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101 Succession Answers – NSW

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Following an author review new cases have been added and other enhancements made to the By Lawyers Reference Manual 101 Succession Answers (NSW).

Nobarani v Mariconte [2018] HCA 36

This case supports the requirement of an ‘interested’ party wishing to challenge the validity of a will to show that they have rights which will be affected by the disputed grant of probate or administration.

Re Estates Brooker-Pain and Soulos [2019] NSWSC 671

Considerations regarding disclosure of documents and information in contested probate proceedings were extensively discussed. This case analysed the applicable law, practice and procedure in the context of applications to set aside subpoenas and notices to produce which called for documents relating to the making of the disputed wills. This included solicitors’ notes and files. The interplay between subpoenas, the court’s Practice Note SC Eq 11 and case management orders was examined in detail.

The court addressed the determination of ‘legitimate forensic purpose’ in such cases, especially where pleadings had not closed and the issues in dispute were uncertain. This decision has therefore been added to the By Lawyers Reference Manual 101 Subpoena Answers too.

The court also commented on the practice of sending ‘Larke v Nugus’ letters to ‘…a person involved in the preparation or execution of a will…[seeking] disclosures about the circumstances in which a will was prepared or executed’.

Application of NSW Trustee & Guardian; Estate of Dudley Keith Vaughn [2019] NSWSC 850 and In the Estate of Hansie Hart [2019] ACTSC 317

These two recent cases each dealt with issues relating to the presumption of death.

Gregory Joseph Mills as trustee v Julie Elizabeth Mills and Ors [2018] NSWSC 363

This case is instructive as to the considerations the court applies when giving judicial advice and determining construction issues on testamentary trusts.

Finnegan & Anor v Garner & Ors [2019] QSC 100

Here the estate faced claims which, if they were resolved by litigation would result in the estate being consumed by legal costs. The court noted, at [10], that:

It is the duty of trustees of the estate not to embark upon expensive litigation which will have the effect of depleting the estate. In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand Gummow ACJ, Kirby, Hayne and Heydon JJ said that: “a trustee who is sued should take no step in defence of the suit without first obtaining judicial advice about whether it is proper to defend the proceedings.”

Koellner v Spicer [2019] NSWSC 1571

On a family provision claim, an adult child with a medical condition and meagre financial resources was awarded a 35% legacy from the reasonably small estate even though the deceased had expressly excluded him on the basis they had no relationship.

Grant v Roberts; Smith v Smith; Roberts v Smith; Curtis v Smith [2019] NSWSC 843

The court emphasised, including by reference to the ‘overriding principles’ of the Civil Procedure Act, the duty on parties to contain costs in family provision litigation. The court heavily criticised disproportionate costs being incurred.

 

Like all By Lawyers Reference Materials, 101 Succession Answers (NSW) is updated regularly to cover developments in case law and procedure.

Land tax – NSW

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Land tax NSW – Increases to threshold values

Land tax thresholds are indexed to rise on 1 January each year.

The 2020 threshold combined land value will increase to $734,000 for all liable land. Special trusts and non-concessional companies are excepted.

A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold plus $100 applies.

If the aggregate taxable value exceeds the premium rate threshold of $4,488,000 then $60,164 is payable plus a marginal tax rate of 2% over that amount.

All relevant commentary and precedents in By Lawyers Conveyancing & Property Guides have been updated accordingly.

By Lawyers wish everyone a happy holiday season.

 

Testamentary discretionary trusts – Foreign person – NSW

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Testamentary discretionary trusts holding residential property – Surcharge duty and land tax

Where a foreign person acquires or holds residential property, duty and land tax surcharge can apply. Foreign person surcharge duty and land tax can also apply to testamentary discretionary trusts where foreign persons are beneficiaries or potential beneficiaries.

The NSW Commissioner of State Revenue issued a ruling in March 2017 allowing exemption of discretionary trusts from surcharge duty and land tax if the trust deed was amended to exclude foreign beneficiaries within six months of the exemption being granted.

The State Revenue Legislation Further Amendment Bill 2019 is currently before the NSW Parliament. If this Bill is passed, the ability to amend a trust deed to avoid the surcharge will be restricted. Once the Bill passes, the exemption is likely to be removed. The second reading speech for the Bill states: ‘the Government considers that the end of 2019 allows sufficient time for any remaining trustees and their advisers to make necessary changes to trust deeds’.

There is two-year period of grace, from the commencement of the proposed new s 104JA of the Duties Act 1997. During that period, the trustee of a testamentary discretionary trust will not be deemed a foreign person if the deceased was not a foreign person, even if the trust does not prevent a foreign person from being a beneficiary of the trust.

In order to avoid the application of surcharge duty and land tax, the By Lawyers wills creating testamentary discretionary trusts and library of testamentary discretionary trust provisions include a clause titled ‘Foreign beneficiaries’ that prohibits the trustee from making trust distributions to, or otherwise benefiting, a foreign person. The clause must also prohibit an amendment that has the effect of including a beneficiary or potential beneficiary who is a foreign person. Where it is intended for a foreign person to benefit under a testamentary discretionary trust, this clause should be appropriately amended or removed when drafting the will.

It is important to review existing testamentary trust provisions arising under a will and consider whether it is necessary to amend to avoid the application of surcharge duty and land tax.

See the commentary in the Wills (NSW) Guide for further details.

Trusts – Foreign person – NSW

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Discretionary trusts – foreign person

Where a foreign person acquires or holds residential property, duty and land tax surcharge can apply. Foreign person surcharge duty and land tax can also apply to discretionary trusts where foreign persons are beneficiaries or potential beneficiaries.

The NSW Commissioner of State Revenue issued a ruling in March 2017 allowing exemption of discretionary trusts from surcharge duty and land tax if the trust deed was amended to exclude foreign beneficiaries within six months of the exemption being granted.

The State Revenue Legislation Further Amendment Bill 2019 is currently before the NSW Parliament. If this Bill is passed, the ability to amend a trust deed to avoid the surcharge will be restricted. Once the Bill passes, the exemption is likely to be removed. The second reading speech for the Bill states: ‘the Government considers that the end of 2019 allows sufficient time for any remaining trustees and their advisers to make necessary changes to trust deeds’.

It is therefore important for trustees to review existing discretionary trust deeds and consider whether they require amendment.

In order to avoid the application of surcharge duty and land tax, discretionary trust deeds must include a clause that prohibits the trustee from making trust distributions to, or otherwise benefiting a foreign person. The deed must also prohibit an amendment that has the effect of allowing the trustee to make distributions to, or to otherwise benefit, a foreign person.

The By Lawyers Discretionary Trust deed precedents and commentary have been amended accordingly. A note has also been added to the ‘Retainer Instructions – Trusts’ precedent, to prompt practitioners to raise this issue with clients when drafting trust deeds.

See the commentary in the By Lawyers Trusts Publication for further details.

 

Off the plan contracts – NSW

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Significant changes to off the plan contracts commenced 1 December 2019.

The changes arise from the Conveyancing Legislation Amendment Act 2018 (NSW) and the Conveyancing (Sale of Land) Amendment Regulation 2019 (NSW). They place further disclosure obligations on vendors. They also create new remedies and stronger protections for purchasers when entering into residential off the plan contracts.

Changes to off the plan contracts – summary:

  • Certain prescribed documents must be attached to residential off the plan contracts. These include a prescribed Disclosure Statement, a draft plan prepared by a registered surveyor and other draft documents, as set out in clause 4A of the Conveyancing (Sale of Land) Regulation 2017.
  • A purchaser can rescind the contract within 14 days if the Disclosure Statement, draft plan or relevant prescribed documents are not attached to off the plan contracts exchanged on or after 1 December 2019.
  • There is an ongoing obligation on the vendor to notify purchasers of changes to material particulars using the prescribed Notice of Changes form. Purchasers may be able to rescind or claim compensation if there is a change to a material particular.
  • The cooling-off period for residential off the plan contracts is extended to 10 business days.
  • The final registered plan must be provided to the purchaser at least 21 days before settlement.
  • Deposits must be retained by the stakeholder in a trust or controlled monies account.

An off the plan contract is defined in the amending act to mean a contract for the sale of a residential lot that does not exist at the time the contract is entered into.

The following are not caught by the amendments:

  • The sale of a commercial property off the plan.
  • The sale of a residential lot off the plan if it is sold at the point when the title is registered but an occupation certificate has not been issued.
  • Contracts arising out of the exercise of an option that was entered into before 1 December 2019.

Updates to By Lawyers publications

  • The By Lawyers Conveyancing Publication, including Sale and Purchase Guides and 1001 Conveyancing Answers, all contain dedicated commentary regarding off the plan contracts. These commentaries now cover the new requirements in detail.
  • The By Lawyers Contract for Sale of Land has been amended as follows:
    • Statutory cooling off notice – 10 business days;
    • Statutory attachments table includes Disclosure Statement;
    • Price and deposit clause addresses the requirement for deposit and instalment payments to be held as trust or controlled money;
    • New clause 16(d) ‘Residential off the plan contracts’; and
    • Off the plan settlement changed to 21 days after notice of registration of plan.
  • All precedents making reference to cooling off periods have been updated to accord with the new period.
  • Disclosure Statement and Notice of Changes forms are available on the Sale matter plan.
  • New notices for rescission and compensation claims have been added to the ‘Claims, disputes and notices’ folder. Precedent letters serving these notices on the relevant parties have also been added.

By Lawyers are proud to assist subscribers to understand and comply with these amendments. Like all By Lawyers publications, our Conveyancing Guides provide all the necessary commentary and precedents in one place. Enjoy practice more!

 

 

Revocation of Power of Attorney – NSW

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Revocation of Power of Attorney

Unlike a will, a power of attorney does not revoke a previous appointment of an attorney by the principal. Powers of attorney which are not intended to continue must be revoked.

The By Lawyers Powers of Attorney, Appointment of Enduring Guardian and Advance Care Planning Guide for NSW includes commentary on revoking a power of attorney, as well as a Revocation of Power of Attorney precedent.

Following some helpful feedback from our subscribers, the Revocation of Power of Attorney precedent has been amended for enhanced functioning.

Amended precedent

The following amendments have been made:

  • Guidance notes have been added to the precedent;
  • For LEAP users, the precedent has been coded for matters with multiple clients so that an ‘ASK’ will run when the precedent is opened asking which client is revoking and the address of all attorneys now populates.

This precedent can be found in the Revocation of Powers of Attorney sub-folder under Folder B. Powers of Attorney in the By Lawyers Powers of Attorney, Appointment of Enduring Guardian and Advance Care Planning Guide.

 

Interpreters – NSW

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The rules concerning the engagement or appointment of interpreters for civil litigation in NSW courts have been amended.

The Uniform Civil Procedure (Amendment No 92) Rule 2019 provides for new rules. These are based on the Model Rules in Recommended National Standards for Working with Interpreters in Courts and Tribunals prepared by the Judicial Council on Cultural Diversity.

The amendments that commenced on 8 November add Division 3 of Part 31 and Schedule 7A to the Uniform Civil Procedure Rules 2005 (NSW). The new division sets out rules which cover:

  • When an interpreter may be engaged;
  • Who may act as an interpreter; and
  • Functions of interpreters.

Importantly, an interpreter must now adhere to the Court Interpreters’ Code of Conduct, which is set out in Schedule 7A of the UCPR. A copy needs to be given to the interpreter as soon as possible after they have been engaged or appointed.

The By Lawyers Litigation publications for Local, District and Supreme Courts have been updated accordingly. A link to the Code of Conduct is included.

Testamentary capacity – NSW

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A recent Court of Appeal decision on testamentary capacity has been added to the By Lawyers publication 101 Succession Answers (NSW).

In Drivas v Jakopovic [2019] NSWCA 218 the Court of Appeal upheld a first instance decision which had given substantial weight to the evidence of the attending solicitor over the retrospective evidence of medical experts based on the deceased’s medical records.

The case is notable because the solicitor had no specific recollection, nor any notes, of the interaction with the client. However the will was time-stamped to show it had been prepared over the course of 1.5 hours spent with the client. The solicitor was very experienced in preparing wills and dealing with elderly clients, including assessing their testamentary capacity. The solicitor gave evidence as to his usual practice when taking instructions, including his understanding of the legal tests for capacity laid down in Banks v Goodfellow (1870) LR 5 QB 549.

The Court of Appeal agreed with the fist instance judge that the evidence of the solicitor – which suggested there was no issue with the will maker’s capacity – was preferable to the evidence of doctors who had considered the deceased’s medical records and made a retrospective assessment that she lacked capacity.

This case highlights the importance of the role of the attending solicitor in assessing testamentary capacity. However it is specific to its facts and reliance upon ‘usual practice’ as evidence of capacity is not ideal. The prudent course, as noted both under Capacity in 101 Succession Answers and in the commentary in the By Lawyers Wills guide, is for the attending lawyer to ensure that comprehensive notes are taken. The notes should include specific reference to the legal tests in Banks v Goodfellow. Where capacity may be in issue, a statement from the testator’s GP or treating doctor as to their capacity, addressing the tests in Banks v Goodfellow, is also likely to be valuable evidence to protect against any later challenge to the will maker’s capacity.

101 Succession Answers (NSW) is available in the reference materials folder in the NSW Wills, Estates, Powers of Attorney, Appointment of Enduring Guardian and Family Provision guides.

Off the plan amendments – NSW

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Off the plan amendments

Off the plan amendments for residential properties are being introduced by the Conveyancing Legislation (Amendment) Act 2018 and the Conveyancing (Sale of Land) Amendment Regulation 2019. The bulk of the amendments will commence on 1 December 2019, however, the provisions affecting statutory cooling off commenced on 25 October 2019, introducing a transition period until 30 November 2019.

The cooling off period for off-the-plan contracts has been extended from 5 to 10 business days. The cooling off warning notice form, prescribed by Schedule 5 of the Conveyancing (Sale of Land) Regulation 2017, has also been amended to reflect this change. A contract for the sale of residential property entered into during the transitional period may include the new cooling off warning notice form or the old form in force immediately before the amendment. There is no obligation for a contract to include the new form of notice until 1 December 2019. 

A summary of the amendments that will commence 1 December 2019 include:

  • Increased vendor disclosure requirements including a Disclosure Statement and draft documents to be attached to the contract. Purchasers can rescind the contract within 14 days of exchange if the Disclosure Statement or relevant prescribed documents are not attached to an off-the-plan contract before it is signed. These new requirements are additional to the existing disclosure regime imposed by Part 2 of the Conveyancing (Sale of Land) Regulation 2017. There is no need to attach more than one copy of the same document to the contract and the Disclosure Statement;
  • Vendors to notify changes to ‘material particulars’. Purchasers can rescind or claim compensation for some changes to material particulars. Notification of changes must be made on an approved form which will be available on the By Lawyers Sale matter plan soon;
  • 10-Business-Day cooling-off period. All contracts for sale of land may use either the old form or new form of warning notice until 30 November 2019. Contracts for established properties may use the old form or new form of warning notice for 6 months after commencement. From 2 June 2020, all contracts for sale, whether for off-the-plan or established properties, will need to use the new form of cooling off warning notice;
  • Purchasers to be given registered plans 21 days before settlement;
  • Deposit to be held in trust. Any money paid by the purchaser by way of deposit or installment under the contract must be retained by the stakeholder in a trust or controlled money account during the contract period. This money cannot be released to the vendor before settlement. This measure will ensure deposit and instalment monies are protected in the event of the developer’s insolvency;
  • Stronger sunset clause protections. The amendments extend the definition of a sunset clause to capture other events which trigger termination of the contract, like the issue of an occupation certificate. Changes also confirm that the Court can award damages if the vendor is permitted to end the contract under a sunset clause. These changes are contained in new Section 66ZS introduced by the Conveyancing Legislation (Amendment) Act 2018. New sunset clause provisions will apply to all off-the-plan contracts, irrespective of whether they were signed before or after commencement.

The By Lawyers Conveyancing (NSW) Publication will be updated accordingly. This will include new provisions in the By Lawyers Contract for the sale of land 2019, precedents and commentary.

Companies – FED

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Following an extensive author review, the By Lawyers Companies guide has been substantially enhanced. Users will find new commentary and a number of helpful new precedents.

The commentary now includes sections on Running a company and Company disputes.

With trademark By Lawyers practicality, the new sections of commentary assist practitioners to advise clients about most of the common issues which arise in the operation of small private companies, from managing company business, conducting meetings, issuing new shares and dealing with various types of company disputes, to negotiating share sales, handling insolvency events and participating in voluntarily winding up. Some aspects of the existing commentary on Setting up a company have also been enhanced and new precedents added.

Users will find the following new precedents have been added to the By Lawyers Companies Guide:

  • Retainer instructions – Company disputes;
  • Initial letter to company which has received a statutory demand;
  • Letter to the client  to make an appointment to sign documentation required for incorporation;
  • Letter to the client advising that the company has been incorporated;
  • Letter to the client with draft shareholder’s agreement;
  • New letters gathering information relevant to company disputes:
    • Letter to client requesting relevant documents;
    • Letter to director requesting inspection of company minutes;
    • Letter to director requesting company records; and
    • Letter to director advising of intention to seek a s 247A order to inspect company records;
  • New option precedents:
    • Notice of exercise of call option;
    • Notice of exercise of option to purchase
    • Notice of exercise of put option;
    • Notice of appointment of nominee;
    • Letter to seller’s solicitor exercising option; and
    • Letter to buyer’s solicitor exercising option;
  • Company resolution; and
  • Minutes of meeting – Directors.

These substantial enhancements to this already popular publication are part of By Lawyers commitment to constantly add value for our users and keep our content updated.

We invite you to peruse the new commentary and precedents in the Companies Guide, located in the Companies, Trusts, Partnerships and Superannuation publication. Also available in the Reference materials folder on each of these matter plans is the helpful reference manual Business structures and comparative table, which compares and contrasts the different types of business structures and considers their advantages and disadvantages, including from a taxation point of view.

 

 

 

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