively straightforward procedure and providing that the relevant signatories are available could be completed within a week or so…
If this proposal is acceptable to you/the executors we will be able to provide you with a draft of the discretionary trust/s in the next few days.[1]
[1]Emphasis added.
On 18 September 2020, Ms Berry sent an email to Ms Ryan attaching draft forms of the deed of variation and discretionary settlement for review. In her email, Ms Berry provided the following explanation and clarification in respect of both documents:
The Deed of Variation is of a form we would use in England/Wales… It redirects [Vivien’s] entitlement into six Discretionary Settlements. We have done this because for UK tax purposes each Settlement needs to hold assets of less than £325k otherwise a tax liability will be incurred here.
…
The Discretionary Settlement is of a standard form. … For UK tax purposes [Vivien’s] Attorneys cannot act as the Settlor. We have therefore drafted the document on the basis of there being a third party Settlor whose description may change. All the powers and provisions of the Settlement(s) are exercisable by the Trustees, who are [Vivien’s] attorneys.
On 24 September 2020, Ms Ryan sent an email to Ms Berry confirming receipt of the draft deed of variation and draft discretionary settlement. The email also forwarded email advice from Mr Michael Flynn QC dated 22 September 2020 relating to the proposed arrangement, which provided as follows:
I agree … that you would need the court’s approval to a variation of the will that gives one-quarter of the estate to the discretionary trusts, but I doubt whether the court would approve the variation. It appears that the attorneys will be the trustees and beneficiaries of the trusts. There would be nothing to prevent them from distributing income and capital to themselves instead of for the benefit of their mother. A court might approve a variation in which Vivien has the right to the income during her lifetime. It might also approve a variation in which there was an independent trustee who would administer the trust primarily for Vivien’s benefit.
On 6 October 2020, Mr Marriott sent an email to Ms Ryan indicating that Vivien’s attorneys wished to proceed on the basis that Mr Marriott would act as trustee. That email relevantly provided as follows:
We would wish to proceed with this matter on the basis that I, Stephen Marriott will act as a professional trustee of the settlements who will administer the trusts primarily for [Vivien’s] benefit. …
The other two trustees will be [Vivien’s] attorneys who again are tasked to act for [Vivien’s] benefit.
There will be a different settlor, Mr Michael Lucas, but the Settlor has no powers under the terms of the settlements.
Rather than the six settlements originally envisaged this will be increased to eight.
Updated drafts of the deed of variation and discretionary settlement to reflect this arrangement were also circulated by Ms Berry on 6 October 2020.
In her affidavit sworn 8 June 2021, Siobhan deposed that on or around 30 October 2020, she was advised by Ms Berry that the power of attorney would not be recognised in Victoria,[2] and that Siobhan would need to apply to the Victorian Civil and Administrative Tribunal (‘VCAT’) to be made administrator of Vivien’s estate in Victoria. Siobhan further deposed that on 23 December 2020, she made such application to VCAT via Ms Berry, and attended a subsequent hearing via video link on 3 March 2021.[3] Also present at that hearing were Desmond and Ms Berry.
[2]The Powers of Attorney Act 2014 (Vic) does not provide for recognition of foreign enduring powers of attorney.
[3]A copy of Siobhan’s application to VCAT was emailed by Ms Berry to Vivien’s seven other children (copying Siobhan) on 24 December 2020.
On 10 March 2021, VCAT made orders, pursuant to s 23 of the Guardianship and Administration Act 2019 (Vic) (‘the Guardianship and Administration Act’) that Siobhan be appointed as Vivien’s administrator (‘the VCAT orders’). The VCAT orders were made on the following terms:
2. [Siobhan] has power to make decisions about the following financial matters:
decisions dealing with [Vivien’s] property in Victoria, being an inheritance under [the will].
3.[Siobhan] has powers given under the Guardianship and Administration Act2019 section:
- 51, to bring and defend legal proceedings and to negotiate and consent to a variation of [the will] by executing a Deed of Family Arrangement for the approval of the Supreme Court of Victoria, construing [the will] as if [Patsy] had gifted [Vivien’s] inheritance, of one quarter share of the residuary estate, equally between [the Vivien Callaghan settlements], of which [Vivien] is a beneficiary.
The VCAT orders also ordered that:
5.In so far as the above proposed variation of [the will] may include a conflict transaction, as [Siobhan] is also a beneficiary of [the Vivien Callaghan settlements], VCAT validates that transaction.
VCAT did not provide reasons for the VCAT orders, but stated that it made the decision described above because it was satisfied that:
- due to a disability, [Vivien] does not have capacity to make decisions about the financial matters listed in this order
-[Vivien] needs an administrator, considering the factors set out in section 31 of the Guardianship and Administration Act 2019, including [her] will and preferences (what’s important to [her])
-this administration order will promote the personal and social wellbeing of [Vivien]
On 5 May 2021,[4] pursuant to the VCAT orders, the plaintiffs and Vivien, by her administrator Siobhan, purported to enter into the deed of variation. The deed of variation provides as follows:
1.This Deed is subject to, and conditional upon, the [plaintiffs] obtaining the approval of the Supreme Court of Victoria to their executing, and giving effect to, this Deed.
2.The disposition by [the will] to [Vivien] shall be varied and [the will] shall be read and construed as if [Patsy] had given a one quarter share of her residuary estate equally between [the Vivien Callaghan settlements] of which [Vivien] is also a beneficiary and which are detailed in the Schedule to this Deed.
3.The [plaintiffs] shall distribute one quarter of the residuary estate equally between [the Vivien Callaghan settlements] referred to in Clause 2 hereof.
[4]The signing month originally set out in the deed, being April, is crossed out and replaced with the date 5 May 2021. The first plaintiff’s affidavit in support of the present application is also dated 5 May 2021.
The Vivien Callaghan settlements were created by eight deeds of trust dated variously between 11 and 22 November 2021. Each of the Vivien Callaghan settlements names two original trustees, namely Mr Marriott and one of each of Vivien’s eight children. The specific details are:
Vivien Callaghan settlement number Settlor Original trustees 1 Michael Robert Lucas Siobhan Haley
Mr Marriott
2 Michael Robert Lucas Desmond Callaghan
Mr Marriott
3 Michael Robert Lucas Joseph Patrick Callaghan
Mr Marriott
4 Michael Robert Lucas St. John Callaghan
Mr Marriott
5 Michael Robert Lucas Austin Callaghan
Mr Marriott
6 Michael Robert Lucas Aidan Callaghan
Mr Marriott
7 Michael Robert Lucas Gerard Callaghan
Mr Marriott
8 Michael Robert Lucas Eva Robbins
Mr Marriott
The terms of each of the Vivien Callaghan settlements are identical.[5] The beneficiaries of each settlement are defined as Vivien, her children and remoter issue and any charities or charitable objects determined by the trustees.
[5]However, substantial sections of the operative provisions of the fourth Vivien Callaghan settlement appear to have been omitted from the exhibits to Ms Ryan’s affidavit sworn 26 November 2021. The characterisation of each settlement as being made on identical terms is therefore subject to this caveat.
Clause 2.1 provides that the trustees hold the capital and income of the trust fund for the benefit of any one or more of the beneficiaries as the trustees in their absolute discretion at any time by deed, revocable or irrevocable, appoint. During the currency of the trust, the trustees have absolute discretion:
(a) In relation to income, to pay or apply it to or for the benefit of any beneficiary, or to accumulate it, pursuant to cl 3;
(b) To pay or apply capital to any beneficiary, pursuant to cl 4; and
(c) Subject to these two powers, at the end of the trust period (125 years), to hold the capital and any undistributed income for such of the beneficiaries as may be living at the end of the trust period, in equal shares, pursuant to cl 5.
Each of the Vivien Callaghan settlements also includes a statement of wishes from the settlor to the trustees, in the following terms:
I have gifted the property defined as the Trust Fund to you to hold it on a discretionary trust. In the hope that this may be of help to you in exercising your powers, but without trying to impose any binding obligation or to deter you from acting as you think best in the light of changing circumstances, I express the following wishes:
1That you should regard [Vivien] as the primary beneficiary while she is alive, augmenting her own resources out of income or, if necessary, out of capital to any extent which may be required to ensure that she is able to live in full comfort for the rest of her life.
2That subject to (1) above you should regard [the relevant child of Vivien] as the primary beneficiary while [he or she] is alive, augmenting [his or her] own resources out of income or, if necessary, out of capital to any extent which may be required to ensure that [he or she] is able to live in full comfort for the rest of [his or her] life.
3That subject to (1) and (2) above you should hold the Trust Fund for such of the children of [the relevant child of Vivien][6] as shall survive [him or her] and if more than one in equal shares absolutely.
4That subject to (1), (2) and (3) above you should hold the Trust Fund for [the other seven of Vivien’s children] equally between them provided that if any of them shall die before attaining a vested interest leaving a child or children alive then such child or children shall take absolutely the share their parent would have taken and if more than one in equal shares absolutely.[7]
[6]Presumably the result of an error in drafting, rather than setting out the name of the relevant child of Vivien in this paragraph, several of the deeds provide that the trust fund is to be held for the children of either Desmond or Siobhan.
[7]Emphasis added.
If Mr Marriott (or any other person) cannot, for any reason, act as trustee under the terms of the deeds establishing the Vivien Callaghan settlements, then cl 12 of those deeds empowers the trustees to appoint new trustees. Clause 14 also provides that, if any person in whom any power is vested under the deeds is confirmed to be incapacitated, then during the period of such incapacity the person’s powers will be exercisable as if the person had died. Clause 2 of sch 2 provides that the trustees may delegate in writing any of their functions to any person. Finally, cl 5 of sch 2, which relates to the appointment and retirement of trustees generally, provides that a trustee may be discharged even though there is neither a trust corporation nor two persons acting as trustee, provided that there remains at least one independent trustee until six months after a grant of probate is obtained in respect of Vivien’s will.
Vivien’s circumstances
Vivien was born on 15 September 1934. She is a retired solicitor who practised for more than 20 years in the United Kingdom.
Vivien’s medical condition
Vivien was diagnosed with dementia in or around September 2016. Since around May 2017, she has resided in a nursing home specialising in dementia care. Her condition has been the subject of two reports prepared by Dr P T Saleem (‘Dr Saleem’), a consultant psychiatrist.
In his first report, dated 15 December 2020, Dr Saleem opined that:
[Vivien] has significant cognitive impairment as a result of mixed dementia. She has features of dementia of Alzheimer’s type and also vascular dementia. Her condition has been progressively worsening. She has significant communication difficulties. She is unable to comprehend even simple information. She has obvious difficulties retaining relevant information and she is unable to communicate her responses.
…
In my view, [Vivien] lacks capacity to make decisions regarding legal matters, including providing instructions to solicitors in complex matters involving the inheritance she is due to receive.
…
[Vivien] is suffering from significant dementia. Her problems have been getting worse since 2016. Dementia is a progressive, degenerative condition. Her condition is unlikely to improve.
Pursuant to requests from the contradictor concerning the impacts of dementia vis-à-vis Vivien’s current state of health, prognosis and life expectancy, in his second report dated 26 September 2021, Dr Saleem opined:
The life expectancy in people with a diagnosis of Alzheimer’s disease is around eight to twelve years. The life expectancy of people with a diagnosis of vascular dementia is five years.
[Vivien] was diagnosed with dementia nearly five years ago. She has a diagnosis of hypertension and a previous history of cerebro-vascular accidents. She runs the risk of suffering from further strokes or mini strokes.
In my view, on the whole, her life expectancy is poor.
Vivien’s financial position
The plaintiffs rely on the Marriott report, the Marriott addendum, the Marriott correction and Siobhan’s affidavit sworn 8 June 2021 as evidence of Vivien’s financial position.
A copy of Ms Ryan’s instructing letter to Ms Berry copying Mr Marriott, dated 26 April 2021, is exhibited to the Marriott report and relevantly provides:
We are in the process of finalising the affidavit for [the plaintiffs] in support of their application for the approval of the Supreme Court for execution of the Deed of Variation. For the purpose of the application [the plaintiffs] need to provide to the Court a report from an expert witness on the application of inheritance tax and aged care fees in light of the gift from the deceased. That report can take the form of a letter from your firm that answers the following questions:
1.How would inheritance tax apply if the gift is effected by paying it to [Vivien]?
2.What effect, if any, would the gift have on the aged care fees for which [Vivien] is liable?
3.How would inheritance tax apply if, instead of paying the gift directly to [Vivien], [the plaintiffs] instead pay it to [the Vivien Callaghan settlements] in accordance with the Deed of Variation of the will?
4.What would be the effect on the deceased’s[8] aged care fees if instead of paying the gift directly to [Vivien], [the plaintiffs] instead pay it to [the Vivien Callaghan settlements]?
[8]Presumably, the reference to ‘the deceased’ in this question is in error, and should instead be read as a reference to Vivien.
In the Marriott report, it is stated that Vivien’s current assets, which include property and bank accounts in the United Kingdom and Ireland, total £542,900. This amount does not include the impending bequest from Patsy’s estate. Vivien’s only liability is an interest only mortgage in the United Kingdom, amounting to £30,000. Mr Marriott concludes that Vivien’s current available estate amounts to £512,900.
The Marriott report then notes that Vivien is due to receive an entitlement of approximately £1,676,000 under the will. Based on the total of these figures, being £2,188,900, Mr Marriott calculates Vivien’s potential inheritance tax liability upon her death as equal to £475,560.
In the Marriott addendum, Mr Marriott clarifies various aspects of the operation of the proposed deed of variation and the Vivien Callaghan settlements vis-à-vis inheritance tax in the United Kingdom, in response to questions raised by the contradictor. The Marriott addendum does not discuss specific figures, assets or values relating to Vivien’s financial position.
In the Marriott correction, Mr Marriott states that Vivien’s monthly net United Kingdom and Irish income amounts to £4,886.38 and her monthly United Kingdom and Irish outgoings, including her care fees, amount to £3,880.38. Vivien’s surplus income over expenditure is therefore calculated as £1,006 per month.
Mr Marriott does not, however, provide a source for any of the figures stated in the Marriott report or the Marriott correction. There are no supporting documents attached, such as tax returns, bank statements, property titles or care home invoices. His letter of instruction from Ms Ryan also does not contain any such information.
In her affidavit sworn 8 June 2021, Siobhan deposes that the information contained in the Marriott report about Vivien’s aged care fees, personal income and expenses is ‘correct and accurate as of now’. However, as each of the affidavits sworn by Siobhan predate the Marriott correction, the amounts which are provided in the latter document in relation to Vivien’s income and outgoings, including care fees, are not addressed or confirmed in any of Siobhan’s affidavits.
In her affidavit sworn 30 June 2021, Siobhan deposes that Vivien ‘requires specialist nursing care for dementia’ and ‘the nursing home [where Vivien lives] is very expensive but [Vivien’s] monthly income from pensions and property investments covers these costs’. She further deposes that Vivien’s ‘present capital continues to grow by a modest amount each month — in terms of cash assets — whilst property prices in the United Kingdom continue to rise. The bulk of the pensions are connected to [Vivien’s] late husband’s medical career and are index linked.’
There are no supporting financial documents exhibited to any of Siobhan’s affidavits. Apart from the matters outlined above, Siobhan does not give any further information about Vivien’s financial position.
Vivien’s will
Vivien’s most recent will, dated 18 October 2012, appoints Siobhan, Desmond, her son Joseph Callaghan, and Gerard Waddingham as her executors and trustees. By her will, Vivien leaves the residue of her estate to her trustees upon trust for such of her children as are living at her death and, if more than one, in equal shares.
As opined by Dr Saleem, Vivien does not have capacity to make decisions regarding complex legal matters. Accordingly, it would appear that Vivien lacks testamentary capacity and is unable to make a new will.
Vivien’s likely preferences
In her affidavit sworn 30 June 2021, Siobhan deposed: ‘I know that my mother would have wanted her children to benefit to the maximum extent from the inheritance’. She deposed further that she and Desmond ‘fully believe that we are carrying out what my mother Vivien would have wished in protecting this generous and totally unexpected inheritance from her sister Patsy, to benefit future generations of her immediate family’.
Exhibited to Siobhan’s affidavit sworn 23 September 2021 are emails from each of her other six siblings, not including Desmond. In varying words, these emails confirm that the siblings are aware of the proceeding and agree with the proposed course of action to distribute the bequest into eight discretionary trusts, of which Vivien is to be named the primary beneficiary while she is alive, and the siblings and their children are to be potential beneficiaries. The emails also refer to the siblings having been kept updated and informed by Siobhan and Desmond on the application.
In her affidavit sworn 5 May 2021, the first plaintiff deposed:
[The plaintiffs] believe that the variation of the will is for the benefit of [Vivien] because it will minimise her aged care fees and avoid significant inheritance tax, which would reduce the size of the estate her heirs and successors will receive. [The plaintiffs] knew [Patsy] for 60 years and we also believe that the variation is consistent with what [Patsy] would have desired to occur.
Consideration
The plaintiff’s application is made under r 54.02 of the Rules, which relevantly provides:
(1)A proceeding may be brought for any relief which could be granted in an administration proceeding and a claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which the relief is sought.
(2)Without limiting paragraph (1), a proceeding may be brought for—
…
(c)an order—
(i)approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee; …
In their originating motion, the plaintiffs seek an order that:
It is proper for the plaintiffs to enter into and give effect to the deed made between the plaintiffs and [Vivien] by her Administrator [Siobhan] dated 5 May 2021 … varying [the will].
The plaintiffs initially characterised the deed of variation as a ‘compromise’ for the purposes of r 54.02(2)(c)(i). They submitted that their application should be decided on the basis identified by Habersberger J in ExxonMobil Superannuation Plan Pty Ltd v Esso Australia Pty Ltd, where his Honour stated:[9]
[T]he authorities demonstrate that the court’s role is not to consider the wisdom of the trustee’s exercise of discretion but to grant the trustee’s application for an order approving the trustee’s agreement to the compromise, if the court is satisfied of the propriety of the application. That involves considering whether:
(a) the trustee’s decision to agree to the compromise was within power;
(b) there was any impropriety in the trustee’s decision;
(c) the trustee exercised its discretion in good faith; and
(d) the trustee gave fair consideration to the relevant issues.[10]
[9](2010) 29 VR 356.
[10]Ibid 375 [87].
This four-part approach was reiterated by Habersberger J in Brown-Sarre v Waddingham,[11] and subsequently applied by Almond J in Re Centro Retail Australia Ltd.[12]
[11][2012] VSC 116, [24] (Habersberger J).
[12](2012) 35 VR 512, 516–7 [16]–[18] (Almond J).
As the contradictor identified, s 19 of the Trustee Act 1958 (Vic) (‘the Trustee Act’) gives executors and trustees wide powers to enter into and give effect to agreements for the purposes of compromising or compounding a claim relating to an estate or trust. Rule 54.02 enables an application to be made to the Court for an order approving such a compromise. However, the contradictor submitted that the proposed transaction in this case is not a ‘compromise’, as there is no dispute to be resolved, and no concessions to be made. Instead, it is a proposal to give away beneficial interests that have arisen, and have already vested in interest, pursuant to a will.
For this reason, as the contradictor submitted, and the plaintiffs ultimately conceded, the deed of variation does not represent a ‘compromise’ of a claim or dispute. Instead, the deed of variation is better characterised as an ‘other transaction’ for the purposes of r 54.02(2)(c)(i).
While certain criteria apply to the approval of a compromise, other factors may be relevant for approval of a transaction. In the present case, such factors may include whether the deed of variation is in Vivien’s interests, what the transaction involves and how it affects Vivien.
On its face, the deed of variation appears to be an attempt to ‘vary’ the terms of the will such that the beneficiary’s property can be given to the Vivien Callaghan settlements. Vivien will not receive her inheritance under the will, and instead will be a discretionary beneficiary of each of the Vivien Callaghan settlements.
As the plaintiffs ultimately acknowledged, they have no power by virtue of their office as executors to give a beneficiary’s entitlement under the will to someone else. Nor have they identified any power to agree to vary or alter the terms of the will in the present circumstances. As the contradictor submitted, the Court is empowered under s 63A of the Trustee Act to approve, on behalf of a person lacking capacity, a variation of a trust under which that person has a beneficial interest. However, this case does not involve such an application.
As the plaintiffs also acknowledged, the Court has no power under r 54.02 to authorise executors to enter into a transaction that they do not otherwise have the power to enter into.[13] Thus, insofar as the deed of variation was intended to operate as an agreement to vary the terms of the will, the Court cannot provide approval of the plaintiffs’ entry into it.
[13]Citing Re Hazeldine’s Trusts [1908] 1 Ch 34, 40–1 (Farwell LJ).
However, as their submissions evolved, the plaintiffs ultimately contended that the source of their power to agree to the deed of variation in fact lay in Siobhan’s execution of the deed of variation. The plaintiffs submitted that the deed of variation took effect as an assignment of Vivien’s interest, alternatively, as a direction to the plaintiffs to hold Vivien’s share of the estate on different trusts.[14] If the deed of variation took effect as an assignment then, subject to the Court’s approval, the plaintiffs were not merely empowered, but instead obliged, to distribute Vivien’s share of Patsy’s residuary estate to the Vivien Callaghan settlements. The plaintiffs therefore requested that the Court determine the question of whether the deed of variation effectively assigned Vivien’s interest in Patsy’s estate to the Vivien Callaghan settlements.
[14]Citing Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614 (‘Howard-Smith’); Crowden v Aldridge [1993] 1 WLR 433.
In Comptroller of Stamps (Vic) v Howard-Smith, Dixon J stated:[15]
A voluntary disposition of an equitable interest may take one of at least three forms. It may consist of an expression or indication of intention on the part of the donor that he shall hold the equitable interest vested in him upon trust for the persons intended to benefit. In that case he retains the title to the equitable interest, but constitutes himself trustee thereof, and, by his declaration, imposes upon himself an obligation to hold it for the benefit of others, namely, the donees.
In the second place, the disposition may consist of a sufficient expression of an immediate intention to make over to the persons intended to benefit the equitable interest vested in the donor, or some less interest carved out of it. In that case communication to the trustee or person in whom the legal title to the property is vested is not required in order effectually to assign the equitable property. Notice to the trustee may be important to bind him to respect the assignment and in order to preserve priorities. But it is not a condition precedent to the operation of the expression of intention as an assignment. Nor does it appear necessary that the intention to pass the equitable property shall be communicated to the assignee. What is necessary is that there shall be an expression of intention then and there to set over the equitable interest, and, perhaps it should be communicated to someone who does not receive the communication under confidence or in the capacity only of an agent for the donor.
In the third place, the intending donor for whom property is held upon trust may give to his trustee a direction requiring him thenceforth to hold the property upon trust for the intended donee.
A beneficiary who is sui juris and entitled to an equitable interest corresponding to the full legal interest in property vested in his trustee may require the transfer to him of the legal estate or interest. He may then transfer the legal interest upon trust for others. Without going through these steps he may simply direct the existing trustee to hold the trust property upon trust for the new beneficiaries. He cannot without the trustee’s consent impose upon him new active duties. But he may substitute a new object, at any rate in the case of any passive trust. Accordingly, a voluntary disposition of an equitable interest may be effected by the communication to the trustee of a direction, intended to be binding on him, thenceforward to hold the trust property upon trust for the donee. But it must be a direction, and not a mere authority revocable until acted upon. Such an authority is not in itself an assignment. It may, it is true, result in a transfer of an equitable interest. For the trustee acting upon it may make an effectual appropriation of the trust property to the new beneficiary, or may acknowledge to him that he holds the trust property thenceforward on his behalf. If the authority contemplates or allows such a method of imparting an equitable interest to the donee, the action of the trustee may be effectual to bring about a result. But, in such a case, it is not the donor’s expression of intention which per se constitutes the assignment. It is the dealing with the trust property under his authorisation. The distinction is, of course, of great importance in considering whether a document is itself an assignment, and, as such, liable to stamp duty.
[15](1936) 54 CLR 614, 621–3.
The plaintiffs submitted that the deed of variation takes effect as an assignment of Vivien’s interest in Patsy’s estate, alternatively, a direction to the plaintiffs as:
(a) Vivien is a residuary beneficiary of Patsy’s estate and has an equitable chose in action;
(b) Under Recital G to the deed of variation, Vivien is desirous of varying the disposition to her effected by the will; and
(c) Clauses 2 and 3 of the deed of variation require the plaintiffs to distribute Vivien’s share of the residuary estate to the Vivien Callaghan settlements.
In oral submissions, the contradictor submitted that one cannot assign what one does not have. Thus, the contradictor submitted, if there were to be an assignment, it is essential that the will be executed and the funds distributed to Vivien, and then those in control of her affairs can proceed to assign the funds by way of gift to the Vivien Callaghan settlements.
However, the contradictor does not dispute the proposition that, if Vivien were sui juris, she could have given the plaintiffs a direction that in effect would have varied the will and required them to distribute her share of the residuary estate to the Vivien Callaghan settlements. Nor does the contradictor dispute that such a direction would have taken immediate legal effect upon communication and would have been irrevocable. However, the contradictor submits that Vivien has not done so, nor has her administrator done so. Further, Vivien’s administrator could only do so if the Court were to approve the deed of variation, and thus the question of whether the Court should approve a deviation from the will by the plaintiffs remains.
In Micallef v Micallef, relied upon by the plaintiffs, Applegarth J stated:[16]
[A] residuary beneficiary may assign his or her interest in an unadministered estate. The right to due administration that a residuary beneficiary holds is an equitable chose in action.[17] Such a right is capable of being assigned or transferred.[18]
[16][2012] QSC 239, [26] (original citations included).
[17]Kennon v Spry (2008) 238 CLR 366, 393–4 [75] (French CJ).
[18]Howard-Smith (n 14); Ford and Lee, The Law of Trusts (Thomson Reuters, 2012) [1.8510]; Parry and Kerridge, The Law of Succession (Sweet and Maxwell, 12th ed, 2009) [24-33].
For an assignment to be effective there must be a clear expression of an intention to make an immediate disposition.[19] It is not necessary for the language of assignment to be used. As explained by Lord Macnaghten in William Brandt’s Sons and Co v Dunlop Rubber Company Limited:[20]
An equitable assignment does not always take that form. … It may be couched in the language of command. It may be a courteous request. It may assume the form of mere permission. The language is immaterial if the meaning is plain.
[19]Norman v Federal Commissioner of Taxation (1963) 109 CLR 9, 30–1 (Windeyer J).
[20][1905] AC 454, 462.
For present purposes, there seems to be little practical distinction between an equitable assignment and a direction to trustees or executors to thenceforth hold a beneficiary’s interest on trust for another. In this regard, it is observed in Jacobs’ Law of Trusts that:[21]
A beneficiary may direct a trustee to hold the whole of the equitable interest on trust for another. It is clear that such a direction amounts to a disposition of an existing equitable interest, and so must be in writing.[22] As formulated by Wilberforce QC in Grey v Inland Revenue Commissioners,[23] a disposition ordinarily includes an act by which someone ceases to be the owner of property in law or in equity.
The precise nature of such a direction is problematic. Dixon J and Romer LC considered it distinct from both a declaration of trust and a transfer.[24] In Grey’s case itself, Upjohn J and Lord Radcliffe said that it was a declaration of trust. Ong characterised the direction in Grey’s case as a release subject to the terms of the new trust.[25] Moreover, it is difficult to differentiate a direction from an assignment: the effect is identical, and a direction clearly satisfies the formal requirements. Sir Frederick Jordan said that this was ‘simply an illustration of equitable assignment’.[26] Little would appear to turn on the point, but given the similarities with both of the two principal methods of creating an express trust, there seems no reason to characterise it as a separate mode.[27]
[21]J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis, 8th ed, 2018) [6-24] (original citations included).
[22]Grey v Inland Revenue Commissioners [1960] AC 1.
[23]A formulation adopted by Lord Hoffmann in Newlon Housing Trust v Alsulaimen [1999] 1 AC 313.
[24]Howard-Smith (n 14) 622; Timpson’s Executors v Yerbury [1936] 1 KB 645, 664.
[25]D Ong, Trusts Law in Australia (Federation Press, 4th ed, 2012) 143–9.
[26]F Jordan, Chapters on Equity in New South Wales (6th ed, 1945) 24, fn [m].
[27]Cf Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491, 503 (Gummow J).
The plaintiffs contended that, as Vivien’s administrator, Siobhan has the power to assign Vivien’s interest under the will or to give a direction to the plaintiffs to hold Vivien’s share of the estate on trust for the Vivien Callaghan settlements, relying upon the decision in Re Tracey.[28]
[28][2017] 2 Qd R 35.
In that case, the Queensland Court of Appeal considered whether the Public Trustee could invoke the rule in Saunders v Vautier[29] on behalf of an incapacitated adult as their administrator under the Guardianship and Administration Act 2000 (Qld). Fraser JA, with whom Holmes CJ agreed, held that while the rule in Saunders v Vautier may only be invoked by a beneficiary who is sui juris, s 33(2) of the Guardianship and Administration Act 2000 (Qld) confers authority upon the administrator to do anything the adult could have done if the adult had legal capacity for the matter, including exercising the power to terminate a trust and require the transfer of the trust property to the adult.
[29](1841) 41 ER 482.
In particular, Fraser JA stated that s 33(2) of the Guardianship and Administration Act 2000 (Qld):
does not draw any distinction between substantive or other rules concerning lack of capacity. It simply provides that an ‘administrator is authorised to do, in accordance with the terms of the administrator’s appointment, anything in relation to a financial matter that the adult could have done if the adult had capacity for the matter when the power is exercised’. Reference to matters that the adult ‘could have done if the adult had capacity’ is apt to describe the power conferred upon such a trust beneficiary by the rule in Saunders v Vautier. …
The term ‘financial matter’ is defined in the Guardianship and Administration Act [2000 (Qld)] to mean ‘a matter relating to the adult’s financial or property matters’ and to include ‘a matter relating to’ any one or more of 16 examples. The most relevant example is para (c) (‘receiving and recovering money payable to the adult’). Understood in the context of s 33(2), this example seems apt to refer to the exercise of a power by an administrator to receive trust moneys beneficially owned by an adult who is under such a disability as precludes the adult from giving a valid discharge to the trustee.
…
Even if it were thought that none of the examples in the definition of ‘financial matter’ described the power to invoke the rule in Saunders v Vautier that would not influence the proper construction of the general expression in the definition ‘a matter relating to the adult’s financial or property matters’. The Guardianship and Administration Act [2000 (Qld)] does not evince any intention to displace the application of the provision in s 14D of the Acts Interpretation Act 1954 [(Qld)] that examples of the operation of a provision are not exhaustive and do not limit the meaning of the provision. It is not open to doubt that the definition of ‘financial matter’ … comprehends an adult’s absolute entitlement to property held upon trust solely for that adult. The exercise of the power to require the transfer of the trust property to the adult beneficiary necessarily must occur ‘in relation’ to that trust property. That the rule in Saunders v Vautier applies only in relation to a beneficiary who is not under a relevant legal disability is not a ground for denying the application of s 33(2). That provision operates upon the very premise that the adult does lack legal capacity for the relevant matter, and it confers authority upon the administrator to do in relation to that matter anything the adult could have done if the adult had legal capacity for the matter.[30]
[30]Re Tracey [2017] 2 Qd R 35, 42-44 [19]-[20], [22] (emphasis in original).
The Guardianship and Administration Act provides for a similar scheme to the Guardianship and Administration Act 2000 (Qld). Section 30 of the Guardianship and Administration Act confers jurisdiction on VCAT to make an administration order after considering an application. Under s 30(2), VCAT may only make an administration order if satisfied that:
(a) because of the proposed represented person’s disability, the person does not have decision-making capacity in relation to the financial matter in relation to which the order is sought;
(b) the proposed represented person is in need of an administrator;
(c) the administration order will promote the proposed represented person’s personal and social wellbeing; and
(d) in the case of an application for an administration order for a proposed represented person who does not reside in Victoria, State Trustees has not been authorised to collect, manage, sell or otherwise dispose of or administer any property in Victoria in relation to which the administration order is sought.
Section 34(2) of the Guardianship and Administration Act sets out the various matters which must be specified in an administration order, including:
(a) the name of the represented person;
(b) the name of the administrator;
(c) the financial matters in relation to which the administrator has powers;
(d)any other power referred to in Division 6 that VCAT specifically confers on the administrator;
(e)any restrictions on the administrator’s exercise of a power referred to in paragraph (c) or (d);
(f) whether the order is an urgent order.
Section 3 of the Guardianship and Administration Act defines ‘financial matter’ as follows:
Financial matter, in relation to a person, means any matter relating to the person’s financial or property affairs and includes any legal matter that relates to the financial or property affairs of the person.
Following this definition, sixteen examples of financial matters are set out. The plaintiffs submitted that the assignment of a beneficial interest under a will is analogous to the example in provided in para (d), namely, ‘[r]eceiving and recovering money payable to the person’.
Section 46 of the Guardianship and Administration Act deals with the powers of administrators, relevantly providing:
(1)An administration order confers on the person appointed as administrator—
(a)a power to make decisions about the financial matters in relation to the represented person specified in the order; and
…
(e) any other power that is specified in the order; and
(f)a power to sign and do any thing that is necessary to give effect to any power or duty vested in the administrator; and
(g)a power to do all matters necessary or incidental to the performance of any power conferred on the administrator.
…
(3)Subject to, and in accordance with, this Act and the administration order, an administrator may do all acts and exercise all powers in relation to the financial matters specified in the order in the name, and on behalf, of the represented person as effectually and in the same manner as the represented person may have done if the represented person had the relevant decision-making capacity.
(4)A decision made, action taken, consent given or thing done by an administrator under an administration order has effect as if it were made, taken, given or done by the represented person and the represented person had decision-making capacity for the matter in relation to which the order was made.
While s 50(1) of the Guardianship and Administration Act provides that:
An administrator may, on behalf and in the name of a represented person, exercise a power or give consent as the administrator thinks fit if—
(a)the power is vested in a represented person for that person’s own benefit or the consent of the represented person is necessary to the exercise of the power; and
(b)the power or consent is in the nature of a beneficial interest in the represented person; and
(c)the administrator believes exercising the power or giving the consent will benefit the represented person.
The Guardianship and Administration Act also imposes a number of duties on administrators. For example, s 55 requires an administrator to, inter alia: act in accordance with the general principles and decision-making principles set out in the Guardianship and Administration Act; act honestly, diligently and in good faith; exercise reasonable skill and care; and avoid acting if there is or may be a conflict of interest unless authorised to act under the Guardianship and Administration Act, by an order of VCAT or otherwise by law.
Section 57(1) prevents an administrator from entering into a transaction in their capacity as administrator if the transaction is one in which there is, or may be, a conflict between their duty as administrator to the represented person and their own interests, or the interests of a relative, business associate or close friend of the administrator. However, s 57(1) does not apply to certain transactions described in s 57(2), or where a transaction is authorised by VCAT under s 58. Section 58 provides:
(1)An administrator may enter into a transaction prohibited by section 57(1) if VCAT authorises the administrator at or before the time of the transaction to enter into—
(a) the transaction; or
(b) a transaction of a similar nature; or
(c) any transaction prohibited by section 57(1).
(2) VCAT may validate a transaction prohibited under section 57(1).
(3)A transaction validated under subsection (2) is taken to be valid from the time it was entered into.
A sui juris residuary beneficiary under a will has the ability to effect an equitable assignment of his or her interest under the will or to direct an executor to henceforth hold his or her interest on trust for another. Each of these actions would fall within the definition of ‘financial matter’, as they are matters relating to financial or property affairs. Where an administration order under the Guardianship and Administration Act is in place, the administrator may, subject to that Act and the terms of the administration order, do all acts and exercise all powers in the same manner as the represented person may have done if they had the relevant decision-making capacity. Accordingly, where appropriately authorised by an administration order, an administrator is able to effect an equitable assignment of the represented person’s interest under a will or to direct an executor to hold the represented person’s interest under the will on trust for another, subject to the requirements set out in the Guardianship and Administration Act.
However, in the present case the deed of variation itself is expressly ‘subject to, and conditional upon, the [plaintiffs] obtaining the approval of the Supreme Court of Victoria to their executing, and giving effect to, this Deed’. This condition suggests that it was not Siobhan’s intention to immediately assign Vivien’s interest under the will, or to direct the plaintiffs to immediately hold Vivien’s interest on trust for the Vivien Callaghan settlements. Under the terms of the deed of variation, the inheritance under the will was to remain Vivien’s own entitlement unless and until the Court approved the deed of variation. As the plaintiffs have no power to execute such a deed, it would be inappropriate for the Court to give such approval.
Furthermore, accepting for present purposes that, notwithstanding its conditional nature, the deed of variation is capable of being viewed as an expression of Siobhan’s intention to assign Vivien’s interest under the will (alternatively, as a direction to the plaintiffs), difficult questions remain relating to the role of this Court in the present application and the scope of power conferred on Siobhan by VCAT.
As the contradictor submitted, the authority given to Siobhan by VCAT to consent to an arrangement treating the gift in the will to Vivien as a gift to eight discretionary trusts is expressly subject to the approval of the Court.
The plaintiffs submitted that VCAT should not be taken by the VCAT orders to have sought to require the Court to do anything more than perform its established role under r 54.02 of guiding the plaintiffs. They submitted that if Siobhan has effectively assigned Vivien’s entitlement under the will by the deed of variation then it was, strictly, unnecessary for the plaintiffs to execute the deed of variation, and they have no discretion about whether to distribute to the Vivien Callaghan settlements. They contended, therefore, that the key questions for the Court are whether the deed of variation takes effect as an assignment and whether Siobhan is acting lawfully.
The contradictor submitted that the Court should not approve an arrangement whereby executors do not distribute a disabled beneficiary’s entitlement in accordance with the will, or in accordance with an existing binding and lawful direction by that beneficiary requiring and obliging the executors to distribute that entitlement to someone else. It is submitted that the fact that this might accord with the supposed wishes of the named beneficiary or that, if the distribution were made to Vivien, it could and very probably would be gifted to a third party or parties, is no basis for the Court to approve the plaintiffs deviating from the words of the will.
The Guardianship and Administration Act confers jurisdiction on VCAT to make administration orders in the appropriate circumstances defined in that Act. The Guardianship and Administration Act requires VCAT to decide the extent of the power conferred upon the administrator having regard to the relevant matters under the Act. The Guardianship and Administration Act provides for the review of the appointment, and under s 64 of the Guardianship and Administration Act an administrator may apply to VCAT for advice on any matter relating to the scope of the administration order or the exercise of any power under the order.
As set out above, the VCAT orders provide:
2.[Siobhan] has power to make decisions about the following financial matters:
decisions dealing with [Vivien’s] property in Victoria, being an inheritance under [the will].
3.[Siobhan] has powers given under Guardianship and Administration Act 2019 section:
-51, to bring and defend legal proceedings and to negotiate and consent to a variation of [the will] by executing a Deed of Family Arrangement for the approval of the Supreme Court of Victoria construing [the will] as if [Patsy] had gifted [Vivien’s] inheritance, of one quarter share of the residuary estate, equally between [the Vivien Callaghan settlements], of which [Vivien] is a beneficiary.
…
5.In so far as the above proposed variation of [the will] may include a conflict transaction, as [Siobhan] is also a beneficiary of [the Vivien Callaghan settlements], VCAT validates the transaction.
The VCAT member did not publish reasons for the VCAT orders. However, it appears from the VCAT orders that the member was under the apprehension that it was possible for Siobhan and the plaintiffs to agree to vary the terms of the will and that the Court would have a supervisory role to play in such a transaction. Order 5 of the VCAT orders, which permits a conflict transaction, is limited to a transaction approved by this Court. As noted above, the plaintiffs do not have the power to agree to a ‘variation of the will’ and it is therefore inappropriate for the Court to approve such a transaction.
The VCAT orders do not appear to contemplate providing Siobhan with the power to assign Vivien’s interest under the will such that the plaintiffs would be bound to distribute her interest to the Vivien Callaghan settlements, or to direct the plaintiffs to hold her interest on trust for such settlements, without the approval of the Court. Notwithstanding this, the plaintiffs submitted that the Court should nevertheless approve the transaction if the deed of variation can be understood as effecting an assignment or constituting a direction to the plaintiffs.
Such an approach would not be appropriate in the present circumstances. Under the Guardianship and Administration Act it is for VCAT to determine the extent of an administrator’s powers, and it is unclear what role, if any, was played by the possibility of the Court granting approval of the anticipated transaction in VCAT’s decision to appoint Siobhan as Vivien’s administrator.
As noted above, it may be possible for an administrator who is appropriately empowered by an administration order made by VCAT under the Guardianship and Administration Act to assign a represented person’s interest under a will or to give a direction to the executors to hold that interest on trust for another. However, VCAT does not appear to have contemplated granting Siobhan such power. In addition, it appears that Siobhan and the plaintiffs did not understand Siobhan as possessing such a power when they entered into the deed of variation, as they made it conditional on the approval of the Court. It would be inappropriate for the Court to speculate as to whether, in exercising its jurisdiction under the Guardianship and Administration Act, VCAT may give, or would have given, power to Siobhan to effect an assignment or give a direction to the trustees if VCAT had not been under the misapprehension that the plaintiffs had the power to agree to vary the will.
The fact that it may be possible for a suitably empowered administrator to assign an interest under a will does not justify the Court making the orders sought. Nor does the fact that if the will were executed according to its terms, it is likely that Vivien’s entitlement would be gifted to others, either inter vivos or through her will. This is so even if it were accepted that Vivien would likely have sought to assign her interest under the will or otherwise direct the plaintiffs to hold her interest on trust for another, or others, if she was sui juris.
Without the approval of the Court, the deed of variation cannot have the effect of an assignment or direction to the plaintiffs. To the extent that the plaintiffs’ submissions suggest that Siobhan is nonetheless empowered by ord 2 of the VCAT orders to effect such an assignment or direction without the approval of this Court, the appropriate course would be for Siobhan to seek the advice of VCAT in accordance with s 64 of the Guardianship and Administration Act before seeking to do so.
Conclusion
For the foregoing reasons, the plaintiffs’ originating motion will be dismissed.
Costs
The costs of the contradictor of and incidental to the proceeding were dealt with pursuant to orders made 30 July 2021, that is, they are to be paid out of the estate on an indemnity basis.
The costs of the plaintiffs are still to be determined. The plaintiffs are to forward short written submissions as to their costs of the proceeding by 28 October 2022.
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