Rd'A : 'Do you want to sign your Will now?'
IA: 'Yes'."
89 The principal reason that Mrs Abraham gave for excluding Mrs Gutkovich from her will was that she considered that Mrs Gutkovich had stolen her car. From time to time she also expressed the view that Mrs Gutkovich had stolen her money, and she thought that Mrs Gutkovich had "got enough".
90 On 3 March 2005 Mrs Abraham, acting through her tutor, the Protective Commissioner, commenced proceedings against Mrs Gutkovich in the Local Court for damages for conversion of the motor vehicle. The proceeding was defended. On 23 August 2005 Dr Wallace advised that:
" 1. Mrs Abraham is able to express a reasonable opinion regarding the disposition of her assets and estate. She is competent to make such testimony when presented with appropriate facts and allowed opportunity to consider them.
2. Cognitive impairment such as that seen in Alzheimer's Dementia is particular [sic] sensitive to stressful and aversive situations leading to a reduced level of performance such as with recall. Cross-examination would constitute such a stressor and would therefore impair her ability to reasonably express herself. "
91 On 2 November 2005 Dr Wallace advised that he had again reviewed Mrs Abraham that day and advised that there was a six-month history of declining cognition and a development of disturbed behaviour. He advised that Mrs Abraham was then no longer competent to give testimony and would be unable to provide a statement for the purpose of evidence in the Local Court.
92 Mrs Abraham did not give evidence in the Local Court. On 9 May 2006 the Local Court gave judgment for Mrs Abraham in the amount of $18,500, being the full value of the motor vehicle and the full amount of the damages claimed, plus interest and costs.
93 As probate is no longer sought of the will of 10 May 2004 the relevant times for determining Mrs Abraham's testamentary capacity are 7 July 2004 (when she signed the codicil revoking the gift to Mrs Gutkovich in the 2003 will), 23 November 2004 (when Mrs Abraham gave instructions to Mr d'Apice) and 3 December 2004 (when Mrs Abraham signed her last will). There is no reason to think that if Mrs Abraham had testamentary capacity on 23 November 2004 she lost it by 3 December 2004. The position can be considered as at 3 December 2004, having regard to what Mrs Abraham said both on 23 November 2004 and 3 December 2004. The onus of establishing testamentary capacity in each of those cases rests on the plaintiff. Given Mrs Abraham's age, frailty, and the diagnosis of dementia, the plaintiff cannot and does not rely on a presumption of testamentary capacity arising from the due execution of a will apparently rational on its face.
Testamentary capacity for will and codicil
94 For Mrs Abraham to have had testamentary capacity to make her will of 3 December 2004 she must have been aware of and appreciated the significance of the act upon which she was to embark, namely, making her will; at least in general terms, she must have been aware of the nature and extent of her assets; and she must have been able to comprehend and appreciate the claims to which she ought to give effect, that is, she must have had the ability to evaluate those claims and discriminate the respective strengths of the claims on her, so that no disorder of her mind should prevent the exercise of her "natural faculties" which would influence her in making her will so as to bring about a disposal of her assets which, if her mind were sound, she would not have made (Banks v Goodfellow at 565; Read v Carmody (Court of Appeal, 23 July 1998, unreported); BC9803374 at 4-5; Re Estate of Paul Francis Hodges deceased; Shorter v Hodges (1988) 14 NSWLR 698 at 705-707).
95 In Read v Carmody, Powell JA, with whom Meagher and Stein JJA agreed, said (at 4-5) that a testator or testatrix must be aware, at least in general terms, of the nature, extent and value of the estate. There is no evidence that the deceased was aware of the value of her estate, but the Court of Appeal has subsequently affirmed the correctness of the views expressed by Windeyer J in Kerr v Badran [2004] NSWSC 735 at [48]-[50] (see Zorbas v Sidiropoulous (No 2) [2009] NSWCA 197 at [64], [94], [99]). In Kerr v Badran Windeyer J said (at [49]) that:
" Older people living today may well be aware that they own substantial shareholdings or substantial real estate, but yet may not have an accurate understanding of the value of those assets, nor for that matter, the addresses of the real estate or the particular shareholdings which they have. Many people have handed over management of share portfolios and even real estate investments to advisers. They may be quite comfortable with what they have; they may understand that they have assets which can provide an acceptable income for them, but at the same time they may not have a proper understanding of the value of the assets which provide the income. They may however be well able to distribute those assets by will. I think that this needs to be kept in mind in 2004 when the requirement of knowing 'the extent' of the estate is considered. This does not necessarily mean knowledge of each particular asset or knowledge of the value of that asset, or even a particular class of assets particularly when shares in private companies are part of the estate. "
96 These principles elucidate what is required for a testator or testatrix to be capable of making a will disposing of his or her estate to a particular beneficiary or amongst beneficiaries. As a matter of principle, it does not appear to me that the same capacity would necessarily be required for a testator or testatrix who wished only to revoke a particular gift. A testatrix, when perfectly capable, may have disposed by her will of an elaborate and valuable estate carefully between numerous potential claimants, having weighed their respective claims to a nicety. If one of the beneficiaries should so misbehave towards the testatrix that she resolved that that person should receive nothing, I see no reason in principle why it should be necessary in order for a revocation of such a particular gift to be effective that the testatrix should still have the capacity to appreciate the general nature and extent of her estate and be able to weigh the claims of all persons who might then be potential objects of her testamentary bounty. In principle, it should be enough that the testatrix is capable of making a judgment as to whether the person deserves to be excluded from the will. If the testatrix's mind is so disordered by mental illness or disease that she is not capable of properly comprehending the continued claims of the beneficiary, so that the gift is revoked when it would not have been had her mind not been so affected, then the revocation should not stand. But in carrying out such a testamentary act, prima facie, it should be irrelevant if the testatrix did not know what was the extent of her assets.
97 It may be said that the testatrix should be able to decide how she would leave the disappointed beneficiary's share, and for that purpose she would need to appreciate the strengths of the claims of everybody else on the estate. But that need not be so, if, as in the present case, there is a gift of residue. In providing for a residuary gift when she was fully capable the testatrix would have considered that the residuary beneficiaries were the persons who should be entitled if for any reason any of the specific gifts failed.
98 This view is supported by the observations of Young J (as his Honour then was) in the Public Trustee v Elderfield & Anor; Re Estate of Poole (Supreme Court of New South Wales, Young J, 26 April 1996, unreported) where his Honour contemplated that in some cases a lesser degree of mental capacity might be required for the revocation of a specific bequest or legacy. In Hay v Simpson (1890) 11 LR (NSW) Eq 109 Manning J said (at 118-119):
" No doubt it is unwise to make a will so late when a codicil will do, because a codicil keeps up the continuity of the testamentary capacity existing at the date of the will, so that in executing a codicil much less intelligence is necessary than in executing a will, and consequently professional men dissuade old persons from making wills where a codicil would be sufficient. "
99 It is unnecessary to consider what the position would be if the revocation were of an entire will or a residuary gift (compare Public Trustee v Elderfield).
100 In the case of the codicil of 7 July 2004 revoking the gift to Mrs Gutkovich in the will of 9 September 2003, in my view it is necessary and also sufficient for the plaintiff to demonstrate that Mrs Abraham was capable of evaluating the strength of Mrs Gutkovich's claim on her testamentary bounty.
101 Counsel for the plaintiff submitted that it was not necessary to show that Mrs Abraham had such an ability. Counsel said that the requirement in Banks v Goodfellow that a testator be able to comprehend and appreciate the claims to which he ought to give effect applies only in respect of those persons who have a natural claim on the testator's bounty. Counsel submitted that a carer was not a person with a natural claim on the bounty of the testator, and her claim was not one to which Mrs Abraham "ought to give effect". I do not accept that submission. It is a matter for a testator, not the court, to judge who are the persons with claims on his testamentary bounty. It is clear that Mrs Abraham earlier thought that Mrs Gutkovich was a person with a claim on her testamentary bounty. She had been Mrs Abraham's close companion as well as carer for 10 years.
102 I consider first the validity of the will of 3 December 2004. It is clear and was not disputed that Mrs Abraham understood the significance of the act upon which she was embarking. That is to say, she understood that she was making a will which would direct who would receive her property after her death.
103 I consider that Mrs Abraham was also aware, in general terms, of the nature and extent of her assets. That assessment is not made easily because neither party sought to place before the court a clear description of the assets Mrs Abraham owned in 2004. It appears from Mr William d'Apice's affidavit of the deceased's assets as at 27 February 2009, from an account provided by the Office of the Protective Commissioner of the transactions conducted by the Protective Commissioner between 22 June 2004 and Mrs Abraham's death, and also from evidence given by Mr Richard d'Apice, that in 2004 Mrs Abraham owned her unit in Darling Point in which she lived, the block of units in McKeon Street, Maroubra which she still owned at her death, a unit in Byron Street, Coogee, shares from which she derived dividends, and term deposits with Westpac Banking Corporation and BT Financial Group. On 8 September 2004, 14 October 2004 and 13 September 2005 the Protective Commissioner redeemed investment funds held with BT Financial Group and Westpac. The amounts of the redemptions were $110,590 on 8 September 2004, $112,526 on 14 October 2004 and $139,125 on 13 September 2005. On 12 July 2006 and 18 July 2006 cheques totalling $471,594.47 were received, representing the proceeds of sale of the Coogee property.
104 When asked about her assets in 2004, Mrs Abraham made no reference to the Coogee unit. There is no evidence as to whether she was deriving rent from the Coogee unit, although it is reasonable to assume that she was. However, Mrs Abraham was able to say accurately that she owned units in Maroubra, her unit at Darling Point, shares, and other money. She so advised Mr d'Apice on 1 July 2004 (para 25 of Mr d'Apice's affidavit quoted at [63] above). On 23 November 2004 Mrs Abraham told Mr d'Apice that she owned her apartment in Darling Point, flats in Maroubra and had cash investments (para 41 of Mr d'Apice's affidavit quoted at [83] above). She did not then refer to owning shares. However, on 3 December 2004 she was able to say that she also received dividends and referred to bank deposits. Although there is no evidence that Mrs Abraham then appreciated the market value of her shares, investment properties and unit, it is clear from Kerr v Badran that such awareness would not be necessary for her to have testamentary capacity.
105 The only substantial omission from her description of her assets was the omission of the Coogee unit. Nonetheless, Mrs Abraham was aware that she owned real estate as an investment and was able to identify the principal asset of that category. Kerr v Badran establishes that the Banks v Goodfellow test may not require that older people know of each particular asset, let alone the value of each asset comprising the estate. Mrs Abraham knew that she had real estate investments and it is a reasonable inference that she knew that she received income from that source. It does not matter that she did not know how much income from real estate investments she received. Nor does it matter that she did not identify the Coogee unit as being one of those investments. In my view the second element of the Banks v Goodfellow test (namely that the testatrix understand the extent of property of which she was disposing) is satisfied.
106 The third necessary element is common to both the will of 3 December 2004 and the codicil of 7 July 2004 (if the will of 3 December 2004 is not admitted to probate). It is that Mrs Abraham have been able to comprehend and appreciate the claims to which she ought to give effect. The only real issue concerns the claim of Mrs Gutkovich. In respect of other claimants, Mrs Abraham did make an assessment as to the amounts she considered each beneficiary should receive. She said that a legacy of $500,000 in addition to the Darling Point unit for Mr Cario was too much, and reduced the legacy to $200,000. She gave further consideration to whether the sum of $200,000 was appropriate and confirmed to Mr d'Apice that in her view it was. The mere fact that Mrs Abraham debated whether the quantum of the legacies was right does not of itself indicate that she had the capacity to make an assessment that the quantum was right, but there is nothing to show that she was unable to appreciate the extent of the claim of Mr Cario on her testamentary bounty. The same observation applies to her debate as to whether a legacy of $200,000 for Mrs Marsden was appropriate. Of course the onus is on the plaintiff to establish capacity, but the fact that Mrs Abraham apparently weighed in her own mind when giving instructions to Mr d'Apice whether the legacies were appropriate, coupled with Dr Wallace's opinion, indicates that she had capacity to weigh the claims of the legatees.
107 The real question is whether Mrs Abraham was able properly to appreciate the claim of Mrs Gutkovich on her estate.
108 In approaching that question I start from the position that Dr Wallace and Mr Richard d'Apice were satisfied as to Mrs Abraham's capacity to make both the will of 3 December 2004 and the codicil of 7 July 2004 (in relation to Mr d'Apice, see affidavit of Richard d'Apice sworn 12 November 2008 at [17] and T45, T54, T55; in relation to Dr Wallace, see T211 and affidavit of Dr Wallace sworn 4 February 2009 at [19]). Mr d'Apice's opinion is of no small weight. He had over 30 years' experience in estate matters. At all points he acted appropriately in referring Mrs Abraham for specialist opinion. He did all that he could do to satisfy himself that the Banks v Goodfellow tests for testamentary capacity were satisfied. He was clearly satisfied that they were as at 23 November and 3 December 2004. He also thought that Mrs Abraham had capacity at 7 July 2004 to revoke the previous gifts to Mrs Gutkovich. Mrs Abraham's lucid responses to his questions were the foundation for those opinions.
109 Although Dr Wallace's notes of his consultation on 17 November 2004 and his affidavit evidence do not demonstrate that he did all that was required to assess Mrs Abraham's testamentary capacity, particularly in the area of determining her ability to understand the general nature of the extent of her estate, his opinion that Mrs Abraham had testamentary capacity is also entitled to significant weight. That is particularly so given that the area in which his evidence of appropriate questioning was deficient is remedied by the evidence of Mr d'Apice.
110 Prima facie, the onus of establishing testamentary capacity is discharged by the evidence of Dr Wallace and Mr d'Apice. However, that would not be so if I were satisfied that Mrs Abraham had told Mrs Gutkovich in December 2003 that she would buy the Toyota motor vehicle for Mrs Gutkovich. If I were satisfied of that fact, the question would arise why it was that from 1 July 2004 Mrs Abraham asserted that Mrs Gutkovich had stolen the motor vehicle. As Mrs Abraham suffered from dementia, was vulnerable to suggestion, and had an impaired memory, I could well conclude that notwithstanding the opinion of Dr Wallace and the evidence of Mr d'Apice, in fact Mrs Abraham was not able properly to appreciate the claim of Mrs Gutkovich on her testamentary bounty. She may have simply yielded to suggestions of others that Mrs Gutkovich had stolen the car and had no memory of having promised the car to Mrs Gutkovich as a gift (although there was no direct evidence of anyone making that suggestion to her). However, if I am not satisfied that Mrs Abraham promised the car to Mrs Gutkovich as a gift, then this ground for challenging Mrs Abraham's testamentary capacity would not arise. (Compare Re Estate of Griffith (dec'd); Easter v Griffith (1995) 217 ALR 284.)
111 Therefore, although the critical question is whether Mrs Abraham had testamentary capacity, and as an aspect of that, whether she had the capacity properly to appreciate and weigh the claims of Mrs Gutkovich on her testamentary bounty, the factual issue of whether or not Mrs Abraham did promise the car to Mrs Gutkovich as a gift is important in determining those questions of capacity. On the issue of whether there was a gift of the car, the evidentiary onus lies on Mrs Gutkovich, notwithstanding that the onus of proving testamentary capacity lies on the plaintiff. Prima facie, as the car was purchased with Mrs Abraham's money, she would be beneficially entitled to the car. The question is whether I am satisfied on Mrs Gutkovich's evidence that the car had been given to her.
112 Counsel for the plaintiff said that that question had already been decided and that Mrs Gutkovich was bound by the finding of the Local Court. Undoubtedly the Local Court judgment creates an estoppel which bound the parties to the Local Court proceeding, namely Mrs Gutkovich and Mrs Abraham. But the present claim for probate is not a suit between Mrs Abraham and Mrs Gutkovich. It is a procedure in rem which decides for the whole world whether or not Mrs Abraham had testamentary capacity. I do not think that an estoppel arises.
113 The only evidence of the alleged gift was from Mrs Gutkovich herself. In such a case, because the deceased is not able herself to give evidence, the court scrutinises very carefully the evidence of Mrs Gutkovich that there was a gift (Plunkett v Bull [1915] HCA 14; (1915) 19 CLR 544).
114 I do not consider Mrs Gutkovich to be a reliable witness. Her evidence on the quantum of payments she received from Mrs Abraham was inconsistent with her submissions to the Guardianship Tribunal and with the Tribunal's account of her evidence to it. It is also inconsistent with the other evidence. From her perspective this was an important issue as behind it lay the contentions advanced by other parties to the Tribunal that she exploited Mrs Abraham. That was not a question before me, but it indicates the importance to Mrs Gutkovich of the topic of how much she was paid. On that topic her evidence was less than frank. Her evidence of not having retained Mr Bush as her solicitor (see para [30] above) was also important on the question of credit, because again the implication was that she exploited Mrs Abraham by having Mrs Abraham pay her solicitor's bill. There may have been any number of reasons why it was appropriate for that bill to be paid by Mrs Abraham, but Mrs Gutkovich's denial that she retained Mr Bush was contrary to other objective evidence and damaging to her credit.
115 There was no corroboration of Mrs Gutkovich's evidence that Mrs Abraham told the salesperson at Toyota to register the car in Mrs Gutkovich's name, as it was her car. According to Mrs Gutkovich, that statement was witnessed both by the salesperson at Toyota and by her daughter and son-in-law. Mrs Gutkovich's daughter, Diana, was present in court during the hearing. She did not give evidence. There was no evidence that her son-in-law, Mr Lekrari, was not available to give evidence. Nor do I accept that it would not have been possible, after making appropriate inquiry, for Mrs Gutkovich to have identified the salesperson before whom the statement was allegedly made.
116 In short, I am not satisfied that Mrs Abraham did make a gift of the car as Mrs Gutkovich deposed. That being so, Mrs Abraham's repeated statements that Mrs Gutkovich had stolen her car do not raise doubts about her testamentary capacity. I do not conclude that Mrs Abraham had forgotten the gift, or spoke in those terms because it was an idea suggested to her by others, because I am not satisfied that there was such a gift.
117 On 1 July 2004 Mrs Abraham told Mr d'Apice that Mrs Gutkovich "turned out to be a thief. She took money from me and she took my car." Mrs Abraham told Dr Wallace on 7 July 2004 that "she stole from me and took my car." On 23 November 2004 she did not tell Mr d'Apice that her reason for leaving nothing to Mrs Gutkovich was that Mrs Gutkovich had taken money as well as the car.
118 It could not be said that Mrs Gutkovich stole money from Mrs Abraham. But Mrs Gutkovich did receive substantial amounts of money from Mrs Abraham in a way which created a large tax liability for Mrs Abraham for unremitted PAYG deductions. She undoubtedly "took" money from Mrs Abraham. The statements made by Mrs Abraham after 18 June 2004 (when Mrs Gutkovich had been dismissed) concerning the money she paid to Mrs Gutkovich do not indicate a lack of testamentary capacity. They indicate only some degree of exaggeration.
119 The third reason given by Mrs Abraham for not leaving any money to Mrs Gutkovich was that Mrs Gutkovich had already received enough. That was a view which could rationally be held.
120 Neither in his reports nor in his affidavits did Dr Wallace specifically address the question whether Mrs Abraham had the capacity to make a proper assessment of whether Mrs Gutkovich deserved to be excluded from her will. Nor was that matter specifically raised in cross-examination. In response to questions asked by me, Dr Wallace said that he did not form an opinion on 7 July 2004 as to whether Mrs Abraham had the capacity to assess rationally whether Mrs Gutkovich had done anything to deserve being removed as a beneficiary. I also asked:
" Q. Considering the position now, having regard to all you saw of her, are you able to express an opinion today as to whether you think Mrs Abraham had the capacity on 7 July to make a rational assessment of whether Galina had stolen from her and taken her car? "