Sandblant v Ormsby

[2020] NZHC 2128

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV2019-404-2567

[2020] NZHC 2128

UNDER

Part 18 of the High Court Rules.

IN THE MATTER`

Of the estate of RABURN ROBERT WALLACE

BETWEEN

ANTHONY CLIVE SANDLANT AND ROBERT DUDLEY BERRY

Plaintiffs

AND

GAYLENE ORMSBY AND PATRICIA WALMSLEY

Defendants

Hearing:

20 August 2020

Via Virtual Meeting Room

Counsel:

A Eager for Plaintiffs

J K Gilby-Todd for Gaylene Ormsby R Sutton for Patricia Walmsley

Judgment:

20 August 2020

ORAL JUDGMENT OF WHATA J

Solicitors:           Hesketh Henry, Auckland

Harkness Henry, Hamilton Swarbricks, Te Awamutu

SANDLANT & ANOR v ORMSBY & ANOR [2020] NZHC 2128 [20 August 2020]

[1]    Raburn Robert Wallace (Ray) died on 4 March 2019. He made his last will dated 17 September 2009 (the 2009 will). This will appointed the plaintiffs to be executors and trustees. They applied for probate. However, the death certificate records, among other things, “cognitive impairment 10 years”. This raises an issue as to whether, as at the date of the will, Mr Wallace had testamentary capacity. The plaintiffs submit that there is sufficient evidence that he had capacity but, if not, that I should grant probate in respect of a 2007 will (the 2007 will).

Background

[2]    The 2009 will gives all of Ray’s estate to his wife, Phyllis Leon Wallace (Phyllis), should she survive him by 14 days. The plaintiffs are appointed as executors. Phyllis died before the deceased, on 28 February 2017, so the residue under this will will be divided as follows:

(a)One-half to the deceased’s sister Carmel  Naomi  Spencer-Payne  (Mrs Spencer-Payne);

(b)One-twelfth to Mrs Wallace’s niece June Walmsley (June);

(c)One-twelfth to Mrs Wallace’s niece Lorraine Joyce Gash (Lorraine); and

(d)One-third to Mrs Wallace’s niece Gaylene Ormsby (Gaylene).

[3]    The 2007 will appointed Mrs Wallace as executor and trustee and gave the entirety of the deceased’s estate to her, provided she survived him by 14 days. In the event Mrs Wallace died before the deceased, the 2007 will appointed the plaintiffs as executors and trustees. The residue under this will is divided as follows:

(a)One-half to Mrs Spencer-Payne.

(b)One-half to June, Lorraine and Gaylene as tenants in common in equal shares.

(c)In the event of June, Lorraine and Gaylene dying before the deceased, her children would take her share as tenants in common in equal shares, the effect of this clause being that each woman would receive one sixth of the deceased’s estate.

[4]    The effect of the 2009 will is to adjust the relative shares of the nieces as follows:

(a)June and Lorraine — from one-sixth to one-twelfth each; and

(b)Gaylene — from one-sixth to one-third.

[5]    Gaylene supports the 2009 will. June supports the 2007 will, though she abides the decision of this Court.

Circumstances of the making of 2009 will

[6]    Turning then to the circumstances of making the 2009 will. Ray’s 2009 will was prepared by Mr Bryan Hugh McDermott, a senior legal executive with Hesketh Henry, with some 35 years’ experience. Mr McDermott was well-known to Ray and Phyllis having, among other things, prepared their annual tax returns and Ray’s 2007 will. On 30 July 2009, Mr McDermott, together with a lawyer, Ms Gerbich, visited Ray at the Elizabeth Knox Home where he was staying having been recently discharged from hospital due to injuries suffered in a fall.

[7]Mr McDermott made a record of that visit. It records:

(a)Finances were discussed with Ray, including the pros and cons of closing or retaining Ray’s accounts with certain banks and letters authorising closure were signed by him;

(b)They discussed returning to his Mt Eden Road home, and Ray said they would have to sell, though it was agreed to adopt a wait and see approach;

(c)Ray and Phyllis liked to keep their financial affairs separate;

(d)They discussed their wills, including the following particulars:

(i)Ray had not heard from June or Lorraine for a long time and neither of them had enquired as to how they were progressing with their illness;

(ii)He was happy for a full half-share to go to Gaylene;

(iii)They discussed the shares, including whether June and Lorraine should receive a share;

(iv)Phyllis wanted to be fair and said that they should receive something, but would leave the decision to Ray; and

(v)Ray agreed they should receive about $50,000 (or one-twelfth) each while Gaylene should receive about $600,000 (or one- third).

(e)They were not happy with the Elizabeth Knox Home. In general, they considered it to be very restrictive and they “feel like prisoners and they can’t get out to buy even small items like soap and the food is not good”.

[8]    About six weeks after the initial meeting, Mr McDermott and Ms Gerbich met again with Ray and Phyllis at the Elizabeth Knox Home to sign the 2009 will. Before doing so, Ray indicated to Mr McDermott that he had a full understanding of the will’s contents. Mr McDermott had no indication that the deceased, Ray, did not have full possession of his mental faculties.

Circumstances after the execution of the 2009 will

[9]    Turning to the circumstances after the execution of the will, shortly after the execution of the 2009 will, Ray and Phyllis returned to their Mt Eden Road villa. It

had been Ray’s home since childhood and he and Phyllis had lived there all their lives. At the time, his physical health had been deteriorating, and he had been in and out of hospital and his living conditions were not ideal — the house was uninsulated and quite unsafe for an elderly couple to live in. But they were fiercely independent and, with help from Gaylene and Mr McDermott, were able to live independently until September 2013, when Ray had his first capacity assessment which found that he had been suffering with dementia. Gaylene, who held Ray’s power of attorney, then arranged for Ray and Phyllis to be place in a care facility close to her home and where her mother, Phyllis’ sister, was staying.

Other evidence

[10]   Gaylene refers to Ray’s old diaries which document every letter he had written until the diary entries started to get scrappy, around 2013.1 Gaylene also remembers Ray as intelligent as he ever was in 2010 and the letters he wrote to her were normal, asking her about her health, her children and updated her on his news.

[11]   June recalls Ray keeping up to date with current affairs and visiting his lawyer and bank regularly, but she also recalls his health problems and his hospitalisation, including for acute bladder problems. What stood out for her was that both Ray and Phyllis let themselves go, being short of basic supplies. She says, in hindsight, she would describe both of them as lacking insight and both failing to plan for the future.

[12]   Mr Robert Berry, one of the plaintiffs, is a partner at Hesketh Henry. He gave evidence that Ray and Phyllis had a longstanding relationship with Hesketh Henry. He also refers to the application for probate, to which I now turn.

Application for probate

[13]   The plaintiffs applied for probate on or about 9 April 2019. They applied for probate in relation to the 2009 will. By letter dated 4 June 2019, Tony Mortimer, Registrar at the High Court of Auckland, wrote to Hesketh Henry identifying various issues with the plaintiffs’ application for a grant of probate of Ray’s last will.

1      The diaries were not formally produced but no challenge was taken to them.

[14]At paragraph 2 of his letter, Mr Mortimer noted:

There is a reference in the death certificate produced, to the deceased suffering from "cognitive impairment" possibly at the time that the will was executed. This gives rise to doubt as to whether the testator thoroughly understood the will and/or had full knowledge of its contents and full possession of their mental faculties. Affidavit evidence that the deceased had full knowledge of the contents of the will (and or thoroughly understood the will) and full possession of their mental faculties at the time the will was executed is required. See rules 27.16 of the High Court Rules. There should also be evidence from a medical practitioner as to the nature and severity of the illness at the time the will was executed.

[15]   The plaintiffs made enquiries about Ray’s mental health as at 2009 but could find no assessment as to whether he had testamentary capacity at that time or at the time he made his 2009 will. As such, the plaintiffs were unable to obtain an affidavit from a medical practitioner as to Ray’s testamentary capacity at the time he executed the last will.

Assessment

[16]   I am grateful for the submissions on behalf of the plaintiffs, Gaylene and June. They helpfully refer to leading authority and identify important points going to the issue of testamentary capacity. I mean no criticism of them with the brevity of my judgment. As stated by the Court of Appeal in Loosley v Powell, it essential that a testator understands the nature and effects of a will.2 As the plaintiffs also acknowledge, the indication of cognitive impairment raises the lack of capacity as a tenable issue and so they have the onus of proving that Ray had testamentary capacity.3 However, if there is sufficient intelligence to understand and appreciate the Testamentary Act4 in its different bearings, the power to make the will remains.5

[17]   In this case, apart from the death certificate and a diagnosis of dementia in September 2013, there is nothing to suggest that Ray lacked testamentary capacity at the time he executed the 2009 will. On the contrary, the contemporaneous evidence speaks of an intelligent man with a firm grasp on his affairs, his moral obligations  to

2      Loosley v Powell [2018] NZCA 3, [2018] 2 NZLR 618 at [19], citing the Banks v Goodfellow

(1870) LR 5 QB 549 at 565-568 criteria as affirmed in Woodward v Smith [2009] NZCA 215.

3      Bishop v O’Dea (1999) 18 FRNZ 492 (CA) at [7].

4      Law Reform (Testamentary Promises) Act 1949.

5      Loosley v Powell, above n 2, at [19].

his nieces, and his testamentary wishes. Mr McDermott’s file note, his personal observations and Gaylene’s recollections (which were not tested) are compelling in this regard. The diary notes fortify the view that, at least until about 2013, Ray was well able to appreciate events at the time.

[18]   I do not agree with Mr Sutton’s submission that at the time Ray executed the 2009 will, he was not able to demonstrate capacity by identifying the nature and extent of his financial affairs or to consider any potential claims against his estate, because Mr McDermott had provided this advice prior to the will instructions having been obtained. Whatever the advice received, it is clearly evident from the file note that Ray made an independent judgment on his financial affairs and an evidently logical moral judgment in terms of the shares that will be left for his nieces. June’s observations of Ray and Phyllis letting themselves go falls well short of showing a lack of testamentary capacity. Further, while the changes made to the 2007 will were significant, an explanation was sought and obtained by Mr McDermott at the time — Ray had not heard from June or Lorraine for a long time and they had not enquired into his affairs.6

[19]   The plaintiffs have therefore discharged the burden of showing that Ray had testamentary capacity when he executed the 2009 will. Probate in respect of the 2009 will is therefore granted.

[20]   The plaintiffs shall have their reasonable costs paid out of the estate. Gaylene and June shall have costs on a 2B basis. For completeness, the issues raised by them were properly brought before the Court and, as noted, I was much assisted by the submissions of all counsel.

6      A relevant factor per Loosley, above n 2, at [34].