Hooper v Thackwell
[2025] NZHC 648
•26 March 2025
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2023-425-88
[2025] NZHC 648
BETWEEN KAREN LEE HOOPER
Plaintiff
AND
DARRYL RONALD THACKWELL
Defendant
Hearing: 6 November and 16 December 2024 Appearances:
B A J Taylor for the Plaintiff (via VMR) No appearance for the Defendant
Judgment:
26 March 2025
JUDGMENT OF HARLAND J
(formal proof)
Introduction
[1] Enid Joyce Thackwell (Enid) died on 7 May 2022 at Invercargill when she was 95 years of age. She had been a widow since 2013 and was survived by two adult children, a son and a daughter, who are the named parties in this proceeding. I refer to them as Karen and Darryl in this judgment.
[2] No major assets remained in Enid's possession at the time of her death. Her last major asset was the former family home on Estuary Road, Christchurch.
[3]On 9 October 2014, Enid legally bound herself in several ways. She:
(a) entered into an agreement to sell the Estuary Road property to Darryl for
$305,000.
HOOPER v THACKWELL [2025] NZHC 648 [26 March 2025]
(b) made her only known Will, in which she appointed Darryl as her executor and trustee, and left her entire residual estate to him alone; and
(c) signed enduring powers of attorney for personal care and welfare and property appointing Darryl as her attorney.
[4] These documents were not prepared by Enid’s family solicitor, but by a new solicitor who acted for both Enid and Darryl on the transactions, having obtained from them both a waiver of independent legal advice.
[5] On 3 November 2014, the Estuary Road property was transferred to Darryl. The same day, two other important documents were executed by Enid. The first was a deed of acknowledgement of debt recording that the agreed purchase price of
$305,000 for the Estuary Road property had been lent to Darryl by Enid and the second was a deed of forgiveness of that debt.
[6] Darryl sold the Estuary Road property, with settlement on about 29 June 2015. He then purchased two properties in Invercargill. Enid went to live with Darryl in one of the Invercargill properties.
[7] In January 2016, Enid was diagnosed with advanced dementia after she fell and was admitted to hospital. This was preceded by a Montreal Cognitive Assessment (MoCA) in either April or June of 2015 which demonstrated moderate impairment and CT scans conducted on 20 December 2015 and 21 January 2016. On 25 January 2016, Enid was deemed not to be competent and the enduring powers of attorney in favour of Darryl were activated. A further MoCA conducted on 29 August 2016 supported the dementia diagnosis.
[8] Concerns arose about Enid’s care arrangements in Invercargill by multiple agencies engaged to support Enid including her general practitioner, Age Concern New Zealand, home support agencies, HealthCare New Zealand and needs assessors. On 29 March 2022, about six weeks before she died, the Southern District Health Board applied to the Family Court on an urgent basis for personal orders addressing Enid’s residential, medical and financial needs. The Court made such orders on 1 April 2022.
[9] The proceeding pleads four causes of action, one of which I have already determined.1 In an interim judgment dated 7 November 2024, I appointed Karen as the temporary administrator of Enid's estate pursuant to s 7 of the Administration Act 1969 (the Act). The remaining causes of action plead that Enid’s Will is invalid because she executed it at a time when she lacked testamentary capacity and that the gift referred to in [5] above was obtained by Darryl in circumstances that establish undue influence and unconscionable dealing. Declarations are sought, as is an order requiring the gift (the sum of $305,000 plus interest) to be paid into Enid’s estate.
[10] I outlined in my interim judgment the steps that had been taken to serve Darryl with a copy of the proceeding and the case management steps taken to allow him time to file a statement of defence. He has still taken no steps in the proceeding.
[11] The case has proceeded before me as a formal proof hearing. As well as the statement of claim, I have considered the evidence supporting the claim from Karen; George Thackwell (George), Enid’s nephew and the parties cousin; Peter Doody, the former family lawyer for Enid and her late husband Ronald; Michelle Downey, a clinical coordinator employed by Te Whatu Ora at the Invercargill Hospital and Georgina Couper, an employee of the plaintiff’s solicitors annexing a bundle of documents from various sources obtained by the plaintiff as temporary administrator.
[12] I have decided to make the declarations sought by the plaintiff and orders to unwind the impugned transactions.
The evidence
Background
[13] Enid and Ronald were married and lived their entire married life in Christchurch. They built their house on land that had been given to them by Enid's parents as a wedding present. They lived at this property on Estuary Road from 1948 and brought up their two children there.
[14]Karen has lived and worked overseas for many years.
1 Hooper v Thackwell [2024] NZHC 3298.
[15] Darryl was married and remained living in New Zealand. He acquired a property in Christchurch following his marriage comprising two units, one of which was rented.
[16] George was close to Enid and Ronald throughout his life as he remained living in Canterbury. After he retired, Ronald played a significant part in George’s engineering truck fabrication business.
[17] It appears that Darryl was assisted financially by his parents during his adulthood, including paying off debt, whereas Karen was not. George deposed that, to the best of his knowledge, Darryl was on a sickness benefit for much of his adult life and did not earn any significant income.
[18] The relationship between the siblings was fraught. Karen said Darryl has been abusive towards her for her entire life, referring to her on multiple occasions as the “adopted bitch” and telling her she would not get anything from their parents as "it would all go to him". George also witnessed Darryl’s ill-feeling towards Karen.
[19] Karen said she had a very good relationship with her parents, returning to visit them in New Zealand each year, and talking with Enid on the phone at least once a week.
[20]In about 2009, Ronald suffered a stroke and was moved into a special care unit.
Darryl moves into the family home at Estuary Road with Enid
[21]In 2010, Darryl moved into the Estuary Road property to live with Enid.
[22] The second earthquake in 2011 significantly damaged the Estuary Road property resulting in an extension to the house being split off from the main house. George said the repairs were never completed but he understood a cash settlement was later provided by the Earthquake Commission (EQC), a process that was managed by Darryl. He was also aware that Darryl had access to Enid's bank accounts.
[23] At around the time of the earthquakes, Enid contacted George and asked him to visit her. She wanted his support because she was facing pressure from Darryl to provide him with funds to meet his mortgage obligations. George visited Enid and told her not to provide the funds to Darryl. During this conversation, Enid asked George to be her attorney for property matters however he said he would only do so if his sister was also appointed an attorney. During George's conversation with Enid about financial matters, Darryl came into the room and confronted them about the subject matter of the conversation. The conversation became heated, and George said he was eventually forced to leave. Neither George nor his sister were ever appointed as Enid’s attorney.
[24] At around this time, when he was visiting Ronald in hospital, George said Ronald asked him to tell Enid not to give Darryl any more money because, if she did, “then they were going to go broke”. There is nothing to suggest this statement, although hearsay, is unreliable.
[25] After Darryl moved into the Estuary Road property, Karen said her weekly phone calls to Enid were disrupted by Darryl’s actions, which included cutting the phone off mid-conversation and changing Enid's phone number on several occasions.
[26] George also recalled a time after the earthquakes when he was contacted by Karen and asked to check on Enid because the home phone number was no longer working. George said he visited Enid shortly afterwards but, when he arrived, Enid would only speak to him over the top of the gate to the property, she appeared agitated and would not invite him in as was her usual habit. George became aware, from what Enid told him, that the phone number she and Ronald had for most of their married life had been changed. During this conversation, George said Darryl came to the gate and stared at him over Enid's shoulder, demanding to know why he was there. George left the property once Enid told him she would get in contact with Karen.
[27] On another occasion, when George tried to visit Enid at the property, he said Darryl approached him in the driveway, told him he could not enter the home and that he would be trespassing if he did. However, that situation was resolved after Enid came out of the house and told Darryl to behave as it wasn’t his house.
[28] George formed the view that Darryl was trying to prevent him from having contact with Enid.
[29] Ronald died in 2013. Karen said Enid was not allowed to ring her to tell her about Ronald’s death. She found out about her father’s death from Enid sometime later when Karen was finally able to have a conversation with Enid and, I infer, the reason Karen was not told about it at the time was shared with her.
[30] Karen alleges that the EQC payments for the Estuary Road property were used by Darryl for his own purposes, namely, the purchase of a property on Lancaster Street, Invercargill in 2013, as well as potentially contributing to subsequent property purchases discussed below. At or around the time of the purchase of Lancaster Street, it appears Darryl moved to Invercargill, returning to Christchurch occasionally to visit Enid.
Involvement of family lawyer
[31] Following Ronald's death in 2013, Peter Doody, Ronald and Enid's family solicitor, became aware that Enid did not have a Will. He prepared a basic draft Will for Enid and sent it to her on 4 July 2014 asking her to confirm who she wanted as her executors and beneficiaries. At that time, Mr Doody understood Enid was considering giving Darryl a greater share in her estate than Karen, so he also asked her whether she would like to have an independent executor.
[32] Mr Doody next saw Enid when she came into his office with Darryl. She said she wanted to transfer the Estuary Road property to Darryl. She also asked Mr Doody to make Darryl the executor and sole beneficiary in her Will.
[33] Mr Doody asked to speak to Enid on her own, but she insisted Darryl remain in the meeting. Mr Doody told Enid that, in his view, there was no good reason to transfer the property to Darryl given that she had in place powers of attorney (including for property) and that her home and the contents of that home appeared to be her only substantial assets. Mr Doody deposed he was conscious that, if Enid transferred her home to Darryl, she would lose her independence and would be financially dependent on Darryl.
[34] Although Mr Doody referred to powers of attorney being in place, there is no evidence about these documents and how they may have differed from the powers of attorney Mr Davies subsequently prepared and which Enid executed.
[35] Mr Doody also enquired about the EQC insurance payments made in relation to the damage to the Estuary Road property, but he was not provided with any information about this.
[36] Mr Doody was concerned about the circumstances of the proposed transfer and advised Enid that he was not prepared to facilitate it or to complete a Will without the opportunity to provide her with independent advice and to have a proper discussion with her on her own.
[37] Shortly thereafter, on 22 August 2014, Enid and Darryl returned to Mr Doody's office to uplift her deeds. What these deeds comprised was not outlined in the evidence provided to me.
[38] Mr Doody later found out that Enid had consulted another solicitor, Mr Philip Davies.
Execution of key documents October 2014
[39] In October 2014, Enid and Darryl met with Mr Davies. At this point Enid was 87 years old. After signing a waiver of independent advice, the following documents were prepared by Mr Davies and signed:
(a) a Will for Enid dated 9 October 2014 appointing Darryl as the sole executor, trustee and beneficiary of her estate;
(b) enduring powers of attorney for Enid’s personal care and welfare and property, both dated 9 October 2014 appointing Darryl as Enid's attorney. Mr Davies provided a certificate to these documents stating that he had no reason to suspect Enid was or may have been mentally incapable at the time she signed them;
(c) an authority and instructions signed by Enid and Darryl on 9 October 2014 specifying the transfer of the Estuary Road property to Darryl for the sum of $305,000 along with the contemporaneous forgiveness of that debt. The document refers to a sale and purchase agreement which has not been located; and
(d) a waiver of independent advice dated 9 October 2014 signed by Enid and Darryl, advising them about the desirability of independent legal advice but recording that, notwithstanding that advice, Mr Davies was instructed to act for both parties on the transfer of the Estuary Road property.
[40] The Estuary Road property was transferred to Darryl on 3 November 2014. The same day, a deed of acknowledgement of debt, in which Enid lent the entire purchase price to Darryl, and a deed of forgiveness of that debt were also signed. Later that month, Karen recalled Enid saying she did not believe the property was no longer in her name, a belief Karen said lasted for many years,
[41] Mr Davies' files dealing with the documents outlined in [39] above were obtained. There is one file note dated 9 October 2014 which is the same day the documents were executed but, although other file note/s precede this file note, the file note appears to record something handwritten about the powers of attorney. What is written is impossible to decipher. There is no record of:
(a) what information (if any) was provided to Mr Davies about the family and the family dynamics;
(b) whether Enid’s rights and responsibilities in relation to both her children were explained to her and, if they were, why she chose to exclude Karen from her Will;
(c) the evidential basis for the certificate as to Enid’s capacity; and
(d) what documents Mr Davies was provided with from the deeds uplifted from Mr Doody by Darryl and Enid.
Enid’s health issues - November 2014
[42] On 21 November 2014, Enid was admitted to hospital in Christchurch having been unwell for the preceding four days. She was diagnosed with a hernia that required surgery. Home help was organised for Enid after her discharge from hospital. This was then transferred to Nurse Maude (a community care agency) to help with her personal care three times per week. A file note on 3 December 2014 records that Enid was also receiving Meals on Wheels five days per week and that Age Concern had been involved.
[43] The involvement of Age Concern is explained, to a degree, in Karen’s affidavit. She said Enid’s false teeth had been misplaced while she was in hospital and that Darryl had received money to purchase a new set but had not done so. She had asked Age Concern to investigate this. Karen said Enid remained without her false teeth until her death.
Events in 2015 - property transactions and Enid’s health
[44] In April 2015, Darryl entered an agreement to sell the Estuary Road property with settlement on or about 29 June 2015 for $259,500.
[45] On 15 June 2015, Enid was assessed by a Canterbury health board assessor pending her transfer to Invercargill. There is reference to Darryl living in Invercargill at that time but visiting Enid in Christchurch at weekends and sometimes staying with her for a week. The assessor referred to a MoCA completed by Enid’s GP in April or June 2015 in which she scored 17/30. Enid was noted to have lost points for visuospatial executive function, language, abstraction and delayed recall, and she was unable to provide the date, day or month. Episodes of forgetting to take her medication were noted.
[46]The assessor noted that, among other things, Enid:
(a) was deaf in her left ear but able to hear if facing the person speaking;
(b) was often lonely but happy, spending most of her time watching TV;
(c) was anxious about moving to Invercargill but wanted to be near Darryl;
(d) was reliant on Darryl for shopping, transport and assistance with her finances;
(e) was only able to eat soft food given the loss of her false teeth in hospital, the replacement of which Darryl was noted as still looking into; and
(f) had experienced a fall down the front doorstep in late 2014 resulting in a skin tear which still required attention from a District Nurse twice a week for wound care.
[47] On 3 July 2015, Darryl entered into an agreement to purchase a property at McQuarrie Street in Invercargill for $205,000 with settlement on 31 July 2015. The settlement statement for this purchase showed that the $206,737.66 required was sourced from the sale of the Estuary Road property. It is also evident from Mr Davies reporting letter to Darryl that the sum of $42,650.84 was “left over” following the sale of the Estuary Road property and the purchase of McQuarrie Street, as this amount was invested through Mr Davies' trust account.
[48] On 3 October 2015, Darryl entered into an agreement to purchase a property at Bridge Street, Tuatapere for $96,500, with settlement later agreed to occur on 30 October 2015. Darryl’s instructions relayed to Mr Davies by email were for the balance of the funds from the sale of the Estuary Road property to be used for this purchase with the balance to come from the ANZ bank account. A trust statement dated 3 November 2015 shows funds of $42,772.91 being used towards the purchase which Karen alleges is clearly the $42,650.84 “left over” from the McQuarrie Street purchase, referred to above at [47], plus some interest.
[49] The bank statements obtained show transactions from January 2018–January 2020. These statements reveal a pattern of fortnightly superannuation deposits initially of $886.40 with withdrawals by cheque of $880 afterwards within the fortnightly period, with an increase in the deposits to $907.74 starting in April 2018 and cheque withdrawals of between $880 and $970 but mostly sums of over $900 after the increase in the amount of the superannuation deposits.
[50] It is not known if Darryl banked with the ANZ as well. But it is known that the enduring power of attorney had been activated on 25 January 2016 so it can be inferred that any cheques were signed by Darryl as Enid’s attorney. What is not known is where these funds were deposited or spent. On 1 April 2022, the Family Court directed Darryl to provide Enid’s financial information to the Court including a statement of her assets and liabilities. Darryl has not provided this information.
[51] Karen deposes to her belief that Darryl was not employed during these years and was only able to afford to purchase these properties using the funds from the sale of the Estuary Road property and potentially funds from the EQC settlement. While the inference as to Darryl’s employment is supported by George’s affidavit, given the formal proof nature of this hearing where I only have one side of the story, caution is required in considering hearsay evidence of this type. I disregard this evidence.
[52] The Bridge Street and Lancaster Street properties have since been sold by the respective District Councils as sales under the Local Government (Rating) Act 2002.
[53] The McQuarrie Street property seems likely to be the only property that currently remains in Darryl's ownership.
Enid moves to Invercargill late 2015 onwards
[54] Information explaining Enid’s life in Invercargill postdates the signing of the key legal documents at issue in this proceeding and is therefore of less relevance. However, describing the rest of Enid’s story completes the context to which the October 2014 events must be understood and, as such, are briefly outlined.
[55] Following the sale of the Estuary Road property, Enid moved from Christchurch to Invercargill and lived with Darryl in the McQuarrie Street property. Enid was about 88 years of age at this time.
[56] On 20 December 2015, Enid was admitted to Southland Hospital following a fall. A CT scan revealed generalised moderate cerebral and cerebellar atrophy and degenerative changes in the cervical spine. She had scored 17/30 on a MoCA test conducted earlier that year.
[57] On 20 January 2016, Enid was again admitted to Southland Hospital having fallen off the couch and hurting her knee which necessitated the use of a knee brace. The notes record her as living alone, with Darryl living nearby. On admission she was said to have had occasional memory loss and was a poor historian. Concerns were raised about her safety at home, with a placement found at a residential village for “D3 care”. The notes record “Discussed with Mrs Thackwell multiple times - lacking insight and memory secondary to dementia for these discussions, not seeing any safety concerns for discharge home.”
[58] On 25 January 2016, Dr Downie completed a certificate of mental incapacity for the purpose of triggering the two enduring powers of attorney. It recorded that Enid had advanced dementia and was mentally incapable of making any decisions about her personal care, welfare and property.
[59] Enid was discharged from hospital to the residential care facility but was subsequently removed from that facility by Darryl in early 2016 against medical advice.
[60] Michelle Downey provided an affidavit outlining the involvement of the Southern District Health Board with Enid from 2015, as Enid was allocated a clinical needs assessor following her move to Invercargill. The records reveal that, while in Christchurch, Enid had been monitored by Age Concern because of what was stated in evidence as concerns about abuse by Darryl. In Invercargill, Enid was supported by her general practitioner, Age Concern, home support agencies, Royal District Nursing Service, needs assessors and Older Persons Health (a department within the Southern District Health Board). The concerns held by Age Concern in Christchurch were passed on to the Invercargill branch.
[61] Ms Downey personally became aware of Enid's circumstances after Enid was removed from the residential care facility by Darryl in early 2016. When Ms Downey was appointed as the clinical co-ordinator/clinical needs assessor for the Care Co- ordination Centre in 2020, she became more involved with Enid's situation. She and others in her team were concerned about Enid's safety if she continued to remain at home. Ms Downey described Darryl as a very challenging individual to deal with and
she outlined that many members of her team, her included, were regularly subjected to abuse from him in his email or phone communications. Examples of Darryl's email communications in 2022 were annexed to Ms Downey's affidavit.
[62] Ms Downey attached a statement to her affidavit. She prepared this statement with the nurse practitioner working with Enid. She said it summarises some of the information contained on Enid's file held by the Southern District Health Board. This includes a summary of the concerns that were held in relation to Darryl's care of Enid.
[63]The notes record (in summary) the following medical information:
(a) CT scans of Enid's head from 2015 show cerebral and cerebellar atrophy and white matter changes;
(b) Enid was admitted to hospital in January 2016 following a fall, at which time concerns were raised by the multi-disciplinary team about her lack of insight and memory secondary to dementia. At this time, it was deemed she was not competent and her enduring power of attorney as to welfare in favour of Darryl was activated;
(c) a subsequent MoCA on 29 August 2016, in which Enid scored 19/30, supported the diagnosis of dementia; and
(d) in February 2022, Dr Short advised Darryl and Enid that blood test results and ongoing weight loss indicated a "presumed malignancy" and eventual mortality was discussed. Enid was deemed to be in a palliative state.
[64] The statement outlines examples of documented concerns about Darryl's care of Enid noted on the Southern District Health Board's records since 2016, including:
(a) not providing Enid with sufficient food, clothing and continence products. A lack of oversight of her medication and a lack of attention to her personal care;
(b) his lack of insight into Enid's increasing care needs;
(c) his misuse of funds and withholding money despite Enid's requests. On one occasion Darryl's failure to pay the power bill meant the power was disconnected and Enid had to be taken into care (temporarily);
(d) failing to provide adequate health care for Enid by refusing to accept or facilitate the 24/7 care she needed; and
(e) his ongoing aggressive attitude towards health professionals.
Limitation
[65] Two jurisdiction arguments were submitted by the plaintiff. The first is the plaintiff’s standing, which I dealt with via an interim judgment granting her temporary administration of Enid’s estate. The second is still outstanding and concerns whether the proceedings have been brought out of time.
[66] All causes of action in law and equity against a person survive for the benefit of their estate per s 3 (1) of the Law Reform Act 1936.2 This means Enid’s claims in equity against Darryl of undue influence and unconscionable dealing survive her death.
[67] The plaintiff outlines that despite the general six-year time limit in the Limitation Act 2010,3 this may be extended by the Court if the claimant became incapacitated during a claim’s primary period or longstop period.4 The plaintiff submits that Enid, as claimant, lost capacity by January 2016 at the latest. As such, the claimant was incapacitated at the start of the claim’s primary period or as an alternative, during the claim’s primary period.
[68] In any event, it is submitted it was open to Darryl to raise limitation as a defence to the claim but he has chosen not to take any steps in the proceeding. This, in my view, is the key point, doing away with the need to assess this issue in any more
2 Law Reform Act 1936.
3 Limitation Act 2010, s 11.
4 Section 45(1)-(2).
detail. Regardless, it would remain open to the Court to order the period be extended if just to do so.5
Was Enid's Will invalid due to a lack of capacity?
Legal principles
[69] The principles for assessing testamentary capacity in relation to the validity of a Will are set out in Woodward v Smith.6 In that case, the Court of Appeal accepted and paraphrased the principles that apply in the leading authority of Banks v Goodfellow.7
[70] Testamentary capacity is essential when making a Will. This includes a testator understanding what they are doing by making a Will and the effect of it. A testator must also:
(a) understand the extent of the property they are disposing of under their Will;
(b) be able to comprehend and appreciate any claim to which they ought to give effect; and
(c) be of sound mind, meaning having sufficient "intelligence to understand and appreciate the testamentary act".8
[71] Testamentary capacity does not require a sound and disposing mind or memory in the highest degree but there must be the ability to understand and make a sound assessment of the circumstances which are required to be considered when making a "rational, fair and just testament".9
[72] If there is evidence that raises the lack of capacity as a tenable issue, the onus of satisfying the Court that the maker of the Will did have testamentary capacity rests
5 Section 45(2).
6 Woodward v Smith [2009] NZCA 215 at [19](2).
7 Banks v Goodfellow (1870) LR 5 QB 549 at 565-8.
8 Woodward v Smith, above n 6, at [19](3).
9 At [19](8).
on those who seek probate of the Will. That onus must be discharged on the balance of probabilities. Whether the onus has been discharged will depend, amongst other things, upon the strength of the evidence suggesting a lack of capacity.10
[73] Mr Taylor, counsel for Karen, submitted that, in this case, the plaintiff has succeeded in raising testamentary capacity as a tenable issue and therefore the onus passes to Darryl, as the sole executor and beneficiary of the Will, to satisfy the Court that Enid had testamentary capacity at the time the Will was made. It is unclear whether this remains the case now that I have appointed Karen as the temporary administrator of the estate but that is neither here nor there as the presumption that a Will-maker has capacity is done away with upon the raising of the tenable issue.
Discussion
[74] I am required to determine whether Enid had the requisite testamentary capacity in October 2014 when the Will was signed, therefore any evidence about Enid’s medical history in the period leading up to her death is only relevant insofar as it assists me to make that determination.
[75] The leading case Green v Green cited the English Court of Appeal decision in Hawes v Burgess, and specifically the point that, where a Will has been professionally prepared and the lawyer has formed the view that the will-maker has capacity, the Courts should not too readily overturn that view.11
[76] Enid’s Will was professionally prepared by Mr Davies. However, there is evidence that Enid may have lacked capacity at the time she made her Will in October 2014 due to her rapid and well-recorded physical and mental deterioration following that date. This renders further enquiry necessary. There is no direct medical evidence that can be relied on for that period. No expert evidence about Enid’s capacity has been provided to the Court. I must therefore rely on circumstantial evidence to piece together Enid’s probable condition in October 2014.
10 Bishop v O'Dea [1999] 18 FRNZ 492 (CA), cited in Loosley v Powell [2018] NZCA 3 at [20].
11 Green v Green [2015] NZHC 1218 at [89] citing Hawes v Burgess [2013] EWCA Civ 94 at [38].
[77] The medical evidence attached to the affidavits, although hearsay, is admissible as business records.12 The plaintiff correctly submits it would not be practical nor useful to require the many healthcare workers Enid and Darryl interacted with during Enid’s final years to give their evidence as witnesses and I consider this evidence reliable.
[78] Enid was 87 years of age when she signed the key documents. Although age of itself is not evidence of diminishing capacity, in this case it is coupled with the evidence that Enid underwent CT scans in April 2015 – a mere seven months after the signing of the key documents in October 2014 – which showed cerebral and cerebellar atrophy with white matter changes indicative of dementia. And there is the diagnosis of advanced dementia made in January 2016, at which time her enduring power of attorney as to welfare was activated. On 29 August 2016, Enid's cognitive test results confirmed her dementia diagnosis.
[79] As against that, there is Mr Doody's evidence that he sent a basic draft Will to Enid on 4 July 2014, at which time his understanding was that she was considering giving Darryl a greater share of the estate than Karen but, I infer, not disentitling Karen completely. Sometime after this, but before 22 August 2014 when Enid and Darryl returned to Mr Doody's office to uplift her deeds, Mr Doody had an appointment with Enid at which Darryl was present. The concerns he had about what was proposed are outlined above. Importantly however, there is nothing in Mr Doody's affidavit to suggest that he was concerned about Enid's testamentary capacity or her ability to make a Will at that time. Otherwise, he is likely, in my view, to have done something about this.
[80] And then, there is Mr Davies' (the solicitor who made the Will) certificate of witness to Enid’s donation of an enduring power of attorney to Darryl which importantly states he did not consider Enid to be lacking capacity. I approach this certificate with considerable caution, given that there are insufficient detailed file notes available from Mr Davies' files. It is therefore impossible to ascertain whether Mr Davies was advised that Enid had a daughter. Nor is there any evidence Mr Davies
12 Evidence Act 2006, s 19.
enquired about the extent of Enid's assets, particularly given that the sale of the Estuary Road property to Darryl, with forgiveness of the debt back to her, would effectively leave her vulnerable should she need to apply for a rest home subsidy. Mr Doody deposed that, in his view, Enid had no reason to transfer the property to Darryl given she had in place powers of attorney and that her home and its contents appeared to be her only substantial assets. It is unclear whether Mr Davies was aware of this important context.
[81] Also relevant, in my view, are the comments of Enid’s general practitioner, Dr Short. Her belief is that Enid did not lack testamentary capacity in 2015 but did suffer from situational vulnerability. In her view, Enid retained sufficient capacity so that her powers of attorney were not invoked. In response, Mr Taylor submitted that Dr Short’s assessment was not that of the practitioner who administered the MoCAs, did not appreciate the background of the case, was not a formal medical assessment and was based on recollections from nine years ago. Nonetheless, evidence directly from Enid’s general practitioner must be afforded some weight.
[82] Aside from the medical evidence, Karen deposed that Enid did not understand that the effect of the transfer was that Estuary Road was no longer hers, but instead Darryl’s. Such a comprehensive misunderstanding must, in my view, raise questions about her understanding of her Will which was agreed to contemporaneously with the transfer. Enid needed to understand that the effect of the new Will was to completely disinherit Karen. I am not convinced she did. The evidence suggests Karen had a good, albeit distant relationship with her mother. While Mr Doody’s evidence suggests Enid may have been considering altering the Will to provide a greater share of her estate to Darryl, that is different from completely disinheriting Karen. Such a major change in testamentary disposition has, in other cases, been seen as supporting an inference of incapacity in cases like this where the change lacks an adequate explanation.13 It is at least arguable that Enid was not of sufficiently sound mind to render the testamentary disposition dated 9 October above reproach.
13 Loosley v Powell, above n 10, at [32].
[83] The determination is difficult in the absence of direct medical evidence on Enid’s capacity in 2014. Mr Taylor was unable to provide such expert evidence in time and did not apply for an adjournment to do so.
[84] I was referred to Kingsford v Mathers to provide assistance in interpreting Enid's MoCA scores. The expert evidence there described the MoCA test as “a screening tool that can be used for assessing vascular dementia, for which Dr Casey [the expert in that case] explained a cut-off is said to be around 17 out of 30… A score of 22 indicates mild cognitive impairment and those with mild Alzheimer’s dementia score less than 20, with an average score of 16 out of 30”.
[85] The plaintiff referred the Court to several cases where MoCA test results similar to Enid’s contributed to a finding of testamentary incapacity.14 However, referring to expert evidence given in an entirely separate proceeding is of low evidential value given the complex nature and individual circumstances that may apply to a diagnosis of dementia. It does however establish that similar MoCA scores have, in the past, been evidence of testamentary incapacity.
[86] It is my view that, by a narrow margin, despite the lack of evidence provided to the Court and the inherent issues involved with estimating capacity at a particular time, Enid’s testamentary capacity on 9 October 2014 has been raised as a tenable issue, leaving it to the party obliged to uphold the Will to show Enid did in fact have capacity. Therefore, in the absence of any evidence from Darryl, I conclude Enid’s Will dated 9 October 2014 is invalid due to her lack of testamentary capacity. I will return to necessary orders at the end of this judgment.
14 Kingsford v Mathers [2024] NZHC 2470 at [72]; Public Trust v White [2023] NZHC 1608 at [6];
Matich v Matich [2024] NZHC 1216 at [32].
Is the transfer of the Estuary Road property invalid on account of undue influence?
Legal principles
[87] The principles that apply to the law of undue influence are set out in Green v Green.15 In summary:
(a) The person asserting undue influence must show on the balance of probabilities:
(i)the alleged influence led to the making of the impugned transaction; and
(ii)the influence was undue in the sense that the transaction was not the result of the free exercise of an independent will on behalf of the person at whose expense the transaction was made.
(b) The question of whether a transaction was brought about by undue influence is a question of fact. A party can succeed in establishing this either directly by proving "actual undue influence" or by recourse to an evidential presumption which arises where it is established that:
(i)the person said to have been subject to undue influence placed trust and confidence in the other; and
(ii)the transaction called for an explanation.
(c) A relationship of trust and confidence can be established factually or by reference to a class of specific relationships. In the latter category, the law presumes irrebuttably that one party had influence over the other. The presumption is only as to proof of influence. The person alleging undue influence will still need to establish a transaction calling for an explanation.
15 Green v Green, above n 11, adopting the principles from the House of Lords in Royal Bank of Scotland v Etridge [2002] 2 AC 773, approved by the Court of Appeal in Hogan v Commercial Factors Ltd [2006] 3 NZLR 618 at [36].
(d) Once the person claiming undue influence has established both the relationship of trust and confidence and a transaction calling for explanation, the evidential burden shifts to the person seeking to uphold the transaction to show that it was not the result of undue influence (noting that the overall burden of proof will always rest on the person alleging undue influence).
(e) The presence of independent advice is one of many factors that may be considered in determining whether undue influence is proven. But establishing that a person fully understood the act is not the same as establishing that the act was not brought about by undue influence. A person can fully understand an act and still be subject to undue influence.
(f) The overall burden of proof rests on the person seeking to establish undue influence. The standard of proof is the balance of probabilities.
Discussion
[88] There is no automatic presumption of undue influence by children over parents.16 However, it may exist in “the relationship between a son in the prime of life and parents in the evening of life”.17 The relationship between Enid and Darryl in October 2014 was clearly one of trust and confidence, especially considering Enid's age and her emotional reliance upon Darryl. I am satisfied that a rebuttable presumption has been created, the effect of which is that I can find that Darryl had influence over Enid. That being the case, Karen must establish that the transactions complained about call for an explanation.
[89] In this case, there are two transactions where Karen deposed Darryl exerted undue influence over Enid; the first is the making of the Will and the second is the transfer of the Estuary Road property to him. I would add to this a third, which is necessary to consider as one with the second, the forgiveness of the entire purchase price lent by Enid to Darryl to enable him to purchase Estuary Road. I will consider the Will separately below.
16 Round v Round [2017] NZHC 428 at [84].
17 Avon Finance Co Ltd v Bridger [1985] 2 All ER 281 (CA) at 298.
[90] I place considerable weight on the evidence of Mr Doody who, responsibly in my view, refused to carry out Enid's instructions until he could speak to her without Darryl being present. The fact that Enid went to another lawyer (Mr Davies) very shortly after this is telling. I conclude it is more probable than not that Enid was persuaded by Darryl to see a new solicitor rather than her family solicitor. That Darryl was not prepared to allow Enid to see Mr Doody without being present himself suggests he was concerned the advice Enid might receive in his absence would be contrary to his interests. It is safe to conclude that Enid and Darryl uplifting her files shortly after the meeting with Mr Doody was driven by Darryl to distance Enid from Mr Doody.
[91] I have already outlined my concerns about the lack of file notes on Mr Davies' files. Because of this, there is no evidence about the information he was provided with before enacting Enid's instructions. Neither is it clear whether he knew that Mr Doody had refused to act for both parties without speaking with Enid on her own, whether Darryl was present during the entire or part of the client interview with Enid, or whether proper details were obtained about her property interests and family members.
[92] It is also not clear whether the consequences of the property transaction, including the forgiveness of the debt, were explained to Enid, especially how these might weaken her ability to be financially independent if her health needs required access to funds.
[93] I find that Enid's transfer of the Estuary Road property in Christchurch to Darryl is a transaction calling for an explanation. This is because the transfer was affected by way of a loan from Enid to Darryl for the entire purchase price, a debt that was contemporaneously forgiven in full. Counsel submitted that, because of this, Enid was not entitled to receive a residential care subsidy because the transfer of the property was within the exclusionary timeframe. This left Enid with no home and no funds with which to meet any residential care or general living costs, so she was entirely reliant on Darryl to provide her with the necessary funds.
[94] Importantly, there was no apparent need for Enid to transfer the Estuary Road property to Darryl at that time. Enid had lived at Estuary Road since 1948 and had a
clear attachment to the property. There is also no explanation as to why she would completely deprive herself of assets, especially with the transferee also having power of attorney over Enid’s property.
[95] In summary, I am satisfied that Karen has established the existence of a relationship of trust and confidence between Enid and Darryl and that the transfer of the Estuary Road property and forgiveness of the debt are transactions calling for an explanation. Given that the evidential burden in these circumstances shifts to Darryl and he has chosen to take no steps in the proceeding, there is no evidence to show that the transactions were not the result of undue influence.
[96] I am satisfied that the cause of action alleging undue influence over the Estuary Road transfer has been established to the requisite standard. I will return to deal with what relief ought to be granted at the end of this judgment.
Is the Will invalid on account of undue influence?
Legal principles
[97] Whereas a party alleging undue influence in respect of an inter vivos gift may rely on an evidential presumption of a relationship of trust and confidence and a transaction which “calls for an explanation”, the orthodox position is that an evidential presumption is not available in a challenge to a Will on the grounds of undue influence.18 That is, unlike the discussion of the transfer of the Estuary Road property above, with respect to this Will, actual undue influence must be proven by Karen as the party alleging it.
[98] The plaintiff’s submissions assess alleged undue influence over the Will in the same way as the transfer of the Estuary Road property, using an evidential presumption. I instead think the authorities require me to determine whether actual undue influence was exerted by Darryl over Enid in the signing of the Will.
18 Gorringe v Pointon [2023] NZCA 42 at [21] citing Carey v Norton [1998] 1 NZLR 661at 663.
[99] In Re Estate of Dudley; Hayden v Simeti, Fisher J provided a useful summary of the legal considerations that apply, as follows:19
(a) The key question is whether, because of extraneous pressure from others, the will-maker has signed a will contrary to his or her own wishes.
(b) Persuasion which has left the final choice to the will-maker is not undue influence. Where there is evidence of strong influence or pressure, the Court will approach the question of the will-maker's own wishes with suspicion. However, if satisfied that the will-maker's wishes have not been overborne, and that in the end he or she wanted the will in that form, the Court must uphold the will. In those circumstances the ultimate source of the will is not the external pressures but the exercise of the will- maker's own free judgment.
(c) The onus of proof lies upon the proponent of undue influence. However direct evidence of undue influence is not to be expected. These cases usually turn upon the strength of the circumstantial evidence. The question is whether from all the surrounding circumstances, with particular emphasis upon the result of the will and the circumstances in which it was actually executed, undue influence is to be inferred.
(d) For this purpose, all the circumstances bearing directly or indirectly upon the free will of the will-maker at the time of execution are relevant. These include illness, pain and suffering, physical weakness and mental deterioration falling short of testamentary incapacity. They also include dependency upon others in legal, business, social, medical and/or domestic matters. One should view with special care any powerful need, obligation, or vulnerability on the part of the deceased which others might be in a position to exploit.
(e) However, it is not enough to show that others had the means and opportunity to unduly influence the deceased and that there has been a recent testamentary disposition in their favour. The Court must be satisfied both that the power was exercised and that the will would not have resulted but for that exercise.
Discussion
[100] The effect of my conclusion above, that Enid’s Will is invalid by reason of testamentary capacity, is that this cause of action becomes moot. I therefore limit my discussion of it considerably.
[101] Adopting Fisher J's approach, the key question is whether Enid was subject to extraneous pressure from Darryl when she made her Will, which was contrary to her real wishes. Given her earlier discussion with Mr Doody, I conclude Enid did not,
19 Re Estate of Dudley; Hayden v Simeti HC Auckland P1042/92, 14 May 1993 at 11–12.
upon her death, intend to completely disinherit Karen. Based on this, I am satisfied the unilateral disposition of Enid’s estate to Darryl was not her true wish. She may well have, as Mr Doody suggested, wished to provide a greater share of her estate to Darryl out of gratitude for his continued presence in her life and his care for her, but the evidence establishes that Enid and Karen had a good relationship, despite the many years Karen had lived overseas and their limited contact in the latter stage of Enid’s life.
[102] It follows that a high level of dependence held by the alleged influencer over the Will-maker for their personal wellbeing and quality of life can increase the risk of undue influence.20 Ronald, Enid’s partner of many decades, had recently passed away. Karen, Enid’s only other child, was living overseas. Darryl was Enid’s only available immediate family. Enid was therefore highly dependent on Darryl. While this is not evidence of undue influence itself, I consider it a relevant part of the overall factual matrix and it reinforces my decision that Darryl did exert undue influence over Enid in the making of her Will in October 2014.
[103] Fisher J accepts circumstantial evidence will likely be required of findings of this type. I consider it more likely than not that Darryl used his influence over Enid to have the Will changed by encouraging her to go to a new solicitor who would make the arrangements and that, without that influence, Enid’s Will would not have been changed. In reaching this finding, I have considered the temporal proximity between the gift and sale of Estuary Road with the purchase of the Invercargill properties, and the fact that a second solicitor was immediately retained to conduct the transfer after the first refused.
[104] I would therefore, if the circumstances had rendered it necessary, consider Enid’s Will to be invalid by reason of undue influence, as well as incapacity.
20 Lindsay Breach Nevill's Law of Trusts, Wills and Administration (14th ed, LexisNexis, Wellington, 2023) at 458.
Was the transfer of the Estuary Road property to Darryl an unconscionable dealing?
Legal principles
[105] While undue influence focuses on the mind of the weaker party, unconscionable dealing instead focuses on the unconscientious taking of advantage. As such, points of focus include the disadvantage of the weaker party, the fairness of the transaction and the conduct of the stronger party.21 The principles governing unconscionable dealing are set out in Gustav & Co Ltd v MacField Ltd.22 In short, equity will intervene to relieve a party from the rigors of the common law in respect of a bargain that can be shown to be unconscionable. It operates to protect those who enter into bargains when they are under a significant disability or disadvantage from exploitation.
[106] A qualifying disability or disadvantage does not arise simply from an inequality of bargaining power, but it is a conditional characteristic which significantly diminishes the party's ability to assess his or her best interests. Characteristics that can constitute a qualifying disability or disadvantage include infirmity, age and illness, among other things.
[107] If one party is under a qualifying disability or disadvantage (the weaker party), the focus shifts to the conduct of the other party (the stronger party). The key question is whether, in the circumstances of the case, it is unconscionable to permit the stronger party to take the benefit of the bargain.
[108] However, before a finding of unconscionability will be made, the stronger party must know of the weaker party's disability or disadvantage and must take advantage of that disability or disadvantage. This knowledge may be actual or constructive. For example, the failure of one party to receive independent advice in relation to a significant transaction may lead to a finding that the stronger party had constructive knowledge.
21 Round v Round, above n 16, at [64].
22 Gustav & Co Ltd v MacField Ltd [2007] NZCA 205 at [30]–[31].
[109] As Tipping J said in Bowkett v Action Finance Ltd, an unconscionable victimisation ("taking advantage of") will occur where there are:23
Circumstances which are either known or which ought to be known to the stronger party in which he has an obligation in equity to say to the weaker party: no, I cannot in all good conscience accept the benefit of this transaction in these circumstances either at all or unless you have full independent advice.
[110] If these conditions are met, the burden falls to the stronger party to show that the transaction was a fair and reasonable one and therefore should be upheld.
Discussion
[111] The matters at issue under this cause of action are the transfer of the Estuary Road property and the forgiveness of the loan amount borrowed for the transfer. I am satisfied that Enid was in a period of mental decline leading up to, during and after the transfer of the Estuary Road property to Darryl and the subsequent gifting transaction. Her age, physical and mental fragility and her reliance on Darryl placed her, in my view, at a qualifying disadvantage for the purposes of the doctrine at the time the transactions were entered into in October 2014. Darryl clearly knew about this disadvantage. His interactions with health professionals, Mr Doody and his attempts to prevent Enid from having meaningful contact with Karen and George are all matters I consider in reaching this conclusion.
[112] But even if Darryl's motivation was to apply the funds from the sale of the Estuary Road property for the benefit of Enid and take care of her residential needs, that in fact did not occur. The evidence from Ms Downey and the notes attached to her affidavit show that Enid was not provided with certain basic necessities – such as a replacement for misplaced dentures, access to support workers and other services, and she was deprived of the funds she required to live a comfortable life in her later years.
[113] This was, in my view, a very clear situation where Enid should have received independent legal advice to fully understand the impact of the sale of the Estuary Road property to Darryl, the subsequent gift and deed of forgiveness of debt that followed
23 Bowkett v Action Finance Ltd [1992] 1 NZLR 449 at 457.
and the fact that she had appointed him as attorney in respect of both property and welfare. As noted, I am satisfied Darryl set out to prevent Enid from getting such advice. Enid and Darryl signed a waiver of independent legal advice from Mr Davies at the time of the transactions. While Enid did not receive independent advice as a result, it was offered to her. In respect of this cause of action, Mr Doody's evidence is particularly relevant. Darryl, having been present, was fully aware of Mr Doody's concerns and yet, I infer, he encouraged his mother to go to another lawyer to affect the transactions that ultimately benefited him alone.
[114] In my view, these transactions were not fair and reasonable, and the effect of them meant Enid, in her final years, was not able to appropriately access the funds she needed to provide sufficiently for her needs. I find that the fourth cause of action, relating to unconscionable dealing, has been proven to the requisite standard.
What remedies should follow?
[115]Karen seeks declarations that:
(a) Enid's Will dated 9 October 2014 is invalid as it was executed at a time when she lacked testamentary capacity and/or was made subject to undue influence; and
(b) a declaration that the gift of the Estuary Road property to Darryl was unduly influenced and/or an unconscionable dealing; and
(c) an order that Darryl pay the sum of $305,000 plus interest into Enid's estate or that the McQuarrie Street property be sold or put on trust for the benefit of the estate.
[116] I am satisfied I should make the declarations sought. It has, in my view, been demonstrated that the Will is invalid due to both lack of testamentary capacity and undue influence, and the gift of the Estuary Road property to Darryl was unduly influenced and an unconscionable dealing. I must now determine appropriate orders.
[117] I have been referred to the analogous case Round v Round, in which Palmer J ordered the “obvious relief” of revesting the property in the party subject to the undue
influence and unconscionable dealing.24 Preventing such a revesting here of course is the fact that the Estuary Road property has been on sold to a third party. As such, Karen has sought the remedy that the Court order Darryl to pay the sum of $305,000 plus interest (s 10 Money Claims Act 2016) from 9 October 2014 into Enid’s estate. Karen also seeks an order for costs of and incidental to these proceedings.
[118] Mr Taylor submitted an alternative open to me is to trace the funds from the sale of Estuary Road into another property owned by Darryl and either order that property to be sold and the funds transferred to the estate or order the property be held on trust for the estate and its beneficiaries. Per [53] above, as the only property remaining in Darryl’s name from the evidence, it would have to be the McQuarrie Street property that was subject to those orders.
[119] In advancing this argument, Mr Taylor has submitted convincing evidence tracing the sale of the Estuary Road property to the purchase of the McQuarrie and Bridge Street properties. The Estuary Road property was sold on 29 June 2015. The McQuarrie Street property was purchased on 31 July 2015. A letter from Mr Davies to Darryl reported on these transactions and made it clear they were dealt with together. A trust statement shows the McQuarrie Street property was funded by a transfer of
$20,500 from the sale of Estuary Road for the deposit and a further $186,237.66 to complete the purchase.
[120] It is likely a large portion of Darryl’s wealth is equity in the McQuarrie Street property. Any orders are likely to impact him significantly.
Orders
[121] The typical remedy for undue influence is setting aside the impugned transaction.25 The issue for me is which transaction should be set aside?
[122] Strictly speaking, Enid was paid for her house - she (on paper) lent the purchase price to Darryl. The evidence does not tell me whether the sale price was at an undervalue or not. However, the value of the loan, which in Enid’s hands replaced the
24 Round v Round, above n 16, at [99].
25 Andrew Butler (Editor) Equity and Trusts in New Zealand (2nd edition) at 22.11.
value of her home, was immediately lost to her by virtue of the deed of forgiveness of debt. It is the forgiveness of debt that I therefore set aside. I make the following orders:
The forgiveness of debt
(a) There is a declaration that the forgiveness of debt dated 3 November 2014 in favour of Darryl was obtained by his undue influence and/or unconscionable dealing.
(b) The deed of acknowledgment of debt dated 9 October 2014 is hereby set aside.
(c) Darryl is to pay to Enid’s estate $305,000.
(d) Darryl is to pay interest on $305,000 to the estate from 9 October 2014 to the date of repayment.
(e) Leave is reserved for Enid’s estate to seek, in the alternative to interest, an account of profits made by Darryl arising from the deed of acknowledgement of debt.
The Will
(f) There is a declaration that:
Enid’s Will dated 9 October 2014 was executed at a time when she lacked testamentary capacity and/or was made subject to undue influence; and
(g) There is a declaration that Enid’s Will dated 9 October 2014 is invalid and it is hereby set aside.
Further orders
(h) There is an order that Enid’s estate may immediately lodge a charging order against any real estate owned by Darryl to secure the payment of
$305,000 plus interest and costs.
(i) For the avoidance of doubt, the appointment of Karen as temporary administrator of Enid’s estate made on 21 November 2024 continues in effect until further order of the Court.
(j) Leave is reserved further for Karen to apply for any consequential orders.
Costs
[123] The plaintiff is to file and serve any memorandum in relation to costs within 10 working days of this judgment being issued. The respondent is to file and serve any memorandum in reply no later than 10 working days thereafter. Costs will be dealt with on the papers. The estate may deduct from any amount otherwise payable to Darryl by the estate any amount outstanding for costs and disbursements.
Harland J
Solicitors:
Wilkinson Rodgers Lawyers, Dunedin.
Copy to:
D R Thackwell, Defendant.
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