Lewis v Lewis

Case •

[2021] NSWCA 168

•

06 August 2021

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

  • Summary available
  • Amendment notes
Medium Neutral Citation: Lewis v Lewis [2021] NSWCA 168
Hearing dates: 22 June 2021, last written submissions 1 July 2021
Decision date: 06 August 2021
Before: Meagher JA at [1];
Leeming JA at [2];
Payne JA at [218].
Decision:

1. Appeal dismissed.

2. Cross-appeal dismissed.

3. The appellant David Lewis to pay the costs of the first respondent Peter Lewis of the appeal and cross-appeal.

Catchwords:

SUCCESSION – contested probate – knowledge and approval – suspicious circumstances - significance of reading out will to capable testator – whether reading out will to capable testator who executes it will discharge onus on propounder – whether sufficient to establish knowledge of contents of will or whether it may be necessary to establish knowledge of its effect – consideration of Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 – consideration of “mistake doctrine” – significance of statutory power to rectify wills

SUCCESSION – contested probate – severance of testamentary instruments – power to admit only those clauses to probate of which testator has been shown to have known and approved – distinction between omitted clauses which confer bequests and omitted clauses which confer power – Osborne v Smith (1960) 105 CLR 153; [1960] HCA 89 considered and explained

SUBPOENAS – production of documents – redaction of parts of documents on ground of relevance – distinction between redaction for privilege and redaction for relevance

Legislation Cited:

Court of Probate Act 1857 (20 & 21 Vict c 77)

Probate Act 1890 (NSW)

Probate Jurisdiction Rules 1936 (NSW), r 68(3)

Regulae Generales 1899 (NSW), r 67(iii)

Succession Act 2007 (NSW), ss 27, 31-39, 43

Supreme Court Act 1970 (NSW)

Supreme Court Rules 1970 (NSW), Pt 78 r 16

Uniform Civil Procedure Rules 2005 (NSW), rr 33.3, 33.6

Wills Act 1837 (1 Vict c 26)

Wills, Probate and Administration Act 1898 (NSW), s 29A

Cases Cited:

Astridge v Pepper [1970] 1 NSWR 542

Atter v Atkinson (1869) LR 1 P & D 665

Bacon v Pianta (1966) 114 CLR 634; [1966] HCA 44

Bailey v Director-General, Department of Land and Water Conservation (2009) 74 NSWLR 333; [2009] NSWCA 100

Barry v Butlin (1838) 2 Moo PC 480; 12 ER 1089

Bayldon v Bayldon (1826) 3 Add 232; 162 ER 464

Bevan v Coolahan (2019) 101 NSWLR 86; [2019] NSWCA 217

Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148

Carew v White (1842) 5 Beav 172; 49 ER 542

Church v Mason [2013] NSWCA 481

Cleare v Cleare (1869) LR 1 P & D 655

Collins v Elstone [1893] P 1

Craig-Bridges v NSW Trustee and Guardian [2017] NSWCA 197

Crerar v Crerar (Sachs J, unreported, April 1956)

Cunliffe v Cross (1862) 3 Sw & Tr 37; 164 ER 1185

Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335

Director General of Department of Community Services; Re Sophie [2008] NSWCA 250

DJ Singh v DH Singh [2018] NSWCA 30; 17 ASTLR 317

Dore v Billinghurst [2006] QCA 494

Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7

Estate of Aspasia Kandros [2019] NSWSC 757

Estate of George Aeneas McDonald; Howard v The Sydney Children’s Hospital Network (Randwick & Westmead) [2015] NSWSC 1610

Ex parteHebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416

Farelly v Corrigan [1899] AC 563

Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097

Fulton v Andrew (1875) LR 7 HL 448

Garnett-Botfield v Garnett-Botfield [1901] P 335

Gill v Woodall [2011] Ch 380

Guardhouse v Blackburn (1866) LR 1 P & D 109

Gunns Ltd v Marr [2008] VSC 464

Harter v Harter (1873) LR 3 P & D 11

Hastilow v Stobie (1865) LR 1 P & D 64

Hendy v Jenkins (1901) 1 SR (NSW) B&P 34

Hera Project Pty Ltd v Bisognin [No 4] [2017] VSC 270

Hobhouse v Macarthur-Onslow [2016] NSWSC 1831

Hoff v Atherton [2004] EWCA Civ 1554; [2005] WTLR 99

Housman v Camuglia [2021] NSWCA 106

In re Horrocks (Decd); Taylor v Kershaw [1939] P 198

In re Phelan (Decd) [1972] Fam 33

In re Tait, Deceased [1957] VR 405

In the matter of Anne Lewis Pty Ltd [2013] NSWSC 1992

In the matter of Anne Lewis Pty Ltd [2014] NSWSC 418

In the matter of Anne Lewis Pty Ltd [2016] NSWSC 1860

In the Will of Hempel (1959) 60 SR (NSW) 147

Kenward v Adams (The Times, 29 November 1975)

Lewis v Lewis [2020] NSWSC 1306

Lewis v Lewis (No 2) [2020] NSWSC 1519

LG v Brock as executor of the Estate of the late Leo Clarke [2016] NSWSC 323

Marley v Rawlings [2015] AC 129; [2014] UKSC 2

Marsh v Tyrrell (1828) 2 Hagg Ecc 84

McGarvey v Temo as Temporary Administraro of the Estate of Heremia [2007] NZHC 1779

Mekhail v Hana; Mekail v Hana [2019] NSWCA 197

Menkens v Wintour [2007] 2 Qd R 40; [2006] QSC 342

Middlehurst v Johnson (1860) 30 L J (P M & A) 14

Nock v Austin (1918) 25 CLR 519; [1918] HCA 73

Osborne v Smith (1960) 105 CLR 153; [1960] HCA 89

Perpetual Trustee v Baker [1999] NSWCA 244

Perpetual Trustee Co v Williamson (1929) 29 SR (NSW) 487

Perrins v Holland [2011] Ch 270; [2010] EWCA Civ 840

Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116

Re Bryden [1975] Qd R 210

Re Estate of Paul Francis Hodges Deceased; Shorter v Hodges (1988) 14 NSWLR 698

Re Estate of Stanley William Church [2012] NSWSC 1489

Re Fenwick [1972] 72 VR 646

Re Horrocks (decd); Taylor v Kershaw [1939] P 198

Re Reynette-James, Wightman v Reynette [1976] 1 WLR 161; [1976] 3 All ER 1037

Simon v Byford [2014] EWCA Civ 280

Sky v Body (1970) 92 WN (NSW) 934

Stojic v Stojic [2018] NSWCA 28; 17 ASTLR 215

Tanner v Public Trustee [1973] 1 NZLR 68

Tatham v Huxtable (1950) 81 CLR 639 at 651; [1950] HCA 56

Telstra Corporation v Australis Media Holdings (unreported, Supreme Court of New South Wales, McLelland CJ in Eq, 10 February 1997)

Thomas v Arthur Hughes Pty Ltd [2015] NSWSC 1027; 107 ACSR 443

Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285

Veall v Veall (2015) 46 VR 123; [2015] VSCA 60

Wintle v Nye [1959] 1 WLR 284

ZP v PS (1994) 181 CLR 639; [1994] HCA 29

Texts Cited:

J Bennett, A History of the Supreme Court of New South Wales (Law Book Company, 1974)

H Coote, Practice of the Court of Probate (5th ed, London, Butterworths, 1866)

T Garrett, The Ecclesiastical Practice (NSW) (1889)

I Hardingham, “The Jurisdiction of Courts of Probate to Rectify Errors in Wills” (1972) 46 Australian Law Journal 221

R Kerridge and A Brierley, “Mistakes in Wills: Rectify and be Damned” (2003) 62(3) Cambridge Law Journal 750

R Kerridge, “The Vulnerable Testator” (2000) 59 Cambridge Law Journal 310

H Theobald, The Law of Wills (2nd ed, 1881)

“Knowledge and Approval” (1956) 106 Law Journal 694

M Voyce, “Statutory Reform of Rectification of Wills in New South Wales” (1992) 8 Australian Bar Review 49

Mortimer’s Probate Practice (2nd ed 1927)

Theobald on Wills (19th ed, Sweet & Maxwell, 2021)

Williams, The Law of Executors and Administrators (7th ed 1873; 8th ed 1879; 10th ed 1905; 11th ed 1921)

“Wills – Execution and Revocation” LRC 47 (1986)

W Walker and H Bignold, Wills, Probate and Administration Act 1898 (Law Book Company, Sydney, 1903)

Category:Principal judgment
Parties: David Grant Lewis (Appellant; Cross-respondent)
Peter Howarth Lewis (First Respondent; Cross-appellant)
Jeremy Neil Glass (Second Respondent, submitting)
Representation:

Counsel:
R Wilson SC (Appellant; Cross-respondent)
LJ Ellison SC (First Respondent; Cross-appellant)

Solicitors:
Walker & White (Appellant; Cross-respondent)
L Rundle & Co Solicitors (First Respondent; Cross-appellant)
File Number(s): 2020/00317667
Publication restriction: Nil
 Decision under appeal 
Court or tribunal:
Supreme Court of New South Wales
Jurisdiction:
Equity – Probate List
Citation:

[2020] NSWSC 1306

Date of Decision:
25 September 2020
Before:
Parker J
File Number(s):
2017/130576

HEADNOTE

[This headnote is not to be read as part of the decision]

The late Ms Pamela Lewis died in 2017 leaving a will dated 22 June 2011 and four codicils, and a later will dated 19 December 2014 and two codicils. Four sons and seven grandchildren survived her. In 2011 and 2012, while her husband was alive but in a nursing home, the deceased together with her son David had transferred assets held by a family company to a series of newly established trusts, in accordance with advice from a tax practitioner. Another son Peter learned of this, and there followed litigation appointing a liquidator to the family company, who brought proceedings against Pamela and the new companies to recover the assets, ultimately obtaining judgment holding that the assets were held on constructive trust, that Pamela had breached her duties to the company and that David had instigated those breaches. There were also contested proceedings in the Guardianship Tribunal in which David and Peter were opposed.

Pamela’s wills divided her assets equally between the four sons with a share to the grandchildren. However, the later will and codicils conferred powers on David to “claw back” amounts representing the costs of the litigation from Peter, gave him control of the trustee, and otherwise entitled him to cause the trustee to alter the equal distribution of assets. The trial judge found that the provisions in the later will and codicils had in substance been drafted by David.

Peter propounded the 2011 will and three of its codicils. David propounded the 2014 will and its codicils. It was common ground that the “suspicious circumstances” doctrine applied, such that David bore the onus of establishing testamentary capacity and knowledge and approval. The trial judge found that Pamela had testamentary capacity, but had not been shown to have known and approved the clauses of the 2014 will and its codicils which conferred powers on David. Accordingly, his Honour admitted to probate clauses 1-11 of the 2014 will and clauses 3, 10 and 11 of one of its codicils.

David appealed. The main issues in the appeal were:

  1. Whether the 2014 will had been read out loud to Pamela who then executed it;

  2. Whether, if so, the primary judge had erred in failing to find that she had known and approved the instruments;

  3. Whether the primary judge had erred in severing the 2014 will and one of its codicils.

The Court (Leeming JA, Meagher JA and Payne JA agreeing) held, dismissing the appeal:

As to issue (i):

  1. Reading the judgment as a whole, the trial judge found that the 2014 will had been read out loud to Pamela before she executed it: at [89].

ZP v PS (1994) 181 CLR 639; [1994] HCA 29 and Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 applied.

As to issue (ii):

  1. It is not the law that a capable testator whose will is read out loud to him or her and who then executes it is taken to have known and approved it: at [130].

  2. Consideration of:

(a)   the history of the requirement of “knowledge and approval”: at [131]-[136];

Hastilow v Stobie (1865) LR 1 P & D 64; Barry v Butlin (1838) 2 Moo PC 480; 12 ER 1089, considered.

(b)   the “rule” in Guardhouse v Blackburn (1866) LR 1 P & D 109 that a testator is taken to have known and approved of a will read to him or her who then executes it: at [137]-[150];

Fulton v Andrew (1875) LR 7 HL 448; Garnett-Botfield v Garnett-Botfield [1901] P 335; Crerar v Crerar (unreported, April 1956, noted 106 Law Journal 694); In re Morris, decd [1971] P 62; Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097; Tanner v Public Trustee [1973] 1 NZLR 68; Hoff v Atherton [2004] EWCA Civ 1554; [2005] WTLR 99; Veall v Veall (2015) 46 VR 123; [2015] VSCA 60 considered;

(c)   the “mistake doctrine” whereby wills containing mistakes made by persons authorised by the testator to draft a will would be admitted to probate: at [151]-[165];

Wintle v Nye [1959] 1 WLR 284; Gill v Woodall [2011] Ch 380; In re Horrocks (Decd); Taylor v Kershaw [1939] P 198; Perpetual Trustee Co v Williamson (1929) 29 SR (NSW) 487, considered.

(d)   the requirement that a testator be shown, in a case of suspicious circumstances, to have known and approved of the contents and effect of a will: at [166]-[187].

Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 confirmed; Nock v Austin (1918) 25 CLR 519; [1918] HCA 73; Dore v Billinghurst [2006] QCA 494; Gill v Woodall; Hobhouse v Mcarthur-Onslow [2016] NSWSC 1831, considered.

  1. Consideration of the significance of statutory powers to rectify a will on the mistake doctrine: at [164]-[165].

As to issue (3):

  1. There was no error in the primary judge admitting parts only of the 2014 will and the August 2015 codicil to probate: at [189]-[212].

Osborne v Smith (1960) 105 CLR 153; [1960] HCA 89 explained; Astridge v Pepper [1970] 1 NSWR 542 applied; Fuller v Strum at [36] approved.

  1. Consideration of:

  1. the principles applicable to redacting documents produced on subpoena: at [95]-[99], and

  2. the role of courts’ rules of practice in the development of legal doctrine: at [133]-[136].

Judgment

  1. MEAGHER JA: I have had the considerable benefit of reading Leeming JA’s judgment in draft. I agree with his Honour’s reasons for the making of the orders he proposes. I have nothing to add to those reasons.

  2. LEEMING JA: It is settled that the propounder of a will bears the onus of establishing that it was executed with the testator’s “knowledge and approval” before it is admitted to probate. What is the nature and content of the requirement of “knowledge and approval” where there are suspicious circumstances? Is it sufficient to show that the testator knew and approved the contents of the will, or may it be necessary to demonstrate knowledge and approval of its effect? Those are the principal issues raised in this appeal, although it also concerns the circumstances in which a court may sever a will by not admitting parts of it to probate.

  3. I have concluded that there was no error in the primary judge’s finding, on quite unusual facts, that the deceased was shown only to have known and approved parts of a will and a codicil, and only admitting those parts to probate. These reasons take the following form:

  1. Overview of proceedings at first instance

  2. Overview of appeal and cross-appeal

  3. Factual background

  4. The testamentary instruments

  1. The 2011 will

  2. The four codicils to the 2011 will

  3. The will dated 19 December 2014

  4. The 2015 codicils

  1. Execution of the testamentary instruments – capacity and knowledge and approval

  2. The grounds of appeal and the appellant’s submissions

  3. First submission: were the 2014 will and the 2015 codicils read to Pamela?

  4. Second submission: Knowledge and approval of the contents of the will as opposed to its effect

  1. Documentary evidence relevant to the execution of the December 2014 will

  2. Testimonial evidence relevant to the execution of the December 2014 will

  3. Conclusions on evidentiary background

  4. David’s submissions on the failure to find knowledge and approval

  5. Consideration – the source of the “knowledge and approval” requirement

  6. The effect of reading a will to a capable testator who executes it

  7. The “mistake doctrine”

  8. David’s invitation to clarify Tobin v Ezekiel

  1. Third submission: did the primary judge err by severing the 2014 will and its second codicil?

  1. Astridge v Pepper

  2. Application of Astridge v Pepper to the present appeal

  1. Challenge to the costs orders

  2. Orders

  3. Annexure: Background to Osborne v Smith

Overview of proceedings at first instance

  1. The late Ms Pamela Lewis died in 2017, aged 92. Her husband Geoffrey died in 2012. Their four sons Peter, David, Roger and Hugh survived their parents, as did seven grandchildren. Pamela left behind a slew of wills and codicils, but those which matter most for present purposes are:

  1. a will dated 22 June 2011 and four codicils dated 6 March, 6 September, 6 December 2012 and 14 November 2013,

  2. a will dated 19 December 2014 and two codicils dated 5 May and 6 August 2015.

  1. Generally speaking, both wills divide Pamela’s estate with equal shares to Peter, David, Roger and Hugh, with a further portion to be divided equally between the grandchildren. However, the documents executed in 2013, 2014 and 2015 confer substantial discretionary powers upon David which bring about the possibility, having regard to the way in which assets accumulated by Geoffrey and Pamela came to be held on trust, of substantially distorting the equal distribution in practice.

  2. The two eldest sons, Peter and David, litigated probate proceedings by statement of claim and cross-claim. David sought a grant in respect of the 2014 will and its two codicils, while Peter sought a grant in relation to the 2011 will and its second and third codicils (he contended that the fourth codicil suffered from the same defects as the 2014 will). Peter and David appear to have agreed to the appointment of the second respondent, Mr Jeremy Glass, solicitor, as administrator pendente lite. He played no active part in the appeal.

  3. Following a four day trial, the primary judge dismissed Peter’s cross-claim and ordered that the estate of the deceased be administered in accordance with the 2014 will, but limited to cll 1-11, and the codicil dated 6 August 2015, limited to cll 3, 10 and 11: Lewis v Lewis [2020] NSWSC 1306. This result reflected neither party’s primary contention. Indeed, although it was clearly flagged by the primary judge during final address, Peter’s counsel maintained that the 2014 will “can’t be admitted in part” and “[t]he whole of the document must fail”. Nonetheless, the effect of confining the order to specified clauses in the 2014 will and the 6 August 2015 codicil amounted to what, in substance, was success for Peter, because the excised clauses gave significant powers to David, while the clauses admitted to probate effected substantially the same equal distribution as found in the 2011 will and its second and third codicils. Peter’s success was in turn reflected in a separate costs judgment: Lewis v Lewis (No 2) [2020] NSWSC 1519.

  4. Speaking generally, the primary judge found that the deceased had testamentary capacity at all relevant times, but was not satisfied that she knew and approved of the complex aspects of the 2014 will and the August 2015 codicil. The primary judge expressed his conclusions at the end of a long judgment thus:

“[464]   I have concluded that:

(1)    clauses 1 to 11 of the December 2014 will and clauses 3, 10 and 11 of the August 2015 codicil should be admitted to probate;

(2)    neither the other clauses of the 2014 will, nor the other clauses of the August 2015 codicil, nor the May 2015 codicil should be admitted to probate;

(3)    both the July 2010 will and the June 2011 will satisfy the testamentary capacity and knowledge and approval requirements, but should not be admitted to probate, on the ground that each was revoked by a subsequent valid will;

(4)    it is unnecessary to consider whether the first three codicils to the June 2011 will, the April 2013 testamentary letter, or the fourth codicil to the June 2011 will satisfy the knowledge and approval requirement, since even if valid they would have been revoked by the December 2014 will.”

Overview of appeal and cross-appeal

  1. David has appealed. Having regard to the size of the estate, his appeal is as of right. In accordance with directions issued by this Court at the conclusion of the hearing, Peter has contingently cross-appealed, and there has been a further exchange of written submissions on the cross-appeal.

  2. In this Court as at first instance, David propounds the entirety of the 2014 will and its 2015 codicils, and further maintains that the primary judge was wrong to sever those instruments. Peter defends the judgment of the primary judge, and in the alternative propounds the 2011 will and its second and third codicils.

  3. Although it somewhat simplifies the position, it is convenient to summarise at the outset how the dispute arose. David and Pamela, acting on tax advice, established a moderately elaborate structure of companies and trusts the effect of which was that most of the assets acquired by Geoffrey and Pamela became held on trust. The implementation of the advice was flawed: a liquidator appointed to the company which had originally held the assets succeeded in obtaining orders that the assets transferred were held on constructive trust. But nonetheless the companies and trusts remained, and the litigation has proceeded on the basis that substantial assets are held by them.

  1. Pamela’s wills and codicils did essentially three things: (a) they divided Pamela’s assets equally between the four sons, with a share to be divided equally between the grandchildren; (b) they dealt with certain funds which had been given to the sons which had been treated as advances on a testamentary bequest, and (c) the fourth codicil and the clauses of the 2014 will and its codicils which were not admitted to probate conferred power on David to control the trustees of the trusts, including wide discretionary powers to alter the otherwise equal distribution on the basis of damages suffered or expenses incurred by reason of the litigation which had culminated in the appointment of the liquidator and the findings of constructive trust.

  2. Many of the provisions in the testamentary instruments were in straightforward form, equally dividing an estate and dealing with advances made inter vivos. However, the clauses directed to the trusts formed a different category. They were lengthy and complicated. They were also, in the words of the primary judge, “lamentably drafted”. On any view, the clauses concerning the trusts were much harder to understand. Originally they were found in the fourth codicil to the 2011 will, but their substance was later incorporated (with some elaborations) into some of the clauses of the 2014 will.

  3. Speaking generally, David by his appeal challenged the failure to find knowledge and approval and, separately, contended that the primary judge erred in severing cll 12-25 of the 2014 will and cll 1, 2, 4, 5, and 6 of the August 2015 codicil. (It will be recalled that the primary judge admitted cll 3, 10 and 11 of that codicil to probate. The remaining clauses of that codicil, 7-9, had not been propounded at trial.) There was also a ground of appeal concerning costs.

  4. During the hearing of the appeal, in response to the submissions concerning severance and the limitations in Osborne v Smith (1960) 105 CLR 153; [1960] HCA 89, senior counsel for Peter accepted that if the severance effected by the primary judge was unavailable, he would be driven to a cross-appeal. At the conclusion of the hearing, the Court made directions for the filing of a contingent cross-appeal and the exchange of written submissions, and that has occurred.

  5. Regrettably, the factual background of this appeal illustrates many of the worst elements of the law of succession.

  1. Peter (an accountant who later qualified as a solicitor) has been substantially successful, but the primary judge referred the papers to the Law Society for his conduct in knowingly procuring false attestations of the 2011 will. The primary judge’s finding that Peter’s conduct was “completely unsatisfactory”, and other matters which led his Honour to regard Peter’s evidence with “extreme caution” are at [156]-[166].

  2. David’s affidavit evidence was regarded as “self-serving”, and drafted in a form which did not inspire confidence (at [313]). In particular the primary judge noted at [314] that there was “no hint in any of the reported conversations that in some cases the process of drafting took months from beginning to end and involved several different versions of the instrument ultimately executed”. Following his cross-examination, the primary judge found that in fact David was in substance responsible for much of the drafting in his mother’s will and codicils, of which his Honour held she did not know and approve.

  3. The solicitor who acted for David, Mr John Rickard, who provided the various testamentary instruments executed by the deceased and who witnessed the deceased’s execution, fell far short of the standards of proper practice when he caused his 89-year-old and vision-impaired client to execute documents which in large measure were drafted by David and were to David’s benefit.

  4. The complexity attending those testamentary instruments was the direct result of steps taken in early 2011 unilaterally, by David, who also qualified as an accountant, in an attempt to avoid capital gains tax on the substantial assets which had been accumulated by his parents during their lifetime. Even if (which may be doubted) there was a proper purpose for the advice, the execution was ill-conceived. Because the transactions were undertaken unilaterally, Pamela was found to have breached her fiduciary duty as a director by causing the company owned by her and her husband to transfer the entirety of its assets to five other companies she controlled. David was the instigator of those transactions and, therefore, of his mother’s breaches of fiduciary and statutory duties. Both were held liable to pay equitable compensation to the company in a decision by White J (as his Honour then was) which was heard on 4 and 5 December 2014 and determined on 29 July 2015: Thomas v Arthur Hughes Pty Ltd [2015] NSWSC 1027; 107 ACSR 443. Ultimately the Court approved the liquidator’s proposal that the compensation be set off against the distribution to which Pamela was entitled as a shareholder: In the matter of Anne Lewis Pty Ltd [2016] NSWSC 1860, but by then Pamela had suffered a stroke and she went into a nursing home in March 2016.

  1. The first three matters noted above bear upon the evidence in light of which any findings of knowledge and approval fall to be made. The fourth matter provides central context to the various testamentary instruments executed by Pamela which were in issue in this litigation. It will be seen that the 2014 will was executed a fortnight after the trial before White J, and the second codicil was executed a week after the judgment which was adverse to David and the deceased. The timing is squarely relevant to both testamentary instruments. The November 2013 fourth codicil, which was the first testamentary document conferring substantial powers on David, was prepared shortly before Peter, in his capacity as executor of Geoffrey’s estate, commenced proceedings for Anne Lewis Pty Ltd to be wound up on 5 December 2013 (see In the matter of Anne Lewis Pty Ltd [2014] NSWSC 418 at [1]; Mr Thomas was appointed liquidator on 9 April 2014).

  2. It was acknowledged, candidly and properly, that the later wills and codicils executed by Pamela engaged the “suspicious circumstances” doctrine. Indeed, the primary judge regarded it as “somewhat surprising” that neither undue influence nor fraud had been raised: at [399]. It was common ground that David as propounder bore the onus to establish Pamela’s knowledge and approval affirmatively, in accordance with what was said in Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 at [51] and Stojic v Stojic [2018] NSWCA 28; 17 ASTLR 215 at [133]. In particular, as Meagher JA said in Tobin v Ezekiel at [47],

“Particular vigilance is required where a person who played a part in the preparation of the will takes a substantial benefit under it. In those circumstances it is said that such a person has the onus of showing the righteousness of the transaction: Fulton v Andrew at 472; Tyrrell v Painton at 160. That requires that it be affirmatively established that the testator knew the contents of the will and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator: Tyrrell v Painton at 157, 160; Nock v Austin at 523-524, 528; Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097 at [33]; Dore v Billinghurst [2006] QCA 494 at [32], [42].”

  1. I shall return to that passage, which was central to David’s principal submission on appeal. But it is important to be clear how the reference to “the righteousness of the transaction” applies to the facts of this case. It is necessary to put to one side the moral and professional failings of the parties and their advisers. I would respectfully endorse the statements made by Chadwick LJ in Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097 at [65]:

“The question is not whether the court approves of the circumstances in which the document was executed or of its contents. The question is whether the court is satisfied that the contents do truly represent the testator’s testamentary intentions. That is not, of course, to suggest that the circumstances of execution or the contents may not, in the particular case, be of the greatest materiality in reaching a conclusion whether or not the testator did know and approve of the contents of the document – and did intend that they should have testamentary effect. But their importance is evidential. There is no over-riding requirement of morality. If Lord Hatherley’s reference to ‘the righteousness of the transaction’ in a speech delivered in the late 19th century [in Fulton v Andrew (1875) LR 7 HL 448 at 471] leads to misunderstanding at the beginning of the 21st century, then the time has come to consider whether that phrase is still helpful. For my part, I think it is better to avoid it.”

  1. Peter Gibson LJ made the same point at [36] concerning the inappropriateness of rejecting part or all of a will merely because of the court’s disapproval of its propounder.

Factual background

  1. The deceased attended university and worked as a social worker in a local hospital until her retirement in the early 1970s. Her husband Geoffrey was an accountant, practising as a principal of the firm Lewis & Coble in Chatswood. Their two oldest sons, Peter and David, were both qualified in accountancy, but Peter also qualified, in 2009, as a solicitor. In 2001, each son was given $250,000 by Geoffrey and Pamela, save that David’s money was (so it was said) “treated as a loan” because he was going through a divorce at the time.

  2. There was a history of estrangement between David and his three brothers, from 1994 for some 16 years. Following a diabetic seizure in early 2010 leading to his hospitalization for many months, David re-established contact with his brothers. It was shortly after this time that steps were taken leading to the formulation of the “succession plan” summarised shortly below, principally by David and Peter.

  3. The primary judge provided a chronological account commencing in around early 2007. At that time, the family home was a house in Turramurra, owned by Geoffrey. Pamela and Geoffrey each held half of the shares in Anne Lewis Pty Ltd, and each was a director. The company owned substantial cash and shares in listed companies which by 2012 amounted to some $9 million. Those assets generated the income on which Geoffrey and Pamela lived.

  4. Geoffrey’s health appears to have declined after 2007, and in January 2010 he was admitted to a nursing home. Pamela continued to live in the Turramurra house, visiting her husband weekly. Geoffrey had executed a general power of attorney in favour of Pamela. However, Pamela suffered from macular degeneration, and the primary judge recorded that her eyesight was “severely impaired” by 2007, but that she could read documents with the help of a device which magnified and displayed them on a computer monitor.

  5. In May 2010, Pamela gave Peter $500,000 by way of advance on his entitlement under her estate, and he signed an acknowledgment to that effect. In July 2011, Pamela paid Roger $50,000 by way of advance against his entitlement under her estate, and he signed a formal acknowledgment to that effect.

  6. Peter and David obtained advice from a tax practitioner, Mr Bryan Pape, with a view to seeking to avoid capital gains tax when, as was expected, the shares held by Anne Lewis Pty Ltd were sold following their parents’ deaths. Significantly, the steps summarised below were taken by David and Pamela unilaterally, without obtaining the agreement of his brothers, or of his father (although the evidence did not disclose what Geoffrey’s mental state was at the time). This led to the litigation heard and determined by White J mentioned above, and, as was noted at [46], the parties agreed that the primary judge should adopt White J’s findings of fact for the purposes of the present judgment.

  7. The so called “succession plan” involved the incorporation of six new companies, and the establishment of four discretionary trusts and one unit trust, as follows:

  1. Arthur Hughes Pty Ltd was incorporated, with Pamela as its sole shareholder and Pamela and Mr Bryan Edmund Bird (a partner of Lewis & Coble, who had acted as the family accountant) as its directors.

  2. Arthur Hughes was the sole shareholder of four new companies, Speakman Hughes Pty Ltd, Telfer Hughes Pty Ltd, Melvie Hughes Pty Ltd, and Gypson Hughes Ltd. Pamela and Mr Bird were directors of each company.

  3. Arthur Hughes was also the trustee of four discretionary trusts, in materially identical terms, each named by reference to the middle name of one of the four sons, and each of which was intended to benefit that son and members of his family, although the terms of the class of discretionary objects were broad enough to include members of the wider family including Pamela herself. The shares of each of the subsidiary companies were held by Arthur Hughes as trustee of the relevant discretionary trust. Pamela was the appointor of each trust.

  4. Arthur Hughes was also the trustee of a unit trust, and 140 units were issued representing 20 per grandchild. Each grandchild’s units were trust property of his or her father’s discretionary trust.

  5. All of the shares and other securities held by Anne Lewis Pty Ltd were transferred to the four subsidiary companies, with each receiving one quarter of the securities. The consideration was an unsecured loan from Anne Lewis to the subsidiary company, said to be for not longer than seven years with “interest to be charged on a mutually agreed basis”.

  6. The cash assets of Anne Lewis were transferred to a sixth company, Bathurst Hughes Pty Ltd, which was also a subsidiary of Arthur Hughes. The transfer was recorded as a loan from Anne Lewis Pty Ltd to Bathurst Hughes on the same terms as the loans to the other subsidiary companies.

  1. The immediate consequence of the transfer of shares and other securities from Anne Lewis Pty Ltd to the subsidiary companies was that Anne Lewis had no assets save for the unsecured debts from its subsidiaries, and a substantial capital gains tax liability. Further, the income generated by the shares would no longer be received by Anne Lewis Pty Ltd. Instead, it would be received by the Arthur Hughes subsidiary companies. The primary judge recorded that it did not appear to have been intended that those companies would be paying interest on the loans from Anne Lewis: at [61]. It is not necessary to explain the consequences had the steps taken by David and his mother been effective in their terms (and in particular whether the steps gave rise to deemed dividends under Div 7A of the Income Tax Assessment Act 1936 (Cth)); the result of the proceedings determined by White J is that the subsidiary companies held their shares on constructive trust for Anne Lewis and were required to transfer them back: see at [73] and orders 3-5. There was evidence that because the monies were repaid pursuant to court order, there were no adverse income tax implications.

  2. But the fundamental consequence was that Pamela had ceased being an indirect owner (through her shareholding in Anne Lewis) of the assets accumulated by Geoffrey and her during their lifetimes. The bulk of those assets were held on trusts which would continue after Pamela’s death. Pamela was no longer entitled to determine who would own those assets upon her death; instead, she could determine who would control the trustees of the trusts. To anticipate what follows, the primary judge found that Pamela never understood this.

The testamentary instruments

  1. It is necessary to describe the various testamentary instruments, in order to appreciate the distinction drawn by the primary judge between the simple clauses found to have been known and approved by Pamela, and the more complex ones which were not admitted to probate.

The 2011 will

  1. The 2011 will appointed David, Roger and Mr Bird as joint executors and trustees and divided the entirety of the residue of Pamela’s estate into five equal shares. Each son was given one share, with the remaining one-fifth share given in equal shares to the seven grandchildren or their survivors. It may also be noted that cl 13 enumerated some standard powers to the trustee appointed under the will, cl 14 provided that Pamela wished to be cremated and her ashes buried with her husband, and cl 15 authorised the executors to employ and pay an accountant to do any work required to be done in connection with the administration of her estate.

The four codicils to the 2011 will

  1. The first codicil dated 6 March 2012 referred to Pamela’s being the appointor (being an office transmissible by will) of the four family trusts, and appointed each of her sons as the appointor of their respective trusts.

  2. On 22 June 2012 Geoffrey died. His funeral was on 28 June. The primary judge stated at [72] that while the family came together for his funeral, “his death appears to have caused a rift between the testator and Peter, who, along with Mr Bird, was Geoffrey’s executor” and that there was “no further oral communication between the testator and Peter after 28 June”.

  3. The second codicil dated 6 September 2012 added a clause that “[a]ny gifts that I give to my grandchildren during my lifetime shall be in addition to the gifts contained in this my will” and another clause to similar effect.

  4. The third codicil dated 6 December 2012 removed Roger as one of the three executors (thereby leaving David and Mr Bird) and revoked the first codicil. It also added a new power to the trustees as follows: “My trustees shall have the power to deal with my share in Anne Lewis Pty Ltd in my trustees’ absolute and unfettered discretion.” The effect of that clause is more complex than it may seem. It purported to create a power, the donees of which were the trustees David and Mr Bird, who so far as I can see would have to act jointly in accordance with the usual rule: Sky v Body (1970) 92 WN (NSW) 934.

  5. In 2012 and 2013 there were proceedings in the Guardianship Tribunal, which dismissed Peter’s application for the appointment of a Financial Manager for Pamela on 25 January 2013. The primary judge noted at [95] that the decision recorded that Pamela did not fully understand the “succession plan”, but she did understand the motivation for it, being to avoid capital gains tax, and she trusted David completely. In October 2013, Mr Rickard later made an application on Pamela’s behalf that Peter pay the costs, claimed at $65,000, of the proceedings in the Tribunal. The application was dismissed. Precisely when that occurred is not clear from my review of the appeal books, but it must have been sometime after Peter made submissions opposing the costs order on 10 December 2013.

  6. The fourth codicil dated 14 November 2013 is a much longer document than the previous three. Clause 1 removed Mr Bird as an executor; with the effect that David became the sole executor and trustee. Clause 2 provided that if David predeceased Pamela or was otherwise unable or unwilling to act as her executor and trustee, then she appointed three grandchildren as joint executors and trustees. Clause 3 directed the trustees to deduct from her gift to Peter the sum of $500,000 paid to him as a partial entitlement from her estate, in accordance with a letter of acknowledgment dated 6 July 2010. Clauses 4-7 provided that any distribution from one of the four discretionary trusts to a named beneficiary of that trust between the date of the codicil and the date of her death was, at the absolute discretion of her trustees, to be treated as an early inheritance advance to the relevant son. Clause 8 provided that if any beneficiaries challenged the will or any of the codicils, then Pamela directed that any gift to that beneficiary should be revoked and instead that beneficiary should be given $50,000. Clauses 9 and 10 were directions to the trustees to deduct from the gift to Peter all the legal costs and disbursements incurred as a result of various legal proceedings since 22 June 2012, and an amount equal to all the costs incurred by Geoffrey’s estate, representing “liquidated damages for the monetary expense and great emotional distress Peter Howarth Lewis has caused me since 22 June 2012”. Clause 11 was a more general “claw-back” provision, directing the deduction of any costs including but not limited to legal costs and audit and accounting fees that any beneficiary caused her to incur. Clause 12 directed that monies deducted pursuant to some of the previous clauses were to be distributed equally amongst the other named beneficiaries (there is a numbering error in this clause, on which nothing turns).

  1. The claw-back provisions in the fourth codicil would be apt to include the cost of proceedings in the Guardianship Tribunal, claimed by Mr Rickard at $65,000.

  2. In May 2013, Peter commenced separate proceedings in the Supreme Court, seeking production of documents concerning the “succession plan”, based on Peter’s status as a shareholder of Anne Lewis by his being executor of his father’s estate, and by way of preliminary discovery against Pamela and the various companies established pursuant to the succession plan. On 6 August the application came before Bergin CJ in Eq. The primary judge recorded that “[a]fter the argument had advanced some distance, and her Honour had made some comments, the parties agreed on consent orders” which provided for the production of most of the documents from Anne Lewis. They were produced by November, and the balance of the proceedings was dismissed with no order as to costs: In the matter of Anne Lewis Pty Ltd [2013] NSWSC 1992.

  3. Thus by the time she executed the fourth codicil, Pamela had incurred substantial irrecoverable costs in both the Guardianship Tribunal and the Supreme Court in defending applications made by Peter.

The will dated 19 December 2014

  1. Work on the December 2014 will had begun several months before, in August. It was signed two weeks after White J had heard and reserved his decision on the liquidator’s action.

  2. It will be recalled that the primary judge admitted cll 1-11 to probate, but declined to find that Pamela had known and approved of the balance.

  3. Clause 1 of the new will revoked all previous testamentary dispositions by the testator. Clause 2 appointed David as the testator’s executor and trustee, with his son Andrew being appointed in the event that David predeceased her or was unwilling or unable to act. Clause 3 dealt with gifts by the testator to her grandchildren during her lifetime. Clause 4 made various specific bequests, including a gift on trust for the benefit of Hugh’s daughter, Kate; gifts of $10,000 to each of Peter’s, Roger’s and Hugh’s wives and a release of David’s 2001 loan. Clause 5 provided that the residue of the estate was to be divided into five parts, with one part to each brother and the remaining part to be divided among the seven grandchildren. Clauses 6 to 9 addressed the possibility that the sons might predecease her. Clauses 10 and 11 dealt with early inheritance advances made by the testator during her lifetime. Clause 10 provided generally that such advances were to be deducted from the relevant son’s share of the estate. The gifts to the testator’s grandchildren and the forgiveness of David’s loan were specifically excluded. Clause 11 provided for the $500,000 advance to Peter in July 2010 to be deducted from his share of his estate.

  4. Clause 12 recited the incorporation of the companies and the creation of the trusts, recited in sub-cl (iii) that the companies “own cash and shares and stapled securities and other assets”, and then directed the trustee “to include in the value of my estate the market value of these cash and shares and stapled securities and other assets”. That is problematic insofar as it seemingly ignores the existence of the discretionary trusts, and treats as assets of the estate assets which had been transferred to separate ownership and held on trust. (To be clear, it was not suggested that there was a sham trust.) Sub-clause (iv) nominated the trustee as appointor of each of the discretionary trusts.

  5. Sub-clause 12(v) provided that the trustee should “have the power to deal with the entitlements of the named beneficiaries of” each of the four discretionary trusts “at the absolute and unfettered discretion of the Trustee and the decision of the Trustee shall be final and conclusive”.  Similarly, cl 12(vi) provided that the trustee should “have the power to deal with” the units in the grandchildren’s trust “at the absolute and unfettered discretion of the Trustee and the decision of the Trustee shall be final and conclusive”. Sub-clause 12(vii) was in the same terms for Pamela’s shares in Anne Lewis Pty Ltd.

  6. Clauses 13 to 16 provided that any distribution from a particular discretionary trust was to be treated as an early inheritance advanced to the relevant brother. They resembled cll 4-7 of the November 2013 codicil, save that the direction was expressed to be mandatory, rather than subject to the trustee’s absolute discretion.

  7. Clauses 17 to 21 replaced the claw-back provisions in the November 2013 codicil. Clause 17 was as follows:

“(i)      WHEREAS my son PETER HOWARTH LEWIS has, since 28 June 2012 being the date of my beloved husband Geoffrey Howarth Lewis’ funeral, caused me to suffer great emotional distress and suffering and sadness and has shown me no love or compassion, and

(ii)      WHEREAS my son PETER HOWARTH LEWIS has, since 28 June 2012 being the date of my beloved husband Geoffrey Howarth Lewis’ funeral, caused me to suffer additional expenses or caused my son DAVID GRANT LEWIS to suffer additional expenses or caused Anne Lewis Pty Limited, Speakman Hughes Pty Ltd, Telfer Hughes Pty Ltd, Melvie Hughes Pty Ltd, Gypson Hughes Pty Ltd, Bathurst Hughes Pty Ltd, Arthur Hughes Pty Ltd and the trusts of which Arthur Hughes Pty Ltd is trustee to suffer additional expenses

I DIRECT the Trustee to deduct from my gift to my son PETER HOWARTH LEWIS the quantum of the additional expenses the Trustee decides in the absolute and unfettered discretion of the Trustee were suffered by me or suffered by my son DAVID GRANT LEWIS or suffered by Anne Lewis Pty Limited, Speakman Hughes Pty Ltd, Telfer Hughes Pty Ltd, Melvie Hughes Pty Ltd, Gypson Hughes Pty Ltd, Bathurst Hughes Pty Ltd, Arthur Hughes Pty Ltd and the trusts of which Arthur Hughes Pty Ltd is trustee since 28 June 2012 including but not limited to penalties, pecuniary penalties, liquidator’s fees and disbursements, additional income tax, legaI costs and disbursements, specialists advice fees, audit fees and accounting fees and the decision of the Trustee shall be final and conclusive.”

  1. Clause 18 was equally verbose and in similar terms, but was directed to Roger, and it added to the deductions which the trustee was directed to make those “expenses the Trustee decides in the absolute and unfettered discretion of the Trustee cannot be easily recovered from” Peter.

  2. Clauses 19 and 20 provided:

“I DIRECT the Trustee to deduct from my gift to any of my beneficiaries with the exception of my son DAVID GRANT LEWIS the quantum of additional expenses the Trustee decides in the absolute and unfettered discretion of the Trustee were suffered by me or suffered by my son DAVID GRANT LEWIS or suffered by Anne Lewis Pty Limited, Speakman Hughes Pty Ltd, Telfer Hughes Pty Ltd, Melvie Hughes Pty Ltd, Gypson Hughes Pty Ltd, Bathurst Hughes Pty Ltd, Arthur Hughes Pty Ltd and the trusts of which Arthur Hughes Pty Ltd is trustee and the trusts of which [the Hughes Parent Company] is trustee since 28 June 2012 including but not limited to penalties, pecuniary penalties, liquidator's fees and disbursements, additional income tax, legal costs and disbursements, specialists advice fees, audit fees and accounting fees and which additional expenses were in the absolute and unfettered discretion of the Trustee directly or indirectly or explicitly or implicitly due to the action or actions of that beneficiary either acting severally or jointly and the decision of the Trustee shall be final and conclusive.

I DIRECTthe Trustee to deduct from my gift to any of my beneficiaries with the exception of my son DAVID GRANT LEWIS the quantum of any losses or expenses of whatsoever kind the Trustee decides in the absolute and unfettered discretion of the Trustee were suffered by my estate and these losses were in the absolute and unfettered discretion of the Trustee directly or indirectly or explicitly or implicitly due to the action or actions of that beneficiary either acting severally or jointly and the decision of the Trustee shall be final and conclusive.”

  1. Clause 21 provided that 80% of the monies deducted should be distributed amongst the testator’s sons at the “absolute and unfettered discretion of the Trustee” other than the son from whom the deduction was made and added that “the decision of the Trustee shall be final and conclusive”, with the remaining 20% to be distributed amongst the grandchildren according to the trustee’s discretion.

The 2015 codicils

  1. The 5 May 2015 codicil added a new clause as follows:

“I GIVE DEVISE and BEQUEATH my one fully paid ordinary share in Arthur Hughes Pty Ltd ACN 155117650 to my son the said DAVID GRANT LEWIS for his use absolutely.”

  1. That on its face gave ownership of the company which was a trustee of each of the trusts to David. To that extent it altered the general equal division between the four sons, although it did not purport to give the beneficial ownership of the assets held on trust to him. However, as sole shareholder, David could control the decisions of the trustee of all five trusts, including by removing and appointing directors and by shareholder resolution causing the company to make any particular decision.

  2. Clauses 1 and 2 of the second codicil rescinded the first codicil but then reinserted the single relevant clause of that codicil in identical terms. Clause 3 deleted the clause appointing Pamela’s executor, replacing it with a clause which continued to appoint David as executor with the fallback being the NSW Trustee and Guardian rather than Andrew Lewis, David’s son.

  3. Clause 4 was a separate gift to the seven grandchildren in an amount equal to the gross market value as at the date of Pamela’s death of the Turramurra property in equal shares as tenants-in-common. Clause 5 made a consequential change in relation to the grandchildren, and clause 6 made a consequential change in relation to the gift of the share in Arthur Hughes Pty Ltd to David.

  4. Clauses 7-9 were not pressed at first instance by counsel then appearing for David. Clauses 7 and 8 asserted that each of Peter and Roger had “caused me to suffer great emotional distress and suffering and sadness and ha[d] shown me no love or compassion” and directed the trustees to deduct from gifts to those sons a broadly defined category of expenses or liabilities of any of the companies or trusts established pursuant to the succession plan. Clause 9 was a general provision authorising further deductions from any of the beneficiaries, with the exception of David Grant Lewis, for expenses or liabilities which the trustee decided should appropriately be deducted from gifts to those beneficiaries.

  5. Clause 10 identified the Australian Company Numbers of Anne Lewis Pty Ltd and the companies established pursuant to the succession plan. Clause 11 stated that “in all other respects I confirm my will dated 19 December 2014.”

  6. As it happened, David did not predecease his mother and was neither unable nor unwilling to act as executor or trustee. Mr R Wilson SC, who appeared for David in this Court but not at first instance, candidly acknowledged that in those circumstances the clauses of the second codicil which the primary judge admitted to probate, being cll 3, 10 and 11, had no operative effect.

  7. The upshot is that the 2014 will included both the equal distribution between the four brothers and the grandchildren as had been found in the previous will, but also conferred substantial discretionary powers on David as trustee and executor, which had their origin in the fourth codicil of the earlier will. The distinction is apparent both as a matter of form and substance. The 2014 will occupies just over 6 single spaced pages, of which just over 4 pages deal with the clauses directed to the trusts and the clawbacks. It is not merely that clauses 11-25 are verbose. They are more complicated legally than the earlier provisions, and cannot be understood without a clear appreciation of the nature of the powers exercisable by the trustee of a discretionary trust and the power of an appointor. But their effect was plain. David agreed in cross-examination that the words in the later testamentary instruments were his, that they were drafted so that the decisions of the trustee were to be “as watertight as possible”, that he was to be the sole controller of the trustee after his mother’s death, that “the will and the shareholding was a mechanism whereby after [Pamela’s] death [David] would control her estate and the various trusts” and that he would “have the unfettered discretion to determine what Peter and Roger might owe [Pamela]”.

Execution of the testamentary instruments – capacity and knowledge and approval

  1. There was no challenge to Pamela’s knowledge and approval of the 2011 will and the first, second and third codicils. However, there was a large issue at trial as to Pamela’s capacity, and her knowledge and approval of the fourth codicil and the 2014 will and its codicils.

  2. This was the opposite of a case where the solicitor retained to prepare a will obtained instructions, prepared a draft, formed an opinion as to testamentary capacity and then ensured that the testator knew and approved of the will, in each case documenting the steps taken. Rather, this was a case where the fourth codicil and the later will and its codicils materially detracted from the equal distribution of assets to Pamela’s four sons and their families. Yet there is almost no evidence whatsoever of the instructions from Pamela. Instead, not merely did instructions to Mr Rickard come from David – the son who stood to benefit from the second will and the codicils – but also David was the primary drafter of the instruments. It was rightly conceded that there were “suspicious circumstances” enlivening the Court’s obligation to scrutinise with care whether Pamela both had testamentary capacity and knew and approved of the will.

  3. The primary judge introduced this section of his reasons with the following general comments, finding that the source of Mr Rickard’s instructions for his client Pamela was David:

“[309]   General comments: As already mentioned, David was Mr Rickard’s source of instructions for all of the testamentary instruments which he prepared. For the December 2014 will onwards, the actual drafting work was almost entirely done by David as well (albeit that such drafting was based on the wording of earlier testamentary instruments to which Mr Rickard may have contributed more). In their expression, the instruments in question represent what David wanted. There is no evidence that the testator made any contribution of substance to the wording (I am not even satisfied that the reference to Peter inflicting ‘great emotional distress’ on the testator came from her, as David claimed).

[310]    The testamentary instruments prepared by Mr Rickard were David’s in another, more fundamental, sense. As I have already pointed out, David attributed the consolidation of the then statutory instruments into a single will in December 2014 as having been the testator’s idea. In fact the correspondence shows that it was Mr Rickard’s. There is no independent evidence that the idea of preparing the will or any of the codicils came from the testator. Indeed on David’s own account he was the one who suggested the August 2015 codicil.

[311]    David’s account of the origin of the April 2013 letter for the benefit of Kate stands out from the other instruments. On that account, the idea originated with the testator and the testator was the one who consulted Rhonda and decided to proceed. The testator’s special relationship with Kate makes it clear that this instrument came from her heart.

[312]   This exception underlines the point. Otherwise, in timing as well as in content, I think it is clear that the testamentary instruments prepared by Mr Rickard originated from David not the testator.”

  1. There was no challenge to any of those findings. In the case of clause 20, which was new, the clause was drafted by David and first provided by him to Mr Rickard by an email sent shortly after midnight on the day of execution. There is nothing to suggest that Mr Rickard attempted to explain its force, let alone why David, who benefited from it and who drafted it, had included it merely hours beforehand.

  2. The primary judge also regarded David’s account of what occurred as “of little weight”: at [316]. His Honour stated that David appeared to have telescoped his recollections and discussions with his mother, and that the passages in his affidavit “give every indication of having been a reconstruction”: at [316]. His Honour then stated:

“[318]    What this means is that all the Court is left with in the end to establish that the instruments in question represented what the testator intended is the fact that they were read over to the testator before she executed them. As I have already pointed out, even if the testator did interrupt and seek clarification as that happened, we do not know what that clarification was. The Court simply has to be able to infer from the reading of the text alone that the testator had the requisite understanding of its effect.

[319]    In considering the testator’s understanding, it unfortunately becomes necessary to consider how well Mr Rickard discharged his obligations as the testator’s solicitor. Two points, in particular, stand out. First, the wills and codicils in question contain some lamentably poor drafting. I have already pointed these out above. The claw-back provisions were particularly problematical. They display a lack of clear understanding of the legal effect of the ‘succession plan’ or a lack of clear thinking as to what the provisions were designed to achieve, or both.

[320]   The significance of this is that, even if I could be satisfied that the testator had asked questions about the purpose and intended effect of the provisions, I could not be satisfied she would have received sensible answers. Indeed I suspect that the true author of the language, David, probably did not have a clear idea in his own mind of the legal effect he intended to achieve.

[321]   The second point is a more general reflection of the first one. Mr Rickard seems to have seen his function as being simply to translate David’s wishes into written form. On the evidence he made little if any attempt to divine from the testator what her intentions were. Mr Rickard did block David’s idea of using the power of attorney to transfer the Turramurra property out of Geoffrey’s sole name (see [188] above), although the wider question about the validity of the ‘succession plan’, which had also depended on the use of the power of attorney, apparently went unexplored. But if there is any other occasion on which Mr Rickard stood up to David, the evidence does not reveal it.”

  1. At [322]-[364], the primary judge addressed in detail evidence bearing upon Pamela’s testamentary capacity, including a report from a medical practitioner in July 2015 which represented “an independent assessment of the testator’s cognitive function at the end of the relevant period” and which “confirms the general picture presented in the lay witness evidence of generally very good cognitive function with limited short term memory loss”: at [364].

  2. In the following section, the primary judge analysed evidence bearing upon the moderately elaborate structure of companies and trusts which her sons had caused to be established and found both that Pamela was uninterested in investments in any form other than cash deposits and also that her lack of understanding was more fundamental: at [387]. The primary judge explained that when, before 2011, her assets comprised her shareholding in Anne Lewis Pty Ltd, through which she had an indirect interest in the investments held by that company, she enjoyed a half share in the dividend income from that company. However, following the implementation of the succession plan, Pamela had control through her ownership of the trustee company, Arthur Hughes Pty, coupled with her position as appointor under the various trust deeds. Thus the bulk of the assets accumulated by Geoffrey and Pamela during their lives would not be transmitted upon their deaths. All that Pamela could do was to pass on control of the assets by nominating someone else as appointor in her will.

  1. This was the basis of the severance effected by the primary judge. He explained the position as follows:

“[393]    There is no evidence that the testator ever understood this. Certainly there is no evidence that it was ever explained to her in these terms by David or by Mr Rickard. All there is in the evidence is the testator’s description of the Lewis Company investments being ‘turned into trust accounts in the name of the family’.

[394]   The reference to ‘trust accounts in the name of the family’ was, of course, a hopelessly inadequate description of the discretionary trust structure established by the ‘succession plan’. But the problem was more fundamental even than this. The testator seems to have subscribed to the popular superstition that by putting assets or income into a trust, tax liabilities can be made to disappear. There is no evidence that she had any understanding of trusts, or how they actually work.

[395]   The transfer of the Lewis Company’s assets to the Hughes Trusts was not wholly irrevocable. Its financial effect could be unwound, at least in part, if the Lewis Company were to demand repayment of the loans which it had made to the Hughes Companies to finance the transfers. But there is nothing to suggest that the testator had the slightest inkling about that.

[396]   Nor is there any evidence that the testator ever really understood what the effect of the scheme had been on the Lewis Company. There is no sign that she appreciated, even after Hugh read parts of White J’s judgment to her, why it had been wrong for her, as David’s instrument, to appropriate the assets of the Lewis Company to trusts which she controlled. Nor does she seem to have confronted the fact that this involved defeating or impairing the interests of her husband, Geoffrey, and the intent of his will.

[397]    It follows that the testator could never have properly understood the nature of the liquidator’s action against her, David and the Hughes Companies. In particular she could not have understood that the action involved an assertion of the Lewis Company’s rights, ultimately in the interests of its shareholders (including those of the testator herself), in response to David’s unlawful scheme. The testator was therefore in no position to appreciate the justice of what Hugh said to her on 30 July 2015 about the futile attempt to defend the proceedings (see [381] above).”

  1. For completeness, I note that by a notice of contention, David challenged the finding that Pamela lacked a general understanding of the structures established in her lifetime. The submission was substantially unelaborated and in any event there is no reason to depart from what the primary judge held – especially since, as will have been noted, aspects of the testamentary instruments disclosed an imperfect understanding of those structures, notwithstanding David’s and Mr Rickard’s accounting and legal qualifications.

  2. His Honour expressed his conclusions thus at [405]-[406]:

“Subject to the possible qualification which I will mention in a moment, I am satisfied that at all relevant times the testator possessed testamentary capacity.

The potential qualification concerns the requisite understanding on the part of the testator [of] the nature of the assets being disposed of. Arguably there is a question about whether the testator had sufficient understanding of those assets following the implementation of the ‘succession plan’ in 2012. On the evidence, however, the testator’s lack of understanding appears to have been more a result of disinterest or delegation than incapacity. I therefore propose to address this issue when considering knowledge and approval, to which I now turn.”

  1. While the primary judge found that Pamela had testamentary capacity, his Honour applied the principles in Tobin v Ezekiel at [46]-[47] concerning knowledge and approval of a will. His Honour observed that the complexity of the testamentary instruments and of the estate was a factor in play, because of the structures established in 2011 and some of the clauses in the instruments. So too was the sophistication of the testator.

  2. The primary judge considered that the December 2014 will gave immunity to David from the claw-back provisions, something not shared by any of his siblings, and extensive powers under the will. His Honour rejected the submission that “particular vigilance” was not required because the will did not directly provide David with additional benefits. In addition to the immunity from the claw-back provisions, his Honour noted the broad powers conferred upon David as trustee, which permitted substantial reductions to legacies to other beneficiaries under the will, and, potentially, in the discretionary trusts.

  3. The primary judge stated that cll 1-11 of the 2014 will presented no difficulty, but that cl 12-16 gave rise to different considerations. The primary judge identified the complexities of many of the subclauses within cl 12 at [423]-[428]. His Honour identified the minimum level of understanding that the testator would have needed to have possessed in order to know and approve of the contents of the will, in a passage which was critical to David’s submissions based on knowledge and approval:

“[420]   In the circumstances, I think this would have required an explanation sufficient to convey to the testator that: the cash and securities formerly held by the Lewis Company had been transferred to the four sons’ trusts and the grandchildren’s trust, and the testator no longer had any direct or indirect interest in those assets; the assets were held under the terms of the relevant trust deeds, which could not be altered by the testator or anyone else; the sons’ trusts (which included the unit-holdings in the grandchildren’s trust, and thus the beneficial interest in that trust as well) were held on terms which allowed the trustee to distribute both capital or income to any of the defined class of beneficiaries, which was not confined to the relevant son and his family; effective control of the trust lay with the trustee (… and thus with ownership of the Hughes Parent Company); but this was subject to the appointor’s power to nominate a new trustee, or to nominate a new appointor by will.

[421]   Most importantly, the testator would have needed to understand that by nominating the Trustee as the appointor the testator would be conferring on the Trustee (who would probably be David) virtually complete control over all of the former investment assets of the Lewis Company; the only substantial asset in the estate would be the dividend received by the testator from the liquidation of the Lewis Company; and that dividend would depend upon the liquidator successfully unwinding the ‘succession plan’, if the liquidator’s action succeeded, or, if the liquidator’s action failed, upon the liquidator requiring repayment of the loans made by the Lewis Company to the Trusts.”

  1. His Honour did not separately analyse cll 13, 14, 15 or 16 of the will, which very substantially resembled cll 4-7 of the fourth codicil to the 2011 will. However, no separate complaint was made about that, which may well have reflected the way the case had been argued.

  2. The primary judge regarded cll 17-21 as “even further along the scale”. His Honour said that “[u]nderstanding the verbiage as it was read to her, just as a matter of English, is unlikely to have been easy for the testator. But that is only the beginning of the problem”. The essential change was expanding the scope of the claw-back provisions from legal costs to all other forms of expenses and liabilities. His Honour said at [433]-[435]:

“[433]   ... [I]n the December 2014 will the scope of the claw-back provisions extended far beyond the unrecovered costs of the proceedings brought by Peter. In my view, the requirement of knowledge and approval meant that it was necessary to bring home to the testator the full scope and implications of the extended claw-back powers. Otherwise there would have been a risk of the testator treating the new provisions as mechanical ones with a relatively confined effect, and being of a type she had already approved.

[434]   In these circumstances, I think that knowledge and approval would have required explaining to the testator that the claw-back provisions purported to allow David, as Trustee, a broad and uncontrolled power to identify ‘additional expenses’ in some way associated with the implementation of the succession plan or the subsequent litigation. These ‘additional expenses’ would not be confined to legal costs but might extend to tax liabilities and accounting or other professional fees. David would then be entitled to impose liability for these ‘expenses’ on any beneficiary who he considered, again in the exercise of the broadest possible discretion, had in some way been responsible. As a result, Peter or Roger, at least, could be deprived of his inheritance, which could then be re-distributed according to David’s discretion.

[435]   The observations I have made about clauses 12 to 16 apply with still greater force to the claw-back provisions in clauses 17 to 21. I am not satisfied that the knowledge and approval requirement is satisfied.”

  1. The primary judge then addressed the two 2015 codicils, and concluded that only those clauses which had no practical impact (at least so long as David was willing and able to act as executor) should be admitted to probate.

  2. The primary judge considered that the June 2011 will had been understood and approved by the testator. It was relatively simple in form, and not in substance different from the 2010 will. True it is that it had been falsely attested, but the primary judge considered that would not prevent its being admissible to probate had it not been revoked by the 2014 will. The primary judge stated that he did not propose to deal with the validity of the codicils to the June 2011 will.

  3. By a second oral judgment delivered immediately after a hearing on 29 October 2020, the primary judge made the substantive orders indicated above selectively admitting clauses of the 2014 will and the August 2015 codicil to probate: Lewis v Lewis (No 2). His Honour stated that the major issue debated between counsel was costs. While both brothers contended that each had succeeded, his Honour concluded that overall David had failed and Peter had succeeded, and ordered that David should pay Peter’s costs which were solely referable to the cross-claim, and 80% of Peter’s costs otherwise, the discount reflecting Peter’s lack of success on the testamentary capacity defence which had been a relatively minor issue in the litigation. Because his Honour found that Peter’s proceedings had been for the benefit of the estate, Peter was entitled to recover his costs from the estate. Because “on my findings the whole impetus for execution of those instruments came from David”, and “[i]n a real sense he has been the cause of this litigation”, his Honour concluded that it would be “quite wrong” for any of David’s costs to be paid from the estate. Finally, his Honour confirmed the reference of the papers to the Law Society for consideration of possible disciplinary action against Peter.

The grounds of appeal and the appellant’s submissions

  1. Grounds 1-7 of David’s notice of appeal challenged the failure to find that Pamela had known and approved those clauses of the December 2014 will and of the August 2015 codicil (save for clauses 7-9 which David had not sought to prove) which were not subject of the grant of probate. Grounds 8 and 9 challenged the severance of clauses from the December 2014 will and the August 2015 codicil. Ground 10 was conclusionary. Ground 11 challenged the exercise of the costs discretion. It is contingent upon all other aspects of David’s appeal failing.

  2. David advanced three principal submissions.

  1. He contended for a finding of fact that the solicitor Mr Rickard had read the entirety of each testamentary instrument to Pamela who had indicated her approval before execution.

  2. He submitted that the knowledge and approval requirement was thereby satisfied, it being sufficient for the testator to have knowledge of and to approve the contents of the will, it being no part of the test that the testator had knowledge of its legal effect, at least in circumstances where the testator had delegated the task of drafting her will to another.

  3. He submitted that the primary judge had erred in severing cll 12-25 from the 2014 will, and the majority of the clauses of the second codicil, which could not operate independently of the balance of the will.

  1. David’s first submission reflected a fresh issue raised by the parties’ written submissions, for Peter did not accept that the primary judge had found that Mr Rickard had read the 2014 will and 2015 codicils to Pamela before they were executed. Resolving it turns on reading the judgment in light of the evidence and the approach taken by counsel who then appeared for Peter.

  2. David’s second and third submissions give rise to questions of principle. In particular, under the rubric of the second submission, David invited this Court to clarify the meaning of the reasoning in Tobin v Ezekiel at [47], and in particular the passage “the testator knew the contents of the will and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator”. David’s submission drew upon the analysis in Hobhouse v Macarthur-Onslow [2016] NSWSC 1831 at [441]-[445]. Its gravamen was to engage a principle of law that assenting to a testamentary instrument after it was read to the testator is sufficient to satisfy the knowledge and approval requirement, even in a “suspicious circumstances” case, at least where the testator has delegated the task of drafting the will to another.

  3. David’s third submission rested upon the limitations identified and applied in Osborne v Smith. He contended that the severance by which parts only of the 2014 will and its second codicil were admitted to probate was not permissible.

  4. Coincidentally, David’s submissions concerning knowledge and approval of the effect as opposed to the contents of the will, and the effect of reading it out loud, and the limitations upon a probate court’s power to sever a testamentary instrument, are all addressed in a lucid article: I Hardingham, “The Jurisdiction of Courts of Probate to Rectify Errors in Wills” (1972) 46 Australian Law Journal 221. It has assisted me considerably, despite my reading it after preparing the majority of these reasons.

First submission: Were the 2014 will and the 2015 codicils read to Pamela?

  1. Peter maintained that “there is no evidence clause 12 and in particular clause 12(vii) of the December 2014 Will was read to the deceased and agreed to by her”, and submitted that paragraph [278] of the primary judgment “is to the express contrary”. That paragraph was:

“Again, the lack of evidence from David and Mr Rickard means that there is no account of the intention behind the drafting of the December 2014 will, apart from that which emerged in cross-examination. Nor is there any evidence, reliable or not, about what the testator was told.”

  1. Peter relied in particular upon the last sentence. But one cannot take one broadly worded sentence in a long judgment in isolation without regard to other passages which are squarely directed to the issue. Peter’s focus on [278] suffers from the same flaw as was identified in ZP v PS (1994) 181 CLR 639 at 655-657; [1994] HCA 29. It is necessary to read the reasons as a whole, fairly and in context. That context may include the relevant legislative regime, both substantive and procedural, as I sought to explain in Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 at [7]-[45]. It may also be necessary to have regard to the issues at trial and the conduct of the trial (see for example Director General of Department of Community Services; Re Sophie [2008] NSWCA 250 at [54]-[64]). Doing so is merely observing the basal proposition that every word of every judgment must be read in context.

  2. David relied on the fact that the 2014 will was attested by Mr Rickard, and the attestation clause stated that the will had been read to Pamela. Further, Mr Rickard had affirmed an affidavit in which he said that he read the will aloud. He confirmed in cross-examination that he would read any testamentary document to Pamela out loud and ask her if she agreed. In the case of the August 2015 codicil, he explicitly stated that he asked the Court to believe that he read the document verbatim to Pamela. I do not accept Peter’s submission that there was no evidence of the December 2014 will being read to Pamela.

  3. Nor do I accept Peter’s submission that no such finding was made. Counsel then appearing for Peter did not confront Mr Rickard to falsify the statement in his affidavit that he read the document aloud to his client. Notwithstanding the deficiencies associated with the approach taken by Mr Rickard to have Pamela’s later will and codicils prepared and executed, it would be surprising in the absence of cross-examination for the primary judge to make a finding which amounted to a rejection of Mr Rickard’s affirmative evidence to the contrary.

  4. Paragraph [278] on which Peter relied is to be read in that context. Other passages in the judgment reflect his Honour’s sensitivity to the way in which Peter’s case was advanced at trial. The following passages, at [318], [360] and [428] reflect the acceptance of Mr Rickard’s unchallenged evidence that he read the will to Pamela:

“What this means is that all the Court is left with in the end to establish that the instruments in question represented what the testator intended is the fact that they were read over to the testator before she executed them. As I have already pointed out, even if the testator did interrupt and seek clarification as that happened, we do not know what that clarification was. The Court simply has to be able to infer from the reading of the text alone that the testator had the requisite understanding of its effect.

...

Again the testator’s capacity to read documents is of limited significance: the later wills were read to her, and she also had David available to assist with reading if she needed it. The bigger question is whether the testator had sufficient interest in business documents to use the magnifier to read them, or to take them in if they were read to her. I will deal with that question in due course.

...

Underlying all of this is the testator’s apparent lack of interest in the structure and workings of the family investments, and her willingness to leave such matters to David. It is all too easy to imagine the testator having clauses 12 to 16 read to her and treating them as the auditory equivalent of David “droning on and on” (see [373] above). On balance I am not satisfied that the testator had sufficient knowledge and paid sufficient attention to satisfy the knowledge and approval requirement.” (emphasis added).

  1. Each of those paragraphs accords with Mr Rickard’s evidence, and amounts to an explicit or implicit finding that he read the 2014 will aloud to Pamela.

  2. When the judgment is read as a whole, and in light of the manner in which Peter’s case was conducted, it is tolerably clear that the reference in [278] to there being no evidence of what Pamela was told is to be understood as a reference to the absence of evidence as to what Pamela was told concerning the effect of the will. That is the subject matter to which [277] and [278] relate. Those paragraphs are not to be read as contradicting the repeated, subsequent references by the primary judge to the reading out loud of the will to Pamela.

  3. I accept David’s first submission.

Second submission: Knowledge and approval of the contents of the will as opposed to knowledge of its effect

The finding of the primary judge

“I do not doubt that it is possible for a court to find that part of a will did have the knowledge and approval of the deceased and that another part did not. An example would be if a solicitor, who has been instructed to draft a will, obtains the deceased’s approval of the draft but subsequently before execution adds a clause without drawing it to the attention of the testator and keeps the executed will. But the circumstances in which it will be proper to find such a curate’s egg of a will are likely to be rare.”

  1. Chadwick LJ said at [59]:

“It is not, and cannot be, in dispute that, before admitting the document to probate, the judge needed to be satisfied that it did truly represent the testator’s testamentary intentions; or, to use the traditional phrase, that the testator ‘knew and approved’ its contents. Nor is it in dispute that, if satisfied that the testator knew and approved of part only of the contents of the document, the judge was bound, before admitting the document to probate, to require that those parts with respect to which he was not so satisfied be struck out. If he were right to take the view that there was serious doubt whether parts of the document did truly represent the testator’s testamentary intentions, then he cannot be criticised for taking the course that he did. But the judge’s finding that there was serious doubt whether the whole of a home-made document – executed by a testator who (as the judge found) knew and believed that, by executing that document, he was making his will – did truly represent the testator’s testamentary intentions raises a number of questions.”

  1. I would respectfully endorse what was said in Fuller v Strum at [36] about the circumstances in which this course is appropriate likely being rare.

  2. David’s submission focussed upon the restriction stated in Re Horrocks (decd); Taylor v Kershaw [1939] P 198 at 219, that the power was limited to occasions where “the matter omitted was, so to speak, self-contained and its omission did not alter the sense of what remained”. That was approved by Kitto J in Osborne v Smith at 160-162. The dispositive aspect of the decision was at 162:

“The point is crucial in the present case. The findings in the earlier suit by which the appellant is bound make it necessary that the case should be decided on the footing that the deceased did not know and approve of the clause which actually appears in the will in reference to the Home of Peace. But for the same reason the case must be decided on the footing that the deceased did not know and approve of a bequest to the appellant of the entire estate undiminished by a gift of £100 or £200 to the Home of Peace. Here lies the difficulty which is inherent in the proceedings and stands in the appellant’s way whatever may be thought about the question of due execution. As has been pointed out, if the existing clause in favour of the Home of Peace were to be struck out, the gift to the appellant would necessarily have an effect different both from that which it has on the face of the instrument and from that which the deceased intended it to have. It would stand as a gift of the entire estate without qualification. While refusing recognition to one provision which the deceased did not know and approve, the Court would be turning another, which she knew and approved subject to a qualification, into one which, being unqualified, she did not know and approve. That, plainly, would be to go beyond the jurisdiction of the Probate Court.”

  1. David submitted that, in accordance with the limitations identified in Osborne v Smith, it was beyond the jurisdiction exercised by the primary judge to excise the majority of the clauses of the 2014 will and its second codicil.

  2. The question in Osborne v Smith was a fine one. There was a legacy to the Home of Peace, with the residue being left to Ms Osborne. The High Court considered that it was not possible to omit the clause leaving the legacy to the Home of Peace, in circumstances where the only evidence of knowledge and approval was of the estate being left to Ms Osborne, because a gift of the residue unqualified by the legacy was different from a gift of the residue qualified by the legacy.

  3. I do not accept David’s submission. I rest my decision on a narrow point, although there may be a more general point as well. It is far from clear to me that the constraints which attended the traditional limitation upon not admitting parts of a will to probate survive the enactment of a broad power to rectify a will. As I have observed, the “traditional” limitation is as recent as the Wills Act 1837, and is sourced in a view taken of the unyielding requirements of that statute. I see no good reason to preserve that limitation now that statute confers far greater discretionary powers on courts. That view finds some support in the reference in the 19th edition of Theobald on Wills (Sweet & Maxwell, 2021), p 128 to “the now obsolete practice whereby the court would attempt to approximate rectification of a will, in the absence of any true power in the probate court of rectification, by omitting words in the will from the grant of probate, ostensibly on the ground that they had been included without the testator’s knowledge and approval”. The restriction to omitting and the prohibition upon inserting words turned on courts’ “enslavement” to the Wills Act 1837; but the modern legislation confers broad powers to rectify a will, and I doubt that the earlier restriction can survive. But this general point was not argued, and I say no more of it.

  4. The narrow point is that the difficulty in Osborne v Smith was not merely that the Home of Peace did not receive its legacy, but also that the sole beneficiary was not receiving as the deceased had intended the entire estate diminished by a small gift to the Home of Peace. The High Court treated that alteration as dispositive. But the clauses of Pamela’s will which were not admitted to probate did not (save in relation to the share in Arthur Hughes Pty Ltd in the codicils) themselves alter the equal distribution of Pamela’s estate. For the most part, they authorised David to exercise in his absolute and unfettered discretion a power to claw back various amounts from brothers who were said to have caused loss to the estate. But only if that power were exercised would Pamela’s equal distribution between the brothers be altered.

  5. Bearing that in mind, a close consideration of the facts and reasoning in Astridge v Pepper [1970] 1 NSWR 542 is warranted. That decision addressed the limitation upon the power to admit part of a will to probate, and in many respects, not least the comparative intelligibility of the different parts of the will, resembles the present case.

Astridge v Pepper

  1. Astridge v Pepper was elaborately argued over 7 days culminating on 2-5 and 9-10 March 1970. Helsham J delivered what appears to have been a comprehensive oral judgment on 11 March 1970, directing that letters of administration cta confined to cl 3 of the deceased’s December 1967 will be granted. The deceased, Mrs Edith Lilias Bowen, had been widowed some 30 years before her death in June 1968, aged 100. A sister, Mrs Pepper, survived her. For many years, the effect of the deceased’s will was to leave the whole, or the bulk, of her estate to a niece, Miss Jean Dent. Miss Dent worked as a secretary for Mr Astridge, a solicitor in a large commercial firm. The deceased also had a friend, Mrs McCarthy, a neighbour who visited her most days, and who was “probably her closest friend” save for Miss Dent.

  2. The deceased made a will in 1949 leaving her estate to Miss Dent and appointing her executrix. The deceased then made two wills in October and December 1967, when she was aged 99. The October 1967 will was drafted by Mr Astridge on instructions from Miss Dent, who was herself dying (and knew she was dying). Miss Dent instructed that Mr Astridge be appointed executor, with the estate to be left to her but to Mrs Pepper if Miss Dent predeceased. This will was executed by the deceased in hospital. Because nothing ultimately turned on it, Helsham J passed over the detail of the evidence bearing upon the creation and execution of this will.

  3. Miss Dent died on 18 November 1967. In early December 1967, Mrs Bowen gave instructions to Mr Astridge to draft a new will, leaving her estate to Mrs McCarthy. Almost the entirety of the will is reproduced on p 545. It comprised four clauses. The first clause revoked earlier wills, the second appointed Mr Astridge as executor and trustee, the third gave the entirety of her estate to Mrs McCarthy, and the substance of the fourth was an authorisation to Mr Astridge to charge for work done administering the estate. The portion of the fourth clause reproduced in the judgment is a single sentence exceeding 120 words of legalese.

  4. Helsham J accepted that the will was handed to the deceased on 11 December 1967, in hospital and that she appeared to read it thoroughly. He recounted that Mr Astridge asked, “Do you understand the will” to which the deceased replied “Yes, I am leaving all my money to Mrs Mac” and that Mr Astridge said, “Is that what you want?” to which the deceased replied, “Yes”.

  5. Helsham J found that the deceased had testamentary capacity. His Honour said that the problem which loomed largest in the case was knowledge and approval. He said that he did not believe the deceased was capable of reading and understanding the will, and referred to evidence that she was “not really capable of reading a newspaper except perhaps the headlines”. He concluded:

“I do not believe that she would have been able to or did understand the legal terminology. Due regard must be given to her answer [scil, to the question “Do you understand the will?], to which I have already referred, and I have done so. It means that she understood her will was to leave her estate to Mrs McCarthy. Beyond this I am not prepared to hold on the evidence that she understood any more of it.”

  1. Helsham J then stated the familiar passage applicable where another person is authorised to draft the testator’s will (at 548):

“If a testator knows that the document with which he is confronted is his will and correctly assumes that the will deals with his property in a certain way and if he wishes to dispose of his property by his will in that way, is the execution of the document as his will sufficient to establish knowledge and approval of its contents even though he has not read the actual document nor been told what is in it? I think the answer to this question must be yes, at least if the testator has given instructions for a will to be prepared in those terms. I think a testator is entitled to assume at the time of execution that his will is in accordance with his instructions.”

  1. His Honour then addressed the evidence concerning the deceased's instructions, which supported the finding that she had indeed conveyed such instructions for a new will in favour of Mrs McCarthy.

  2. His Honour then addressed the difficulty that he had found that “the deceased was not in a position to read and absorb what was in the document signed as her will, there is just no evidence that she knew and approved of any portion of it except the disposition in favour of Mrs McCarthy.” His Honour then asked, “Is it then open in law for me to order that this portion of the document alone, the portion of which she knew and approved, should receive the imprimatur of the court as having been proved to set forth the testamentary disposition of the deceased?”. His Honour applied what Kitto J had said in Osborne v Smith and formed the view that cll 1, 2 and 4 could be omitted without altering the sense of what remained. That was obviously so in the case of cll 1 and 2. His Honour then said at 551:

“The question arises as to whether the omission of that portion (cl 4) which permits the executor to charge professional fees is permissible under the proper application of the principle. While not forgetting that a clause in a will permitting a solicitor executor to charge fees for his services of a professional nature is a bounty in the nature of a legacy, yet I do not think that the omission from the will of such a provision (at least before it is availed of) can be said to alter the sense of what remains. Ex hypothesi the deceased did not intend the gift to Mrs McCarthy to be subject to a legacy in favour of Astridge, if one should for the purpose of this problem characterize it as such before quantification. She intended the gift of her estate to be absolute, that is, free from any other gifts, and this is precisely the sense of what remains after omission of cl 4. So that I see no difficulty in the application of the principle ...”

Application of Astridge v Pepper to the present appeal

  1. David did not discharge the onus he bore to establish that the elaborate clauses conferring powers upon him were known and approved by Pamela. Those clauses resemble cl 4 of the will in Astridge v Pepper in their relative complexity, both in their not being established to have been known and approved by the testatrix, and also in their conferring power upon another. But at least before the exercise of that power, their deletion does not alter the sense of the erstwhile distribution between the brothers and the grandchildren effected by the rest of the will.

  2. I would add that, taking a high level view of the position, the amenability to admitting only part of the 2014 will to probate is borne out by its history. Broadly speaking, the deleted clauses correspond to the fourth codicil to the 2011 will, while those admitted to probate are from earlier testamentary instruments. It would be a triumph of form over substance if a decision to consolidate separate testamentary instruments into a single will led to an inability on the part of the Court selectively to admit to probate the simple clauses which were shown to have been known and approved by the testator, but not to excise the complex clauses which were not shown to have been known and approved by her.

  3. I turn to some matters of detail. I am conscious that cl 12 of the 2014 will, which was not admitted to probate, directed the trustee to include in the value of the estate the market value of cash and shares and stapled securities which were held on trust. It is an example of the drafting the primary judge rightly regarded as lamentable. I cannot see that it had any legal effect; Pamela’s property did not include the property held on trust. Accordingly, its non-admission to probate was not prevented by any restriction established by Osborne v Smith. I am also conscious that cll 13-16 departed somewhat from cll 4-7 of the November 2013 codicil in that they were not expressed to be powers conferred upon the trustee in his absolute and unfettered discretion, but mandated distributions to be treated as early inheritance. A peculiarity of these clauses is that they were not separately considered in the primary judge’s reasons, nor were any submissions specifically directed to them in this Court. It may be that there were in fact no distributions to which the clauses applied; if so the clauses have no practical content. I have borne in mind that counsel then appearing for David at trial concluded his written closing submissions with the statement that “giving [David] broad discretionary powers to claw back sums from the other beneficiaries [is not] the same thing as excluding those beneficiaries”, and “[Pamela’s] four sons remain equal beneficiaries” and “The claw back power is now a dead letter as it is in the hands of independent administrator Mr Glass”. In the absence of any submission directed to them, I am unpersuaded that there was error in not admitting them to probate.

  4. For those reasons, this ground is not made out.

Challenge to the costs orders

  1. Finally, it was submitted that even if all other grounds failed, the discretion as to costs had miscarried. David submitted that this was a case where the litigation had been caused by Pamela’s executing a series of documents, such that it could be said that Pamela’s conduct had caused the litigation to occur, within the principle stated in Perpetual Trustee v Baker [1999] NSWCA 244 at [14] and Re Estate of Paul Francis Hodges Deceased; Shorter v Hodges (1988) 14 NSWLR 698 at 709, such that David’s costs should be paid by the estate. He added that what was said in testamentary capacity cases mentioned in that passage should be applied by analogy to the present case where the largest issue was knowledge and approval.

  2. David may advance this ground as of right: Housman v Camuglia [2021] NSWCA 106. However, it is not made out. This is not a case where Pamela’s conduct caused the litigation. There is nothing to indicate any error or inaccuracy with the primary judge’s statement that the “whole impetus” for the execution of the 2014 will and its codicils came from David, and that in a “real sense he has been the cause of this litigation”: Lewis v Lewis (No 2) at [39]. Wisely, no attempt was made in the (very brief) written submissions on this ground, or in the (even briefer) oral submissions, to challenge that finding. It amply sustained the costs order made. The discretion not to order David’s costs to be paid from the estate has not been shown to have miscarried.

Orders

  1. It follows that Peter’s cross-appeal does not arise, and I shall not summarise the submissions made in its support and against it, although it may be noted that if I were wrong as to severance, much the same result would follow from admitting the 2011 will (pursuant to the dispensing power in s 8 of the Succession Act in light of its failure to be executed by Pamela in the presence of those purporting to witness it) and its second and third codicils to probate.

  2. Both the appeal and the cross-appeal should be dismissed. The cross-appeal being wholly defensive, and there being in substance a single event, David should pay the whole of Peter’s costs in this Court.

  3. I propose these orders:

1. Appeal dismissed.

2. Cross-appeal dismissed.

3. The appellant David Lewis to pay the costs of the first respondent Peter Lewis of the appeal and cross-appeal.

  1. PAYNE JA: I agree with Leeming JA.

Annexure: Background to Osborne v Smith

  1. As was mentioned when the appeal was heard, Osborne v Smith has some unusual aspects. According to the report in the Commonwealth Law Reports, it was heard over no fewer than four days in August 1960, with Mr E H St John QC and Mr P Flannery appearing for Ms Osborne, the substantial beneficiary under the will. The deceased’s husband appeared in person to oppose the appeal. Each member of the High Court referred to the dispositive finding of Myers J, sitting in Probate in the Supreme Court of New South Wales, that he was unable to conclude that the document had been executed as required by law. Kitto J said that a question which might have required serious consideration was whether his Honour had allowed sufficient weight to the presumption which the law recognises on the point (at 157). Menzies J went further, and said that, had it been necessary, he would have been prepared to decide that there should have been a finding that the document had been executed as required by law (at 163). Windeyer J added that he thought that the decision that the will was not duly executed was “probably erroneous”: at 163.

  2. Nonetheless, although all members of the High Court were doubtful, and the majority favoured the conclusion that the dispositive reasoning at first instance was erroneous, the appeal was dismissed. That arose because of a point not decided at first instance, concerning the effect of an annuity of £100 to the “Home of the Peace Petersham”, which, according to the primary judge, had not reflected her intention, and had not been explained to her at the time of execution. In light of the submissions in the present appeal, which contended that Osborne v Smith favoured the severance which had occurred (in part by consent, and in part by the decision of the primary judge), it is desirable to elaborate upon what occurred in the litigation culminating in Osborne v Smith.

  1. The volume of “Cases decided by Mr Justice Myers” in the Law Courts’ library for 1959-1960 contains no fewer than four decisions in the litigation, at pp 25, 162, 188A and 188H. What follows is drawn from those decisions.

  2. The deceased, Ruth Smith, who was known as Ms “Petah King”, died on 14 March 1958. Her will was executed on 31 January 1958. It disinherited her fifth husband, Mr Charles Gabriel Smith, and left the entirety of her estate, save for her Home of Peace annuity, to Ms Ena Lois Osborne, who had been working in the deceased’s lingerie shop for about a year. Myers J said that “I do not know the value of her estate, but it is not less than £5000” (at 159). The deceased married Mr Smith some six months before her death. Mr Blanch had been the accountant of the deceased, and had opposed her marriage to Mr Smith. He was one of two executors appointed under the will. The other renounced probate.

  3. The first judgment, dated 24 March 1959, dismissed Mr Blanch’s suit for probate of the will. It records that Mr Blanch gave evidence that he took instructions from the deceased on the telephone as follows:

“Q.   What did she say?

A.       She said that she wanted to leave everything to Ena.

Q.    Who is Ena?

A.    Ena is Mrs Osborne mentioned in the will.

Q.    And what else did she say?

A.    And she wanted to leave £100 or £200 to a certain charity.

Q.    Did she specify the charity?

A.    Yes, she specified the charity.

Q.    Can you recall the charity she specified?

A.    I think it was the Home of Peace.”

  1. After the will was drawn up, Mr Blanch gave evidence of the explanation he gave to the deceased:

“‘Petah, this is your will that you wanted drawn up. You are leaving everything to Ena except £100 or so to the charity of the Home of Peace. Is that what you want?’ and she said, ‘Yes; that is what I want’.”

  1. Mr Blanch operated his accountancy practice from an office in the same suite of offices as the firm of solicitors which drew up the will. It seems that Mr Blanch wrote down the deceased’s instructions and handed them to Mr Duke, a solicitor. Myers J summarised the position thus:

“Mr Duke, the solicitor who drew the will, thus received no personal instructions from his client at all, nor did he or anybody on his behalf read the will over to the client or explain it to her. In so acting he committed in my opinion, a breach of what has been called ‘the bounden duty’ of solicitors to their clients in the preparation and execution of wills: Jarman on Wills, 8th Edn ....

I regret to say that sitting in this jurisdiction I find only too frequently solicitors preparing wills for persons from whom they have received no instructions personally and who make no effort to verify the correctness and accuracy of the instructions received. Only too often also do solicitors then allow that will to pass out of their possession for the purpose of execution without any explanation to the client whatever, or any communication with him. It is the duty of a solicitor who prepares a will for his client not only to be sure of the client’s wishes but to give to the client advice regarding his testamentary acts, and to do what is necessary to ensure that they will be given effect to.”

  1. Although the will was left in the possession of the solicitors, Mr Blanch asked for it and it was handed to him without her authority. Mr Blanch then tore the will into four pieces. He gave evidence that the “testatrix had rung him and instructed him to destroy it”, but that he put the pieces into his drawer so that he could show her that he had carried out his instructions. Myers J did not accept this. The torn pieces were never shown to the deceased and Mr Blanch pasted them on a sheet of paper after she died and sought probate of the reconstructed document. The solicitor Mr Duke did not give evidence.

  2. (Unlike a contract, tearing up a will can be effective to revoke it. However, destruction of will by an agent cannot revoke the will unless the agent is authorised by the testator and it occurs in the testator’s presence. The counterpart to s 11(1)(e) of the Succession Act 2006 (NSW) was s 17 of the Wills Probate and Administration Act 1898 (NSW), both of which are considered in Re Estate Miruzzi, deceased [2018] NSWSC 1899 at [29]-[66].)

  3. Myers J found that he could not be satisfied that the deceased knew and approved of the contents of her will. His reasons included:

“If I accept Mr Blanch’s evidence as to the instructions he received, I have a will which does not accord with them. Mrs Osborn inherits the shop, the only real asset, but she cannot carry it on except on condition of paying £100 a year to the Home of Peace and a further £200 when she gives up the business. This is contrary to the testatrix’s instructions. The plaintiff, who received the instructions, becomes her executor with one Hill, of whom, as far as I know, the testatrix has never heard. She gave no such instructions. The plaintiff receives a legacy of accountancy charges for his work as executor, and Mr Duke is appointed solicitor to the executors. Again the testatrix gave no such instructions.

The will prepared and executed therefore differed from the will instructed in important respects and it is therefore incumbent on the plaintiff to explain how those differences came about and show that they were made in pursuance of the expressed wish of the testatrix, or, if they were made without her authority, that she was made aware of them and approved them before she executed the will.

There is no evidence of that kind at all. On the contrary, the plaintiff misrepresented the will to the testatrix immediately before she signed it. He described the legacy to the Home of Peace in quite misleading terms and said nothing at all about the other matters to which I have referred. I could not possibly hold that the testatrix knew and approved of the contents of the document before me.”

  1. Additional matters strengthened that conclusion, including his lack of confidence in Mr Blanch’s evidence, the failure to tender the written instructions which he said were handed to the solicitor Mr Duke, the failure to call Mr Duke, and the circumstances in which the document was destroyed. He concluded that the evidence given on behalf of the plaintiff had been “extremely unsatisfactory” and he found it “difficult to accept most of it”. Although he was satisfied that the will was duly executed in Mr Blanch’s office, his Honour said that “I can see no degree of persuasion about any other aspect of it at all.”

  2. On 10 August 1959, there was an application for an extension of the time within which to lodge appeal books and serve a notice of appeal from that decree. That appears to have been an ex tempore judgment, following which his Honour stated that “Mr St John has drawn my attention to some remarks made by me in the course of the judgment I just delivered”. There follow the statements reproduced by Kitto J at 155-156, concerning the gift to the Home of Peace Petersham, of which he said:

“My failure to be satisfied that the testatrix intended to make the gifts to the Home of Peace stated in the will would have made it impossible for me to grant letters of administration with the will annexed, because Mrs Osborne’s estate would then have been made subject to a considerably more detrimental charge than the testatrix had intended and the Home of Peace would have received considerably more th[a]n she ever meant it to get.

Nor could I have granted letters of administration with the will annexed omitting the gift to the Home of Peace, because then the Home of Peace would have failed to get something which she did intend it to get and Mrs Osborne would have received more. Consequently, the application for probate would have failed even had I been satisfied that the testatrix knew and approved the appointment of her executors.”

  1. On 14 September 1959, Myers J appointed Malcolm Charles Tard as administrator of the personal estate and receiver of the real estate with power, inter alia, to manage and carry on the business as a going concern.

  2. The appeal brought by Mr Blanch was dismissed on his own motion, as Myers J recorded in the fourth judgment, dated 16 November 1959, dismissing a separate suit brought by Ms Osborne, the substantial beneficiary under the will. Her application was for letters of administration of the estate “with parts of the will annexed, the parts being specified as the whole will except the appointment of executors, the annuity and legacy to the Home of the Peace, the appointment of Blanch as accountant to the estate and authority for him to charge and the appointment of Mr Duke as solicitor” (p 155). On the issue which ultimately was to prove dispositive, Myers J said this:

“It is a remarkable feature of this case that no evidence at all was directed to the question of omitting parts from the will and consequently, even though I found every other issue in favour of the plaintiff, there is nothing to justify me omitting one word from the will. It may be that, having regard to the terms of s 42 and r 5, this would prevent me making a decree in any event, but I do not stop to consider the point, because in my opinion the suit fails for other reasons. I would only observe that I directed counsel’s attention to this aspect, but I was not favoured with either evidence or argument on the matter.”

  1. There are two final aspects of the case which partly resemble the present appeal. First, Myers J said:

“Mr Duke is said to have acted in a manner which is, I hope, unusual for a solicitor. He accepted instructions for a will from an agent of the testatrix, who was to receive a substantial benefit under it. Blanch’s estimate of his remuneration was £5-5-0 per week. The will directed that Mr Duke be employed as solicitor. He did not take any steps to ensure that the will represented his client’s wishes, or make any arrangement to have it executed.” (pp 160-161).

  1. Secondly, Myers J said that “I suspect that the will was signed by the testatrix at the hospital, when Blanch wrote in the date, and that the signatures of the witnesses were added on a subsequent occasion”: at p 161.

**********

Amendments

06 August 2021 - [136] – “arose from statue” changed to “arose from statute”


[143] – “the High Court left open” changed to “the House of Lords left open”

28 September 2021 - [136] – "Maitland's aphorism" changed to "Maine's aphorism"

08 March 2022 - [5] – “Peter” replaced with “David” in fourth line


[27(5)] – “Pty Ltd” added after “Anne Lewis”


[53] – “the” inserted before “NSW Trustee”


[56] – “ACN numbers” changed to “Australian Company Numbers”


[98] – “by” inserted before “producing”


[111] – “you” in quote changed to “you[r]”


[135] – reference to NSW Statutory Rules changed to “see the Probate Rules published in New South Wales Government Gazette, 15 January 1937 at 127”


[146] – “Administrator” typo fixed


[153] – “Re Reynette-James, Wightman v Reynette” changed to “In re Reynette-James (Deceased); Wightman v Reynette-James”


[156] – corrections to quotation


[158] – “affects” changed to “effects” in quote


[225] – ellipsis added after “8th Edn” in quotation

Decision last updated: 08 March 2022

Most Recent Citation
Cases Citing This Decision

22

Schwanke v Alexakis; Camilleri v Alexakis [2024] NSWCA 118
Lewis v Lewis (No 2) [2021] NSWCA 259
Re Estate Barzacca [2025] NSWSC 1252
Cases Cited

41

Statutory Material Cited

10

Tobin v Ezekiel [2012] NSWCA 285
Tobin v Ezekiel [2012] NSWCA 285
Tobin v Ezekiel [2012] NSWCA 285