Edwards & Anor v Caldwell & Anor

[2] The plaintiffs are the executors of the 1999 will, while the defendants are the executors of the 1994 will. The defendants are two nephews of the deceased, the defendant, Graham Caldwell, being a significant beneficiary under the 1994 will. The plaintiff, Graham Edwards, with a lady called Joan Binney, replaced Graham Caldwell as a significant beneficiary in the 1999 will. Graham Edwards was a neighbour of the deceased and his co-executor appears to have been someone who also knew the deceased and who lived in the area near the deceased's major asset, a rural property known as "the Nobby".

[3] In early 1994 the deceased's intention was to leave the Nobby to Mr Caldwell as he wanted it to stay in his family. That was his state of mind when he executed the 1994 will. On the evidence there was no doubt at that time that he had the necessary testamentary capacity.

[4] On 28 July 1994 he also executed an enduring power of attorney in favour of the defendants. They did not exercise its powers until 10 February 1998. After the execution of the 1994 will and power of attorney, the deceased, at least since April 1997, had begun to experience episodes of confusion. He had surgery in 1997 to remove a blockage to his left carotid artery to increase the blood flow to the brain, had further surgery to that artery but thereafter began to show confusion, memory loss, less interest in activities he had previously enjoyed, less command of detail and less ability to protect himself. Those conditions are reflected in contemporaneous medical reports including, in particular, a report of 27 October 1997 by Dr Venugopalan, a psychiatrist who, in a letter to the deceased's then general practitioner, Dr Gibson, said that his testamentary capacity was significantly impaired as was his ability to manage his financial affairs. Dr Venugopalan, in expressing that opinion, summarised the normal tests for testamentary capacity expressed, for example, in Banks v Goodfellow (1870) LR 5 QB 549, 565. The general practitioner, Dr Gibson, and the surgeon who had treated the deceased also expressed the view about that time that he had significantly mentally deteriorated or was suffering from worsening confusion.

[5] At this stage the deceased and his wife were living with Mrs Binney, whom they had known for some time and who moved in with them to care for the deceased's wife, Mrs McLelland, in a house jointly owned by the deceased and Mrs McLelland in Toowoomba. In early 1994 Mrs McLelland was admitted to a nursing home but Mrs Binney continued to stay with the deceased in Toowoomba to help look after him. Mrs Binney was a minor beneficiary under the 1994 will but a significant beneficiary under the 1999 will. She was entitled to the residue of the estate equally with Mr Edwards, a residue which was to include the proceeds of sale of the Nobby. There is evidence suggesting that Mrs Binney, in 1997 and 1998, often expressed the view that the deceased was "bonkers" and needed help.

[6] In February 1998 Mrs Binney and the deceased moved to Dalby from Toowoomba to live in a rented property after which there were said to be difficulties with his nephews and other members of his family contacting the deceased except in her presence. Mrs McLelland was then still alive at the nursing home in Toowoomba. She died after her husband.

[7] A Dr Keys, who was a general practitioner in Dalby, noticed cognitive impairment in the deceased on 11 March 1998 and Dr Venugopalan again reported on 19 March 1998, saying that the deceased had improved somewhat, that he did not fulfil the clinical criteria for nursing home care in his present state, was capable of making decisions about his personal and social needs but said that there was still some evidence of impairment of his testamentary capacity. At that stage he was unable to recall the number of bedrooms in the house on his grazing property, did not know the approximate value of his residence in Toowoomba or the amount of money in his bank accounts or the whereabouts of his will. He also incorrectly stated the date of the execution of his will.

[8] Dr Venugopalan told the deceased and Mrs Binney at a consultation on 17 March 1998 that the deceased could not remember the extent of his property, did not know his income or finances and could not change his will. He wrote a letter to that effect to the deceased's then solicitors, Clewett, Corser & Drummond, which he copied to the referring general practitioner, Dr Gibson in Toowoomba, saying that although he was far less confused than in October 1997 he still did not fulfil the clinical criteria for testamentary capacity.

[9] His memory problems and associated personality problems and other disabilities continued according to reports from the Blue Nurses in Dalby and are also reflected in the clinical notes relevant to an admission by him to St Vincent's Hospital in Toowoomba in August 1998 and another admission to Dalby Hospital in the same month.

Dispute over who should manage the deceased's affairs

[10] In October 1998 Mr Justin O'Sullivan of Justin F O'Sullivan & Edgar appears to have begun acting for the deceased and alleged against the defendants, the deceased's nephews, that they had forced him out of his Toowoomba house and tried to stop him going to his farm, an allegation denied by Mr Caldwell.

[11] The deceased continued to display confusion on readmissions to Dalby Hospital in October and November 1998 and was recorded as having medical problems including dementia, poor short term memory, lack of awareness of time and place and occasional disruptive behaviour. In January 1999 Mrs Binney took the deceased to see Dr Venugopalan about the establishment of a separate bank account for the deceased and the making of a new will. Dr Venugopalan told the deceased and her that he could not change his will and also said that the deceased could not identify his relatives and the extent of his property. As a result of that examination Dr Venugopalan completed a functional competence report for the Intellectually Disabled Citizens Council of Queensland ("IDCCQ) where he stated that the deceased had senile dementia since mid 1997, significant impairment to his testamentary capacity with fluctuating cognitive impairment and the expectation of progressive and slow deterioration. He also said that he did not have the capacity to execute an enduring power of attorney.

[12] Then, on 28 January 1999 the deceased attended a meeting with Mr Teevan, a solicitor at Wonderley & Hall. Before this date the deceased had not consulted that firm for any advice. Mr Edwards attended the meeting and gave his consent to act as an attorney for the deceased, having driven him to and from the Oakey office of Wonderley & Hall. No power of attorney was executed then and one infers that Mr Teevan sought a medical opinion about the capacity of the deceased to execute such a document as a brief report from Dr Keys dated 29 January 1999 then appears in the evidence.

[13] There was no suggestion in that report of Dr Keys that he had been made aware at the time of the previously expressed views of Dr Venugopalan. His report is very brief.

"To my questioning he fully understands the meaning of Power of Attorney and its full implications. He states that he wishes to change his current Power of Attorney and in my opinion he is fully capable of understanding the ramifications of this and is capable of thus changing it should he so desire."

[14] He did not swear an affidavit in support of that view and there was no cross-examination about what information he was given at the time but one might infer that, if he had been told of Dr Venugopalan's opinion, he would probably have mentioned it to explain why he disagreed with it.

[15] On 12 February 1999 the deceased did execute an enduring power of attorney in favour of Mr Edwards for financial and personal/health matters. It was witnessed by Mr Teevan and signed by Mr Edwards also on that day. The defendants then received a letter from Wonderley & Hall sent 15 February 1999 advising them that the deceased had executed a fresh enduring power of attorney terminating the previous one held by them.

[16] Clewett Corser & Drummond then wrote to Wonderley & Hall on 18 February 1999 disputing the deceased's capacity to revoke his existing power of attorney or to make a fresh one in the absence of an independent assessment by a specialist geriatrician. They also expressed the view that the deceased was subject to undue influence by Mrs Binney and said that she excluded family members from having access to him except in her presence.

[17] In a tape recorded conversation between the defendants and the deceased on 24 February 1999, in the presence of a nurse from the Blue Nurses Day Respite Centre, the deceased demonstrated confusion and appeared not to realise that he had revoked the earlier power of attorney and appointed a new attorney.

[18] On the same date, 24 February 1999, Dr Keys gave a further certificate referring to the number of times he had examined the deceased over the previous 11 months and saying that, in his opinion, the deceased was capable of fully understanding the implications of creating a new will in spite of some short term memory loss. He went on to say that the deceased would understand fully what he was doing at the time but would not necessarily recall subsequently when exactly he did change it. He did not attempt to address the normal legal tests appropriate to help decide whether somebody has testamentary capacity. Again, there is no indication that he had been given Dr Venugopalan's reports.

[19] On that day Mr Teevan from Wonderley & Hall wrote to Clewett Corser & Drummond demanding that the defendants cease entering on the deceased's farm, alleging they were trespassing. The next day he took instructions for a new will from the deceased with Mr Edwards to be the executor but where the Nobby was to go to Mr Caldwell's son. No such will was executed.

[20] During the earlier part of 1999 there was some discussion among the parties about the need to have the deceased examined in respect of his mental capacity, in the context of his execution of a power of attorney. He was examined on 22 June 1999 by a Dr Oliver a geriatrician, who concluded that despite some cognitive impairment he was "competent to make a decision as to whom (sic) should arrange his affairs". That assessment was conducted in the presence of Mrs Binney and Mr Edwards, in the absence of the respondents and in circumstances where Dr Oliver also shows no sign of having been made aware of the earlier reports by Dr Venugopalan and was not asked to address the question of the deceased's testamentary capacity.

Proceedings about the validity of the 1999 power of attorney

[21] On 28 June 1999 the defendants to this action filed an originating summons in this Court in Toowoomba seeking to set aside the enduring power of attorney dated 12 February 1999. It was served on Mr Edwards who was represented by Justin O'Sullivan & Edgar which later changed its name to Edgar & Wood and continues to act for the plaintiffs. Mr Edwards admitted in those proceedings, that he was acting in the management of the deceased's affairs pursuant to the power of attorney in favour of him. That power of attorney was capable of being exercised not only in respect of the deceased's financial affairs but also in respect of "personal/health" matters.

[22] The application was treated by Mackenzie J as one that could not be determined summarily but which needed to go to trial. It remains undecided to this day. Perhaps its main significance for this case is that it provided the opportunity for Mr Edwards and the solicitors who continue to act for him and Mr Naumann, the second plaintiff, to become fully aware of the reports from Dr Venugopalan and the other allegations made about the deceased's mental state in those proceedings.

The deceased's condition about the time he executed the 1999 will

[23] The other contemporary medical evidence suggest that the deceased during this period continued to suffer from senile dementia, was not oriented in time and place and had a poor short term memory.

[24] He had, apparently, given instructions for the execution of a new will to Mr Teevan of Wonderley & Hall but, on 19 August 1999, Mr Teevan postponed the execution of the will because he was not satisfied "beyond a reasonable doubt as to his mental capacity to understand the contents of what he was to sign". During that conference with the solicitor Mr Edwards and Mrs Binney were both present. There is no evidence that Mr Teevan was given any of the information available to them dealing with the deceased's testamentary capacity or of Mrs Binney's previously expressed views about his mental state.

[25] Four days later the will was executed in circumstances where one can infer that Mr Teevan relied on a certificate of Dr Keys, the report of Dr Oliver and his reading of the judgment of Mackenzie J in adjourning the application in respect of the enduring power of attorney when satisfying himself that the deceased had testamentary capacity. There is no affidavit from Mr Teevan saying that he had satisfied himself as to that issue but that seems to be the reasonable inference from a letter by him of 22 January 2003 that is in evidence.

[26] On 29 October 1999 the deceased was video taped in a conversation between him, Mr Caldwell, and Mr Caldwell's wife and son. The conversation extended over more than an hour and was played before me. The picture it paints of the deceased was that he was very vague, with a poor short term memory and lacked awareness of his nephew's position and the alleged attempts to keep him away from the Nobby. The deceased himself said that his memory was gone and that he did not remember the power of attorney. He does not come across at all as someone meeting the test for testamentary capacity described in Banks v Goodfellow at 565:

"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."

[27] Mr Edwards was himself aware at about that time that the deceased appeared to provide answers to questions dependent upon whom he was talking to, according to his solicitor's statement of 3 November 1999.

[28] Mr Edwards later purported to execute a lease of the Nobby, in favour of himself and his wife, for five years from 1 July 2001 to 30 June 2006 on terms alleged to be uncommercial from the deceased's perspective. This issue has not been litigated in this application but Mr Lee submits that it is significant that there is no evidence of the deceased obtaining independent advice in respect of the entry into that lease with the man who then exercised his power of attorney.

The proceedings seeking probate of the 1999 will

[29] The application for probate in common form of the 1999 will was signed by the plaintiffs on 28 November 2002 but not filed until 18 December 2002. The defendants had already caveated requiring proof in solemn form of any will of the deceased. The reply and answer filed 9 September 2003 made it clear that the plaintiffs' case was that the deceased had testamentary capacity to execute the 1999 will.

[30] The audio tape of 24 February 1999, the video tape of the meeting on 27 October 1999 and a psychiatric report from Dr Mulholland were disclosed by the defendants on 14 November 2003. A transcript of the audio tape had been disclosed previously, on 28 June 1999. The plaintiffs received their own specialist's report from a Dr Powell on about 7 January 2005. She concluded that the deceased did not have testamentary capacity on 23 August 1999 but that report was not served on the defendants until 11 April 2005 with an addendum dated 21 March 2005. The plaintiffs did not indicate that they were not likely to continue to seek probate of the 1999 will until mid 2006 when they indicated their willingness to enter into a draft settlement deed subject to certain conditions. Mr Edwards' lease of the Nobby also terminated on 30 June 2006.

[31] There was further discussion between the parties in the latter part of 2006 in respect of the status of a number of deemed admissions by the plaintiffs in the pleadings where the plaintiffs also inquired about the available evidence of the deceased's capacity at the time of the 1994 will.

The propriety of the plaintiffs' conduct of the litigation

[32] There is a legitimate inference available on the evidence that the deceased was manipulated into executing the 1999 will by Mr Edwards and Mrs Binney when he was clearly incapable of understanding what he was doing and where he was not competent to execute a will. Mr Edwards denied that in his affidavit, however, and was not cross-examined. There was also some contemporary medical evidence, which seems unpersuasive to me in the wider context, on which he and Mr Teevan from Wonderley & Hall were able to rely to be satisfied of the deceased's capacity to execute the will. Mrs Binney did not swear an affidavit. In the circumstances it is not appropriate for me to make any finding based on the inference that they manipulated the deceased into executing the 1999 will.

[33] There is, however, the uncontradicted evidence that on 3 November 1999, shortly after the will was executed, Mr Edwards had concerns about attending a conference between himself, Mr Caldwell and the deceased because of the deceased's apparent readiness to provide answers to questions as to his wishes dependent upon which person he was talking to at the time. Mr Edwards' adoption of the powers given to him under the enduring power of attorney executed earlier in 1999, before the execution of the will, also suggests, in the circumstances known about the deceased's condition then, that he knowingly took on those powers because of the deceased's inability to look after his own affairs.

[34] He also should have known by 28 June 1999 that the reports of Dr Keys and Dr Oliver about the deceased's capacity were, most probably, provided in ignorance of the information then provided to him in the proceedings challenging the power of attorney, notably the reports of Dr Venugopalan. Dr Oliver's report was dated 22 June 1999 and did not refer to Dr Venugopalan's reports.

[35] Those facts coupled with the provision of the information obtained on disclosure in the application relating to the validity of the power of attorney executed in favour of Mr Edwards that occurred on 14 November 2003 and the failure of the plaintiffs to indicate they may withdraw until about the time of expiration of the lease of the Nobby, about 18 months after they obtained the negative advice of their own expert, all suggest to me that the action was not one brought out of a disinterested wish to ascertain whether the deceased's 1999 will was able to be supported.

[36] The contemporary evidence all suggests that anyone in regular contact with the deceased at this time should have known that the action had no chance of success based on their own observations of the deceased. This should have included Mrs Binney who was also in regular contact with Mr Edwards and shared an interest with him as a beneficiary under the 1999 will. In this context it is also worth noting that the deceased also lived with the other co-executor, Mr Naumann, although that was after the date of the 1999 will and was well known to him during the period before and after the will was executed. It is also probable on the evidence that Mr Naumann knew of the earlier proceedings challenging the validity of the power of attorney and was certainly capable of being informed of them by his solicitors. Mr Naumann's solicitor's knowledge of the material disclosed dealing with the deceased's capacity at the time he made the will should also be imputed to him in the absence of evidence to the contrary.

[37] The plaintiffs did not seek to rely upon affidavit evidence from Dr Keys or Dr Oliver whose reports, in the overall context, were not persuasive and were not always directed to the precise issue of testamentary capacity. As I have already said it should also have been apparent to Mr Edwards from 28 June 1999, well before these proceedings were instituted, when the proceedings challenging the power of attorney were served, that those doctors were not provided with all the relevant information as to that issue.

[38] Mr Edwards is also a principal beneficiary under the 1999 will where under the 1994 will he received nothing. The plaintiffs also delayed in obtaining an expert's report themselves and then in disclosing it. In my view the proper inference is that, as was submitted by the defendants, they deliberately courted a substantial risk in instituting proceedings that they knew or, properly advised, should have known were bound to fail. They also continued the proceedings for a considerable period after their own expert confirmed that they could not succeed.

[39] In the circumstances, it is my view that they are not entitled to costs and that they should pay the costs of and incidental to the application and the action to be paid by them personally on an indemnity basis and not from the estate of the deceased. I shall also make the other orders sought in the proposed draft order that were not controversial pronouncing for the validity of the 1994 will and dispensing with the advertising requirements because they have been met in a previous application. The balance of the defendants' counterclaim is stood over to a date to be fixed.