Vagg v McPhee - [2013] NSWCA 29

Court of Appeal

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Vagg v McPhee [2013] NSWCA 29
Hearing dates: 4 February 2013
Decision date: 22 February 2013
Before: Basten JA at [1];
Ward JA at [24];
Tobias AJA at [25]
Decision:
Appeal dismissed. Written submissions on costs to be filed and served by the respondents within seven days of the publication of these reasons with the appellants to have a further seven days to respond thereto.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
PROFESSIONAL NEGLIGENCE - legal - advice in connection with execution of will - whether failure to explain possibility of severance of joint tenancy - whether duty of care owed to deceased's children

EVIDENCE - challenge to factual findings and assessment of witnesses - whether primary judge erred in failing to recognise requirement of close scrutiny of evidence of conversations with deceased person - whether primary judge erred in failing to consider absence of corroborating evidence - whether primary judge erred in assessment of documentary evidence of circumstances surrounding execution of will
WILLS AND ESTATES - whether terms of will reflected instructions of testatrix - evidence of instructions
Legislation Cited: Conveyancing Act 1919
Land Title Act 1994 (Qld)
Real Property Act 1900
Cases Cited: Baira v RHG Mortgage Corporation Limited [2012] NSWCA 387
Carr-Glynn v Frearsons [1999] Ch 326
Clarke v Bruce Lance & Co [1988] 1 All ER 364
Fox v Percy [2003] HCA 22; (2003) 214 NSWLR 118
Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159
Queensland Art Gallery Board of Trustees v Henderson Trout [2000] QCA 93
Miller v Cooney [2004] NSWCA 380
Ross v Caunters [1980] Ch 297
Smeaton v Pattison [2003] QCA 341
Smeaton v Pattison [2002] QSC 431
Watson v Foxman (1995) 49 NSWLR 315
Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277
White v Jones [1995] UKHL 5; [1995] 2 AC 207
Category: Principal judgment
Parties: Margaret Doreen Vagg (First Appellant)
Benjamin John Vagg (Second Appellant)
Julia Lillian Vagg (Third Appellant)
Cecilia Anne Vagg (Fourth Appellant)
James Gregory Vagg (Fifth Appellant)
Paul McPhee (First Respondent)
Trevor Cork (Second Respondent)
David Dunkley (Third Respondent)
Steven Nicholson (Fourth Respondent)
Representation: Counsel:
P Webb QC with E W Young (Appellants)
J C Kelly SC (Respondents)
Solicitors:
Turner Freeman (Appellants)
Colin Biggers & Paisley (Respondents)

File Number(s): CA13018 of 2012
Decision under appeal

Citation:

[2011] NSWSC 1584

Date of Decision:

2011-12-19 00:00:00

Before:

Schmidt J

File Number(s):

CL297399 of 2009 (formerly 20072 of 2009)

Judgment

BASTEN JA: Julia Patricia Vagg (the testatrix) died on 14 March 2005. Pursuant to a will dated 27 January 2005, after gifts of specific items of personal property, she left the residue of her estate to be divided equally between her five children.

At the date of her death, the testatrix lived at 15 Singles Ridge Road, Winmalee, which she owned as joint tenant with her husband, Carl Stanly Vagg. For a period the house had been let, but after the testatrix separated from her husband in early January 2001, she and her children moved into the house at Winmalee. During that year she obtained advice from a partner in the respondent law firm that, if the Winmalee property were held in joint tenancy, according to the principle of survivorship, when one joint tenant died his or her interest in the property would pass to the other.

When, in January 2005, the testatrix gave instructions for her last will, she knew that she and her husband owned the Winmalee property as joint tenants in equal shares. She gave instructions to a solicitor employed by the respondent law firm to include in her will a request that the house be sold and "the money received from that sale be given to our children for their education, to enable them to pay any HECS debts that they may have or incur". That request was included in the will as clause 11.

The present proceedings were brought by the five beneficiaries entitled to the testatrix' residuary estate. Although the eldest daughter, Ms Margaret Vagg, was named as the executrix of the estate, she did not sue in that capacity on behalf of the estate. Rather, the pleadings alleged a duty of care owed by the respondent law firm to ensure that the plaintiffs as beneficiaries named in the will received "the benefit of the assets of" the testatrix, as the testatrix had wished: Statement of Claim, par 8. The particulars of breach included a failure to advise the testatrix that she could unilaterally sever the joint tenancy and a failure to take instructions to take the necessary step to give effect to that advice.

In order to establish the intentions of the testatrix at various points in time, the instructions she gave to the respondent law firm, the advice she was given and other related matters, evidence was proffered as to conversations between the testatrix and three of her children and evidence, in response, from the solicitors who had advised her, both in 2001 and in 2005.

The trial judge (Schmidt J) dismissed the claims on a number of bases: [2011] NSWSC 1584. The notice of appeal challenged a plethora of factual findings, identified at various levels of particularity. The notice contained 78 grounds as originally drafted and 68 after the Registrar had directed that further consideration be given to the prolixity of the document. However, the respondents submitted that the claim failed at the threshold because there was no duty at law owed to the beneficiaries in the circumstances of the case.

If that submission be correct, it is unnecessary to engage with the lengthy analysis of the evidence and factual findings proposed by the appellants. The respondents' submission on the failure to establish a duty of care owed to the beneficiaries in the circumstances of this case is correct. It follows that the appeal must be dismissed for that reason.

Duty of care

Until late last century, the general law principle denied that where, through the negligence of a solicitor, a gift intended under a will did not take effect, the prospective beneficiary had any right of action against the solicitor. The solicitor's duty, both in contract and in tort, was owed to the client who gave instructions for preparation and execution of the will. The disappointed beneficiary had no legal right or entitlement, but only an expectation, which sounded in a claim for economic loss. When claims in negligence for economic loss became available in 1964, at least one basis for the old principle fell away.

The critical departure from the general law principle as it existed under English law came with the decision in Ross v Caunters [1980] Ch 297, where Vice-Chancellor Megarry upheld a claim against solicitors who sent the will to the testator for execution, but failed to warn him that it should not be witnessed by the spouse of a beneficiary. That failure (together with the failure to notice the identity of the attesting witness when the will was returned to the solicitors) resulted in the beneficiary forfeiting her interest under the will. The estate had suffered no loss by the breach of duty to the testator, but the disappointed beneficiary, under the rule then in force, had no right of action. Megarry VC upheld the claim in damages against the solicitor by the disappointed beneficiary; he expressed the policy in succinct terms (at 303):

"The only person who has a valid claim has suffered no loss, and the only person who has suffered a loss has no valid claim. However great the negligence, and however great the loss, the solicitors would be under no liability to pay substantial damages to anyone."

The correctness of that approach was affirmed in England by the House of Lords in White v Jones [1995] 2 AC 207 and adopted by the High Court in Hill v Van Erp [1997] HCA 9; 188 CLR 159. Lord Goff in White v Jones at 268 concluded:

"...that the assumption of responsibility by the solicitor towards his client should be held in law to extend to the intended beneficiary who (as the solicitor can reasonably foresee) may, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor."

The present case differed in three significant respects from these authorities. First, there was in the present case no specific bequest or devise which failed because of the want of due care on the part of the solicitors in having the will properly executed. Secondly, far from indicating an intention that a particular item of property should go to a nominated beneficiary, the present will reflected an understanding of the current ownership of the Winmalee property and a correct legal understanding that the interest of the testatrix would not form part of her estate. Those matters were reflected in the "request" in clause 11.

Thirdly, the case did not fulfil the analysis succinctly stated by Megarry VC in Ross v Caunters and relied on in White v Jones and Hill v Van Erp, namely that the person to whom the duty was owed (the testator and thus the estate) had no claim for more than nominal damages for its breach. By contrast, in a case where the failure on the part of the solicitor is, in effect, to bring some asset within the residuary estate, the estate itself suffers a loss. In such a case, the justification for finding a duty in favour of the beneficiaries lies outside the rationale of the extension in Hill v Van Erp.

The only expansion of that principle, on the authorities to which this Court was taken, is to be found in the English case of Carr-Glynn v Frearsons [1999] Ch 326. That case involved the execution by the testatrix of a new will, varying gifts made by an earlier will. The testatrix apparently had no children of her own but sought to benefit the two children of her sister Jessie, namely her niece (the appellant) and her nephew Peter. In 1953 she had bought a property, "Homelands", for Jessie and the two children. In 1969 she had transferred the property into the joint names of herself and her nephew Peter. By a will made in 1983, she left her interest in the property to Peter and the moneys standing to her credit in a bank account to the appellant. In 1989 she sought to change the will so as to leave her half share in the property to her niece and the bank account to another nephew (not one of Jessie's children). Although the solicitor who drew up the second will foresaw a problem if the property were held by her and Peter as joint tenants, no steps were taken to sever the joint tenancy before the death of the testatrix. As a result, the intention to leave a half share in the property to her niece failed, although the gift of the bank account to the other nephew was effective. As a result, the appellant niece got nothing.

As noted by Chadwick LJ (with the agreement of Butler-Sloss and Thorpe LJJ) at 333:

"In [White v Jones] the testator's intentions were frustrated by the solicitors' delay in carrying out his instructions to prepare a new will providing for legacies to his daughters. The testator died before the new will was available for execution. The House of Lords decided, by a majority, that the assumption of responsibility by a solicitor to his client, who had given instructions for the drawing up of a will for execution, extended to an intended beneficiary under the proposed will in circumstances where the solicitor could reasonably foresee that a consequence of his negligence might be the loss of the intended legacy without either the testator or his estate having a remedy against him. That statement of principle, ... reflects a passage in the speech of Lord Goff of Chieveley, with which Lord Browne-Wilkinson and Lord Nolan expressed agreement, at p 286....

At first sight the facts in the present case take it outside the principle as stated by Lord Goff. This is a case in which the estate itself would have a remedy.

The question, therefore, is whether the remedy which the House of Lords was prepared to extend to a disappointed beneficiary in White v Jones is confined to those cases, of which White v Jones was an example, in which the estate itself has no remedy - so that, absent a remedy at the suit of the beneficiary, there is no remedy at all; or is to be further extended to cases in which the estate does have a remedy but where the estate's remedy will be of no advantage to the disappointed beneficiary."

In one respect, Carr-Glynn supports the present appellants. The first issue which involved an extension of White v Jones was whether the duty to the intended beneficiary extended to "the service of a notice of severance without which the relevant provision in the will cannot take effect": at 335. The Court held that it did, Chadwick LJ reasoning at 335-336:

"It is essential to have in mind that, in the circumstances of the present case, the need to take care to ensure that the asset fell into the estate was integral to the carrying into effect of the testatrix's intention that her share in the property 'Homelands' should pass to the plaintiff under her will. It was because the testatrix was making an alteration to the provisions in clause 2(b) of the 1983 will - under which her share in that property had been devised to her co-owner - that the need for severance arose. This is not a case in which the solicitors were instructed to advise in relation to an inter vivos transaction which was independent of the will-making process. On a proper analysis, the service of a notice of severance was part of the will-making process. The plaintiff was as much an intended beneficiary of the severance as she was of the new clause 2(b) in the 1989 will. To refuse to treat the plaintiff as an intended beneficiary who (as the solicitors could reasonably foresee) might, as a result of their negligence in carrying the testatrix's testamentary instructions, be deprived of the legacy which she was intended to enjoy on the ground that the negligence lay in failing to get in the asset rather than to provide for its disposition would, in my view, properly be regarded as bizarre."

The second respect in which Carr-Glynn extended the principle in White v Jones arose from the fact that the estate did in fact have an available claim against the solicitors: the failure to arrange for severance resulted in the estate being deprived of an half interest in the property "Homelands". However, that remedy was of no avail to the appellant: any damages recoverable by the estate would fall into the residue, in which she had no interest.

By contrast, the present appellants seek to achieve precisely that relief which would have been available to the estate, namely the payment of a sum by way of damages which would form part of the residuary estate, to which they alone were entitled. Carr-Glynn is not authority for the proposition that the present appellants would be entitled to rely upon a duty owed to them. Indeed, at least by negative implication, it is authority for the proposition that White v Jones would not extend to provide a remedy to beneficiaries in circumstances where an equivalent remedy was available to the estate.

The trial judge referred to the decision of this Court in Miller v Cooney [2004] NSWCA 380. That case was factually similar to Carr-Glynn in the sense that there had been a failure to sever a joint tenancy, with the result that various gifts in the will failed. Sheller JA (with whom Hodgson and Santow JJA agreed) referred to the concurring judgment of Thorpe LJ in Carr-Glynn but distinguished the case on the basis that the solicitor in Miller was, on the facts, unaware of the risk that the property was not owned by the testatrix. It may be accepted that the Court would have followed Carr-Glynn, had the circumstances been the same. That conclusion does not, however, give any assistance to the appellants: it is not authority for the proposition that beneficiaries can enforce a duty supposedly owed to them by the solicitor for the testatrix in circumstances where there was an undoubted duty owed to the estate for which the estate had an effective remedy which would in turn have provided an identical outcome to that sought by the beneficiaries in their own names.

Conclusions

On one view, it may seem unduly pedantic to conclude that no duty of care is owed by solicitors to an intended beneficiary in circumstances where the estate has an effective remedy, but that a duty is owed in circumstances where the estate does not have a remedy sounding in substantial damages. Even if the law should sensibly overlook that distinction (which on the present state of authorities it cannot) there would be a further difficulty in granting relief in the present case.

In the cases referred to above where the beneficiary had been successful, the result has been to require payment of compensation by a solicitor who has failed to give effect to the testamentary instructions of his or her client. In each case, the instructions were discernable from the express terms of the will. Thus it was, in Carr-Glynn, appropriate to say in such circumstances that the need for severance was "integral to the carrying into effect of the testatrix's intention". No such intention was revealed in the present will. On the contrary, the "request" revealed that the testatrix understood that she could not (even assuming that she wanted to) dispose of her half interest in the Winmalee property. The question whether she wished to get in her half interest so as to be able to dispose of it was not integral to the terms of the will and involved a separate and discrete question, not covered by the principle in Hill v Van Erp. Assuming that a testatrix instructed the solicitor to take steps to acquire certain property (not then owned by her) to be disposed of by bequest in a proposed will, which requests due to unwarranted delay were not effected before her death, it would require a significant extension of current principle to hold that the prospective beneficiary could sue the solicitor in negligence for the value of the unacquired property.

The reasoning of the trial judge at [99]-[101] appears to reach the same conclusion as to the absence of duty to a potential beneficiary as that set out above.

The notice of appeal (ground 51) took issue with any finding which might have been contained at [101]. The appellants also challenged the formulation of the duty at [97] (ground 49). Because, for the reasons set out above, no duty enforceable by the appellants arose in the present case, the appeal should be dismissed.

It is therefore not necessary to consider the other grounds. If the foregoing reasoning is wrong, I agree with the additional reasons of Tobias AJA for dismissing the appeal. I agree with his proposed orders.

WARD JA: I agree that the appeal should be dismissed for the reasons given by Basten JA and Tobias AJA.

TOBIAS AJA: The late Julia Patricia Vagg (Mrs Vagg) died on 14 March 2005 having made her last will and testament on 27 January 2005. She appointed the first appellant her executrix and left her residuary estate to her and the other appellants, being her son and other two daughters.

On or about 20 January 2005 Mrs Vagg retained the firm of solicitors McPhee Kelshaw (the firm) to prepare her will. The four respondents are the relevant partners of the firm. For the purpose of giving instructions for the preparation of her will, Mrs Vagg consulted with Ms Anne Maree Woodward-Brown (Ms Woodward-Brown) who was an employed solicitor of the firm. In accordance with Mrs Vagg's instructions Ms Woodward-Brown prepared a will which contained the following provision:

11. I REQUEST that the house that I reside in and own jointly with my husband CARL STANLY VAGG at XX XXXXX XX XXXXX Road, Winmalee, be sold and the money received from that sale be given to our children for their education, to enable them to pay any HECS debts that they may have or incur.

The Winmalee property referred to in clause 11 of the will was owned by Mrs Vagg and her husband as joint tenants. Accordingly, her interest in the property was unable to be disposed of by will. Upon her death Mrs Vagg's interest would pass directly to her husband as the surviving joint tenant by right of survivorship. The only way for a joint tenant to dispose by will of his or her interest in a property subject to a joint tenancy is to sever the joint tenancy. A major issue in the present case was whether Mrs Vagg sought advice from Ms Woodward-Brown as to how she could avoid the operation of the right of survivorship and whether she was advised that that could be achieved by her unilaterally severing the joint tenancy.

On the appeal the appellants' case was that Mrs Vagg was advised that nothing could be done to avoid her husband's right of survivorship. Hence on her death the whole of the property vested in him. This explains, so it was contended, the form of clause 11 of the will being couched in terms of an unenforceable request.

Mr Vagg did not accede to the request contained in clause 11 of the will that the Winmalee property be sold and the proceeds received from the sale divided amongst the appellants in equal shares. The property was sold but the proceeds were used by Mr Vagg in conjunction with other monies to purchase a property at Coogee in which he resided at the time of trial.

On 27 February 2009 the appellants instituted proceedings against the respondents alleging that Ms Woodward-Brown was negligent in failing, relevantly, to advise Mrs Vagg that she could unilaterally sever the joint tenancy of the Winmalee property as a consequence of which her one half interest in that property would form part of her residuary estate. The foregoing is the allegation of negligence that was pleaded but as will appear it is not the case that was ultimately made by the appellants on appeal.

The proceedings were heard by Schmidt J who on 19 December 2011 ordered that they be dismissed. Her Honour essentially held that the proceedings failed on two grounds: first, that the duty of care on the part of Ms Woodward-Brown alleged by the appellants at trial did not exist; and, secondly, that even if it did the appellants had not established that Mrs Vagg would have taken the steps necessary to sever the joint tenancy so as to ensure that her residuary estate was increased by her one half interest in the Winmalee property. From her Honour's orders, the appellants appeal to this Court.

How the appellants' case was pleaded

The Statement of Claim pleaded the execution by Mrs Vagg of her will on 27 January 2005 pursuant to which the appellants were the beneficiaries of her residuary estate. In paragraph 8 it was alleged that the respondents owed each of the appellants

a duty of care to take all reasonable steps to ensure that the [appellants] receive the benefit of the assets of Mrs Vagg as Mrs Vagg wished.

Having then pleaded Mrs Vagg's interest in the Winmalee property, the Statement of Claim proceeded as follows:

14. In January 2005, Mrs Vagg instructed the defendants with respect to her wishes as to the distribution of her assets upon her death, including, inter alia, the fact of her holding a half share of the property, and the fact that it was held by her as a joint tenant.

15. Mrs Vagg expressly instructed the defendants that she wished the property to be sold and the value of her share of the property to be distributed to the plaintiffs in equal shares.

Paragraph 16 alleged that the respondents were in breach of their duty of care in that, relevantly, they failed to:

(a) advise Mrs Vagg that she could unilaterally sever the joint tenancy of the property pursuant to s.97 of the Real Property Act 1900 (NSW);

. . .

(f) seek instructions from Mrs Vagg to take . . . the [step] referred to in [sub-paragraph (a)].

The duty claimed as understood by the primary judge

At [66] of her reasons her Honour stated the appellants' case as alleging that the respondents had

failed in their duty to advise Mrs Vagg of the steps which could be taken to sever the joint tenancy, given her intention to maximise the size of her estate and to protect her children from financial adversity. The duty was to take reasonable care to effectuate Mrs Vagg's wishes. In the circumstances, proper, clear and appropriate advice had to be given about the property.

At [97] her Honour expressed the view that the appellants' claim depended:

... on them showing not only that the solicitor was under a duty to give Mrs Vagg advice about steps available to be taken, so that her interest in the Winmalee property formed a part of her residual estate on her death, but also that:

- she had a testamentary disposition [intention?] in relation to half the property being left to them; and

- that in those circumstances, a duty fell on the solicitor to ensure that Mrs Vagg took such steps, so that her residual estate would have included a half interest in the property, which they would have inherited under the terms of her will, on her death.

At [105] of her reasons her Honour held that there was no instruction given by Mrs Vagg that there should be any testamentary disposition of her one half interest in the Winmalee property in favour of the appellants without which the duty claimed by them to, in effect, take steps to sever the joint tenancy could not arise.

Thus at [107] the primary judge held that the respondents had no duty to take steps to seek further instructions from Mrs Vagg or to attempt to persuade her to pursue a course which the appellants perceived would have been in their financial interests in relation to the Winmalee property.

At [99] her Honour had noted that, relevantly, a solicitor's duty to a beneficiary was that he or she was required to take reasonable care to give effect to the client's intentions as to a stated testamentary disposition in favour of particular beneficiaries. A failure to prepare a will that was effective to achieve the client's testamentary intentions would constitute a breach of any such duty. However, in the present case her Honour considered that the duty asserted by the appellants at trial involved a considerable expansion of that owed by a solicitor to a beneficiary under a will. That extension was encapsulated at [97] of her reasons the relevant portion of which I have recorded at [36] above.

The appellants' submissions on the issue of duty on the appeal

On the hearing of the appeal the appellants denied that the duty of care they alleged involved any expansion of established law. In fact the duty of care and breach now alleged does not seem to have any relationship to the will prepared by Ms Woodward-Brown in accordance with what she understood to be her instructions. In particular, the appellants eschewed any suggestion that they were asserting a duty of care on the part of Ms Woodward-Brown to ensure that Mrs Vagg took steps to sever the joint tenancy so as to enable her one half share of the Winmalee property to form part of her residuary estate.

As articulated in oral argument, the appellants took issue with her Honour's conclusion at [74] of her reasons that it was unnecessary to come to a concluded view as to whether the respondents' retainer included not only the preparation of Mrs Vagg's will, but also the giving of advice as to the steps which could be taken in relation to her joint interest in the Winmalee property. They submitted that the crux of their case required the identification of the instructions that constituted the terms of that retainer and, in particular, the instructions which Mrs Vagg gave to Ms Woodward-Brown.

It was submitted that the retainer included the provision of advice about what could be done to avoid the inevitable vesting of Mrs Vagg's interest in the Winmalee property in her husband upon her death. It was thus contended that Mrs Vagg expressly sought advice from Ms Woodward-Brown as to what could be done to avoid the inevitable operation of the right of survivorship upon her death as a consequence of the Winmalee property being held by her and her husband as joint tenants. Such advice having been sought, Ms Woodward-Brown had a duty to use reasonable care to provide accurate advice which she failed to do when she advised Mrs Vagg that nothing could be done about it. In other words she was not told that survivorship could be avoided by severance of the joint tenancy which could be achieved unilaterally under the provisions of the Real Property Act 1900. Hence all that could be done was for clause 11 to be inserted into the will in the hope that Mrs Vagg's husband would accede to the request that the property be sold and the whole of the proceeds divided amongst their children.

There are a number of difficulties with the foregoing submission, not the least of which is that her Honour concluded (at [103]) that there was no evidence of an intended testamentary disposition by Mrs Vagg of her one half share of the Winmalee property in favour of the appellants. Her Honour held that Mrs Vagg had never discussed with the children their receiving only her one half interest in the property and there was no evidence that she wanted to take steps to give them only that half share. There were no instructions, her Honour held, given to Ms Woodward-Brown to deal with Mrs Vagg's half of the property other than by way of the request contained in clause 11 of the executed will.

The appellants' case on appeal assumed that the duty of care relied upon was owed by Ms Woodward-Brown to the appellants as beneficiaries of Mrs Vagg's residuary estate. This assumption was wrong. As the case made was, in effect, one of negligent advice provided by Ms Woodward-Brown to Mrs Vagg, any relevant duty of care was owed only to Mrs Vagg. Accordingly, if there had been a breach of that duty which resulted in Mrs Vagg's estate being deprived of her one half share in the Winmalee property, any proceedings for damages for that breach could only have been brought by the first appellant as executrix of the estate. The appellants as beneficiaries thus had no standing to bring the present proceedings as now particularised. This notwithstanding, it is appropriate to deal with the merits of the appellants' case.

The appellants' written submissions were replete with the following contentions. First, Mrs Vagg was aware that she and her husband held the Winmalee property as joint tenants; secondly, she was aware that upon her death the effect of the joint tenancy would be that the whole property would vest in her husband; thirdly, she was aware that she had no right to the whole of the property but only to a one half share as joint tenant; fourthly, Mrs Vagg sought advice from Ms Woodward-Brown as to how the consequence of survivorship on her death could be avoided; fifthly, she made Ms Woodward-Brown aware that she wanted her children to receive her one half share of the Winmalee property and, sixthly, she sought advice as to how that could be achieved. The appellants' ultimate complaint was that that advice was not given but, on the contrary, Mrs Vagg was informed that nothing could be done to achieve her testamentary intention. In other words, she was not advised by Ms Woodward-Brown that the joint tenancy could be severed by her unilaterally.

It is in the above context that the appellants submitted that the distinction at [103] of her Honour's reasons concerning whether Mrs Vagg intended her children to receive the whole or only her half share of the Winmalee property was "specious". It was contended that the three appellants who gave evidence (Margaret, Julia and Cecilia), as well as Mrs Vagg, knew that the latter only had a joint interest in the Winmalee property, that she did not own the whole of it, and that she therefore did not have the capacity to provide her children with the whole of the proceeds. Her statements to those of the appellants who gave evidence of her desire to provide her children with the proceeds of the sale of the property referred, so it was submitted, to the amount which could be obtained from the sale of her one half interest. Her Honour found, in effect, that there was no such evidence, a conclusion with which I concur.

The relevant legal principles

It is well established in both English and Australian law that a solicitor is liable to a person who does not receive an intended benefit under a will due to the solicitor's negligent preparation, drawing or execution of the will. The leading English case is White v Jones [1995] UKHL 5; [1995] 2 AC 207, which was followed by the High Court in Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159.

Liability in this situation has been justified in part on the basis that the law of negligence must fill a lacuna in the law: but for the existence of a duty of care to the beneficiaries, the only person who might have a valid claim (the testator and subsequently the estate) has suffered no loss, and the only person who has suffered a loss has no claim: White v Jones at 259 per Lord Goff; Hill v Van Erp at 195 per Gaudron J. The existence of a duty of care is supported by the fact that there can be no conflict of interest between the solicitor and client, on the one hand, and the intended beneficiary on the other: White v Jones at 276 per Lord Browne-Wilkinson; Hill v Van Erp at 187 per Dawson J; at 236 per Gummow J.

Certain limitations on the duty are clear. First, a solicitor is not liable to a potential devisee under a will for negligence when acting for the testator in an inter vivos transaction affecting the subject matter of the devise: Clarke v Bruce Lance & Co [1988] 1 All ER 364 (CA). Secondly, no liability arises where the defect in the will comes to light before the death of the testator, so as to be remediable: White v Jones at 268 per Lord Goff. Thirdly, the solicitor's duty is circumscribed by the terms of the retainer and the instructions of the client, to whom the primary duty is owed: Queensland Art Gallery Board of Trustees v Henderson Trout [2000] QCA 93. In that case, the plaintiff asserted that the solicitor's delay prevented the testatrix making a new will by which her art collection would have passed to it; damages were sought for deprivation of the collection. It was held that as the testatrix did not unconditionally intend to make a gift to the gallery, and did not give express instructions for the preparation of a will for her execution, no liability arose.

Carr-Glynn v Frearsons [1999] Ch 326 (CA) appears to extend the principle in White v Jones, insofar as liability is imposed despite the existence of a potential claim by the testator's estate. The testatrix executed a will leaving the plaintiff all her share in a property. The defendant solicitors informed the testatrix that there was some doubt as to whether the gift would be effective, as it was unknown whether the testatrix held her share in the property as a joint tenant or as a tenant in common. The solicitors advised the testatrix that, if she wished, they could obtain the deeds to clarify the position, but did not pursue the matter. The testatrix did not sever the joint tenancy before her death with the result that the gift to the plaintiff was ineffective. The plaintiff asserted that it was the defendants' responsibility to ensure that she received the benefit which the testatrix intended her to receive. The Court of Appeal (Butler-Sloss, Thorpe and Chadwick LJJ) held that a solicitor owes a duty of care to an intended beneficiary to ensure that effect is given to the testator's testamentary intentions. The duty exists despite the fact that the testator's estate might also have a remedy against the solicitor for breach of duty, the two duties being complementary. In the result, the solicitors breached their duty to the plaintiff by failing to advise the testatrix of the need to serve a notice of severance immediately.

Carr-Glynn was applied in Smeaton v Pattison [2002] QSC 431. The testator in that case retained the defendant solicitor to prepare a will leaving the testator's half interest in certain joint tenancies to his children. The solicitor failed to advise that to sever a joint tenancy under s 59 of the Land Title Act 1994 (Qld), a transfer must be served on the other joint tenant. Consequently, the intended beneficiaries were deprived of the intended benefit under the will. Atkinson J held that the solicitor had negligently advised the testator, and that the solicitor's advice was the cause of the loss to the plaintiff beneficiaries. Her Honour's judgment was affirmed on appeal in Smeaton v Pattison [2003] QCA 341 (which primarily addressed the issue of causation). Neither at first instance nor on appeal was the scope of the duty extensively discussed. However, it was common ground that, to the knowledge of the solicitor, the testator intended his children to inherit his half interest in the properties. Applying what was said by Brennan CJ in Hill v Van Erp at 167 and by Chadwick LJ in Carr-Glynn at 332, her Honour held (and it was not contested) that the solicitor had breached his duty of care to the intended beneficiaries to take such steps as were necessary to give effect to the testator's express intentions.

Hill v Van Erp does not fully answer the question of how far the duty extends in relation to instructions regarding the assets of an estate. Brennan CJ outlined the elements of liability as follows (at 170):

By accepting the testator's retainer, the solicitor enters upon the task of effecting compliance with the formalities necessary to transfer property from a testator on death to an intended beneficiary; it is foreseeable that, if reasonable care is not exercised in performing the task, the intended beneficiary will not take the property; the solicitor fails to exercise reasonable care whereby the formalities are not complied with; and the intended beneficiary thereby loses the property.

Dawson J stated (at 187):

[a] solicitor retained to draw up and attend to the execution of a will is in a relationship of proximity with an intended beneficiary under the will. That relationship gives rise to a duty to exercise reasonable skill and care in the performance of those tasks.

Both statements perhaps imply the existence of a duty only in relation to the formal aspects of the will. No Australian case has directly addressed the point.

Whether Carr-Glynn is correct in establishing a duty where no "lacuna" exists in the law is thus not settled. However, the Queensland Art Gallery Board case suggests that no duty arises until an unconditional intention to make a gift is formed and instructions are given accordingly: see, for example, Thomas JA at [40]. Statements in Hill v Van Erp and White v Jones regarding conflict of interest also suggest that if there is potential for such a conflict between the solicitor/client and the beneficiary (as where the solicitor might give advice about dealing with assets which is in the interests of an intended beneficiary, but not clearly in the interests of the client/estate), no duty arises. There must therefore be some doubt as to whether a solicitor can ever be under a duty to seek instructions (not otherwise given) to deal with assets in a certain way in order to benefit intended beneficiaries under a will.

Finally, reference should be made to the decision of this Court in Miller v Cooney [2004] NSWCA 380. In that case the solicitor prepared a will which provided that certain properties be divided between various identified family members. However, as the properties were held by the testatrix jointly with her husband, the gift was ineffective.

Applying Hill v Van Erp, it was held by Sheller JA (with Hodgson and Santow JJA agreeing) that a solicitor preparing a will for a client upon the client's instructions to include a testamentary disposition in favour of particular beneficiaries is under a duty to take reasonable care to give effect to the client's intentions. However, it was also held that in the particular circumstances, the solicitor, not being aware and having no reason to believe that the testatrix was not the sole registered proprietor of the gifted properties, was not under a duty to make an inquiry about their ownership. His Honour (at [35]) distinguished the decision in Carr-Glynn on the basis that in that case the solicitor recognised the possible problem with the will so long as the joint tenancy remained but allowed the testatrix to run the risk that the existing ownership was a joint ownership whereas in Miller the solicitor was unaware of that risk.

The facts of the authorities referred to above are all distinguishable from those of the present case. As noted above (at [43]), the finding of the primary judge was that Mrs Vagg did not intend to dispose only of her one half interest in the Winmalee property to her children. She did not so instruct Ms Woodward-Brown. On the contrary, her wish was to have her husband sell the property and distribute the whole of the sale proceeds to their children. Ms Woodward-Brown therefore had no duty to sever the joint tenancy without the specific instruction of Mrs Vagg to do so.

The foregoing is consistent with the finding in the Queensland Art Gallery Board case that no duty arises until an unconditional intention to make a gift (in the present case a gift to her children of Mrs Vagg's one half interest in the Winmalee property) is formed and instructions given to the solicitor accordingly. Thus the critical factual issue in the present appeal is whether Mrs Vagg conveyed such an intention to Ms Woodward-Brown. Her Honour held she did not and in my view that was a finding clearly open to her.

The relevant evidence of the appellants

Mr and Mrs Vagg had been married for many years but separated in 2001. On separating, Mrs Vagg took advice from a Mr Dunkley who at the time was a partner of the firm. Although Mr Dunkley had no particular recollection of Mrs Vagg or the advice which he gave to her, it was common ground that he told her that the institution of Family Court proceedings would not be in her interest as she might lose the Winmalee property in which she proposed to reside after separation, her husband residing in a house he owned at Faulconbridge. However, at [40] of her reasons, the primary judge, relevantly, recited that Mr Dunkley in a typical conference would also have given advice as to property held in a joint tenancy and that he would have advised as follows:

It is wise to go through the process of severing a joint tenancy in case you die, otherwise the survivor of you or your [spouse] gets the whole property, unless Family Law proceedings have been filed.

There was no challenge on the appeal to Mr Dunkley's evidence to the effect that he would have given Mrs Vagg advice relating to the severance of the joint tenancy which would avoid the consequences of survivorship. However, it was also common ground that Mrs Vagg did not seek to implement Mr Dunkley's advice as to severance of the joint tenancy with respect to the Winmalee property. Regrettably Mrs Vagg contracted breast cancer and her health deteriorated in early 2005. It was that fact and her desire to financially assist her children that caused her to instruct the firm with respect to the preparation of a new will.

Mrs Vagg's three daughters gave evidence at the trial. The first appellant, Ms Margaret Vagg (who was a solicitor at the time of trial), did not depose in her affidavit as to any discussions with her mother before or after she saw Ms Woodward-Brown. The primary judge set out the relevant parts of her oral evidence at [28] and [29] of her reasons. Essentially, that evidence established the following:

at no time did Mrs Vagg ever say to her daughter prior to her death that all she wanted was for her children to have her one half share in the Winmalee property;

when asked whether the substance of what Mrs Vagg said to the first appellant was that she would like her children to be financially assisted when the Winmalee property was sold by their father, she responded that her mother thought it would be fair if the children received the proceeds of sale of that property;

at some point the first appellant and Mrs Vagg had a conversation about the fact that the Winmalee property was owned by her mother and father as joint tenants when the first appellant explained to her mother that the fact that they held the property as joint tenants meant that the property would pass on survivorship depending upon who died first;

the first appellant indicated to her mother her understanding that the difference between a joint tenancy and a tenancy in common was that if she was a joint tenant when she died then the whole property would go automatically to Mr Vagg whereas if she had a tenancy in common she could dispose of her half share in the property in her will;

the first appellant considered her mother was an intelligent woman and understood what she was being told. However, she told her mother that she was not a lawyer, and that apart from her limited understanding of the difference between a joint tenancy and a tenancy in common, that was all she could tell her and "she would have to go get more advice";

the foregoing conversations took place prior to Mrs Vagg seeing her solicitor on 20 January 2005 for the first appellant recollected that her mother was tapping away at her computer about various things including what was to happen at her funeral.

In addition to the foregoing evidence referred to by the primary judge, the following exchange occurred in the cross-examination of the first appellant (at Black 25):

Q. It is the case isn't it, in your affidavit you referred to conversations with your mother prior to her death in which she said to you that she wanted the house at Winmalee meaning the whole house?

A. Yes.

Q. To be sold?

A. Yes.

Q. She never spoke of half the house?

A. She wanted the whole house sold and split between the children. That is what she said.

That evidence accords with the primary judge's finding that at no time did Mrs Vagg indicate to Ms Woodward-Brown that she would be content to leave her one half of the Winmalee property to her children which, admittedly, could only be achieved if there was a severance of the joint tenancy. On the other hand, her desire for the whole property to be sold and the proceeds of sale divided between the children could not be achieved unless Mr Vagg acceded to Mrs Vagg's request that after her death he sell the Winmalee property and divide the whole of the proceeds amongst their children.

In re-examination the following exchange took place (which was not referred to by the primary judge) (at Black 28):

Q. The conversation that you had with your mother concerning the joint tenancy, what did she actually say to you in this conversation? You explained, told her about the difference between joint tenants and tenants in common and that if it was a joint tenancy, the survivor took the property; in this case your

father?

A. Yes.

Q. What did your mother say when you told her that?

A. Well, she was quite upset about not leaving anything to the children. She was quite distressed about it. I was trying to calm her down and say it did not matter so much we will be fine but I explained my understanding, the difference between tenancy in common and joint tenancy and urged her to not worry about it until she'd seen a lawyer, asked the lawyer the questions and find out if anything could be done to leave anything to us children.

Q. What did she say when you said that to her?

A. She said, yes, l will wait until I have been, I have spoken to the solicitor and see if anything can be done so I can leave anything to you kids.

At [31] and [32] of her reasons the primary judge set out the evidence of Ms Julia Vagg (the third appellant) upon which the appellants placed significant reliance. It is convenient to set out those paragraphs in full:

[31] Ms Julia Vagg's affidavit evidence was:

When I was driving Mum to chemo one day she said that she had written her will, and told me what she had left to me and to the others. We continued to talk about it while she was having the chemo, and she said that while she didn't really expect dad to honour it, she had put in a request that the Winmalee house be sold and the money divided amongst us to help pay for uni and a violin for me etc, because it was the only thing she could do. I said that maybe dad would honour it because it was what she wanted and that I thought he would respect her wishes; she agreed that possibly he would. (Emphasis added)

[The foregoing conversation took place in the first week of February 2005 according to an undated document prepared by the third appellant.]

[32] In cross-examination she was asked about the terms of the will:

Q. Are you aware it contains a clause 11?

A. I am aware that it contains a request to have Dad sell the house and divide it amongst us.

Q. And you became aware that that was your mother's will when you first, that was the terms of your mother's will when you first read a copy of the will?

A. She told me of a conversation in 2005 that the only thing she could do was to put a request in and that is what she has done, and I also read it after she died of course. (Emphasis added)

At the end of her examination-in-chief, the third appellant said her mother mentioned to her in 2005 that the Winmalee property was owned as a joint tenancy with their father. The following exchange then occurred (at Black 32):

Q. What did she say then?

A. In 2005 she said it was in joint tenancy and was told not possible to sever that joint tenancy. The only thing she could do is -

Objection was then taken but her Honour admitted the evidence upon the basis that it represented Mrs Vagg's state of mind.

However, the third appellant repeated this evidence in the following exchange (at Black 33):

Q. You talked about the property, but not the tenancy or who owned it?

A. Yes.

Q. When the consent [sic, concept] of joint tenancy, those words --

A. Yes.

Q. -- were first used in conversation with your mother, when do you say that was?

A. That was definitely in 2005.

Q. After the will was made?

A. Yes.

Q. Did you know what she was talking about when she spoke about joint tenancy?

A. I have not studied law, that she and Dad owned equally, when she died it would go into his name and no way it could be severed.

q. That is what she told you?

A. Yes, that is what she told me. (Emphasis added)

It may be noted that the appellants' case at trial was that Mrs Vagg informed Ms Woodward-Brown that she wished to leave her one half interest in the Winmalee property to her children but that she was essentially told that she could not sever the joint tenancy and therefore there was nothing she could do about it. The appellant's case on the appeal was slightly different in that it was not alleged that Ms Woodward-Brown informed Mrs Vagg that she could not sever the joint tenancy but only that nothing could be done to avoid survivorship operating upon her death and the whole property vesting in her husband. The difference between the two versions may only be semantic but it is indicative of the apparent difficulty the appellants had in accurately framing their case.

Finally, the fourth appellant, Ms Cecilia Vagg, gave evidence portions of which her Honour set out at [33] to [35] of her reasons. Relevant to the appellants' argument, I set out what her Honour recorded at [34] which related to a discussion by the fourth appellant with her mother prior to the latter's death with respect to the Winmalee property:

I said: "Can you sell the house?"

My mother said: "No. A lawyer in Springwood told me when I die the house will go into Dad's name because both our names are on the title, and there is nothing I can do about it and when I die it will be transferred into your Dad's name.

I said: "That sucks". (Emphasis added)

I would observe that the assertion on appeal (which appears to be inconsistent with the way the matter was pleaded as well as with her Honour's stated understanding of the appellants' case at trial) that Ms Woodward-Brown responded to Mrs Vagg's request for advice as to how to avoid her interest in the Winmalee property vesting in her husband on her death by advising that nothing could be done about it, seems to have been advanced to reflect those parts of the evidence of the third and fourth appellants which I have emphasised.

However, that response (which was denied by Ms Woodward-Brown) would be correct if what Mrs Vagg asked her solicitor was not how her husband's right of survivorship could be avoided so she could leave her one half share in the Winmalee property to her children but how she could ensure that the property was sold by her husband and the whole of the proceeds of sale distributed to the children. There was nothing she could do about that if Mr Vagg declined Mrs Vagg's testamentary request that he, in effect, hand over his share of the property to his children.

The evidence of Ms Woodward-Brown

Before turning to Ms Woodward-Brown's evidence it is of relevance to note that at [44] of her reasons, in a passage not challenged by the appellants, her Honour concluded that there was no reason for rejecting Mr Dunkley's evidence that in 2001, in accordance with his usual practice, he explained to Mrs Vagg the effect of holding the Winmalee property as a joint tenancy and advised her about the possibility of it being severed. There is nothing to suggest that Mrs Vagg had forgotten this advice when she saw Ms Woodward-Brown on 20 January 2005. She certainly did not give instructions to Ms Woodward-Brown to sever the joint tenancy and it was not reflected in her written instructions to her solicitor which contained the following:

I request that the house at Winmalee be sold and the money received be given to the children for their education as a priority -equal shares. Margaret has a huge HECS debt and Julia, Ben and Cecilia are also well on the way to these large loans. James will need educational expenses catered for too as he may do uni or tafe etc. There are other expenses that they have to incur and I would like to be able to assist them. James', Cecilia's and Ben's share are to be retained by Margaret until they are 25 - if something important comes up before they are 25 then she should use her discretion eg HECS debt. Julia can have access from 21 because she will need a new violin.

The appellants submitted that the "request" referred to was a request directed not at Mr Vagg but at Ms Woodward-Brown. In other words, she was requesting Ms Woodward-Brown to advise how the Winmalee property could be sold and her one half share of the proceeds of sale provided to her children. In my view, this construction of Mrs Vagg's instruction is unsustainable. That instruction is consistent only with her wish for the children to receive the whole of those proceeds. Understandably, it is directly reflected in clause 11 of the will and there is no suggestion that Mrs Vagg, who received a number of drafts of the will containing that provision, misunderstood its import.

I turn now to Ms Woodward-Brown's evidence. Ms Woodward-Brown was admitted as a solicitor in 1996. Her evidence-in-chief revealed that her main areas of practice were conveyancing and taking instructions for wills. Prior to being admitted she worked as a paralegal for approximately 11 or 12 years studying law part-time through the Solicitors Admission Board. By 2005 she had been "immersed in legal practice" for about 16 years.

There is no doubt that Ms Woodward-Brown's credibility was the subject of challenge. One reason for this was that her affidavit evidence as to her discussions with Mrs Vagg was inconsistent with the respondents' answers to interrogatories. Although the interrogatories were sworn by the fourth respondent, Ms Woodward-Brown acknowledged that she provided him with the answers. In particular, when interrogated as to the substance of the advice given to Mrs Vagg on 20 January 2005 Ms Woodward-Brown's response was as follows:

d) 20 January 2005 - from written notes - Ms Woodward-Brown asked her re executor, superannuation and testamentary guardians. She asked details of her children, names and ages and she recorded her husband's name and address and that it was a request re the Winmalee property. (This is all from her notes; she obviously would have spoken to her about other things and would have gone through her prepared list with her. Ms Woodward-Brown does not recall anything else that she said in particular to Mrs Vagg. Her normal practice would be to go through the will instructions but Ms Woodward-Brown has no specific recollection of what she said to Mrs Vagg.) (Emphasis added)

At [51] the primary judge concluded that from her evidence and the answers given, it was apparent that Ms Woodward-Brown had given inadequate attention to the task of accurately answering the interrogatory as to the advice given by her to Mrs Vagg at the meeting of 20 January 2005. Her Honour continued:

... Contrary to the advice that Ms Woodward-Brown had no specific recollection of the discussions, in her affidavit, she deposed as to her first meeting with Mrs Vagg:

"I continued my review of annexure "A" with Mrs Vagg, and in particular the paragraph on the first page of Mrs Vagg's written instructions, being the words "I request that the house at Winmalee be sold and the money received be given to the children for their education as a priority - equal shares", my conversation with Mrs Vagg proceeded with words to the following effect:

I said "Who owns the house at Winmalee?"

Mrs Vagg said "I own it as joint tenant with my husband Carl."

I said "If you own the property as joint tenants with you [sic] husband, it will go to him by survivorship on your death, but if he goes first it will go to you. You will need to sever that joint tenancy if you wished your share to be given to your children. You also need to see one of our family law solicitors to get family law advice about your property.

Mrs Vagg said "I have seen David Dunkley about a property settlement some time ago. This is just a request so that the children can pay off their HECS debt and that sort of thing."

I said "Alright. What is the address of the property?

Mrs(sic) said "XX XXXXX XX XXXXX Road, Winmalee."

As Mrs Vagg spoke, I believe I wrote the words "request" - XX XXXXX XX XXXXX Road, Winmalee" where the [sic] they appear on the first page of annexure "B".

I then said "What is your husband's full name and address?"

Mrs Vagg said "Carl Stanley Vagg, XX XX XXXXX XX XXXXX XXX, Faulconbridge".

I wrote those words down on annexure "B" as she spoke."

(Emphasis added)

At [53] of her reasons the primary judge set out Ms Woodward-Brown's response to the fourth appellant's affidavit evidence as to the conversation she had with her mother before her death in which she asserted that her mother had told her that her solicitor had advised that there was nothing that could be done about the Winmalee property. Ms Woodward-Brown denied that at any time she said any words to Mrs Vagg to the effect that there was nothing she could do about that property going to her husband on her death.

Ms Woodward-Brown's cross-examination included the following exchanges relied upon by the appellants:

at Black 67

Q. You, at that time, in 2005 in January when you saw Mrs Vagg, knew how to sever a joint tenancy didn't you?

A. I did.

Q. Have you ever done it?

A. I think I have done it.

Q. Do you recall you had?

A. I haven't done a lot of severing of joint tenancy but I am aware of it.

at Black 77

Q. How long do you estimate it would take to complete a form for the severing of the joint tenancy, how long?

A. Probably 10 minutes, I would have to dictate to my secretary.

. . .

Q. Do you agree that you could have easily, between 20 and 27 January, easily filled in that form had Mrs Vagg signed it, paid a filing fee of $97, and lodged it at the Land Title Office?

A. If I had received instructions to do it we could have done it.

Q. Did you show her the form and explain how easily it could be done?

A. Yes.

Q. Did you explain to her that it was a simple administrative procedure to do it?

A. I would have explained to her how it was done and how it was filed. (Emphasis added)

at Black 78-79

Q. And you knew that the client wanted to leave her interest in the property at Winmalee to her children because she was concerned about their future, didn't you?

A. I think it was, I don't think that is what she conveyed to me in those words, she didn't say that.

Q. You see, she was concerned, was she not, that if she decided the property would go to her husband and not to her children or her interest in that property?

A. I told her her interest would go to her husband if she decided.

Q. And your duty was to protect her interest if you could to ensure that didn't happen?

A. If she instructed me to do so, I would have done.

Q. Would you have to tell her there was a simple -

A. I could have told her she could have severed the joint tenancy.

Q. You see, that is just a reconstruction on your part, is it not?

A. No.

Q. Only when you were asked to swear an affidavit for these proceedings did you give for the first time an explanation that you had, in fact, given that advice?

A. I don't think so, I have been thinking about it for a long time and the last thing I did, my affidavit, I recall having a conversation with her about all these things. (Emphasis added)

I interpolate that the majority of the last mentioned exchange was recorded by her Honour at [55] of her reasons. The first question and answer is significant for if accepted it undermines the appellants' case that Mrs Vagg wished only to leave her one half share of the Winmalee property to her children and conveyed that intention to her solicitor.

at Black 83 Ms Woodward-Brown admitted that she was not sure whether she could recall any transfers that she had prepared severing a joint tenancy although she accepted it was a simple task which could be done by a clerk or secretary.

at Black 84-85:

Q. Mrs Woodward-Brown, is this your position today, that you knew that the clause in the will which contained a request for the sale of the Winmalee property had no legal effect?

A. That's correct.

Q. And you say that you told the deceased, Mrs Vagg, the difference between join [sic] tenancy and tenancy in common, is that right?

A. I told Mrs Vagg how to sever the joint tenancy.

Q. And you realised that unless she severed the joint tenancy any attempt to leave the property or her interest in the property at Winmalee by will was going to fail, wasn't it?

A. If there wasn't a severance of a joint tenancy then her property doesn't go to her.

Q. You knew that any attempt to leave that property by will in circumstances where her husband survived her, that bequest was bound to fail, wasn't it?

A. The property would go on survivorship.

Q. The bequest would fail, wouldn't it?

A. It wasn't a bequest in the will, it was a request.

Q. No, her instructions contained a request, you then drafted the will in terms of a request rather than a bequest, didn't you?

A. I drafted the will on her instructions.

at Black 90:

Q. You had advised her that she didn't have to accept that her husband would inherit the property, that the children could be protected, but you didn't give that advice, did you?

A. I advised her about severing joint tenancy and seeking family law advice.

The primary judge's ultimate findings with respect to Ms Woodward-Brown's evidence were as follows:

[54] In cross-examination, Ms Woodward-Brown denied that she had been instructed to advise Mrs Vagg as to how the joint tenancy could be severed, or to take such steps. She also denied giving Mrs Vagg advice that there was nothing that she could do about the property at Winmalee going to her husband on her death. She insisted that she had given advice about severance and family law advice, in terms she had deposed to in her affidavit. This evidence was challenged, on the basis of accuracy of the recollection to which Ms Woodward-Brown deposed in her affidavit, which was submitted to have been but a reconstruction, given the answers earlier provided to the interrogatories.

...

[56] Ms Woodward-Brown insisted that her recollection in her affidavit was accurate. Having considered this evidence, I am not able to accept that Ms Woodward-Brown was being untruthful in her evidence. Clearly the answers given to interrogatories shows inadequate attention was paid to the matter at that time. That the evidence to which Ms Woodward-Brown swore in cross-examination, was a mere reconstruction, may not be accepted. Were that the case, one might have expected a suggestion that more complete advice on the matter which had been identified as requiring advice, would have been forthcoming.

The appellants submitted that Mrs Vagg had strongly indicated to her daughters that she wanted to obtain some advice to obviate the survivorship consequence of her death. As noted at [58] above, she had received that advice from Mr Dunkley in 2001 and, as noted at [70] above, there was no reason to infer that she had forgotten that advice. In fact it was not suggested in the appellants' submissions that she had.

It was nevertheless submitted that her intentions may have changed between 2001 and 2005 in so far as in 2001 she had not taken any steps to sever the joint tenancy whereas in 2005, when she was dying, she wished to do so. The difficulty with this submission is that according to the evidence of the first appellant her mother never indicated that she only wanted her children to have the benefit of her one half share in the Winmalee property; on the contrary she wanted the property to be sold and for the children to share in the total proceeds of that sale. If she was told by Ms Woodward-Brown, as the appellants assert, that nothing could be done then the inference was open that that advice was given in the context of Mrs Vagg's desire that the property be sold and that the whole of the proceeds should be shared by her children.

Of course, the evidence of Ms Woodward-Brown which her Honour accepted notwithstanding the submission that it involved a reconstruction, was that she had specifically informed Mrs Vagg that as the property was owned by her and her husband as joint tenants it would vest in him by survivorship on her death unless she severed the joint tenancy.

Did the primary judge err in accepting the evidence of Ms Woodward-Brown?

The appellants submitted that the primary judge was in error in accepting the evidence of Ms Woodward-Brown as it lacked any contemporaneous, corroborative documentary material supporting her account. It was further submitted that the primary judge had failed to properly analyse her evidence and to provide reasons why it should be accepted. Although it was acknowledged that Ms Woodward-Brown had not consciously fabricated her affidavit evidence, nevertheless it was contended that it involved a reconstruction. Reliance was placed upon the observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319 where his Honour said:

Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

There is nothing to indicate that the primary judge was not aware of the foregoing observations. They are well known to any experienced trial judge.

It was further submitted that there was a line of authority to the effect that courts should subject to close scrutiny claims made concerning conversations with deceased persons. Again there is nothing to suggest that her Honour did not scrutinise carefully the evidence of Ms Woodward-Brown. It must be remembered that her Honour had the benefit of seeing her in the witness box and, in particular, being cross-examined fairly robustly. She had in that respect an advantage which this Court does not have.

The appellants acknowledged that in order for this Court to reject the finding of the primary judge whereby she accepted the critical evidence of Ms Woodward-Brown, it would be necessary to comply with the principles adumbrated by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [26] - [29]. In particular, it was accepted that it was necessary for the appellants to establish that there were "incontrovertible facts" or "uncontested testimony" which demonstrated that her Honour's conclusion with respect to Ms Woodward-Brown's credit was erroneous or, in the absence thereof, that her finding that she was not being untruthful was "glaringly improbable" or "contrary to compelling inferences".

It is true that her Honour did not expressly rely on Ms Woodward-Brown's demeanour. Nevertheless, as her credit was clearly in issue, it is unlikely that her presentation in the witness box was not keenly observed and taken into account by her Honour when coming to the conclusion that her evidence was not untruthful and should be accepted.

In Baira v RHG Mortgage Corporation Limited [2012] NSWCA 387 at [494] - [507], although in dissent in the result, I examined and analysed the relevant principles arising out of Fox v Percy. At [503] I referred in particular to some observations of Basten JA in Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 particularly at [15]. I there acknowledged his Honour's remarks that a trial judge, when determining issues of credit, enters upon a complex intellectual process involving the interaction of documentary material, elements of testimony from different witnesses and matters of emphasis none of which readily appear from reading a transcript. In my view those comments are particularly apposite in the present case. Her Honour was faced squarely with the proposition that Ms Woodward-Brown's evidence was a reconstruction and this was essentially based upon the instructions she gave the fourth respondent to enable him to answer the relevant interrogatory.

A reading of the transcript of Ms Woodward-Brown's cross-examination gives the impression that as that cross-examination progressed, the witness tended to "firm up" her evidence. Her answer (at Black 77 as recorded in the second dot point at [76] above) that she had shown Mrs Vagg the relevant form to effect a severance and explained to her how easily it could be done, does not have the ring of truth about it. That evidence could be interpreted, given that it was not referred to in her affidavit evidence, as an attempt to "firm up" her affidavit evidence that she had advised Mrs Vagg that she could sever the joint tenancy.

On the other hand, upon the assumption that Mrs Vagg sought the advice now alleged, it is difficult to accept that Ms Woodward-Brown would not have advised her that she could sever the joint tenancy. To reject her evidence on this issue would require a finding that Ms Woodward-Brown had never heard of the concept of severance or had totally forgotten that it existed. That would, in my respectful opinion, be a rather bizarre conclusion and certainly not one that would be made lightly.

Although there may be a suspicion of reconstruction involved in her affidavit evidence and some of her answers in cross-examination, nevertheless I do not consider that any relevant error has been demonstrated in the manner in which her Honour concluded that she would accept Ms Woodward-Brown's evidence such as would justify appellate intervention. If one resorts to the so-called Fox v Percy tests, then there is no indication that her Honour misused her position of advantage when assessing Ms Woodward-Brown's credibility. In particular, her evidence that she did advise Mrs Vagg that the joint tenancy could be severed if she wished to only leave her one half interest in the Winmalee property to her children, was not "glaringly improbable".

In my view the evidence of the first appellant that her mother never indicated prior to her death that she only wanted to leave her children her half share in the Winmalee property, the fact that in 2001 she was informed by Mr Dunkley that she could sever the joint tenancy and her written instructions to Ms Woodward-Brown which made clear her wish that the Winmalee property be sold by her husband and that the whole of the proceeds be equally divided amongst her children, militate against a finding that the primary judge was bound to reject Ms Woodward-Brown as a truthful witness. That was a matter peculiarly within the province of her Honour as the trial judge and is not one which is readily open to appellate intervention particularly in the present case.

The appellants acknowledged that unless her Honour's acceptance of Ms Woodward-Brown's evidence that she did advise Mrs Vagg that she could sever the joint tenancy was rejected, then the appeal must fail. In my view that concession was properly made.

The issue of causation

The primary judge dealt with the issue of causation at [108] - [121] of her reasons. The issue was whether, had Mrs Vagg received advice that she could sever the joint tenancy and thereby at least achieve a result whereby her children would receive her one half share in the Winmalee property, she would have given instructions to Ms Woodward-Brown to effect the severance.

At [121] the primary judge held that the appellants had not established that their mother would have taken the steps necessary (or given the necessary instruction to Ms Woodward-Brown) to ensure that her residuary estate included her one half share of the Winmalee property. She gave a number of reasons for this conclusion which may be summarised thus:

(a) On the first appellant's evidence, her mother never spoke of a desire that her children receive only a one half interest in the Winmalee property but always spoke of the belief that it would be fair if they received the whole of the proceeds of the sale of the property after her death notwithstanding that she had a concern that her husband might not agree ([109]);

(b) Prior to attending upon Ms Woodward-Brown, Mrs Vagg understood the effect of her death on the joint tenancy. Even if Ms Woodward-Brown had not advised her as to the possibility of severance, Mrs Vagg had earlier received that advice from Mr Dunkley in 2001. She did not act upon it then and it was difficult to see that she would have acted upon it in 2005 in the face of her imminent death ([110] and [112]);

(c) There was no evidence that Mrs Vagg ever raised with her husband the question of his selling the Winmalee property after her death and dividing the whole of the proceeds amongst their children. She had a closer relationship with her husband in 2005 than in 2001 when they separated so that if she wished to know her husband's attitude she could have asked him but did not ([111]);

(d) Mrs Vagg told her children that she believed there was nothing which she could do to deal with the joint tenancy. However this is not an accurate reflection of Mr Dunkley's advice to her. There was no reason to believe that Mrs Vagg did not understand that advice as she was unquestionably an intelligent woman. Inferentially her Honour held that there was no reason to believe that Mrs Vagg had either misunderstood or had forgotten Mr Dunkley's advice even if it was not repeated by Ms Woodward-Brown ([112]);

(e) If her children properly understood that their mother believed that there was nothing she could do about the joint tenancy, then either she had forgotten Mr Dunkley's advice or the notion there was nothing she could do reflected a continuing personal view given her understanding of the legal position ([113]);

[I would interpolate that Mrs Vagg's belief, if such it be, that she could do nothing about the survivorship issue was consistent with what she had told the first appellant, namely, that she wanted her husband to sell the property after her death and to divide the whole of the proceeds amongst her children, something she could not achieve legally as severance would only result in her children receiving one half of those proceeds.]

(f) That Mrs Vagg did not wish to sever the joint tenancy notwithstanding her understanding that she could accorded with the evidence of the nature of the continuing relationship between her and her husband despite their separation. The evidence suggested the possibility that Mrs Vagg had the view, despite the legal avenues available to her in relation to the Winmalee property, that she did not wish to pursue them given her ongoing attitude to her husband and a continuing desire not to become involved in any further dispute, let alone legal proceedings, with him ([114]);

(g) The foregoing was consistent with her not raising with Mr Vagg the possibility of the sale of the property for the benefit of the children after her death even though she was concerned that he would not comply with the request contained in clause 11 of the will ([115]);

(h) On the evidence Mrs Vagg understood that clause 11 had no legal effect and would not have the result she desired unless her husband agreed. She executed the will with this knowledge. Accordingly, it was doubtful that Mrs Vagg would have pursued any legal avenues available to her to ensure that her one half interest in the Winmalee property formed part of her residuary estate even if she had been informed that this could be achieved by severance of the joint tenancy ([116]);

[I again interpolate that on the evidence of the first appellant Mrs Vagg was well aware that if the joint tenancy was converted to a tenancy in common she could leave her half share in the Winmalee property to her children in her will (see the fourth dot point at [60] above).]

(i) Although there were a number of options other than severance open to Mrs Vagg such as an application under s 66G of the Conveyancing Act 1919 or the institution of Family Law proceedings, on the whole of the evidence it was apparent that Mrs Vagg did not wish to involve her husband in litigation, let alone her children ([117] - [118]);

(j) Although Mrs Vagg was aware from the advice she received from Mr Dunkley in 2001 that she could sever the joint tenancy, she did not do so. If she was properly advised, she would have been informed that the unilateral act of severance under s 97 of the Real Property Act did not necessarily avoid opposition from her husband which could embroil the family in litigation: see Real Property Act s 97(5) ([119]);

(k) Executing the will did not preclude Mrs Vagg from pursuing the various options available to her including severance. Its execution was critical given her state of health for otherwise she would have died intestate and her children would have been worse off. She gave no instructions that any further steps should be pursued. In telling her children only that nothing could be done about severing the joint tenancy, she did not explain why and they did not inquire ([120]);

The appellants took issue with her Honour's finding at [112] where she relied upon what Mrs Vagg was told in 2001 by Mr Dunkley with respect to the severance of the joint tenancy under which the Winmalee property was held. It was submitted that it did not follow that her attitude had not changed between 2001 and 2005. However, importantly, it was not submitted that by 2005 Mrs Vagg had forgotten the advice of Mr Dunkley that she could sever the joint tenancy. This notwithstanding, it was submitted that the evidence of her daughters strongly indicated that she wished to obtain some advice as to how she could obviate the survivorship consequences of her death.

However, although the evidence of the first appellant was that she told her mother that her understanding of the difference between a joint tenancy and a tenancy in common was limited and that she would have to get more advice on that subject, there was no evidence that she "strongly indicated" to her daughters that she wanted that advice or the purpose for which she wanted it. Although the third and fourth appellants gave evidence that their mother informed them that there was nothing she could do about the property being transferred into their father's name on her death, the inference was clearly open and the evidence, particularly that of the first appellant, supported a finding that this was because her wish was for her husband to sell the property and to divide the whole of the proceeds of sale amongst their children, a wish which she knew was not legally enforceable. Hence, her use of the word "request". Her Honour found, and the evidence supports the proposition, that at no time did Mrs Vagg inform her children, let alone Ms Woodward-Brown, that she would be content with her children receiving only one half of such proceeds.

In my opinion her Honour stated a number of justifiable reasons which led her to the conclusion that the appellants had not established that their mother would have instructed Ms Woodward-Brown to sever the joint tenancy even if she had been advised that it was a course open to her. In their written submissions the appellants only challenged the findings in [112] of the primary judge's reasons but not the other reasons to which reference has been made above. The only other written submission on this issue was the base assertion that Mrs Vagg would have taken steps to sever the joint tenancy had she been advised to do so.

In my view, no error has been demonstrated in her Honour's finding to the contrary. Accordingly, even if Ms Woodward-Brown's evidence that she advised Mrs Vagg that the joint tenancy could be severed was rejected, nevertheless the appellants fail on the issue of causation.

Conclusion

In my opinion, the appellants' challenge to the primary judge's findings in favour of the respondents cannot be sustained. I therefore propose that the appeal be dismissed. The respondents requested that if the appeal was dismissed it wished to have the opportunity to make submissions on costs. I would therefore propose a direction that any written submissions on costs be filed and served by the respondents within seven days of the publication of these reasons with the appellants to have a further seven days to respond thereto.

********

Amendments

28 May 2014 -

02 April 2014 - Typographical error, amending second "grave" to "great" in quote.

Amended paragraphs: [9]

Decision last updated: 28 May 2014

Medium Neutral Citation:	Vagg v McPhee [2013] NSWCA 29
Hearing dates:	4 February 2013
Decision date:	22 February 2013
Before:	Basten JA at [1]; Ward JA at [24]; Tobias AJA at [25]
Decision:	Appeal dismissed. Written submissions on costs to be filed and served by the respondents within seven days of the publication of these reasons with the appellants to have a further seven days to respond thereto. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	PROFESSIONAL NEGLIGENCE - legal - advice in connection with execution of will - whether failure to explain possibility of severance of joint tenancy - whether duty of care owed to deceased's children EVIDENCE - challenge to factual findings and assessment of witnesses - whether primary judge erred in failing to recognise requirement of close scrutiny of evidence of conversations with deceased person - whether primary judge erred in failing to consider absence of corroborating evidence - whether primary judge erred in assessment of documentary evidence of circumstances surrounding execution of will WILLS AND ESTATES - whether terms of will reflected instructions of testatrix - evidence of instructions
Legislation Cited:	Conveyancing Act 1919 Land Title Act 1994 (Qld) Real Property Act 1900
Cases Cited:	Baira v RHG Mortgage Corporation Limited [2012] NSWCA 387 Carr-Glynn v Frearsons [1999] Ch 326 Clarke v Bruce Lance & Co [1988] 1 All ER 364 Fox v Percy [2003] HCA 22; (2003) 214 NSWLR 118 Hill v Van Erp [1997] HCA 9; (1997) 188 CLR 159 Queensland Art Gallery Board of Trustees v Henderson Trout [2000] QCA 93 Miller v Cooney [2004] NSWCA 380 Ross v Caunters [1980] Ch 297 Smeaton v Pattison [2003] QCA 341 Smeaton v Pattison [2002] QSC 431 Watson v Foxman (1995) 49 NSWLR 315 Xu v Jinhong Design & Constructions Pty Ltd [2011] NSWCA 277 White v Jones [1995] UKHL 5; [1995] 2 AC 207
Category:	Principal judgment
Parties:	Margaret Doreen Vagg (First Appellant) Benjamin John Vagg (Second Appellant) Julia Lillian Vagg (Third Appellant) Cecilia Anne Vagg (Fourth Appellant) James Gregory Vagg (Fifth Appellant) Paul McPhee (First Respondent) Trevor Cork (Second Respondent) David Dunkley (Third Respondent) Steven Nicholson (Fourth Respondent)
Representation:	Counsel: P Webb QC with E W Young (Appellants) J C Kelly SC (Respondents) Solicitors: Turner Freeman (Appellants) Colin Biggers & Paisley (Respondents)
File Number(s):	CA13018 of 2012
Decision under appeal	Citation: [2011] NSWSC 1584 Date of Decision: 2011-12-19 00:00:00 Before: Schmidt J File Number(s): CL297399 of 2009 (formerly 20072 of 2009)