Wills and Probate Case Update September 2014
by Carol McOmish and Nathan McOmish
Testamentary Capacity, undue influence, knowledge and approval
Brown v Guss [2014] VSC 251
A 94 year old widow was survived by her son and predeceased by her daughter. Her last will
was challenged by the son of the deceased daughter on the grounds of lack of testamentary
capacity, lack of knowledge and approval, and undue influence. The last will, made nearly
three months before death, appointed the son as executor, left legacies that included
$30,000.00 to the grandson and his sister, and left the residuary estate to the son. The
grandson alleged that a will made around two months earlier was the last valid will. That
will, in addition to the legacies, left the residuary estate equally between the son and the
two grandchildren.
The son contended in the alternative that the last valid will was a will made 3 years earlier.
That will appointed the son and his son as executors, left legacies that included $30,000 to
each of the grandson and the granddaughter, and left the residuary estate to the son.
At the time of the last will the deceased was elderly, frail, tired easily, had mobility and
occasional short term memory problems, and was coping with the help of carers. She
entrusted her financial affairs to the son, who was predominately responsible for her living
arrangements.
The will made three months before death was instigated by the grandson, who was present
when instructions were given. The son then made alterations to a draft will prepared by a
solicitor pursuant to the instructions that included deletion of the grandchildren as
residuary beneficiaries. The grandson subsequently made alterations essentially changing
the draft will back to the original drafting and then got the deceased to sign it in the
presence of he and his wife and an employee at the deceased’s apartment complex.
Eight days later the deceased “re-signed” the will made 3 years earlier, after the son had
made some handwritten changes and written “re-signed” on the last page (the grandson’s
allegation that the son had forced her to re-sign was not supported by any evidence and
was rejected by McMillan J).
Instructions were then given for the last will, nine days before it was signed. The son was
involved in the preparation and execution of the will, having provided a draft will on which
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he had made annotations, and being involved in procuring the firm of solicitors who
prepared the will. The senior law clerk taking instructions was aware that her firm had had
no previous dealings with deceased, saw her alone (the son met her when she arrived at the
deceased’s apartment complex and then left), ensured that she dealt only with the
deceased, took instructions from her without reference to the draft will, and made careful
contemporaneous notes. She actively engaged the deceased in conversation to make sure
she was not merely repeating rehearsed instructions. She observed that the deceased had
poor recollection regarding certain events and dates, not being able to give her exact age or
the exact date of her daughter's death or recall all of her assets or their extent. However,
having observed and conversed with the deceased and having read an ACAT assessment,
she was satisfied that the deceased had testamentary capacity. When she returned for the
signing of the will the son let her into the apartment and she asked him to leave them. She
and the deceased spent time reading through the will, amendments requested by the
deceased were made, and the deceased made some calculations to make sure that her
estate could meet the legacies. The law clerk then arranged for another resident to witness
the will, the widow of a former partner of her firm whom the deceased recognised.
McMillan J was satisfied that the deceased had the requisite mental capacity (i.e. she
understood the nature of the act of making a will and the effects of that act, understood
what it was that she was disposing of, and understood properly the claims of those who
might be expected to benefit from her will) to give instructions for the last will. Her Honour
considered that the deceased was clear in her instructions and gave reasons for what she
wanted to do, and that a loss of memory as to correct age and date of death and the
inability to be precise with figures (she had relied on her husband and then on the son to
manage her assets and income, and she understood that the bulk of her estate was to pass
to the son) insufficient to establish lack of capacity. Her Honour said that:
…..in our day and indeed for a long time, many elderly persons choose to give a degree of
control of their finances to their relatives and advisors. That is their decision, and very often
it is a wise decision. When assessing their testamentary capacity, a court should in light of
this look not to the testator's actual understanding of their precise financial situation, but to
their capacity to understand the nature of their assets, the extent of their assets, how they
wish those assets to be divided, and who they should consider when dividing those assets.
Making a will is not an exercise in memorisation, but in disposition. It is the soundness of the
testator's ability to dispose that concerns this Court.
As to execution of the will, her Honour was satisfied that the deceased had capacity to meet
the Parker v Felgate test, i.e. that she understood that what she was doing was executing
the will, and she understood that the will she was executing was the one for which she had
given instructions, even if she could not recall the detail of those instructions.
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As to knowledge and approval, her Honour referred to the “suspicious circumstances” rule
(i.e. that where there is a just ground of suspicion the plaintiff has the onus of showing that
the deceased knew the substantive content of the will and approved of that content), and
considered that the son’s involvement was at least sufficient to “give rise to a suspicion of
foul play”, the suspicion of concern to the Court being whether any solicitors procured by
the son merely acted as his instrument and drew up a will on his instructions and not those
of the deceased.
Her Honour was satisfied that the suspicion could be allayed and that the deceased knew
and approved of the contents of the last will, she having received independent advice from
the law clerk, and the law clerk having gone through the clauses of the will with her and
discussed them with her and satisfied herself that the deceased knew and approved of the
contents of her will.
Her Honour, after referring to the rejection by Vickery J of the approach taken in relation to
the standard of proof in undue influence cases such as Boyse v Rossborough, and referring to
the principles expressed in Briginshaw v Briginshaw, observed:
The statement of principle by the Lord Chancellor in Boyse v Rossborough does not, on my
reading, impose any standard or onus of proof that differs from the general law as it applies
in Australia. The party alleging undue influence must show that the circumstances attending
the execution of the will are inconsistent with the will having been obtained other than by
undue influence. The standard to which they must show that the circumstances are so is on
the balance of probabilities. If all they are able to prove is that undue influence and a lack
thereof are equally likely, they have not proved their case. They must instead show that on
balance, the hypothesis that the testator has been unduly influenced must be more likely
than the contrary. I do not believe that in so stating the test, I am saying anything
controversial.
The particulars of undue influence were alleged testamentary intentions of the deceased
expressed when her daughter was dying, the son’s improper dealings with properties
owned by the deceased, and the son having dominion and influence over the deceased in
respect of her wills. Her Honour held that the grandson had not satisfied the onus to show
that the last will was made under undue influence of the son. Her Honour considered that
his evidence did not establish the allegations made, was in some instances not credible
(particularly given that there had been no intervention by him in the deceased’s lifetime to
protect her interests in relation to the alleged improper dealings). Her Honour also
considered that the last will was consistent with the deceased’s will making pattern over the
years and family history, and with the son working in the family business and assisting the
deceased in her financial and family affairs and building up the family assets, and that there
were no indications of undue influence in her dealings with the son or with the law clerk.
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Informal Wills
Re Appln by Pastro [2014] VSC 221
An application to have an informal codicil admitted to probate pursuant to s. 9 of the Wills
Act was refused.
In her will made approximately a year before an informal codicil the deceased left a right to
reside in one of the units she owned to one of her sisters and a grandson, and left an option
to purchase another unit to the sister, who was appointed as executor. The residuary estate
was left between the deceased’s two sons and her grandchildren. The unsigned and
unwitnessed codicil was handwritten by another of the deceased’s sisters when the
deceased was in hospital and close to death. The codicil recorded a wish to leave the unit
subject to the option to purchase to the “executor sister” absolutely, and to replace her as
executor with “my solicitor”.
The deceased was diagnosed with cancer at about the time that she made her will and had
an operation for a brain tumour. The sister who wrote the codicil gave evidence that the
deceased told her a few months prior to the codicil that she wanted to make the change to
her will, that shortly before the codicil the deceased told her that she wanted to make the
change before commencing morphine for pain relief, that she instigated writing out the
deceased’s wishes in case she deteriorated as a temporary measure pending the deceased’s
solicitor returning from leave, that the codicil was dictated to her by the deceased, that she
had not asked the deceased to sign (she had lost the use of her writing hand but could use
her other hand), that she had made a video on her phone of the deceased reading the
codicil, that she thought she heard the deceased say "thank you for that, now people will
know what I want" after the video was completed, and that it had not occurred to her to
have another witness present. The sister had obtained a statutory declaration from a doctor
at the hospital that stated that the deceased “is competent to make decisions regarding her
will”. The deceased’s condition deteriorated after making the informal codicil and she died
six days later.
McMillan J noted that the Court must be satisfied that a deceased, by some words or act,
demonstrated an intention that, without any alteration or reservation, the document in
question should have effect as a will. Her Honour referred to the standard of proof required
in these cases set out by Habersberger J in Fast v Rockman, i.e. that it must be proven on
the balance of probabilities that a deceased wanted that particular draft of the will to be his
or her final will, and did not want to make any changes to the document. Her Honour noted
that issues arising relating to the capacity of the deceased, and the knowledge and approval
of the deceased, were relevant factors in considering whether the informal codicil satisfied s
9 of the Wills Act.
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Her Honour held that in the circumstances of the case the evidence did not satisfy the
standard of proof required to support a conclusion that the deceased intended the informal
codicil to be an amendment to her will. The relevant circumstances were that the deceased
could be taken to have been aware of the importance of making a will and attending on a
solicitor to do so, that nothing had been done about making a will earlier when the
deceased allegedly said that she wanted to make a change, that no reason was given as to
why a will was not made earlier, that the statutory declaration was insufficient to support a
conclusion that the deceased possessed testamentary capacity, that the codicil had a
substantial effect on the distribution of the estate, that the video of the deceased simply
reading the codicil did not satisfy the Court that she approved of it, that the reason for not
involving another witness was odd, and that the deceased was not asked to sign or initial
the document with her other hand. Her Honour noted the contrast with cases where an
informal will had been admitted to probate, in that there had been a clear indication by the
deceased that he or she intended a draft will to be a final will.
Estate Administration
Re Chomley [2014] VSC 220
An application by an administrator of an intestate estate seeking that he and his co
administrators have leave to bid at the auction of estate real estate and to purchase the real
estate if successful was dismissed.
The administrators were the three adult children of the deceased, and two of them were
interested in purchasing the estate real estate. They were unable to agree between
themselves, and so the plaintiff applied for orders that all administrators be directed by the
Court to sell the property at public auction through an appropriate agent and that they each
have liberty to bid at the auction and if successful purchase the property from the estate.
One administrator supported the application, the other consented to orders that the
property be auctioned, but otherwise opposed the application on the basis that the rule that
a legal representative cannot purchase property from himself or herself from an estate
prohibited the parties from bidding at auction.
McMillan J noted that the rule is an application of the general principle that a trustee must
not profit from his or her position as trustee, unless authorised by the trust instrument or
with the consent of the beneficiaries or the Court, the rationale being a trustee’s duty is to
do everything in his or her power for the benefit of beneficiaries.
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The plaintiff accepted the authority of Re Tabone, i.e. that the Court has power to grant
permission to a trustee to purchase estate assets where a beneficiary objects, but the power
should only be exercised in exceptional circumstances. Submissions that exceptional
circumstances were made out included a submission since all three administrators must be
involved in the sale process, including selecting the estate agent and auctioneer, agreeing
on the marketing plan, agreeing upon contractual terms upon which the property was to be
sold, and agreeing on the reserve, there was no possible detriment in permitting them to
bid, and that the objecting administrator was ignoring her obligations under the Civil
Procedure Act to take steps to resolve the dispute.
Her Honour referred to the following passage in Jacobs’ Law of Trusts in Australia:
Trustees for sale are bound to get the best possible price for the property and, if
they purchase for themselves, their interest as a buyer is to get the property at the
lowest possible price, that is, their interest as a purchaser is inconsistent with their
duties as trustees, and it is this conflict of interest and duty which gives the court
grounds for exercising its equitable jurisdiction to protect the beneficiaries,
In her Honour’s view the problem that arose was that any ability of the plaintiff to bid at
auction compromised his involvement as an administrator in the sale process.
As to the contention that the opposing administrator had ignored the overarching
obligation to take steps to resolve and determine the dispute, her Honour considered there
were valid grounds for opposing the plaintiff's application due to the conflict of interest, the
fact that it appeared that the dispute would only have been resolved if the opposing
administrator had agreed with the plaintiff, and that there was an issue best resolved by the
Court.
Orders were made that the plaintiff personally pay the opposing administrator’s costs of
the proceeding and not be indemnified for his costs and expenses of the proceeding out of
the estate of the deceased.
Fodor v Simudvarac [2014] VSC 227
An application for letters of administration ad litem in order to bring a proceeding based on
breach of fiduciary duty seeking that transfers in respect of the real estate owned by the
deceased’s be set aside.
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The deceased was eighty-two when she died and survived by two daughters. Her will left
her estate, consisting of cash of $12,000, to one of the daughters. The other daughter
brought the application.
State Trustees had been appointed the deceased’s administrator, limited to the conduct of
unrelated litigation. The deceased, by her attorney the defending daughter, executed a
transfer of land for the purchase of a property. The administration order was reassessed and
orders were made that the defendant be appointed as the deceased’s administrator and
that she not, without the prior approval of VCAT, dispose of the property. The deceased
then transferred two of eight shares in the property to the defendant and her husband,
allegedly in satisfaction of a debt that she owed to them. She subsequently transferred her
remaining shares to the defendant as a gift. On a further reassessment by VCAT State
Trustees was appointed as the deceased’s administrator. State Trustees ascertained that
the defendant had not sought VCAT’s approval to dispose of the property, and lodged a
caveat.
The plaintiff submitted that there were factual matters that called for careful investigation
of the administration of the deceased's affairs during her lifetime and that she had standing
to apply for a limited grant, relying on Mataska v Browne. The defendant submitted that
the case differed in circumstances from those in Mataska v Browne because State Trustees,
as administrator, did not take steps when it might have taken them to set aside the
transactions. That submission, unsupported by authority, was rejected.
McMillan J concluded that:
(a)
in circumstances where it can be comfortably concluded, as was the case, that a
plaintiff has a prima facie case in a potential Part IV claim the plaintiff has a
reasonable possibility of an interest sufficient to conclude that she has standing;
(b)
in the circumstances there was need for careful scrutiny and investigation of the
transactions of the defendant in respect of the transfer of the property;
(c)
as the defendant had been the main beneficiary of the transactions it was unlikely
that she would undertake that investigation. and her opposition to the plaintiff's
application supported such a conclusion; and
(d)
it was sensible that the determination of the composition of the estate precede the
question whether the plaintiff had received adequate provision.
Her Honour held that, having regard to the due and proper administration of the estate, the
interests of those beneficially entitled to the estate, and the interests of the plaintiff in the
estate of the deceased, a limited grant of administration should be made.
Costs
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Wales v Wales [2014] VSCA 101
An appeal against costs orders made by McMillian J in Wales v Wales [No 2] [2014] VSC 33
that trustees successfully removed personally pay their own and the applicant’s costs and
be denied indemnity from the trust.
The appellants submitted that the decisive consideration at first instance in respect of costs
was her Honour’s conclusion that it was unreasonable for them to have defended the
removal application without first seeking directions from the court and without the court’s
approval, the consequence being that the costs had been improperly incurred. They
submitted that this consideration had not been raised by opposing counsel on the costs
argument nor by her Honour in the course of submissions, that had it been raised
submissions could have been made in response, that they had been denied procedural
fairness, and that the failure to raise the consideration constituted an error of law and the
costs orders were thereby vitiated.
Ashley JA rejected the respondents’ submission that her Honour’s failure to alert counsel to
the prospect that she would rest her decision on the failure to seek the advice of the court
whether to contest the removal application was incapable of constituting a denial of
procedural fairness. His Honour then noted that to obtain relief a party need only show the
possibility of a different outcome, and that relief will only be refused if the result would
have inevitably been the same. His Honour concluded that it was certainly possible that
submissions would have led to a different outcome, there being a question of perspective as
to whether failure to seek advice is fatal to indemnification.
His Honour’s analysis that:
……had the trustees sought advice, which would have been a desirable course, they
would have been advised to accede to their removal, that they would have been
indemnified for the costs of the advice application, that the costs incurred in that
application would have been somewhat less than the costs of the removal
application and that the trustees, in the event, should have part indemnification but
otherwise pay the costs of the first and second respondents and their own costs.
formed the framework for orders in lieu of the costs orders made that the appellants be
indemnified for 50 per cent of their costs and 50 per cent of the respondents’ costs
respecting the removal application. As their success had been less than complete his
Honour, subject to hearing the parties. was disposed to order that the respondents pay two
thirds of the costs of the appeal. Almond AJA agreed with his Honour’s reasons and the
orders proposed.
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Testators Family Maintenance
Brandon v Hanley [2014] VSC 103
A claim by one of the deceased’s three surviving adult children against an estate of
approximately $1.8m.
The plaintiff, an adult son, and one daughter each received $65,000.00 under their father’s
will. The defendant, the other daughter, received the residuary estate of approximately
$1.4m. The plaintiff sought further provision of a legacy of $427,000 in order to repay his
debts.
In the course of her judgment McMillan J gave helpful summaries of the principles
applicable in relation to large estates, adult children, acrimony and estrangement, and
statements made by the testator.
The plaintiff had had a strong bond with his mother who had died many years ago, but had
not had an ideal relationship with his deceased father. He was 71 years old, had health
problems, was retired, and owned his matrimonial home, valued at $600,00, and three
other properties that had a total value of approximately $1.1m. He and his wife had no
savings or superannuation, and their mortgage and various debts totalled approximately
$426,000. His wife cared for their adult son, who had suffered head injuries in a motorcycle
accident, who lived with them and would continue to do so for the foreseeable future. The
defendant’s net asset position was approximately $1m. She had health and mental health
problems, and she cared for her husband who had ill health.
Her Honour found on the evidence that the plaintiff’s relationship with his father, who was a
difficult person, was not one of estrangement as alleged by the defendant. Her Honour
considered that his evidence established that although the relationship was less than ideal
there was regular written and verbal communication and the plaintiff had shown great
resolve in remaining in contact.
Her Honour awarded the provision sought to pay the plaintiff’s debts, noting that where the
estate is a large one a generous approach is justified but the Court should not order more
than is adequate for proper maintenance and support.
Brandon v Hanley (No 2) [2014] VSC 179
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The defendant’s solicitor appeared by counsel and resisted orders sought by the plaintiff
that all liquid estate funds be paid to the plaintiff’s solicitors in payment of at least part of
the legacy awarded to the plaintiff.
McMillan J had made orders by consent during the trial that estate monies be transferred
into an interest bearing account and orders by consent restraining the defendant generally
from dealing with the estate monies in any way. Her Honour had commented during the
trial regarding the high level of costs incurred in the proceeding at that stage (the
defendant’s costs totalled approximately $184,000) and the court's powers under the Civil
Procedure Act to make a costs order against legal practitioners.
The solicitor resisted the orders sought on the ground that he held a lien for the costs of the
trial over the money held in the controlled money account, and that the lien prevented an
order that the money be paid to the plaintiff.
Her Honour determined that the asserted lien did not prevent the orders sought by the
plaintiff and made those orders. Her Honour stated that a lien only attaches to money that
is the property of the client, whereas the money in the controlled money account was
estate money that was subject to the orders made by the Court.
The solicitor further submitted that where an executor pays money in order to get legal
advice that money ought to be treated as the executor’s money at least to the extent of any
lien claimed. The plaintiff submitted that estate money remains estate money unless and
until the Court makes an order that the executor is entitled to reimbursement of costs out
of an estate.
Her Honour said, in response to the solicitor’s further submission:
Mr Boots represented the defendant throughout the period leading up to trial, and
at trial when the orders referred to above were made. Mr Boots assisted in the
preparation of a statement of financial affairs that described the money in his trust
account as estate money. He was acting for the defendant when the defendant
consented to orders restraining the use of that money on the basis that it was
estate money. He is an officer of this court. If his position was that the money in
question was not estate money, but the money of the defendant, then he was
under an obligation to inform the court that those orders were being made under a
misconception. He chose not to do so. He cannot now be heard to say that the
money could not be subject to the orders because it was money belonging to the
defendant, over which he now claims a lien.
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