Du Maurier v Wechsler [2001] NSWSC 4 | Case summary

9 Mr & Mrs Fiala came to Australia with their daughters in 1949. They were successful immigrants to Australia. They owned properties in partnership with two persons, Mr & Mrs Lederer. It seems that most of the properties were purchased with the Lederers holding a one half interest and the Fialas the other half interest, the families probably holding their shares between themselves as joint tenants. In any event whether by will or survivorship, Mrs Fiala took her husband's interest in the properties on his death in November 1986. The Fiala/Lederer properties at that time comprised two at Kings Cross and one at Miranda. In addition to these properties, another property at 822 George Street, Sydney was acquired in 1983. It was purchased in the same names as the Fiala/Lederer properties. I accept the evidence that in fact Dr. & Mrs Wechsler were purchasers as to a one quarter share with Mr & Mrs Fiala as to a further one quarter share and Mr & Mrs Lederer as to a one half share. The Wechsler interest was acquired in the name of one of their family companies Hexiva Pty Limited, although all those involved treated it as being an interest held by Katie and her husband Robert. I am satisfied that Katie and Robert - or Hexiva - paid for the twenty-five percent share or undertook the liability in respect of the mortgage arranged to fund the purchase, but that Mr Fiala had some reason for not taking the purchase in their names. In any event, prior to his death Mr Fiala in the presence of his wife, told Mr Winter, his long time solicitor, of the arrangements and instructed him to arrange the transfer of the one quarter share to Hexiva Pty Limited. Mr Fiala died before any such action was taken. After his death, Mrs Fiala signed a transfer of a one quarter share out of her share to Hexiva Pty Limited which transfer is dated 5 May 1986. Mr Winter says that there was delay caused by inaction of the solicitors for Dr and Mrs Wechsler. 10 At the time of the death of her husband, Mrs Fiala was living at Vaucluse and both of her daughters were living in Killara. In 1990 she decided to move to Killara to be nearer her daughters and to purchase a unit at No. 67 Stanhope Road, Killara. Mr & Mrs Du Maurier purchased a unit in the same block on the same floor next to Mrs Fiala. It seems that Mrs Fiala paid for both units but gave to Mrs Wechsler a sum of money equal to the purchase price of the unit purchased for the Du Mauriers. 11 Mrs Fiala had some depression problems after her husband died and after her move to Killara. She was treated by Dr Atlas, who subsequently referred her to Dr Jenneke, a specialist psychiatrist and psycho-geriatrician. He concluded that Mrs Fiala was suffering from agoraphobia and unresolved grief following the death of her husband. He explained to Mrs Du Maurier that desensitisation was the appropriate treatment for the former condition. Mrs Du Maurier said that she did not think that she could take part in this treatment and that her sister would have to do it. Any criticism about this was, I consider, unfounded because treatment involved keeping the disturbed person in the situation which disturbed them. Dr Jenneke said that many people had difficulty with assisting in such circumstances. 12 The accounting for the 822 George Street partnership and what I will call the Lederer/Fiala partnership, which was the partnership in respect of the other real estate holdings, was carried out in the office of Mr Lederer by a Mr Otto Slazenger, he being named as an executor in the second and third wills of the deceased, but having renounced probate of each. The actual formal accounts were prepared each year by Messrs Agoston, Douglas & Partners, Chartered Accountants. In practice what happened was that certain distributions of profits from the 822 George Street partnership were made to the parties in proper proportions but other moneys, being part of the profits from that partnership, were banked to the credit of the Lederer/Fiala partnership, it seems in a cash management account. Distributions were made from that account to Mr & Mrs Lederer and Mrs Fiala. Mrs Fiala generally drew about $4,000 per month for her own purposes and for the most part distributed other moneys to her daughters in equal amounts. In the five years up to June 1995 each of Mrs Wechsler and Mrs Du Maurier received over $1 million by way of gifts. In the accounts of the 822 George Street partnership the moneys paid to the Lederer/Fiala partnership were shown as loans and interest at what seems to have been commercial rates was charged and added to the amount of the loan account each year. By 30 June 1993 the loan account had increased to over $3 million. By that time the 822 George Street partnership building was showing a very good return. 13 The result of this rather extraordinary accounting was that rather than receiving its full share of income from the George Street partnership, Hexiva became entitled to a one quarter share of the amount of the loan account, while Mrs Fiala was giving away to her daughters funds which she received only because they came to her as distributions from the Lederer/Fiala partnership and were at least in part moneys lent by 822 George Street partnership to the Lederer/Fiala partnership. This had no financial impact on the Lederer interests as they had fifty percent of each partnership. Mr Lederer may have been reluctant to change what had been the existing arrangements for other buildings just because Hexiva acquired an interest in George Street. Provided that the Lederer/Fiala partnership assets, and perhaps the assets of the partners themselves, were sufficient to discharge the liability to the 822 George Street partnership, it could not be said that anybody suffered financially except that from the point of view of Hexiva Pty Limited and the Wechslers, as they did not have the availability of funds from their share of profits which could have been used for other investment. They did however have the gifts. 14 It is clear that the problems which subsequently arose were brought about by the accounting procedures adopted for the two partnerships. Dr Wechsler said that he had drawn to the attention of Mrs Fiala the situation with the growth of the loan account and that Mrs Fiala had said that Mrs Holley, who was her accountant, knew about it and that he and his wife would get more from George Street when it was sold. I accept this evidence but I think it clear that Mrs Fiala did not comprehend the problem which it seems she thought was restricted to imbalances in the capital accounts. 15 Matters came to a head in April 1994. By then the accounts of the 822 George Street partnership were available for the year ended 30 June 1993 and showed the loan account standing at $3,043,886 which was an increase of over $800,000 on the previous year. Dr. Wechsler claimed that one quarter of this was due to Hexiva by Mrs Fiala. It is unlikely that could have been correct on any accounting basis because he had agreed to some of the moneys going to the Lederer/Fiala partnership when he was told that partnership needed the money, presumably for the upkeep of some of its assets. Dr Wechsler said that there was a meeting with Mrs Fiala in about the middle of April 1994 and that Mr & Mrs Du Maurier were present at that time when the debt was discussed. Mrs Du Maurier denied this. I find that the discussion took place but not in the presence of the Du Mauriers. I also find that the true ramifications of the problem were not understood by Mrs Fiala. The Wechslers also gave evidence to the effect that there was discussed ways of solving the problem of the debt said to be owed by Mrs Fiala to Hexiva Pty Limited and one method of resolution was by transfer of Mrs Fiala's interest in George Street to them or to one of their companies. Mrs Wechsler said she thought this was discussed before a holiday at Surfers Paradise over Easter 1994. This is not an easy question to determine. Mrs Wechsler was uncertain and she was hesitant rather than free with her answers to questions. Dr Wechsler arranged for an estimate of the sale price of the George Street property to be obtained from Messrs Jones Lang Wootton and his accountant, Mr Hurwitz, referred to this price in a letter to Dr Wechsler dated 21 April 1994 suggesting how the matters which were giving rise to problems could be adjusted among the partners stating that he understood the question of transfer of interests had been discussed between the Wechslers and Mrs Fiala. Nevertheless the later complaints of Mrs Fiala about what she thought was an attempt to obtain her interest makes it difficult to accept there was any detailed prior discussion. I consider the position to be that there was some discussion about transfer but that this was never understood by Mrs Fiala as other than giving some increased entitlement to the Wechslers when 822 George Street was sold. 16 On 24 April 1994 there was a meeting in the evening in Mrs Fiala's unit attended by Dr & Mrs Wechsler and Mr Hurwitz. Mrs Fiala had told Mrs Du Maurier that this meeting was to take place and she had appeared concerned about it. There was some suggestion in the evidence that Mr & Mrs Du Maurier were present throughout this conference but I find that they were not. The suggestion they were was unconvincing and neither Mr Hurwitz nor Mrs Wechsler were able to say definitely that they were. I accept the evidence of Mrs Du Maurier that her mother rang her in an emotional state asking her to come in quickly because she was being told that she owed a great deal of money to the Wechslers. The evidence makes it quite clear that Mrs Fiala was shocked and upset when she was told the amount of the debt. She was also shown the letter from Mr Hurwitz which proceeded to set out figures on the basis that the one quarter interest held by Mrs Fiala in George Street would be transferred to the Wechslers and she was clearly disturbed about this as well. As I accept the clear evidence that Mrs Fiala was shocked and upset as a result of the meeting this is another reason not to accept that she had at an earlier date been happy to consider a transfer of her interest in George Street to the Wechsler interests, but that she changed her mind about this later. I should add that it was in the interests of the Wechslers to obtain the fifty percent interest in the George Street property as it was producing a very high income at the time. On the other hand it would have been detrimental to Mrs Fiala to dispose of her interest as it was producing a considerable part of the income which was enabling her to make the gifts which she was making to her daughters. The outcome of this case is not determined by whether there was a significant meeting before that on 24 April 1994. 17 Whatever her feelings of shock, Mrs Fiala did not stop making gifts to her daughters and she gave each of them $20,000 on about 18 May 1994. By that time Mr Winter and Mrs Holley had met and discussed the debt but no firm conclusions had been reached, although there can be no doubt that Mrs Fiala accepted that she was indebted to Hexiva Pty Limited whether or not that was strictly the case. The evidence establishes that she accepted the debt, and accepted that she owed money to Hexiva, although she would have considered Hexiva to be the Wechslers, but she was extremely unhappy as to how this came about and the attitude of the Wechslers or particularly Dr Wechsler as to this. She thought that some of the blame for her predicament came about as a result of Mrs Holley not warning her of the true position and as a result of this she decided she would dispense with the services of Mrs Holley and engage Mr Peter Vickers, an accountant, to look after her affairs instead of Mrs Holley. This happened in June 1994, Mr Vickers having been introduced to her by Dr Wechsler as somebody who was independent who could look after her properly and be "her man". The deceased came to doubt this but nevertheless there can be no criticism of the Wechslers for the change of accountants. 18 Having accepted the debt Mrs Fiala arranged for her next payment from the Lederer/Fiala partnership, which amounted to $250,000 to be made to Hexiva Pty Limited at the beginning of June 1994. She made further gifts of $50,000 each to her daughters towards the end of June 1994 although she had been told that this was not a good course and that the money should be applied towards reducing the Hexiva debt. She did not agree to that because once she had decided to give $50,000 to Mrs Du Maurier she thought it proper to maintain the equality which she had always maintained up to that date and give her daughter Katie the same amount. It is right to say that up to that time equality was carefully maintained. Mrs Du Maurier regularly went with the deceased on visits to family members in Israel. For the most part Mrs Du Maurier paid the costs for these trips and was reimbursed by her mother and then on their return an amount equal to the costs involved with Mrs Du Maurier's visit was paid to Mrs Wechsler. The last of the equal gifts was made on 1 November 1994 when each daughter received a cheque for $10,000. 19 From April 1994 the relationship of Mrs Fiala with Mrs Wechsler and also with Dr Wechsler deteriorated. Mrs Fiala stated to Dr Wechsler and her daughter Mrs Wechsler and to others in whom she was confiding that she considered that she should have been warned about the increasing debt at the time when she was making gifts to her daughters and she was upset that she was expected to pay interest. To put it simply, her view was that her daughter Katie had two pockets into one of which she accepted gifts from her mother and into the other of which she expected to have paid amounts which should have gone to Hexiva Pty Limited with interest on those amounts. The Wechslers on the other hand were obviously happy to get the very generous gifts which were being made to Mrs Wechsler, although clearly it would have been far more appropriate if smaller gifts were made to each daughter and moneys paid to Hexiva Pty Limited as they ought to have been. 20 A constant complaint of Mrs Fiala during this period was that Dr Wechsler had not given her a receipt for the $250,000. He said that the word used was a "chesbon" which meant more an account or a reconciliation and there was no point in this because the amount would not have been agreed. Whether or not that is correct, it is perfectly clearly from the evidence of Mrs Wechsler that her mother was on occasions talking about a receipt and complaining about not having a receipt and that she was satisfied when finally she got one six months later. 21 Between the end of June 1994 and December 1994 there was considerable discussion about the claimed debt. Mr Vickers was endeavouring to arrange with the accountants for the partnerships adjustments in the accounts to reflect what he considered to be the correct position; those adjustments were in part made in the 1994 accounts resulting in the capital account of Mrs Fiala being reduced to nil, which seems only to have the result of enraging her. In any event it was ultimately agreed that the adjustments should be reversed, although Mr Vickers said they were not in accordance with his suggestions and he said that it had been agreed by Mr Agoston that the position would be properly shown in the accounts for the year ended 30 June 1995. Mrs Holley said that the problem could have been solved by adjustments to the capital accounts in the 822 George Street partnership, but whether that was so or not, none of the interested parties accepted that method of adjustment. 22 There was considerable correspondence between Dr Wechsler and Mr Winter and Mr Vickers and Mr Winter during this time. Mrs Fiala told Mr Winter on 22 November that she had agreed with Dr Wechsler that the debt was $750,000, that it was to be reduced by agreement to $650,000 and that as $250,000 had already been paid, the balance stood at $400,000 which she would pay when she was able to do so, without any interest being payable on that amount. At the same time she told Mr Winter that she wished to change her will so as to provide that on her death her unit at Killara be sold and the proceeds be divided among her grandchildren equally. Mr Winter prepared a will to that effect but it was never signed. On 23 November 1994, Dr Wechsler rang Mr Winter and said that the amount outstanding on 30 June 1993 was $750,000 but that he should wait for further details from Mr Vickers because it was more complicated than Mrs Fiala had told him (Winter). Five days later Mrs Fiala rang Mr Winter most distressed, said she was desperate and asked him to see her daughter Katie, who went in on the same day to say that she was torn between her husband, her sister and her mother, and wanted all problems in the family resolved. At about the same time on 28 November Mr Vickers wrote to Mr Winter giving an historical summary of the problems with the accounts. That letter included reference to what was described as "another problem area" in connection with the Astoria Hotel. Although he first denied having even seen this letter, that particular paragraph was inserted into the letter on the suggestion of Dr Wechsler as was another paragraph as to the matters of calculation of interest on the partnership loan accounts. Both these matters inserted at the suggestion of Dr Wechsler caused much anger in the deceased, and it seems that as a result of her anger about the letter in general she decided to dispense with the services of Mr Vickers and engaged Mrs Holley to look after her affairs again. She told Mr Winter she was enraged by the letter and it is likely that the letter caused her to think Vickers was not "her man". 23 On 7 December 1994, Mr Hurwitz calculated that Mrs Fiala's debt to the Wechslers was $629,150 as at 30 June 1994 after giving credit for the $250,000 paid. Even then there were said to be some problems with interest, although Dr Wechsler had agreed to a reduction of $100,000 in the debt by recalculating interest at a lower rate, bringing about a reduction of $400,000 in the debt due by the Lederer/Fiala partnership to the 822 George Street partnership. This seems to have been a unilateral decision and the evidence is silent on whether this adjustment was ever reflected in the accounts. The next day, there was a conference at Mr Winter's office attended by Mrs Fiala, Mrs Du Maurier, Mr Lederer, Mr Slazenger and Dr Wechsler. According to Mr Winter, and I accept this evidence, agreement about the fact and amount of the debt was reached and he was requested to prepare minutes of the meeting. At the meeting Mr Lederer expressed the view that Hexiva had no real claim because the gifts made to Katie should be taken into account. There was a great deal of cross-examination on this subject during the action, but I do not think it took the matter very far, except to bring some understanding about the anger of the deceased because she thought it wrong for her daughter to be accepting gifts and then demanding money - or at least interest on a debt - at the same time. Even after the meeting and what was said to be an agreement as to amount there was further disagreement, Dr Wechsler saying, among other things, that his acceptance was conditional upon equality of gifts being maintained and that the amount which he had agreed to accept was not $500,000 but $529,150. According to Mr Winter, Mrs Fiala eventually agreed to that figure, but not any condition as to future gifts. The minutes were amended to take this into account and signed by all those interested who were present. Of the sum of $529,150, $29,150 was paid in 1997, but no other payments were made in spite of Mrs Fiala having agreed to make payments as she could. The meeting was the last occasion Dr Wechsler met with the deceased. 24 On the same date as the meeting, Mrs Fiala told Mr Winter that she did not intend to sign the draft will which he had prepared but she would give him fresh instructions, which she did by telephone on 19 December 1994, when she told Mr Winter that the relationship between her daughters was strained and she was thinking of appointing Mr Du Maurier and Mr Slazenger as executors and would speak to them to see if they agreed. She said that she had decided that the jewellery and furniture were to be divided equally between her daughters and the residue 60% to Mary and 40% to Katie. Mr Winter said that he asked Mrs Fiala about this apportionment and she said "I love my daughters equally but Mary is looking after me day and night. They do everything for me and I feel I must reward her efforts in some way". A few days later Mrs Fiala sent to Mr Winter a note from Dr Atlas dated 21 December 1994 which said that Mrs Fiala "has been suffering from panic disorder and takes medication when required. She does not have senile dementia". The evidence of Dr Atlas as to this and a certificate which he prepared later was that Mrs Fiala had requested it and that it had been suggested to Mrs Fiala by Mrs Wechsler that she was senile. Although Mrs Wechsler denied this I find that the deceased made that statement to Dr Atlas. I do not accept the evidence of Mrs Wechsler that she did not make such statements to her mother. On 3 January 1995 at 8.15 am Mrs Fiala telephoned Mr Winter and said that she wished to change the draft of her will and that Mrs Du Maurier was to get 70% and her daughter Katie 30%. Mr Winter advised that that would cause problems and she said that she had made up her mind and that "Katie and her husband are nasty to me". At 5.00 pm on the same day Mrs Du Maurier rang Mr Winter at home and said that she had been told of her mother's intentions, she did not want 70%, but would accept 60%, having been told that would be the provision which would be made for her some time earlier. Mrs Fiala was present during this conversation and she then spoke to Mr Winter stating that the proportions of 60% and 40% were to remain, that she had had an argument with her daughter the day before, which had caused her to make the telephone call early in the morning, but that she had calmed down later in the day. On 12 January 1995 Mrs Fiala told Mr Winter that she wished to give her home unit at Artarmon to Mrs Du Maurier and instructed him to prepare the papers. On 18 January 1995 Mrs Fiala executed the will for which she had given instructions (the second will), in the presence of Mr Winter and Mr Amos as witnesses. She also signed a power of attorney in favour of Mrs Du Maurier, although Mrs Du Maurier said that this was never acted upon as she had authority to operate on her mother's bank account. 25 While the original response as to the difference in proportions was made by the deceased in response to a question from Mr Winter, the wording of clause 6 and the decision to include it in the second will was made, according to Mr Winter, by the deceased and I accept that evidence. There was never any suggestion made to Mr Winter that Katie had cheated her mother or deceived her mother. 26 Mrs Fiala spoke to Mr Winter on 9 February 1995 stating she was considering some changes to her will, but he should wait for written instructions. Nothing further came of this. 27 During 1995 the reference to the Astoria continued to weigh on the mind of Mrs Fiala, who was continually discussing this with Katie who asked her husband to do something about it. He evidently felt there would be no purpose in this but ultimately wrote in August saying "I know nothing about a problem with Astoria". This was not what the deceased wanted. What she wanted was a statement that there were no problems. Ultimately on 21 August Dr Wechsler wrote to Mrs Fiala stating "there are no problems with Astoria". He sent that with some letter of explanation to some extent blaming Mr Vickers for it although it is to be remembered that he was responsible for the problem being raised by Vickers. 28 Mr Winter retired from active practice as a consultant to Messrs Dunhill Madden Butler in 1995 and Mr Hamilton of that firm took over the affairs of Mrs Fiala, although Mr Winter remained available to give advice and some assistance. Mr Hamilton had a conference with Mrs Fiala, the Du Mauriers and Mrs Holley on 5 September 1995 when the various partnership matters were discussed. Mr Hamilton was generally aware of these matters because he had access the file, and he knew about the agreement in respect of the $529,150. At the conference Mrs Fiala expressed concern about some claim that Dr Wechsler might make on her and she showed Mr Hamilton a letter dated 1 September 1995 from Dr Wechsler stating that apart from the $529,150 there was no money payable to the Wechslers or any of their companies. In any event Mr Hamilton pointed out that the agreement encompassed in the minutes covered all claims and that no further claim could be made by Hexiva. At that meeting Mrs Fiala gave instructions for a change to her will so that Mrs Wechsler would get Mrs Fiala's interest in the Bankstown property free of debt and that $500,000 would be left to the grandchildren in equal shares. There was discussion about a challenge to the will by Mrs Wechsler. Mr Hamilton prepared a draft of the new will and forwarded this to Mrs Fiala on 3 October with a letter giving quite a full explanation of it and of the rights to persons to challenge wills under the Family Provision legislation. 29 On 17 October Mrs Fiala and Mrs Du Maurier attended Mr Hamilton at Messrs Dunhill Madden Butler when the third will was executed. Leaving aside the defence raised there is no suggestion in this case that any of the wills or the codicil were not duly executed so that a grant in solemn form can be made of whatever documents it is appropriate to admit to probate. 30 In January 1996 Mrs Fiala attended Mr Hamilton again, discussing a change to her will under which the share which would have gone to Mrs Wechsler would go to her children. The explanation she gave for this was that the relationship with Mrs Wechsler was bad, in that there were constant fights between them and she got upset when she saw her. Mr Hamilton prepared a draft will in accordance with these instructions and sent it to Mrs Fiala with a letter strongly advising her against making the change envisaged. On 6 March 1996 Mrs Du Maurier told Mr Hamilton that Mrs Fiala's instructions were that she would not go ahead with the new will. During 1997 there were some further discussions between the deceased and Mr Hamilton which were not of great significance. On 8 June Mr Hamilton called to see Mrs Fiala at her home because Mrs Du Maurier had told him that she was still upset particularly with Dr Wechsler. They discussed her being upset about the bitterness between herself and Mrs Wechsler but the intention of the meeting was really to try to settle Mrs Fiala down. By this time Mrs Fiala had been diagnosed as having incurable cancer and had not a great deal of time to live. 31 In early November Mrs Du Maurier telephoned Mr Hamilton to say that Mrs Fiala was having trouble with one of Mrs Wechsler's children, Benjamin, who had upset her and she had thrown him out of the house. Mrs Fiala then spoke to Mr Hamilton and said that she wanted the Wechsler children to have their share when they were twenty eight. He suggested that twenty-eight should be put in as an age for all the grandchildren, rather than twenty-one, although he did not recommend the change. Subsequently this age was changed to twenty-seven, perhaps to benefit the Du Maurier children, as the youngest was twenty-six. In any event Mr Hamilton prepared a codicil which was duly executed by Mrs Fiala at her home on 19 November 1997 in the presence of Mr Hamilton and a Mrs Vahtrick, who lived nearby. The day before the codicil was signed Mrs Du Maurier had sent to Mr Hamilton a copy of a medical certificate from Dr Atlas which stated that Mrs Fiala "is in a good state of mind and fully responsible for her decisions". In evidence Dr Atlas said that both certificates were given at the request of Mrs Fiala and that she had asked for them because of statements made by her daughter as to her capacity. It was shortly after the signing of the codicil that Mrs Fiala died on 3 December 1997. 32 A few days after Mrs Fiala died the Wechslers made an appointment to see Dr Jenneke. In spite of their evidence it is clear the purpose of this was to discuss the mental state of Mrs Fiala and her ability to make a will. 33 Dr Jenneke was, I thought, an impressive witness. In his report of 29 June 1999 the following appears on page 2: During the consultation on the 08/08/95 Mrs Fiala was very distressed because of a conflict with her son-in-law. She had received distributions of profits from a company in which she had shares. She was subsequently informed that the accountant had made an error and that she was only entitled to half of the amount given to her as the other half was due to her son-in-law. She was unable to understand how this could have occurred. She was extremely upset as she was now called upon to repay her son-in-law his share as well as interest on the amount. She had distributed some of the money given to her to her two daughters. Mrs Fiala during this consultation requested a statement from me that she was sane and that her "brain was working". In my opinion Mrs Fiala at the time was of sound mind and able to make rational decisions. There was no evidence at the time that she suffered from delusions or was psychotic. In addition there was no evidence of any intellectual deficits eg. dementia. In my opinion Mrs Fiala's perception at the time that she was a victim of an error of judgment or even deception was not a delusion. 34 Mrs Du Maurier accepted that her mother was angry with Mrs Wechsler. Nevertheless she said that her mother wished to be reconciled with her daughter and the reason that this was not brought about was that she wanted Katie to sit down and talk to her quietly but Katie was always in a rush, partly because, as Mrs Du Maurier acknowledged, she was busily engaged in her real estate agency business. There was evidence that Mrs Wechsler, when asked for explanations, said that the deceased would have to ask her husband, which she was not prepared to do. There is no doubt whatever that Dr Wechsler made the position worse by his bringing up through Mr Vickers, the question of the Astoria debt and the question of the interest rate and he also made the position far worse by his refusal to give a receipt, or an account, in respect of the $250,000 repayment. It is also clear that Mrs Fiala had difficulty in coming to terms with the idea that she owed money to Hexiva because her view was that you owed money if you borrowed it and she had not borrowed any money so far as she understood the position. It is also clear that she was upset from the start and remained upset about the fact that interest was claimed to be payable on the debt, albeit that in the long run she agreed to pay it, Dr Wechsler having reduced it by $100,000. Additional facts 35 There is no doubt that the relationship between the deceased and Mrs Wechsler changed after April 1994. There is also no doubt that the relationship between the deceased and Dr Wechsler changed and that any personal contact between them came to an end at the end of 1994. During conversations between the deceased and Mrs Du Maurier the question of the partnership accounts and the debt often arose and that the anger of the deceased in not being advised about the full implications of the debt at an earlier stage when she was making gifts to her daughters and in being asked to pay interest on the amount of the debt was a constant topic of conversation. Another constant complaint was the failure of Dr Wechsler to give a receipt for the $250,000 and the suggestion, which was really put forward by him, of some possible problems with the Astoria, which in the deceased's mind could easily give rise to some other claim. There is no doubt that when the deceased raised her concerns and her lack of understanding about how the debt arose with Mrs Wechsler she was told that Robert would have to explain it, but he never appeared to explain it to her satisfaction. That is hardly surprising in view of the matters to which I have drawn attention earlier in this judgment. There is no doubt that the deceased felt that she had been mislead, at least by Dr Wechsler, by his allowing her to continue to make gifts to Mrs Wechsler without drawing attention in a way she understood to the problems with what was described as the debt. 36 One of the significant items of evidence relied upon by Mrs Wechsler was notes which the deceased wrote at various times after 1994. These were writings which were never given to either of the Wechslers by Mrs Fiala but which were in fact handed over to the Wechslers by Mr Du Maurier after the death of the deceased. To a large extent these are really diatribes against Dr Wechsler; they constantly refer to the unhappiness of Mrs Fiala, the fact that Dr Wechsler allowed the money to be paid to his wife, without bringing to the attention of Mrs Fiala what he considered the problem with the debt, the refusal to give a receipt for the $250,000, the desire of the Wechslers to obtain Mrs Fiala's interest in the George Street property and statements that she, Mrs Fiala, was the one who had taken the Wechslers in as partners in George Street. While this last statement was incorrect it is true that the co-operation of Mrs Fiala was required to get Hexiva noted on the title as registered proprietor as to a one quarter interest and in fact Mrs Fiala always accepted they were entitled to that interest. There are also in evidence letters written by Mrs Wechsler to her mother sometimes with the help of her husband, setting out her sadness about the accusations made against her and her husband and her mother's unwillingness to accept that the accusations were incorrect. These are sad letters, honestly written which go to support the claim that at least Mrs Wechsler thought that Mrs Fiala could not be shaken from her views as to the conduct of the Wechslers. Dr Jenneke saw the notes shortly before he gave evidence. His opinion was that they were the product of anger not delusion. 37 There is also evidence from the two children of Dr & Mrs Wechsler, Julie and Benjamin, as to statements made by their grandmother about their parents. These conversations with the grandchildren over a period between 1994 and 1997 involved serious attacks on Dr Wechsler, although there was criticism of Mrs Wechsler as well. Both Julie and Benjamin knew that they were beneficiaries under the will of the deceased. Benjamin Wechsler denied that he had said to his grandmother that he would be rich the next year and that this was the reason she threw him out of the house, and which brought about the change of the vesting age in the codicil. He said that the reason was that he had made some criticism of Mrs Du Maurier saying that if she was the good person she was held out to be then she would help the situation in the family. It is possible that statement was made as well, but I find there was some mention of coming into money which angered the deceased and caused her to change the date at which the grandchildren would become entitled to their share. Pleaded claims and relevant law 38 As I have said the plaintiff, Mr Du Maurier makes alternative claims. In essence he claims probate of the 17 October 1995 will and the codicil thereto, but failing that probate of the January 1995 and failing that probate of the March 1986 will, but in that case to the two sisters. Mr Du Maurier is the sole plaintiff, the other executor named in the later documents having renounced probate. Mrs Wechsler who has lodged a caveat is the first defendant and Mrs Du Maurier the second defendant, but she supports her husband's claims, so that Mrs Wechsler is the only real defendant and contradictor. While on the pleadings the allegation in the statement of claim that the deceased knew and approved the contents of the relevant documents is denied, that was in fact not an issue raised on the hearing. It tends to arise, as I have said before, because of the allegation of knowledge and approval in the statement of claim which need not be made. The only defence relied upon is that raised in paragraph 15 of the defence which is set out hereunder: In answer to each of the First Claim, Second Claim and Third Claim: 15. The first defendant says that the deceased at the time of making her alleged wills or either of them, and at the time of executing her alleged codicil was not of sound mind, memory and understanding by reason of the facts that: (a) at that time, the deceased had been suffering from a delusion that the first defendant and her husband had somehow cheated her or dealt with her improperly; (b) at that time, the deceased's said delusion was sufficiently significant to affect her judgment in dealing with persons who would be normally expected to take under her will; (c) at that time, the deceased was, by reason of the said delusion, incapable of understanding the nature of the act of execution of a will, the extent of which property of which she was disposing; and in particular the claims to which she ought to give effect; (d) the deceased was so obsessed and deluded about her family and various partnership dealings between and among members of her family and others that it caused her irrationally to favour the second defendant and to leave the first defendant the smaller proportion of the residue. The deceased's irrational and deluded belief that she was being cheated was one from which she could not be shaken and it occupied her mind to such an extent as to cause her to lose a proper sense of how to dispose of her estate. 39 It was accepted that the case fell to be determined on the question of testamentary capacity by and within the principles laid down in Banks v Goodfellow LR 5 QB 549. At p565 Cockburn CJ in discussing the existence of testamentary power said: It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and with a view to the latter object, that no disorder of the mind shall 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. 40 When discussing delusions in terms of testamentary capacity, it is generally accepted that delusion is a belief not capable of rational explanation or amenable to reason; or a fixed and incorrigible false belief which the victim could not be reasoned out of: Bull v Fulton (1942) 66 CLR 295 at 339. It does not necessarily follow that for this test to be satisfied there must be evidence of some psychotic disorder, although the medical evidence establishes that a psychiatrist would say that there can be no delusion in the absence of a psychotic disorder. That was the evidence of Drs Jenneke and Atlas, both of whom said that Mrs Fiala has no psychotic disorder and therefore she did not suffer from delusions. Nevertheless what I have described as a delusion does generally fall within one of the definitions of delusion set out by Dr Jenneke from the Diagnostic and Statistical Manual of the American Psychiatric Association, namely: a false personal belief based on incorrect inferences about external reality and firmly sustained despite of what almost everyone believes and in spite of what constitute incontrovertible and obvious proof or evidence to the contrary. The belief is one not ordinary accepted by the members of a person's culture of sub-culture.

Du Maurier v Wechsler

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Judgment (10 paragraphs)

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