Secretary, Department of Family and Community Services v M and F

[2018] NSWSC 1179

Supreme Court

New South Wales

Medium Neutral Citation:	Secretary, Department of Family and Community Services v M and F [2018] NSWSC 1179
Hearing dates:	26 July 2018
Date of orders:	26 July 2018
Decision date:	26 July 2018
Jurisdiction:	Equity - Duty List
Before:	Parker J
Decision:	Reasons given for order authorising a will to be made on behalf of a minor lacking testamentary capacity
Catchwords:	SUCCESSION – Wills, probate and administration – Statutory will – Succession Act 2006 (NSW), s 18 – where capacity never existed – proposal one “reasonably likely” if capacity existed – statutory will made in circumstances where minor entitled to large estate – statutory will made in circumstances where minor under the parental responsibility of the Department of Family and Community Services PRACTICE AND PROCEDURE – Uniform Civil Procedure Rules 2005 (NSW), r 36.16 – finality of judgment or order – whether order allowing judgment or order to be set aside affects finality of judgment or order
Legislation Cited:	Succession Act 2006 (NSW), ss 18, 23 Uniform Civil Procedure Rules 2005 (NSW), r 36.16
Cases Cited:	Re Fenwick; Application of J R Fenwick; Re ‘Charles’ (2009) 76 NSWLR 22
Category:	Principal judgment
Parties:	Secretary, Department of Family and Community Services (Plaintiff)
Representation:	Counsel: V Hartstein (Plaintiff)   Solicitors: Department of Family and Community Services (Plaintiff)
File Number(s):	2018/231047
Publication restriction:	Nil

Judgment – Ex tempore

Judgment delivered on 27 July 2018; revised and reissued 31 July 2018

1. Yesterday evening (26 July), an application was made to me as the Duty Judge on an urgent basis for an order pursuant to s 18 of the Succession Act 2006 (NSW) to authorise a will to be made for an 8-year-old boy who lacks testamentary capacity, and to whom I will refer as “J”. The application was made by the Secretary of the Department of Family and Community Services, to which I will refer as “the Department”. J is under the parental responsibility of the Minister for Family and Community Services pursuant to orders made by the Children's Court in June 2010 to which I will refer in more detail shortly. I made orders on an urgent basis at 8.25pm last night on the application. The following are the reasons for my orders.

2. The circumstances of this case are more than usually tragic. Things went wrong when J was born and, as a result, he suffered a significant neurological impairment at birth due to a lack of oxygen. He is severely disabled, suffering in particular from severe spastic quadriparetic cerebral palsy. Recently he was admitted to hospital with pneumonia and it appears that his life expectancy is limited to a matter of days, if not hours.

3. J's mother, to whom I will refer as “M”, is 36 years-old. She has six children of whom J is the fifth. The eldest three are daughters who are half-sisters of J, having a different father or fathers. I will refer to them as “HS1”, “HS2” and “HS3”. HS1 is a few days short of 17 years old. HS2 was born in August 2002 and is therefore almost 16. HS3 is 14. M's next child to whom I will refer as “B”, is J's full brother. He was born in August 2008, and is therefore nearly 10 years old. J himself was born in October 2009. M's youngest child is a daughter who is a full sister to J. She is 4 years old. I will refer to her as “S”.

4. J's father, to whom I will refer as “F”, is 49 years-old. As I have mentioned, he is also the father of J's full siblings, B and S. He remains in a relationship with M, although they do not appear to have married.

5. Since he was discharged from hospital following his birth, J has lived with M's parents (and thus his grandparents) to whom I will refer as “GM” and “GF”. They live in Muswellbrook, New South Wales and care not only for J but for his full brother B and for the youngest of his half-sisters, HS3. These living arrangements were formalised by a care plan which was approved pursuant to orders of the Children's Court in June 2010 to which I have already referred. The care plan provides for GM and GF to have full responsibility for J's medical care but otherwise, as I have indicated, for formal parental responsibility for J to rest with the Minister.

6. J's parents, M and F, have no formal role in his care and their involvement with J is limited to supervised visits for up to a few hours a month. The reason for this is that the Department was, and remains, of the view that M and F lack the capacity to provide J with the level of care he requires to develop, and to ensure that he had and has a safe and secure environment to do so. The plan refers to a number of incidents which led the Department to form that view, and which it is unnecessary to detail further for the purposes of this judgment. The care plan records that M and F were consulted about the proposed arrangements for J's care and accepted them.

7. J's younger full sister S, remains in the care of M and F. But all of his other siblings and half siblings are not. As I have mentioned, his full brother B and his youngest half-sister, HS3, are under the care of GM and GF. His oldest half-sister, HS1, lives with her paternal grandmother. His second half-sister, HS2, lives in refuge accommodation. She, B and HS3, are all subject to parental responsibility of the Minister pursuant to orders of the Children's Court, no doubt for reasons similar to those which led that Court to approve the care plan for J.

8. Both GM and GF are 61 years old. In addition to the three children J, B and HS3, the other member of their household at Muswellbrook is their daughter, the younger sister of F, who is thus J's aunt. I will refer to her as “A”. She is 24 years old, and as a consequence of living in the household, provides some assistance to them in looking after the three children.

9. In September 2015 this Court awarded J the sum of $5.7 million by way of damages for medical negligence arising out of the circumstances of his birth, together with costs. Subsequently, orders were made for the proceeds of that judgment by the Court appointing the NSW Trustee and Guardian, to which I will refer as “the NSW Trustee”, as the manager of J's estate.

10. Some of the moneys in J's estate were used to purchase the property at Muswellbrook in which he lives with GM and GF and the other members of their household. Moneys were also used to buy a motor car for the use of the household. The remaining funds were invested. J's assets now consist of the house, the car and approximately $4.9 million in investments.

11. In or before March 2018, the relevant officials of the Department formed the view that it was desirable to apply to the Court to have a will made for J. A meeting took place in March between representatives of the Department and J's grandparents, GM and GF. Following this, a proposed will was formulated. The proposed will would appoint the NSW Trustee as J's executor and trustee. It would provide for the Muswellbrook property to pass to GM should she survive J, and otherwise to J's full brother B and his youngest half-sister HS3. The proposed gift to GM would be accompanied by a request that she retain the property as a place for B and HS3 to live until each of them had attained the age of 18.

12. The proposed will would then provide for any motor vehicles owned by J to pass to his grandmother, GM, along with all of his personal effects, providing that she survived him, otherwise the personal effects would pass to his aunt, A. This would be accompanied by a request that GM, or failing her, A, should distribute his personal effects between members of his family at her discretion.

13. The proposed will would provide that the residue of J's estate be divided into parts and distributed among members of his family. GM and GF jointly would receive 27%. J's aunt, A, would receive 3%, and each of his brother, B, and his half-sister, HS3, would receive 20%. This totals 70% for the members of J's household. M and F would each receive 7.5%, and J's two other half-sisters and full sister would each receive 5%. The proposed will contains other mechanical provisions which it is not necessary to detail for present purposes.

14. Ms Walker of the Crown Solicitor's Office, who had the carriage of the matter, informed GM and GF through their nominated solicitor of the proposed will earlier yesterday. Ms Walker had planned to meet M and F early next week to provide them with a copy of the proposed will and seek their views, but J's illness has intervened, and for quite understandable reasons it has not been possible for the members of his family to consider the Department's proposal while he is in extremis.

15. The Summons which commenced these proceedings named M and F as defendants, but in the circumstances it was not possible to secure their attendance or give them any proper notice of the proceedings and I dispensed with service of the application upon them.

16. It was essential, if the Court's power was to be exercised at all, that it be exercised while J was still alive. That meant for practical purposes that the application had to be heard and determined yesterday evening.

17. Counsel for the Department referred me to the judgment of Palmer J in Re Fenwick; Application of J R Fenwick; Re ‘Charles’ (2009) 76 NSWLR 22; [2009] NSWSC 530 (“Re Fenwick”) concerning the exercise of the court's powers under the Succession Act, s 18. I understand that that decision is constantly referred to in applications of the present sort in this Division as stating the principles upon which the Court acts.

18. His Honour said (at 52 [172]):

As, in the absence of a statutory will, the person in a nil capacity case must inevitably die intestate, I do not think that the Court starts with the meaningless question: would this particular person have chosen to make a will if he or she had attained testamentary capacity? Rather, I think that the Court must start from the position that, if there are assets of any significance in the minor's estate, it should authorise some kind of statutory will unless it is satisfied that what would incur on intestacy would provide adequately for all the reasonable claims on the estate.

19. His Honour said (at 52 [173]), among other things:

In a nil capacity case, where there cannot be any meaningful search for actual or likely subjective intention, the Court of necessity must make objective assessments of likelihood. The Court can take notice of the fact that people in our society who have assets of any worth and who have a family and other relationships usually choose to make wills rather than die intestate. In my opinion, the Court can be satisfied by reference to common experience that if the incapacitated minor had attained testamentary capacity and had assets of any significant worth, then it is reasonably likely - in the sense of a fairly good chance - that, in common with most people, he or she would have chosen to make a will.

20. These statements of principle apply in the present case. J does not have and never has had testamentary capacity. He has assets totalling more than $5 million which, on any view, is significant. I am satisfied that it is reasonably likely that had he attained testamentary capacity he would have chosen to make a will for the benefit of members of his family.

21. I reach this conclusion because, as Palmer J pointed out, experience shows that people generally choose to make wills rather than die intestate, even if the wills they make may not necessarily differ from the result which would be produced by intestacy. But in the present case, as was also the case in Re Fenwick, I think there are independent reasons why it would not be adequate to leave J's assets to pass on intestacy. If that were to happen they will pass entirely to M and F. In my opinion such an outcome would fail to reflect the fact that others, and in particular GM, GF and J's siblings, have an important claim on his testamentary bounty.

22. It would of course be open to M and F, should they succeed to J’s estate on intestacy, to provide for other members of J’s family out of his estate. But the evidence suggests that the relationship between M on the one hand and GM and GF on the other hand is at times strained. Given the circumstances which led to J being placed with GM and GF, there would be a significant risk that proper calls on J's testamentary bounty would go unsatisfied were his estate to pass in its entirety to M and F.

23. I therefore concluded that this was an appropriate case for the Court's power under s 18 to be exercised. The difficulty I found was in formulating the terms of the will. This is not a case where J's parents, M and F, should be wholly excluded from his testamentary bounty. The Department does not suggest that, and the evidence, such as it is, would not justify it. There is no suggestion that M and F are themselves responsible for J's condition. And whatever their inadequacies, real or perceived, in discharging their responsibilities as J's parents, this appears to result more from a lack of capacity rather than any deliberate choice, or estrangement.

24. The proposed will would provide for nominated shares of the residue of J’s estate to pass to GM and GF jointly; A; J's parents M and F; and J's five siblings or half siblings; a total (counting GM and GF as two) of eleven people. Even if this application had been made based on a full opportunity of all interested parties to lead evidence, I doubt that I would have been capable in any appropriate way of weighing against each other the different merits of the different claimants on J's bounty. The task was quite impossible in an application which had to be heard and determined within a matter of a few hours and without hearing from any of those potentially affected parties.

25. I did not think it was possible to justify the conclusion that, for instance, each of M and F's parents should receive 7.5%, whereas GM and GF between them should receive 27%. Why, it might be asked, should it not be 10%, and 10%, and 22%? Furthermore, it remains possible that M or F may have further children who will be siblings or half siblings to J. Such children will, of course, never have known J, but they will have a blood relationship to him which arguably is comparable to the relationship with siblings or half siblings with whom J never lived during his lifetime.

26. The reality is that the deployment of J's assets for the benefit of his family is very much a matter of judgment which depends upon the precise circumstances at the time the judgment comes to be exercised and which involves value judgments and a degree of knowledge of the family's affairs which this Court cannot hope to achieve.

27. An additional consideration which was mentioned by counsel for the Department is that, so I was informed, J's grandmother GM, although she appears to have discharged admirably her responsibilities for caring for him, is not good with money and requires the assistance of an advocate in her dealings with the NSW Trustee. The proposed will, providing as it does for an absolute gift totalling more than two and a half million dollars to GM and GF jointly, would effect a complete transformation of GM and GF's financial position which they may be ill-equipped to take advantage of.

28. These considerations led me to think that the more appropriate course might be to provide in the will for a trust in favour of GM as a life in being and with wide powers of appointment. This would have the merit that J's assets would continue to be managed by the NSW Trustee who has the undoubted expertise to do so. It would also provide for flexibility both during the minority of J's siblings and half siblings and thereafter in the way in which the capital and income derived from J's assets can be deployed overall to the best advantage of his relatives. I put this view to counsel for the Department, who, broadly speaking, adopted it.

29. The will as ultimately formulated by me contains a gift on trust of both the property and the residue (essentially the investments) in favour of GM for her lifetime, with a power of appointment in her will, and, in default, division among members of J's family. The family is defined to include the eleven people to whom I have referred, together with any other siblings of J who may be born before GM's death. GM will also have a power during her lifetime to direct the NSW Trustee to make distributions of income or capital to members of J's family as defined.

30. I appreciate that this will place a substantial responsibility on GM, but I am fortified in placing this responsibility on her by the fact that on the evidence before me she has so far discharged her responsibilities as J's carer to the very best of her ability.

31. The will as ultimately formulated left the provisions relating to J's motor vehicles and personal effects, which will essentially put them in the hands of GM to be distributed as she may see fit, unchanged. It also adopted a number of the mechanical provisions in the will proposed by the Department which it is unnecessary to detail.

32. I was conscious, in dealing with the application, that M and F, who are directly affected by the exercise of the Court's power, were not heard. I was also conscious of the fact that, in concluding that the distribution to M and F of all of J's assets on intestacy was inappropriate, I relied on the circumstances disclosed by the care plan. While there is no reason whatsoever to doubt the good faith of the departmental officers who were responsible for the care plan, the fact remains that the views reflected in the care plan, which are adverse to M and F, have not been supported in evidence before me of the actual facts, and M and F have had no opportunity to contest them.

33. Uniform Civil Procedure Rules 2005 (NSW) r 36.16(3A) has the effect that an application may be made within 14 days after a judgment or order is entered to set aside or vary that judgment or order. Counsel for the Department was understandably concerned to ensure that any order I made was final and effective. When I raised with counsel the possibility of allowing liberty to apply to set the judgment aside, counsel submitted that I should not do so as it might deprive my judgment of final effect.

34. It may be that the procedures set out in r 36.16 are inapplicable to an order made under the Succession Act s 18. I have not considered that question or received any submissions on it; but if the rule is applicable, I do not think that the fact that there is a 14-day period within which an application can be made to set a judgment aside deprives that judgment of finality. For that reason, I considered it appropriate to provide in my orders for such an application to be made. It would be most unfortunate if, during the next few days, any of J's family members, and M and F in particular, should be distracted by consideration of what will happen to his assets after his death.

35. Accordingly, I thought it appropriate to order that the period under r 36.16(3A) should be extended to 42 days from the date of making of the order. On reflection, I have noticed that r 36.16(3C) apparently prevents the Court from extending the time provided by r 36.16(3A). Accordingly, if r 36.16 applies at all, my order extending the 14-day period to 42 days may not be effective. I directed the legal representatives for the plaintiff to provide M and F with copies of my orders, and I trust that they will draw this point to M and F's attention, so that if M and F wished to make an application to have my orders set aside, they have a proper opportunity to do so.

36. The Succession Act s 23 provides for the execution of a will pursuant to an order made under s 18. That section expressly provides for a Registrar to sign the will and that the will may effectively be signed even after the death of the person to whom the order relates. Accordingly, I thought it right in the orders I made to provide that the will which is the subject of my orders should not be executed until the time for making of any application by M and F to have my orders set aside has expired or, if such an application is made, the application has been determined.

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Decision last updated: 31 July 2018