Re Vallance; Harper v Vallance
[2018] VSC 573
•27 September 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S PRB 2017 12107
IN THE MATTER of the Will and Estate of FREDA MARCEL VALLANCE, deceased
| FIONA ANNETTE HARPER | Plaintiff |
| v | |
| DAVID JOHN VALLANCE | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 May 2018 |
DATE OF JUDGMENT: | 27 September 2018 |
CASE MAY BE CITED AS: | Re Vallance; Harper v Vallance |
MEDIUM NEUTRAL CITATION: | [2018] VSC 573 Revised 22 October 2018 |
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PROBATE — Application for grant of probate in common form — Objection to grant on grounds that deceased lacked testamentary capacity — Where plaintiff and defendant compromised proceeding as well as foreshadowed claim by defendant for further provision from the estate — Where non-party residuary beneficiary did not consent to compromise —Validity of testamentary document to be determined by Court — Application for grant continued on undefended basis — Probate of will granted in solemn form — Veall v Veall (2015) 46 VR 123
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Verspaandonk | Vines Lawyers |
| For the Defendant | Mr P Pascoe | Wightons Lawyers |
HER HONOUR:
Introduction
Freda Marcel Vallance (‘the deceased’) died on 24 May 2017. She was survived by her three adult children, Fiona Harper (‘the plaintiff’), David Vallance (‘the defendant’) and Elle Vallance (‘Ms Vallance’), and her six grandchildren, one of whom is a minor. The value of the deceased’s estate at the time of her death is estimated to be $243,000.
By originating motion filed 31 July 2017, the plaintiff, as the named executor, sought a grant of probate of the deceased’s will dated 23 January 2013 (‘the 2013 will’). The defendant challenged the application, asserting that the deceased lacked testamentary capacity at the time of execution of the will and that a copy of the deceased’s penultimate will dated 2 June 2010 (‘the 2010 will’) should be admitted to probate.
After discovery and mediation, the plaintiff and the defendant entered into terms of settlement. The terms involved withdrawal of the defendant’s opposition to the plaintiff’s application for a grant of probate of the 2013 will and an alteration to the distribution of the assets of the estate. The terms were subject to and conditional upon their execution by Ms Vallance, an affected residuary beneficiary under the 2013 will. Ms Vallance refused to consent to the terms of settlement.
Despite Ms Vallance’s position, the plaintiff and defendant initially contemplated pursuing orders giving effect to the compromise as reflected in the terms of settlement. As no grant of probate had been made in the estate, the parties accepted that this was not possible. The parties now seek to have the 2013 will admitted to probate and for their costs to be paid from the estate of the deceased. After probate is granted,
the defendant intends to issue a claim against the estate seeking further provision in the amount agreed in the terms of settlement.
Factual background
In 2012, the deceased lived at a property in Ocean Grove (‘the property’), which she co-owned with the defendant. On 3 August 2012, the deceased was admitted to Geelong hospital with chest pain, hyperglycaemia and hypertension. She was treated for eleven days at the Geelong hospital and then transferred as an inpatient to the McKellar Centre. At that Centre, she underwent further tests, including assessments by an occupational therapist and a neuropsychologist.
An occupational therapy assessment dated 29 August 2012 indicated that the deceased demonstrated, inter alia, reduced recall and attention, as well as impaired orientation, reasoning and memory. A home assessment conducted a week later noted significant cognitive impairment, difficulty managing finances, poor management of diabetes and out-of-date food.
In early September 2012, the deceased underwent neuropsychological testing regarding her cognition and decision making capacity, and an Aged Care Assessment Service (‘ACAS’) assessment. The neuropsychological assessment was requested
‘in order to determine [the deceased’s] cognitive status with regards to diagnosis and decision making capacity’. The deceased was discharged home on 11 September 2012 and appears to have been referred to a cognitive, dementia and memory service.
The report of the neuropsychologist dated 1 October 2012 noted that the deceased demonstrated particular impairment in visual and verbal memory ‘characterised by rapid forgetting, poor recognition memory, and no benefit from repetition’.
The deceased’s processing speed was said to be particularly slow, and she demonstrated ‘deficits in executive functioning, including planning and organisation, strategy generation, and cognitive flexibility’. While it was noted that the continuing effects of resolving delirium and vascular compromise may be relevant, the deceased’s presentation, along with a two year decline in function as described by the plaintiff, was thought to be consistent with ‘a diagnosis of probable dementia of the Alzheimer’s type’. ‘Considerable concern’ was raised regarding the deceased’s decision making capacity in relation to lifestyle and medical issues.
On 14 November 2012, the deceased attended the office of Vines Lawyers to give instructions for her enduring powers of attorney. Although the plaintiff drove the deceased to the appointment, she was excused from the room when instructions were given by the deceased.
The file note of the lawyer who took instructions from the deceased, Ms Melanie Crowe, states that the deceased ‘seemed easily confused and volunteered that her memory, especially her short term memory [wa]s absolutely shocking’. Ms Crowe has since deposed that the deceased gave examples, such as forgetting to take her medications and leaving the stove on. Some degree of confusion is also evident from the file note, for example, at one point she responded ‘no’ to a question that provided two factual alternatives to be selected. After taking instructions, Ms Crowe advised that before she would draft the powers of attorney, the deceased should obtain certification from her treating general practitioner as to her capacity. The plaintiff conveyed to Ms Crowe that the deceased had recently been in hospital and respite, that the word ‘Alzheimer’s’ had been used, and that there were some concerns in relation to the deceased’s ability to continue to reside at the property.
During the appointment, the plaintiff also provided Ms Crowe with a copy of the 2010 will. In her file notes, Ms Crowe noted that Vines Lawyers did not hold the original, although the 2010 will had been executed before a colleague at Vines Lawyers. It appears that it was the practice of the solicitor who drafted the 2010 will to provide original documents to clients.
On 19 November 2012, the deceased attended the rooms of Dr Leong, who had been her general practitioner for over three and a half years. Dr Leong was not asked to consider the deceased’s testamentary capacity. His letter dated 19 November 2012 addressed the deceased’s capacity for executing the powers of attorney. In his letter, Dr Leong stated that the deceased:
is suffering from Alzheimer’s dementia and other medical conditions, but today she still has the mental capacity of making the decisions that affect her life and future decisions, in particular about appointing guardianship, powers of attorney for medical, legal and financial.
The deceased executed enduring powers of attorney on 26 November 2012.
On 21 January 2013, the deceased and the plaintiff again attended the office of Vines Lawyers. The deceased gave instructions as to the sale of her interest in the property in order to fund her entry into aged care, and also provided handwritten notes regarding a new will that she wished to make. The handwritten notes list certain items of personal property to be bequeathed to each of the plaintiff, the defendant and
Ms Vallance, then address the sale of the deceased’s remaining property and distribution of the realised funds. After payment of expenses, the plaintiff, defendant and Ms Vallance were each to receive 30 per cent and the deceased’s grandchildren were to receive the remaining ten per cent between them.
Ms Crowe’s contemporaneous file note indicates that the deceased clearly described how her instructions differed from the 2010 will, and also detailed the extent of her estate. She was able to discuss the omission of certain personal items from the new will instructions, as well as identifying that a previous term deposit no longer existed. The deceased also indicated that it was time ‘she looked into moving into aged care’ and ‘coping at home alone is becoming an uphill battle’. Discussion included the possible application of certain assets, including the deceased’s interest in the property, for a bond for her aged care accommodation. During the appointment, Ms Crowe explained that given the change in distribution of the deceased’s estate compared to the 2010 will, there was a risk that the defendant would claim against the estate. On this point, Ms Crowe deposed that the deceased stated that she felt her new instructions were fair.
In addition to a typed file note, Ms Crowe made handwritten notes, on what appears to be a pro forma undated document titled ‘testamentary capacity’. The notes indicate that the deceased had a ‘very clear understanding’ of her property, including property owned with the defendant, and appreciated the claims to which she ought to give effect. Ticks were placed against the phrases ‘understand the nature of the act’ and ‘understand the effect of the document’. In response to the typed question, ‘is there any condition or disorder of the mind, affecting cognition, that may influence the way in which he/she disposes of property (ie if was not present would dispose of differently)?’, the handwritten note provides:
Yes. Short term memory loss – alz.
Clear her memory – short term affected. She is forgetful, but I satisfied [sic] she very clear on her instr. + how she wants her estate distr. amongst her children + family.
She realises a risk [the defendant] may challenge –but hopes he won’t.
On 23 January 2013, the deceased attended the office of Vines Lawyers to execute her new will, having arrived on her own by taxi. Ms Crowe ‘went over’ the draft document in detail with the deceased. She and the deceased also discussed an amendment to the draft will in relation to a mortgage over the property, which was adopted in the final version of the 2013 will. The deceased indicated that she was happy with the document and that it reflected her wishes. She then executed the 2013 will in the presence of Ms Crowe and Ms Crowe’s assistant. The file note of 23 January 2013 makes no reference to testamentary capacity.
On 7 February 2013, Dr Leong provided a medical report to the Victorian Civil and Administrative Tribunal, having last seen the deceased six days earlier. The report indicates that the deceased had a number of conditions, including Alzheimer’s disease from September 2012, which fluctuated with infections or when her diabetes was not controlled. Further, Dr Leong considered that the deceased still had the capacity to make an enduring power of attorney, as although the deceased’s memory ‘could be very poor - she was alert, rational, well orientated to person and space’.
Dr Leong was also of the opinion that the deceased was able to make reasonable decisions as to her ‘financial and legal affairs’.
On 1 March 2013, State Trustees Limited was appointed as administrator for the deceased. The order remained in force until the deceased’s death on 24 May 2017. During the course of administration by State Trustees, the deceased’s interest in the property was sold.
On 13 July 2017, the plaintiff advertised her intention to apply for a grant of probate of the 2013 will. Two weeks later the defendant lodged a caveat. On 31 July 2017, the plaintiff applied for a grant of probate of the 2013 will.
On 25 August 2017, the defendant filed grounds for objection to a grant of probate of the 2013 will, being lack of testamentary capacity ‘shortly before and at the time of execution and existing before that period and due to insanity or imbecility of which the symptoms first manifested themselves at a date to be set out’.
The plaintiff filed a summons for directions on 3 October 2017. A hearing listed for 27 October 2017 was adjourned, the written submissions of the defendant accepting that he ought to provide particulars of the grounds for objection. The defendant was ordered to file and serve particulars of his grounds of objection and to pay the costs of the plaintiff of and incidental to the orders. The particulars were filed on 14 November 2017. They rely upon information from the neuropsychological report of 1 October 2012, an Aged Care Assessment Team report of 25 October 2010, the notes of
Ms Crowe of 21 January 2013 and the appointment of an administrator on 1 March 2013. A number of points were made, including:
(a) the deceased had become increasingly confused and forgetful in the 12 to 24 months before September 2012;
(b) the Mini-Mental State Examination (‘MMSE’) on 20 August 2012 and 22 August 2012 produced results of 16/30, ‘indicating impaired orientation, calculation, judgment … and memory’;
(c) the home assessment of the occupational therapist on 29 August 2012 noted ‘significant cognitive impairment, difficulty managing finances’;
(d) on 4 and 10 September 2012 the neuropsychologist assessed the deceased as probably suffering from dementia and referenced multiple impairments;
(e) an Aged Care Assessment Team assessment of 25 October 2010 regarding admission of the deceased into aged care services noted that the deceased ‘always’ exhibited short and long term memory problems, confusion and disorientation; and recorded a MMSE result of 16/30, as well as severe short-term memory loss.
Orders were made on 15 November 2017 joining the defendant to the proceeding and further interlocutory steps, such as discovery and mediation. The plaintiff and defendant filed affidavits of documents on 1 December 2017 and 4 December 2017 respectively.
On 18 December 2017, it appears that Ms Vallance telephoned Vines Lawyers regarding a mediation scheduled to take place the next day. Ms Crowe replied to
Ms Vallance via email, copying in a solicitor of Piper Alderman who had previously represented Ms Vallance. The email refers to the earlier contact and continues:
As you are not a party to the proceeding, you are not required to attend. However, the reason you have now been notified is because I had contacted [the defendant’s] solicitor this morning to confirm if you had at least been made aware … If we can reach an agreement and that proposed agreement effects [sic] your entitlement under your mother’s last Will, then your consent would be required. I raised your awareness of the mediation merely pointing out to [the defendant’s] solicitor that if an agreement is struck, you (or your solicitors) should at least be available by telephone so that you can be contacted to discuss possible terms.
I hope that has allayed your concerns about the news of the mediation.
On 19 December 2017, the plaintiff and the defendant attended a mediation. On the morning of the mediation, Ms Vallance emailed to Ms Crowe a ‘Statement of Support of the Current Will’. The parties entered into the terms of settlement that day.
It appears that counsel for the plaintiff contacted Ms Vallance by telephone during the mediation to inform her of the terms of settlement and suggested that Ms Vallance obtain legal advice.
On 20 December 2017, Vines Lawyers sent Ms Vallance a letter attaching the terms of settlement and additional relevant documents, seeking Ms Vallance’s response.
The letter also noted that the proceeding would be listed before the Court on 9 February 2018. On the same day, Ms Vallance replied by email raising a number of concerns that she had regarding the events of the previous two days, including not being notified of the mediation by Vines Lawyers, or by the defendant’s lawyers, Wightons Lawyers.
On 31 December 2017, Ms Vallance again contacted Ms Crowe by email, stating that she had reviewed the proposed terms of settlement and that she refused to consent to them. Further, Ms Vallance stated that she would ‘only agree to being treated in the same manner as the other beneficiaries not contesting the current will, namely the grandchildren’. She specified that her entitlement under the 2013 will should not be diminished by the payment of legal fees as a consequence of the defendant’s challenge to the 2013 will.
By email dated 8 January 2018, Ms Crowe responded to the concerns of Ms Vallance raised in her email of 20 December 2017. This response included the statement:
It was already explained to you that as you were not a party to the proceeding brought by [the defendant], there was no requirement for [the defendant] to involve you. To do so would only have added to the costs and constraints of the day, especially if you were to raise many of the matters you did in your statement that were frankly irrelevant to the proceedings. Again, I confirm you have not been adversely affected by the outcome reached at the mediation. It was explained to you by me in my email the day preceding the mediation, and by Counsel on the phone to you at the mediation that the agreement struck, require yours [sic]. In defending and responding to those proceedings, the Estate incurs legal costs. These are unavoidable.
The email also reiterated it ‘is not a large estate’ and that settlement would avoid the estate being very quickly exhausted by legal costs.
In a follow-up email of 24 January 2018, Ms Crowe sought a response from Ms Vallance. Again, the next Court date of 9 February 2018 was noted, as was the potential of a hearing and further costs being incurred if Ms Vallance chose not to agree to the terms of settlement. Ms Vallance replied by email on the same day, stating that she would ‘not be bullied into accepting a prejudicial distribution from the estate that I had no participation in determining’. Ms Crowe replied by email approximately three hours later, noting that ‘the residual estate will be affected by costs whether
[Ms Vallance is] a participant in these proceedings or not’, and that Ms Vallance was not entitled to have her share of the estate quarantined unless all parties agreed.
She concluded by stating that she would advise the Court that the proceeding had not settled and would need to be listed for hearing.
On 5 February 2018, Mr Jesse Rankine of Wightons Lawyers, the solicitors for the defendant, emailed Ms Vallance setting out three possible scenarios and the potential sum that Ms Vallance would receive upon distribution in each scenario. Legal costs up to mediation of $65,000 were noted, as was the potential of a reduction in the size of the estate on account of continuing litigation. Ms Vallance replied by email on 6 February 2018, stating again that she did not consent to the terms of settlement.
On 9 February 2018, the Court ordered that the hearing of the proceeding be adjourned to 13 April 2018. In ‘Other Matters’’ of the orders the Court noted the in principle settlement as between the plaintiff and the defendant, that Ms Vallance had declined to consent to the settlement terms, and that the plaintiff, with the consent of the defendant, would apply for a grant of representation and approval of compromise. Further, the parties were to notify Ms Vallance and the grandchildren of the deceased of the adjourned date to enable them to attend or be represented if they desired.
Ms Vallance emailed Ms Crowe on 20 February 2018, seeking an update on the outcome of the hearing of 9 February 2018. By reply email of the same day, Ms Crowe informed Ms Vallance that the proceeding had been adjourned to 16 March 2018 and that, on that date, the plaintiff and defendant would seek to have the 2013 will propounded and, in light of the size of the estate, orders that the claim be compromised by making orders in terms of the proposed terms of settlement.
Ms Vallance replied within an hour stating, inter alia, ‘I will not be attending as I am not a party to the proceedings, and I have no reason to be there’.
On 8 March 2018, Dr Leong deposed that, in relation to the letter provided of 19 November 2012, although the deceased was suffering from the beginnings of Alzheimer’s dementia, she ‘maintained the mental capacity to make decisions that affected her life, in particular the making of Enduring Powers of Attorney’. Dr Leong also stated:
[a]lthough the deceased had a diagnosis of Alzheimer’s disease, it is my assessment that condition was not of sufficient severity to have influenced or compromised her capacity to give competent instructions for the making of her Enduring Powers of Attorney or Will at the relevant dates.
The neuropsychological report dated 1 October 2012 is annexed to Dr Leong’s affidavit.
In her affidavit sworn 19 March 2018, Ms Crowe deposed that it was her view that at the time the deceased gave instructions and executed the 2013 will, the deceased:
(a) clearly understood what a will was;
(b)understood what her estate comprised of and the extent of her property to be disposed under her will. She was very sharp on these matters;
(c)was able to comprehend and appreciate the claims she ought give effect to and weigh up those factors.
On 19 March 2018, Vines Lawyers forwarded to Ms Vallance and the deceased’s six grandchildren letters dated 17 March 2018, enclosing copies of the 2013 will and 2010 will, copies of the terms of settlement, referred to as the ‘provisional agreement’ and the affidavits of Ms Crowe and Dr Leong as to the deceased’s capacity. The letters outlined the defendant’s challenge to the 2013 will, the terms of the provisional agreement as contained in the terms of settlement and the possible outcomes of the proceeding. It was noted that when the proceeding returned to Court on 13 April 2013, the plaintiff and defendant would submit that the 2013 will be admitted to probate and permit the estate to be distributed in accordance with the provisional agreement.
On 5 April 2018, Megan Vallance, a granddaughter of the deceased, consented to the orders sought. On 11 April 2018, the plaintiff informed Ms Crowe that her two children, namely the beneficiaries Madison Harper and Rowan Harper, had confirmed receipt of the correspondence. On 11 April 2018, Ms Vallance confirmed receipt of the correspondence by herself and her three children.
On 13 April 2018, both parties sought an adjournment to consider the legal issues further. Written submissions referred to the parties being ‘stymied’ by Ms Vallance’s refusal to consent. The proceeding was adjourned to 4 May 2018. On the return date, counsel for the plaintiff submitted that the plaintiff and defendant had reached a common position, namely, that the 2013 will be admitted to probate and the costs of both parties be paid from the estate of the deceased.
The wills
The 2013 will gives certain chattels to the plaintiff, the defendant and Ms Vallance, and then divides the residue of the estate as to 30 per cent to each of the defendant, the plaintiff and Ms Vallance and the remaining ten per cent to be divided equally between the deceased’s grandchildren.
The copy of the 2010 will is not in evidence. According to the plaintiff, it appoints the plaintiff and defendant as executors, devises the deceased’s half interest in the property to the defendant, bequeaths certain chattels to the defendant, shares and cash from a specified fund to the plaintiff and $5,000 cash to the defendant’s daughter, before dividing the residue between the deceased’s grandchildren equally. Two particular issues are said to arise in association with propounding the copy 2010 will and administering the estate. First, the original 2010 will cannot be located, thereby raising the issue of whether the presumption of destruction is rebutted. Secondly, as the deceased sold her interest in the property prior to her death,
the defendant seeks to rely upon s 53 of the Guardianship Act 1986 to assert that he was entitled to the residue of the estate.
The estimated value of the estate at the time of death is $243,777.62, comprising an accommodation bond, cash and investment funds. Funeral costs of $10,234.31 were paid by the State Trustees, bringing the net balance of the estate to $233,543.31.
The plaintiff’s costs, up to and including 13 April 2018, were estimated to be $56,976.61.
Issues for determination
The substantive issues for determination are whether a grant of probate of the 2013 will should be made to the plaintiff and, if so, whether it should be made in common or solemn form.
Submissions
In written submissions dated 12 April 2018, it was noted that the parties intended the Court to grant probate of the 2013 Will to the plaintiff on the basis that the terms of settlement be implemented. Issues as to the power of an executor to vary beneficial entitlements, as discussed in Dowling v St Vincent De Paul Society[1] and Robinson v Jones (No 3)[2] were noted, however, in the absence of consent of Ms Vallance, the parties to the proceeding were said to find themselves ‘stymied’.
[1][2003] VSC 454 (20 November 2003).
[2][2015] VSC 508 (14 August 2015).
After an adjournment of three weeks, the plaintiff conceded that while the Court was at liberty to admit the 2013 will to probate and make an order regarding costs,
the second part of the compromise, in relation to the alteration of beneficial entitlements, could not be implemented without the consent of Ms Vallance. On the admission of the 2013 will to probate, the plaintiff submitted that despite the diagnosis of probable dementia in the report of the neuropsychologist dated 1 October 2012 and some short term memory loss disclosed by the deceased, the evidence of Ms Crowe and Dr Leong support the conclusion that the deceased had testamentary capacity to make the 2013 will.
In written submissions dated 3 May 2018, the defendant drew the Court’s attention to a number of principles regarding compromise of probate proceedings. While the submissions canvassed the position in both Victoria and England as to binding absent beneficiaries to a compromise, they did not extend to identifying how the Court could bind Ms Vallance to the alteration of beneficial interests as encompassed within the terms of settlement. In the event, counsel for the plaintiff and the defendant reached the common position whereby the parties sought probate of the 2013 will and their costs out of the estate of the deceased.
Applicable principles
Despite the agreement between the plaintiff and the defendant that the 2013 will be admitted to probate, the Court retains the power itself to determine the deceased’s valid testamentary dispositions.[3] The purpose of the probate jurisdiction is ‘ensuring that the testamentary intentions of a deceased person are carried out and that the beneficiaries receive what is due to them’.[4] The propounder of a will must satisfy the Court on the balance of probabilities that the relevant will is valid,[5] that is, it must be proved that the testatrix had ‘testamentary capacity and knew and approved of the contents of the will at the time of its execution’.[6]
[3]Dowling v St Vincent De Paul Society [2003] VSC 454 (20 November 2003) [31]; Robinson v Jones (No 3) [2015] VSC 508 (14 August 2015) [29]; Goods of Watts (1837) 1 Curt 594, 595; 163 ER 208; Will of Podger [1957] VR 275, 278.
[4]Re Przychodski [2016] VSC 781 (15 December 2016) [15].
[5]Re Tang [2017] VSCA 171 (30 June 2017) [85].
[6]Veall v Veall [2015] 46 VR 123; Re Tang [2017] VSCA 171 (30 June 2017) [85]; Giarrusso v Veca [2015] VSCA 214 (21 August 2015)
In Veall v Veall, the Court of Appeal summarised the question of testamentary capacity as follows:
Where a will is rational on its face and is proved to have been duly executed, it is presumed that the testator was mentally competent. That presumption is displaced where there are circumstances that raise a suspicion about the testator’s capacity. Where there is a doubt that the testator was of ‘sound and disposing mind’, ‘[t]hat 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’.[7]
[7]Veall v Veall (2015) 46 VR 123, 188, quoting Tobin v Ezekiel (2012) 83 NSWLR 757, 771.
Whenever the evidence as a whole raises a doubt as to a testator’s testamentary capacity — a real doubt, the Court must be satisfied affirmatively[8] that the testator:
[8]Kantor v Vosahlo [2004] VSCA 235 (16 December 2004) [50]–[51].
(a) understood the effect of making a will;
(b) was aware of the general nature and value of the estate;
(c) was aware of those who would have a natural claim on the estate; and
(d) was able to evaluate and discriminate between such claims.[9]
[9]Banks v Goodfellow (1870) LR 5 QB 549; Bailey v Bailey (1924) 34 CLR 558, 566-7, cited in Re Parr; State Trustees Limited v Nicholson [2018] VSC 359 (28 June 2018) [7]; see also Veall v Veall 46 VR 123 [167], citing Kantor v Vosahlo [2004] VSCA 235 (16 December 2004) [37], Norris v Tuppen [1999] VSC 228 (25 June 1999) [330].
Old age, and the associated infirmities of old age, do not by themselves establish a lack of testamentary capacity.[10] In Kinleside v Harrison, Sir John Nicholl noted that they are factors that raise ‘some doubt of capacity, but only so far as to excite the vigilance of the Court; for the law allows a person at any age to make a will’.[11] More recently, in Easter v Griffith, Kirby P stated:
In judging the question of testamentary capacity the courts do not overlook the fact that many wills are made by people of advanced years. In such people, slowness, illness, feebleness and eccentricity will sometimes be apparent — more so than in most persons of younger age. But these are not ordinarily sufficient, if proved, to disentitle the testator of the right to dispose of his or her property by will.[12]
[10]Bailey v Bailey (1924) 34 CLR 558, 570; Re Vukotic v Vukotic [2013] VSC 718 (18 December 2013)[18].
[11]Kinleside v Harrison (1818) 2 Phillimore 449; 161 ER 1196 [461]-[462], affd Bull v Fulton (1942) 66 CLR 295, 338.
[12]Re Griffith (decd); Easter v Griffith (1995) 217 ALR 284, 295 (Kirby P).
Once testamentary capacity and due execution of the will are established, there is a presumption that a testator knew and approved of the contents of the will.[13]
[13]Veall v Veall [2015] 46 VR 123.
In circumstances where a party objects to an application for a grant of probate before abandoning their opposition, issues may arise as to whether any ensuing grant by the Court should be made in common or solemn form.[14] Ultimately, the Court has discretion as to which form the grant takes, having regard to the evidence available and notification of interested parties of the proceeding.[15] For a grant in solemn form, the Court must be satisfied on the evidence of the formal validity of the will, including proof of due execution of the will, and that the testator had the capacity to make the will at the relevant time.[16] In the context of a compromise and discontinuance,
in Wheatley v Edgar Heenan J reasoned that where there remains doubt as to testamentary capacity, for example, a grant in common form should not be made.[17] Rather, in accordance with the relevant Western Australian rules, his Honour determined that a short hearing was necessary to allow the propounder to adduce the requisite evidence for a grant in solemn form.
[14]Re Kouvakas; Lucas v Konakas [2014] NSWSC 786 (16 July 2014) [238].
[15]Ibid [236].
[16]Ibid [68]; Khouri v Khoury [2018] VSC 305 (13 June 2018) [18]. See also Barry v Butlin [1838] EngR 1056; 12 ER 1089; Re Levy (deceased) [1953] VicLawRp 87; Wheatley v Edgar [2003] WASC 118 (17 June 2003) [20]–[24].
[17]Wheatley v Edgar [2003] WASC 118 (17 June 2003) [28].
Consideration
As deposed to by Ms Crowe, the 2013 will was signed by the deceased in the presence of two witnesses and is dated 23 January 2013. The 2013 will revokes former wills and appoints the plaintiff as executor. It then bequeaths certain personal items, before distributing 90 per cent of the residuary estate equally between the deceased’s children and 10 per cent equally between the deceased’s grandchildren. It also takes into account the potential discharge of the mortgage over the property by the defendant. Prima facie, the 2013 will is rational upon its face and duly executed by the deceased in the presence of the witnesses.
However, the evidence as a whole raises real doubt as to the deceased’s testamentary capacity in January 2013. In addition to a diagnosis of Alzheimer’s in September 2010, there are other significant factors as follows:
(a) the findings in the neuropsychological report, based on assessments in September 2012, including the conclusion of ‘considerable concern’ surrounding the deceased’s decision making capacity;
(b) Ms Crowe’s description of the deceased as ‘easily confused’ in November 2012 and some confusion being apparent from her file note of 14 November 2012;
(c) the self reported forgetfulness of the deceased in November 2012;
(d) the appointment of an administrator by the VCAT on 1 March 2013.
Accordingly, it is necessary for the Court to be satisfied affirmatively that the deceased had testamentary capacity at the time of giving instructions and executing her will. The general impression from the evidence is that the deceased had cognitive difficulties from at least September 2012 and was finding it increasingly difficult to manage at home independently. Specifically at issue, however, is the deceased’s testamentary capacity in January 2013. On this point, the evidence of Dr Leong and Ms Crowe is of particular relevance.
Dr Leong notes that the cognition of the deceased could fluctuate with the management of her physical conditions. Dr Leong did not assess the deceased’s testamentary capacity in November 2012, making his letter of 19 November 2012 of limited probative value. Similarly, while it is of some relevance that the deceased was alert and rational nine days after executing the 2013 will and, in Dr Leong’s opinion, able to make reasonable decisions as to her legal affairs, the generality of the opinion limits its probative value. Moreover, the VCAT report of Dr Leong may be balanced, to a degree, by the appointment of an administrator by VCAT on 1 March 2013.
Of more probative value is Ms Crowe’s evidence. Her file note of 21 January 2013 indicates that the deceased was able to discuss her estate in detail and clearly describe how her instructions differed from her 2010 will. She also had insight into the difficulties she was having with managing at home and how certain assets would have to be realised in association with a move to aged care accommodation. Ms Crowe deposed that the deceased was ‘very sharp’ as to the extent of her estate. The separate document titled ‘testamentary capacity’ acknowledged that while the deceased had difficulties with her short term memory, Ms Crowe was satisfied that the deceased had testamentary capacity when giving her instructions, including that she hoped that the defendant would not challenge her new will.
Notably, Ms Crowe’s file note of 21 January 2013, the date of execution of the 2013 will, provides no detail as to the deceased’s testamentary capacity. However, she deposed that at that time the deceased understood what a will was, understood the extent of her estate, and was able to comprehend and weigh up the claims to which she ought give effect. In addition, the evidence establishes that on that date, the deceased arrived by taxi on her own at the offices of Vines Lawyers and was able to discuss and approve an amendment to the draft will.
Conclusions
On balance, the Court is satisfied of the due execution of the 2013 will and that the deceased had the requisite testamentary capacity on 23 January 2013. In this regard, Ms Crowe’s evidence is significant, and is supported to a limited extent by Dr Leong’s evidence that nine days later the deceased was alert and rational. With the Court being satisfied of the deceased’s testamentary capacity and due execution of her will, it is presumed that the deceased had knowledge of and approved the contents of the 2013 will. There is no evidence that gives rise to a suspicion that would displace this presumption.
Accordingly, the Court is satisfied that the 2013 will represents the valid testamentary dispositions of the deceased and should be admitted to probate. While the decision as to the type of grant is discretionary, in light of the approach of Heenan J in Wheatley v Edgar and the resolution of doubt in the current circumstances, it is appropriate to admit the 2013 will to probate in solemn form.
Costs of the proceeding
The remaining issue concerns the costs of the proceeding. The net value of the deceased’s estate is $233,000 according to the terms of settlement. The terms provide that the 10 per cent share of the estate passing to the grandchildren is $23,000 and that no costs should be paid from that amount.
The plaintiff and the defendant seek their costs be paid from the 90 per cent share of the estate that passes to the children of the deceased. Ms Vallance maintains that her share of the estate should be treated in the same manner as the share of the grandchildren, that is, her share of the estate should not bear the burden of the costs of the litigation.
The terms of settlement dealt with the costs on the basis that the plaintiff’s costs were $40,000 and the defendant’s costs were $25,000. There is mention of an unspecified figure for the costs of administration of the estate. Since the terms were signed,
these costs have increased, although the actual quantum is unclear. In an affidavit sworn 11 April 2018, Ms Crowe deposes that the plaintiff’s costs up to and including
13 April 2018 amount to $56,976.61. The defendant has not stated whether the amount for his costs remain at $25,000. Assuming they remain the same, the costs now amount to approximately $82,000. If these costs were paid out of the 90 per cent share of the estate being $210,000, the net estate amounts to $128,000.
Pursuant to the terms, 50 per cent of this amount would be paid to the defendant and 25 per cent would be paid to each of the plaintiff and Ms Vallance, instead of 33 per cent each as provided in the 2013 will. This means that the defendant receives $64,000 and the plaintiff and Ms Vallance each receive $32,000. These figures do not include any costs arising from the defendant’s proposed proceeding seeking further provision from the estate.
The plaintiff submits that making a costs order is a necessary part of the proceeding as it is apparent from the medical evidence that there was an issue to be tried and the opposition of the defendant to the grant of probate of the 2013 will was withdrawn on the basis that his costs would be paid from the estate. In respect of Ms Vallance’s refusal to consent to the terms of settlement, the plaintiff submits that she ‘has been on notice of the parties’ intentions to seek this result for several months’. The defendant made no separate submissions as to the costs.
Submissions were also made by the other beneficiaries affected by the terms, namely Ms Vallance and her three children, that the defendant alone should be required to pay the legal fees and that the value of the estate for all beneficiaries should not be diminished.
The terms of settlement that provide for the defendant to receive a 50 per cent share of the 90 per cent of the net estate appear to be the compromise for the defendant’s foreshadowed claim for further provision. Where parties by agreement settle a family provision dispute, the Court’s jurisdiction does not depend on the agreement, but on whether the deceased made adequate provision for an applicant. This makes it necessary for the Court to consider the facts and circumstances that are relevant to the claim. Where the proposed compromise affects other beneficiaries who may or may not consent and where the compromise falls outside ‘the bounds of a reasonable exercise of discretion’, the Court may not approve the settlement.[18] The parties and the practitioners must also have regard to their overarching obligations under the Civil Procedure Act 2010, including that the costs be reasonable and proportionate to the issues in dispute.
[18]Schaechtele v Schaechtele [2008] WASC 148 (25 July 2008) [18].
These issues and the quantum of the costs in the context of the size of the estate affect where the burden of any costs should fall. This makes it premature for the Court to determine the costs of the proceeding at this stage.
Orders
The Court will make the following orders:
(a) probate of the will dated 23 January 2013 of Freda Marcel Vallance deceased be granted in solemn form to the plaintiff, the executor named in the will of the deceased; and
(b) the costs of the proceeding be reserved.
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