Woodward v Smith
[2009] NZCA 215
•28 May 2009
IN THE COURT OF APPEAL OF NEW ZEALAND
CA84/2008
[2009] NZCA 215BETWEENELAINE CORAL WOODWARD
Appellant
ANDJON PHILIP SMITH
Respondent
Hearing:3 March 2009
Court:Glazebrook, O'Regan and Baragwanath JJ
Counsel:J C Corry for Appellant
J O Upton QC for Respondent
Judgment:28 May 2009 at 12pm
JUDGMENT OF THE COURT
A THE APPEAL IS DISMISSED.
B We direct payment to the appellant out of the estate of costs for a standard appeal on a band A basis and usual disbursements in this Court.
____________________________________________________________________
REASONS OF THE COURT
(Given by Baragwanath J)
Table of Contents
Para No
FACTUAL CONTEXT [2]
THE WILL OF 10 APRIL 2001 [9]
SCOPE OF THE APPEAL [17]
THE LAW OF TESTAMENTARY CAPACITY [19]
APPELLANT’S SUBMISSIONS
THE INTERVIEWS: DR WAKEFIELD AND MS HARE [23]
DR MOSSMAN’S EVIDENCE [24]
JON SMITH’S APPOINTMENT AS SOLE EXECUTOR [25]
DISCUSSION [26]
THE APPOINTMENT OF JON AS SOLE EXECUTOR AND AS SOLE TRUSTEE [28]
MR SMITH’S CAPACITY [32]
DR GOMMANS’ EVIDENCE AND THE HOSPITAL NOTES [44]
ANALYSIS OF EVIDENCE OF DR GOMMANS [53]Result [72]
[1] Until a stroke on 3 May 1998 when he was aged 73, the late Arthur Percy Lionel John Smith was a man of formidable presence and clarity of mind. Following the stroke his mental capacity was reduced. The issue on this appeal is whether the High Court (Woodward v Smith HC NAP CIV-2004-441-706 8 February 2008) was right to find proved that when, nearly three years after his stroke, he executed a will dated 10 April 2001 altering a prior will in two material respects, the reduced capacity of his mind met the standard required by law for that purpose.
Factual context
[2] Mr Smith was born in 1925 and died on 14 November 2001. He and his late wife (“Mrs Smith”), who died in December 2002, married in England in 1944 when he was 19. Their daughter Elaine Coral Woodward (“Elaine”, the appellant) was born in 1946 and their son Jon Philip Smith (“Jon”, the respondent) in 1952. There are two children of Elaine’s first marriage who, like their father, live in the United States and one, Ashley Woodward, of her second marriage. Jon has three children, Jon BD Smith (“Jon Jr”), Philip and Elizabeth.
[3] After Jon’s birth the family moved to New Zealand where, in what became a partnership with Jon (50% Mr and Mrs Smith, 50% Jon) for more than 30 years, they developed the Smith family business. Simon France J found that until the stroke in 1998 Jon and Mr Smith worked together daily as a team. That included physical labour in the family vineyards and cleaning the family motels each day. They managed and maintained the family commercial premises. While to the world Mr Smith was head of the family, he and Jon took their business decisions together.
[4] For most of Ashley’s childhood Elaine was working. Mr and Mrs Smith played a big role in Ashley’s upbringing, looking after him during the day in his pre-school years and during the school holidays as he grew older. Elaine deposed that she and her husband provided some unpaid help to establish the first vineyard, he with the installation of posts and she with weeding and watering in the morning before work and that until 1984 she helped at the motel. But for the most part Elaine worked elsewhere. While Mr Smith loved Elaine there is no evidence of her contributing substantially to the creation of the family assets.
[5] By contrast Jon’s 30 year business partnership with Mr Smith entailed considerable commitment, contributing notably to the creation of the family assets and resulting in deep mutual affection. Until 1999, after Mr Smith’s stroke, Jon sought and received no payment, beyond sustenance, for his contributions to assets other than his own; his wife and sons also contributed. The stroke added to Jon’s responsibilities in terms both of running the business and of personal care of his father, which Mr Smith greatly appreciated.
[6] By the time of Mr Smith’s death the family’s relevant assets were held as follows by trusts, by partnerships of the trusts and by family members:
(a) the APLJ Smith Family Trust, of which, following the death of Mrs Smith, Elaine and Jon and their respective families are beneficiaries. By a deed of 14 September 1990 the capital fund is to be shared as to one third to Elaine and Ashley and as to two thirds to Jon and his three children. By a deed of appointment of 19 June 2001 Mr Smith appointed Jon to join himself and Mrs Smith as trustees of the trust. While that deed was challenged in the High Court as obtained by undue influence, the High Court’s rejection of that claim was not the subject of appeal. Jon is now, by survivorship, the sole trustee of the trust;
(b) the Hawkhurst Trust, of which the family of Jon (but not Jon himself) are beneficiaries. The original trustees were Mr and Mrs Smith and Jon, now the surviving trustee;
(c) the Wanstead trust, of which Ashley Woodward, his children and grandchildren are beneficiaries. The original trustees were Mr and Mrs Smith together with Elaine and Jon, who are the surviving trustees.
[7] The APLJ Family Trust held major property interests, namely:
(a) 100% of four tenanted flats in Heretaunga St West, Napier;
(b) 50% of a property in Emerson St, Napier, leased to a retailer, of which the Wanstead Trust and the Hawkhurst Trust each held 25%;
(c) 33% of a factory, leased to a bank, in Heretaunga St West, Napier of which the estate of Mr Smith and the Hawkhurst Trust each held 33%;
(d) 20% of a property in Gloucester St, Taradale, of which the Hawkhurst Trust held 45%, the Wanstead Trust 15% and Jon 20%;
(e) 20% of a property in Palomino Road, Haumoana, of which Elaine and her husband hold 40% and the Wanstead Trust 40%. The couple built the house on the land and repaid from their earnings a loan from Mr Smith for its cost.
A motel in Heretaunga St East, Napier, is owned as to 50% by Jon and, as to the balance, by the estates of Mr and Mrs Smith. Those estates also own two residential flats in Napier Road, Havelock North. Vineyards 1 and 2 in Napier Road, each with a house, were owned as to 50% by Jon and 50% by the estates of Mr and Mrs Smith. While the evidence did not record other assets held by the Hawkhurst and Wanstead Trusts, we were told that the total property interests of the trusts are worth about $6,000,000. The residue of the estate is worth not much more than $6000.
[8] By a will of 12 June 1995, which Elaine claims is the true last will of Mr Smith and in respect of which she wishes to receive probate:
(a)she and Jon were appointed his executors and trustees;
(b)various dispositions were made of Mr Smith’s personal assets. A will of 4 February 2000 and a codicil of 27 July 2001 are not in our view material to the appeal, save that the 2000 will continued to appoint Jon and Elaine as joint executors. Since we have concluded the 10 April 2001 will was effective the issue of whether the 2000 will would have been valid does not arise. Counsel did not contend that the codicil, expressed to remove any doubt that the gift to Jon was free of estate expenses and to elaborate the effect of clause 8 altered the construction of the 2001 will. A further clause deleted clauses 5 and 6 of the 2001 will purporting to appoint Jon as trustee of two trusts. But since that had been performed by the unchallenged deed of appointment, they can be disregarded as without effect.
THE WILL OF 10 APRIL 2001
[9] Prior to 7 March 2001 Mr Smith prepared handwritten instructions for Ms Hare of Public Trust which had been involved in the preparation of earlier wills. The instructions, reproduced at [66] of the High Court judgment, were to make a gift of $223,000 to Jon:
[I]n appreciation of his help and work without which we would not have a dollar. No pressure has been placed on me by any person in fact I would have liked to make the sum twice as much. Jon has been a really wonderful son, no one has a better right to my money than he has, he has never asked for a cent.
Typed instructions based on that draft and given to Ms Hare on 7 March reproduced the handwriting and added (at [67] of the High Court judgment):
[A] paragraph that explained that Mr Smith wished to carry out a gifting programme over the next 9 years, and that in the event of his death the balance was to be gifted in the will. Jon Smith testified that he added the paragraph to explain what his father had said to him he wanted, and that it was read over and shown to Mr Smith before he signed it. The figure is $223,000 because the initial $27,000 of the gifting programme had already been given to Jon Smith by the time of the will. This gifting programme was the alternative to the initial lump sum gift idea which would have incurred gift duties.
[10] Ms Hare met Mr Smith on 13 and 20 March 2001. Her file note of 13 March recorded:
His son was like being him, they were so close. For 40 years he and his son had worked and lived and played together and he trusted him like no other person in his life. He loved both his children dearly but the relationship with his son was paramount and he wanted to ensure that the trust that he had put in his son was never questioned. He felt that he hadn’t forgotten his daughter as she had always had everything she had asked for and some years ago he had purchased about 25 acres of land at Waimarama for his daughter on which she had built a home so he felt that she had been well looked after as it was now worth a great deal of money. My daughter will be upset about the gift I have no doubt about it – after all it is human nature, one child always thinks they are favoured over the other. That is not the case; my son has worked very very hard for me and deserved all I can give him.
[11] She performed a test of Mr Smith’s capacity, which she noted as follows:
Who is your Dr? – Dr Wakefield
Who is the PM? – a lady, her first name is Helen
What is your address? – 116 Napier Road, Havelock North, I also live in
Waiapu House and move between the twoHow many children do you have? – 2, a girl and a boy
How long have you been married? – 50 years, got married during the war
Have you been watching the cricket? – I am a funny fellow never been much interested in sport, don’t know why. I can tell you what is happening in the stock market tho – the dollar ducking and diving and the Japanese yen fallen – those Japanese are in trouble.
All of these questions in my view he answered correctly. He spoke further about the Japanese economy. There had been a great deal about it in the news during the week which he had obviously followed closely.
[12] Dr Wakefield’s brief of evidence of his subsequent meeting with Mr Smith, also on 13 March, stated:
At the request of Public Trust at Hastings, I examined Mr Smith on 13 March 2001 and found him to be of sound mind and fit to attend to his affairs. When he presented, he volunteered that he was "as fit as a fiddle". He said that Public Trust wanted to be sure he was "sound of mind" (as he put it). I duly examined him. I started by asking him the date. He said "March 7th 2000 " but then corrected himself and said "2001". I asked him the name of the Prime Minister, to which he replied "Helen Clark". He then correctly identified the Mayor of Hastings as "Jeremy Dwyer" and the President of the USA as "George W Bush". As a result, I wrote to Public Trust that same day confirming testamentary capacity.
[13] On 20 March Mr Smith and Jon called again on Public Trust. Ms Hare noted that Mr Smith confirmed his instructions. He stated in particular that he had decided to make Jon sole executor, leaving out Elaine, to ensure Jon had control and was not challenged.
[14] In the High Court, Simon France J gave the following account of events on 10 April:
[73] [O]n 10 April, the day the will was signed, Dr Wakefield saw Mr Smith in his consulting rooms. Ms Hare was present. Recollections of whether Jon Smith was in the room vary, but I think it probable he was not. Dr Wakefield asked a series of questions, set out below. It will be seen that the interview is in two stages – general questions, and then estate specific questions.
[74] The recollections of Dr Wakefield and Ms Hare differ as to the role played by Ms Hare. Both agree Dr Wakefield asked the questions. Ms Hare thinks she was silent and that Dr Wakefield was able to ask the questions he did because of a prior briefing she had given him. Dr Wakefield recalls that during the questioning Ms Hare reminded him of topics to cover.
[75] The questions and answers in full read:
Myself speaking to Mr Smith
What is the date today? – The 20th of May 1900
What is the year again? – 2001
What is the Festival coming up soon? Easter (correct)
What does Friday of Easter mean? Its [sic] Good Friday
What happened in the Christian sense on Good Friday? It is the day they tried Jesus. Monday was the day he was crucified
Who is the Mayor of Hastings? You beat me
His christian name is Jeremy, what is his surname? Dwyer (correct)
Who is the President of the USA? George Bush (correct)
How many hostages is he trying to rescue? 24 (correct)
How many of those hostages are women? One
Who is the Prime Minister? Helen Clarke [sic] (correct)
Which Political Party does she belong to? National … Labour Party
What is the other Political Party? …
Please subtract 7 from 100 and continue to do so. 83, 75, 87, 80, 67, 60, 53, …47, 40, …33, 25, 27, 20, 13, 15, 9, 3
Are you aware of any conflict which may be caused by the will? If there’s a ripple I couldn’t give a damn. The Trust interests are not changed. It’s the $250,000 gift to Jon – given at $27,000 per day.
Is it true that Jon is both a beneficiary and an executor of the will? But I trust him for that. Jon has really worked. I trust him absolutely.
What is the provision for Elaine? The rent goes to pay the rates.
Elaine is a beneficiary of the APLJ Smith Family Trust –so she is dependent on Jon’s good will? I suppose that is true. Ashley (Elaine’s son) goes clubbing. I don’t want any of my relatives doing that.
Are you comfortable with an Independent Executor? Not particularly.
Are you aware that your wife and daughter may be uncomfortable with Jon’s power? Yes.
Do you see a lot of your daughter? Not enough. She knows where to come. I said I’d help them set up a business (Restaurant). I see her for 10-15 minutes in the Pub once a week and sometimes at Waiapu.
Have you got it (the will) right this time? I’m 90% sure I have.
Is it OK with you that Elaine is no longer an executor? Yes.
Do you understand Jon’s job as executor of the Estate? It’s what he’s doing now… the Vineyard … if the others don’t get out and do work they won’t have a say. There’s been friction between Jon and Elaine since the day they were born, I don’t know why.
Will your wife be upset by Jon being executor? Possibly. My wife is well looked after.
If something happens to Jon then his 18 year old son little Jon would be executor? If he doesn’t sink through it he’ll cope. When I was 18 I was married and had a baby and bought my own shop. I can’t stand people not working.
[15] The changes made by the challenged will of 10 April 2001 were:
(a) Jon’s appointment as sole executor and trustee of the will;
(b) Jon’s appointment as trustee of the APLJ Smith Family Trust and of the Jon Philip Smith Trust, of which the evidence did not disclose any assets;
(c) a gift of $250,000 to Jon of which $27,000 was recorded as having paid.
[16] Since it is common ground that Mr Smith lacked power by will to make Jon’s appointment as trustee of the APLJ Smith Family Trust, and since Jon’s appointment as such trustee by the deed of 19 June 2001 is no longer challenged, the subject-matter of the dispute is confined to the exclusion of Elaine as a trustee of the will and to the bequest to Jon (in effect $223,000).
Scope of the appeal
[17] The appeal focused on Mr Smith’s instructions for the will of 10 April 2001 given on 13 and 20 March 2001 and its execution.
[18] Whereas prior to his stroke on 3 May 1998 Mr Smith had been a decisive and confident man to whom much of the family fortune must be due, Elaine contends that after that date his capacity was so reduced that the Judge was wrong to find he possessed testamentary capacity on 10 April 2001.
The law of testamentary capacity
[19] The celebrated judgment of the Court of Cockburn CJ in the Queen’s Bench (Cockburn CJ, Blackburn, Mellor and Hannen JJ) in Banks v Goodfellow (1870) LR 5 QB 549 remains the leading authority on testamentary capacity. We paraphrase and number the propositions stated in that case at 565-8:
(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.
(3) Unsoundness of mind arising from want of intelligence caused by defective organization, or by supervening physical infirmity or the decay of advancing age, as distinguished from mental derangement is equally cause of incapacity. But
[i] though the mental power may be reduced below the ordinary standard, yet if there be sufficient intelligence to understand and appreciate the testamentary act in its different bearings, the power to make a will remains.
[ii] It is enough if the mental faculties retain sufficient strength fully to comprehend the testamentary act about to be done.
(4) It is not necessary that the testator should view his will with the eye of a lawyer, and comprehend its provisions in their legal form. It is sufficient if he has such a mind and memory as will enable him to understand the elements of which it is composed, and the disposition of his property in its simple forms.
(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.
While Simon France J cited part of this formulation he did not cite the passage at (2)[iii], which Mr Corry emphasised.
[20] Mr Corry also emphasised the statement of Byles J in Swinfen v Swinfen (1858) 1 F & F 584, 592; 175 ER 862, 866:
It is not enough that a testator is able to answer familiar and usual questions. That has always been laid down. He must be able to exercise a competent understanding as to the general nature of the property. As to the state of his family, and as to the general condition and claims of the objects of his bounty; as to the nature of the instrument which he executes, and as to the general nature and general objects of the provisions which it contains; if he can do that, though he may be very feeble and debilitated in understanding, and be at the point of death, it is enough.
(Footnotes omitted.)
[21] The scope of the requirement of knowledge of the nature and extent of his property was put in homely terms by Coleridge J directing the jury in Waters v Waters (1848) 2 De G & Sm 591; 64 ER 263, 276 (Ch D): to have capacity the testator must:
…ha[ve] a mind…of sufficient memory and understanding to know generally the state of his property (I use the word generally, because you have no right to expect from a man…a specific and accurate knowledge of every atom of his property…[But i]f a man has six children, and …thinks he has only five…you could hardly say he is in a proper state of mind to dispose of his property.
[22] In Nijsse v Squires CA53/04 15 December 2004 this Court added at [12]:
[T]he case cannot be left finely balanced… The Judge must be able to find that the reasonable inference relating to testamentary capacity can and should be drawn, otherwise the attempt to propound the will must fail.
In that case, where the condition of the elderly testatrix fluctuated, this Court was not prepared to uphold a decision of the High Court that the will had been made when the testatrix was probably in a rational phase.
Appellant’s submissions
The interviews: (Dr Wakefield and Ms Hare)
[23] Mr Corry submitted that, contrary to the opinion of the Judge, the evidence of the interviews preceding execution of the will ([10-14] above) did not establish Mr Smith’s testamentary capacity. He argued that:
(a)Dr Wakefield was not sufficiently briefed to be able to make adequate evaluation of Mr Smith’s responses and capacity;
(b)Mr Smith’s responses to questions were inadequate for the purpose of determining that he was of sound mind, memory and understanding;
(c)the range of questions asked by Dr Wakefield on 10 April 2007 was too narrow to assess that he was of sound mind, memory and understanding as to the nature and effects of his will, of the nature and extent of his property and of claims to which he should consider giving effect;
(d)prior to 10 April 2001 he showed no understanding of the size of the residue available for his wife;
(e)he did not understand that he had failed to provide for Elaine;
(f)Dr Wakefield did not explore whether there were good reasons for excluding Elaine from the role of joint executor contemplated in prior wills;
(g)Ms Hare did not have the professional expertise required to make a proper assessment of capacity; nor did she pose and receive responses to necessary questions;
Dr Mossman’s evidence
[24] Mr Corry submitted that the Judge placed undue weight on the opinion of Dr Mossman, the respondent’s specialist geriatrician who, having read the hospital notes and considered the other evidence in the case expressed the firm opinion that Mr Smith possessed testamentary capacity.
Jon Smith’s appointment as sole executor
[25] Mr Corry further submitted that the process of appointment of Jon as sole executor was erratic. The 2000 and 2001 wills both purported to appoint Jon trustee of the APLJ Smith Family Trust. Under the former his appointment was jointly with Elaine; under the latter he was appointed and she excluded. The Judge held that the impetus for making Jon sole executor in the 2001 will was his realisation that the 2000 will was ineffective to make him trustee of the family trust. Mr Corry correctly argued that the Judge erred in so finding: in fact the April 2001 will repeated the error of purporting to appoint Jon as trustee. It was not until June 2001 that Jon was appointed as trustee by deed. Mr Corry argued that the reason for the change was not, as the Judge held, a rational one.
Discussion
[26] The test of capacity to make a will is a practical one. It requires focus on:
(a) the nature of the task in hand; and
(b) whether in the light of the authorities there was capacity to perform that task.
[27] What was the task here? In practical terms it was to consider whether Mr Smith had legal capacity to depart from the will of 12 June 1995, given the nature of Mr Smith’s estate and the competing calls upon his benevolence.
The appointment of Jon as sole executor and as sole trustee
[28] It is convenient to deal at the outset with Jon’s appointment as sole executor and trustee of Mr Smith’s will. Further, while not of direct relevance, both because it was legally ineffective and because it was overtaken by the operative deed of appointment of 19 June 2001, it is germane to an overall perspective of Mr Smith’s conduct, as bearing on capacity, to consider the clause purporting to appoint Jon as the only trustee of the APLJ Smith Family Trust of his generation (the others being Mr and Mrs Smith). On 26 July 1989, Mr and Mrs Smith had expressed in writing the desire that on their death both Jon and Elaine (and when possible their respective sons Jon Jr and Ashley) should become trustees of that trust. When on 14 September 1990 the trustees determined that four members of the Jon Smith family and two members of the Elaine Woodward family should receive 2/3 and 1/3 respectively of the capital of the trust, the discretion of the trustees was limited to income. The exercise of that discretion is of course subject to review by the Court under s 68 of the Trustee Act 1956.
[29] In cross-examination Elaine complained that her children were being treated unfairly. When she made that statement she was unaware of the direction that Elaine and Ashley should receive one third of the capital of the APLJ Family Trust. That and the establishment of the Wanstead Trust and the unchallenged evidence of Jon that the jewellery Elaine received on the death of Mrs Smith included two rings worth $150,000 each point to a concern by Mr and Mrs Smith that Elaine and Ashley, who was very close to his grandparents, should receive a substantial share of the family assets. There was no specific evidence, nor did we receive submissions, on the extent to which the ratios of respective benefits of Elaine and Jon were actually altered by his $223,000 bequest.
[30] But, given his three decades of largely unpaid service to the family fortunes, that alteration in his share above his family’s 2/3 interest in the capital of the APLJ Family Trust (compared with Elaine’s family’s 1/3), taken with the other provisions made prior to and by the will of 10 April 1991, cannot be seen as disproportionate or improvident so as to suggest that the terms of that will evidenced irrationality on the part of Mr Smith.
[31] Nor was Jon’s appointment as sole executor irrational. Unhappily, for reasons that were not explored and do not matter, there had never been good relations between Elaine and Jon. Had they been appointed as joint trustees there might well have been disputes. And since trustees must act unanimously, the operation of the family businesses could have been frustrated. It is not at all surprising that, when the reality of his condition dawned on Mr Smith, he departed from the policy of trying to treat Elaine and Jon alike and trusted Jon to look after Elaine’s interests and those of her family fairly. There is no evidence to suggest that he would do otherwise.
Mr Smith’s capacity
[32] The major debate concerned Mr Smith’s capacity following the stroke. Certainly there was substantial change. Ms Laughton, Mr Smith’s accountant, spoke of Mr Smith’s change after the stroke. She said that he went from being “always very astute and focussed on his affairs…very in control and upright in stature…a very proud and decisive man” to being “definitely not as sharp as he had been…he would agree with any decisions made regarding the income allocation… although Jon tried to involve his father and brought him to our interviews, Jon was now the person we took instructions from”.
[33] Simon France J did not accept parts of the evidence of Elaine and her son to the effect that Mr Smith lacked capacity. Given the Judge’s advantage of seeing and hearing the witnesses, by itself that credibility assessment of the evidence of Elaine and her son is difficult to challenge on appeal and Mr Corry did not seek to do so. But there was as well a deep-seated difference of professional opinion as to the extent and effect of the change. Mr Smith’s GP for 25 years, Dr Wakefield, a neurologist Dr Mossman, a clinical psychiatrist and consultant physician of the aged at Napier Hospital, a neuropsychologist Mr Dick, his solicitor Mr Sullivan, a counsellor Mr Dromgool, and officers of Public Trust involved in preparing Mr Smith’s successive wills all supported Jon’s claim that Mr Smith possessed testamentary capacity. A highly qualified consultant physician and geriatician, Dr Gommans, by contrast considered that Mr Smith lacked capacity. He referred, among other information, to tests performed by occupational therapists.
[34] The evidence of Dr Gommans is the lynch-pin of the appeal. He oversaw Mr Smith’s care in hospital from May to August 1998 and saw him again in October 2001. It is true that for his opinion on what happened during the period of two years eight months after that prior to execution of the will of 10 April 2001 he was dependent on hospital notes, which included assessments of his condition by others who cared for Mr Smith in 1999-2000. But Dr Gommans’ standing is such that he was elected President of the New Zealand Division of the Australian and New Zealand Society for Geriatric Medicine and is New Zealand’s representative on international steering committees for supervising and providing advice to all other New Zealand physicians, geriatricians, neurologists and hospitals involved in certain stroke trials. He is recognised as an expert on stroke and has been elected by professional colleagues as President of the New Zealand Geriatrics Society. His credentials are solid. And he has the advantage not only of having had Mr Smith under his care but of overseeing his participation in a research trial of a new drug treatment for stroke in which Mr Smith and his family had agreed to take part.
[35] Dr Mossman and Mr Dick by contrast had never seen Mr Smith, while Dr Wakefield, Mr Sullivan and the Public Trust officers cannot claim the professional expertise of Dr Gommans in understanding geriatric capacity. As to the evidence of Mr Sullivan, in Knox v Till [1999] 2 NZLR 753, 754 Henry J for this Court stated:
…whether or not a person has testamentary capacity is outside the area of a solicitor’s professional expertise.
[36] In appraising Dr Gommans’ evidence there are three considerations of particular importance.
[37] The first is what in law is the standard to meet. The Judge considered (at [168]) that Dr Gommans “set the bar too high”. He observed (at [89]) that Dr Gommans employed a normative standard of how a medical expert should approach the issue of testamentary capacity and distinguished that from the Court’s assessment of whether the evidence establishes capacity. We return to that topic.
[38] The second is the scope of the appellant’s challenge. Before us it was focused particularly on the specific occasions when Mr Smith gave his will instructions and executed the will. That has presented some difficulty; the context of that specific challenge was necessarily the preceding history from the time of Mr Smith’s stroke. But, presumably because the challenge made in the High Court was similarly specific, the Judge did not engage with Dr Gommans’ general reasons for his opinion: that:
(a) when Mr Smith was under his care, although he had capacity to make an enduring power of attorney he lacked testamentary capacity;
(b) Mr Smith lacked capacity for significant improvement;
(c) the hospital notes evidenced, as Dr Gommans had expected, a deterioration of testamentary capacity;
(d) when he saw Mr Smith in October 2001, after the will had been executed in April, Dr Gommans could confirm the expected deterioration.
At [154] Simon France J referred to the difference between Dr Gommans’ opinion that the notes showed deterioration in capacity and that of Dr Mossman who considered that the notes showed an improvement. While recognising that “the issue is relevant particularly to Dr Gommans’ assessment of capacity” the Judge said:
There is little point in rehearsing the voluminous records that inform very conflicting assessments. In the end these things are inevitably a package and since I give weight to the assessments of people dealing with Mr Smith at the time such as Dr Wakefield and the Public Trust personnel, I inevitably prefer the consistent statements of Dr Mossman and Mr Dick to that of Dr Gommans.
[39] This is a conclusory assertion as to their significance.Although elsewhere (at [157] and [159]) the Judge spoke of reviewing and reading the records no such preference could properly be made until the Judge had first analysed whether Dr Gommans could be right in his appraisal of the records and the reasons given for his conclusion. But in the absence of a specific challenge, with analysis of the evidence in the hospital records, we lack the materials needed to appraise the fundamental conflict between Dr Gommans, as to deterioration, and Dr Mossman to the contrary. The issue was not pressed before us.
[40] A final difficulty concerns the onus of proof. At [157] Simon France J said:
…a review of the records leaves me far from concluding that he was a man generally unable to instruct as to the content of his will, or to understand what he was doing.
Again at [160] he stated:
Whilst it must be accepted that the specific incidents Dr Gommans relies on could reflect the realisation of the deterioration risk factors he has identified, the whole of the evidence leads me to conclude, along with Dr Mossman and Mr Dick, that such deterioration is not established on the evidence.
[41] But the onus lay the other way: the issue was whether the evidence, including those records, established the presence of testamentary capacity. The issue at [157] was whether the evidence established capacity; at [160] it was whether deterioration was excluded. The Judge may have reasoned that the evidence of other witnesses tended to establish capacity and so the question was simply whether there was a basis for setting his evidence aside vis-à-vis other evidence. That would entail no error of law. But the task of this Court, of assessing whether the evidence met the standard of proof, unless and until his evidence can be shown to be flawed, requires us to examine the possibility that Dr Gommans is right.
[42] It is therefore necessary for us to:
(a) assess for ourselves Dr Gommans’ evidence, including his reliance on the hospital notes, in the light of the evidence which commended itself to the Judge but without specific submissions on the historical material;
(b) determine how our own assessment of the evidence relates to the requirements of the law.
[43] We observe that, while Drs Gommans and Mossman referred to one anothers’ evidence in their written briefs and counsel in cross-examination sought further comments on their respective opinions, the appeal presented some difficulty in identifying precisely why they disagreed and in evaluating the differences. It would have brought the major points of difference into more direct collision had the experts been sworn and called concurrently. The judge complained that he had not been supplied with a chronology. A comparative document setting out in sequence the competing versions of how Mr Smith’s condition did or did not progress would have assisted him. The document with which we were supplied lacked the detail required to facilitate our task on appeal. We have set out at [50] what appear to be the major aspects of difference.
Dr Gommans’ evidence and the hospital notes
[44] What Dr Gommans described at the outset as “a devastating stroke in a previously alert, active and independent man” on 3 May 1995 involved Mr Smith’s right middle cerebral artery. Blockage of the main blood vessel feeding the right half of the brain resulted in damage to a large area of that half of the brain. That caused total paralysis of the left arm and leg and loss of sensation in those limbs and loss of vision in the let half of each eye. Importantly, it resulted in major impairment of his higher cognitive (thought) functions.
[45] Close attention was paid in cross-examination and submissions to the assessment on 27 May 1998 performed by Ms Atkins, occupational therapist, which yielded a score of 18/30 on the Folstein Mini-Mental State Examination. It suggested severe deficits in concentration and attention and inability to complete tasks without verbal prompting. Mr Smith was described in the nursing notes as “very drowsy” as well as “chang[ing] topic frequently – no logical flow of new topic to previous conversation”. But the previous day he had been extremely tired and difficult to rouse. Of itself the test could not be definitive. It took place at an early stage and there was prospect of improvement.
[46] On 30 July 1998 Dr Gommans advised the family that Mr Smith had capacity to execute an enduring power of attorney. While he suffered considerable cognitive dysfunction, he was able to understand that he was nominating a person to manage his affairs and make decisions for him should be lose his own capacity. Dr Gommans did not perform an assessment of testamentary capacity but gave evidence that, since Mr Smith was just competent to give an enduring power of attorney, and since the standard for testamentary capacity exceeds that, his assessment of capacity to give the power of attorney was relevant to testamentary capacity. He recounted that during the three month period in hospital Mr Smith had frequent and repeated episodes of confusion and agitation, usually worse at night and sufficiently severe to require tranquillising medication. Those problems of confusion and agitation remained at the end of Mr Smith’s stay in hospital, by which time he was medically stable. During the period in hospital Dr Gommans assessed Mr Smith on 30 occasions.
[47] On 3 August 1998, the day of his discharge, Dr Gommans found him alert and keenly responsive and able to follow simple commands. But he could not give correct answers to standard questions about the month and his age. Despite retaining good verbal fluency and relatively good short term memory he was unable fully to understand detailed instructions. He was described by a speech and language therapist as verbose, unable to keep on the topic and in conversation introduced topics inappropriately. These were described as “high level language problems… reflecting his cognitive dysfunction”.
[48] While Dr Gommans did not see Mr Smith again until October 2001, on the basis of his own assessments and of subsequent medical records he expressed the opinion that Mr Smith’s cognitive function deteriorated following his discharge in August and that he would not have had testamentary capacity during 2001. That opinion is at odds with the opinion of Dr Mossman, which the judge accepted. Dr Gommans’ opinion is based especially on the points recorded in the left column. The responses of Dr Mossman appear in the right column.
Dr Gommans
1. He agrees with Dr Mossman as to the likelihood of frontal lobe damage from the original stroke, subsequent strokes or a combination, inferred from reports of cognitive function and behaviour at Waiapu House following admission there in February 1999. Specific components of frontal lobe function include the ability to understand concepts, abstract reasoning, mental flexibility, ability to resist interference, concentration, self monitoring and the planning and control of actions – all being important for decision making. Deficits in frontal lobe functioning include impairments in insight, planning, judgment and the ability to control impulses and behaviour. Sexual indiscretions and gross errors of judgment concerning inter-personal and financial matters may occur.
2. Following a further seizure on 17 January 1999, two days later Dr Baker, neurologist, found damage suggestive of injury to both sides of the brain.
3. In February 1999, it was necessary for Mr Smith to shift from his home to nursing care at Waiapu House. Dr Selderbeck, gastroenterologist, spoke of a marked and progressive deterioration in Mr Smith’s general health.
4. On 6 November 1999 Jon commented to nursing staff about his father’s confusion.
5. On 2 February 2000 Dr Muller’s referral letter requesting hospital attention stated "Element of dementia – worse since [discharge] from [Hawkes Bay Hospital six months] ago.
6. On 3 February 2000 Mrs Smith reported "increased confusion since mid December 1999".
7. Repeatedly very low MMSE scores during admission February 2000. Cross-examined (215-7) he accepted that Mr Smith was in an acute state, subject to infection, and that such tests are better avoided in those conditions.
8. On 1 March 2000 Jon expressed concern about increased level of confusion. Dr Leikis stated "likely confusion fluctuating – normal + expected after stroke".
9. 30 May 2000 unrealistic ideas of ability to travel to UK.
10. 10 April 2001 failure to demonstrate adequately reasoning and understanding of consequences in response to questions put during Dr Wakefield’s and Ms Hare’s assessments relating to testamentary capacity.
11. 29 April 2001 Waiapu records "? short term memory – thought he had lost cell phone, when only 5-10 minutes earlier it had been put in shirt pocket"; nursing referral letter referring to short term loss of memory; 16 October 2001 Waiapu House referral letter to hospital "short term memory loss" (no such problem in 1998).
Dr Mossman
1. Agreed.
Disagreement as to consequences for Mr Smith.
2. 2. Not disputed.
3. Impaired function easily aggravated by minor illnesses but no basis for conclusion of progression of cognitive incapacity
4. Not disputed but again no basis for conclusion of progression of cognitive incapacity
5. No evidentiary basis for assertion of dementia. Dr Muller did not give evidence
6. Not disputed. But attributable to temporary urinary infection
7. Low MMSE scores due to infection and to lack of co-operation because of perception of inadequate care of catherisation by hospital
8. Compare Dr Wakefield note 13 March 2001 “This is to confirm that I have been John’s doctor since 18.05.76 is nearly 25 years. Today I have seen him and undertaken a manual status check and find him to be sound of wind and fit to attend to his affairs.”
9. Mr Smith acknowledged not realistic
10. Disputed: see [51] ff below
11. Many people misplace their cell phone. While short term memory loss is commonly associated with short term memory loss this on its own does not preclude testamentary capacity.
[49] Cross-examined, Dr Gommans accepted that one episode, in which Mr Smith tried to sell some of wine from the family vineyards to the local supermarket, indicated that Mr Smith at least on some occasions retained his cognitive function. He also accepted that, while there were some 80 episodes of grumpiness, rudeness and abusiveness between April 2000 and mid-November 2001 which caused comment in the notes, they seemed to occur more at night than during the day, and a possible explanation was boredom and frustration.
[50] Dr Gommans was asked whether the evidence of Ms Hare of Public Trust and Ms McCaskill, registered nurse and Dr Wakefield as to the circumstances of execution of the will, if accepted by the Court, would disprove his thesis of progressive deterioration. He replied that, while deterioration was likely, that did not mean it occurred. But while it would affect the strength of his opinion as to a cognitive state that did not confer testamentary capacity, he adhered to that opinion.
[51] Dr Gommans accepted that a possible explanation for Mr Smith’s fluctuating cognitive state was a combination of sleep deprivation, pain in his left leg, reduced hearing, and discomfort from an incident involving a catheter, all on top of the original stroke. While recognising that all those factors were likely to be present, he did not accept that that was a probable explanation. They did not, in his view, explain the severity of the deficits found on testing. Moreover, Mr Smith was at high risk of having silent strokes with fluctuating confusion. While accepting that different people could form different views on the topic, he maintained his criticism of the methodology employed by Dr Wakefield and his own opinion that testamentary capacity was not established.
[52] Dr Gommans’ proper concessions leave open the realistic possibility that Mr Smith did in fact possess testamentary capacity in April 2001. That fact, coupled with evidence from other witnesses which the Judge considered would, but for Dr Gommans’ evidence, make out an overwhelming case for Mr Smith’s testamentary capacity ([56] of judgment), is of obvious assistance to the appellant. But it does not relieve us from the obligation of examining that evidence with care, in the light of Mr Corry’s submissions. It is unnecessary to lengthen this judgment by relating in detail the evidence which is recounted by the Judge at [59]ff of his judgment, which is publicly available (see citation at [1]). We have recounted at [14] the Judge’s summary of events on 10 April. We turn to discuss the important evidence of Dr Gommans, beginning with the approach of the Judge.
Analysis of evidence of Dr Gommans
[53] The Judge’s analysis began with the comment that Dr Gommans would criticise much of his reasoning. Dr Gommans was concerned that Dr Wakefield’s assessments were too dependent on his knowledge of Mr Smith and the family and assumed rationality from apparent consistency when he should have tested it more rigorously. While taking that caution into account, the Judge did not wholly accept it, stating that the bar must not be set too high. The interview took 40 minutes. Mr Smith’s business interests and asset holdings were complex. How long should questioning have lasted? There must, he said, be balance. While there were dangers in Dr Wakefield’s 25 year’s familiarity with Mr Smith there was also obvious advantage in being able to assess the extent of deterioration of someone he knew well. The point was important to the judgment: both Dr Mossman and Mr Dick, whose evidence was accepted by the Judge, were significantly influenced by it in forming their own views.
[54] Certain aspects of the interviews were the subject of particular consideration by the experts and the Judge. There is no evidence of theological knowledge on Mr Smith’s part and the errors of detail about Easter are not significant. There were also errors in arithmetic during a process of successive deductions from 100 down to zero. Dr Wakefield reported that some of the answers were correct, some were not far off, and what was important was that Mr Smith persisted down to zero and maintained his concentration. And while there was inaccuracy in relation to the “$27,000 a day”, when what mattered was the annual exemption of that sum from gift duty, no point was taken concerning it. Mr Upton QC relied on the correct detail about the surname of the mayor of Hastings, the President of the United States and the number of hostages in Iran he was trying to rescue, the name of the New Zealand Prime Minister and the potential family implications of Jon becoming sole executor.
[55] Mr Corry emphasised the errors as to date and the subtraction errors; that Mr Smith was only “90% sure” he had got the will right; and the answers to the question about provision for Elaine: “He felt that he hadn’t forgotten his daughter as she had always had everything she had asked for and some years ago he had purchased about 25 acres of land at Waimarama for his daughter on which she had built a home so he felt that she had been well looked after as it was now worth a great deal of money”; “The rent goes to pay the rates”. The reality was that Elaine and Mr Woodward, having borrowed money from Mr Smith to build a house on the land they occupied, had paid off the loan. They had also paid for a 40% share of the land cost, the balance being owned as to 40% by the Wanstead Trust (of which her son Ashley is beneficiary) and as to 20% by the APLJ Smith Family Trust. Elaine’s concern was that she had paid 100% of the house but only owns 40%.
[56] On the other hand, Mr Smith had facilitated the acquisition by means of the loan; he continued to provided 60% of the land cost; and via Elaine’s 1/3 capital interest in the capital of the APLJ Smith Family Trust and Ashley's interest in the Wanstead Trust he had, very substantially, ensured that she and her family should enjoy the 25 acre property where she and her husband live. There is no evidence to refute Mr Smith's belief that it is worth a great deal of money.
[57] Dr Gommans cited an advisory paper for doctors: Jacoby and Steer “How to assess capacity to make a will” (2007) 335 BMJ 155. It was written jointly by an old-age psychiatrist (geriatrician) and a solicitor, each expert in dealing with contentious probate cases. It explains the legal principles and proposes that doctors follow specific steps as necessary for an adequate medical assessment of capacity:
(a) get a letter from the solicitor detailing the legal tests;
(b) set aside enough time;
(c) assess (according to standard medical knowledge) whether the patient has dementia;
(d) Check that the patient understands each of the Banks v Goodfellow criteria ([20] above), being:
(i) The nature and effect of making a will;
(ii) The extent of his or her estate;
(iii)The claims of those who might expect to benefit under the will; and
(iv) The patient should not have a mental illness that influences making gifts in the will that would not otherwise have been made;
(e) Record the patient’s answers verbatim;
(f) Check facts, such as the extent of the estate, with the solicitor;
(g) Ask about and review previous wills;
(h) Ask why potential beneficiaries are included or excluded; and
(i) If in doubt as to capacity, seek a second opinion from an experienced professional.
He reiterated the lesson provided by the expert geriatricians in Nijsse, that best practice requires the interviewer to have the testator repeat without prompting in his own words the essence of his understanding of the Banks v Goodfellow factors and his instructions.
[58] Dr Gommans expressed the opinion that Mr Smith’s answers to Dr Wakefield’s questions, as documented, raise significant doubts regarding Mr Smith’s insight, reasoning and comprehension of the consequences of his actions. He concluded that the evidence of Dr Wakefield and that of Ms Hare unfortunately did not adequately assess Mr Smith’s cognitive function and all relevant aspects of testamentary capacity.
[59] We endorse what Dr Gommans says about good practice. The experience in both Nijsse v Squires and this case brings out the uncertainty, delay, cost and distress caused by failure of professional advisers to educate themselves in the basic precautions required to achieve the result sought by the patient or client – to adopt a test supported by expert experience which will withstand future investigation. Failure in future to adopt such practices may give rise to claims by those who have suffered as a result.
[60] To appraise the differences between the opinions of Dr Gommans and the respondent’s experts we have taken time first to see in context and then to reflect upon the evidence and its significance. We have however concluded that, on the balance of probabilities, the Judge’s decision was correct and met the Nijsse requirement that the balance must not be a fine one. That is because of the cumulative effect of the contemporary evidence, even when viewed against the highly professional analysis of Dr Gommans and by the standards of proper practice which he advocated, and taking into account the errors emphasised by Mr Corry.
[61] Dr Mossman’s opinion has been referred to. He expressed the confident view that testamentary capacity clearly existed. Mr Dick’s evidence was to similar effect as was that of Dr Wakefield, the Public Trust witnesses, notably Ms Hare, and Mr Sullivan.
[62] Its overall thrust is that Mr Smith recovered sufficiently from his stroke to have testamentary capacity; that contrary to the expectation of Dr Gommans his condition did not deteriorate prior to 10 April 2001; and that Jon has established his claim to probate.
[63] Despite the regrettable failure to comply with best practice, we are brought, on our own appraisal of the evidence, to the same conclusion as the Judge. That is because of the cumulative effect of a series of reasons, none of itself decisive.
[64] The first is that Mr Smith had prepared a rational set of instructions himself and explained what he wanted to do and why, in rational terms.
[65] The second is that the two issues requiring appraisal - whether to add to Jon's provision and equally reduce that for Elaine; and whether Jon should become sole executor - were not complex in two ways:
(a) As to the nature of the estate, the observation at (6) of the Banks v Goodfellow criteria ([20] above), as to the advantage of long familiarity with the subject-matter of the will, is of particular pertinence. Mr Smith, with Jon, had created the estate. Elaine submitted that there was no free cash of anything like the $223,000 bequest; a subsequent statement by Mr Smith on 1 June 2001 that he thought he had cash of about $600,000 was not substantiated. But Jon's evidence, that “there were a number of term deposits at Westpac Bank as I remember at the time possibly totalling $1.2-1.3m” and that it was the family's practice to make funds available from one part of the family's assets to another, was not discredited by the production of inconsistent records.
(b) As to the identity of those warranting consideration and their respective calls upon his benevolence, the only parties in contention were Jon and Elaine.
[66] The third is that the decisions cannot be challenged as irrational.
[67] The fourth is that, like the Judge, we endorse the evidence of Dr Mossman and Mr Dick as to the advantage enjoyed by Dr Wakefield with his long experience of Mr Smith. While less sturdy than it might have been following compliance with the criteria cited by Dr Gommans – (see [57] above), the evidence was not nullified by the breach of those criteria and was entitled to be given weight.
[68] The fifth is that Ms Hare did persist in testing the decisions to benefit Jon in the two material respects. While not a geriatric expert, she had worthwhile experience of dealing with will making by the elderly. Her recognition of the need to be able to establish capacity and to justify the two changes from the 1995 will is a significant theme of the sequence of interviews from 13 March to 10 April.
[69] The sixth is that we classify Mr Smith’s errors as of a kind falling within (8) of the formulation in Banks v Goodfellow. The issue is – does the debilitation extend to essentials? Errors of date and of arithmetical capacity may by themselves afford some evidence of incapacity but are not decisive of it. But the crucial zone here is the capacity to understand the significance of the two essential changes. We have recorded our reasons why we are satisfied that the removal of Elaine as joint executrix was in the circumstances justifiable. So too was the reward to Jon for his exemplary service, which was never challenged. Mr Smith’s limiting the sum to $250,000, when he would have liked it to be greater, was in the context of the total family fortune a proportionate decision which it is reasonable to infer was informed by his concern to be fair to Elaine and her family.
[70] The sixth is that, despite the weight to which Dr Gommans’ opinion is entitled, not least his view that improvement to achieve testamentary capacity was unlikely, he accepted that the alternative view was a legitimate one. The clear opinion of Simon France J, with his advantage of seeing and hearing the witnesses, may properly be taken into account in this regard.
[71] We record that in taking the Judge’s assessment into account we have reflected on his opinion that Dr Gommans “set the bar too high” and his observation that Dr Gommans employed a normative standard of how a medical expert should approach the issue of testamentary capacity and distinguished that from the Court’s assessment of whether the evidence establishes capacity. We have expressed our endorsement of Dr Gommans’ assessment of what is good practice. We take the Judge to be saying, not that Dr Gommans’ formulation of good practice on the part of assessing practitioners is wrong, but that it is to be distinguished from the subsequent judicial responsibility to evaluate whether the Banks v Goodfellow criteria are met.
Result
[72] Our conclusion is that the Nijsse standard of proof has been met by Jon. The appeal is therefore dismissed.
[73] We are nevertheless satisfied that the failure of those advising Mr Smith to comply with the criteria described by Dr Gommans injected sufficient uncertainty into the case both for us to disagree with the Judge that the answer is obvious. On the contrary it warrants a contribution by the estate to Elaine’s costs on appeal. The principles stated by Stringer J in re Paterson [1924] NZLR 441, applied in Squires v Nijsse, emphasises the High Court’s entitlement under R 46 (now 14.1) to award costs in probate proceedings in such manner as achieves justice between the parties. An example is where, as here, there are issues which leave such uncertainty as reasonably to justify testing the executor’s entitlement to probate. Costs in the High Court have been reserved and require to be fixed there in the light of this judgment, if not agreed.
[74] We direct payment to Elaine out of the estate of her costs in this Court and usual disbursements for a standard appeal on a band A basis.
Solicitors:
Scannell Hardy & Co, Hastings for Appellant
Napier Law, Napier for Respondent
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