Statutory will following property settlement – Re Gillam [2016] VSC 5

This decision of McMillan J was published on 21 January 2016.  It is only the second statutory will case for which reasons have been published since the amendments to the Wills Act 1997 (Vic) commenced on 1 January 2015.  The other case is Bailey v Richardson [2015] VSC 255.

Facts

The proposed testator, Mrs Gillam, was 92 years of age.  There were two children from her first marriage: Ian and Peter.  Her first husband had died in 1963.  She was married again, in 1976, to Noel Gillam.  There were no children of that second marriage.  However, Noel had a daughter.

Mrs Gillam’s last will, made in 2011, provided for the appointment of her two sons and Noel as executors and trustees, and for her estate to pass as follows:

  • $30,000 to her step daughter;
  • legacies of $20,000 each to her six grandchildren and her six step-grandchildren;
  • various gifts of her chattels and effects, to her sons and Noel;
  • a life interest for Noel in ta property at Canterbury, with the property to pass to her two sons in equal shares, upon Noel’s death; and
  • the residue to pass to her two sons and Noel, in equal shares.

At the time that will was made, Mrs Gillam was the sole registered proprietor of the Canterbury property, which was the matrimonial home. Later that year, she transferred to Noel a half interest in the property.  It appears that the transfer was to give Noel a greater sense of security, and to ease tensions that had developed between them over their financial affairs.

From about 2012, it became apparent that Mrs Gillam was suffering from dementia.

From November 2014, Mrs Gillam was cared for by her son Peter and his family at their home.  Noel visited her weekly, and it appears from the judgment that he was still doing so at the time the statutory will application was heard.

In July 2015, Noel commenced proceedings in the Federal Circuit Court, seeking a property settlement under the Family Law Act 1975 (Cth).  The proceeding was settled, with final orders made on 16 November 2015.  The orders were made on the basis that the financial relationship between the parties was finalised.  Thereafter, Noel did not support Mrs Gillam financially. The effect of the settlement was that:

  • Mrs Gillam’s remaining half share in the Canterbury property was transferred to Noel;
  • funds of $550,000 were retained by Noel;
  • Mrs Gillam retained her property at Fairhaven;
  • each party retained their share portfolios;
  • loans to members of Noel’s family were retained by Noel; and
  • loans owing by members of Mrs Gillam’s family were retained by her.

As a result of the property settlement, the value of Mrs Gillam’s estate was approximately $1.986 million (and Noel’s estate $1.730 million).

The application

The application for a statutory will was brought by Ian, in his capacity as his mother’s attorney. At the time of the application, her dementia was at an advanced stage.

The proposed will was in similar terms to the 2011 will, except that it provided for the appointment of Mrs Gillam’s two sons as executors (without Noel), and made no provision for Noel.

The essence of the application was stated as follows (at [14]–[15]):

“The plaintiff submits that a person who has just entered a financial settlement that has divided the assets between the parties would want to make a will to exclude the other party, particularly where, as a result of the financial settlement, the defendant received substantial assets that are sufficient to provide for his ongoing maintenance and support.

He further submits that this is even more likely where the marriage was a second marriage for both parties and where both had children from earlier marriages.  With the death of Mrs Gillam imminent, unless a new will is made, there is a significant risk that the majority of the matrimonial assets would pass to the defendant and his family.”

The plaintiff also pointed to a pattern of gifts in his mother’s previous wills, made in 2005, 2009 and 2011, which he said did not make provision for Noel equal to or exceeding what Noel received under the matrimonial property settlement.

The decision

McMillan J found that the three pre-requisites in s 21B of the Act were met.

As regards the requirement that the proposed testator does not have testamentary capacity, the published reasons do not state what evidence was adduced in that regard. It was, though, common ground between the parties that Mrs Gillam lacked testamentary capacity.

As regards the ‘core test’ (s 21B(b) – that 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 the person had testamentary capacity), her Honour observed that the nature of the sub-section is such that various forms of a proposed will may meet the test.  Her Honour placed considerable weight was placed on the three prior wills.  It was found that under those wills, Mrs Gillam did not leave Noel “anything close to the equivalent sum he received under the financial settlement”. It was also found to be relevant that as a result of the property settlement Noel had become the sole proprietor of the Canterbury property.  Her Honour drew the following conclusion (at [30]):

“If Mrs Gillam had testamentary capacity, I am satisfied that after the financial settlement with the defendant, her intentions would likely be for her to continue to provide for the legacies to her grandchildren, step daughter and step grandchildren and to leave the residue of her estate to her two sons equally.”

Accordingly, a will was authorised to be made in terms of the proposed draft.

Comment

There appears to have been no direct evidence in this case that Mrs Gillam would, if she had testamentary capacity, have taken the proactive step of changing her will to deprive Noel of the gift of one third of residue, particularly in circumstances where the separation that resulted in the property settlement was likely (at least in part) caused by Mrs Gillam’s health and related circumstances, rather than the breakdown of the personal relationship between her and Noel, in the context of a 40 year marriage.