3. Statutory wills

Introduction

  1. 3.1 The Commission has been asked to review and report on ‘whether the current requirements that allow the Supreme Court to authorise wills for persons who do not have testamentary capacity should be revised’.
  2. 3.2 Since 1997, the Supreme Court has had the power under Part 3 of the Wills Act 1997 (Vic) to authorise a will for a person who lacks testamentary capacity. The Court does not make a will: it determines whether to authorise a will proposed by the applicant. However these wills are commonly referred to as ‘statutory wills’.
  3. 3.3 The National Committee for Uniform Succession Laws recommended a statutory wills regime that is very similar to Victoria’s scheme.1 All Australian states and territories now have a similar regime in their succession legislation.2
  4. 3.4 In the consultation paper on wills, the Commission examined Victoria’s statutory wills scheme in order to determine if it is operating justly, fairly and in accordance with community expectations. It identified three significant matters at the outset. First, as the Court is being asked to authorise a will for a living person, the test that the Court applies to determine the person’s intentions is of fundamental importance. Secondly, given that capacity to make decisions ranges across a broad spectrum, the ability of the person involved to give their views is a significant consideration. Thirdly, the statutory wills scheme is rarely used, so the Commission has examined its accessibility.
  5. 3.5 Most of those who made submissions or attended consultations told the Commission that the statutory wills system is working well and does not require any major reform. One participant at the wills roundtable suggested allowing applications to be made for a statutory will after the person has died.3 However, the Commission does not favour such a change, as it would create difficulties with overlapping family provision jurisdiction.
  6. 3.6 This chapter outlines the Commission’s views in relation to:
  • determining the intentions of the incapacitated person
  • involvement of the incapacitated person in decision making
  • accessibility of the statutory wills scheme. 

Determining the intentions of the incapacitated person

  1. 3.7 When considering whether to authorise a will proposed by the applicant, the Court must be satisfied that:
  • the person does not have testamentary capacity
  • the proposed will reflects what the intentions of the person would be likely to be, or what the intentions of the person might reasonably be expected to be, if he or she had testamentary capacity
  • it is reasonable in all the circumstances for the Court to authorise the will.4
  1. 3.8 In order to determine the incapacitated person’s likely intentions, the Wills Act sets out a list of information that the Court may require the applicant to provide, including:
  • a reasonable estimate of the size and character of the estate
  • a draft of the proposed will
  • any evidence of the wishes of the person
  • any evidence of the likelihood of the person acquiring or regaining will-making capacity
  • the terms of any will previously made by the person
  • any evidence of the likelihood of a family provision claim being made after the person’s death
  • the circumstances of any person for whom provision might reasonably be expected to be made under the will
  • details of any persons who may be entitled to claim on intestacy
  • any evidence of any gift for a charitable or other purpose that the person might reasonably be expected to give or make by will.5
  1. 3.9 The test for a court to authorise a statutory will differs in all Australian states and territories.6 The Commission therefore asked in the consultation paper on wills whether the National Committee for Uniform Succession Laws’ proposal would be preferable
    to the Victorian test.7
  2. 3.10 The Victorian test requires that the proposed will reflect ‘what the intentions of the person would be likely to be or what the intentions of the person might reasonably be expected to be’.8
  3. 3.11 This test is the result of a 2007 amendment made in response to the decision in Boulton v Sanders,9in which the Victorian Court of Appeal interpreted the previous test restrictively. The amendment was designed to allow for applications where the person has never had capacity, as well as where the person lost capacity later in life.10 Accordingly, the second limb of the test (what the intentions of the person might reasonably be expected to be) is expressed in more objective terms than the first limb (what the intentions of the person would be likely to be).
  4. 3.12 In contrast, the National Committee for Uniform Succession Laws recommended that the court should be able to authorise a statutory will that ‘is or might be one that would have been made’ by the person if they had capacity.11 This test has been adopted in the Northern Territory and Queensland.12
  5. 3.13 Submissions received by the Commission overwhelmingly supported retaining the Victorian test.13 There was concern that the term ‘might’ is too broad and could lead to wills being authorised that the incapacitated person would not have wanted.14
  6. 3.14 The Commission agrees that the Victorian test should be retained. While national consistency should be promoted in succession law generally, the Victorian test is preferable because it is more closely aligned with the wishes of a person who has lost capacity and more clearly allows a will to be authorised in situations where the person has never had capacity.15
  7. 3.15 Further, the Victorian test was developed in response to Victorian case law and the particular problem identified by that case law. The test therefore achieves a degree of certainty that could be lacking if the National Committee’s recommended model were adopted.
  8. 3.16 The current Victorian test has also found favour in New South Wales. Justice Palmer of the Supreme Court of New South Wales noted the similarity of the Victorian test to the New South Wales test and observed that the words of the Victorian test:

[give] the court far more latitude in applying an objectively reasonable approach to identification of testamentary intention than did the words of the previous section. Indeed, the words of the new section 26(b) are very close in substance to the words of section 22(b) of the NSW Act [is, or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity].16

Involvement of the incapacitated person in the decision

Current law

  1. 3.17 The Wills Act states that any person may make an application for a statutory will.17 Applications are usually made by:
  • family members
  • other potential beneficiaries such as carers or friends
  • administrators, guardians or legal practitioners involved in the incapacitated person’s affairs.
  1. 3.18 It is legitimate for a beneficiary to bring an application for a statutory will.18 Many cases are brought by people who are proposing a will under which they would receive a benefit.
  2. 3.19 In Victoria, the person on whose behalf a statutory will is proposed is entitled to appear when the Court considers the application.19 However, there is no statutory requirement that the person be involved in the proceedings if possible, or even informed of the proceedings. The legislation imposes no obligation on the applicant to provide the incapacitated person with information or seek to involve them in the decision.
  3. 3.20 In contrast, the Commission has recently recommended in relation to guardianship laws that those making decisions on behalf of a person without capacity should use a ‘substituted judgment’ approach. This includes, among other things, acting in consultation with the person and encouraging the person to participate in decisions as far as is reasonably possible.20

Other jurisdictions

  1. 3.21 Comparable statutory wills legislation in New South Wales and the Australian Capital Territory specifies that the court may order separate representation for the incapacitated person.21 This may occur where it appears that the interests of the incapacitated person and the applicant are in conflict.22
  2. 3.22 In the United Kingdom, the incapacitated person must be given the opportunity to participate in the decision if possible.23

Views and conclusions

  1. 3.23 Submissions to the Commission generally agreed that the Wills Act should specify that the Court may order separate representation for the incapacitated person, as well as allowing the person to appear.24 It was noted that this would support the rights of persons with disabilities to participate in legal processes25 and enhance procedural fairness.26
  2. 3.24 Other submissions conveyed the view that an additional statutory provision allowing for separate representation would not offer any advantage over the current law,27 and that a requirement for separate representation may lead to increased costs for no good reason.28 It was suggested that the views of an incapacitated person who is able to express them could be presented to the Court by affidavit.29
  3. 3.25 In the Commission’s view, the Wills Act should provide that the Court may order that the incapacitated person be separately represented. While the Court already has the power to order this under its inherent jurisdiction, explicit recognition in the Wills Act may make it more likely that the incapacitated person’s views are taken into account. While the person subject to the application does not have will-making capacity, the person may still be able to express some views or preferences that the Court could take into account.
  4. 3.26 The Commission notes that ordering separate representation would be in the Court’s discretion and often may not be necessary, particularly where the person is not capable of expressing any views or preferences. However, even in this situation, representation by one of the people entitled to appear (an attorney, guardian or administrator or legal practitioner)30 may be desirable to defend the person’s interests—for example, in relation to the burden of a costs order.

Recommendation

3 The Wills Act 1997 (Vic) should expressly provide that the Court may order separate representation for the person on whose behalf an application for
a statutory will is made.

 

Accessibility of the statutory wills process

  1. 3.27 Since being given the power to do so, the Supreme Court has authorised approximately 32 statutory wills in 16 years. Wills have been authorised in the following circumstances:
  • removing a de facto partner from a previous will where the relationship had broken down31
  • removing from a previous will a husband who had been charged with the attempted murder of the incapacitated person32
  • removing from a previous will a friend who had since misused his position as administrator by selling off the incapacitated person’s property and taking the money as a loan to himself33
  • creating a will for an incapacitated person leaving more than half the estate
    to a nephew by marriage who was performing a carer’s role34
  • remedying a current will where there may have been a problem with lack of capacity, valid execution or ademption.35
  1. 3.28 The low number of applications for statutory wills may indicate that the system is not being used by those whom it is intended to assist, particularly given that there are many adults in Victoria who lack capacity to make or change a will.
  2. 3.29 The Commission was told of a number of reasons for the low number of applications. Some depend on the circumstances of the individual:
  • A person’s existing will or the intestacy provisions are often appropriate to the person’s circumstances.36
  • Many potential beneficiaries, particularly carers, would see it as inappropriate to bring an application during the person’s lifetime.37
  • Prospective applicants may not have access to relevant information, for example, the person’s current will, details of family members and relationships or information about the person’s assets.38
  1. 3.30 Other reasons for low numbers of applications are more closely related to the statutory wills scheme:
  • a lack of knowledge about the scheme, both in the legal sector and the wider community39
  • uncertainty about how much an application will cost and who will be required to pay for it40
  • the relatively small size of an estate may make the cost of an application unaffordable.41

Removing the two-stage process for an application

Current law

  1. 3.31 The Wills Act currently provides that the Court must grant an applicant leave to apply before the applicant may apply for authorisation of a proposed will.42 This two-stage process was originally intended to guard against unmeritorious applications, particularly baseless claims that a person lacks testamentary capacity.43
  2. 3.32 However, in practice the two stages are combined. Section 27(2) of the Wills Act gives the Court discretion to determine that an application for leave to apply may proceed as
    an application for an order authorising the proposed will. The Court has invariably used this power.
  3. 3.33 In a recent Victorian case, Justice Habersberger questioned the utility of the two-stage process:

In order to obtain leave an applicant must satisfy the Court of the three critical requirements in s 26 and, if required by the Court, give the information set out in s 28, which means putting all relevant evidence before the Court. Leave should only be refused after all of these matters have been taken into account. On the other hand, once leave has been given, it is extremely unlikely, in my opinion, that an order authorising a will to be made would be refused by the Court. It is, therefore, very hard to see why the second step was thought to be necessary as it seems to me that it serves no useful purpose.44

Views and conclusions

  1. 3.34 The Commission suggested in the consultation paper on wills that the two-stage process could be removed from the legislation. Of those who addressed this issue in submissions to the Commission, there was near unanimous support for the idea.45 Submissions noted that only one hearing is held in practice46 and that costs rules are sufficient to deter unmeritorious or vexatious applications.47
  2. 3.35 The Commission agrees that the two-stage process for a statutory will application in the Wills Act is unnecessary. Applications are usually determined in the one hearing, and the legislation should be amended to reflect that practice. Including a two-stage process in the legislation may deter those who are unfamiliar with the jurisdiction from making an application, as it may seem more complicated than the process actually is. The Commission agrees that a costs order is a sufficient deterrent to vexatious or unmeritorious applications being made.

Recommendation

4 An application for a statutory will should be made in one stage rather than two. The requirement at section 21(2) of the Wills Act 1997 (Vic) to seek leave to make an application for a statutory will should be repealed and consequential amendments made to sections 26–29. 

Hearings at the Victorian Civil and Administrative Tribunal

  1. 3.36 The consultation paper on wills sought views on whether the Guardianship List of the Victorian Civil and Administrative Tribunal (VCAT) should have jurisdiction to hear statutory will applications instead of, or in addition to, the Supreme Court.48 The Commission raised this idea in view of the low number of applications that have been heard by the Supreme Court and the possibility that a hearing at VCAT may make the system more accessible.
  2. 3.37 In Tasmania, jurisdiction to hear applications for statutory wills has been extended to the Guardianship and Administration Board.49 However, the board may only hear applications relating to persons who do not have a current will. Tasmania is the only Australian jurisdiction to have extended the statutory wills jurisdiction in this way.
  3. 3.38 Submissions were divided on whether this would be a desirable reform. Those in favour of VCAT having jurisdiction noted that:
  • VCAT is more accessible regionally than the Supreme Court50
  • VCAT is less formal and less expensive than the Supreme Court51
  • VCAT members in the Guardianship List have experience in dealing with persons who have disabilities and lack capacity52
  • senior members with legal expertise could be assigned to these matters to ensure appropriate legal analysis and resolution53
  • a VCAT hearing would be useful for smaller estates where the cost of an application to the Supreme Court may not be justified.54
  1. 3.39 Those who were opposed to VCAT having this jurisdiction noted that:
  • VCAT members do not necessarily have expertise in succession law55
  • VCAT is not necessarily cheaper than the Supreme Court (in particular, a barrister instructed by a solicitor may still be necessary in VCAT)56
  • there is no requirement for VCAT to publish its decisions and its jurisprudence is therefore less developed and less consistent.57
  1. 3.40 While seeing some merit in allowing applications at VCAT for approval of statutory wills, and noting that VCAT could introduce appropriate procedures and ensure that senior members with legal expertise are assigned to these matters, the Commission has concluded that this change in jurisdiction is not necessary. It is not clear that an application process at VCAT would cost less than in the Supreme Court and that the procedure would therefore be more accessible. 

Hearings on the papers

  1. 3.41 Another idea put forward in the consultation paper on wills was the possibility that a judge could determine unopposed statutory will applications based on written information only, with no court hearing.58 Hearings ‘on the papers’ have the potential to reduce the cost of the application as no appearances would be necessary. This procedure is used in New South Wales for this type of matter.59
  2. 3.42 Views on the idea were divided. Some submissions supported hearings on the papers as a way to reduce costs and improve accessibility of the statutory wills procedure.60 The Commercial Bar Association did not support hearings on the papers and was concerned that justice should be seen to be done in open court.61 Moores Legal preferred the idea of hearings on the papers in the Supreme Court to the idea of referring the power to determine statutory wills matters to VCAT.62
  3. 3.43 The Supreme Court noted that hearings on the papers:
  • may not be sufficient to satisfy the Court that the criteria are met and all relevant interests are protected
  • would not allow for greater participation of the incapacitated person.63
  1. 3.44 The Commission is of the view that hearings on the papers for unopposed matters would not necessarily make the statutory will procedure more accessible. While it is possible that costs may be reduced, the disadvantages outlined by the Supreme Court are sufficient to dissuade the Commission from recommending a change of practice.

Costs rules

  1. 3.45 There are no costs provisions in the Wills Act or the Court rules that are specific to statutory will applications. Costs are in the discretion of the Court. The starting point for determining who will pay the costs of an application is the general rule that ‘costs follow the event’, which means in effect that the unsuccessful party pays their own costs and most of the costs of the successful party.
  2. 3.46 However, the operation of this general rule is not clear where a statutory will application is successful but not contested. In this case, the costs are paid either from the estate of the incapacitated person or by the applicant.64
  3. 3.47 A key difference in statutory will applications compared to usual succession law proceedings is that the incapacitated person is still alive and has care needs due to their lack of capacity. Any order that costs come from the estate of the incapacitated person will deplete the assets of a living person. This factor will weigh heavily with the Court where the estate is modest, and may lead to a successful applicant being denied costs out of the incapacitated person’s estate. 
  4. 3.48 Given this key difference, the Supreme Court of Victoria has developed specific principles related to costs in statutory will applications. In Hill v Hill, which was a successful application by the daughter of an elderly woman who had lost capacity, Justice Byrne observed that other succession proceedings are not truly analogous in determining costs because ‘the will-maker is still alive and entitled, so long as she lives, to enjoy her assets undiminished by the burden of paying the costs of those whose claims anticipate her demise’.65 Applicants who stand to benefit from the proposed will, whether or not they are successful, may be required to meet their own costs.
  5. 3.49 Justice Byrne noted that the successful applicant was a beneficiary and ‘her costs in due course may be recouped from the estate which she may inherit’.66 The Court of Appeal has stated:

Where an application is brought by and for the benefit of persons including the applicant, rather than by a disinterested administrator, the ordinary principles governing costs in adversarial litigation properly apply. It should not be presumed that the estate, rather than an unsuccessful applicant, will be ordered to pay the costs of the proceeding merely because there is ‘a fair case of dispute’.

In determining whether it is appropriate to exercise the discretion to order that the costs of an application … be paid from the estate of a living but incapacitated person, the avoidance of any potentially adverse impact on that vulnerable person’s long-term security and welfare will always be an important consideration.67

  1. 3.50 However, where an application is brought by an administrator who receives no benefit under the proposed will, the court will usually allow the administrator costs from the represented person’s estate. Justice Hansen has stated that a disinterested administrator ‘would at least normally be entitled to recoup his costs out of the estate of the represented person. That does not mean that where appropriate he may not recover costs from another party.’68
  2. 3.51 Following a review of 25 successful applications for statutory wills in Victoria, the Commission found that:
  • Costs were paid from the estate of the incapacitated person in 15 cases. Ten of these matters involved applicants who received a benefit under the statutory will; four involved disinterested applicants such as administrators; and, in one case, it was not clear whether or not the applicant would benefit.69
  • No order for costs was made in nine cases (meaning that the applicant and the defendant, if the matter was contested, paid their own costs).70
  • Costs were ordered to be paid by an unsuccessful defendant in one case.71
  1. 3.52 In the consultation paper on wills, the Commission outlined the general principles that courts have developed in this area and asked whether specific legislative costs provisions should be enacted for statutory will applications.72
  2. 3.53 Most submissions that addressed this issue indicated a preference for the Court to retain its general discretion over costs.73 Reasons given for this included that the current principles are appropriate and fair and must be applied on a case by case basis74 and, given that only a small number of applications are made, special provisions need not be enacted.75
  3. 3.54 Other submissions argued that more specific costs rules should apply, for example:
  • A distinction should be made between interested and disinterested applicants.76
  • There should be a statutory presumption that disinterested applicants receive their costs out of the estate at the time of judgment.77
  • There should be a statutory presumption that a successful interested applicant, and any defendant beneficiary or executor, should receive their costs from the incapacitated person’s estate after death.78
  1. 3.55 In the Commission’s view, it is appropriate for the Court to retain a general discretion in relation to costs for statutory will applications. The costs principles have been developing in a consistent way across Australian jurisdictions and no other jurisdiction has legislative costs principles in this field.79 The principles that have been developed so far are generally perceived as fair and appropriate and the Commission considers that they should remain in the discretion of the Court.

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