Background to the Reference
1.1 On 23 December 1987 the then Attorney General, the Hon R J Mulock LLB MP, gave the Commission a reference to inquire into and report upon:
1.2 The Reference arose under the Commission’s Community Law Reform Program. The Program allows the Commission to give preliminary consideration to proposals for law reform made by members of the legal profession and the community at large and, where it is thought appropriate, to seek a suitable reference from the Attorney General on matters raised by the proposals.1
The scope of the investigation
1.3 The Commission has interpreted the terms of reference to include any person lacking testamentary capacity. The Commission, in considering the introduction of a statutory will-making scheme, was of the view that it was not appropriate to limit the scheme to those persons lacking testamentary capacity by reason of intellectual disability alone. Any scheme introduced should apply to individuals in any one or more of at least four categories:
- persons suffering from a developmental disorder or disability;
- persons diagnosed as suffering from a mental illness or disorder, including both organic and non-organic psychological conditions;
- persons lacking capacity by reason of disease or accident, including the diseases and incapacities associated with old age and brain damage affecting capacity such as results from a stroke or accident; or
- persons who may have testamentary capacity but through severe physical disability or injury are completely unable to communicate.
1.4 All persons who would otherwise be prevented from executing a valid will by reason of a failure to satisfy the requirement of testamentary capacity should be able to take advantage of a statutory will-making scheme.
The need for wills for persons lacking testamentary capacity
1.5 A statutory will-making scheme would benefit persons lacking testamentary capacity where:
- a person makes a valid will and subsequently loses testamentary capacity;
- a person has testamentary capacity, never makes a valid will and subsequently loses testamentary capacity; or
- a person never has testamentary capacity and never makes a valid will.
1.6 In the first situation, if the person’s circumstances change as a result, for example, of a child being born who is not included in the will or the person inherits property, then, subject to the provisions of the Family Provision Act 1982, there is currently no way of altering the will. In the second and third situations, if the person dies his or her property is distributed according to the rules of intestacy. An application may be made under the Family Provision Act 1982 for an order redistributing property but only a spouse, former spouse, de facto spouse, child, grandchild, dependant or a member of a household of which the deceased person was a member may apply under these provisions. An order will be made only if the Court is satisfied that the statutory criteria have been met.
1.7 In these situations, therefore, a person’s property may be distributed in a way that is contrary to his or her intentions or, more accurately, what they would have been had he or she had testamentary capacity and been able to devise property. A statutory will-making scheme would allow the alteration of an existing will or the creation of a will on behalf of any person lacking testamentary capacity.
Consultation
1.8 In August 1989 the Commission distributed a Discussion Paper entitled Wills for Persons Lacking Will-Making Capacity2 in which the Commission invited comment on the desirability of creating a scheme to allow court-sanctioned wills to be made on behalf of persons lacking testamentary capacity. Submissions received in response to the Paper were generally in favour of this proposal.
1.9 The Commission wishes to express its indebtedness to Mr Brian Porter, the current Protective Commissioner, for his invaluable assistance and useful practical advice on how the scheme should operate.
THE EXISTING LAW
Testamentary capacity
1.10 Testamentary capacity is essential for the making of a valid will and admission to probate. A testator must be of sound mind, memory and understanding when he or she is making a will to satisfy this requirement. A classic exposition on the degree of capability required for making a will was made by Cockburn CJ in Banks v Goodfellow:
It is essential to the exercise of [testamentary] power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affection, pervert his sense of right, or prevent the exercise of his natural faculties - that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.3
1.11 A loss of sound mind, memory and understanding can arise from numerous conditions. Traditionally however, the law has distinguished between those persons who are generally insane and those who suffer from specific insane delusions but are otherwise sane. A condition of the mind will only be material where it affects the disposition of property in a will.4
1.12 Mental illness will not preclude a person from possessing testamentary capacity if it can be shown that the will was made during a lucid interval and the person satisfied the requirements of testamentary capacity at that time.5 Insane delusions, even where only a portion of dispositions are affected, will preclude a person possessing testamentary capacity and render the whole will invalid.6
1.13 A will executed by a person who does not possess sound mind, memory and understanding when making the will may be declared invalid. Where a person dies without leaving a will or leaving an invalid will, his or her property will be distributed according to the rules of intestacy.
The intestacy rules
1.14 The rules of intestacy are contained in Division 2A of the Wills Probate and Administration Act 1898. These rules attempt to distribute a deceased person’s estate in an equitable manner between a surviving spouse or de facto spouse, children, parents and other specified classes of relatives.
1.15 Under these rules, where a deceased person leaves a spouse and no children, the estate will be held in trust for the spouse absolutely but, where the person has been living at the time of his or her death with a de facto spouse for two years, the de facto spouse will receive the entire estate. Where there are children and a surviving spouse or de facto spouse, the estate will be divided between them according to a set formula. Where there is no spouse or children, the property may then go to the person’s parents or other relatives, depending on the relational proximity to the deceased person.
1.16 The rules of intestacy may lead to a fair and equitable distribution of property among a person’s next of kin and may come close to what the person’s intentions would have been. The rules can however operate to exclude persons whom the deceased person may have wished to benefit. Friends, relatives by marriage and other relatives who are not kin are excluded from receiving any part of the estate. Conversely people may take who may not otherwise receive anything if the deceased had testamentary capacity.
1.17 The fact that property is distributed according to a fixed formula has several consequences. The most serious is that the rules cannot incorporate any assessment of the special needs of a spouse or a particular child. Another consequence is that particular items such as a home, business or jewellery are divided according to the rules and cannot be given to a person or persons in accordance with the deceased’s wishes. The intestacy rules may therefore distribute property in a way that is contrary to the manner in which it would have been distributed had the person had testamentary capacity and been able to devise property.
The Family Provision Act 1982
1.18 The Family Provision Act 1982 enables an “eligible person” who has not received proper provision for his or her maintenance, education or advancement in life under a will or as a result of the operation of the rules of intestacy, to apply for an order for provision out of the deceased person’s estate.7 An eligible person is a person who is a spouse, former spouse, de facto spouse, child, grandchild, dependant or a member of a household of which the deceased person was a member.8 The Act does not accommodate friends and other persons whom the deceased person may have wished to benefit.
MANAGEMENT OF THE AFFAIRS OF PERSONS WITH DISABILITIES
Inherent jurisdiction of the Supreme Court
1.19 The Supreme Court of New South Wales, from its inception in 1823, has had an inherent jurisdiction over persons who are mentally incompetent. Clause XVIII of the Charter of Justice 18239 provided:
And we do hereby authorise the said Supreme Court of New South Wales to appoint ... guardians and keepers of the persons and estates of natural fools, and of such as are or shall be deprived of their understanding or reason by act of God, so as to be unable to govern themselves and their estates.
This has been interpreted to vest in the Supreme Court jurisdiction to exercise that part of the Royal Prerogative which related to persons of unsound mind as in force in England in 1823.10
1.20 The terms “natural fools” and “persons deprived of their understanding or reason by act of God” have escaped precise definition. The degree of incapacity required to invoke this jurisdiction is therefore uncertain. This provision is mainly of historical interest in light of the provisions of the Protected Estates Act 1983 and the Disability Services and Guardianship Act 1987.
Jurisdiction under the Protected Estates Act 1983
1.21 The Protected Estates Act 1983 vests jurisdiction in the Supreme Court in relation to persons who are incapable of managing their affairs. Section 13 provides:
Where the Court is satisfied that a person is incapable of managing his or her affairs, it may make a declaration to that effect and order that the estate of the person be subject to management under the Act.
The Court may appoint a suitable person as manager of the estate or commit the management of the estate to the Protective Commissioner.11
The Protective Commissioner
1.22 The Protective Commissioner may be invested with the management of a person’s estate from any one of four sources:
- the Supreme Court;12
- a magistrate;13
- the Mental Health Review Tribunal;14 or
- the Guardianship Board.15
1.23 The Protective Commissioner may exercise all functions necessary and incidental to the management and care of a person’s estate and such functions as may be specified by the Court.16 The Protective Commissioner’s powers are very wide17 and allow a degree of flexibility to incorporate a person’s individual needs and circumstances in managing his or her estate.
The Guardianship Board
1.24 The Guardianship Board was established by the Disability Services and Guardianship Act 1987. Section 14 enables the Guardianship Board, after conducting a hearing into any application made to it, to make a guardianship order if the Board is satisfied that the person is in need of a guardian, being a person “who has a disability and who, by virtue of that fact, is totally or partially incapable of managing his or her person”.18
1.25 The Guardianship Board also has the power, as a result of an amendment to the Protected Estates Act 1983,19 to make an order that the person’s estate be subject to management under that Act if the Board is satisfied that the person is incapable of managing his or her affairs.20 The Board can also request the Protective Commissioner to conduct an inquiry in relation to a person the subject of proceedings before the Board and report back to it.21
1.26 The effect of these provisions is that the Guardianship Board may conduct an examination of a person’s capability to manage his or her person or affairs in the same way as the Supreme Court, a magistrate and the Mental Health Review Tribunal. The Board does not manage the affairs of a person. That function is referred to the Protective Commissioner.
THE LAW IN OTHER JURISDICTIONS
The English legislation
1.27 In England, legislation has been enacted to allow wills to be made for persons who are incapable of managing and administering their property by reason of mental disorder. The relevant provisions are contained in the Mental Health Act 1983 (UK).
1.28 Section 95 of that Act sets out the general functions of the judge with respect to the property and affairs of persons who are unable to manage or administer the same on his or her own behalf.
1.29 Section 96 provides:
(1) ... the judge shall have power to make such orders and give such directions and authorities as he thinks fit for the purposes of that section [s95] and in particular may for those purposes make orders or give directions or authorities for-
(e) the execution for the patient of a will making any provision (whether by way of disposing of property or exercising a power or otherwise) which could be made by a will executed by the patient if he were not mentally disordered.
1.30 Section 96 empowers the judge22 to make a will for a “patient”, that is, a person “incapable, by reason of a mental disorder, of managing and administering his property and affairs”.23 The judge must however have reason to believe that the patient is incapable of making a valid will for himself or herself, and the patient must not be a minor, before he or she can order the execution of a will for a patient.24
1.31 The legislation does not contain any criteria specifying how the discretion is to be exercised. It is however apparent that a judge must have regard to the circumstances of the particular patient when making a will. In outlining the general function of a judge in relation to the property and affairs of a patient, section 95 requires a judge “to do all such things as appear necessary or expedient for making provision for other persons or purposes for whom or which the patient might be expected to provide if he were not mentally disordered”.25
1.32 In In re D(J)26 the Vice-Chancellor, Sir Robert Megarry, affirmed that the focus of the enquiry was the actual patient. His Honour then specified the principles which should guide the Court in deciding when and how the will-making power should be exercised:
The first of the principles ... is that it is to be assumed that the patient is having a brief lucid interval at the time when the will is made. The second is that during the lucid interval the patient has a full knowledge of the past, and a full realisation that as soon as the will is executed he or she will relapse into the actual mental state that previously existed, with the prognosis as it actually is. ... The third proposition is that it is the actual patient who has to be considered and not a hypothetical patient. One is not concerned with the patient on the Clapham omnibus ... Fourth, ... that during the hypothetical lucid interval the patient is to be envisaged as being advised by competent solicitors. ... Fifth, in all normal cases the patient is to be envisaged as taking a broad brush to the claims on his bounty, rather than an accountant’s pen.27
1.33 Applications under the English legislation may be made by specified categories of persons including receivers, any beneficiary under an existing will, and any person for whom the patient might be expected to provide if he or she was not mentally disordered.28
South Australia
1.34 The Aged and Infirm Persons’ Property Act 1940 (SA) gives the Supreme Court a limited power to alter an existing will of a protected person. The Court can, if it appears that the will was made when the protected person suffered from an incapacity,29 inspect the will, conduct enquiries to ascertain whether the will expresses the present desire and intention of the protected person and, if satisfied to the contrary, authorise the execution by the protected person of a new will disposing of his or her estate according to his or her present desire and intention.30 This provision has rarely been used.31
Proposals for reform in Victoria
1.35 A Sub-committee of the Chief Justice’s Law Reform Committee was constituted in 1983 to investigate whether the Supreme Court of Victoria should have the same power to direct and authorise the execution of a will or codicil for an infirm person as was conferred on the Court of Protection, initially by the Administration of Justice Act 1969 (UK) and now by the Mental Health Act 1983 (UK).
1.36 The principal recommendation in the Sub-Committee’s Report32 was that the Supreme Court should be given a similar power which would enable a judge:
... to direct or authorise that a will be made for any person of full age, if the Judge has reason to believe that the person is by reason of injury, disease, senility, illness or physical or mental infirmity incapable of making a valid will for himself.33
1.37 The Sub-committee’s recommendations mirrored closely the English scheme except in two material respects. First, the scheme was not limited to “patients” as defined in the English legislation and encompassed any person who the Court had reason to believe was incapable of making a valid will. Secondly, any person was entitled to make an application to the Court for a will to be made, provided that leave was obtained from a Master where the person applying was not the Public Trustee.34
1.38 The Sub-committee’s recommendations have yet to be implemented.
Other jurisdictions
1.39 No other Australian jurisdiction has legislation allowing a statutory will to be made for a person lacking testamentary capacity.
FOOTNOTES
1. The nature and progress of the Community Law Reform Program is discussed in detail in the Commission’s Annual Reports.
2. DP 20, 1989.
3. (1870) LR 5 QB 549 at 564.
4. Tippet v Moore (1911) 13 CLR 248.
5. See eg Kenny v Wilson (1911) 11 SR (NSW) 460; Bailey v Bailey (1924) 34 CLR 558.
6. Woodhead v Perpetual Trustee Co Ltd (1987) 11 NSWLR 267. Prior to Woodhead the tainted portions could have been severed as a result of the decision in In the Estate of Bohrmann [1938] 1 All ER 271.
7. Family Provision Act 1982, s7.
8. id, s6.
9. Promulgated pursuant to the provisions of the New South Wales Act (4 GEO.IV C.96).
10. RH v CAH (1984) 1 NSWLR 694.
11. Protected Estates Act 1983, s22.
12. id, s13.
13. id, s16.
14. id, s17, s18, s19.
15. id, s17A.
16. id, s24.
17. See s24(2) for an inclusive list of functions.
18. Disability Services and Guardianship Act 1987, s7.
19. Protected Estates (Disability Services and Guardianship) Amendment Act 1987.
20. Protected Estates Act 1983, s17A.
21. id, s6(2).
22. Section 94 of the Mental Health Act 1983 (UK) allows the functions conferred on the judge to be exercised by the Lord Chancellor, any nominated judge, the Master of the Court of Protection or any nominated officer. Almost all statutory wills are however made by the Master.
23. Mental Health Act 1983 (UK), s94(2).
24. id, s94(4).
25. id, s95(1)(c).
26. [1982] 1 Ch 237.
27. id, 243.
28. Court of Protection Rules 1984 (UK), r17.
29. Incapacity is defined in s7 of the Aged and Infirm Persons’ Property Act 1940 (SA).
30. Aged and Infirm Persons’ Property Act 1940 (SA), s29(2).
31. H E Zelling, Chairman of Law Reform Committee of South Australia in a letter to the Chairman, NSWLRC dated 3 October 1989.
32. Chief Justice’s Law Reform Committee (Vic), Wills For Mentally Disordered Persons, 1985.
33. id, para 53(a).
34. id, para 53(b).
