State Trustees Ltd v Hayden
[2002] VSC 98
•10 April 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 7762 of 2000
| STATE TRUSTEES LIMITED (as administrator of the estate of WYNNE SLEIGHT) | Plaintiff |
| v | |
| ROGER ALAN HAYDEN | Defendant |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18-19 March 2002 | |
DATE OF JUDGMENT: | Judgment 26 March 2002; Reasons published: 10 April 2002 | |
CASE MAY BE CITED AS: | State Trustees Ltd v Hayden | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 98 | 1st Revision: 7 May 2002 |
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Wills – statutory will – whether proposed will accurately reflects the likely intentions of person, if she had testamentary capacity – whether reasonable in all circumstances to authorise making of will - ss. 21, 26 Wills Act 1997.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. Boaden | State Trustees Ltd |
| For the Defendant | Mr G. Grabau | Brett Ryan & Co |
HIS HONOUR:
On 26 March 2002, in light of the age and health of Wynne Sleight, final orders were made in this proceeding without handing down reasons at that time. These are the reasons for those orders.
This is an application by State Trustees Limited, as administrator of the estate of Wynne Sleight (“Mrs Sleight”), for leave to apply for an order (and for the making of such order) under Section 21 of the Wills Act 1997 (Victoria) authorising a will to be made in specific terms approved by the Court, on behalf of Mrs Sleight, a person who (it is common ground) does not have testamentary capacity. The application was instituted by originating motion dated 27 November 2000 by a person who was then one of the administrators of the estate of Mrs Sleight (not the present plaintiff). Since then there have been a number of changes and an Appeal in this proceeding which it is unnecessary to mention further.
Section 21 of the Wills Act 1997 empowers the Court to make an order authorising a will to be made in specific terms approved by the Court or revoked on behalf of a person who does not have testamentary capacity. An applicant must obtain leave to make such an application (s. 21(2)). Before granting leave, the Court must be satisfied that the person does not have testamentary capacity (s. 26(a)) and, pursuant to s. 26(b) and (c), that “the proposed will or revocation accurately reflects the likely intentions of the person, if he or she had testamentary capacity” and that “it is reasonable in all the circumstances for the Court” to make the relevant order authorising the will or revocation.
The material now relied upon by the plaintiff is contained in a number of affidavits, all sworn in March 2002, and in various documents which are either exhibited to those affidavits or were tendered at trial. The principal affidavits relied upon are an affidavit of John Wnek sworn 8 March 2002 and an affidavit of Eileen Jean Synott sworn 18 March 2002. Mr Wnek is an Administrator employed by the plaintiff. He was cross-examined as to a number of limited matters but, save for those matters and for some facts deposed to in answering affidavits on behalf of the defendant, his affidavit is substantially uncontradicted.
Ms Synott was a personal carer of Mrs Sleight from February 1997 until June 2001. She was not cross-examined upon her affidavit.
The defendant is a friend of Mrs Sleight and a major beneficiary under her last known will, made by her in 1995.
The defendant relied upon his own affidavits sworn 8 March 2001, 28 February 2002 and 14 March 2002 together with affidavits of Mark Bernard Hayden sworn 26 February 2002 and Noreen Esma Porozny sworn 26 February 2002. The defendant was cross-examined, his other deponents were not.
Facts
Mrs Sleight was born in England on 14 May 1903. Her maiden name was Gladwin. On a visit to Australia in 1921, she met and married Harold Richmond Sleight. Her husband died in 1968. The defendant has known Mrs Sleight since about 1977. When the defendant first met Mrs Sleight, he owned and managed a travel agency business at premises which were a short distance from Mrs Sleight’s residence at 42 Albert Road, South Melbourne. At that time, the defendant (now divorced) was a man in his late twenties and either married or soon to be married. The evidence does not disclose his age or the date of his marriage. However, there are three sons of the marriage who were born in or about 1978, 1980 and 1983. As the defendant deposed, Mrs Sleight used to come into the travel agency office “nearly every day with morning tea, biscuits and cakes” for the defendant’s staff. A good friendship developed between them.
As the defendant further deposed, Mrs Sleight, “was like a member of my family over many years”. The defendant produced photographs, inter alia, showing Mrs Sleight celebrating Christmas at the defendant’s house with his family in 1988, and the defendant celebrating with Mrs Sleight on her birthday in 1994, 1998 and 1999. He also produced a photograph showing Mrs Sleight with his three sons labelled September 1981 (although the year is probably incorrect). The defendant assisted Mrs Sleight, from the early 80s onwards, in a number of ways which are set out in his affidavit, including work in relation to her properties and, later on, looking after her banking, bills and the like.
Mrs Sleight has owned a number of pieces of real estate. She owned commercial properties at 35 Park Street and 12 and 14 Kings Place, South Melbourne which were sold in 1997 for $475,000, in circumstances which are relevant for the purposes of this proceeding. Her home at 42 Albert Road and commercial properties at 5 and 7 Park Street, South Melbourne were recently sold by the plaintiff realising net proceeds of $945,045.28 and $804,695.05 respectively. The current total net value of Mrs Sleight’s estate is about $1.7M.
On 7 October 1980 Mrs Sleight had made a will in which she appointed the Equity Trustees Executors and Agency Company Limited as her executor and gave pecuniary legacies of $5,000 to each of two brothers (Henry and Charles) and to a nephew and a sister-in-law, of $10,000 to a niece (Beryl Smith) and of $20,000 to the Asthma Foundation, to Sir Edward Dunlop, to a nephew, and to a friend Ralph James Lynes, and gave her residuary estate to a trust for a number of named charities. On 11 November 1980 Mrs Sleight made a codicil in which she revoked the gift to Mr Lynes.
On 19 September 1989 Mrs Sleight made a will in which she appointed Jonathan McLeod (an accountant) and one Valda Street (who was a secretary or nurse of Sir Edward Dunlop) as her executors. In that will, she gave legacies of $100,000 to her brother Charles and $20,000 to her niece Beryl Smith and various other pecuniary legacies including $20,000 to the defendant (who is mentioned for the first time), $20,000 to “Ralph Lyons”, $50,000 to her solicitor (employed by Hunt & Hunt), $200,000 to “Anti-Cancer of Victoria” and $200,000 to the Royal Victorian Institute for the Blind. She specifically devised her house at 42 Albert Road including contents not otherwise disposed of to Beryl Smith. She left her residuary estate equally between her brother Charles, a niece and a nephew. By a codicil dated 16 January 1990, Mrs Sleight replaced her co-executor Street with her solicitor, increased Beryl Smith’s legacy to $200,000 but deleted the specific devise to Beryl Smith.
Mrs Sleight was first seen as a patient at the Dorcas Street Medical Clinic (“the Clinic”) in South Melbourne in 1977. All medical information before the Court is contained in a letter from Dr J. Mannerheim (Exhibit “B”) dated 2 June 2000 summarising Mrs Sleight’s history notes. Dr Mannerheim first saw her at the Clinic on 16 January 1992 when “she showed some short and long term memory problems”. She did not know what medication she had been taking nor why. Her memory appeared to fluctuate through 1992. In November 1992 Dr L. Kilvington, at the Clinic, noted that Mrs Sleight seemed more confused and in December 1992 it was again noted that her memory was poor. On 18 January 1993 she attended the Clinic, not remembering that she had seen Dr Kilvington on 11 January 1993. In later consultations at the Clinic in January, March and April 1993, it was noted that her memory was deteriorating. She was referred for a “dementia screen” which involved blood tests and a CT scan and thereafter she was referred to a neurosurgeon who considered that her dementia was due to multiple micro-infarcts in the brain.
On 19 May 1993 Mrs Sleight made a will which was prepared by new solicitors, Macmillon Segal & Lenton. She appointed Ralph James Lynes and Rhonda Eva Lynes as executors. The will contains a number of pecuniary legacies to the same relatives, friends and charities, some of significantly reduced amount from her previous will. For example, the legacy to Beryl Smith was reduced to $1,000 and the legacy to the Blind Institute was reduced to $15,000. There was a new legacy of $50,000 to the Church of England Homes for Boys and Girls. There remained a legacy of $200,000 to the Anti-Cancer Council of Victoria. The defendant’s legacy became $15,000. The whole of the residue (and a legacy of $20,000) was given to “my friend Ralph Lawrence Lynes”.
On 16 July 1993 Mrs Sleight consulted Dr Towie at the Clinic who noted that “she was very upset and grieving over the death of Sir Edward (Weary) Dunlop who had been one of her doctors for 20 to 30 years and whom she considered a very close friend”.
According to the defendant, Mrs Sleight may have had some concerns relating to the conduct of Ralph Lawrence Lynes. Her next will deleted all reference to him. That will was prepared by McGrath Colman Stewart, solicitors known to and suggested by the defendant. The defendant and another friend of Mrs Sleight, Francene Irene Miller, accompanied Mrs Sleight to the solicitors. The will, dated 21 July 1993, gave a pecuniary legacy of $250,000 to brother Charles, legacies of $150,000 to each of four other relatives (including Beryl Smith), $20,000 to the Blind Institute, $50,000 to the Church of England Home for Boys and Girls and $260,000 to the Anti-Cancer Council of Victoria. The legacies totalled $1.2M. The residuary estate was left to the defendant and Miller in equal shares.
On the same date that she made the last-mentioned will (21 July 1993) Mr Tony Stewart of McGrath Coleman Stewart telephoned Dr Towie and informed the doctor that Mrs Sleight wanted to alter her will and “seemed psychologically fit and able”. Dr Towie “agreed”. On 2 August 1993 Mrs Sleight talked to Dr Kilvington about her grief and depression. She was meant to be taking Tofranil for depression and bladder incontinence. She was unable to tell the doctor whether she was taking it or not. On 4 August 1993 she came with her solicitor “to confirm with Dr Towie that she was of sound mind and able to understand the documents relating to changing her will and appointing a Power of Attorney”.
The defendant accompanied Mrs Sleight again to the solicitor when she wished to change her will in August 1993. She made a new will on 11 August 1993. By this will she appointed the defendant as sole executor. The provisions of the will differed from her previous will in the following substantial respects: legacies of $10,000 were given to Valda Street and to Francene Miller; there was a legacy of $20,000 to the defendant’s mother, Lenore Hayden; there was a specific devise and bequest to the defendant of “my house together with the contents thereof… for his own sole use and benefit absolutely”; the residuary estate was left, as to one half, to the defendant and, as to the other half, “to the Fund set up to commemorate and honour the late Sir William (sic) Dunlop”. On 11 August 1993 Mrs Sleight also appointed the defendant her attorney under power.
Dr Mannerheim said this of Mrs Sleight’s mental capacity in 1993:
“My opinion of her mental capacity as at 21 July 1993 is difficult as I saw her only twice that year, on 28-1-93 and 10-5-93. However she noticed herself and was observed by all of us to have impaired cognition for at least 8 months prior July ’93, to the point of requiring screening for a cause of dementia in April 1993. When Dr Towie agreed with her solicitors on 21-7-93 that she seemed psychologically fit & able to alter her will and confirmed this on 4-8-93, there is no record that a mini-mental or other cognitive test had been done and she was distressed as described above about the death (2-7-93) of Sir Edward Dunlop.”
By October 1994 Dr Mannerheim had become Mrs Sleight’s regular doctor. She no longer felt herself able to find her way to the Clinic. Dr Mannerheim’s report continues:
“So I began to make home calls to her house at 42 Albert Rd South Melbourne. However she did not answer the phone when I phoned her first on 24-11-94 and 1-12-94. On 6-12-94 she answered the phone and said she was OK and would come to the surgery when the weather was cooler. As she had not come by 13-1-95, I visited her and found that she weighed 41.7kg and had not been taking any medication for months. She appeared to be fabricating about shopping and the food she was eating and visitors. Her blood pressure was normal and she was not anaemic but there was no evidence of food in the house and she was unable to name her visitors. I was concerned as to how she caring for herself.”
The defendant says that in about early January 1995 a bank branch manager took Mrs Sleight to a firm of solicitors in Port Melbourne where she made a will allegedly in favour of the bank manager. Shortly thereafter on 12 January 1995 Mrs Sleight made another will prepared by McGrath Colman Stewart, which was (save for minor and immaterial changes) identical with the will which she had made in August 1993. She also appointed the defendant as her attorney under an enduring power of attorney. However, Dr Mannerheim reports in relation to January 1995 as follows:
“On 23-1-95 Mr Peter McGrath spoke with me at the practice about Mrs Sleight. He stated that other people had been approaching her recently to get her to change her will. She had signed a hand written will in the last two weeks. He asked me if she was mentally competent to know what she was doing. I stated that I did not believe she was and that the most recent will could have been signed under persuasion, ie; anyone who influenced her.
I visited her that afternoon. She could not find the medication she was meant to be taking but had a drawer full of old tablets. The refrigerator was completely empty but she said she had bought a large takeaway lunch from the café next door and was going to cook herself fish and chips for tea. There was oil in the pantry but no fish or potatoes in the house and I believed that she no longer knew how to get to the shopping centre but was relying on takeaways or visitors bringing her food.”
Dr Mannerheim’s opinion of Mrs Sleight’s mental capacity in January 1995 was expressed as follows:
“My opinion of her mental capacity as at 12 January 1995 was that she did not have the capacity to understand the signing of legal documents especially with regard to a will or power of attorney. This was verified by Dr G. Sutcliffe on formal memory and cognitive testing on [30 June 1995].”
Dr Sutcliffe was a psychogeriatrician who, according to Dr Mannerheim:
“… confirmed that she had dementia of a moderate degree but no supervening psychiatric disorder at the time. She was unable to tell him the name of those people who may have a likely claimant to her, on her estate or the extent or broad details of her estate or how she wished it to be disposed of after her death. He did not consider her cognitive capacity adequate enough to give consistent instructions… regarding the drawing up of a new will or to sign a power of attorney document.”
At sometime in 1995 (at the latest) the defendant was informed by Mrs Sleight of the gift of the house to him by her will. On 18 December 1995 the Guardianship and Administration Board (“the Board”), on application by the defendant, dismissed his application for guardianship of Mrs Sleight but appointed the defendant as administrator of the estate of Mrs Sleight.
During 1996 the defendant arranged a part-time carer for Mrs Sleight and in 1997 he arranged for two full-time carers to cover the week, day and night. Mrs Synott deposed that she commenced as a personal carer of Mrs Sleight on 17 February 1997 and continued as such until June 2001. Her hours of duty were continuous from 9.30 am on Monday to 9.30 am on Friday. They developed a close and enjoyable companionship. Mrs Synott took Mrs Sleight on many outings using a new wheelchair which she obtained for her. Mrs Synott deposed that the defendant had asked her to buy a second-hand wheelchair but that a new one was not much more expensive. Mrs Synott deposed that “everything” that she requested the defendant to buy for Mrs Sleight, he insisted should be second-hand. In relation to the defendant’s conduct she swore as follows (referring to Mrs Sleight as “Peggy” and the defendant as “Roger”):
“When I starting working for Peggy in 1997 I found Roger to be very reluctant to spend Peggy’s money on her own needs. Anything I purchased I had to use my personal visa card and he would reimburse me at a later date when I produced the receipt. He was often late when giving the housekeeping cheque, and at time [sic] was away in Bali, so I had to buy groceries on my own personal visa card or she would have had to go without.
Roger only once during the four and a half years I was Peggy’s personal carer took her out for a drive. This was on her birthday in 1999. He drove up to the Dandenong’s to a lady friend’s home with the personal carer on duty, and also with his male friend Ian…
On her birthday in 1998, I drove Peggy, Roger and myself to Warburton to Peggy’s dear friend Val [Valda Street]. She was Sir Weary Dunlop’s secretary until he passed away. Sir Weary was Peggy’s surgeon and great friend who visited Peggy many times in her home. We had a most enjoyable luncheon, and I suggested to Roger (as Peggy’s administrator) to offer to pay for the luncheon because Val was running a business. He found this unacceptable and refused…
Roger sometimes did bring flowers to Peggy for Christmas, birthdays and special occasions.
When I became Peggy’s carer in 1997, the bed Peggy slept on was totally inadequate for such a frail lady. The mattress was very thin. With the help of Peggy’s doctor, I took Peggy into Myer Melbourne and Peggy tried four beds and chose a beautiful three-quarter single bed… Also, the chair Peggy sat in was so old that when staff sat in front of Peggy to get her up from the chair, the foot-stool section would shoot out and hit our legs and bruise them. So with the doctor’s assistance once again, a special chair was purchased for Peggy, a recliner from the same person that we purchased the wheelchair from.
When I arrived at Peggy’s house in 1997, Roger had purchased a twin very small washing machine. It was useless. I telephoned the washing machine people, explained about Peggy’s condition and they did a changeover for me and we got a good washing machine. No changeover of money was involved, it was more or less given to Peggy. Roger one day asked the plumber to come and pick up the other washing machine so that he could use it in his hotel for washing up the tea towels at his bar. I refused to give the plumber the washing machine as it belonged to Peggy. The plumber told me that if he did not go back with the washing machine Roger would not pay him. All work done by the plumber for Roger’s private use was added onto Peggy’s account. Peggy paid for his personal work done at home and the hotel.
I am told by Peggy’s niece Beryl Smith that as a young girl she used to receive comics from Peggy in Australia, and also Christmas and Birthday cards. This ceased when Roger came on the scene. Roger had Peggy’s telephone number changed to a silent number. He said it was because people were annoying Peggy with the telephone calls. So all contact that Beryl had was stopped. Because Beryl was worried that Peggy had passed away she contacted the Salvation Army in England, who got in touch with the Salvation Army in Australia. They knocked on Peggy’s door at 42 Albert Road, South Melbourne and found Peggy there. They then contacted Beryl in England and told her that she was still residing at this address.”
Returning to the year 1997, the defendant obtained a marketing report from estate agents in June which contained estimates of the prices likely to be obtainable on a sale of Mrs Sleight’s properties at 5-7 Park Street and 35 Park Street. The defendant prepared an annual budget for Mrs Sleight. On 6 August 1997, McGrath Colman Stewart , on behalf of the defendant as administrator, wrote to the Board stating that, in order to provide sufficient funds to cover 24 hour care, the defendant believed that it was necessary to sell one of her properties and nominating 35 Park Street, which could be sold with vacant possession as it was being used as a car park and was not the subject of any lease. Apparently the Board agreed to this proposal. The property was sold at auction for $475,000 on 31 October 1997.
The defendant next procured Mrs Sleight’s signature to a typewritten document dated 20 December 1997 which read as follows:
“42 ALBERT ROAD,
SOUTH MELBOURNE, VIC 3205
TO WHOM IT MAY CONCERN
THIS IS TO CONFIRM THAT I WYNNE SLEIGHT AGREE TO THE INVESTMENT OF $320,000 INTO A 20 YEAR LEASE ON A HOTEL IN COLLINGWOOD
THE LOAN MONIES WILL BE INVESTED AT 8% INTEREST WITH THE INTEREST BEING PAID MONTHLY INTO MY CHEQUE ACCOUNT TO ASSIST IN THE PAYMENT OF MY MONTHLY EXPENSES
THE MONIES WILL BE RE-PAID ON DEMAND
SIGNED
WYNNE SLEIGHT ……………(s)………………….
20TH DECEMBER 1997
WITNESS
ROGER HAYDEN …………… (s)………………….”
By letter dated 12 March 1998, Williams Winter & Higgs, as solicitors for the defendant, wrote to the Board. The solicitors informed the Board that they were instructed “that Mr Hayden is the sole beneficiary of the estate of Ms Sleight”. This of course was not true. The solicitors advised the Board that the defendant, through his company “Vicksure”, had negotiated the purchase of the lease of the Glasshouse Hotel at 51 Gipps Street, Collingwood for a price of $260,000 plus the value of stock and adjustments. The lease was to be for five years with three options of renewal each of five years, a total possible tenure of 20 years. The solicitors advised the Board that the sale of 35 Park Street for $475,000 had not settled on 22 February 1998 as required and a Notice of Rescission had been served. The solicitors further advised the Board that the defendant believed that he was entitled to borrow $320,000 from Mrs Sleight to assist him in the purchase of the hotel business at 8 percent per annum payable monthly, to be secured by a debenture over the assets of the Hotel. A copy of the “Authority” (the document dated 20 December 1997) was enclosed. The solicitors stated that, in view of the uncertainty over the sale of the Park Street property, the defendant had negotiated a two year loan of $320,000 at 8% interest on the security of the property and that it was intended that in consideration of the title being made available the defendant would pay interest at 7% to Mrs Sleight. The solicitors sought the Board’s approval of both proposals.
By letter dated 17 March 1998, the defendant’s then solicitors again wrote to the Board, for the attention of Mr McArthur. The letter refers to a telephone conversation of 16 March and the subsequent receipt of further instructions from the defendant. The solicitors then referred to the defendant’s “share” of the estate and indicated that it would pass to his three sons (aged 21, 18 and 16) if the defendant predeceased Mrs Sleight. They set out estimates of Mrs Sleight’s income and expenses and then went on to say:
“Clearly Mr Hayden is a favourite nephew of Mrs Sleight and is no doubt being rewarded for the attention that he has given her over the years. We are instructed that in her lucid moments Mrs Sleight has well understood that Mr Hayden wished to purchase a hotel and she encouraged him to do so.
When entering into the contract for the purchase of the Glasshouse Hotel Mr Hayden believed that this was a proper use of his aunt’s money as he would be able to pay her a higher rate of interest… [they then referred to the security of a debenture over the defendant’s company’s assets]…
The current valuation… of the property at 42 Albert Road in $825,000 and this we understand has been left in its entirety to Mr Hayden in Mrs Sleight’s Will… [they then proposed a charge over the defendant’s ‘share of the estate’].”
The solicitors’ letter concluded by requesting that in all the circumstances approval be given by the Board to the proposal “as it is in the interests and for the benefit of Mrs Sleight and it is unlikely to affect the interests of others who are her potential beneficiaries”.
I note that it was false to state that the defendant was a nephew of Mrs Sleight and that she was his aunt. I am satisfied that the solicitors were given those false instructions by the defendant for the purpose of his application to the Board.
The following orders were made by the Board on 17 March 1998 (the same date as the solicitors’ second letter):
“Upon an Application made Pursuant to Section 55 of the Act dated 12 March, 1998 by the Administrator Roger Hayden of 9 Hodgson Terrace, Richmond, 3121 for advice relating to the exercise of the powers under the Administration Order made on 18 December, 1995
THE BOARD HEREBY ORDERS:
1.That the Administrator be authorised to borrow the sum of $320,000.00 from the Estate of the Represented Person to enable the Administrator or his nominee purchase the lease and stock of the Glasshouse Hotel, Collingwood.
2.That there be a registered mortgage or debenture over the assets of the Administrator or his nominee in favour of the Represented person drawn by a current legal practitioner in accordance with usual commercial lending principles and, inter alia, including:-
2.1An interest rate of 7.5% per annum (9.5% per annum in event of any default) calculated and paid quarterly.
2.2The principal and interest outstanding to be repaid within three months of the death of the Represented Person.
2.3If the nominee of the Administrator is the purchaser of the lease, the Administrator personally guarantee the nominee’s performance under the mortgage or debenture.
3.That the Administrator grant a charge over his entitlement under the Will of the Represented Person in favour of the other beneficiaries of the Estate of the Represented Person, such charge to become effective in the event of there being a default by the Administrator or his nominee of any covenant, duty or responsibility as set out in the mortgage or debenture referred in Clause 2 hereof.
4.That copies of the mortgage or debenture and charge be lodged with the Board.”
On the material before the Court, I must comment that it seems an extraordinary and improper order for the Board to have made, permitting an administrator to lend to himself or a nominee substantial monies from Mrs Sleight’s estate for a business venture of his own without any apparent security other than the business itself, notwithstanding the charge to be granted over his potential interest under what might or might not in due course be proved as her last will.
The Park Street sale settled and the sum of $320,000 was lent by the defendant as administrator to the defendant’s company (Vicksure) and apparently a debenture was given by Vicksure over its assets. The defendant also charged his share as beneficiary in the estate of Mrs Sleight by a document dated 18 April 1998. Interest was paid for some time but the hotel business subsequently failed and the lease was lost and Vicksure was unable to repay the balance of monies due. The defendant never gave a guarantee as required by para. 2.3 of the Board’s order but it would seem that he would at present be unable to repay anything of the balance of loan plus interest, which now amounts to nearly $400,000.
It appears from a summary provided by the defendant at trial that Vicksure’s debt of $400,000 includes an advance of $12,000 procured by the defendant from the estate of Mrs Sleight on 29 December 1999. The defendant said that there had been a partial repayment of loan principal on 29 June 1998 of $22,983.84 and he contended, therefore, that the advance on 29 December 1999 of $12,000 was simply part of the original approved advance of $320,000 and was required “for working capital needed as a result of fires and thefts at the hotel”. However the circumstances were different by 29 December 1999. Numerous infringement notices had been received and penalties paid in respect of the defendant’s operation of the hotel business. On or about 25 June 1999 an application was brought by the Licensing Inspector of the Victoria Police to VCAT for an enquiry under s. 90 of the Liquor Control Reform Act 1998. There was a substantial fire in the hotel (including the hotel kitchen) in September 1999 which closed the kitchen and had an ongoing damaging effect on the business. The defendant was arrested on the premises of the hotel on charges of being drunk in a public place and of being in breach of the Drugs Poisons and Controlled Substances Act on 3 November 1999. On 19 December 1999 a burglary occurred on the hotel premises and about $9,000-$10,000 in cash was taken. On 24 December 1999 four penalty infringement notices were served on the defendant. At the time that the defendant procured this further advance of $12,000 for Vicksure on 29 December 1999, Vicksure was substantially in arrears of payment of interest on the loan for the previous financial year and had paid no interest at all in the then current financial year. No further interest was ever paid.
On 18 February 2000, following complaints by various persons, the defendant was replaced as administrator of the estate of Mrs Sleight by two other persons. They have subsequently been replaced by the plaintiff. In August 2001 Mrs Sleight was admitted to a special accommodation institution, Vaucluse Hospital, Brunswick, and has since resided there.
As at June 2000, Dr Mannerheim considered that Mrs Sleight’s dementia had increased but that, despite her many serious physical ailments and diseases, she could live to 100. Dr Bonwick, her treating doctor since she moved to the hospital, says that “her mental state is one of confusion in time and place with minimal short-term memory and very poor long-term memory”. I am satisfied on the material before the Court that Mrs Sleight does not now have testamentary capacity and that she has not possessed such capacity for some years. There is no likelihood of improvement. In his affidavit, Mr Wnek describes a conversation which he had with Mrs Sleight on 5 March 2002. He records the answers and comments which she made in response to various questions which he put to her. I am not satisfied that any of her answers and comments can be treated as accurately reflecting or suggesting her likely intentions in relation to a will, if she had the present capacity to make one. I accept Mr Wnek’s assessment that she was confused and appeared to have little recollection of her earlier life. Dr Bonwick’s medical opinion is to the same effect.
Since the appointment of the plaintiff as administrator and Mrs Sleight’s admission to the Vaucluse Hospital, her real estate has been sold with the following financial consequences. The total monies which now comprise her estate are about $1.7M. That sum includes the sum of $945,045.28, being the net proceeds of 42 Albert Road, South Melbourne, to which the defendant would become entitled under her will of 12 January 1995 (see s. 53(1) Guardianship and Administration Act 1986). If it be assumed that Mrs Sleight’s net estate will on her death be, say, $1.5M, a distribution under the will of 12 January 1995 would result in an approximate benefit of some $558,000 to the defendant (the net proceeds of $945,000 plus house contents less the loan and interest of $400,000 charged thereon). That would leave some $948,000 to be distributed pro-rata amongst pecuniary legatees who were left a total of $1,240,000. There would be no residuary estate. If, on the other hand, all benefits to the defendant were removed from the will as the plaintiff seeks, the pecuniary legatees would receive their full amounts and there would be some $260,000 payable to the remaining residuary beneficiary.
Relevant aspects of the applicable law
In Monger v Taylor [2000] VSC 304, Gillard J provided a useful summary of the relevant provisions of the Wills Act and of the relevant Rules of the Supreme Court and the procedures thereunder. Gillard J also referred to the English statutory provisions and to the oft-quoted statements of Megarry V-C in In re D(J) [1982] Ch 237. As Gillard J noted, the English provisions provide little guidance for the exercise of the jurisdiction. Megarry V-C discerned from previous cases under the English Mental Health Acts a number of broad and non-exhaustive principles, propositions or factors relevant to the exercise of discretion, which I paraphrase as follows:
(i)it is to be assumed that the person is having a brief lucid interval at a time when the will is to be made;
(ii)during the lucid interval the patient has a full knowledge of the past (and a full realisation that he or she will thereafter relapse into the previous state of incapacity);
(iii)it is the actual person who has to be considered not the hypothetical person – the Court must take the person as he or she was before losing testamentary capacity with his or her antipathies, views and affections – the Court must seek to make the will which the actual patient, acting reasonably, would have made if restored to full capacity;
(iv)during the hypothetical lucid interval the person is to be envisaged as being advised by competent solicitors;
(v)the person is to be envisaged as taking a broad brush to the claims on his or her bounty.
I would agree with Gillard J that much of what was said by Megarry V-C can usefully be applied in considering the question of leave under s. 26 of the Wills Act 1997. However, the express requirement in s. 26(b) of satisfaction that the proposed will or revocation “accurately reflects the likely intentions of the person, if he or she had testamentary capacity” must at all times be borne in mind. This language appears to have been derived from the South Australian Wills (Wills for Persons Lacking Testamentary Capacity) Amendment Act 1996 which introduced a new s. 7 into the Wills Act 1936 (SA): in s. 7(3)(b) of that Act the words “would accurately reflect the likely intentions of the person” were utilised. The South Australian provisions of 1996 were the first of the kind enacted in Australia. The test or approach so adopted perhaps goes back to the English lunacy jurisdiction. In Ex parte Whitbread (1816) 2 Mer 99; 35 ER 878, the Lord Chancellor, Lord Eldon, spoke of the practice of making an allowance for the relations of a lunatic in cases where the estate of a lunatic was considerable, based upon “what it is likely the Lunatic himself would do, if he were in a capacity to act”. In In re Darling (1888) 39 ChD 208, 212, 213, members of the Court of Appeal spoke of the need to be satisfied as to what the lunatic himself would have done, if sane (see too In re Freeman [1927] 1 Ch 479, 488, per Lord Hanworth MR).
In Hill v Hill [2001] VSC 83, Mrs Hill was 93 years of age and lacked testamentary capacity. When 89, she had made a will leaving her estate (which mainly comprised a residential unit worth some $220,000) to be divided equally between her daughter and the Cat Protection Society of Victoria. Mrs Hill had been a passionate cat lover and a member of the Society. The provision for her daughter was apparently only included at the suggestion of the Treasurer of the Society. Byrne J was satisfied on the evidence that Mrs Hill had testamentary capacity in 1996 and that the terms of her will represented her intentions at the time the will was made in 1996. However, there was evidence that in 1998, while still mentally alert, she had on a number of occasions expressed regrets at the terms of her will and a desire that her daughter should inherit her unit. Byrne J was satisfied on all the evidence that Mrs Hill had changed her mind and he was satisfied, on the balance of probabilities, that, if possessing testamentary capacity, she would today have benefited her daughter at the expense of the Society. Byrne J was also satisfied of the reasonableness, in all the circumstances, of making the daughter the sole beneficiary.
On the other hand, in Re Fletcher [2001] VSC 109, Byrne J refused an application for a statutory will. In that case Mrs Fletcher’s will of 1967 and codicil of 1970 in effect provided that her two children, John Fletcher and Celia Cox would take her estate in equal shares. In essence, the subsequent facts were that between 1993 and 1998, John Fletcher had received substantial advances from Mrs Fletcher which were not repaid and John Fletcher then became bankrupt. The administrator of Mrs Fletcher’s estate contended that equality should be restored between the children by taking into account these advances. Byrne J emphasised the necessity to satisfy the express statutory requirement that the proposed will reflect the person’s likely intentions. Byrne J was not prepared to infer or conclude that Mrs Fletcher’s likely intentions would have been to restore equality between the children. She may have treated John Fletcher as the prodigal son. There may have been other relevant matters affecting her intentions in relation to her children (no notice of the application had been given to John Fletcher who had not been located). Byrne J concluded that it was not for the Court to impose upon Mrs Fletcher an intention which he thought “she might or ought to have”.
In order to meet the requirements of s. 26(b) of the Wills Act 1997, the Court must be satisfied on the balance of probabilities that the proposed will or revocation accurately reflects the “likely” intentions of the person. The use of the word “accurately” indicates the need for the proposed will to reproduce the person’s intentions with a substantial degree of precision and exactitude. Nevertheless, it is the “likely” intentions of the person which are to be ascertained. Of necessity, the likely intentions must be derived from all such relevant evidence and information as may be available concerning the actual intentions, attitudes and predispositions of the person from time to time in the past - but that is not to say, in a given case, that a court may not be able to conclude in the absence of much or any evidence concerning the particular person, that it is more likely than not that the person in the events which have occurred would have, as a normal decent person, reacted in a particular way to those events and formed the relevant intentions as a result.
In Re C (a patient) [1991] 3 All ER 866, an order was made under the Mental Health Act 1983 (UK), making a will for a person who had from birth suffered a severe mental disability. Hoffman J invoked the authorities which decided that the will must reflect the court’s view of what the actual patient might be expected to provide and not (if different) what some reasonable person in the patient’s position would have done (at p. 869). His Lordship went on (at p.870) to say that, in a case where there could be no evidence of the patient’s likely actual intentions, that in “the absence of evidence to the contrary, the court must assume that she would have been a normal decent person… no less should be assumed of any person…”.
The present case is of course quite different in some respects, as are the statutory provisions. There is much evidence of Mrs Sleight’s testamentary intentions in the past. There is broad general evidence concerning Mrs Sleight’s character, that of a friendly, independent minded and decent person. Nevertheless there is no direct subjective evidence as to whether she would have altered her will, and if so how, in the light of events since her last known will. In this situation, the Court is entitled to assume that she is likely to have acted or reacted as a normal, decent person is likely to have acted or reacted in all the circumstances.
Proposed will
The will proposed by the plaintiff, apart from some drafting, typographical and other minor changes differs in the following substantial respects from Mrs Sleight’s wills of 11 August 1993 and 12 January 1995:
(a) State Trustees Ltd is substituted for the defendant as executor and trustee;
(b)the legacy of $20,000 to the defendant’s mother is deleted;
(c)all benefits to the defendant (i.e. the gift of the house and contents and half of the residuary estate) are deleted;
(d)“the fund set up to commemorate and honour the late Sir Edward (Weary) Dunlop” is substituted by “The Sir Edward Dunlop Medical Research Foundation” as the residuary beneficiary.
The principal issues in this proceeding therefore may be encapsulated as follows:
(i)does the removal of the defendant from benefits under the will accurately reflect the likely intentions of Mrs Sleight, if she had testamentary capacity; and
(ii)is it reasonable in all the circumstances to authorise the making of such a will?
Does the proposed will accurately reflect the likely intentions of Mrs Sleight, if she had testamentary capacity?
It seems distinctly possible, on the evidence and information before the Court, that Mrs Sleight lacked testamentary capacity at the time of making her 1995 will. Neither party so contended, although counsel for the plaintiff said that “[b]efore she lost capacity and perhaps during the twilight years whilst that capacity was ebbing away, she made a number of wills”. It is conceivable also that evidence admissible in a probate suit might lead a court not to be satisfied that Mrs Sleight possessed testamentary capacity in 1993. However, the material before the Court in this proceeding does, in my view, on balance, support the conclusion that at least the 11 August 1993 will reflects Mrs Sleight’s then real and sane intentions. The 12 January 1995 will was in substance the same as the 11 August 1993 will so that Mrs Sleight’s mental state in January 1995 is of little importance for present purposes. The parties in this proceeding were both content to proceed on the basis that Mrs Sleight’s wills of 11 August 1993 and 12 January 1995 reflected her real and sane intentions on those dates. In other words, it was common ground, and I so find, that the correct starting point for ascertaining the present likely intentions of Mrs Sleight, if of full capacity, was the contents of her 11 August 1993 and 12 January 1995 wills. Where the parties differed was on the question (in essence) whether the court should be satisfied that relevant events since January 1995 would have caused her to alter her will in any way, in particular, by deleting the benefits to the defendant. The prime but not the only question debated was thus whether a will, along the lines of those previous wills but deleting the benefits to the defendant, accurately reflected the likely intentions of Mrs Sleight, if she now had testamentary capacity.
In my opinion the conduct of the defendant since 12 January 1995 has been such that Mrs Sleight, if possessing testamentary capacity and knowledge of that conduct, is likely to have removed all benefits in his favour from her will. The principal features of his conduct were:
¨ the procuring from Mrs Sleight of the written agreement to invest $320,000 in the hotel business at a time when her estate was in need of and therefore under administration and he was the administrator;
¨ the misrepresentation to the Board that he was a nephew of Mrs Sleight;
¨ his evident failure, despite the Board’s approval of the loan, to consider sufficiently the interests of Mrs Sleight or to put her interests before his own in procuring the loan for his own somewhat speculative business interests;
¨ his failure to provide the guarantee required by the Board;
¨ again as administrator, procuring an advance of $12,000 from Mrs Sleight’s estate in December 1999 for the purpose of working capital, when the risk of business failure was apparent and interest on the loan was already in arrears;
¨ his behaviour both as administrator and personally as deposed to by Ms Synott (see para [21] above).
I consider that the defendant’s said conduct in relation to Mrs Sleight would be considered by most people to be reprehensible and disgraceful. There is no specific evidence of what Mrs Sleight’s own attitude would have been likely to be in relation to such conduct but it is evident that she was a normal, decent person. I consider that Mrs Sleight in her position, if possessing testamentary capacity, is very likely to have reacted in the way most normal, decent people would react to such conduct. I am strongly of the view that Mrs Sleight is likely to have regarded the defendant’s conduct as reprehensible and disgraceful. There was evidence that Mrs Sleight was more than ready to change her testamentary provisions and beneficiaries from time to time. I find that Mrs Sleight is likely to have disinherited the defendant as a result of his said conduct. I am satisfied on the balance of probabilities that a will which excludes the defendant from all benefits accurately reflects the likely intentions of Mrs Sleight, if she had testamentary capacity. It was submitted that (if that point was reached) Mrs Sleight would nevertheless have, by her will, released the defendant from any liability to her estate for the balance of loan and interest. It is not apparent that the defendant has any such personal liability to the estate but, in any event, I consider it likely that Mrs Sleight would simply have treated the debt as unlikely to be recovered from the defendant without making any specific provision in her will about it. Certainly I am not satisfied that a release provision would reflect her likely intentions.
I turn to other aspects of the proposed will. I am satisfied that a will containing the following further provisions accurately reflects the likely intentions of Mrs Sleight:
(a)legacies to Elizabeth Gladwin, Beryl Smith, John Gladwin, Roger Bodinnar, Valda Street, Francene Miller, Lenore Hayden, The Royal Victorian Institute for the Blind, and the Anti-Cancer Council in the same amounts as contained in her wills of 11 August 1993 and 12 January 1995;
(b)the legacy of $250,000 (left to Charles Gladwin by the said wills) to her niece Margaret Gladwin in lieu of her late brother Charles Gladwin on the basis that Clause 7 of those wills provided for issue to take the share of a deceased parent;
(c)an additional amount of $150,000 added to the legacy under these wills of her niece Elizabeth Gladwin (thus totalling $300,000) as a result of the death of her sister-in-law Gwenneth Gladwin (Elizabeth’s mother), for the same reason as in (b);
(d)the legacy of $50,000 to the former Church of England Home for Boys and Girls under those wills to be given to Anglicare Victoria as, on the evidence, the appropriate substituted charity;
(e)the description of the remaining residuary beneficiary to be changed from the vague reference to “the fund set up to commemorate and honour the late Sir Edward ‘Weary’ Dunlop” to “The Sir Edward Dunlop Medical Research Foundation”, having regard to the material contained in the affidavit of Dino de Marchi sworn 19 March 2002 and the exhibit thereto;
(f)the substitution of the plaintiff for the defendant as executor and trustee, the plaintiff being the existing administrator and also having regard to the past conduct of the defendant.
I note that I could not be satisfied of any proper basis to delete the legacy to the defendant’s mother.
Is it reasonable in all the circumstances for the Court to authorise the making of a will containing the abovementioned provisions?
I take into account all of the facts to which reference has been made. I also take into account that the defendant’s obligation as administrator under s. 49(1) of the Guardianship and Administration Act 1986 was to act in the best interests of Mrs Sleight, which he manifestly failed to do. An administrator, although not strictly a trustee, is a fiduciary (cf Clay v Clay (2001) 202 CLR 410 at 428-430). In my opinion, viewed objectively, the defendant’s conduct was such that he should not receive any benefit from the estate. Such assistance and friendship as he accorded to Mrs Sleight was more than satisfied by the loan to Vicksure which has not been and in all likelihood cannot be repaid. In my opinion it is therefore reasonable in all the circumstances to authorise the making of a will for Mrs Sleight in the terms specified for all the reasons mentioned and further I consider that the making of such a will should be authorised.
Conclusion
For the foregoing reasons, leave to make this application was granted and final orders authorising a will to be made were pronounced on 26 March 2002. I will hear submissions as to costs.
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