Loosley v Powell
[2018] NZCA 3
•2 February 2018 at 12.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA168/2017 [2018] NZCA 3 |
| BETWEEN | JENNIFER LOOSLEY AND ROBERT GEORGE LOOSLEY AS EXECUTORS OF THE ESTATE OF ALLISON SLATER |
| AND | KATHERINE ANNE POWELL, BENJAMIN EDWARD POWELL, BARBARA ANNE POWELL, JILL ROSEMARY ELEVELD AND MARK ELEVELD |
| Hearing: | 24 October 2017 |
Court: | French, Cooper and Asher JJ |
Counsel: | A F Grant and H G Holmes for Appellants |
Judgment: | 2 February 2018 at 12.30 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BWe invite further submissions on costs as set out in [125].
____________________________________________________________________
REASONS OF THE COURT
(Given by Asher J)
Table of Contents
| Para No | |
| Introduction The criticism of Courtney J’s approach Our assessment of the evidence relating to testamentary capacity on 2 May 2014 Background Costs in this Court | [1] [68] [81] [101] [107] |
Introduction
Allison Slater died on 8 May 2014 after suffering breast cancer. She was a widow and childless. The value of her estate was approximately $2,000,000. She had executed a will six days before her death on 2 May 2014 (the Final Will) in which she left her residuary estate to the two children of one of her two sisters. She excluded the two children of her other sister and the child of her sister-in-law. This was a significant change from a will she had executed on 9 May 2011 (the 2011 Will) in which her residuary estate was to be divided equally between all four of her sisters’ children and the child of her sister‑in‑law.
This appeal concerns testamentary capacity. In the High Court Courtney J found that Allison[1] lacked testamentary capacity when she signed the Final Will.[2] Accordingly, probate of the Final Will was recalled.
[1]We refer to the deceased Allison Slater throughout as Allison. We mean no disrespect to her in doing so and have chosen this course for ease of expression, and because it was the approach adopted by Courtney J in the High Court.
[2]Farn v Loosley [2017] NZHC 317, [2017] 3 NZLR 383.
The appellants submit that Courtney J erred by effectively modifying the longstanding principles of testamentary capacity laid down in Banks v Goodfellow,[3] restated by this Court in Woodward v Smith.[4] They argue that Allison had sufficient testamentary capacity when she executed the Final Will on 2 May 2014. Alternatively, if she lacked testamentary capacity when she executed the Final Will, she nevertheless had testamentary capacity on 29 April 2014 when she instructed her lawyer as to the contents of the Final Will, and had sufficient knowledge and understanding of what she was doing when she executed the Final Will, for the rule in Parker v Felgate to apply.[5] As part of these arguments the appellants contend that the Judge incorrectly assessed the relevant facts.
Brief history
[3]Banks v Goodfellow (1870) LR 5 QB 549.
[4]Woodward v Smith [2009] NZCA 215 at [19].
[5]Parker v Felgate (1883) 8 PD 171.
We briefly summarise the key facts. Aspects of those facts are considered in more detail later in this judgment.
Allison was 64 years old when she died. She was born in New Zealand, the middle of three sisters. Her mother was Evelyn Farn, who was still alive on Allison’s death. Mrs Farn was a significant witness in the High Court proceeding, having given her evidence before Courtney J prior to the trial. She died before the commencement of the hearing. Allison’s older sister is Jennifer Loosley, married to Robert Loosley, who together have two children, Thomas (Tom) and Nicholas (Nick). Mr and Mrs Loosley are the appellants in this proceeding in their capacity as executors of Allison’s estate. Tom and Nick are interested parties. Allison’s younger sister is Barbara Powell, married to Kerry Powell, who together have two children, Katherine (Kate) and Benjamin (Ben). Kate and Ben are twins. Barbara, Kate and Ben are respondents in this proceeding.
Allison lived for much of her adult life in the United Kingdom having married an Englishman, Paul Slater. He died on 28 March 2010. Mr Slater had a sister in England, Jill Eleveld, who had a son, Mark Eleveld. Jill and Mark Eleveld are also respondents in this proceeding.
The Slater marriage was long and happy. They ran a successful hotel in England, which was sold after Mr Slater’s death in 2010. They had no children. They regularly visited New Zealand, and at Christmases would rent a bach at Ferry Landing, Coromandel, where they were close to the Loosley and Powell families. After her husband’s death Allison continued to spend most of her time in England, although having sold the hotel she had no permanent home. She continued to visit New Zealand and go to Ferry Landing at Christmas, and was in close contact with her New Zealand friends and family.
In 2011 Allison decided to execute a will. She did so in New Zealand. She chose her mother’s lawyer, Terry McDell, to assist her. He prepared the 2011 Will which Allison signed on 9 May 2011. The 2011 Will provided for some of her valuable chattels and paintings to go to Kate Powell, together with her jewellery, clothing and articles of personal use or ornament. The residue was to be paid equally to Tom Loosley, Nick Loosley, Kate Powell, Ben Powell and Mark Eleveld. Thus all of her nephews and her niece were to benefit equally from the residue, including her nephew by marriage.
Around this time Allison discovered a lump in her breast and was told she needed a partial mastectomy. In 2011 she did not attend the usual family holiday at Ferry Landing that Christmas and remained in England for treatment. She returned to Ferry Landing for Christmas 2012 with the Loosley and Powell families. However, through 2013 her health deteriorated and it became clear that she would not survive the cancer. On 4 December 2013 she arrived back in New Zealand having decided, it would seem, to spend her last months in New Zealand. Allison rented an apartment in Auckland and bought a motor vehicle. She continued to live as independently as she could. Again there was the usual family holiday after Christmas 2013 at Ferry Landing, but Allison was much weaker. She continued to suffer from acute fluid build‑up in her abdomen.
In 2014, despite her deteriorating health, Allison was determined to organise a family holiday in Rarotonga with her two sisters, their husbands and four children. This took place over approximately a week through the Easter holiday in April. Allison could only participate in limited activities. By the time she returned to Auckland on 23 April 2014 she was too ill to go to her rented apartment to live alone, and she went to live in the Loosley home in Parkside Street, Auckland.
On Monday 28 April 2014 Allison telephoned Mr McDell and arranged to see him at the Loosley home at Parkside Street the next day. She had prepared some diary notes which we will refer to later.
On Tuesday 29 April 2014 Mr McDell came to the home in the morning and stayed for about half an hour. Allison was in bed. He did not recognise Allison from their previous dealings in 2011. He described her as “chirpy” despite her illness. After a general discussion they moved to the question of a new will. Allison instructed Mr McDell that she wanted to appoint Mr and Mrs Loosley as executors and change the bequests made in her 2011 Will. Her instructions were that she wished to remove the Powell children and Mark Eleveld as residuary beneficiaries, leaving only Tom and Nick Loosley as residuary beneficiaries, with specific bequests to various family members. Mr McDell left to prepare the will.
The next day, Wednesday 30 April 2014, Allison sent an email to Mr McDell to clarify her instructions about the new will, and met with her mother. Mr McDell posted a letter to Parkside Street that same day which contained the new will he had prepared on Allison’s instructions together with an enduring power of attorney in relation to property and one in relation to personal care and welfare. He concluded by asking whether the enclosures were in accordance with her wishes. If so he could call past to have the documents completed.
The following day, Thursday 1 May 2014, Allison was admitted to the Dove House Hospice in Glendowie, Auckland for palliative care. Mr McDell went to see Allison on Friday 2 May 2014, and she executed the Final Will he had drafted, using Mr McDell and a medical professional at Dove House as witnesses. The Final Will provided for bequests of $50,000 each to Kate and Ben Powell, $75,000 to Barbara Powell and a car and $50,000 to Jennifer Loosley. There was no provision for Mark Eleveld, but $100,000 was to go to his mother, Jill Eleveld. The residue of the estate was to be divided equally between Tom and Nick Loosley. Kate and Ben Powell and Mark Eleveld were no longer residuary beneficiaries. There was no provision for chattels.
In the days that followed Allison continued to deteriorate and she died on 8 May 2014.
After Allison’s death the Powells and Mrs Farn did not hear about the terms of the Final Will until probate had been granted, which was over a month later. During that time their inquiries were rebuffed by the Loosleys, who knew its terms, and their suspicions developed. When they learned of the position in June 2014, they issued the proceedings that give rise to this appeal.
The issues
Courtney J described the issues as follows:[6]
(a)Did Allison have testamentary capacity when she executed the Final Will on 2 May 2014?
(b)If not, did she have testamentary capacity when she gave her solicitor instructions on 29 April 2014 and sufficient understanding when she executed the Final Will on 2 May 2014 to bring the Final Will within the rule in Parker v Felgate?
(c)If so, was the Final Will the product of undue influence?
(d)If the Final Will is not valid (either because of lack of capacity or undue influence) should documents prepared in the days between 29 April and 2 May 2014 be declared a valid will under s 14 of the Wills Act 2007?
[6]Farn v Loosley, above n 2, at [4].
Of these issues, the third does not arise before us. Courtney J found that undue influence was not established, and there has been no cross-appeal against that finding. The fourth also does not arise, as Mr Grant for the appellants advised that on reconsideration, the ground under s 14 would not proceed.
Testamentary capacity
The principles relating to the assessment of testamentary capacity are well‑settled, and were set out by this Court in Woodward v Smith.[7] There, this Court re‑stated the principles laid down in the often-cited judgment of Banks v Goodfellow:[8]
[7]Woodward v Smith, above n 4.
[8]At [19], quoting Banks v Goodfellow, above n 3, at 565–568.
(1)Because it involves moral responsibility, the possession of the intellectual and moral faculties common to our nature is essential to the validity of a will.
(2) It is essential to the exercise of such a power that a testator:
(i) understands the nature of the act and its effects; and also the extent of the property of which he is disposing;
(ii) is able to comprehend and appreciate the claims to which he ought to give effect;
(iii) be free of any disorder of the mind which would poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties; that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.
…
(5) In deciding upon the capacity of the testator to make his will, it is the soundness of the mind, and not the particular state of the bodily health, that is to be attended to. The latter may be in a state of extreme weakness, feebleness or debility and yet he may have enough understanding to direct how his property shall be disposed of; his capacity may be perfect to dispose of his property by will, and yet very inadequate to the management of other business, as, for instance, to make contracts for the purchase or sale of property.
(6) A testator who has reflected over the years on how his property should be disposed of by will is likely to find it less difficult to express his testamentary intentions than to understand some new business.
(7) Testamentary capacity does not require a sound and disposing mind and memory in the highest degree; otherwise, very few could make testaments at all.
(8) Nor must the testator possess such capacity to the same extent as previously. His mind may have been in some degree weakened, his memory may have become in some degree enfeebled; and yet there may be enough left clearly to understand and make a sound assessment of all those things, and all those circumstances, which enter into the nature of a rational, fair and just testament.
(9) But if that standard is not met, he will lack capacity.
Although we have quoted from the summary in Woodward v Smith, we will refer to these as the Banks v Goodfellow criteria. Courtney J relied on them.[9] The Banks v Goodfellow propositions as summarised in Woodward v Smith have been widely accepted and applied in New Zealand.[10] It is important to treat them as guiding propositions rather than as a formula.
[9]Farn v Loosley, above n 2, at [39]–[40].
[10]See for example Parkes v Parkes [2015] NZHC 1289 at [27]; Hewton v Heming [2015] NZHC 2831 at [33]; and Green v Green [2015] NZHC 1218 at [91] [Green v Green (HC)], aff’d [2016] NZCA 486, [2017] 2 NZLR 321.
In Bishop v O’Dea, this Court described the relevant onus and standard of proof in a testamentary capacity case in a statement also relied on by Courtney J:[11]
[3] In probate proceedings those propounding the will do not have to establish that the maker of the will had testamentary capacity, unless there is some evidence raising lack of capacity as a tenable issue. In the absence of such evidence, the maker of a will apparently rational on its face, will be presumed to have testamentary capacity.
[4] If there is evidence which raises lack of capacity as a tenable issue, the onus of satisfying the Court that the maker of the will did have testamentary capacity rests on those who seek probate of the will.
[5] 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 lack of capacity.
[11]Bishop v O’Dea (1999) 18 FRNZ 492 (CA) (citations omitted). Referred to by Courtney J in Farn v Loosley, above n 2, at [41].
Here, for reasons that we will outline, there is evidence that raises Allison’s lack of capacity as a tenable issue. That being so, the onus fell on the parties seeking to support the Final Will, the Loosleys, to discharge the onus. Having heard and considered the evidence, the Court had to be satisfied that there was testamentary capacity. If the issue was left hanging in the balance, capacity would not have been established.[12]
[12]Nijsse v Squires CA53/04, 15 December 2004 at [12].
It is not only the date of the signing of the Final Will on 2 May 2014 that is relevant to the issue of capacity. Under the rule in Parker v Felgate if, when the instructions were given by a will-maker, that will-maker had testamentary capacity, the will can be valid even though that testamentary capacity had been lost by the time of execution.[13] In Parker v Felgate the will-maker had given instructions for her will in July 1882 but ceased to have testamentary capacity by the date she executed the will on 29 August 1882. She died shortly after. The jury was instructed that the will was valid if there was testamentary capacity at the time the instructions were given, and at the time of signing the will-maker was capable of understanding and did understand that she was engaged in executing the will for which she had given instructions.
[13]Parker v Felgate, above n 5, at 173–174.
This case has often been applied and accepted as good law in English decisions.[14] There are conceptual difficulties. One, in particular, is how a court, in assessing the testamentary capacity of a will-maker who was very ill and confused at the time of execution, can be certain that there has been no change of mind by the will‑maker. The rule in Parker v Felgate was attacked by the appellant in the England and Wales Court of Appeal decision in Perrins v Holland, the point being made that if the validity of a will depends on both testamentary capacity and due execution, logically the former should exist at the time of the latter.[15] The Court did not accept the criticism, noting that there was strong persuasive authority for upholding the decision in Parker v Felgate, and that it was a proposition of some antiquity acted on for over 250 years.[16] Moore-Bick LJ summarised the law as follows:[17]
What is required is due execution of a will which the court can be satisfied expressed the wishes of a testator at a time when he did have full testamentary capacity and has not been subsequently revoked.
[14]See the exhaustive consideration of the history and reception of Parker v Felgate in Perrins v Holland [2010] EWCA Civ 840, [2010] WTLR 1415 at [13]–[23].
[15]At [23].
[16]At [23].
[17]At [23].
The rule in Parker v Felgate has been accepted by the New Zealand High Court.[18] It was accepted by Courtney J in this case.[19] Under the rule the court must be satisfied that there has been no revocation of the earlier instructions when the will is signed, all the more so when the earlier instructions involve a significant change from an earlier will for no apparent rational reason.
[18]Tansley v Trustees Executors and Agency Co of New Zealand HC Wellington CP698/92, 17 March 1994 at 5; and Re Prasad [2012] NZHC 1489 at [97(e)].
[19]Farn v Loosley, above n 2, at [43].
The application of the Parker v Felgate rule in New Zealand has not been challenged in the submissions made to us. For that reason, and because of the view we take of Allison’s capacity when she gave instructions for the Final Will, we do not consider that this is the appropriate occasion to review its application in New Zealand.
The criticism of Courtney J’s approach
Mr Grant did not challenge the applicability of the Banks v Goodfellow criteria. However, he submitted that Courtney J had unilaterally modified the Banks v Goodfellow formulation by stipulating, at least in respect of deathbed wills, that there is a further requirement; the court must be satisfied with the testator’s rationale for deviating from any pattern of disposition identified in previous wills or wishes regarding testamentary intent. The effect of his submissions was that Courtney J’s judgment had created a requirement that a deathbed will-maker must be asked to provide an explanation as to the reasons for significant change to a will, and that if this was not provided this indicated a lack of testamentary capacity. This, he submitted, was not part of the law of New Zealand.
Courtney J quoted extensively from an article supporting the proposition that an unexplained deviation from a previous pattern of disposition is a factor to be considered when assessing testamentary capacity.[20] This article had been referred to by the respondents’ medical expert, Dr Gary Chi Wah Cheung. In a passage quoted by Courtney J, the authors of the article recommended:[21]
… [a] structured methodology of assessing both the testator’s mental status and their ability to meet the task-specific aspects of testamentary capacity, guided by the Banks v Goodfellow criteria. This methodology involves an assessment of (i) the testator’s understanding of the nature and extent of their property; (ii) awareness of potential beneficiaries and the testator’s ability to evaluate and discriminate between the claims of such beneficiaries; (iii) the testator’s rationale for deviating from any pattern of disposition identified in previous wills or wishes regarding testamentary intent; (iv) the presence of any disorder of mind such as delusions or hallucinations which might be influencing the testator’s disposition; and (v) ensuring the will-making is a free and voluntary act.
[20]C Pesiah and others “Deathbed wills: assessing testamentary capacity in the dying patient” (2014) 26 International Psychogeriatrics 209, quoted by Courtney J in Farn v Loosley, above n 2, at [73]–[75] and [77].
[21]At 213, quoted by Courtney J in Farn v Loosley, above n 2, at [77] (Courtney J’s emphasis).
The authors of the article also made the following statement, again quoted by Courtney J:[22]
The vital question to ask the testator is “why?” It is not sufficient to simply document that the testator was emphatic or “clear” in their wishes to disinherit or favour a beneficiary — often assumed to be synonymous with capacity despite the fact that clarity of emphasis may reflect cognitive impairment or psychotic thinking.
[22]At 214, quoted by Courtney J in Farn v Loosley, above n 2, at [77].
Despite Courtney J’s extensive quotation of the article in her decision, we do not agree that Courtney J sought to add to the Banks v Goodfellow criteria, or to make investigation of the rationale for deviation from past bequests at the time of execution of the will a requirement for establishing capacity. Her references to the article were in the context of setting out Dr Cheung’s evidence and the submissions for the respondents. The closest she got to putting a further requirement forward was in this statement:
[79] Given Allison’s serious illness, the fact that she was, more likely than not, taking medication at a higher than recommended dose and the relative complexity of her estate, an effective assessment of her testamentary capacity would have required a careful enquiry as to the rationale behind the quite significant changes from her previous will. Against that background, I turn to consider Mr McDell’s evidence.
We do not interpret this as elevating the existence of an explanation for changes to a will to the status of an additional requirement for establishing testamentary capacity. Her approach was to consider, when assessing testamentary capacity, all matters indicative of capacity, including the rationale (or lack thereof) behind any significant changes.
Having commented that it was not the role of the court to substitute its own view for that of the will-maker, the England and Wales Court of Appeal observed in Sharp v Adam:[23]
But it did not follow that the court should not look for a justification for the change in the will or inquire why [the will-maker] disinherited his daughters. An irrational, unjust and unfair will must be upheld if the testator had the capacity to make a rational just and fair one, but it could not be upheld if he did not.
[23]Sharp v Adam [2006] EWCA Civ 449, [2006] WTLR 1059 at [79].
There are indeed numerous authorities where a major change of testamentary disposition has been seen as supporting an inference of incapacity in the absence of an adequate explanation.[24] Hammond J noted in Re Rhodes:[25]
Where property is disposed of fairly, and in accordance with moral dictates, then only a very small amount of capacity is needed. But with abrupt and unfair changes, fuller and clearer evidence of capacity is required.
[24]Brown v McEnroe (1890) 11 NSWR Eq 134 at 138; Bool v Bool [1941] St R Qd 26 (Full Court) at 39; and Roche v Roche [2017] SASC 8 at [29] and [31].
[25]Re Rhodes HC Wellington CP25/02, 7 March 2002 at [40].
Nevertheless, there is no “requirement” that a Banks v Goodfellow assessment involve an inquiry into why a will-maker has made a significant change at the time the will is executed. It would be wrong to deny capacity only because of a failure by a solicitor to so enquire. There are a number of factors taken into account in assessing capacity as outlined in Banks v Goodfellow; including evidence of lucidity and mental command, available medical assessments, and third party observations of behaviour. A further factor can be, if the will does involve a significant change from earlier wills, the reasons for the change apparent from the factual background, or as expressed by the will‑maker. It is self‑evident that the nature and reasons for a major change in a deathbed will are part of the relevant factual matrix for assessing capacity.
Thus, if the factual background leading up to the execution of a will by a dying person shows good reason for a significant change, for instance the collapse of a close relationship or a particular action by a beneficiary adverse to the interests of the will‑maker, then this can be supportive of testamentary capacity. Equally, if a significant change is made to a will for no apparent or rational reason, this will be a factor that a court can take into account, and could be seen as indicative of weakness and debility or a lack of understanding of the claims to which the will-maker should give effect. Apparently rational changes can support a claim of capacity, while apparently irrational changes can undermine it. Such a sudden change can be a symptom of a failure to comprehend and appreciate the claims to which the will‑maker should give effect, one of the established Banks v Goodfellow factors.[26]
[26]A number of New Zealand decisions have held that it is legitimate to draw on the rationality or irrationality of changes to a will in assessing testamentary capacity; Re Rhodes, above n 25, at [40]; Re Austin [2013] NZHC 2374 at [49]; and Green v Green (HC), above n 10, at [88]–[99].
It is imperative that a court does not substitute an examination of testamentary capacity with its own perception of moral obligation. A court must not reject the will‑maker’s reason for a change in a will because the court sees it to be unreasonable. A will-maker is free to change a will and unfairly and indeed brutally disappoint expectations, providing that is done with a full understanding and capacity. A potential beneficiary in that situation has only the statutory relief available in the Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949. That relief is not available in this case. Yet nor should a court ignore an irrational change if it is a factor that could, with other factors, indicate incapacity. The change to the residuary beneficiaries in Allison’s Final Will is such a factor.
On our analysis Courtney J did not elevate the issue of the will-maker’s rationale for the change to an addition to the Banks v Goodfellow criteria. In her discussion she was doing no more than recognising that a change that appeared to have no rational basis by an extremely unwell will‑maker was indicative, in terms of the Banks v Goodfellow criteria, of a lack of understanding and an inability to comprehend and appreciate the claims which ought to be given effect.
Certain factual findings of the Judge
In assessing testamentary capacity the Judge analysed in detail Allison’s consumption of Oxynorm, a type of morphine. Allison had been permitted by her oncologist to “self-medicate” using this drug. The recognised side-effects of Oxynorm include confusion, nausea and vomiting, particularly in the initial few weeks.
Both the medical experts called, Dr Cheung and Dr Mark Patrick Simpson, agreed that for a patient with liver damage consuming Oxynorm, the level in the body could be higher than expected as a result of the liver’s inability to metabolise the drug. They differed however as to how significant that effect would be in Allison’s case. Dr Simpson assumed that Allison was only taking 10 mg a day, but the Judge disagreed.[27] She analysed the various prescriptions of Oxynorm and the use of that drug by Allison as shown in the records that were kept at Dove House. She thought it more likely than not that prior to going to Dove House Allison was taking more than 10 mg of Oxynorm a day.
[27]Farn v Loosley, above n 2, at [59].
We do not consider that this was a safe conclusion for the Judge to reach, given that there had not been direct evidence or cross-examination on this issue. Dr Cheung in his evidence did not go so far as to give the opinion that Allison was consuming Oxynorm in excess of the recommended dosage, while expressing the view that her diseased liver and alcohol consumption made her more vulnerable to the drug’s effects. The Judge referred to a data sheet for the drug which had not been traversed in evidence. The Judge could not carry out her own assessment of extra consumption without evidence and submissions on the topic.
However, we do agree that she was entitled to view the consumption of Oxynorm as a relevant factor. She clearly preferred Dr Cheung as an expert to Dr Simpson and, given his greater level of relevant expertise which we will refer to, she was justified in doing so. There was also a basis for the Judge’s conclusion that female subjects could be at special risk when taking the drug, and that alcohol consumption could increase its effects. The Judge ultimately accepted Dr Cheung’s view that Allison’s impaired liver function, and history of heavy alcohol consumption,[28] meant that her body would have had increasing difficulty in metabolising the drug. She would have accordingly suffered from its side‑effects.
[28]Although it is to be noted that because of her severe illness Allison was drinking far less in the last days of her life, and presumably nothing at all when she was at Dove House.
We note that the Judge was not correct when she said that neither Mr or Mrs Loosley gave evidence concerning Allison’s condition on 29 April 2014. In fact they both did give such evidence, saying in effect that she appeared to be in command of what she was doing and was not confused.
We also note that the Judge offered little direct comment on the very considerable differences in the evidence adduced by the parties as to what was observed of Allison’s condition in the weeks before her death. As we outline later, two good friends of Allison gave very different views about her condition and command of her faculties in the lead up to her giving instructions for the Final Will. The Judge did not deal with that evidence, or make a finding in relation to the difference.
The Judge did say in assessing Allison’s overall capacity and in particular her capacity on 29 April 2014:
[101] There is no clear evidence on which to make a retrospective assessment of testamentary capacity. Some of the evidence points towards Allison having capacity but other evidence points away from it. Still other evidence could be consistent with either. I am left far from satisfied that Allison had testamentary capacity when she gave Mr McDell instructions. The result is that the defendants have not discharged the burden of proving testamentary capacity for the purposes of the rule in Parker v Felgate.
Given that there is force in the appellants’ submission that the Judge made some errors on the facts and given that she did not make direct findings on some of the conflicting evidence relating to capacity, we think it is necessary to carry out a detailed review of the facts ourselves.
In commencing our own review of the evidence we note that Allison’s testamentary capacity must be assessed on 2 May 2014, when she executed the Final Will. However, this day is not considered in isolation. The broad background that we have already set out, and details as to her actions and statements in the days prior to 2 May 2014, are highly relevant as part of a continuum of deterioration where at some point she plainly did lose capacity (although on the appellants’ case this was after 2 May 2014). Irrespective of the rule in Parker v Felgate, her capacity at the meeting on 29 April 2014 when Allison gave instructions to Mr McDell is relevant to her capacity when she signed the Final Will three days later on 2 May 2014. As Courtney J observed, much of the evidence of the medical experts is relevant to both dates and any attempt to separate it makes for a clumsy analysis. Thus, we will consider all the evidence leading up to the execution of the Final Will, focusing not just on 2 May 2014 but on the weeks prior to this and in particular on 29 April 2014.
The giving of instructions for the Final Will in late-April
On 28 April 2014 Allison contacted Mr McDell, who had prepared her 2011 Will, and asked him to come to see her in relation to a new will. He arranged to see her the next day, Tuesday 29 April 2014, at the Loosleys’ Parkside Street home where she was staying.
He visited her at about 9.30 to 10 am. Mr McDell is a very experienced solicitor who has now retired. Mr McDell deposed that his discussions with Allison covered the size of her estate, which she indicated was in the vicinity of $2,000,000. They also discussed changes to the executors of the will. The executors of the 2011 Will had been based in England and Allison wished to appoint Mr and Mrs Loosley. She then told Mr McDell that she wished to change the bequests from the ones that she had made in 2011, and gave him a photocopy of the second page of her 2011 Will on which she had written:
All monies given to be passed on to ONLY BLOOD RelativesKate Powell $50,000
Ben Powell $50,000
Jenny Loosley Fiat car and $50,000
Barbara Loosley $75,000
Jill Eleveld $100,000
Receptions/Celebrations ?
Remainder of Estate will be divided between Thomas Loosley and Nick Loosley
To be decided: TV, sofas, furniture, bed
Mr McDell deposed in an extract quoted by Courtney J:[29]
The question of capacity is always at the forefront of your mind when you’re talking to a client. There was nothing about her, the way she answered questions, the way she looked, her general demeanour, the discussion we had about both her will and powers of attorney. I got the very clear impression that she understood, this was my own personal opinion obviously, that she knew exactly what she was doing and understood what I was explaining to her to the point where the issue of lack of capacity didn’t even raise its head. I didn’t think there was an issue.
He did not make any notes of the meeting, because he said he had no concerns about capacity.
[29]Farn v Loosley, above n 2, at [80].
The instructions he received would result in a will quite different from the 2011 Will, under which the residuary estate was to be divided equally between Tom and Nick Loosely, Kate and Ben Powell and Mark Eleveld. Mr McDell stated that none of the proposed beneficiaries would have been entitled to a claim under the Family Protection Act and he saw no reason to be concerned about the changes. He observed that Allison appeared to know the size of her estate, who the potential beneficiaries were, and was able to decide between them.
It was agreed at that meeting that Mrs Loosley would be appointed Allison’s attorney for personal care and welfare under an enduring power of attorney. Mr and Mrs Loosley would be appointed joint attorneys for property. Mr and Mrs Loosley were asked into the room to confirm that they would be prepared to act as executors and attorneys. They did so.
The view of a lawyer involved in the execution of a will is relevant in assessing capacity. The value of the view will turn on the level of enquiry and discussion on the part of the lawyer of and with the deceased.[30] Mr McDell did not enquire about the reason for the changes. In our view it would have been good practice for him to have done so. When a will-maker is very ill, in this case giving instructions from a bed, an enquiry into the reasons behind significant changes is a good way of checking whether the will-maker understands the nature of his or her actions and the effect of those actions. In Woodward v Smith this Court endorsed as good practice a set of precautionary steps including asking about and reviewing previous wills, and asking why potential beneficiaries are included or excluded.[31]
[30]Hawes v Burgess [2013] EWCA Civ 94 at [60]. Quoted in Green v Green (HC), above n 10, at [89(f)].
[31]Woodward v Smith, above n 4, at [57] and [59].
During the meeting Mr McDell asked Mr Loosley to photocopy the second page of the 2011 Will with the handwritten notes given to him by Allison. Mr Loosley proceeded to do so, and deposed that when he saw what was on the paper, he photocopied it. He returned the original and a copy to Mr McDell and retained a copy for himself which he put on file.
Mr Loosley deposed that after Mr McDell left their house he went back upstairs to the bedroom where Allison was. She said to him “[h]ave I made the right decision?” He replied, “[w]ell you have had a long time to think about it, Al.” She then punched her fist into the bed and said with feeling, “[y]es I have”. Mr Grant submitted that this evidence could be seen as showing that she made a rational decision and understood its impact on those she was removing as residuary beneficiaries. This may be so, but on the other hand it could be seen as indicating that she was emotional in her thinking, and going through a mood oscillation.
Mr Loosley asserted that Allison was bright and alert that day. He did not detect any difficulties with her memory or cognition generally and believed that if there had been he would have “readily detected it”. Mr Loosley said that after the meeting Allison spoke with him and Mrs Loosley and asked if they would keep the contents of the will confidential. He said he would respect her wishes.
The next day Allison emailed Mr McDell:
Dear Terry
It was good to meet you again yesterday.
Before you do the draght [sic] will, the name on it is Barbara Powell not Barbara Loosley to receive $75,000 from the estate.
I’m going to Dove [House] tomorrow for about a week, so please deliver documents to Parkside St.
There are no medical notes written on 29 April 2014, save for a pre‑admission hospice assessment form dated 29 April 2014 signed by a Dora Mak, a nurse at Dove House. She was not called on to give evidence and, as Courtney J noted, it is not known what questions were asked by Ms Mak when she ticked the various boxes in the form. It is also not known whether the assessment was on the phone or in person. The ticked boxes on the form indicated that Allison was alert and oriented, able to express herself, and had no noticeable memory deficit or delusions or hallucinations. Her motivation and insight were expressed to be good and no anxiety was recorded. Given the uncertainty around the basis for the observations recorded in the pre‑admission form, Courtney J did not accord it any weight.
On 30 April 2014 Mrs Farn visited Allison at the Loosleys’ home at Parkside Street. She originally thought this visit was on 27 April, but Mrs Farn relied on Mr and Mrs Loosley for transport and they were in Wellington until the night of 27 April. Further, Mrs Loosley had made an entry in her diary for 30 April, “Mum — coffee here with Ali”. Courtney J was satisfied that Mrs Farn visited on 30 April, and we agree.
Mrs Farn, Allison’s mother, gave her evidence before Courtney J in 2015. There was no challenge to her account of that visit. She described Allison as propped up in bed, obviously very weak but able to converse. During the conversation Allison suddenly announced that she was concerned about her will because she felt Ben and Kate Powell would simply “fritter” her money away. Mrs Farn responded briefly, disagreeing, and no more was said about the topic. Mrs Farn in her affidavit commented that in hindsight she regretted bitterly not taking the matter further with her daughter.
When Allison’s oncologist arranged for her to have a week of respite care at Dove House, it was obvious that she was very frail and might not return home. A hospice assessment form dated 1 May 2014 was produced. This recorded Allison as being exhausted from fluid removal, and that she was there for palliative care. There was reference to her taking medications with a sedative effect. The words “[m]entally sound” were encircled rather than the alternative phrases “[s]ometimes confused” or “[t]otally confused”. There were no other comments.
The execution of the Final Will
Mr Loosley telephoned Mr McDell on the morning of 2 May 2014, told him that Allison had “taken a turn for the worse” and asked him to bring the will to Dove House. Mr McDell was at his office in Highbrook when Mr Loosley called. He printed further original copies of the will he had prepared and the powers of attorney and drove to Dove House.
Mr McDell arrived at Dove House some time before midday. He met with Allison alone in her room and spoke to her about the will. He was with her for approximately 20 minutes. He observed that she looked tired and uncomfortable. He took her through the various bequests, and directed her attention to the parts of the will that she had wished to alter, including the change to the residuary beneficiaries. When he asked her whether she was “okay” with the will she gave a non-specific affirmative answer. He could not recall her exact words. Mr McDell does not appear to have discussed the rationale for the changes from the 2011 Will, or made any enquiry about her understanding of what she was doing or its effects.
In the annotated copy of her 2011 Will that Allison gave to Mr McDell on 29 April 2014, she had noted that the disposition of her chattels was “[t]o be decided”. There was no provision as to chattels in the Final Will. We consider that Allison’s lack of reference to the absence of chattels in the Final Will, and the lack of any discussion about them when she signed the Final Will, are an indication that she was not focused.
The two witnesses of the Final Will were Mr McDell and Carmen Stadler‑Hanekom, a clinical nurse manager at Dove House. They do not recall anything untoward about Allison’s cognitive function and observed that she appeared to be lucid. However, the nurses’ notes for the early hours of 2 May 2014 record:
0245: … had severe back pain … and took Oxynorm 5mgs. Was also nauseated and … vomited … Displayed a temporary bad temper but apologised afterwards.
0430: Sleeping now has had an unsettled nocte [night].
0520: Remains sleepy, position altered. Checked for pain level and left her to go back to sleep.
The next entry was timed at 12.15 pm but in Courtney J’s view clearly reflected the nurses’ observations over the course of the morning, including the period before midday when Allison executed the Final Will:
1215: Allison is poorly:
Lethargy +++; poor night’s sleep, nausea, uncomfortable particularly round abdomen which is full + tense ascites drainage site still leaking.
Dr Wardrope will assess + chart medications today. Allison is overwhelmed re health events — and cannot process too many questions.
Julia + I spoke to sister Jenny this morning to discuss our findings. Jenny has power of attorney.
Jenny would like Allison to stay in Dove wing for palliative care.
Comfort measures only.
Jenny would like to be informed of any change in condition.
Courtney J particularly noted the reference to Allison being overwhelmed with health events and unable to process too many questions, and the fact that her condition was such that there would be “comfort measures only”. The Judge considered that these indicated how unwell Allison was that morning.[32]
[32]Farn v Loosley, above n 2, at [37].
Dr Wardrope, Allison’s GP, visited on the afternoon of 2 May 2014. In anticipation of Allison’s admission, Dove House had sent Dr Wardrope a pre‑admission form that sought, among other things, advice as to Allison’s mental capacity by ticking a box “yes” or “no”. Dr Wardrope had ticked “yes” and signed the form on 30 April 2014. But he had not actually seen Allison for some time because she was under the care of an oncologist. When he visited Allison on 2 May 2014 he added a note, drawing an arrow from the statement confirming mental capacity to the foot of the document where he wrote and signed the following:
This was based on information given. But on admission certainly was deteriorating quickly.
Allison continued to deteriorate and ultimately died on 8 May 2014.
Observations by others as to Allison’s mental and physical state
There was detailed evidence adduced concerning Allison’s health and capacity to communicate and function normally from mid-March 2014, including when the trip to Rarotonga that she had initiated took place. It is clear that she was feeling ill and weak throughout that trip. Deponents from the Loosley side of the family referred to her ability to participate and join in on occasions and her apparent grasp on matters. Deponents from the Powell side of the family emphasised her weakness and her confused understanding of conversations. Kate Powell shared a hotel room with Allison. She deposed that Allison would vomit violently in the early mornings and was irascible, at times irrationally so. After Rarotonga Kate Powell suffered from a bout of dengue fever and was not able to visit Allison again before she died.
A friend of the Loosleys and Allison, John Haworth, spent a considerable amount of time with her in the weekend of 26–27 April 2014. He deposed:
It was clear to me that the end was very close. Even so her mind was still crystal clear as she faced her end. Over that weekend we discussed all sorts of topics. We had plenty of laughs and shed quite a few tears together. We talked about what her funeral service could be like; what readings there might be; and other topics. Her mind was not clouded, confused or muddled either then, or in the preceding months. Her judgment on all matters — people, art, family etc never changed or became tinged with bitterness as the cancer took hold of her body. Even at the end she was to me the same person that I had met several years before.
Mr Haworth was called by the appellants and was cross‑examined. He was very clear that Allison was not confused or muddled and that her judgment in all matters did not change.
In stark contrast was the evidence of another close friend of Allison, Dr Robert Rowley, called by the respondents. Dr Rowley is a paediatrician with a practice in Auckland. He and his wife were close long-term friends originally of the Powells (arising from the premature birth of Kate and Ben, who are twins). They became friends with Allison through the Powell family. In contrast to Mr Haworth, who referred to criticisms by Allison of the Powells, Dr Rowley commented on Allison’s focus always tending to be on Ben and Kate Powell rather than Tom and Nick Loosley, and how in January 2014 she was angry and resentful toward the Loosleys. He had a dinner with Allison on 25 March 2014 and observed:
Ann and I were with Ali for several hours that evening and it was clear to us that, by that time, Ali was confused, her judgment about simple matters was clouded, her thinking and conversation was “all over the place”, she was in pain and, in my opinion, her mental state was clearly affected by her very frail physical state, pain and medications.
He went on to say that he believed that anyone who did not know her as well as he and his wife did could easily have believed her mental state was normal. However, he deposed:
I am very conscious of the fact that I am making this affidavit as a close friend, not as a medical practitioner. However, I must say that by this stage Ali’s mental state was such that I would not have been prepared to accept any gift from Ali other than, perhaps, some small “keepsake” of no commercial value. Certainly, I would have advised her strongly against entering into any transaction such as, for example, the sale of her car.
He then spoke of a phone call with her on 29 April 2014, where she told him she was very tired and was going to a hospice for a rest. He deposed that in general she was very vague and confused and was not able to pass on any information other than that she had been to Rarotonga. His views remained firm under cross‑examination.
As we have said the Judge did not make any finding about this conflict in the evidence about Allison’s condition, although her end conclusions are more consistent with the observations of Dr Rowley than those of Mr Haworth. In our view, real weight can be placed on Dr Rowley’s evidence, given the fact that he is a medical practitioner, and supported his evidence with emails and a detailed description of his communications and discussions with Allison. But Mr Haworth’s evidence must also be taken into account.
Further written evidence
Allison’s diaries were produced. Both the appellants and the respondents submitted that they could draw support from the entries. The diaries were in the form of two books which were not dated and contained blank pages. Allison would make entries but they were often undated and did not show the year. However, there is clearly an entry completed on or around Monday 28 April 2014 referring to the pending visit of Mr McDell. It read:
Terry McLell
9690813 969 0813
1) Need to change Will
Unable to get in, could he come here
2) Present will not valid so will amend other one & get witness to sign
3) Discuss Privacy among recipients
10am Tues. 28/11.
There are a number of errors or unusual features of this entry. Mr McDell’s name is spelt incorrectly. His phone number is repeated. The reference to the will not being “valid” is curious, given that there was no question of invalidity raised by her or Mr McDell. The date of “28/11” is clearly wrong, given that it was April not November, and 2014 not 2011.
Opposite that entry there is a further set of entries in very shaky handwriting:
1,000,000
15 000,0001,500,00£250,000 each — 500 Tom + Nick
— 50 Jill
Drinks nibbles
Mark & BenB + K £50 each — 50
BenTomBenTom + Nick £250,000 — 50
Kate1‘00
£ 71
£ 65, — Lossley
Allison spelt Loosely incorrectly. The currency is expressed in pounds, and most of the figures make no sense in the light of the context and the Final Will, save perhaps for the references to “50”. The Judge found the sequential pages contained the notes of possible bequests, and that these notes were made in New Zealand.[33] She considered that they were made within a relatively short time before Allison went into Dove House.[34] Given that the page containing these entries is opposite to that containing the notes in anticipation of the meeting with Mr McDell (made on or around 28 April 2014), we think it is likely that the entries were made at that time.
[33]At [97].
[34]At [89].
As we have outlined,[35] the day after her meeting with Mr McDell, 30 April 2014, Allison sent an email to Mr McDell to clarify her instructions. It is coherent but it refers to a “draght will”, rather than “the will”, indicating that it was subject to her approval.
[35]See above at [55].
The Judge found that the errors in Allison’s diary entries made around the time of giving the instructions for the Final Will suggested a “level of confusion”.[36] We agree. In our view the diary entries contain such a number of errors and misconceptions that they show a person who does not have a good understanding of the process she is undergoing in relation to the changes to her will. They show a general confusion.
Allison’s relationships with her family and expressed intentions
[36]Farn v Loosley, above n 2, at [100].
We adopt this summary of Allison’s personality as set out by Courtney J, which on our review of the evidence is accurate:[37]
She was an outgoing, vivacious and affectionate woman. But she also had some less appealing qualities; she was fickle, had a noticeable habit of criticising friends and family behind their backs and she drank far too much. As a result, Allison’s relationships with her family were not always smooth. Her mother, Evelyn Farn, described her as “an extremely difficult person — swinging from loving to hating people for no apparent reason and she was easily manipulated by those who knew her well”. Many of the witnesses agreed with this description.
[37]At [5].
Allison plainly had a close and loving relationship with her New Zealand niece and three nephews. She had seen them each year when she came to New Zealand. In particular, once Tom and Nick Loosely could travel they would visit her in England. Emails were produced of exchanges in late‑2013 and early‑2014 between Allison and Tom Loosely and Kate Powell. They show a very close and loving relationship with both her nephew and niece. They have an intimate and caring tone. Of significance, given her removal as a residuary beneficiary, is this email Allison sent to Kate who was living and working in Hamilton on 7 March 2014:
Hi Kate, I have booked and paid for the Sotheby’s course but I can’t find your email you sent me. No matter, its at martins and I’m at J and B’s. Please email the person and tell her all paid for by bank draft and money will take about 5 working days. Ask her for confirmation when they receive it. If there are any discrepancies they can be sorted out. Re the village — we’ll have to discuss later in week. I move on Monday and my furniture’s delivered on Tuesday, so later on might be better! Great to see you and super day at Waikato museum. Lots of love Ali. Drainage went well but very tired! Drained!! Axxxx
The context for the email is that Allison was paying for Kate to attend a Southeby’s course overseas.
There was then this follow-up text, when Kate was having difficulty getting time off work to come up to Auckland:
Hi K. Do you think you’ll be coming up Sat nite? I’d love u to. I’ll pay the bus fare. Axxx
Also, with temporary ups and downs, she had a close relationship with both of her sisters, Jennifer Loosley and Barbara Powell, and with her mother Evelyn Farn. Despite the odd blow-up, it is clear that there was real affection and support between the sisters.
Consistent with the description of her personality, Allison would oscillate in her attitudes to people and events, and this could be seen in various comments she made about who would benefit from her will. For example, she commented to Mrs Farn in March 2011 that she would leave her entire estate to Kate and Ben Powell. This made some sense to Mrs Farn as the Loosleys were more comfortable financially than the Powells, and also in Mrs Farn’s view Kate and Ben were less likely to earn significant incomes in their chosen fields, art and music, than Tom and Nick Loosley in their fields of work. However, on this occasion Mrs Farn very firmly told Allison that on no account should she divide the estate so as to benefit only Kate and Ben, which would split the family. She told Allison that, in her opinion, she must leave it all equally to her nephews and niece. There was a similar incident with Mrs Powell at Ferry Landing at Christmas in 2010. Allison had indicated an intention to leave all the estate to her. Mrs Powell told her to skip a generation and leave everything to her niece and four nephews.
One English friend, Charlotte Peddie, had been told by Allison in a number of conversations up to December 2013 how she planned to divide her estate between her niece and nephews, and how she admired the Powells for fighting for the survival of their twins when they were born very prematurely. Another English friend, Alexander Bruce, deposed that in his last discussion with Allison in October 2013 she told him that she intended to leave her estate to her two nephews, Tom and Nick Loosley, and made no mention of intending to leave anything to any other relative.
In a conversation with Kate Powell, approximately six weeks before Allison’s death, Allison said that her contribution to the Southeby’s course and similar payments for Tom and Nick Loosley and Ben Powell were gifts only and not to be confused with her estate where “everything is going to be split evenly”.
However, Tom Loosley deposed that he had a conversation with Allison on or around 19 March 2014 (about the same time as the conversation with Kate Powell). She stated to him that she proposed to leave the bulk of her estate to him and Nick.
In the various affidavits there are varying reports of Allison making statements that were critical of both sides of the family, and the particular children of her sisters. In none of these was there reference to any particular incident or event that might have led to rational criticism. Her critical or disparaging remarks would appear to be consistent with the view expressed by a number of deponents that she was a person who was quick to flare-up and criticise, generally not in the presence of the person criticised, but that the views expressed in these flashes of anger and irritation were changeable.
We add that it is clear that, despite all this, it is a feature of Allison’s life that she developed long-term friendships and relationships. As the affidavits show, she had the strong loyalty of many of those who were close to her. Despite her volatility she did not abandon or change her close friendships and relationships. She never wavered from making her Christmas visits or, save for her last days, in her general support and expressed love for her nephews and niece. A demonstration of this is her insistence on the trip to Rarotonga with them all, despite her severe illness. This feature of her behaviour is significant when assessing the changes in her Final Will.
The most significant report on Allison’s views about the family was that of her mother, Mrs Farn. She deposed that Allison had told her approximately two months before her death that she was leaving everything to her nephews and niece. As we have said, there was also the meeting on 30 April 2014, which Mrs Farn mistakenly recalled taking place on 27 April.[38] Mrs Farn deposed:
On [30] April I visited Ali at Parkside. She was propped up in bed, obviously very weak but able to converse. During our conversation she suddenly made the most extraordinary announcement that she was concerned about her will because she felt Ben and Kate would simply “fritter” her money away. Naturally I was taken aback and replied “what rubbish of course they wouldn’t”, because neither Ben nor Kate had given the slightest indication of being “fritterers”. Quite the contrary. Kate had saved over $12,000 in the last twelve months to fund her OE and Ben is certainly not a flashy person or really materially minded.
I only wish now that I had dwelt strongly on that point but I am afraid I was so surprised that I missed the opportunity to do so. To my mind, there was simply no possible reason or justification for her to think this way about Kate and Ben. This was the second to last time I saw Ali alive.
[38]See above at [57].
This conversation is in stark contrast to the 2011 discussion when Allison was talking about benefiting only Kate and Ben Powell. There has been no evidence adduced that gives any support to her suggestion that Kate and Ben might “fritter” money away.
Two factors emerge from all these contrasting expressions. Allison’s expressed attitude and affections were changeable and not linked to particular events or changed circumstances. However in her 2011 Will right through to the last weeks of her life she showed a strong affection and wish to help all her nephews and niece.
The medical evidence
The direct medical evidence on Allison’s health and state of mind prior to her death is limited. Courtney J did not hear from any of the doctors who treated Allison prior to her death, or from the nursing staff at Dove House who assessed her prior to or on admission, although the nurses’ notes were available. The opinions of expert witnesses who did not know the will-maker, and who make their assessments after her death, must be treated with caution.[39] They are trying to assess mental health from documentary evidence, and the observations of others, without the benefit of knowing or meeting the will-maker.
[39]Zorbas v Sidiropoulous (No 2) [2009] NSWCA 197 at [65] and [80]–[89].
The evidence given directly in relation to capacity came from two medical experts who gave retrospective assessments based on the factual and documentary evidence available. As we have set out, the appellants’ witness was Dr Cheung, an old‑age psychiatrist with extensive clinical experience in assessing mental capacity in older people, and those dying of terminal illnesses. The respondents’ expert witness, Dr Simpson, is a neurologist. His area of expertise is disorders of the brain and the peripheral nervous system. He has experience in communicating with those suffering from progressive terminal diseases, but at the time of trial he had no previous experience in assessing the testamentary capacity either of a living person or, retrospectively, of a deceased person.
It is clear that the Judge preferred the opinions of Dr Cheung to those of Dr Simpson. Dr Simpson, in support of his contention that Allison had capacity, noted that in an MRI scan performed in November 2013 there was no disease of the dura or lining of the brain and no disease of the brain tissue shown. He considered the cancer was confined to Allison’s breastbones and abdomen. Dr Cheung, however, considered that brain metastases were quite possible. He referred to a 2014 study showing that they were identified in 16–30 per cent of patients with breast cancer. He observed the writing out of Mr McDell’s telephone number twice in the diary note of around 28 April 2014, and identified this as an error which could indicate an inability in terms of cognitive functioning. In his view the Dove House nursing notes of 2 May 2014 provided strong evidence of delirium.
Courtney J rejected Dr Simpson’s views and stated:
[56] I accept Dr Cheung’s view that the November 2013 MRI scan does not provide any basis for concluding that Allison’s brain was not affected by her disease. There is insufficient evidence to find that she either was or was not suffering from a disease of the brain.
On our assessment of the evidence we can see why Courtney J placed more weight on Dr Cheung’s evidence than that of Dr Simpson. Unlike Dr Simpson, he specialised in old-age psychiatry and those dying of terminal illnesses. His statements were measured and reasoned, and based on actual experience with elderly ill people. He was prepared to make concessions elicited in a thorough cross‑examination, but the balanced concerns he had about Allison’s mental condition at the relevant times remain persuasive.
The Judge exhaustively considered the effect of liver impairment and Oxynorm and alcohol consumption on Allison’s cognitive function, and the views of the expert witnesses. She was satisfied that there was at least mild impairment to Allison’s liver. She noted in particular the evidence of her heavy drinking in Rarotonga, just nine days after being prescribed Oxynorm. She preferred Dr Cheung’s view that Allison’s impaired liver function and history of heavy alcohol consumption meant that her body would have had increasing difficulty metabolising Oxynorm.[40]
[40]Farn v Loosley, above n 2, at [71].
Mr Grant criticised the Judge’s findings as speculation. Whilst we accept the appellants’ submission that the Judge went too far in her analysis of Allison’s consumption of Oxynorm, the evidence tended to support the general conclusions that she reached. We do not think that her speculation about there being a greater use of Oxynorm should lead us to reject her preference for the views of Dr Cheung. On our own assessment, his views were rightly preferred.
Our assessment of the evidence relating to testamentary capacity on 2 May 2014
We first consider Allison’s state on the day when she signed the Final Will. This is the day, subject to the rule in Parker v Felgate, when she must have had testamentary capacity in order for the Final Will to be valid.
Courtney J was correct to decide that the evidence displaced the presumption of testamentary capacity on 2 May 2014.[41] The evidence we have traversed of Allison’s dire physical condition and her state of mind at the time of signing on 2 May 2014 plainly raise capacity as a tenable issue, shifting the onus onto the appellants as executors to satisfy the Court that Allison had testamentary capacity.
[41]At [98].
While Courtney J may have overemphasised the levels of Oxynorm being consumed by Allison, it is plain that she had been prescribed the drug and was permitted to “self-medicate” using it. The nurses caring for Allison on the morning she signed the Final Will observed that she had a poor night’s sleep, was lethargic, uncomfortable, nauseous, overwhelmed and was unable to process too many questions. The timing of the note was shortly after the signing of the Final Will, but we consider it would have reflected observations through the morning, and is a good indication of Allison’s condition at the relevant time. As Courtney J noted, even Dr Simpson acknowledged that there was a cause for concern about Allison’s testamentary capacity that day. Dr Cheung thought the notes provided strong evidence of delirium.
We agree with Courtney J that nothing much can be drawn from the evidence of the Dove House pre-admission forms, given the fact that, as she observed, the questions asked have not been disclosed and the person who filled in the form was not called. The nurses’ notes detailing her actual condition on 2 May 2014 are much more detailed, and record actual expert observation of her in Dove House. They are powerful evidence that she was weak and confused. The evidence from Ms Stadler‑Hanekom and Mr McDell, the witnesses to the Final Will, is relatively neutral. They did not observe any signs of a lack of lucidity or command, but then neither made any attempt to assess Allison’s testamentary capacity. Dr Cheung’s opinions, and to a lesser extent those of Dr Simpson, support a conclusion of incapacity.
There is no witness who suggests that by 2 May 2014 Allison was herself, and in complete command of what she was doing. Allison was putting all her remaining energy into enduring the acute pain and discomfort of her terminal illness. Her mind at this point was appreciably weakened by drugs and her terminal illness, and we conclude she was incapable of comprehending and appreciating the claims on her estate to which she ought to give effect.
The appellants have not discharged the burden of proving testamentary capacity when the Final Will was signed. Indeed we go further. On our assessment of the evidence Allison plainly did not have testamentary capacity on 2 May 2014.
Our assessment of the evidence relating to testamentary capacity on 29 April 2014
We turn to Allison’s mental state on 29 April 2014. This is relevant as background to the execution of the Final Will on 2 May 2014. It is also directly relevant to considering whether, applying Parker v Felgate, her instructions on that day can be given effect. Apart from the Dove House forms that we have referred to there are no medical reports from that day. There is however the evidence that we have traversed of what people had observed of her condition in the period leading up to this day, her own diary notes written at around that time, and the hypotheses of the expert witnesses about her mental condition. There is also the fact of the significant change to her will, made at this time.
We make the following observations:
(a)The observation evidence of Mr McDell, Mrs Farn and the Loosley and Powell family members offer very different pictures of Allison’s physical and mental state on the Rarotonga trip and afterwards.[42]
(b)There are two witnesses, Mr Haworth and Dr Rowley, from outside the family who discussed Allison’s lucidity and mental command in late‑April, as we have outlined. Of the two, Dr Rowley is a senior doctor and, because of this and his detailed and measured evidence, his views command particular respect. On our reading of his evidence it indicates that Allison was confused and that her judgment about simple matters was clouded as at 25 March 2014. He would not have accepted any significant gift from her, and would have advised her strongly against entering into any transaction. We see his evidence as having considerable weight, although we acknowledge that Courtney J, who heard the very different evidence of both Dr Rowley and Mr Haworth, did not express a preference for one over the other. In fact, she did not discuss their evidence. In our view, Dr Rowley’s evidence was significant, and we place weight on it for the reasons we have mentioned.
(c)The view that Allison was confused is supported by the diary notes. We are unable to accept Mr Grant’s analysis of the diary note of around 28 April 2014 where he sought to explain the various errors and anomalies. In our view they indicate someone who is not lucid and who is confused. The diary notes about division of assets on the opposite page also show a high degree of confusion. Her reference to discussing the chattels is not reflected in her actions or the Final Will, and appears to have been overlooked. The confusion evident in these diary notes is consistent with and reinforces the Powell family’s and Dr Rowley’s evidence that Allison was confused around this time.
(d)The medical evidence indicates a possibility of dementia, and the likelihood that her Oxynorm consumption was affecting her lucidity. Her alcohol consumption and liver damage are significant factors.
(e)Only when she was very ill did Allison give instructions, that had no objectively rational basis, that reversed the premise of equal division and were inconsistent with her long-standing feelings of affection expressed up to that time.[43] Her instructions were based on a premise for which there was no basis (that Kate and Ben Powell would fritter the money away).
(f)We do note that the change in the Final Will is not as extreme as in many of the cases that have been relied on by the respondents.[44] It is also the case that the Final Will does not entirely disinherit Kate and Ben Powell, who each get a bequest. However, Mark Eleveld is entirely disinherited, with a bequest being made to his mother. It was suggested that this was because he had separated from his wife and Allison wanted to protect the bequest from relationship property division. Nonetheless the change and the significant swing to benefit the Loosley side of the family with whom she was temporarily living is, when considered against the background we have outlined, consistent with a lack of capacity.
[42]We note that the Powell family members did not see her over her last days prior to signing the Final Will.
[43]See in relation to Kate the emails and text message reproduced above at [82]–[83].
[44]Brown v McEnroe, above n 24; Bool v Bool, above n 24; and Roche v Roche, above n 24.
Applying the rule in Parker v Felgate, there is no clear evidence on which to make a retrospective assessment of testamentary capacity by reference to the events of 29 April 2014. On an overall balancing of all this evidence we do not consider that testamentary capacity is made out on 29 April 2014.
The Judge also made a further finding:
[102] In the circumstances it is unnecessary for me to consider whether Allison satisfied the standard required by the rule at the time of execution. But, in my view, even if Allison had had testamentary capacity on 29 April 2014 there would be inadequate evidence from which to conclude that the instructions she gave then still represented her intentions when she came to execute the will. There had been no intervening confirmation regarding the draft; to the contrary, in her 30 April email she referred to a draft will. Further, given the evidence of her condition on 2 May, I cannot be satisfied as to her level of understanding that day.
We agree with this assessment. Despite the meeting with Mrs Farn on 30 April 2014, when Allison had expressed a wish to make the changes to her will, the affection and support she had shown all the Loosley and Powell children, and the fact that she had referred to a “draft” will in her email to Mr McDell, raises the question whether she would have confirmed the draft if she had testamentary capacity on 2 May 2014. The uncertainty implicit in her question to Mr Loosley on 29 April 2014 of whether she had made the “right decision” might well have led to a decision not to sign the Final Will. This is a further reason for not applying the rule of Parker v Felgate.
Conclusion on testamentary capacity
We therefore agree with Courtney J that the appellants have failed to establish testamentary capacity on 29 April 2014. She was left far from satisfied that Allison had testamentary capacity when she gave Mr McDell instructions,[45] and so are we. We are also not satisfied that she would not have changed her mind if she had capacity at the time of signing.
[45]Farn v Loosley, above n 2, at [101].
We also agree with Courtney J’s conclusion that the appellants have failed to discharge the burden of proving testamentary capacity when she executed the Final Will on 2 May 2014.
The High Court costs award
Background
In a separate decision the Judge held that costs should be assessed on a 2B basis.[46] She held that Mr and Mrs Loosley should pay 20 per cent of the respondents’ costs personally because “by keeping the terms of the will secret until probate had been granted, the executors contributed to the costs of determining the validity of the will”.[47] For the same reason the Judge also ordered that the Loosleys bear 20 per cent of their own costs, with the remaining 80 per cent to be met by the estate.[48] Mr Grant asserts that in the circumstances this was a cost to Mr and Mrs Loosley of not less than $22,000, and possibly considerably more.
[46]Farn v Loosley [2017] NZHC 1951 at [6].
[47]At [15].
[48]At [19].
In making her costs decision the Judge focused on the fact that, despite requests through the month following Allison’s death and up to the time when probate was granted, the Loosleys did not disclose the terms of the Final Will and were evasive.[49] She observed that if the Loosleys as executors of the Final Will had been open about its terms, there was no doubt that the Powells would have lodged a caveat and probate would ultimately have been required to be proved in solemn form. Had that happened, some of the costs involved in the proceeding would have been avoided. She gave as an example the fact that the executors would have propounded for the Final Will, and a specific hearing that had to be held about which party bore the onus of proof, determined ultimately by a decision of Faire J, would have been avoided.[50] She held:[51]
… Jenny and Robert’s own conduct following Allison’s death and the secrecy with which they dealt with probate raised understandable suspicions of undue influence. I am satisfied that their conduct was no more than a misguided effort to limit what they perceived would be the unhappy reaction from other family members. But in the circumstances they can hardly complain that those same family members drew an adverse inference from it.
[49]At [10], [15]–[16] and [18].
[50]Farn v Loosley [2015] NZHC 1045.
[51]Farn v Loosley, above n 46, at [10].
Mr Grant strongly criticised the Judge’s reasoning. He submitted that it overlooked the fact that Allison had written in her diary in preparation for the meeting with Mr McDell on 29 April 2014, “[d]iscuss privacy among recipients”. This was not a matter actually discussed between Allison and Mr McDell, but she spoke with Mr and Mrs Loosley about her wish to keep the contents of the will confidential after Mr McDell had left. Mr Loosley commented that he could see that her decision would be likely to lead to family conflict and he could understand why she wished to keep it private.
When Mrs Farn asked about the Final Will Mr Loosley deposed that he specifically told her that Allison had made a new will but that her instructions to them were for it to remain confidential. In explanation he said “[a]s executors, Jenny and I considered that we should establish the size of the estate and uphold Ali’s wishes for confidentiality in the meantime”. A lawyer from Mr McDell’s office noted on 14 May 2014 the Loosleys’ instructions to keep the Final Will private to avoid conflict with the family. Mr Grant submitted that it was wrong to say that executors of a will for which probate has not been granted must disclose the contents of the will to those who inquire about it, and that if they did not they should suffer a financial penalty. He submitted that Courtney J did not specifically take into account the Loosleys’ reason for not disclosing the contents of the Final Will.
Analysis
The approach to costs in will cases has long been that set out by Stringer J in Re Paterson, following the leading English decisions of that time:[52]
The Court has a general discretion as to costs in all actions and proceedings before it, but there are certain well-established principles upon which that discretion should be exercised in cases of contested wills. They are as follows: (i) If the litigation originates in the fault of the testator — eg by the state in which he left his testamentary writings, or by his eccentric or irrational habits and mode of life — or of those interested in the residue, the costs may properly be paid out of the estate. (ii) If there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent. (iii) Unless the circumstances of the cases are such as to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail.
[52]Re Paterson [1924] NZLR 441 (SC) at 442, applying Mitchell v Gard (1863) 3 Sw & Tr 275; and Spiers v English (1907) P 122. See for example Squires v Nijsse HC Auckland CIV-2002-404-1618, 6 July 2004.
.
As this statement indicates, in determining costs in a proceeding challenging a will or aspect of the will the reasonableness of the positions taken by the executors and claimants is central. Although in the end one side is likely to win and the other to lose in proceedings, it can often be reasonable in the case of wills for the parties to put their respective positions to the court for a judge to decide on the outcome. Executors are often bound by their duties to propound or contest a position.
Here, as is often the case in will litigation, the executors, the Loosleys, also have a personal interest in the proceedings in the sense that their children are the only residuary beneficiaries under the Final Will. Nevertheless, we agree with the observation of Courtney J that Mr and Mrs Loosley are properly seen as acting as executors in the proceeding despite their personal interest. Courtney J was correct to approach the allocation of costs from the starting position that the estate should meet all the costs. This means that those costs will be paid out of the residue at the expense of the niece and nephews.
We also agree with the Judge’s conclusion that the Loosleys’ evasive attitude led to an increase in costs, because it led to the hearing before Faire J as to the onus of proof. Faire J found against the Loosleys on that point.[53]
[53]Farn v Loosley, above n 50, at [23].
Mr Morgan QC for the respondents pointed out that there was an email on 14 May 2015 sent by Mr McDell’s firm to the Loosleys which attached a copy of Allison’s Final Will and advised them that the affidavit and the probate was ready for them to swear. The Loosleys denied receiving that affidavit. However, on the same day Mr Loosley phoned the firm and advised them that the Powells had been asking about the Final Will and that the Loosleys wanted the contents to be kept private. In response to requests through early-June 2014 Mrs Loosley advised Mrs Farn and Mrs Powell that she was not able to disclose the contents of the Final Will.
While Courtney J did not find it necessary to make findings of credibility against members of the Loosley family, it is clear that she considered the Loosleys’ conduct in not disclosing the content of the Final Will to be unreasonable and to have resulted in extra costs. In our view she was entitled to take this into account in her assessment of costs. With or without legal advice the Loosleys were aware that the contents of the Final Will were a matter of keen and legitimate interest on the part of the Powells and Mrs Farn. The Powell children were in fact beneficiaries of the Final Will, albeit not residuary beneficiaries. The requests for information were reasonable, and the refusal undoubtedly set a tone of acrimony and resulted in the burden of proof hearing, and contributed to undue influence challenges. We agree with Courtney J that the delay undoubtedly exacerbated the family division that arose when the terms became known.
An award of costs is an exercise of discretion.[54] The Judge has relied on matters she was entitled to rely on and we discern no error or omission by her carrying out the exercise. We dismiss the appeal against costs.
Costs in this Court
[54]High Court Rules 2016, r 14.1.
We received submissions on costs at the end of the hearing, at our request. Having reflected on the matter we think it only fair that the parties have the opportunity of addressing the question of costs in the light of this judgment. We invite submissions from the respondents within 14 days of the date of this judgment, submissions from the appellants within a further 14 days, and any submissions in reply within a further seven days. The parties may wish to confer to see whether costs can be agreed.
Result
The appeal is dismissed.
We invite further submissions on costs as set out in [125] above.
Solicitors:
Duthie Whyte, Auckland for Appellants
Harkness Henry, Hamilton for Respondents
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