Stanley v Mechler

[2004] NSWSC 58

CITATION:	Stanley v Mechler [2004] NSWSC 58
HEARING DATE(S):	9.2.04, 10.2.04
JUDGMENT DATE:	18 February 2004
JURISDICTION:	Probate
JUDGMENT OF:	Brownie AJ
DECISION:	Declaration in terms of paaragraph 1 of the further amended summons. Order in terms of paragraph 2. The matter is referred to the Registrar to complete the grant of probate. The cross-claim and further cross-claim dismissed. Parties invited to make submissions as to costs.
CATCHWORDS:	Wills - informal will - trusts - a trustee of an express trust who has accepted appointment as trustee may not thereafter impeach the validity of the trust instrument
LEGISLATION CITED:	Wills Probate and Administration Act 1898 Family Provision Act 1982
PARTIES :	Thomas Alexander Joseph STANLEY - Plaintiff Viola MECHLER - Defendant
FILE NUMBER(S):	SC 115876/02
COUNSEL:	J R Wilson SC - Paintiff M S Willmott SC - Defendant
SOLICITORS:	The Argyle Partnership Lees & Givney

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROBATE LIST

BROWNIE AJ

18 February 2004

Thomas Alexander Joseph STANLEY v Viola MECHLER

JUDGMENT

1 BROWNIE AJ: Alex Stanley (the deceased) died on 24 May 2002, aged fifty-eight. He was formerly married but divorced in 1993. There was one child of the marriage, the plaintiff. In about 1992 the deceased formed a relationship with the defendant, and they lived together as de facto partners from 1996 until the deceased was admitted to hospital on 6 May 2002, during the course of his final illness. On 3 May 2002 the deceased signed a document in the form of a will, but there were no witnesses to his signing the document. I will call this document the informal will.

2 The deceased had earlier made a will, in 1999 (the 1999 will). To state matters very shortly, both the 1999 will and the informal will gave substantial benefits to each of the plaintiff and the defendant, but the defendant was the executrix of the 1999 will and the plaintiff the executor of the informal will, and the informal will was relatively advantageous to the plaintiff and disadvantageous to the defendant, comparing it to the 1999 will.

3 The plaintiff now seeks a declaration that the informal will constitutes the will of the deceased, pursuant to the provisions of s 18A of the Wills Probate and Administration Act 1898 and a grant of probate of the informal will. Alternatively, he seeks a declaration that the informal will revoked all former wills, and on this basis he seeks a grant of letters of administration of the intestate estate. The defendant resists this, and seeks a grant of probate of the 1999 will. In addition, she seeks a declaration that she and the deceased held the title and the beneficial interest in certain property at Artarmon, as tenants in common in equal shares, and free of any encumbrances and any obligation to any trust; and she also seeks rectification of the informal will, if it is to be admitted to probate. She made a claim under the Family Provision Act, but did not press this claim on the hearing. Additionally, by a further cross-claim, filed without objection, she seeks a declaration that the deceased held a half share in the Artarmon property in trust for her, and that it would be unconscionable for the deceased, and therefore for his estate, to deny that she held such an interest.

4 In 1997 the deceased and the defendant contemplated the purchase of a home unit situated at 118/421 Pacific Highway, Artarmon (the Artarmon property). Generally speaking, they intended to buy the property and rent it out, regarding it as an investment. At the time the deceased conducted a business through a company Metro Souvenirs Pty Limited (the company), and the defendant had a separate business of her own. The deceased was advised by his accountant, Mr Calfas, and Mr Calfas came to act for both the deceased and the defendant, although he apparently took instructions primarily from the deceased (except, perhaps, in relation to the taxation affairs of the defendant herself).

5 Upon the advice of Mr Calfas, the deceased brought into existence a superannuation fund called Metro Souvenirs No 2 Superannuation Fund (the fund), and later a unit trust, AS and VM Property Trust (the trust). Mr Calfas kept the records of the company, the fund and the trust. He said that the deceased treated the affairs of the fund as if it was the deceased’s own.

6 The deceased and the defendant spoke as if they were buying the Artarmon property themselves, personally, and as if they owned it personally, but the records show that affairs were arranged quite differently. The property was purchased in their names, as tenants in common, in equal shares but at the same time the trust was constituted by a deed dated 14 January 1997, executed by the deceased and the defendant, and they purchased the property as trustees for the trust; and thereafter, the income and outgoings in relation to the Artarmon property were treated as the income and outgoings of the trust. The trust made distributions to the deceased and defendant, as unit holders in the trust.

7 The deceased and the defendant borrowed money from a bank at the time of the purchase of the Artarmon property, and they executed a mortgage of that property in favour of the bank. However, as Mr Calfas arranged matters, when they received the money from the bank, they lent it to the company; the company made a contribution to the fund; the fund purchased units in the trust; and the trust bought the Artarmon property. In succeeding years, each of the deceased, the defendant, the company, the fund and the trust treated the property for income tax purposes on the basis that the trust owned the Artarmon property. However, it seems clear that neither the deceased nor the defendant had a clear understanding about these niceties.

8 In late 1998 the deceased was diagnosed as suffering from bowel cancer. He was treated for that condition, it was said with success, but in January 1999 he was advised that the cancer had spread to his liver. Presumably this was one of the circumstances that led to the deceased and the defendant each making a will in March 1999. For that purpose they consulted Ms Roser, a solicitor employed by Permanent Trustee Company Limited (Permanent).

9 The deceased seems to have remained in relatively good health until 2001. Then, as his health declined, the plaintiff began to work with the deceased and the company. Until August 2001 the plaintiff’s practice was to drive from his home to the home of the deceased and the defendant at 27 Penrose Street, Lane Cove, on the morning of each working day and to pick up the deceased and to drive him into the City, where the company had premises. In August 2001 the deceased became too ill to continue to do this, but the plaintiff continued to drive to the deceased’s home each morning, before continuing on to the City. Some of the company’s work was done from its city premises, and some from the deceased’s home at Lane Cove. It appears to be common ground that by April 2002, the deceased’s health was noticeably worse.

10 He made an appointment to see Ms Carolyn Yarrington, another solicitor employed by Permanent, on 16 April 2002, to give her instructions to prepare a new will. On that morning, when the plaintiff called into the deceased’s home, the deceased announced that he intended to go into the City with the plaintiff; and in response to a question asked by the plaintiff, he said that he had an appointment to see a solicitor, and then that he intended to make a new will. During the journey to the City the plaintiff asked the deceased if the deceased had told the defendant that he proposed to change his will. The deceased said that he had not, and the plaintiff suggested that he might do so. The deceased said that he would write a letter explaining his decision to her that way. The plaintiff did not press him, and the deceased referred to the need for the plaintiff and defendant to work together, that is conducting the affairs of the company, at the Lane Cove home. The plaintiff dropped the deceased off at the office of Permanent, leaving the deceased there, but later picked him up and drove him home again.

11 The deceased saw Ms Yarrington and the two of them discussed the deceased’s proposed new will. She had previously arranged to procure a copy of the 1999 will. The deceased said that he wanted to change that. He said that he wanted to leave the Lane Cove property to the plaintiff on terms that the deceased could live there until she was ready to move into a unit that she owned at Bondi. He mentioned various other assets, and then said that he wanted the defendant to have a life interest in his half of the Artarmon property, and in two other home units situated at Russell Lea, with the plaintiff taking those properties after the death of the defendant. Ms Yarrington enquired about the details of the ownership of the Artarmon and the Russell Lea properties, and the deceased could not be precise. She explained that she needed this information, to be able to properly draft a will, and he said that he would contact his accountant, obtain the information she was asking for, and that he would then speak to her again, and in the course of the discussion he spoke as if he and the defendant owned the Artarmon and the Russell Lea properties between them. During this discussion the deceased told Ms Yarrington that he did not want the defendant to know that he was making a new will, and he asked that if she telephoned him, she do so between 10 am and 3 pm, when the defendant would not be at home.

12 Later that day the deceased telephoned Ms Yarrington, said that he had spoken to his accountant, that the position was very complex, and that he would not be able to provide her with the further information she had said she needed until he had consulted the accountant. She said that she would not draft anything until she had heard from him again.

13 On 23 April the deceased telephoned Ms Yarrington again. He said that he had spoken to his accountant, but that he was still unclear about the ownership of “my assets”. He believed that his superannuation fund owned the Artarmon property, and that he was the sole trustee and beneficiary of that fund. He believed that he and the defendant owned the Russell Lea properties as joint tenants. He also said that his accountant had told him that the superannuation fund owned his half of the Artarmon property. She advised him of the possibility of severing any joint tenancy that might exist in respect of the Russell Lea properties, and agreed to look into what needed to be done, if those became his instructions. He asked her to telephone Mr Calfas. She did try to telephone Mr Calfas, but did not receive any information from Mr Calfas or his office then, or indeed until 14 May.

14 On 30 April there was a further telephone conversation between Ms Yarrington and the deceased. She said that she had not been able to obtain information from Mr Calfas and said that the position needed to be clarified and in the upshot she agreed to draft a will, and they arranged that he would call in to her office the next day to execute it. By then, the deceased was confident that he and the defendant owned the Russell Lea properties as joint tenants, and he did not wish to take any steps to sever the joint tenancies. It is clear now that this understanding, concerning the ownership of the Russell Lea properties, was correct.

15 Ms Yarrington prepared a will, but the deceased was too ill to attend on 1 May. He telephoned her, and asked her to arrange for it to be delivered to the plaintiff who was to pick it up and take it to the deceased’s home for execution. She agreed to do this, and she put the will, a covering letter, and probably a document prepared by Permanent giving general advice about the execution of wills, into a sealed envelope. On 2 May the plaintiff called at the office of Permanent, picked up this envelope, and took it to the deceased’s home at Lane Cove. The letter to the deceased contained this passage:

The Will should be signed in the presence of two witnesses who must sign, print their names, and add their addresses where indicated. The witnesses must not be beneficiaries under the Will or married to beneficiaries under the Will. Kindly ensure that the Will is dated at the time of execution and that all parties use the same pen.

16 The Permanent document was headed “Will Execution Instructions When Signing Your Will”. It contained detailed instructions, expanding upon what Ms Yarrington had said in her letter. In addition, the will itself had pencil notes, in conventional manner, advising where the deceased and the witnesses should place their signatures, and the date.

17 Later on 2 May the plaintiff told the deceased that he had picked up the will, but at the request of the deceased, he left it in his car. On Friday 3 May at a time when the defendant was out shopping the deceased asked the plaintiff for the will. The plaintiff took the envelope from his car, and handed it to the deceased, when the deceased was in the lounge room of his home. The plaintiff then left the deceased alone in the lounge room for some five or ten minutes. When he returned, and enquired if the deceased was ready, the deceased said that he was not quite ready, and -ad to check something. He was turning the pages of the will at the time, and the plaintiff again left the room, leaving the deceased alone. When the plaintiff next returned, some minutes later, the deceased asked the plaintiff to obtain some sticky tape. When this was provided, the plaintiff saw the deceased seal the envelope, place the sticky tape over the seal, and then sign on top of the sticky tape. The plaintiff did not see it happen, but it is quite clear that whilst he was absent from the lounge room, and whilst the testator was alone, the testator signed the informal will.

18 The deceased said to the plaintiff:

“Thomas, I’ve got no witnesses because it is only you and me here and you can’t witness my will.”

The plaintiff said:

“Yes, I know.”

The deceased then said:

“Ask Carolyn if [Yarrington] she could arrange to get witnesses.”

The deceased then said:

“Put it back in your car and take it to Carolyn when you can. Make sure you hand it to Carolyn personally, don’t leave it at reception. Tell her to organise witnesses.”

19 The deceased’s health seems to have declined sharply from about that time. On Monday 6 May, he was admitted to hospital, and he died in hospital on 24 May. It was not until 8 May that the plaintiff delivered the sealed envelope to Ms Yarrington, containing the informal will. There is a measure of disagreement between the plaintiff and Ms Yarrington as to what was said on that occasion, and the question is said to throw light on what it was that the deceased told the plaintiff on 3 May. I accept the plaintiff’s evidence about this, and I am not confident that either the plaintiff or Ms Yarrington has a sufficiently accurate recollection of the conversation of 8 May to make it safe to prefer the evidence of one to the evidence of the other about this. I accept each of them as a truthful and generally reliable witness.

20 Ms Yarrington made, or caused to be made, daily enquiries of the hospital staff, with a view to having the deceased execute the will in the usual way, before witnesses, but his state of health did not permit that course to be adopted.

21 It is clear that, at some stage between 16 April and 6 May the deceased started to write the letter to the defendant that he had mentioned to the plaintiff on 16 April. The letter was written by hand, on a plain piece of paper, in the Hungarian language (the first language, it seems, of both the deceased and the defendant), and it was unsigned, undated, and apparently incomplete. The defendant later destroyed it, in circumstances of distress and in respect of which no criticism of her has been made, but there is a dispute as to what the letter said. So far as the evidence shows, the defendant was the only person who ever read it.

22 During the period that the deceased was in hospital, the defendant found the letter by chance. It had been placed, presumably by the deceased, on a high shelf, behind some suitcases. The defendant said that to the best of her recollection, and translated into English, the letter was to the effect:

“You and Thomas do not get along very well, nevertheless I would like you to look after him because he is my son when I am not around. Thank you for looking after me. Thank you for the nine years we spent together it was beautiful. I am really sad that I have to leave you.”

23 She says that on the next day (that is, during the lifetime of the deceased) she spoke about the letter to the plaintiff. She said that on that occasion she said to the plaintiff:

“I found a letter from your father which I don’t think I was supposed to find. It was on the top of the shelf. I accidentally found it because I was putting a camera up on the shelf. I can’t understand why your father wrote that we don’t get along. I thought that we were getting along fine. I would like to continue our relationship as good as before. I would still like to cook for you and look after you as much as I can.”

24 The plaintiff asked what else was in the letter, and the defendant said:

“It’s personal comments. You are welcome to read it.”

25 The plaintiff gave a different account of what the defendant had said as to the contents of the letter. According to the plaintiff, she said of it, during the weekend after the death of the deceased:

“I am sorry you had to find out like this, please don’t be angry at me. I feel that my decisions are the fairest. I know you and Thomas do not get along. I did it this way so there would be no arguments. I thought it was the best way to deal with it during the weekend after the death of the deceased. “

26 The evidence does not permit a finding to be made one way or another as to how the plaintiff and the defendant got along, during the lifetime of the deceased. Whilst I accept the evidence of the defendant as to what she had perceived, it is really quite plain, particularly when one considers the evidence of Ms Yarrington and the way in which the deceased acted, that the deceased perceived that the relationship between the defendant and the plaintiff had difficulties, that he intended generally to make a new will, and set out to do so, that one of the matters that motivated him in attempting to make a new will was his perception concerning the relationship between the defendant and the plaintiff, and that he intended to conceal from the defendant the fact that he was making a new will.

27 It might be that the defendant divined the intention of the deceased when she read his letter, or draft letter. If so, she can hardly not have been affected, but the cross-examination of her was (entirely properly) restrained.

28 All these matters are said to go to the s 18A question. As well, the defendant laid emphasis upon the circumstances in which she and the deceased had executed their wills in 1999 and to the formalities that had been observed then: each will had been properly witnessed in the conventional manner.

29 Section 18A provides:

18A(1) A document purporting to embody the testamentary intentions of a deceased person, even though it has not been executed in accordance with the formal requirements of this Act, constitutes a will of the deceased person, an amendment of such a will or the revocation of such a will if the court is satisfied that the deceased person intended the document to constitute his or her will, an amendment of his or her will or the revocation of his or her will.
(2) In forming its view, the Court may have regard (in addition to the document) to any other evidence relating to the manner of execution or testamentary intentions of the deceased person, including evidence (whether admissible before the commencement of this section or otherwise) of statements made by the deceased person.

30 It is common ground that, for the section to operate, three matters must be demonstrated: a document, the purported recording of testamentary intentions, and that the deceased intended the document to constitute his will, or the amendment or revocation of a will. It is also common ground that the first and second of these matters have been demonstrated. The dispute is as to the third – did the deceased intend the document to constitute his will?

31 For the defendant, emphasis was laid particularly on the way in which the deceased twice asked the plaintiff to arrange for Ms Yarrington to arrange for the document to be witnessed. The parties debated the significance of the other circumstances which I have recounted. In the end, it seems to me to be a clear case for the application of s 18A. Whatever the precise thought processes of the deceased on and about 3 May, he had set out to make a new will; he had consulted a solicitor and had given her instructions to draw the will; on the advice of the solicitor, he then made enquiries of his accountant about the details of his assets, so that his solicitor could draw up his intended will; there had been further communications about the will, and he had made an appointment to see the solicitor on 1 May for the purpose of executing it; illness prevented him from keeping that appointment, and he made arrangements for the plaintiff to uplift the will from the solicitor on 2 May and to bring it home for him to execute; on 2 May he asked the plaintiff to keep the will in the plaintiff’s car for the time being; on 3 May he had the will brought to him, and he spent some minutes reading it, apparently carefully; he should I think be taken to have read the advices given to him about having his signature witnessed; he signed the document, when alone; he then put it in an envelope, sealed the envelope, reinforced the seal with sticky tape and signed across the sticky tape; and he then instructed the plaintiff to take the will to his solicitor, and to have the solicitor arrange to have it witnessed. He apparently thought that this was all that he had to do, that his solicitor could do whatever else was necessary, and that the document would be effective as his will.

32 Clearly, he did not fully understand the function of the witnesses, or the advice given to him about having his signature witnessed, or he would not have acted as he did. He did however appreciate that it was somehow necessary to have two persons sign the document as witnesses, but he appreciated that the only person available, the plaintiff, could not act as witness. An important aspect of this was that he wanted to conceal from the defendant the fact that he was making a new will. He instructed Ms Yarrington to telephone him only at hours when he expected the defendant to be out of the home; he delayed even looking at the will on 2 May, asking the plaintiff to retain it; and on 3 May, perhaps when reading the advices about the need for witnesses and realising that the only person whom he was content to have know about the new will could not act as a witness, he left that aspect to be worked out by Ms Yarrington. As she immediately recognised, when told of what had happened on 8 May, this could not be done, but the critical question is the intention of the deceased when he signed the document on 3 May, sealed it up, handed it to the plaintiff, and gave the plaintiff the instructions I have mentioned.

33 Whatever the letter or draft letter written by the deceased to the defendant actually said, the fact that it was written seems to point towards the existence of an intention, probably some time before 3 May, to make the will. This tends to cut down the effect of some of the defendant’s evidence expressing surprise that the deceased has said that she and the plaintiff did not get along, and/or surprise that he was making a new will, but it does not go directly to the deceased’s state of mind on 3 May.

34 The plaintiff is therefore entitled to the relief claimed in paragraphs 1 and 2 of the further amended summons.

35 The defendant’s cross-claim concerning the Artarmon property and her further cross-claim seek to substitute the lay understanding of the defendant and of the deceased for the position carefully put into place by Mr Calfas, and by the solicitors who acted for the deceased and the defendant at the time of the purchase of the Artarmon property. On the one hand, it is perfectly understandable that non-lawyers would think of the Artarmon property as being owned by the deceased and the defendant equally or “on a 50/50 basis”, and that they would speak of the Artarmon property as if it was owned in this manner. On the other hand, all of the records point to the contrary.

36 So far as I can tell it was in the interests of the deceased and of the defendant in 1997 that the structure advised by Mr Calfas be put into place, and there is no reason shown by the evidence to doubt that the deceased instructed Mr Calfas, and probably the solicitors concerned, to act in this way; and the defendant was content to act in accordance with the advice of Mr Calfas, because the deceased was following that advice. At least a significant part of the overall structure was made clear enough in the income tax returns prepared each year by Mr Calfas, or his firm, and the defendant apparently grasped the financial implications, and she approved of them, as was only natural at the time.

37 When the Artarmon property was purchased in early 1997, the defendant and the deceased intended in a non-legal sense that they own the property equally, but the advice of Mr Calfas intruded, and the parties acted upon that advice. The defendant and the deceased executed a deed constituting the trust and appointing themselves as the trustees of it. They instructed, or at least the deceased with the apparent compliance of the defendant instructed their solicitors that the property was to be purchased in their names, but as trustees for the trust. Thereafter, Mr Calfas dealt with all monies coming in and going out, in accordance with the structure he had devised. It is true that the money moved from entity to entity by way of book entry, rather than by the payment of cash, but I do not think anything turns upon that. Each year, each person and each entity concerned lodged an income tax return, and the liabilities for income tax of each person and each entity were assessed accordingly.

38 It is I think impossible for the defendant, one of the trustees of an express trust, who has accepted that appointment, has acted as trustee, and who is also in a practical sense a beneficiary of the trust, to now say that she did not fully understand the complexities involved, or the possible consequences, and thereby obtain the relief that she seeks. She does not say, either of the deed or for that matter of any other document “non est factum”. Rather, she says that she did not fully understand the documents and the ramifications of the transaction, and she points to various statements previously suggesting that the deceased did not fully understand the arrangement either.

39 Her evidence shows that at one stage, an error was made in the office of Mr Calfas, concerning the allocation of some money between the different entities concerned, and that this error has never been corrected, but this circumstance does not seem to be relevant to the rights asserted by the defendant, in substance to set aside the whole transaction.

40 Nor do I think it is relevant to these particular cross-claims that, at first in 1997 and then again later on, the deceased and the defendant made contributions that were different to or inconsistent with the contributions originally intended, that is equal contributions. Equally, it seems beside the point that the deceased’s “half share” became divided into two fragments, one represented by units in the trust held in his name, and the other fragment represented by units in the trust held by the fund.

41 All these circumstances attract sympathy to the defendant’s present position, but they do not authorise the unmaking now of the transaction that was carefully put into place in 1997, and has been preserved in place ever since.

42 Finally, by paragraphs 5 and 6 of her cross-claim the defendant seeks rectification of the informal will in one significant respect, and in a number of minor incidental respects. By clause 6 the deceased left his Lane Cove home to the plaintiff, but expressed the wish that the plaintiff arrange with the defendant “a mutually agreed time-frame for her to vacate the premises, which time-frame will give her sufficient time in which to arrange alternative accommodation”. The defendant sought to have this rectified so that the devise to the plaintiff was “subject to a right [in the defendant] to reside there … for as long as she wishes”.

43 Rectification of a will is not something to be lightly granted, and this part of the cross-claim turns upon a construction of a note made by Ms Yarrington concerning the instructions given to her by the deceased. Looking at the evidence of Ms Yarrington I think it is clear that this part of the cross-claim must fail: the informal will expressed the intentions that the deceased gave to Ms Yarrington. Moreover, the conduct of the deceased so far as concerns his attempts to make a new will, for the reasons he expressed, and his attempts to conceal the will from the defendant tend to point in the same direction.

44 I make a declaration in terms of paragraph 1 of the further amended summons, and an order in terms of paragraph 2. I refer the matter to the Registrar to complete the grant of probate. I dismiss the cross-claim and the further cross-claim. I invite submissions as to costs.

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Last Modified: 02/27/2004