Potter v Perpetual Trustees and National Executors of Tasmania Ltd
[1988] TASSC 96
•9 September 1988
Serial No B28/1988
List "B"
COURT: SUPREME COURT OF TASMANIA
CITATION:Potter v Perpetual Trustees and National Executors of Tasmania Ltd [1988] TASSC 96; B28/1988
PARTIES: POTTER
v
PERPETUAL TRUSTEES AND NATIONAL EXECUTORS OF TASMANIA LIMITED
FILE NO/S: 889/1986
DELIVERED ON: 9 September 1988
JUDGMENT OF: Green CJ
Judgment Number: B28/1988
Number of paragraphs: 17
Serial No B28/1988
List "B"
File No 889/1986
POTTER AND OTHERS v PERPETUAL TRUSTEES AND NATIONAL EXECUTORS OF TASMANIA LIMITED AND ANOTHER
REASONS FOR JUDGMENT GREEN CJ
9 September 1988
By writ dated 3 July 1986 the plaintiffs commenced an action against the defendants for the revocation of the probate of the will of Nona Mildred St Heaps dated 4 May 1983 on the ground, in essence, that she lacked testamentary capacity, and for an order that probate of an earlier will be granted. On 25 February 1988 orders by consent were made in the terms of the following paragraphs of a summons taken out by the plaintiffs:
"1 The Plaintiffs' claim against the Defendants be discontinued in accordance with Order 75 of Rules of the Supreme Court.
2 That Probate of the last Will and Testament dated the 4th day of May, 1983 of Nona Mildred St Heaps, and dated the 14th day of May, 1986 be returned to the Defendants."
During argument I suggested that I should construe the order made upon paragraph 1 of that summons as an order that the court gave leave to the plaintiffs to discontinue their action, but my suggestion was misconceived: O75 r15(2) expressly provides that the court may "order the action to be discontinued".
The plaintiffs seek orders that the costs of the plaintiffs and the defendants be paid out of the estate, or, in the alternative, that the plaintiffs bear their own costs but that the defendants' costs be paid out of the estate. The defendants seek orders that the plaintiffs pay the defendants' costs.
The general rule that ordinarily costs should follow the event is applicable to these proceedings. However, there are two exceptions to that general rule which are capable of being relevant to the exercise of my discretion in this case. The first is that where a testator by his conduct can be said to have brought about the litigation, including cases where the testator's conduct raises doubts as to his testamentary capacity, the costs of both parties should be paid out of the estate: Davies v Gregory (1873) LR 3 P & D 28, 31; Spiers v English [1907] P 122, 123; Lippe v Hedderwick (1922) 31 CLR 148, 154. The second exception is that "if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the ... party to question ... the capacity of the testator ... the losing party may properly be relieved from the costs of his successful opponent" per Sir JP Wilde in Mitchell v Gard (1863) 3 SW & Tr 275 at 278. See also Davies v Gregory (supra) at p33; Spiers v English (supra) and In Re Cutcliffe's Estate [1959] P6, 22.
Evidence has been given by affidavit as to statements relating to the testatrix's capacity which had been received by the plaintiffs and their solicitor. That evidence is admissible to prove the state of mind of the plaintiffs and their advisers and what materials they had before them, but, being hearsay, it has not been tendered to prove the truth of the facts asserted in those statements.
Virtually the only direct evidence before me as to the testatrix's testamentary capacity comprises nurses' notes made when she was admitted to hospital in March 1983 and medical reports from Dr Shane Dorney, who had been attending the testatrix since 1979, and Dr Freeman.
The relevant parts of the notes taken at the hospital show that between the 1 March 1983 and 8 March 1983 when she was discharged, the testatrix was, for varying periods and to varying degrees "forgetful", "wandering", "disorientated" or "confused". One note reads "Mental state, usual state of confusion, knows who she is, but thinks she is home in the unit".
In a report which was tendered by consent as evidence of the truth of what was stated in it Dr Dorney said that whilst the testatrix was in hospital in March 1983 "there was certainly an exacerbation of severe confusion". On 14 March 1983 he found her "a little confused", but a week later she was "much improved". He noted a number of factors of "a reversible nature", such as anaemia, medication and the like which "could have influenced her mental state" and noted "that short term confusion is very common in hospitalised elderly patients". He expressed the following opinion:
"Following hospitalisation and transfusion many of these factors" (ie those referred to above) "were minimised and in my opinion with the subsequent improvement leading up to the signing of her will, Mrs St. Heaps was well and truly capable of understanding that she was making a will and had sufficient mental capacity to comprehend the extent of the property with which she was dealing and the effect of distribution between her relatives."
On 6 March 1985 Dr Freeman wrote a report in which he expressed the opinion that, inter alia, the testatrix "really is very demented".
I make the following observations about that evidence:
1 There is no direct evidence at all about the testatrix's testamentary capacity or her mental state on 4 May 1983.
2 Upon the evidence it would not be open to me to draw any conclusions about the testatrix's testamentary capacity in May 1983 from the fact that in March 1985 Dr Freeman thought that she was demented.
3 The evidence provides possible explanations for the testatrix's confused state in March 1983, but does not demonstrate that the condition which caused it persisted until May 1983.
4 The evidence is not such as to raise a serious doubt about the testatrix's testamentary capacity on 4 May 1983 and Dr Dorney's opinion positively militates against the drawing of any conclusion that she lacked testamentary capacity on that date.
In the light of the foregoing I am not persuaded that the testatrix's conduct or behaviour raised a sufficiently serious doubt about her testamentary capacity to justify my applying the first of the exceptions to the general rule to which I have referred above. I turn to consider whether the second of those exceptions should apply.
The third named plaintiff deposed in an affidavit that she and her co–plaintiffs had little direct personal knowledge of the testatrix's mental condition on 4 May 1983 and that this action "was commenced with an almost total reliance upon the evidence of Mrs Joan Wallace" who was the testatrix's sister.
The evidence shows that in June and July 1986 Mrs Wallace wrote three letters to the first plaintiff and that the solicitor for the plaintiffs interviewed her on 29 July 1986, 6 August 1986 and 28 January 1987.
Although Mrs Wallace's letters and statements contained hearsay and conclusions, I find that they were sufficient to induce in the plaintiffs a reasonable belief that the testatrix's condition at the time of the execution of the will was such as to justify the commencement of this action. I infer that the plaintiffs in fact held such a belief and there is nothing in the materials before me to justify a finding that that belief was not held bona fide. However, in my view, in the absence of further enquiries and evidence, it would not have been reasonable for the plaintiffs to have continued the action to trial upon the basis of Mrs Wallace's statements alone. On the other hand, Mrs Wallace's statements showed that Dr Dorney's evidence was likely to be of critical significance and I would not regard it as reasonable to expect the plaintiffs to have considered discontinuing the proceedings until they had examined him or received a statement from him. The solicitor for the plaintiffs received a copy of the report by Dr Dorney, to which I have already referred, and distributed it to the plaintiffs on 10 August 1987. The plaintiff's solicitor had been endeavouring to speak to, or obtain a statement from Dr Dorney for some period of time before then, the length of which period the evidence does not reveal. The plaintiffs eventually decided to discontinue the action on 21 January 1988 because they thought that it would be detrimental to Mrs Wallace's health if she were required to give evidence.
In my view, upon seeing Dr Dorney's report the plaintiffs should have been alerted to the real possibility that the beliefs or doubts about the testatrix's testamentary capacity which they had originally entertained when they commenced the action were not well founded, and the evidence does not persuade me that thereafter the plaintiffs conducted enquiries or received materials which could reasonably be regarded as justifying the revival of those beliefs or doubts.
Taking into account all the circumstances which have been placed before me and guided by, but not rigidly applying to the exclusion of other considerations, the general rule as to costs and the two exceptions to that rule to which I have referred, I am not persuaded that the plaintiff's costs should come out of the estate, but I am persuaded that the plaintiffs should be required to pay the costs incurred by the defendants after the lapse of a reasonable time after the plaintiffs' receipt of Dr Dorney's report.
Subject to any further submissions as to their precise terms, I propose making the following orders:
1 That the plaintiffs pay the defendant's costs of the action from 24 August 1987 until 25 February 1988 to be taxed as between party and party.
2 That the defendants' costs be taxed as between solicitor and client and, after deduction of the amount payable by the plaintiffs, paid out of the estate.
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