On the buses…

Thursday, 01 October 2009
A reflection on the historic approach to statutory wills in England and Wales and New South Wales and a look at guidance and direction under new legislation.

Statutory wills are, as their name suggests, creatures of statute. They arise from a defined process through which the court authorises the creation, alteration or revocation of a will on behalf of a person who lacks testamentary capacity.

The jurisdictions of both England & Wales and New South Wales have recently introduced new statutory provisions which deal with the creation of statutory wills.

In England & Wales, such provisions can be found in the Mental Capacity Act 2005 (MCA UK), which came into force on 1 October 2007. The relevant legislation in New South Wales is the Succession Act 2006 (SA NSW), which came into force on 1 March 2008.

In February 2009, decisions of both the High Court of England & Wales and the Supreme Court of New South Wales gave the respective jurisdictions an opportunity to reflect on the historic approach to such matters and provide new guidance and direction under the new legislation.

The position in England & Wales prior to the Mental Capacity Act 2005

Prior to the introduction of the MCA UK applications for statutory wills were made under the Mental Health Act 1983 (MHA UK). In applying the MHA UK, the courts ultimately settled upon a ‘substituted judgment’ approach, which was established in Re D(J) [1982] Ch 237 and endorsed in In re C (a patient) [1991] 3 All ER 866. This approach broadly stated that:

  • the incapable person would have a ‘brief lucid interval’ at the time the will was made;
  • the actual (not a hypothetical or reasonable) person was to be considered;
  • during the lucid interval the person had total knowledge of their past, together with a total realisation that as soon as the will was executed their incapacity would relapse;
  • received competent, professional advice.

‘Best interests’ approach

The MCA UK imposed a new approach, dispensing the ‘substituted judgment’ approach in favour of a ‘best interests’ approach in accordance with s 1(5) of the MCA UK.

The court will now give consideration to all of the person’s relevant circumstances including consideration of the person’s past and present wishes, feelings, beliefs and values. In following the underlying thrust of the MCA UK a holistic approach to capacity is to be taken with the person directly involved in the decision process wherever possible.

In Re P [2009] EWHC 163 (Ch) the High Court of England & Wales considered the MCA UK in respect of a statutory will application.

Mr Justice Lewison quoted the explanatory notes to the Mental Capacity Bill, which seemed to sum up the position rather nicely:

‘Best interests is not a test of “substituted judgment” (what the person would have wanted), but rather it requires a determination to be made by applying an objective test as to what would be in the person’s best interests.’

This objective test involves the court considering all the relevant factors before determining what, on balance, is in the person’s ‘best interests’. Such factors will include the person’s past and present wishes, the wishes of certain interested parties and even how the person will be remembered as a result of having ‘done the right thing’ under the terms of the will.

The MCA UK and the decision in Re P mark a significant shift away from the ‘substituted judgment’ approach. No longer will the court be required to undertake the ‘mental gymnastics’ of climbing inside a person’s mind to determine what the person would have done had they had capacity.

Statutory wills in New South Wales

Until the introduction of the SA NSW, New South Wales did not have legislation dealing with the creation of statutory wills for adults lacking testamentary capacity.

This new legislation was recently considered in Re Fenwick; Application of JR Fenwick & Re Charles [2009] NSWSC 530. In considering the new legislation, Palmer J undertook a detailed review of the legislation and case law relating to statutory wills in both England and other Australian jurisdictions before deciding that the court should not ‘attempt to seek guidance from earlier authority…[but] should start with a clean slate’.

The key to the new legislation is found in s 22(b) of the SA NSW, which states that ‘the proposed will, alteration or revocation is, or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity’. (emphasis added)

Palmer J raised and discussed various interpretations of ‘reasonably likely’, including ‘a fairly good chance that it is likely’, ‘some reasonable people that this it is likely’ and ‘some reasonable people could think that there is a fairly good chance that it is likely’.

In determining which approach should be adopted, Palmer J distinguished between different types of persons on whose behalf statutory will applications are likely to be made.

Adults with prior testamentary capacity (‘lost capacity’)

This concerns adults who have previously had testamentary capacity.

Palmer J steered a line between the objective and subjective courses previously undertaken by courts in both England and Australia, but determined that an objective assessment would form the cornerstone of the test.

In such circumstances, the court will first look to the actual intention of the person (established either by the person themselves or through the existence of supporting evidence) in determining the terms of the will. Only if such intentions cannot be clearly established will the court examine the ‘reasonably likely’ subjective intention of that person.

Palmer J also raised the question of what if the person intended to die intestate – will the court ‘impose’ a will in such circumstances? In answering such a question the court will need to be satisfied that, on the evidence available, there is a ‘fairly good chance’ that the person would have made a will at some time had not testamentary incapacity supervened. The burden of proof falls on the party making the application for the statutory will.

Persons who have never obtained testamentary capacity (‘nil capacity’)

When a person (including a minor) has been mentally incapable since birth, a two-stage process is required.

The first stage is to establish whether the person would have made a will in the first place had they possessed the required testamentary capacity. Although each application will be different it appears that the threshold for such a test will be fairly low given that ‘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’.

Once that stage has been satisfied then the court will ask itself ‘is there a fairly good chance that a reasonable person, faced with the circumstances of the incapacitated minor, would make such a testamentary provision?’. Hence, in the absence of any possible evidence of the person’s own intentions, the court will take an entirely objective approach.

Minors with prior testamentary capacity (‘pre-empted capacity’)

Such persons fall somewhere between the two previous categories. Whilst they will have not obtained legal majority they may well have started to form meaningful relationships and demonstrate longer-term intentions, albeit it unlikely that such intentions will have been expressly cloaked with testamentary intentions.

Again, a two stage process is required. Given that an application for a statutory will is likely to be made only if there are sufficient current or future assets to warrant it, the court is likely to find that it is reasonably likely that the minor would have made a will at some point had they obtained testamentary capacity.

The second stage then requires a pragmatic approach combining both the subjective and objective tests made in relation to adult testators. The court will take into consideration all the relevant subjective evidence and circumstances, including the minor’s history and current intentions, but ultimately the decision will be objective. As Palmer J states:

‘Given what is known about the teenager’s relationships and history, is there a fairly good chance that a reasonable person, weighing up those circumstances, would have made the proposed statutory will?’

Looking forward

So where does this all leave statutory wills in England & (New South) Wales?

Although the journey has just begun it appears that both jurisdictions have climbed aboard Clapham omnibuses albeit ones taking different routes to get, roughly, to the same destination.

Balancing the highly personal nature of testamentary dispositions and the need for a uniform approach to statutory wills is, and one suspects always will be, a very difficult path for the courts to tread. By adopting a more objective approach, the legislation (as interpreted by the courts) appears to have provided a greater degree of certainty whilst retaining sensitivity to a particular person’s circumstances.

The reasonable person is alive and well, he (or she) has just become a little more warm and fuzzy around the edges.

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Chris Young

Chris Young TEP is a Solicitor with Teece Hodgson & Ward.

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