New Zealand Guardian Trust Company Limited v Stillman
[2018] NZHC 3303
•13 December 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-485-615512
[2018] NZHC 3303
BETWEEN THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED
PlaintiffAND
VALERIE STILLMAN
First Defendant
CECILIA LATAJA CLARIANTES
Second DefendantDAIJIRO MIYAZAKI
Third DefendantTSUYOSHI NAGAYAMA
Fourth DefendantTHE MOTOR NEURONE DISEASE ASSOCIATION OF NEW ZEALAND
Fifth Defendant
RICHARD JOHN OTLEY ELLIS
Sixth Defendant
Hearing: 12 December 2018 Appearances:
A W Johnson for the Plaintiff
No appearances by or for the Defendants
Judgment:
13 December 2018
RESERVED JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie On 13 December 2018 at 4.00pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
THE NEW ZEALAND GUARDIAN TRUST CO LTD v STILLMAN [2018] NZHC 3303 [13 December 2018]
Introduction
[1] The plaintiff – The New Zealand Guardian Trust Company Limited (Guardian Trust) – seeks an order either that probate of the will of the deceased, John Anthony Butler, dated 20 January 2012 be granted to it in solemn form, or, pursuant to r 27.4 of the High Court Rules, that the proceedings be treated as an application for a grant of probate in common form and that evidence be given by way of affidavit.
[2] No other party to the proceedings has taken any steps to oppose either of the orders sought by Guardian Trust and, by minute dated 17 October 2018, Whata J granted Guardian Trust’s application to proceed by way of formal proof.
[3] I heard from Mr Johnson on behalf of Guardian Trust. There was no appearance by or for any of the defendants.
Factual background
[4] On 21 September 2016, Mr Butler (the deceased) passed away. He had executed a will on 20 January 2012. Guardian Trust is named in that will as the executor and trustee, and Christopher Gambrill (incorrectly named in the will as Christopher Gamble) is appointed as an advisory trustee.
[5]The estate has assets valued at approximately $2,089,000.
[6]By his will, the deceased gave:
(a)gifts of $5,000 each for teaching and research purposes to:
(i)The Cancer Society of New Zealand Auckland Division Incorporated;
(ii)The Auckland Division of the Royal New Zealand Foundation of the Blind;
(iii)CCS Disability Action Auckland Incorporated;
(iv)The Motor Neuron Disease Association of New Zealand; and
(v)The Cerebral Palsy Society of New Zealand Incorporated.
(b)gifts of $10,000 to each of his five godchildren who were living at his death and who reached the age of 20;
(c)gifts of:
(i)$10,000 to the second defendant;
(ii)$20,000 to the first defendant;
(iii)$20,000 to John Lewis;
(iv)$10,000 to Frank Morris and Judith Morris;
(v)$10,000 to the third defendant;
(vi)$20,000 to the fourth defendant; and
(vii)$20,000 to Mr Gambrill;
(d)all of his household effects and articles of personal use to Mr Gambrill; and
(e)the residue of his estate to his trustees to divide into equal one fifth shares and to pay one share to each of the first to fifth defendants.
[7] There are provisions in the will governing what is to happen if particular gifts failed.
[8] After the deceased’s death, Guardian Trust found out that a document purporting to be a codicil had been executed by the deceased on 17 April 2015. Under the codicil, the deceased gifted $20,000 to the sixth defendant, Mr Ellis, in substitution for the gift of $5,000 to the fifth defendant. The fifth defendant was also removed from the will as a residuary beneficiary and Mr Ellis took its place. The codicil provided that if Mr Ellis died before the deceased, Mr Ellis’ interests under the will were to go to Mr Ellis’ son. The codicil recorded that the deceased had made the
provision for Mr Ellis and his son in recognition of the assistance Mr Ellis has been to him over the preceding years.
[9] The codicil was prepared by Mr Gambrill and witnessed by Anne Farmer and Phillip Millar.
[10] Mr Ellis filed a caveat with this Court, preventing any dealing with the will. Guardian Trust was advised of this on or about 13 January 2017.
[11] For some unexplained reason, the Guardian Trust delayed filing these proceedings until May 2018.
Formal proof
[12]As noted, Guardian Trust seeks to proceed by way of formal proof.
[13] Rule 15.9 of the High Court Rules applies. The obligation was on Guardian Trust to file affidavit evidence establishing, to the Court’s satisfaction, the cause of action relied on.1 Guardian Trust was, however, only required to prove the cause of action insofar as the burden of proof lies on it. It was not required to engage with any matters of affirmative defence, set off, or counterclaim.2
The statement of claim/affidavit evidence
[14] The statement of claim sets out the relevant background as noted above and records that, prior to the execution of the codicil, the deceased had been assessed by Tracey Elisabeth McMillan, a registered medical practitioner, as “mentally incapable as he lacked the capacity to foresee the consequences of decisions about his ongoing medical care and future residence, or to foresee the consequences of any failure to make such decision”. The statement of claim asserts that the certificate was given under ss 98(3) and 99D of the Protection of Personal and Property Rights Act 1988, and that it was dated 4 December 2014.
[15] The statement of claim also refers to the filing of the caveat. It records the Guardian Trust’s position that the deceased’s final wishes are as contained in the will,
1 High Court Rules, r 15.9(4).
2 Ferreira v Stockinger [2015] NZHC 2916 at [33]-[36].
and that the deceased was not of sound mind and testamentary capacity at the time of completion of the codicil. The orders are sought on that basis.
[16] Mr Broad, head of Legal Personal Client Services for Guardian Trust, has deposed that Guardian Trust will faithfully execute the will if it is granted probate of the same. He has also deposed that Guardian Trust is not aware of any information that suggests the deceased did not have testamentary capacity at the time of the execution of the will. He also expressed the view, based on the certificate given by Dr McMillan, that the deceased did not have mental capacity to complete a codicil.
[17] Mr Broad has also filed a separate affidavit setting out the factual background in a little more detail and annexing copies of relevant documents, including Dr McMillan’s assessment and memoranda and file notes prepared by Mr Gambrill and Ms Claire Guild, who is Guardian Trust’s file manager who dealt with the deceased.
Service
[18] On 22 June 2018, Churchman J ordered service of the proceedings on the first to sixth defendants.
[19] On 27 August 2018, Collins J dispensed with personal service on the second defendant and directed that the documents should be sent to the second defendant’s last known address.
[20] When the matter was before me in Court, the only affidavits of service on the file related to service on the first and fifth defendants. I raised this issue with Mr Johnson. He undertook to file a further affidavit of service, and I received that affidavit later in the afternoon. It was from Ms Kapua, who is a Legal Assistant employed by Guardian Trust’s solicitors. She deposed that service was affected on the third and fourth defendants by email, and on the sixth defendant by service on his solicitor.
[21] I am satisfied that both the third and fourth defendants specified email addresses for the purposes of service and that the documents were transmitted electronically to the specified email addresses. Similarly, there is no difficulty with service on the sixth defendant’s solicitor. There is, however, still nothing on the Court file confirming service on the second defendant in accordance with the directions
made by Collins J. That, of itself, would preclude the Court proceeding to make orders by way of formal proof.
Steps taken by defendants
[22] The fifth defendant filed an appearance reserving rights. As noted, none of the other defendants served have taken any steps in the proceeding. Although the sixth defendant, Mr Ellis, had earlier lodged a caveat, his solicitors withdrew the caveat by notice dated 26 September 2018.
Analysis
[23]I am asked to grant probate of the will only, and not the will and codicil.
[24] 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.3 In the absence of such evidence, the maker of a will apparently rational on its face, will be presumed to have testamentary capacity.4
[25] Here, there is nothing to suggest that the deceased lacked testamentary capacity at the time he executed his will and the will is apparently rational on its face. However, to obtain a grant of probate of the will alone, Guardian Trust also has to satisfy me that the deceased did not have testamentary capacity when he executed the codicil.
[26] The principles relating to testamentary capacity are of long standing. They were laid down in the oft-cited case of Banks v Goodfellow.5 They have been restated by the Court of Appeal in this country, for example in Woodward v Smith,6 and more recently in Loosley v Powell, as follows:7
[19] …
(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.
3 Bishop v O’Dea (1999) 18 FRNZ 492 (CA) at [3].
4 At [3].
5 Banks v Goodfellow (1870) LR 5 QB 549.
6 Woodward v Smith [2009] NZCA 215 at [19].
7 Loosley v Powell [2018] NZCA 3.
(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.
[27] Although it is hearsay, it appears from Ms Guild’s and Mr Gambrill’s memoranda and file notes, which were annexed to one of Mr Broad’s affidavits, that there were concerns in relation to the deceased’s mental state over a lengthy period. Various persons interested in the deceased’s welfare contacted either Ms Guild or Mr Gambrill and expressed concern. There is nothing, however, to suggest that any of those persons had the appropriate medical or legal training to make any assessment of testamentary capacity and they did not purport to do so.
[28] On 4 December 2014, prior to execution of the codicil, Dr McMillan, who is not only registered with the Medical Council of New Zealand, but is also a fellow of the Royal Australasian College of Physicians as a practitioner of geriatric and internal medicine, issued a certificate in relation to the deceased. The certificate was in the standard form put in place by ss 98(3) and 99D of the Protection of Personal and Property Rights Act. It was not carefully filled out. The doctor did not make it clear whether she examined or simply assessed the deceased and if so, relying on what information. She crossed out some alternatives and circled “statement C” in the form. Statement C reads as follows:
In my opinion, the donor is mentally incapable as he lacks the capacity to foresee the consequences of decisions about her ongoing medical care and future residence or to foresee the consequences of any failure to make such decisions.
The doctor also circled a further statement, reading as follows:
The donor’s mental incapacity is due to the health condition that is likely to continue indefinitely.
In giving the reasons for her opinion, the doctor stated as follows:
Progressive dementia.
[29] There is a further difficulty with Dr McMillan’s certificate. It does not directly address testamentary capacity. The certificate was given under the Protection of Personal and Property Rights Act. The relevant provisions in that Act are concerned not with testamentary capacity, but rather with whether the donor of an enduring power of attorney is mentally incapable in relation to his or her personal care and welfare matters.8 The two issues may overlap but they are not identical.
[30] Further, there is evidence suggesting testamentary capacity. Although it is hearsay, it appears that Mr Gambrill has a law degree. I do not know whether he was a practising solicitor at the time that the codicil was executed, but that is of no moment. It is clear from the memoranda and notes prepared by Mr Gambrill (annexed to Mr Broad’s affidavit) that Mr Gambrill was aware of the testamentary capacity issue and that he took detailed and careful steps to try and address it. He questioned the deceased
8 Protection of Personal and Property Rights Act 1988, s 98(3A).
and he was of the opinion that the deceased knew what he was doing when he signed the codicil, and that he wanted to make provision for Mr Ellis and exclude the fifth defendant from his bounty. So, it seems were the two witnesses, Ms Farmer and Mr Millar.
[31] A further certificate under the Protection of Personal and Property Rights Act was issued by another doctor – Dr Waterfal – on 29 March 2016. The doctor’s handwriting is difficult to read, but he appears to have certified that the deceased, as donor under a power of attorney, was mentally incapable as he lacked the capacity to make any decisions with regards to health or property. The doctor said that the deceased suffered from dementia (vascular). He recorded that the deceased had no recent recall, and that he had no insight or understanding. This certificate, however, was issued some time after the codicil was signed. It does not directly bear on the issue of whether or not the deceased had testamentary capacity at the time he executed the codicil.
[32] For all of these reasons, it follows that I am not satisfied, on the balance of probabilities, that the deceased lacked testamentary capacity when he signed the codicil. I am therefore not prepared to grant probate of the will alone to Guardian Trust, and its application is declined.
[33] This matter will have to proceed as an application for probate in solemn form. Given that the defendants have not taken any steps to date, it will be necessary to appoint an amicus to assist the Court. I direct the Registrar to make enquiries from Ms Vanessa Bruton QC to see whether she is prepared to act as an amicus in this matter.
[34] If Ms Bruton is not available, it will be necessary to consider who else may be suitable. In that regard, I would request that Guardian Trust should file a memorandum giving the names of other persons who it considers may be able to assist the Court.
Costs
[35] In its application, Guardian Trust sought costs against the sixth defendant, Mr Ellis. It has failed in its application, and costs are no longer in issue.
[36] For the sake of completeness, I record that I do not consider that it would have been appropriate to make an award of costs against Mr Ellis. Mr Ellis was entitled to file the caveat in the circumstances which had arisen. He subsequently withdrew the caveat, and it cannot be suggested that he has in any way acted unreasonably. The approach to costs in will cases has long been that set out by Stringer J in Re Paterson,9 following the leading English decisions of the time. It is as follows:10
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 – e.g., 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 case are such as to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail.
[37] Both (i) and (ii) apply. Even if Guardian Trust had succeeded, in my view, it would have been appropriate to order that the estate should bear the costs of this proceeding.
Wylie J
9 Re Paterson [1924] NZLR 441 (SC). See also Loosley v Powell, above n 7, at [118]-[119].
10 At 442.
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