Hobhouse v Macarthur-Onslow

Supreme Court of NSW|2016-04-21|Before: Robb J

19 Osborne v Smith (1960) 105 CLR 153 Pates v Craig; Estate of JJ Cole (NSWSC, unreported, 28 August 1995) Petrovski v Nasev; Estate of Janakievska [2011] NSWSC 1275 Public Trustee (WA) v Brumar Nominees Pty Ltd [2012] WASC 161 Re Estate of Stanley William Church [2012] NSWSC 1489 Re Estate of Tsilfidis; Stavrakakis v Tsilfidis [2015] NSWSC 1720 Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 Tyrrell v Painton [1894] P 151 Varma v Varma [2010] NSWSC 786 Worth v Clasholm (1952) 86 CLR 439 Texts Cited: Mason and Handler, Succession Law and Practice New South Wales (LexisNexis Butterworths) Category: Principal judgment Parties: Katrina Julia Denzil Hobhouse (plaintiff) Lee Macarthur-Onslow (first defendant) Perpetual Trustee Company Limited (second defendant) John Ashton Beardow (third defendant) Stephen John Rogers (fourth defendant) Andrew William Martin (fifth defendant) Representation: Counsel: M S Willmott SC/M Gorrick (plaintiff) M Walton SC/M Sneddon (first and fourth defendants)

Solicitors: Woolf Associates (plaintiff) Bartier Perry (first, third, fourth and fifth defendants) Diamond Conway (second defendant) File Number(s): 2013/231129 Publication restriction: None

The parties

The plaintiff, Lady Katrina Julia Denzil Hobhouse, is the daughter of Lady Dorothy Wolseley Macarthur-Onslow, who died on 10 May 2013.
The first defendant, Mr Lee Macarthur-Onslow, is the brother of the plaintiff, and the son of Lady Macarthur-Onslow. The deceased had no other children.
The plaintiff, the first defendant and Perpetual Trustee Company Ltd (Perpetual), which is the second defendant, were nominated as the executors of the deceased under her will dated 14 July 1988 (1988 will).
The deceased executed a later will on 15 October 2004 (2004 will).
The executors nominated in the later will were Mr Macarthur-Onslow, and the third to fifth defendants, who are respectively Mr John Ashton Beardow, Mr Stephen John Rogers and Mr Andrew William Martin.
Sir Denzil Macarthur-Onslow was Lady Macarthur-Onslow's husband, and the father of Lady Hobhouse and Mr Macarthur-Onslow. Sir Denzil died in 1984, at the age of 80, after suffering from Alzheimer's disease.

The parties' claims

By her amended statement of claim filed on 25 July 2014, the primary relief claimed by Lady Hobhouse is an order that probate of Lady Macarthur-Onslow's 1988 will be granted to herself and the first and second defendants.
Mr Macarthur-Onslow, Mr Rogers and Mr Neil Robert Hillman have filed a cross claim on 27 June 2014, in which they seek an order that probate of the 2004 will be granted to them in solemn form. This application is made on the basis that Mr Beardow and Mr Martin are unwilling to act as executors, and Mr Hillman was appointed by the will as an alternative executor. For the sake of simplicity, as the cross claimants are in the same interest as the defendants, I will generally refer to them all as the "defendants", at least where there is no particular reason to distinguish between the parties other than the plaintiff.
Lady Hobhouse filed an amended defence to the cross claim on 27 August 2014, in which she pleaded that, at the time Lady Macarthur-Onslow made the 2004 will, she lacked testamentary capacity; and furthermore that she did not know and approve the contents of the will.
Lady Hobhouse also raised a defence that the deceased was subject to undue influence at the time she made the 2004 will. The court was informed by senior counsel for Lady Hobhouse at the commencement of the hearing that she abandoned her claim based upon undue influence.

Additional issue

The parties' pleadings raised the issue of whether probate should be granted of the 1988 will or the 2004 will.
However, at the end of his final oral submissions, senior counsel for Lady Hobhouse raised the possibility that, if the court determined that Lady Macarthur-Onslow did have testamentary capacity at the time she executed her 2004 will, and she knew and approved of some parts of that will, but not others, the court could admit to probate the parts of the 2004 will of which Lady Macarthur-Onslow knew and approved, and excise those parts of which she did not know or approve. I raised this issue with senior counsel for the defendants, and the course that emerged was that I permitted the parties to deliver supplementary written submissions on the issue.
Lady Hobhouse's submissions canvassed in detail the relevant authorities; but she ultimately adopted the position that, on the facts of the present case, the court should wholly pass over the 2004 will, and only admit the 1988 will to probate.
The position adopted by the defendants was that they maintained their contention that the 2004 will should be admitted to probate in its entirety; but they submitted that, if the court found that Lady Macarthur-Onslow had testamentary capacity, but the evidence did not overcome any suspicion that she did not know and approve the whole of the provisions of the 2004 will, the only parts of the 2004 will that were at risk of excision were cll 16(a)(i) and (ii) and 17(a)(i) and (ii).
Both parties' additional submissions appear, as I read them, to accept the possibility that the court could admit the 2004 will to probate, with identified provisions excised, notwithstanding the terms of the pleadings.

The deceased's 1988 will

On 14 July 1988, Lady Macarthur-Onslow executed a will, the material parts of which are as follows: THIS IS THE LAST WILL AND TESTAMENT of me DOROTHY WOLSELEY MACARTHUR-ONSLOW of Mount Gilead, Campbelltown in the State of New South Wales, Grazier. 1. I REVOKE all former Wills and testamentary dispositions heretofore made by me and declare this to be my last Will. 2. I APPOINT PERPETUAL TRUSTEE COMPANY LIMITED of 39 Hunter Street, Sydney, my son LEE MACARTHUR-ONSLOW and my daughter KATRINA JULIA DENZIL MACARTHUR-ONSLOW Executors and Trustees of this my Will. 3. I DECLARE that in the interpretation of this Will and in the administration of my estate: (a) The expression "my Trustee" shall mean and include the Executor, Executors, Trustee and Trustees for the time being hereof whether original or substituted; (b) "PERPETUAL" is the Perpetual Trustee Company Limited. (c) "LEE" is my son the said LEE MACARTHUR-ONSLOW; "KATRINA" is my daughter the said KATRINA JULIA DENZIL MACARTHUR-ONSLOW; (d) "HOME UNIT NO. 31B" is my Home Unit known as No. 31B at No. 11 Sutherland Crescent, Darling Point, including the Carport used therewith; (e) "Kalemon" is Kalemon Investments Pty Limited (f) "Mount Gilead" is Mount Gilead Pty Limited; (g) "1972 Trust" is the Discretionary Trust dated 23rd November 1972 therein referred to as the "The Mount Gilead Trust"; (h) "Nominated Director" is the Officer of Perpetual who is appointed and is acting at any particular time as a Director of either Kalemon or Mount Gilead. ... 6. I GIVE AND DEVISE to KATRINA my Home Unit No. 31B and this gift and devise shall include all furniture and domestic and household effects (if any) which belong to me at my death and are situate in the Home Unit. ... 9. I GIVE AND BEQUEATH all shares held by me at my death in Kalemon (hereafter "my Kalemon shares") to my Executors and Trustees (Perpetual, Lee and Katrina) and I DIRECT that the provisions and stipulations as hereafter contained shall apply in relation to my Kalemon shares namely:- (a) Perpetual and such one or more of Lee and Katrina as are living at my death and thereafter shall hold my Kalemon shares as my Executors and Trustees ("my Trustee") upon and subject to the trusts hereafter contained. (b) I DIRECT that my Trustee shall adopt the usual procedure in applying for and obtaining transmission of the Kalemon shares in the books of Kalemon in the order appointed by this Will namely, Perpetual, Lee and Katrina. (c) I DIRECT my Trustee to take such action as may be appropriate to arrange for an Officer of Perpetual to be appointed from time to time as a Director of Kalemon to act as such with such of Lee and Katrina as may be Directors from time to time. And I express the wish that both Lee and Katrina will from time to time co-operate with Perpetual in arranging such appointment. And as provided by Clause 3 of this Will any Officer of Perpetual so acting from time to time is called "Nominated Director". (d) I EXPRESS the wish that the Nominated Director of Kalemon shall assist Lee and Katrina in the performance of the duties and responsibilities of Kalemon as Trustee of the 1972 Trust. And I request that if any difference arises at any time between Lee and Katrina as Directors of Kalemon in relation to the administration of the 1972 Trust or the exercise of the discretions conferred on or vested in Kalemon as the Trustee thereof in regard to the distribution of income or capital or the fixing of a Vesting Date or any other matter on which Kalemon has a power or discretion under the provisions of the 1972 Trust Deed then the Nominated Director shall use his best endeavours to resolve any such difference in an amicable manner and shall if necessary use his vote as a Director to enable a decision to be taken on any matter on which any such difference may have arisen. (e) I REQUEST that if at the date of my death Kalemon is the holder of shares in Mount. Gilead then my Trustee will make such arrangements as may be appropriate for the appointment from time to time of an Officer of Perpetual as a Director from time to time of Mount Gilead. And I further request that if any difference arises at any time between Lee and Katrina as Directors of Mount. Gilead then the Nominated Director shall use his best endeavours to resolve any such difference in an amicable manner and shall if necessary use his vote as a Director to enable a decision to be taken on any matter on which any such difference may have arisen. … AND in relation to the foregoing provisions of this clause I hereby record that I have made those provisions in the belief that they will assist both Lee and Katrina in relation to the affairs of Kalemon, Mount Gilead and the 1972 Trust by their having the advantage and experience of an Officer of Perpetual being a Director with them of both Kalemon and Mount Gilead and in making a contribution as a Nominated Director of both companies to the satisfactory administration of the affairs of those two Companies and of the 1972 Trust. 10. I GIVE DEVISE AND BEQUEATH the whole of the rest and residue of my real and personal estate wheresoever situate to my Trustee UPON TRUST to pay thereout all my debts funeral and testamentary expenses and all duties (if any) payable in consequence of my death and I DIRECT my Trustee to hold the balance thereof after all such payments (hereafter "my residuary estate") UPON TRUST to divide the same into two one-half parts and I direct my Trustee to hold such two one-half parts upon the trusts hereafter declared. 11. (a) I DIRECT my Trustee to hold one of such one-half parts UPON TRUST to pay the income therefrom to my son LEE until he attains the age of fifty-five (55) years and on my son Lee attaining that age I DIRECT my Trustee to pay and transfer to him the whole of the capital of such one equal part; … 12. (a) I DIRECT my Trustee to hold the other one-half part of my residuary estate UPON TRUST to pay the income therefrom to my daughter KATRINA until she attains the age of fifty-five (55) years and on my daughter Katrina attaining that age I DIRECT my Trustee to pay and transfer to her the whole of the capital of such one equal part; …
By cl 8, Lady Macarthur-Onslow gave a small pecuniary legacy to Ms Christine Sinclair, her housekeeper, and cl 14 nominated a default beneficiary if the residuary gift in the 1988 will failed.
The most significant aspect of the 1988 will, for present purposes, is that, save for the gift to Lady Hobhouse in cl 6, it provided for equality in the distribution of the estate as between Lady Hobhouse and Mr Macarthur-Onslow; including in respect of ownership of the shares in Kalemon Investments Pty Ltd (Kalemon), which, as will be seen, is the trustee of a discretionary trust which holds a substantial proportion of the family assets.
Lady Macarthur-Onslow dealt with the possibility of deadlock between Lady Hobhouse and Mr Macarthur-Onslow by making Perpetual an executor, and by including a number of arrangements to facilitate Perpetual being in a position to break any deadlock.

The deceased's 2004 will

The last will executed by Lady Macarthur-Onslow was the 15 October 2004 will, which contained the following provisions, insofar as they are relevant to the present proceedings: This is the last Will and Testament of (Lady) Dorothy Wolseley Macarthur-Onslow of "Mount Gilead", Appin Road via Campbelltown in the State of New South Wales, Grazier. 1. I revoke all former wills and testamentary dispositions heretofore made by me and declare this to be my last Will. 2. I appoint my son Lee Macarthur-Onslow, John Ashton Beardow solicitor, Stephen John Rogers Chartered Accountant and Andrew William Martin Company Director, all of Sydney the Executors and Trustees of this my Will. … 4. I declare that in the interpretation of this Will and in the administration of my estate: (a) the expression "my Trustees" shall mean and include the Executor, Executors, Trustee and Trustees for the time being hereof whether original or substituted; (b) "Lee" my son the said Lee Macarthur-Onslow and "Katrina" is my daughter Katrina Julie Denzil Hobhouse (nee Macarthur-Onslow); (c) "DWMO" is DWMO Investments Pty Limited ACN 071 460 154; (d) "Kalemon" is Kalemon Investments Pty Limited ACN 000 330 692; (e) "Macarthur-Onslow Nominees" is Macarthur-Onslow Nominees Pty Limited ACN 109 280 524; (f) "Mount Gilead" is Mount Gilead Pty Limited ACN 008 499 189; (g) "The Mount Gilead Trust" is the Discretionary Trust established by Deed dated 23 November 1972 between Dorothy Gladys Scott ("The Settlor") and Kalemon ("the Trustee"); (h) "First Determined Sum" is the value of the property known as Kippilaw near Goulburn New South Wales (presently comprised in Certificates of Title Folio 1/78825 and Folio 1/845087) owned by DWMO as at the date of my death determined by two independent valuers appointed by my Trustees (other than Lee) or if those valuers cannot agree the value determined by an umpire who is a third independent valuer appointed in writing by the first two valuers before they enter on the valuation; (i) "Second Determined Sum" is the amount of any stamp or other duty that would be payable by a purchaser of Kippilaw for a consideration equal to the First Determined Sum; (j) "Third Determined Sum" is the amount of any GST (as that expression is defined in the A New Tax System (Goods and Services Tax) Act, 1999, C'th) that is found to be payable on any sale of Kippilaw by DWMO. ... 8. I give and bequeath free of all duties payable in consequence of my death to my son Lee: (a) the First Determined Sum; (b) if he (or his nominee) should purchase Kippilaw pursuant to acceptance of the offer referred to in clause 10(b) of this my Will, the Second Determined Sum; (c) if on a purchase to which paragraph (b) above refers DWMO is liable to pay GST on the price (being equivalent to the First Determined Sum), the Third Determined Sum. 9. I give and bequeath all shares held by me at my death in each of Kalemon, Mount Gilead, DWMO and Macarthur-Onslow Nominees (hereafter "my shares") to my Trustees and I direct that the provisions and stipulations as hereafter contained shall apply in relation to my shares namely: (a) my Trustees shall hold my shares upon and subject to the trusts hereafter contained; (b) I direct that my Trustees shall adopt the usual procedure in applying for and obtaining transmission of the shares in the books of the companies concerned in the order appointed by this Will namely, Lee, John Ashton Beardow, Stephen John Rogers, Andrew William Martin and (if applicable) Neil Robert Hillman; (c) I authorise my Trustees upon becoming registered as the holders of my shares in any of the companies aforesaid (if they have the power to do so vis-à-vis any other holder of shares in that company) to appoint all of any of them (as shall consent to act) to be Directors of that company; (d) I empower each of my Trustees who is acting as a Director from time to time of any of Kalemon, Mount Gilead, DWMO or Macarthur-Onslow Nominees to receive such reasonable Director's fees as may be determined by the shareholders of such company including my Trustees as holders of my shares in such company; (e) I direct that all dividends received by my Trustees in relation to my shares shall fall into and form part of the income of my residuary estate and that capital moneys received in respect of my shares shall be held by my Trustees as part of the capital of my residuary estate. 10. Upon my Trustees becoming registered as the holders of my shares in DWMO: (a) I direct that my Trustees (other than Lee): (i) cause the valuation of Kippilaw, referred to in the definition of First Determined Sum set forth in clause 4 of this my Will, to be effected, (ii) charge the cost of and incidental to the effecting of that valuation against my residuary estate; (b) I direct that my Trustees exercise their control of the company to cause the company to offer to Lee the sale of Kippilaw for the price equivalent to the First Determined Sum plus any GST for which DWMO would be liable on a sale of Kippilaw at that price and otherwise on such terms and conditions as they may in their absolute discretion determine and to hold such offer open for acceptance by him or his nominee for a period of three (3) months after it has been made; and (c) upon acceptance of any offer made in accordance with paragraph (b) above then I empower my Trustee to enter into a contract for the price and on the terms and conditions agreed and to complete the same or exercise all such powers that they may have as a vendor if there is a default on the part of the purchaser in completing that contract. 11. I give and bequeath the farming and grazing business carried on by me at the property known as "Mount Gilead" (presently comprised in Certificates of Title Folios 1/807555 and 2/807555 and Volume 10211 Folio 26 owned by Mount Gilead) and elsewhere including all of the assets thereof identified in clause 12 of this my Will ("my farming and grazing business") to my Trustees upon trust to: (a) conduct the same until the vesting date being the date twenty-one (21) years after the date of my death or such earlier date that my Trustees may in their absolute discretion determine but without limiting that discretion having regard to the provisions of the Put and Call Option dated 13 August 2004 between Mount Gilead and Australand Holdings Limited ACN 008 443 696 and in so doing comply with the obligations on my part expressed in Property Licence dated 13 August 2004 expressed to be between Mount Gilead and me; (b) pay all or part of the income arising from the conduct thereof to any one or more of my children (Lee and Katrina) in the shares and amounts and at the times my Trustees in their absolute discretion think fit without any obligation to make payments for all or any of my children or to ensure equality among those to whom payments are made and with power to accumulate income not so paid; and (c) on the vesting day to pay the capital thereof as an accretion to the capital of the parts (established by my Trustees as hereafter provided) into which my residuary estate is divided at that time in equal shares. … 15. I give devise and bequeath the whole of the rest and residue of my real and personal estate wheresoever situate to my Trustees upon trust to pay thereout all my debts, funeral and testamentary expenses and all duties (if any) payable in consequence of my death and I direct my Trustees to hold the balance thereof after all such payments (hereinafter "my residuary estate") upon trust to divide the same into four (4) parts made up as hereafter provided and I direct my Trustees to hold such parts upon the trusts in respect thereof hereafter declared. 16 (a) I direct my Trustees to make up one part of my residuary estate to comprise: (i) fifty-one (51) of my hundred (100) "A" class redeemable preference shares in Kalemon, (ii) two thousand five hundred and forty-one (2,541) of my five thousand and eighty (5,080) "B" clause shares in Kalemon, (iii) all of my cumulative preference shares in Mount Gilead, (iv) all of my shares in Macarthur-Onslow Nominees, and to hold that part upon trust to pay the income therefrom to my son Lee until he attains the age of sixty (60) years and on my son Lee attaining that age I direct my Trustees to pay and transfer to him the whole of the capital of that part. … 17. (a) I direct my Trustees to make up another part of my residuary estate to comprise: (i) forty-nine (49) of my one of my hundred (100) "A" class redeemable preference shares in Kalemon, (ii) two thousand five hundred and thirty-nine (2,539) of my five thousand and eighty (5,080) "B" class shares in Kalemon, (iii) the sum of nine thousand five hundred and six-two dollars ($9,562), and to hold that part upon trust to pay the income therefrom to my daughter Katrina until she attains the age of sixty (60) years and on my daughter Katrina attaining that age I direct my Trustees to pay and transfer to her the whole of the capital of that part. … 19. I direct that my Trustees divide the remainder of my residuary estate into two (2) equal parts (being the third and fourth of the four parts referred to in clause 15 of this my Will) but so that there is included in each part one-half in number of the shares in DWMO to which I am beneficially entitled, such parts hereafter called "remainder parts", and hold the same upon the trusts hereafter declared. The trusts hereafter declared in respect of the remainder parts are subject in all respects to the exercise by my Trustees of the powers in respect of my shares in DWMO expressed in clause 10 of this my Will. 20. (a) I direct my Trustees to hold one remainder part upon trust to pay the income therefrom to my son Lee until he attains the age of fifty-five (55) years and on my son Lee attaining that age I direct my Trustees to pay and transfer to him the whole part of the capital of such part. 21. (a) I direct my Trustees to hold the other remainder part upon trust to pay the income therefrom to my daughter Katrina until she attains the age of fifty-five (55) years and on my daughter Katrina attaining that age I direct my Trustees to pay and transfer to her the whole part of the capital of such part. …
It will be sufficient for the present to note that the gift of the home unit at Darling Point to Lady Hobhouse in cl 6 of the 1988 will was deleted, as was the small pecuniary legacy to Lady Macarthur-Onslow's housekeeper in cl 8. The identity of the default residuary beneficiary was also changed.
By cll 8 to 10, the 2004 will made provision for Mr Macarthur-Onslow to receive sufficient money from the estate to enable him to purchase, in his own name, a farming property called "Kippilaw", which was owned by DWMO Investments Pty Limited (DWMO), a company controlled by Lady Macarthur-Onslow.
Most importantly, the 2004 will treated Lady Hobhouse and Mr Macarthur-Onslow differently in the manner in which it distributed to them Lady Macarthur-Onslow's shares in Kalemon. The effect was to give Mr Macarthur-Onslow voting control in general meetings of members of Kalemon. Consequently, he could control the identity of the board of directors, and by that means control how Kalemon, as trustee, exercised the powers of the trustee under the discretionary trust referred to above.
That is the matter which is the principal source of the dispute between the parties in these proceedings.

Family companies

The Macarthur-Onslow family held their assets partly through a number of companies. Two of those companies are of particular significance to the present proceedings.
The first is Kalemon. Kalemon was incorporated in New South Wales on 8 August 1960. Sir Denzil was the governing director of the company from its incorporation until his death on 30 November 1984. Lady Macarthur-Onslow was appointed a director on 9 September 1960, and remained a director until her death on 10 May 2013. Lady Hobhouse and Mr Macarthur-Onslow were appointed directors on 25 July 1977.
In circumstances that will be considered below, on 20 February 2004, Lady Macarthur-Onslow, acting in the capacity of the governing director of Kalemon, removed Lady Hobhouse as a director of the company.
The ASIC search that is in evidence shows that the present directors of Kalemon are Mr Macarthur-Onslow, Mr Rogers (who is the fourth defendant, and was the family accountant, and was appointed as an additional director on 28 May 2013, shortly after the death of Lady Macarthur-Onslow), and Lady Hobhouse. I was informed during the course of the hearing that Lady Hobhouse remains a director of the company because of a court order to the effect that her removal as a director was invalid.
At the time of Lady Macarthur-Onslow's death, she and each of Lady Hobhouse and Mr Macarthur-Onslow held 5080 B class shares in Kalemon. In addition, Lady Macarthur-Onslow held 100 A class shares, which she had inherited from Sir Denzil.
The constitutions of the companies are not in evidence, and I have relied upon statements made by Lady Macarthur-Onslow's solicitor, Mr Beardow, in a memorandum of advice that he sent to Lady Macarthur-Onslow on 12 February 2014, as the source of information concerning relevant constitutional provisions of the companies. These matters were not in issue.
Article 68 entitled Sir Denzil to act as governing director of the company, and article 74 authorised him to appoint some other person by his will to be governing director. Sir Denzil exercised that power in his will by appointing Lady Macarthur-Onslow. Article 71 empowered the governing director to remove and replace any other director.
The A class shares were preference shares and the B class shares were ordinary shares.
Every member had under article 61 a vote on a show of hands at a general meeting.
Article 60 provided that upon a poll every member shall have one vote for every share, however, the governing director was entitled to 5 more votes than the holders of the rest of the shares in the company were entitled to.
The consequence was that, so long as Lady Macarthur-Onslow was governing director of Kalemon, she and either Lady Hobhouse or Mr Macarthur-Onslow commanded just over 75% of the votes that could be cast at a general meeting of members.
Relevantly, if Lady Macarthur-Onslow's shares in Kalemon were distributed equally to Lady Hobhouse and Mr Macarthur-Onslow on her death, each would hold 50% of the shares, and there would be a potential for deadlock.
The inventory of property annexed to the executor's affidavit sworn by Mr Rogers on 24 March 2016 valued Lady Macarthur-Onslow's 100 A class shares in Kalemon at $200, and her 5,080 ordinary shares at $12,641,500. This value was said to be represented by shares in listed public companies, a property known as "Southlands", and a property at Darling Point. Lady Hobhouse gave evidence that Kalemon's assets were valued at about $42 million, comprising a listed company share portfolio ($29 million), a rural property ($5 million), a home unit at Darling Point ($3.2 million), shares in a private company ($190,000 - $350,000) and intercompany receivables ($4.65 million).
More importantly, Kalemon held 10 shares in another company that is of importance in this dispute, being Mount Gilead Pty Ltd (MGPL), which is the trustee of a trust known as the "Mount Gilead Trust" (Trust).
Whoever controls Kalemon would therefore control the trustee of the Trust, and would accordingly be able to control the exercise of the trustee's powers under the relevant trust deed.
MGPL was incorporated in the Australian Capital Territory on 20 October 2000. Sir Denzil was also the governing director, but the constitution did not contain a provision empowering him to appoint a successor as governing director in his will. On 25 July 1977, Lady Macarthur-Onslow, Lady Hobhouse and Mr Macarthur-Onslow were appointed directors of MGPL.
Lady Macarthur-Onslow remained a director until her death.
Lady Hobhouse was removed as a director of MGPL on 27 February 2006.
Mr Beardow, Mr Rogers and Mr Martin were appointed as directors on 12 October 2004, but Mr Beardow resigned on 28 May 2013, and Mr Martin resigned on 25 August 2011.
The present directors of the company are Mr Macarthur-Onslow and Mr Rogers.
The share capital of MGPL is comprised of 9,562 cumulative preference shares, which were held by Lady Macarthur-Onslow at the time of her death. These shares entitled the holder to a fixed cumulative preference dividend of 6% per annum and a return of paid-up capital, but no other entitlement to participate in the company's profits or assets. The share capital also comprised 438 ordinary shares. 10 of the ordinary shares were issued to Kalemon.
Lady Hobhouse gave evidence concerning the assets and liabilities of MGPL. She estimated that the current value of the assets of the company was not less than $35 million and could be in excess of $90 million.
The company owes a debt of approximately $3.47 million to Kalemon. It has a listed company share portfolio with a current market value of around $7 million. It also owns two rural properties in the Goulburn area, which Lady Hobhouse valued at between $4 million and $7.4 million.
Accepting Lady Hobhouse's estimates as being indicative of value (her estimates were not specifically challenged, and the precise values are not material) the net value of these assets would be about $8 million to $11.4 million.
Most importantly for present purposes, MGPL is the owner of a property known as "Mount Gilead" on Appin Road in the Campbelltown City Council area. Mount Gilead is an historical farming property of particular significance. It was transferred by Sir Denzil to MGPL. Mount Gilead has been the family home since before the birth of Lady Hobhouse, and is the place of her present residence. It has an area of 740.8 ha (or 1,831 acres).
The evidence does not include a conventional valuation of Mount Gilead. The amount that it is capable of realising will depend upon whether and in what manner it can be rezoned, as the evidence establishes that it has a substantial potential for being rezoned for the purpose of residential development.
Mr Rogers in cross-examination suggested that the "unimproved value" of Mount Gilead (which I understand to mean its improved value under its present zoning) is approximately $25 to $30 million.
The evidence shows that, on 13 August 2004, MGPL entered into a put and call option agreement with Australand Holdings Ltd (Australand). If exercised, the option would have involved the sale of 610 ha of Mount Gilead. In practical terms, the agreement was contingent on necessary rezoning for residential development. The intent was to construct 4,300 dwellings. The purchase price was an amount of not less than $175 million, together with 7.5% of the gross proceeds realised by Australand.
The evidence, though limited, suggests the agreement with Australand has terminated, and that MGPL has entered into a new agreement with Lend Lease. The terms of that agreement are not known.
Lady Hobhouse gave evidence, which was not challenged, that she was informed by Mr Macarthur-Onslow that, if approval is granted for the rezoning of Mount Gilead for residential development of a 450 acre part of Mount Gilead, there would likely be a sale of that area to a major developer for $60 million, for the development of 1,200 residential allotments. Mr Macarthur-Onslow said that the 450 acres would likely realise up to $15 million if sold prior to rezoning.
While the evidence does not permit a finding as to the net value of the assets of MGPL with any precision, the range of possible values is indicated by the circumstances considered above.
At the time of her death, Lady Macarthur-Onslow was also the owner of 749,706 ordinary shares in DWMO. In addition, Kalemon held one ordinary share in DWMO. DWMO was a company through which Lady Macarthur-Onslow held substantial assets, including the rural property near Goulburn called "Kippilaw".
Finally, Macarthur-Onslow Nominees Pty Ltd was a company owned equally by Lady Macarthur-Onslow and Mr Macarthur Onslow, as to one ordinary share each, and was the vehicle for investments made by the shareholders.

The trust deed

The Trust was created by deed dated 23 November 1972, between Lady Hobhouse's maternal grandmother as settlor and Kalemon as trustee.
The effect of cll 1(b), (c) and (d) is that the Vesting Date of the trust is 31 December 2022, or such other date as is fixed by the Trustee.
The Primary Beneficiaries were Lady Macarthur-Onslow, Lady Hobhouse, Mr Macarthur-Onslow, any child or spouse of the latter two, and any company or trust of which the latter two are beneficiaries.
Clause 2 provides that, on the Vesting Day, the Trustee shall hold the capital for all or such one or more of the Primary Beneficiaries as the Trustee may determine.
Under cl 3, until the Vesting Day, the Trustee is required to pay the whole or any part of the income of the Trust for the maintenance, education, advancement or benefit of all or such one or more of the Primary Beneficiaries in such shares as the Trustee in its absolute discretion may determine.
As Kalemon holds all of the issued ordinary shares in MGPL, all of the assets of that company are subject to the discretionary powers of Kalemon under the trust deed.

Effect of 2004 will

Mr Rogers set out in par 13 of his executor's affidavit an estimate of the value of the property that would be distributed to the beneficiaries in accordance with the 2004 will. It is not necessary to set out in detail the assets in the estate or their estimated value. I will set out the total estimated value of the gifts to Lady Hobhouse and Mr Macarthur-Onslow, as that is necessary in order to understand the significance of Mr Macarthur-Onslow being given a control of the Trust. The property given to Lady Hobhouse was estimated to have a value of about $21 million dollars, and the property given to Mr Macarthur-Onslow about $24 million. The difference is represented by the value of Kippilaw. The value of the assets in the Trust was not included in the estimates of the value of the property passing under the will (save that I infer that Kalemon's shares in MGPL were valued at $1 each, as Kalemon was a trustee. Kalemon is not the beneficial owner of those assets.
Compared to the values of the property specifically given to Lady Hobhouse and Mr Macarthur-Onslow under the 2004 will, at the time of the will was executed it was hoped that Australand would exercise its option, in which case MGPL would, as I have noted above, received $175 million, plus 7.5% of the gross proceedings of sale of 4300 residential lots realised by Australand.

The lay evidence

It will be convenient to consider the parties' lay evidence, before I deal with the evidence of the medical experts called by each party.
Lady Hobhouse gave evidence, as did a relative of Sir Denzil, and a friend of the Macarthur-Onslow family, Ms Susan Hayman.
Mr Macarthur-Onslow did not give evidence, although he sat in court throughout the hearing.
Mr Macarthur-Onslow called evidence from Mr Beardow, who is a very senior solicitor, who acted for the family companies from some time in the late 1980s, and who some time later began to act for Lady Macarthur- Onslow personally. Mr Beardow took instructions from Lady Macarthur-Onslow for the preparation of her 2004 will; he drafted the will; and explained its terms to Lady Macarthur-Onslow on the day that she executed the will. The adequacy of that explanation is contentious. He also acted for Lady Macarthur-Onslow and the family companies generally in relation to the transactions that were the context for the dispute within the family, which will be considered below.
Mr Martin, and Mr James Daniel Lane, also gave lay evidence in the defendant's case.
There were in addition a number of other witnesses, who gave less significant evidence, and who need not be identified now.

The plaintiff's lay evidence

I will deal with Lady Hobhouse's evidence generally, and then consider two particular matters; being a conversation between Lady Hobhouse and her mother that took place on 10 September 2004, which was recorded by Lady Hobhouse; and evidence concerning statements made by Lady Macarthur-Onslow to the effect that she intended that her two children would share equally in her estate.

Lady Hobhouse's evidence

Lady Hobhouse gave evidence about the deterioration in her mother's mental capacity, and the consequential effect on her behaviour, in her principal affidavit.
Relevant to this evidence is the evidence that Lady Hobhouse gave concerning the similar fate that was suffered by Sir Denzil, as the earlier experience that Lady Hobhouse had concerning the deterioration of her father may, to some extent, have attuned her to the physical and behavioural changes that may herald a person's decline due to Alzheimer's disease.
Lady Hobhouse said that, by about 1975, it had become apparent that Sir Denzil suffered from some form of cognitive impairment. She gave detailed evidence of the symptoms and behavioural consequences of Sir Denzil's condition (pars 65 to 78). By about 1975, Sir Denzil's impairment had progressed to a stage where the symptoms were markedly observable and where his mental capacity had been significantly affected. Sir Denzil died on 30 November 1984, apparently from the consequences of Alzheimer's disease.
Lady Hobhouse lived in England in 1991 and 1992, and from 1993 to 1999.
According to Lady Hobhouse, when she returned to Australia in late 1999, she noticed that her mother had become extremely forgetful, and she repeated things that she had already told Lady Hobhouse several times previously. Lady Hobhouse gave detailed evidence concerning the progressive decline in her mother's mental state and behaviour (pars 101 to 204). She also gave evidence concerning her mother's condition in the period between late 2004 and 2007, during which Lady Hobhouse was the principal carer for Lady Macarthur-Onslow (pars 205 to 226). Lady Macarthur-Onslow was institutionalised in Lulworth House as a high care Alzheimer's patient in 2008, where she remained until her death in 2013.
Lady Hobhouse gave evidence that generally supported the particulars concerning her mother's mental condition and behaviour set out in pars 9 and 10 of the defence, and additional particulars given by letter dated 3 December 2015. I use the word "generally" to reflect the fact that the overall effect of the evidence supports the particulars given; although the evidence is less probative of some of the particulars in relation to the precise way in which they have been expressed; and others of the particulars are made out more by evidence produced by Lady Macarthur-Onslow's neurologist, Dr Darveniza, during the course of his treatment of her.
I will set out below only the more general or significant observations made by Lady Hobhouse concerning her mother's mental state and behaviour; except where the evidence of certain events appears to have particular significance.
Much of the evidence given by Lady Hobhouse related to the conduct of her mother that took place in the presence of, or with the knowledge of, Mr Macarthur-Onslow. This evidence is of particular significance given that Mr Macarthur-Onslow did not give evidence, and accordingly did not contradict any of this evidence given by his sister, which he must have been in a position to do, if it was his recollection that Lady Hobhouse's evidence was either untrue, or was exaggerated in some way.
Lady Hobhouse gave evidence that, shortly after her return to Australia in 1999, her mother insisted that Mr Macarthur Onslow leave his diary close to the home phone, and that her mother habitually used the diary as a general writing pad. She said that Mr Macarthur-Onslow said that he had tried to explain to his mother that it was his farm diary but: "It is a waste of time because she forgets and just continues to use it as a writing pad."
Before Lady Hobhouse went to live in England, her observation was that her mother's bookkeeping was very efficient, accurate and precise. Lady Macarthur-Onslow knew precisely where everything was in the office, and all the correspondence was filed in good order. Lady Hobhouse began to do the farm accounts when she returned in 1999. It was then that she became aware that, in the previous 12 months, the accounts kept by her mother contained numerous mistakes and did not follow the system which her mother had devised many years earlier. Further, many accounts received in the last 12 months had not been written up. Lady Macarthur-Onslow said that she could not do the bookwork and accounts any longer, because it had become too complicated for her.
Lady Macarthur-Onslow ceased to know where everyday items in the kitchen such as pots and pans, spoons and the like were kept.
Lady Macarthur-Onslow became irritated over small things and seemed to react disproportionately.
Lady Hobhouse said at par 109: My mother's behaviour reminded me of my father's behaviour during the progression of his Alzheimer's disease. The forgetfulness, irritations, repetition of conversations, the inability to carry out some simple tasks, not knowing how to do things which she could easily have done before such as the accounts, not knowing where things were in the kitchen and in the house, suddenly starting a project with enthusiasm but just as quickly forget it and leave it unfinished and eventually inability to think ahead or to plan all reminded me of my father's behaviour which I have described above in this Affidavit during his Alzheimer's illness.
Lady Hobhouse and her mother were in the habit of taking tea together. During and after 2002, Lady Macarthur-Onslow would ask if Lady Hobhouse wanted a cup of tea, and then bring several cups of tea in quick succession, or forget about it altogether. On other occasions, she would forget the tea and just bring hot water; or bring tea with no milk and sugar.
Lady Hobhouse recounted episodes from 2001 onwards when her mother often appeared disoriented or confused. At breakfast, from time to time, Lady Macarthur-Onslow would stand in the kitchen looking at the cupboards without doing anything. On being prompted, Lady Macarthur-Onslow would ask to be told where the breakfast cereal was.
From about late 2002 onwards, Lady Hobhouse became aware that her mother was unable to recall the amounts she paid to the cleaners and other staff, and would ask Lady Hobhouse to pay the staff.
In 2002, or possibly 2003, Lady Macarthur-Onslow damaged her car by reversing it with the driver's door wide open. From this point, Lady Hobhouse realized that Lady Macarthur-Onslow was no longer capable of driving a car, except on the property at Mount Gilead.
In June 2002, Lady Hobhouse persuaded her mother to see Dr Darveniza. The result of Dr Darveniza's consultation with Lady Macarthur-Onslow is set out in his letter dated 28 June 2002, which will be considered in more detail below. Dr Darveniza advised Lady Hobhouse that her mother had Alzheimer's disease.
Lady Hobhouse said that, progressively during 2002, her mother became much less active, staying in bed or on the front veranda of Mount Gilead.
In August 2003, Dr Darveniza recommended that the strength of the medication prescribed for Lady Macarthur-Onslow's dementia should be doubled.
In about late 2002 or in 2003, Lady Macarthur-Onslow's general practitioner informed Lady Hobhouse that her mother needed to be accompanied on future visits to her doctor.
As a result of events concerning the proposed sale of part of Mount Gilead, which will be considered in more detail below, Lady Macarthur-Onslow took steps to remove Lady Hobhouse as a director of the family companies in February 2004. Lady Hobhouse gave evidence at par 150: About an hour later, I was standing in the kitchen with mother. I said to mother: "How dare you knock me off the family company Boards". Mother said in a voice and tone of surprise: "I haven't knocked you off the family company Boards. What are you talking about?" To which Lee said: "Yes mum, you are removing her from the Boards of Mount Gilead Pty Ltd and Kalemon Investments." He then put his arm around mother and guided her out of the kitchen away from me.
Lady Hobhouse gave considerable evidence concerning her relationship with her brother, following a substantial disagreement that had arisen concerning the basis upon which a substantial part of Mount Gilead should be sold to Australand. This disagreement caused a high level of acrimony within the family. Lady Macarthur-Onslow took Mr Macarthur-Onslow's side in this dispute. Lady Hobhouse gave evidence that, on numerous occasions, her brother made very disparaging remarks concerning Lady Hobhouse's behaviour and financial acumen in the presence of their mother; and that Lady Macarthur-Onslow often "parroted" Mr Macarthur-Onslow's comments to Lady Hobhouse.
Lady Hobhouse gave evidence of a number of occasions when Lady Macarthur-Onslow was physically violent towards her, which according to Lady Hobhouse was entirely out of keeping with Lady Macarthur-Onslow's previous attitude to her daughter. On the morning of 13 April 2004, Lady Hobhouse and her brother and mother were in the kitchen. Mr Macarthur-Onslow made a disparaging comment towards his sister in an angry voice, and then (par 172): "Mother was there listening and after a little while she said to me: 'Silly bitch' and she hit me over the head and face with the newspaper". On a later occasion, on 5 August 2004, after an argument between Lady Hobhouse and her mother (par 196): "[M]other hit me on the back of the head when my back was turned. She hit me with a heavy broom handle with such force that it broke in two. I had a huge red lump behind my ear. It was completely out of character for my mother to strike me with such a heavy instrument which could cause serious injury".
Lady Hobhouse said that, from around 2004 onwards, her mother increasingly looked blankly during conversations, or withdrew from conversations before they had concluded (par 179). From 2002 and continuing in 2004, while Lady Macarthur-Onslow was taking the Alzheimer's medication, there were many occasions when Lady Macarthur-Onslow's conversations were unclear and imprecise. She would be monosyllabic, or there would be intervals in conversations when she would suddenly go blank and become silent. Lady Hobhouse said (par 180): "At this time during 2004 there were whole mornings or whole afternoons when mother was not lucid. This was the case many days of each week".
Lady Hobhouse also said that, from about 2001 onwards, her mother became increasingly distrustful when it came to money, and gave examples of this conduct.
On one occasion in July 2004, as recalled by Lady Hobhouse, her mother was washing tea towels in dog bowls. When she pointed this out to her mother, Lady Macarthur-Onslow said (par 193): "[T]hey are not dog bowls". Lady Macarthur-Onslow showed her daughter two dog bowls, one of which still had dog food in it.
In her cross-examination, Lady Hobhouse was not challenged in any detail concerning her evidence of the various events and circumstances that tended to suggest that Lady Macarthur-Onslow was suffering from dementia with increasing disability from no later than 2002. Her evidence concerning specific instances was not challenged.
At T 90.6, Lady Hobhouse was referred to an opinion expressed by Dr Darveniza in his report of a consultation with Lady Macarthur-Onslow on 30 November 2004, that she retained testamentary capacity as at that date. Lady Hobhouse declined to agree that Dr Darveniza's conclusions caused her to doubt the evidence given in her primary affidavit concerning her mother's capacity.
The cross-examination then continued as follows (T 90.16 to 90.30): Q. I want to suggest to you that the incidents that you recount in that affidavit are at least exaggerated by you. A. No. … Q. You have deliberately exaggerated in your evidence the accounts and exchanges that you describe in that affidavit with your mother to suit your own purposes in this litigation, haven't you, Lady Hobhouse? A. No.
It may be that senior counsel for Mr Macarthur-Onslow was inhibited in the extent that he could challenge Lady Hobhouse's evidence, because of the fact that Mr Macarthur-Onslow should have been in a position to give evidence to contradict or deny the truth of much of his sister's evidence, if it was false to his recollection, but he did not do so.
The fact remains that, apart from the general suggestion of deliberate exaggeration made in the extract from the cross-examination set out above, the cross-examiner did not in any detailed or comprehensive way challenge the evidence given by Lady Hobhouse.
At T 97.1, the following exchange occurred in the cross-examination, in the context of the evidence given by Lady Hobhouse concerning her confrontations with her mother concerning the powers of attorney that Lady Macarthur-Onslow granted during 2004 (and which will be considered in more detail below): Q. I want to suggest to you also that during these confrontations your mother was quite firm and quite lucid. A. There were times when she was lucid and there were times when she weren't, wasn't lucid. That would be correct.
Lady Hobhouse accepted that there were times when her mother appeared to be lucid. However, upon a careful reading of her principal affidavit, it is in my view clear that Lady Hobhouse did not give evidence contrary to the proposition that there were times when her mother appeared to be lucid.
As became apparent during the final oral submissions made on behalf of Mr Macarthur-Onslow, his case was that there were times during 2004 when Lady Macarthur-Onslow acted in an apparently lucid manner. Subject to the bare assertion made in cross-examination that Lady Hobhouse intentionally exaggerated her mother's mental condition and conduct, Mr Macarthur-Onslow's case did not directly challenge the evidence given by Lady Hobhouse.
Instead, Mr Macarthur-Onslow's case built upon Lady Hobhouse's acceptance that there were periods when her mother appeared to be lucid, by leading evidence of Lady Macarthur-Onslow's participation in conferences and negotiations, as part of the proposal for the sale of a substantial part of Mount Gilead; and the circumstances in which she granted powers of attorney and made her will. I will come to this evidence below.
This is a convenient point to set out my findings concerning the credibility of Lady Hobhouse's evidence. I accept Lady Hobhouse as a witness of truth. Lady Hobhouse was a careful and meticulous witness, and was prepared, on the few occasions when it may have been necessary, to make concessions against her interest (such as the concession referred to above that her mother had periods of apparent lucidity). She was calm, careful, responsive, and immediate in addressing the questions put to her.
Lady Hobhouse gave detailed evidence in her primary affidavit, concerning the conduct of her mother in respect of the issue of Lady Macarthur-Onslow's mental capacity. The detail in which Lady Hobhouse offered her evidence exposed her to specific contradiction. She was not contradicted in any substantial way.
The defendants criticised Lady Hobhouse's evidence on the ground that she has a direct interest in the result of these proceedings, which has coloured her evidence, and led her to exaggerate her mother's condition.
It is true that Lady Hobhouse gave evidence in her own interest, but it does not follow that she has coloured or exaggerated the evidence of Lady Macarthur-Onslow's condition. My strong assessment that Lady Hobhouse did her best to tell the truth according to her actual recollection must be weighed in conjunction with the fact that she invited contradiction by Mr Macarthur-Onslow, by saying that many of the significant events happened in his presence, but Mr Macarthur-Onslow did not give evidence. I will return to this matter below.
The defendants also argued that Lady Hobhouse's evidence was unreliable as it was largely anecdotal, with insufficient context properly to explain the anecdotes. It is true that the evidence that Lady Hobhouse gave concerning general and specific aspects of her mother's conduct was anecdotal and episodic. It could hardly have been otherwise. This is not a ground for discounting the evidence significantly, although the weight to be given it should take the defendants' argument into account.
The primary relevance of this evidence is only, in any event, to assist in making a general assessment of Lady Macarthur-Onslow's cognitive ability at relevant times.
While aspects of the detail of parts of the evidence may not be entirely reliable, the significance of the events described by Lady Hobhouse was great, and the events so unusual, that it is reasonable for the court to accept the substance of much of her evidence, without perhaps relying upon the precise detail.
I accept that the reconciliation of Lady Hobhouse's evidence with the evidence given by other witnesses concerning Lady Macarthur-Onslow's apparently competent participation in a substantial number of commercial meetings concerning the proposed arrangement with Australand is challenging. That is a task that is also made more difficult by the failure of Mr Macarthur-Onslow to give evidence, and is a matter to which I will return at the appropriate time.
It is sufficient at this point to record that I accept Lady Hobhouse's evidence as being truthful and reflecting her genuine recollection of events; subject however to conventional considerations going to the weight of that evidence, by reason of the passage of time since the events occurred, and the fact that the events the subject of the evidence are necessarily reported in an anecdotal and episodic way.

The conversation between the plaintiff and the deceased on 10 September 2004

On 10 September 2004, Lady Hobhouse had a conversation with Lady Macarthur-Onslow, which the former secretly recorded.
The defendants tendered a compact disc containing the recording, and also a transcript of the recording.
In submissions, counsel for Mr Macarthur-Onslow said that the present is an exceptional case, in which the court has the benefit of a recording of a conversation involving the deceased that was virtually contemporaneous with the making of the will, to assist the court in deciding whether the deceased had testamentary capacity.
The transcript is some 15 pages long, and the following extract is limited to the more material parts of the conversation, and focuses on the parts relied upon by the parties in their final submissions: K: … Mother, I have just received this from my solicitor… Do you realise what you have done? D: I have no idea what's in the letter, dear. I have not the slightest remote idea what's in there. K: Will, would you like to read this, please? … K: You have read - you have read - you have read these documents. D: I've signed these documents, darling - the fact that I don't want you and Lee spending the rest of your lives fighting each other and getting nowhere. Now, at the present moment, you're not making sense about anything you do. You're just being - I discussed the matter with Beardow. Beardow has looked into it very carefully, found reasonable people to look after my affairs when I no longer am able to, and (indistinct) not coming in on this, because all you want to do is what you want to do. You're completely incapable of dealing with (indistinct). K: Well, have you - D: Have I thought about it? Yes, I have thought about it, and I think it's very sad that I've been forced to do this. K: You want Lee to be the one who is running all of the family properties? D: I do at the present moment, yes - not you, quite frankly. K: Why is that, mother? D: You've been nothing but difficult all the way through, or complain bitterly about it, darling. … K: Mother, are you happy for Lee to be in control of all the family companies - D: Yes, I am. … K: Why am I not making reasonable sense? D: Well, darling, you know, I can't explain it. They don't want to get involved with you - none of them will want to work - they say you're impossible to deal with. (Indistinct), sweetheart. … K: So you think it is the best thing that Lee should be running the family companies and all the family properties? D: Yes, I do - better than you, darling, because if you come in on it, all you do is you stand and you fight and you fight and you fight. K: But you have given Lee the right to have complete control over me. D: Well, I think is more sensible, darling. … D: He's got to do the affairs with Beardow, darling. K: Mother, do you realise in those accounts - in those documents you have given Lee the right to control all the bank accounts? D: He's got to also go into it with Beardow, darling. … K: So you're happy for him to do that to the exclusion of me? D: With - with the consent - with the attention and if Beardow is not available, then those other members such as - what - there's a list of them - who will take control. … D: And looking after it. But, darling, you don't realise, you just put everyone in the wrong position. I think Beardow is as good a person as we can find. K: Mother, you have given Lee a power of attorney here for the farming of the four properties, which gives him absolute control. D: No, it's not absolute control. He's got to discuss it with Beardow. K: Why does he have to discuss it with Beardow? D: I think you'll find that's the thing. K: Can you see in these documents that it says Lee has to discuss the farming with Beardow? D: Not only the farming, darling, but the running of the business. They take over, Darling. … K: So you're giving Lee complete control of the finances and the farming activities? D: No, not at all. Beardow is also going to look into it. K: The farming? D: Not the farming, dear. The finances, I said. … K: And in fact do you realise that you said that I would be sharing equally with Lee in all respects? D: No, I didn't say that. K: You did, mother. D: You'll get the same amount of money as Lee gets, darling. … K: With all the farming activities that are going on, but do you realise that you have given Lee complete control over the farming? D: Well, someone's got to have the control, darling.
Lady Macarthur-Onslow appeared to me, from listening to the recording of this conversation, to have been reasonably lucid. In stating that view, I have borne in mind that the evidence does not permit a comparison between Lady Macarthur-Onslow's conversational capacity at this time, and at earlier times before the commencement of her dementia. I have also borne in mind that the conversation was a casual conversation between mother and daughter, in circumstances where Lady Macarthur-Onslow was unaware that the conversation was being recorded. Lady Macarthur-Onslow's participation in the conversation appeared to be well within the range of a reasonably mentally competent person.
The recording, and the related transcript, are not entirely supportive of Mr Macarthur-Onslow's case. The context in which the conversation took place was Lady Hobhouse's discovery of the terms of the powers of attorney granted by her mother. The conversation did not relate to Lady Macarthur-Onslow's proposed will, of which Lady Hobhouse was ignorant at the time.
However, there is in my view a reasonably strong appearance from the content of a number of statements made by Lady Macarthur-Onslow that she did not fully understand the effect of the various powers of attorney that she had granted; notwithstanding the explanation that Mr Beardow said that he gave to her. In some parts of the conversation, the participants appeared to be talking about control of the family companies; in other parts, control of the farming businesses; and in yet further parts, control over both. There is a reasonably strong appearance that Lady Macarthur-Onslow understood that in each of these situations Mr Macarthur-Onslow would not have sole control; but that he would have to act with the agreement of Mr Beardow, or the other attorneys. That was generally correct, but not in relation to the operation of the farming businesses, where the power of attorney granted solely to Mr Macarthur-Onslow was paramount. That appears most clearly from Lady Hobhouse's statement concerning the power of attorney for the farming of the four properties, which gave Mr Macarthur-Onslow absolute control. Lady Macarthur Onslow replied: "No, it's not absolute control. He's got to discuss it with Beardow". The issue was pursued by Lady Hobhouse in the conversation, and Lady Macarthur-Onslow repeated her view that "they take over" not only in relation to the farming, but the running of the business. It is unclear whether Lady Macarthur-Onslow corrected her misapprehension, when she said in relation to Lady Hobhouse's reference to the farming: "Not the farming, dear. The finances, I said".
There is also a question as to what Lady Macarthur-Onslow meant when she said: "You'll get the same amount of money as Lee gets, darling". That was a response to a disagreement concerning Lady Hobhouse's statement: "And in fact do you realise that you said that I would be sharing equally with Lee in all respects?" As I have mentioned above, the context in which this conversation took place was in relation to the grant of the powers of attorney, and not the terms of Lady Macarthur-Onslow's will. However, upon an objective consideration of the whole conversation, it is unlikely that Lady Macarthur-Onslow's statement that Lady Hobhouse would get the same amount of money as Mr Macarthur-Onslow was intended to be limited by her to the division of money from the operation of the companies and the farming businesses through the exercise of the powers of attorney. While the matter is not free from doubt, the better view is that Lady Macarthur-Onslow intended to express a general understanding as to the equality of sharing as between her two children. If that is a correct view, it will be of significance in relation to Lady Macarthur-Onslow's understanding of the effect of the will that she executed about one month after the conversation.

Conversations concerning equality of testamentary treatment

Lady Hobhouse gave evidence, starting from the time when Sir Denzil was alive, of family conversations in which Lady Hobhouse and Mr Macarthur-Onslow were informed that "both of you will equally share and control the family assets when your mother and I are dead" (par 12). Lady Macarthur-Onslow made similar statements over the years (pars 12, 16 (1984), 77 (late 1970's), 90 (1988), and 99 (1999)).
Lady Hobhouse said, in par 202, that in October 2004, she was sitting in the sitting room at Mount Gilead with her brother and mother, during which they had a conversation to the following effect: L: There are four attorneys looking after things. You will get your share. D: See, you will get your share. K: But mother, the attorneys only last while you are alive. L: The attorneys are the directors and they continue to run the company. D: The directors will be continuing to run the company. K: But mother, as governing director, Lee could dismiss all the directors and leave himself as the sole director, just as you removed me as a director. The articles have been changed so only one director is needed for Mount Gilead. Lee could then do what he likes with the money and this leaves me very vulnerable. L: There are four attorneys who are also directors. They are all good people and everything is going to be done legally. Nothing is going to change. You will get your share. D: Katrina, I don't think you know what you are saying. You get these funny ideas in your head. You have heard that there are four attorneys and directors and you will get your share. Now, what are you going on about?
This evidence is potentially highly significant, as it suggests that Mr Macarthur-Onslow made statements that would tend to cause his mother to link her desire that each of her children should share equally in her estate with the ability of the independent directors of the companies to ensure that Mr Macarthur-Onslow did not act solely in his own interests, and that she responded on that basis. Evidence of specific conversations of this nature given a decade after the event is usually considered to be suspect; but again it is significant that Mr Macarthur-Onslow did not give evidence to contradict it, and it was not put to Lady Hobhouse in cross-examination that the conversation did not occur, or was in materially different terms.
Lady Hobhouse said that, later in the same conversation, Lady Macarthur-Onslow said that she would talk to Mr Beardow about it. About half an hour later, Lady Hobhouse reminded her mother that she should remember to talk to Mr Beardow the following day, and Lady Macarthur-Onslow replied: "Talk to Beardow about what?"
Lady Hobhouse then gave evidence, in pars 203 and 204, that on about 30 October 2004, her mother and brother arrived at Mount Gilead after a visit to Sydney. In response to a question as to whether he and his mother had been to see Mr Beardow, Mr Macarthur-Onslow replied: "Yes, we have all had meetings with Sydney Gas and Australand." Lady Hobhouse said she then had the following conversation with her mother: K: Mother, have you talked to John Beardow about the governing directorship as you said you would on Wednesday afternoon? D: I have not seen Beardow. What do you mean by the governing directorship? K: Lee said you have seen him, either yesterday or the day before. D: I don't remember. Lee, I haven't seen Beardow? L: Yes, you have had meetings with him.
Lady Hobhouse said, in par 207, that she had the following conversation with Lady Macarthur-Onslow in November 2004: K: Are you still intending that I should be inheriting equally everything with Lee? D: I don't know what you mean darling. Of course you are getting everything equally with Lee.
Lady Hobhouse also gave evidence, in par 212, that she discussed Lady Macarthur-Onslow's testamentary intentions with her mother on a number of occasions, in which Lady Macarthur-Onslow said words to the effect: "You get exactly the same money as Lee"; "as far as I know you're equal in everything"; "you'll get exactly the same as Lee"; "you'll get your share"; "the directors will be continuing to run the companies"; "you are being treated equally", "go and see Beardow"; "Beardow is running things"; "Beardow controls things".
These statements, which Lady Hobhouse attributes to her mother, are all straightforward in their meaning, so that their effect in Lady Hobhouse's memory is not likely to have been diminished or confused by the passing of time. Once the court accepts that Lady Hobhouse is a truthful witness, it becomes reasonable to accept in substance that Lady Macarthur-Onslow said words to the effect related by Lady Hobhouse.
The possibility that Lady Macarthur-Onslow made statements of this type to her daughter to placate her, and to avoid a fuss, when she did not really mean what she said, is substantially dispelled by evidence of similar statements made to her doctor, Dr Darveniza, and her solicitor, Mr Beardow, which will be considered below.

The evidence of Ms Susan Hayman

Ms Susan Hayman's father was a first cousin of Sir Denzil, and accordingly she is a second cousin of Lady Hobhouse and Mr Macarthur-Onslow. She first met Lady Macarthur-Onslow in about 1952, at the time of her marriage to Sir Denzil. Ms Hayman saw and spoke to Lady Macarthur-Onslow regularly up until the time of her death.
Ms Hayman said that, in the period from 1952 until about 1999, she never observed Lady Macarthur-Onslow to be anything other than highly intelligent, and an amusing person to talk to. She was a sympathetic and helpful person. She was always immaculately dressed; she always wore smart clothes, very fashionable and appropriate for the occasion; she always had her hair done and her face made up and on appropriate occasions would wear one or more of the pieces from her large collection of jewellery.
Ms Hayman said that she first noticed that Lady Macarthur-Onslow was not her normal self in the winter of 1999. Previously, Ms Hayman had known Lady Macarthur-Onslow to be a good and cautious driver. On one occasion, Ms Hayman was being driven by Lady Macarthur-Onslow as a passenger in her car, and she recalled that Lady Macarthur-Onslow was driving all over the road, and not observant of the traffic around her. She drove with confidence but in the wrong lane, changed lanes frequently, and narrowly missing nearby cars. Lady Macarthur-Onslow would also start saying something and then not finish it, and then digress and talk about something else. Lady Macarthur-Onslow appeared to have forgotten what she was about to say in mid-sentence. Lady Macarthur-Onslow had appeared to have forgotten the name of a very close friend of hers. Lady Macarthur-Onslow made unkind comments about Lady Hobhouse, which Ms Hayman believed was quite out of character. Lady Macarthur Onslow was not well dressed and had on very old and tired clothes.
After this occasion, Ms Hayman noticed whenever she saw Lady Macarthur-Onslow that her clothes looked old and tired, as if they had not been properly cleaned or pressed for a very long time.
Ms Hayman thereafter noticed in conversations that she had with Lady Macarthur-Onslow that she repeated herself, she could not remember names, and she was not aware of the names of people who Ms Hayman knew that she knew well.
In June 2000, shortly after the death of Ms Hayman's husband, Lady Macarthur-Onslow made a statement to Ms Hayman that the latter thought was the cruellest thing. She said: "You must be pleased he is gone. You can do what you want with your life now. You can go overseas." Lady Macarthur-Onslow continued in this vein notwithstanding that Ms Hayman was weeping. Previously, Ms Hayman had always experienced Lady Macarthur-Onslow as being a compassionate person.
Ms Hayman said that, after this time, Lady Macarthur-Onslow would call her weekly or sometimes twice weekly, and on each occasion there was no reference or apparent knowledge of the conversation they had had a week or a few days earlier. On several occasions, Lady Macarthur-Onslow would ask exactly the same questions and say exactly the same things as she had said previously.
Ms Hayman gave similar evidence in relation to various subsequent events, in which Lady Macarthur-Onslow appeared in shabby old clothes, and appeared not to remember the names of persons that she knew.
On 9 October 2003, Lady Macarthur-Onslow visited Ms Hayman's home in response to an invitation to meet Ms Hayman's new grandson, following a request by Lady Macarthur-Onslow to meet the child. Ms Hayman said that Lady Macarthur-Onslow did not appear to know what she had come for. She did not look at the baby, nor ask any questions about him. She looked unkempt and scruffy. She did not enter into any conversation, she sat at the table hunched, and appeared to be unhappy to be there.
Between 9 October 2003 and February 2005, Ms Hayman had a few telephone conversations with Lady Macarthur-Onslow. Ms Hayman said that they were all incoherent; it was extremely difficult to converse with Lady Macarthur-Onslow; and she was not lucid. Ms Hayman gave examples of such conversations.
On 18 February 2005, Lady Macarthur-Onslow and Ms Hayman were both guests at a house party. Ms Hayman said that Lady Macarthur-Onslow looked scruffy, and was dressed for working in a kitchen. Lady Macarthur-Onslow said: "I don't know a soul here", when to Ms Hayman's knowledge, of the approximately 100 people in attendance, Lady Macarthur-Onslow knew most of the guests, many of whom were members of her family. Lady Macarthur-Onslow's conversations were not coherent.
Ms Hayman gave evidence that Mr Macarthur-Onslow was present at a number of the events at which Lady Macarthur-Onslow had acted in the manner described by Ms Hayman.
Ms Hayman was cross-examined. The cross-examination did not in any significant way seek to contradict the evidence she gave. Ms Hayman confirmed her evidence in what I consider to be a credible and persuasive way.
Ms Hayman was shown a photograph of the persons who attended the signing in 2004 of the Australand documents, to which I will refer elsewhere. Ms Hayman agreed that, on that occasion, Lady Macarthur appeared to be well groomed and dressed, and wore appropriate jewellery.
Otherwise, it was only suggested to Ms Hayman that her difficulties in communicating with Lady Macarthur-Onslow may have been attributable to increasing hearing difficulties on Lady Macarthur-Onslow's part. Ms Hayman did not accept this explanation.
Further, it was only suggested to Ms Hayman that she was not in a position to know what Lady Macarthur-Onslow's real thought processes were, or what the nature of Lady Macarthur-Onslow's conduct was at the times that Ms Hayman was not present or conversing with Lady Macarthur-Onslow.
I consider Ms Hayman to be an independent witness, in so far as she was a relative of the whole of the Macarthur-Onslow family. The contrary was not put to her, and it was not suggested that she was partial to Lady Hobhouse's case, or that she had reason to colour her evidence in order to damage Mr Macarthur-Onslow. I understand from her evidence that she was primarily a friend of Lady Macarthur-Onslow.
I accept the substance of Ms Hayman's evidence, subject to the necessary qualification that her recollection of the details of events that occurred so long ago may not be precisely reliable.

The evidence of Mr Beardow

Mr Beardow was the primary witness for the defendants' case, in that he gave evidence of much of the relevant background; as well as evidence concerning the making of the 2004 will.
It will be convenient to consider Mr Beardow's evidence concerning the history of his involvement with the Macarthur-Onslow family; as well as the transactions that formed the background against which Lady Macarthur-Onslow's 2004 will was made; before attention is given to the evidence of Mr Beardow that is more directly relevant to the validity of that will. This approach may assist in the analysis of the evidence concerning the making of the will; although it must be acknowledged that many of the relevant events concerning the background transactions and the making of the will were chronologically interspersed.

Mr Beardow's professional history

Mr Beardow was admitted as a solicitor of the Supreme Court of New South Wales on 28 April 1961. It appears that he has had substantial professional experience in acting for private clients in establishing and documenting family business structures; and that his experience includes the preparation of wills and powers of attorney, guardianship advice and estate administration. From 2002, he has practised as special counsel with the law firm known as Norton White.
Mr Beardow was named as an executor in the 2004 will, but he renounced his appointment on 13 August 2013, as he did not wish to take on a long-term obligation.
Lady Macarthur-Onslow was a long-standing client of Mr Beardow's former firm, Sly & Russell, as it was then known. Mr Beardow began to act for the family companies in the late 1980s, mainly in relation to a series of transactions that concerned the possible development of Mount Gilead. He later became Lady Macarthur-Onslow's personal legal adviser.
Mr Beardow said that he was aware that Lady Macarthur-Onslow had been a medical practitioner and hospital administrator. He said that she impressed him as an intelligent and capable businesswoman.
The relationship between Mr Beardow and Lady Macarthur-Onslow extended beyond that of simply a solicitor and client relationship. Thus for example, Mr Beardow and his wife were invited to attend the wedding of Lady Hobhouse in 1993 and the following reception at Mount Gilead.
Mr Beardow became aware from the work undertaken by him for Lady Macarthur-Onslow and the companies that she controlled, that she held substantial real and personal assets in her own right or by companies of which she was the beneficial owner.
Lady Macarthur-Onslow recognised the possibility for development or sale of some of Mount Gilead for residential development. On a number of occasions, Mr Beardow acted on Lady Macarthur-Onslow's instructions in the negotiation of sale option agreements with prospective developers in 1989, 1991 and 1993.
From Mr Beardow's observations, Lady Macarthur-Onslow and her children operated as a "family unit", particularly in relation to the potential development of Mount Gilead, until the family schism to which I will come shortly.

The Australand transaction

Mr Beardow gave evidence concerning his participation in the negotiations that led to the execution on 13 August 2004 of a put and call option between MGPL and Australand.
Apparently, during 2002, Australand approached MGPL in relation to the potential residential development of the major portion of Mount Gilead.
Mr Beardow met with Lady Macarthur-Onslow on 13 September 2002, when she told him that it was her 80th birthday, and that she really wanted to get some money out of Mount Gilead during her lifetime.
Extensive negotiations were undertaken in the period 2002 to 2004. Mr Beardow met with Lady Macarthur-Onslow on many occasions during this period, and engaged in conversations with her, and observed her involvement in negotiations of a commercial nature.
In late 2002 or early 2003, MGPL retained Jones Lang LaSalle (JLL) to present part of Mount Gilead, together with an adjacent area, called "the 11 acre lot", to developers with the intention of conducting a competitive selection tender process.
The 11 acre lot was owned by Lady Hobhouse and Mr Macarthur-Onslow, as tenants in common. Its commercial significance was that it permitted access to and from the F5 Freeway to the balance of the land offered for development.
The total area offered, including the 11 acre lot, was approximately 610 ha. The proposal did not include what was called the "homestead lot", which contained a historic homestead and other buildings, and was referred to in the documentation as "Lot 1".
Lady Macarthur-Onslow, Lady Hobhouse and Mr Macarthur-Onslow participated in extensive discussions with representatives of JLL, in which Mr Beardow also participated, which led to the preparation of an Information Memorandum, which was distributed to a number of developers in May 2003.
One aspect of the Information Memorandum was that it required that any development needed to be sympathetic with the amenity of the homestead lot, which was being retained by the Macarthur-Onslow family, and steps must be taken to minimise any adverse impact on it.
Australand was selected for the purpose of negotiating a formal option agreement on the basis of an expression of interest received from Australand dated 17 July 2003. Australand would seek the rezoning of the property, and have an option to purchase the property for the purposes of undertaking a residential community development comprising over 4,300 dwellings. The purchase price was an amount of not less than $175 million, together with 7.5% of the gross proceeds realised by Australand. Lady Macarthur-Onslow was actively involved in the negotiations for the lengthy and complex put and call option. Conditions precedent to the exercise of the option included the rezoning of the property and obtaining a satisfactory planning approval.
The proposal was that Australand would be granted an initial option period of three years, which could be extended to eight years, or perhaps longer, to enable Australand to obtain the approvals.
Option fees totalling $14,500,000 were payable over a five-year period, of which $6,500,000 was guaranteed to be paid over the first three years of the option term, together with an amount of $500,000 to contribute to the costs incurred by MGPL.
Mr Gary Best, of Mallesons Stephen Jaques, was retained to act for MGPL to negotiate the formal agreement with Australand. Mr Beardow continued to act to provide what he described as a "bridge" between the family unit and Mr Best. There were frequent meetings, which on occasions extended over several hours. Lady Macarthur-Onslow attended those meetings.
Late in 2003, differences began to emerge between Lady and Mr Macarthur-Onslow on the one hand, and Lady Hobhouse on the other, concerning the details of the agreement sought to be reached with Australand.
Mr Beardow gave one example that occurred in late January or early February 2004, when Lady Hobhouse effectively said she had a right to exercise a power of veto over the negotiations with Australand in respect of a particular issue, because she was a director of MGPL.
In about February 2004, Lady Macarthur-Onslow asked Mr Beardow to give her advice as to how a deadlock could be avoided, as Lady Macarthur-Onslow wanted the development transaction to go ahead. I will return to the advice that Mr Beardow subsequently gave.
The advice led to Lady Macarthur-Onslow using her control of Kalemon and MGPL to remove Lady Hobhouse as a director of those companies.
Although the 11 acre lot was included in the property the subject of the negotiations with Australand, Mr Beardow said that Lady Hobhouse declined to commit her interest in that property unless she was satisfied with some of the terms of the agreement with Australand. That agreement was ultimately entered into on the basis that MGPL would procure the 11 acre lot to be included in the transaction if required by Australand. Failing that, the agreement could be terminated, and MGPL would be required to repay all monies received from Australand.
In around mid-2004, Mr Macarthur-Onslow commenced proceedings against Lady Hobhouse for the appointment of trustees for sale to the 11 acre lot pursuant to s 66G of the Conveyancing Act 1919 (NSW). (Ultimately, those proceedings were settled, and the 11 acre lot was transferred to a subsidiary of MGPL for payment of consideration to Lady Hobhouse).
The put and call option agreement with Australand was executed on 13 August 2004, at which time Australand paid to MGPL an amount of $2,500,000 by way of initial option fee, as well as the contribution to the expenses incurred by the company.
Mr Beardow said that the put and call option agreement was voluminous, and the meeting at which it was executed was attended by Lady Macarthur- Onslow "who, to my observation, was attentive to the details of what was occurring".

The February 2004 advice

Following the emergence of the family dispute, Mr Beardow gave advice to Lady Macarthur-Onslow about what could be done to avoid a deadlock in the control of the family's affairs, if Lady Macarthur-Onslow died or became incapacitated.
Mr Beardow gave evidence in his affidavit of a discussion that he had with Lady Macarthur-Onslow in February 2014, in the following terms: I said: 'We are already dealing with conflict in respect of the companies. Your Will needs to be drafted to avoid a deadlock with the conduct of the companies and the trust so that, in particular, Mount Gilead is able to function and do whatever is required under the terms of the option agreement being negotiated with Australand.' Lady Dorothy: 'Yes, I agree. What can be done?' I said: 'You will need to deal with the issue of control upon your passing. Only one of Lee and Katrina can be in control.' Lady Dorothy: 'It should be Lee, but I would like Katrina and Lee to pretty much equally share the assets.' I said: 'Keeping the structure of the companies and the trust in place after your death will not permit you to ultimately control how the assets are distributed. If Lee is given the ability to control those entities, you will have to rely on Lee doing the right thing by Katrina.' Lady Dorothy: 'Yes, I understand. It would be worse if Katrina was able to block the actions of the companies. It will be better if Lee alone is able to control the decisions.' I said: 'I will look at how that can be done and draft something for the Will.' I also said: 'I have had a look at your existing Will. There are a number of other companies controlled by you which are not mentioned. Your Will should deal with them.' Lady Dorothy: 'Yes, all the companies should be controlled by Lee.'
The thrust of this conversation was the need for the avoidance of a deadlock in the control of MGPL in its performance of the terms of the option agreement that was being negotiated with Australand.
Mr Beardow spoke of the need for Lady Macarthur-Onslow's will to be drafted in a way that avoided this deadlock. Mr Beardow advised that the will should be drafted in a way so that only one of Lady Hobhouse or Mr Macarthur-Onslow could exercise control.
Although Lady Macarthur-Onslow nominated Mr Macarthur-Onslow as the one to assume control, she specifically stated that she would like both of her children "to pretty much equally share the assets".
Mr Beardow advised Lady Macarthur-Onslow that, if the structure of the companies and the trust remained in place after her death, she could not ultimately control or determine how the assets were distributed. As to this, Mr Beardow said that Lady Macarthur-Onslow "will have to rely on Lee doing the right thing by Katrina".
Mr Beardow's evidence was that Lady Macarthur-Onslow stated that she understood. That statement of understanding was, however, made in the context of Lady Macarthur-Onslow's desire that only Mr Macarthur-Onslow would be able to control the decisions.
Some eight months were to pass before Mr Beardow submitted a draft will to Lady Macarthur-Onslow, and the will was executed on the very day that the draft was submitted.
Save for the statement that he said he made to Lady Macarthur-Onslow in February 2004 that she would have to rely on Mr Macarthur-Onslow to ensure that the assets in the Trust were distributed equally between the two children, Mr Beardow did not give evidence that he ever discussed this statement with Lady Macarthur-Onslow at any later time, or that he explained in a practical way how her testamentary desire for an equal division of her assets between her children could be, or had been, achieved by the terms of her will.
On 12 February 2004, Mr Beardow provided a letter of advice to Lady Macarthur-Onslow. The letter was in the following terms: Mount Gilead Pty Limited - Control Considerations We recently discussed your concerns about the ongoing control of Mount Gilead Pty Limited, particularly after you die or become incapacitated when there is a likelihood of deadlock arising between Katrina and Lee. Given the climate of dispute between you and Lee, on the one hand, and Katrina, on the other hand, concerning the proposed dealings in respect of Lot 2 at Mount Gilead, you have instructed me to consider and advise on steps to be taken to minimise or eliminate Katrina's involvement (to the extent that it exists) in the control of Mount Gilead Pty Limited and Kalemon Investments Pty Limited and provide that, upon your death or earlier incapacity, control of these entities is vested in Lee. I enclose a Memorandum of Advice that sets out the steps that I see can be taken to achieve your objective. We should confer on these when you have had an opportunity of considering the Memorandum. It seems that me that, in the whole of the circumstances, of which we are only too well aware, there is no real alternative but to proceed with what is proposed if there is to be confidence in Mount Gilead Pty Limited being always in the position to responsibly perform any contractual obligations it enters into with Australand (or anyone else) for the disposal of Lot 2. However, I must make some cautionary comments. You have already accepted that, in achieving your objective, there may well be a permanent rupture in your relationship with Katrina. That is at the personal level. Apart from that, Katrina may seek to mount a legal challenge to the steps that are taken to achieve your objective. Although the recommended steps are designed to ensure that Katrina is not disadvantaged in regard to her ultimate economic interest, there are provisions in the Corporations Act that she may seek to use in applying to the Court for what she perceives as redress. I refer to Par 2F.1 of the Corporations Act. The key provisions of this part are sections 232, 233 and 234. A copy of those sections is enclosed. These provisions are wider in scope than earlier similar provisions and, to a degree, the limits of that scope remain untested by the Court. However, it seems to me that Katrina may have only a limited opportunity to challenge, with any degree of success, the steps to be taken. The relevant factors are: 1. Katrina owns no shares in Mount Gilead Pty Limited, although she may have an expectation to inherit, with Lee, the cumulative preference shares held by you; this is dealt with in the Memorandum. 2. Katrina owns shares in Kalemon Investments Pty Limited although she is in no different a position to Lee and you, save that you also hold an additional 100 redeemable preference shares. 3. Kalemon Investments Pty Limited is the trustee of the Mount Gilead Trust (in which capacity it holds the shares in Mount Gilead Pty Limited) but under which Katrina, as with the other beneficiaries, has only a discretionary interest. 4. A possible complication is that Kalemon Investments Pty Limited also holds substantial investments in its own right. A court may be persuaded that the recommended steps would be detrimental to Katrina's interest as a shareholder on that account, ie because the company owns assets on its own beneficial account. For that reason, in the memorandum, I address the possibility of changing the Trustee of the Mount Gilead Trust to a company controlled by you and Lee. There is much to be considered and on which we should confer so that I can receive your instructions. I await hearing from you.
As appears from the first paragraph of the letter, it was directed to the issue of control of MGPL, after Lady Macarthur-Onslow died or became incapacitated, when there was a likelihood of deadlock arising between Lady Hobhouse and Mr Macarthur-Onslow. The object of the letter was to advise on steps to be taken to minimise or eliminate Lady Hobhouse's involvement in the control of MGPL and Kalemon, and give control of those entities to Mr Macarthur-Onslow.
The letter contained the statement: "Although the recommended steps are designed to ensure that Katrina is not disadvantaged in regard to her ultimate economic interest, there are provisions in the Corporations Act that she may seek to use in applying to the Court for what she perceives as redress".
The memorandum of advice is a relatively complex document of some seven pages, in which are set out in technical detail the facts and circumstances relevant to the governance of MGPL, Kalemon, and the Mount Gilead Trust; and the specific steps that could be taken by reference to the constitutions of the two companies, the holding of meetings, and the exercise of voting rights of members, to remove Lady Hobhouse from any position that would permit her to deadlock the companies or the Trust; and to ensure that Mr Macarthur-Onslow would have sole control following the death or incapacity of Lady Macarthur-Onslow.
The memorandum of advice was directed to the issue of control, which appears from the subject heading: "MOUNT GILEAD PTY LIMITED - CONTROLLED (sic) CONSIDERATIONS".
The memorandum of advice explained that MGPL was the owner of "Mount Gilead", and was controlled by Kalemon, in its capacity as trustee of the Trust, which was a discretionary trust of which Lady Macarthur-Onslow, Mr Macarthur-Onslow and Lady Hobhouse were the primary beneficiaries. For practical purposes control over MGPL rested with Kalemon, which in turn was controlled by Lady Macarthur-Onslow, as its governing director.
In the context of the detailed advice given, Mr Beardow stated: "Broadly, the purpose of those amendments will be to place control of the company (and, thus, the Mount Gilead Trust) into Lee's hands to the exclusion of Katrina, upon Lady Dorothy's death or prior incapacity or if, for some reason, Lady Dorothy resigns her office as governing director (but not necessarily as a director)".
The memorandum of advice sets out, under the heading "The Mount Gilead Trust", an accurate and relatively clear description of the effect of the trust deed, including by pars 1 and 2(d) and (e) the discretionary nature of the trust; the fact that on the vesting day the trustee becomes entitled to pay the capital of the trust to such one or more of the primary beneficiaries as it determined; and that the trustee has an absolute discretion to distribute income to the primary beneficiaries as the trustee determines.
It is not necessary to consider in detail the memorandum of advice insofar as it made recommendations as to how Lady Hobhouse might be removed as a director of the two companies. That step would have the immediate effect of extinguishing her ability to participate in decisions of the boards of directors of the companies; however, she could in any event be outvoted by Lady Macarthur-Onslow and Mr Macarthur-Onslow.
Paragraphs 2 and 3(b), under the heading "Kalemon Investments Pty Limited", and par 4(a), under the heading "Mount Gilead Pty Limited", show that the proposal for entrenching Mr Macarthur-Onslow's control of the companies after the death or incapacity of Lady Macarthur-Onslow was that the constitutions of each of the companies would be amended in the manner set out in "attachment [**]".
When I asked Mr Beardow during his cross-examination whether the significance of the two asterisks was that there were no attachments, or there were attachments and he could not explain why the attachments were identified in the way they were, Mr Beardow responded that he thought there were no attachments (T 187.31).
The absence of the attachments was not followed up in the evidence; including by exploring what the substance of the attachments was intended to be; and whether there was any discussion with Lady Macarthur-Onslow about the intended effect of the attachments.
Paragraph 4(b), under the heading "Mount Gilead Pty Limited", suggests that the amendment of the constitution in relation to that company was intended to have the effect of making Lady Macarthur-Onslow the governing director, and thereafter Mr Macarthur-Onslow. It may be that the same change was intended for Kalemon, but the evidence does not make that clear.
The memorandum of advice suggested an alternative approach, which was to replace Kalemon as the trustee of the Mount Gilead Trust by a new company controlled by Lady Macarthur-Onslow and Mr Macarthur-Onslow.
Neither of Mr Beardow's suggestions was implemented. Mr Beardow did not give any evidence to explain that outcome; and he did not give evidence of any discussions with Lady Macarthur-Onslow concerning the memorandum of advice or its covering letter, or why the suggestions made were not implemented. There is no evidence that Lady Macarthur-Onslow responded to the advice, or even that she read the documents.
At the end of the cross-examination of Mr Beardow, I asked a number of questions concerning Mr Beardow's understanding of the statement in Mr Beardow's letter of advice to Lady Macarthur-Onslow dated 12 February 2004, where he stated "the recommended steps are designed to ensure that Katrina is not disadvantaged in regard to her ultimate economic interest". Relevantly, the following occurred (T 225.1): Q. Could you just explain to me how those steps are designed to ensure that Lady Hobhouse is not disadvantaged in regard to her ultimate economic interest? A. I can't explain it at this time, you will... I just - it doesn't prod any recollection of my thinking at the time.
The statement made by Mr Beardow in his letter of advice may be of significance, because taken literally it would have conveyed to Lady Macarthur-Onslow the proposition that the steps that were recommended in the letter that would remove Lady Hobhouse from control of the family companies would not disadvantage her in regard to her ultimate economic interest. It is difficult to see how that proposition could have been true, if the effect of her removal from any position of control was that Mr Macarthur-Onslow was left in sole control of the trustee of the discretionary trust. It is not surprising that Mr Beardow was unable to explain his statement.

Removal of Lady Hobhouse as a director of the companies

This is a convenient place to briefly note the circumstances in which Lady Macarthur-Onslow acted to remove Lady Hobhouse as a director of Kalemon and MGPL.
There was considerable evidence about the conduct of Lady Hobhouse that led to her removal as a director of the companies, and the reasons why Lady Macarthur-Onslow decided to take that course. It is sufficient to note that Lady Hobhouse stated, in her capacity as a director, primarily of MGPL, that she would not agree to aspects of the proposed agreement with Australand, and she would also not agree, in her capacity as one of the owners of the 11 acre lot, to make that land available to facilitate the performance by MGPL of the proposed agreement with Australand. Put briefly, Lady Hobhouse explained in cross-examination that her reasons for her conduct concerned a lack of faith on her part that Australand would comply with the letter and the spirit of any restrictions in the agreement upon encroaching upon, or diminishing the amenity of, the homestead lot that MGPL would retain.
It is not necessary for the court to make any findings concerning the merits of this intra-family dispute, and I do not do so.
It is clear that, rightly or wrongly, Lady Macarthur-Onslow formed the firm view that, if Lady Hobhouse continued to have any control over the conduct of the companies, her conduct would jeopardise the success of the negotiations with Australand; and then the capacity of MGPL to comply with its obligations under any agreement that may be reached; so that the benefits offered by the agreement may not be realised.
On 16 February 2002, Lady Macarthur-Onslow gave a letter to Lady Hobhouse. The letter was typed, but addressed "Dear Katrina" and signed "With love, your mother" in Lady Macarthur-Onslow's hand. As I understand it, the letter was drafted by Mr Beardow. Among other things, Lady Macarthur-Onslow said: "Notwithstanding the rupture to family relationships it will cause, I have resolved to exercise that control in the interests of the company and the employment of its assets and, in my view, the interests of you and Lee". The letter requested Lady Hobhouse to sign enclosed forms of resignation as a director of Kalemon and MGPL, and also to transfer her interest in the 11 acre lot for its market value. Lady Macarthur-Onslow threatened to use her power as governing director of Kalemon to remove Lady Hobhouse as a director of the companies.
Lady Hobhouse declined to resign as a director of the companies voluntarily.
On 20 February 2004, Lady Macarthur-Onslow, in purported exercise of her power as governing director, executed a document addressed to Lady Hobhouse removing her as a director of Kalemon.
On 27 February 2004, Lady Macarthur-Onslow sent a letter to Lady Hobhouse that enclosed a resolution by the members of MGPL exercising their power under the constitution of that company to remove Lady Hobhouse as a director.
Lady Hobhouse ceased to be involved in the activities of the two companies; particularly in relation to the proposed agreement with Australand. Thereafter, Mr Macarthur-Onslow assisted his mother in relation to conveying her to all relevant meetings; and also participating in the discussions. Mr Macarthur-Onslow also subsequently accompanied his mother to her consultations with Dr Darveniza.
After the cessation of Lady Hobhouse's involvement in the negotiations concerning the Australand proposal, Mr Macarthur-Onslow became the only person who could give evidence of private discussions with Lady Macarthur-Onslow concerning preparations for the numerous meetings that took place, including such matters as the consideration of reports and draft documents, the adoption of strategies for the meetings, and even the way that Lady Macarthur-Onslow presented herself at the meetings.

Mr Beardow's knowledge of Lady Macarthur-Onslow's dementia

Mr Beardow gave evidence that, on 24 February 2004, he attended a meeting with Lady Hobhouse's solicitors. At that meeting, one of the solicitors said: "Katrina has instructed us that Lady Dorothy is under treatment for dementia".
Mr Beardow said that this revelation came as a surprise to him. He said in his affidavit: "… I remained mindful of that statement, and had regard to it, throughout the period when I acted on behalf of Lady Dorothy during the following period of time". Mr Beardow did not give any evidence of any steps that he took to respond to the information that Lady Macarthur-Onslow suffered from dementia.
Mr Beardow said in cross-examination that he knew that dementia "was a condition of impairment of understanding and capacity that's started at probably an almost indiscernible level and progress to quite an advanced state where people were impaired, but that could be over a fairly short time or over a very long time" (T 156.6). He accepted that the disease could cause lack of understanding of events and perhaps meanings of things; it could affect memory, and a person's ability to comprehend an issue and to resolve a problem.
Mr Beardow said that, after he had learnt the suggestion that Lady Macarthur-Onslow was being treated for dementia, he did not discuss it with anyone, including Lady Macarthur-Onslow and her children, and did not enquire whether she was receiving any treatment, or make any enquiries of her treating doctor (T 155.10).
The evidence included a file note prepared by Mr Beardow in his own handwriting on 27 February 2004, which simply stated "Dr Darveniza St Vincent's". Mr Beardow could not explain the file note, and it did not trigger a recollection that he made any enquiry of Dr Darveniza, or any other person, concerning the significance of Lady Macarthur-Onslow's dementia. The file note is dated three days after the meeting with Lady Hobhouse's solicitors on 24 February 2004. The evidence does not permit any inference about how Mr Beardow learned of Dr Darveniza's name.

Instructions for will and powers of attorney

In pars 48 to 52 of his affidavit, Mr Beardow gave some general evidence of the way in which he obtained instructions from Lady Macarthur-Onslow concerning the preparation of her will. Among other things, he said "during the following period of almost 8 months, further issues were raised by her to me from time to time about her Will". He said that he has referred to specific dates, details of instructions and specific time durations, with the assistance of his file notes. As I understand it, Mr Beardow intended to convey that there may have been more occasions on which he spoke to Lady Macarthur-Onslow on the subject of her will than he has been able to remember and give evidence of in specific terms.
Mr Beardow gave evidence of a discussion that he had with Lady Macarthur-Onslow, on 14 May 2004, concerning the preparation of her will, and the execution of powers of attorney to protect Lady Macarthur-Onslow's interests in the event that she became incapacitated.
According to Mr Beardow, the following conversation took place concerning Lady Macarthur-Onslow's will: I said: 'Lady Dorothy, you will need to give some thought as to whom you appoint as your executors. Given the conflict between Lee and Katrina, I don't think it would be workable to have both of them appointed as your executors. In addition, I am not sure why Perpetual Trustee was appointed as an executor, I am not aware of that company being involved with you in any other matter.' Lady Dorothy: 'Yes, I understand what you say, who do you think I could appoint?' I said: 'Do you have any relatives or friends who you think would be willing and able to deal with your affairs?' Lady Dorothy: "Lee should be one of my executors but I really can't think of anyone else to pass on that burden, what about you?' I said: "Well perhaps you could appoint a number of those who are your present advisors. I suggest that you appoint 4 in total. That should provide some comfort to Katrina that views other than Lee's are taken into account with decision making.' Lady Dorothy: 'That would be a good idea. Andrew Martin and Stephen Rogers are familiar with my affairs and get on well with Katrina.' I said: "I can approach Stephen Rogers and Neil Hillman, one of Stephen's partners. Given everyone's ages and the prospects of changed circumstances, perhaps Neil Hillman could be an alternative if one of the other nominated executors does not wish to act. I will also speak to Andrew Martin.' Lady Dorothy: 'Yes, they would all be very good.' I said: 'Your current Will does not contain a provision for your executors to be able to be paid for work done in the administration of your estate. There should be a provision to permit them to charge for their time and to apply for commission.' Lady Dorothy: 'Yes this is appropriate'.
Mr Beardow expressed doubt as to why Perpetual had been appointed an executor under Lady Macarthur-Onslow's 1988 will. It is a reasonable inference, from the terms of that will, that the presence of Perpetual as an executor was intended to provide a mechanism to avoid deadlocks between Lady Hobhouse and Mr Macarthur-Onslow, as well, perhaps, as to provide some experience in managing the affairs of a substantial estate.
Mr Beardow suggested that, if Lady Macarthur-Onslow appointed a total of four executors, including three independent executors in addition to Mr Macarthur-Onslow: "That should provide some comfort to Katrina that views other than Lee's are taken into account with decision-making".
That statement was likely to convey to Lady Macarthur-Onslow, in a general way, that the additional executors would be able to temper the actions of Mr Macarthur-Onslow in relation to all of the affairs of Lady Macarthur-Onslow's estate, for the benefit of Lady Hobhouse. That would only be true whilst the will was being executed by the executors; but not after the executors had transferred the assets to the beneficiaries entitled to them.
During the same conversation, according to Mr Beardow, the following occurred concerning the desirability of Lady Macarthur-Onslow giving powers of attorney: I said: 'In addition to preparing a new Will for you, I recommend that you also grant an enduring power of attorney at this time, to ensure that your affairs can be administered throughout your lifetime, irrespective of your present capabilities, and you should also appoint someone as your guardian. A power of attorney authorises the persons appointed to make financial decisions and sign documents on your behalf, even if you lose capacity to make your own decisions. But the granting of a power of attorney does not enable your attorney to make decisions about your health and medical decisions. This is why a separate appointment of an enduring guardian is made. That person can make those decisions on your behalf. This is good advice for all people of your age, irrespective of how well you are doing at the moment.' Lady Dorothy: 'Yes, I agree, please prepare those documents.' Lady Dorothy also said: 'Who should I appoint to these roles?' I said: 'It should be people you trust. The individuals you appoint as your executors could also be appointed as your attorneys and guardians.' Lady Dorothy: 'Yes, that makes sense. They should be appointed.' I said: 'A specific power of attorney could be granted to Lee to conduct the farming business and a general power of attorney given to all the executors to deal generally with you affairs.' Lady Dorothy: 'Yes, that is a good idea.'
Mr Beardow said Lady Macarthur-Onslow made the following statements concerning specific devises and legacies: Lady Dorothy: 'I don't think the gift of the unit at Sutherland Crescent to Katrina is appropriate any longer. It was appropriate when I made my earlier Will because she needed to have a residence but she no longer needs to receive that property, so that provision in my Will should be removed.' Lady Dorothy: 'Christine Sinclair, who was my housekeeper, has died, so her legacy should be deleted.'
Lady Macarthur-Onslow did not execute any powers of attorney until 13 August 2004. In the meantime, following the passing of the Vendor Duty Act 2004 (NSW), which received the Royal assent on 24 May 2004, it became necessary, according to Mr Beardow, for MGPL to ensure that the whole of the Mount Gilead property that was the subject of the put and call option with Australand was used for primary production for either two continuous years, or at least three out of five years, immediately before the exercise of the option, to ensure that the farming exemption applied on the sale to Australand, which would allow it to avoid the imposition of a duty fixed at 2.25% of the sale consideration.
Mr Beardow therefore had a conversation with Lady Macarthur-Onslow, according to his affidavit, in the following terms: I said 'Another issue has arisen out of the option agreement with Australand. Your farming business will need to continue to be conducted throughout the option period to avoid Mount Gilead becoming liable for the new land vendor tax. This can be dealt with during your lifetime by ensuring you conduct the business and by providing a power of attorney which will operate throughout your lifetime, and by including a provision in your Will.' Lady Dorothy: 'Well I don't see any problem with that, Lee knows all about the farm. Can't he continue to conduct it?' I said: 'I think the thing to do is for you to grant a power to Lee as your attorney and to provide a power to the executors in your Will to conduct the business to cover the option period. The executors can then have Lee manage the farm business as they direct.' Lady Dorothy: 'Well I agree to that.' I said: 'Negotiations with Australand about the option agreement seem to be progressing to finality. Once that deal is closed, I will finalise the drafting of your Will and include provisions to meet the obligations under the final form of the option agreement.'
Mr Beardow's hand-written notes of this conference were in evidence, together with a typed transcription (court book pages 70 to 72). The handwritten note is two pages long. It is headed "Lady Dorothy's will". The notes deal with the identity of the executors and the powers of attorney and enduring guardianship that were discussed. The notes concerning the terms of Lady Macarthur-Onslow's will were: 4. Personal effects & 5. to Lee and Katrina in approx equal shares determined by the Executors other than LEE NO CLAUSE 6 BEQUEST NO CLAUSE 8
There was also a note about a change in the identity of the default residuary beneficiary desired by Lady Macarthur-Onslow.
These notes must be understood from the perspective that Mr Beardow had the 1988 will and used it as a basis for obtaining instructions for the new will. The reference to the earlier will shows that the notes concerning cll 4 and 5 related respectively to Lady Macarthur-Onslow's jewellery trinkets and articles, and furniture and like goods. The reference to "in approx equal shares determined by the Executors other than LEE" therefore appears to refer to furniture and like goods. The reference to there being no cl 6 bequest refers to the deletion of the devise of the Darling Point home unit to Lady Hobhouse. The reference to there being no cl 8 is to the deletion of the pecuniary legacy to the deceased housekeeper.
In this conference, Lady Macarthur-Onslow only gave instructions to Mr Beardow about the distribution by her will of relatively insignificant components of her estate.
Mr Beardow agreed in cross-examination that he did not explain to Lady Macarthur-Onslow during this conference that the executors where only responsible during the course of administration, but once assets have been distributed they no longer have any part to play in how the assets are dealt with (T 200.5).

Execution of Powers of attorney and appointment of enduring guardian

Mr Beardow said that he had the following conversation with Lady Macarthur-Onslow, before she signed the powers of attorney. I said: 'I have prepared a power of attorney which allows Lee to conduct your farming business. It has been prepared because of the deal with Australand but it goes beyond that transaction. I have to explain to you how this power of attorney operates and then certify that you understand my explanation. A separate power of attorney has been prepared by me to deal with your other financial and personal affairs but because I am to be one of the attorneys you appoint, I have arranged for Mark Bennett from Mallesons who has been working on the Australand negotiations to explain to you the provisions of that power of attorney'. I said: 'This is an enduring power of attorney. It will continue to operate throughout your lifetime even if you lose capacity to make decisions for yourself. This is the important element with an enduring power of attorney. Although you can revoke the appointment for so long as you have capacity to do that, should you lose capacity, your attorney will be able to continue to act on your behalf.' Lady Dorothy: 'Yes, I am aware that that is the purpose of the enduring power of attorney.' I said: 'If you sign the power of attorney, Lee will have authority to conduct the farming business at Mount Gilead by himself. It will remain effective throughout your lifetime unless you revoke it.' Lady Dorothy: 'Yes that is what I want'. I said: 'The other power of attorney will appoint Stephen Rogers, Andrew Martin, Lee and me as your attorneys to deal with all your other affairs.'
On 13 August 2004, Lady Macarthur-Onslow executed a general power of attorney in favour of Mr Macarthur-Onslow. The authority given by the power of attorney was limited by the terms of par 8 as follows: This power of attorney is limited to be used only for: (a) the conduct of any farming, grazing, agricultural or horticultural business or activity conducted by me now or at any time hereafter on the properties known as "Mount Gilead", Kippilaw", "Calamondah" and "Southlands" (or any of them) or on any other property on which any such business is hereafter conducted by me, including but not limited to: (i) the exercise of rights, privileges and obligations on my part expressed in Property Licence of or about the date of this power of attorney expressed to be between Mount Gilead Pty Limited (as licensor) and me (as licensee) in respect of Lot 2 in Deposited Plan 807555 and Lot 59 in Deposited Plan 752042, being part of the property known as Mount Gilead; and (ii) the operation of any bank account or trading account with any stock and station agent, pastoral agency or similar entity in respect of any such business; (b) the conduct of or giving effect of any matter or thing which, in the opinion of my attorney, is reasonably incidental to any of the matters expressed in paragraph (a) above.
Mr Beardow executed a certificate under s 19 of the Powers of Attorney Act 2003 (NSW), which included a statement that: "The principal appeared to understand the effect of this power of attorney".
On the same day, Lady Macarthur-Onslow executed a further general power of attorney in favour of Mr Macarthur-Onslow, Mr Beardow, Mr Andrew William Martin and Mr Stephen John Rogers (and if Mr Rogers should die or become incapacitated, Mr Neil Robert Hillman).
This general power of attorney was limited by par 8 in the following way: This power of attorney is limited only to the extent that, for so long as Lee Macarthur-Onslow (my son) is alive and not incapacitated, my attorneys cannot exercise any of the powers that I have granted, on or about this day by an enduring power of attorney, to Lee Macarthur-Onslow in respect of my farming and any similar business as more particularly identified therein.
Mr Mark Bennett, a solicitor, gave a s 19 certificate in relation to the execution of this general power of attorney.
On 3 September 2004, Lady Macarthur-Onslow executed an appointment of enduring guardian in favour of Mr Macarthur-Onslow, Mr Beardow, Mr Martin and Mr Rogers.
It appears that Mr Beardow caused copies of the powers of attorney to be forwarded to "Mount Gilead" under cover of a letter addressed to Lady Macarthur-Onslow, although the covering letter is not in evidence. Lady Hobhouse learned of the existence and terms of the powers of attorney because she had opened the envelope addressed to her mother. Lady Hobhouse gave evidence in cross-examination that, until a later time, when she was prohibited from opening correspondence addressed to her mother, she had been authorised routinely to open such correspondence.
As noted above, Mr Beardow's brief file note of his discussion with Lady Macarthur-Onslow on 14 May 2004 is in evidence. Its structure tends to confirm that the discussion concerning the identity of the proposed executors to Lady Macarthur-Onslow's will occurred in the same context as the discussion as to who should be appointed as the attorneys under the general power of attorney that related to issues other than the running of the properties. The power of attorney is described as: "from Lady Dorothy to Executors".

Further instructions for will on 20 August 2004

Mr Beardow said in his affidavit that, at a later meeting with Lady Macarthur‑Onslow (that is after 14 May 2004), he discussed with Lady Macarthur‑Onslow her desire to ensure that Mr Macarthur-Onslow had a property of his own to work on. He said that Lady Macarthur‑Onslow said: I think Lee should receive a specific rural property so that he can continue farming on his own account with some certainty separate from Mount Gilead. 'Kippilaw' near Goulburn should go to him.
Mr Beardow's affidavit suggests that he had a yet later conversation with Lady Macarthur-Onslow on this subject in the following terms: I said: 'I have given some more consideration to your Will. As you know, Kippilaw is owned by your company DWMO Investments, so that may create some drafting difficulties if Lee is to receive this property under your Will.' Lady Dorothy: 'I think Lee needs to have a property to work. I would like him to receive a property under my Will. If he does not want Kippilaw then I want him to receive enough money to allow him to buy another property." I said: 'All right, I will give some more thought to how that can be achieved through your Will."
The evidence includes a hand written file note (exhibit F) prepared by Mr Beardow, which he said in cross-examination probably was dated 20 August 2004 (the date was not written clearly). It is not clear whether this file note relates to one of the meetings with Lady Macarthur-Onslow referred to above. There is no transcription of the file note.
As I read the file note, it relates to an attendance by Mr Beardow with both Lady and Mr Macarthur-Onslow.
The note includes: Kippilaw go to Lee THEN HALF AND HALF
On its face, this is a note of an instruction from Lady Macarthur-Onslow to Mr Beardow that, apart from the gift of Kippilaw, or an equivalent rural property, Lady Macarthur-Onslow's testamentary intention at the time was that the balance of the property that she controlled would be shared equally between her two children.
Mr Beardow agreed in cross-examination that the reference to "half and half" related to the whole of the residue of Lady Macarthur-Onslow's estate, after the gift of Kippilaw (T 204.5).
Mr Beardow did not give any evidence that he discussed this instruction with Lady Macarthur-Onslow. He did not remind her of the discussion that took place in February 2004 concerning the difficulty of dividing the estate equally between the two children given the existing corporate and trust structure. He did not explain in his evidence why there was no other means to implement Lady Macarthur-Onslow's instruction than the one he ultimately adopted, which did not in fact implement that instruction. He did not discuss the difficulty further with Lady Macarthur-Onslow, or explore alternative approaches. Indeed, on his own evidence, Mr Beardow did not ever discuss this instruction with Lady Macarthur-Onslow, or even mention the instruction. On the face of the evidence, Lady Macarthur-Onslow gave this instruction to Mr Beardow on 20 August 2004, and would reasonably have assumed that Mr Beardow implemented it. If Lady Macarthur-Onslow had remembered Mr Beardow's somewhat cryptic comment made in February that she would have to rely upon Mr Macarthur-Onslow, it is unlikely that she would have given Mr Beardow the "half and half" instruction in August without raising the difficulty of implementing her instruction.

Preparation and execution of 15 October 2004 will

Mr Beardow said that he began to prepare the will shortly following the execution of the put and call option agreement with Australand on 13 August 2004.
He said that, after three or four draft revisions, he was satisfied that all of the matters he had discussed with Lady Macarthur-Onslow about her will had been properly included in the document.
Mr Beardow did not give any evidence of any specific discussions with Lady Macarthur-Onslow on the subject of the terms of her will, other than the meetings on 14 May and 20 August 2004.
Mr Beardow then set up a conference with Lady Macarthur-Onslow on 15 October 2004 to go through the provisions in the will, and to arrange for its execution.
Mr Beardow did not give Lady Macarthur-Onslow a copy of the draft will before the conference. He accepted in cross-examination that he did not communicate with Lady Macarthur-Onslow about the progress of the will until he presented the draft to her on the day it was signed (T 209.17).
Mr Beardow's timesheets record that he spent 2.3 hours with Lady Macarthur-Onslow conferring with her about the terms of the draft will, and arranging for its execution. It is likely that some of this time elapsed when Mr Macarthur-Onslow was present at the meeting. It is not clear how long Mr Beardow spent with Lady Macarthur-Onslow alone.
Mr Beardow did not prepare a file note of his conference with Lady Macarthur-Onslow.
In his affidavit, Mr Beardow dealt with the provisions in the draft will under a number of different subject headings. The first was changes to the 1988 will. Mr Beardow said that he dealt with each of the changes, and he read out to Lady Macarthur-Onslow or paraphrased each of the provisions that had been amended. The provisions related to the identity of the executors (cl 2); the removal of the devise of the Darling Point unit to Lady Hobhouse (cl 6); the deletion of the legacy to Mrs Sinclair (cl 8); and the change in the identity of the default residuary beneficiary (cl 14).
In response to his words about each of these amendments, Lady Macarthur-Onslow said: "Yes, I understand, that" or "That is what I want".
Mr Beardow then set out in his affidavit the discussion that he had with Lady Macarthur-Onslow concerning the provisions in the will in respect of Kippilaw, and the mechanism for Mr Macarthur-Onslow to be given the funds necessary to enable him to purchase that property from DWMO Investments.
In response to each part of the explanation, Lady Macarthur-Onslow said: "Yes, I understand that", or "Yes, I understand that, it is what I want".
In relation to the provisions in the will concerning the conduct of the farming business, Mr Beardow gave evidence of the following conversation with Lady Macarthur-Onslow: I said: I have included a special power to enable the executors to conduct your farming business. I think this is necessary. Lady Dorothy said: Yes, I recall you told me this previously. I also said: I have also provided for the ongoing conduct of the farming business to ensure that the liability for land vendor tax is avoided. The clause I have drafted provides for the farming business to be conducted for up to 21 years after your death, but that will cease if Australand exercises the option and acquires the property for its development. The income will be payable to Lee and Katrina while the business is conducted. Lady Dorothy said: I understand that. I also said: As we previously discussed, your executors are given power to delegate the conduct of the farming business to Lee and for him to be paid for his work. Lady Dorothy said: Yes, that is what I want.
Mr Beardow accepted in cross-examination that the terms of cl 11(b) of the will gave the executors an absolute discretion as to how to apply the proceeds of the operation of the farming business, without any obligation to ensure equality among Lady Macarthur-Onslow's children (T 213.35). Mr Beardow accepted that the consequence was that Mr Macarthur-Onslow might get all of the income and Lady Hobhouse nothing (T 213.48). He also accepted that he did not discuss with Lady Macarthur-Onslow the consequences of the executors' discretion (T 214.15). Thus, the only thing that he said to Lady Macarthur-Onslow on the subject was the statement recorded by him in his affidavit that the income will be payable to the two children while the business is conducted.
Mr Beardow gave evidence of the following conversation concerning what he described as "residue of estate (control of companies)". It may be significant that Mr Beardow conceived of this subject as being primarily concerned with the control of the companies, and not the achievement of Lady Macarthur-Onslow's instruction of an approximate equal distribution of the property that she owned or controlled between her two children.
The conversation was in the following terms: I said: I have changed how the residue of your estate is to be divided. This is important because your shareholding control is part of your residuary estate. Your current will provides for the residue to be divided into two shares equally for Lee and Katrina. I have drafted your new will so that there are four shares. I also said: The residue is to be divided into four parts, two of which will contain your shareholdings to be divided between Lee and Katrina in a way that gives Lee control. I said: Because your 100 A class shares in Kalemon have voting rights, those shares will be divided 51 to Lee and 49 to Katrina. Lee will then be able to control Kalemon, which ultimately controls Mount Gilead and the trust. Lady Dorothy said: Yes, that is what I want. I also said: Lee will also receive your 9,562 non-voting preference shares in Mount Gilead Pty Ltd in his share of the residue. I have provided that Katrina will receive the equivalent amount of $9,562 in her share. Lady Dorothy said: Yes, I understand that. I also said: Lee will also receive your shares in Macarthur-Onslow Nominees, the company we established for you and Lee earlier this year. This way, Lee will end up with the whole ownership of that company. Lady Dorothy said: Yes, I agree. I also said: Of the other two shares in your residuary estate, one will be held for each of Lee and Katrina. Each of those residuary shares will receive half of your shares in DWMO, which will basically be your public company investments after Kippilaw or its value has been given to Lee. Lady Dorothy said: That's right, they should receive half of those shares. I also said: Having regard to their present ages, I have provided that they will receive their interest in your estate when they turn 60, rather than 55. Lady Dorothy said: That is appropriate.
Mr Beardow did not say that he gave any explanation to Lady Macarthur-Onslow about the practical consequences of giving Mr Macarthur-Onslow 51 of the 100 voting shares in Kalemon, which was the trustee of the Mount Gilead Trust, and therefore the shareholder in MGPL, with the power to control the constitution of the board of directors of that company, and thus how the discretions vested in the trustee might be exercised in relation to the distribution of any profits of the Trust, particularly the fruits of the agreement with Australand (or any alternative developer) in relation to the residential development of Mount Gilead.
Mr Beardow did emphasise that the differential gift in voting shares would give "Lee control", but he did not say anything that would specifically have directed Lady Macarthur-Onslow's mind to the possible consequences of that control in relation to the exercise of the Trustee's discretion, rather than the conduct of MGPL in relation to compliance with its obligations under the agreement with Australand.
Mr Beardow agreed in cross-examination that the first time that he had discussed with Lady Macarthur-Onslow the 51-49 split in the gift of the voting shares in Kalemon was on 15 October 2004; but he said that, while those "specific numbers" had not been discussed, "the principle behind it had been discussed with her" (T 216.5). In relation to the subject of the control of Kalemon, the cross-examination included the following (T 216.12-216.48): Q. And you said that Lee would then be able to control Kalemon, and ultimately control Mount Gilead and the trust. A. Uh-huh. Q. And that was said in the context, obviously, of the control of those companies, so that he would have corporate control. Is that right? A. Yes. Q. Was that the full extent of your explanation of that on that occasion to Lady Macarthur-Onslow, to the best of your recollection? A. I don't recall the extent of our discussions. No, I don't recall at all. … Q. Can I ask you, please, to turn to page 318 of the court book? Which contains the provisions of clause 16 of the will, which is annexed to your affidavit. And you'll see clause 16, subclause A, paragraph 1 deals with the A-class shares in Kalemon, and then subparagraph 2 of subclause A of clause 16 deals with the B- class shares in Kalemon. And in your affidavit, you've not indicated that you explained to Lady Macarthur-Onslow in relation to the bequest of those particular shares. A. I accept the affidavit doesn't touch on that. Q. You have no independent recollection otherwise of whether you actually did explain that to her. Is that correct, as you sit in that witness box today? A. I can't recall. Q. Just for completeness, the same would apply in relation to the gift in subclause (a) of clause 17 in relation to the 49 shares that you have referred to in your affidavit which go to Katrina and the 2539 shares, the B class shares. Again, you have no recollection whether you raised that with Lady Macarthur-Onslow on 15 October 2004. A. I don't recall.
Mr Beardow said initially that he did not recall explaining that one of the consequences of the corporate structure giving control to Mr Macarthur‑Onslow was that the homestead lot at Mount Gilead could be sold, with the consequence that Lady Hobhouse would not be able to continue to live at Mount Gilead (T 218.12). He then, however, said: "Not at this time when she was doing the will" in response to a question as to whether he explained to Lady Macarthur-Onslow that the discretionary trust could be exercised in a way that the nominated beneficiaries may not receive anything (T 218.31 and .40).
Mr Beardow's position appears to be encompassed in his response to the question: "When did you explain it to her?" He responded saying that: "It was the subject of discussions and awareness. It was something I believed she understood" (T 218.43). Mr Beardow elaborated by suggesting that it did not follow from the fact that he had not discussed the issue specifically, that Lady Macarthur-Onslow did not understand that the Trust was a discretionary trust (T 219.12). I infer that Mr Beardow was relying upon his long association with Lady Macarthur-Onslow, and his knowledge that she had for many years occupied the role of governing director in relation to the trustee of the discretionary trust.
Mr Beardow agreed that the substance of his explanation to Lady Macarthur-Onslow of the possible consequences of giving Mr Macarthur-Onslow control of the discretionary trust was the statement that he made in the meeting in February 2004, when he said that Lady Macarthur-Onslow would have to rely on Mr Macarthur-Onslow doing the right thing by Lady Hobhouse.
A number of general observations may be made concerning Mr Beardow's evidence of the specific conversations with Lady Macarthur-Onslow.
First, while I accept that Mr Beardow was a truthful witness, it is clear that he relied upon his file notes where they were available, and where they were not available, he was required to reconstruct from memory events that occurred some 11 years before the date of his affidavit. There must be a substantial amount of reconstruction in relation to the conversations to which he has deposed in direct speech.
Secondly, every response by Lady Macarthur-Onslow to which Mr Beardow deposed was in the form: "Yes I agree", or "Yes, I understand that", or something similar. All of the responses related to what Dr Wijeratne described as "closed questions". While Mr Beardow said in his evidence that Lady Macarthur-Onslow asked for further clarifications of what he had said, or requested him to repeat his statements, Mr Beardow did not suggest that he had in any active way asked questions of Lady Macarthur-Onslow that required her to explain her understanding of the effect of the provisions of the will, so that Mr Beardow could objectively satisfy himself that Lady Macarthur-Onslow understood the effect of those provisions.
In his affidavit, Mr Beardow said that, after he had explained the provisions of the will to Lady Macarthur-Onslow, he handed the document to her and asked her to read through it. She appeared to read through the document and then said: "Yes, I understand all of that. I am happy to sign it".

Mr Beardow's view of Lady Macarthur-Onslow's capacity

Mr Beardow said that he was satisfied that Lady Macarthur-Onslow understood each of the provisions of her will, and that the document she was to sign would have testamentary effect. He said that, to his observation and from his discussions with Lady Macarthur-Onslow, she understood the things that he said to her about the provisions of her will and what she wanted in her will.
He said that he was generally familiar with the requirements to be met for a testator to have testamentary capacity, and he was mindful of her age and the matters which had been said about her at the meeting he attended with the solicitors acting on behalf of Lady Hobhouse on 24 February 2004. He said that he had no doubt that Lady Macarthur-Onslow had full testamentary capacity at the time she executed her 2004 will.
Mr Beardow also said that it was his assessment that Lady Macarthur-Onslow had a clear understanding of her own assets and the assets of entities that she effectively controlled. He said she was acutely aware of the claims and expectations of both Lady Hobhouse and Mr Macarthur-Onslow to obtain a benefit under the will.
Mr Beardow concluded this part of his evidence by saying that, based upon his observations throughout the several months leading up to the execution of the will, and from his conversations with Lady Macarthur-Onslow on 15 October 2004, "I had no cause to doubt that Lady Dorothy had testamentary capacity".
In this part of his evidence, Mr Beardow appears to have focused on the issue of whether Lady Macarthur-Onslow had testamentary capacity. However, it is implicit in his evidence that it was his opinion that she understood the meaning and effect of the will that she executed.
In his affidavit, Mr Beardow gave evidence concerning his dealings with Lady Macarthur-Onslow after she executed her will on 15 October 2004. He said that he continued to meet with Lady Macarthur-Onslow and had regular telephone conversations with her in respect of further negotiations and dealings with Australand.
He said that Lady Macarthur-Onslow attended and participated in more than 25 meetings in the period after her execution of the 2004 will. Many of these meetings were of a technical nature "but there were others requiring commercial awareness and decisions on the part of Lady Dorothy on behalf of Mount Gilead Pty Ltd".
Mr Beardow identified three further significant agreements involving Australand in relation to which Lady Macarthur-Onslow provided instructions to him. The agreements were executed on 5 November 2004, 18 October 2005 and 23 December 2005.
Mr Beardow said (par 110): Throughout the period of time I acted on behalf of Mount Gilead Pty Ltd, Lady Dorothy and entities controlled by her, on the basis of my training and experience as a solicitor over many years, I was aware of my duties and obligations as a solicitor to be satisfied that the client from whom I received instructions had legal capacity to provide competent instructions and I believe that that training and experience provided me with an appropriate conceptual framework to assess the capabilities of clients.
He said specifically that: "I did not identify any indication of impaired capacity so as to require me to ask specific questions or take any other action to assess Lady Dorothy's capacity to provide instructions…" (Par 111).
Finally, Mr Beardow addressed the fact that he had been told that Lady Macarthur-Onslow was receiving treatment for dementia and said: "It was my assessment, and I was satisfied, that Lady Dorothy understood the particular matters which were in issue so as to have legal capacity to provide instructions to me in respect of the matters I was acting on her behalf… and that at the time that she provided me with those instructions she had the capacity to make decisions in respect of those instructions" (par 112).

Evidence of Mr Andrew William Martin

Mr Martin was the principal representative of JLL in its dealings with MGPL in relation to the proposed sale of parts of Mount Gilead for residential development, and the negotiations with Australand.
He was a school friend of Mr Macarthur-Onslow, and had advised the company and the family about earlier proposed sales of parts of Mount Gilead.
Mr Martin agreed to be nominated as an executor in Lady Macarthur-Onslow's will, but he renounced his appointment on 17 September 2013.
He said in his affidavit that, during September and October 2003, he attended a number of meetings with Lady Macarthur-Onslow, Mr Macarthur-Onslow and Lady Hobhouse, which were also attended by their legal and accounting advisers, to consider the proposals which had been received in response to the expressions of interest campaign. He was told on 8 October 2003, that they had decided to proceed with the proposal received from Australand.
Mr Martin said that he took Lady Macarthur-Onslow through the contents of the heads of agreement letter signed by Lady Macarthur-Onslow on 27 October 2003, and that he "satisfied [himself] that she understood the terms of the transaction as set out in the letter".
He gave evidence of a meeting on 27 January 2004 at the offices of JLL, at which Lady Macarthur-Onslow responded to a request from Mr Best for instructions to proceed with the agreement with Australand, after he had given an update of the developments with Australand. She responded saying: "Yes I agree, and I want to proceed". Mr Macarthur-Onslow and Lady Hobhouse also said: "Yes, I also agree".
Mr Martin said that, during the period May 2004 to the end of July 2004, he attended approximately 10 meetings that were also attended by Lady Macarthur-Onslow, at which the progress of negotiations was discussed and instructions provided on behalf of MGPL. He annexed to his affidavit a number of documents listing the issues that were discussed at various meetings, for the purpose of JLL recording its instructions from MGPL. The documents set out a substantial number of detailed commercial issues that required resolution. There are many handwritten notes on the documents summarising instructions and further steps to be taken. There are many references to "MG", meaning MGPL, for example: "MG Agreed".
One of these documents related to a meeting at the office of Mallesons on 6 June 2004. The meeting was led by Mr Best. Mr Best read out all of the issues set out in the document, and then said words to the effect: "What is your position on this point?" Mr Martin said that Lady Macarthur-Onslow responded by saying: "I agree with that", or asked a question of Mr Best or himself, saying: "What do you recommend I do about that?"
Mr Martin gave evidence of a number of other occasions on which he attended meetings at which Lady Macarthur-Onslow was present, or when he had conversations with her, in which she participated by making appropriate responses and observations.
Mr Martin said (par 38): It was my opinion that Lady Dorothy was a handsome woman. To my observation, throughout the time that I knew her, she was always well-dressed and her hair was maintained in a neat and clean condition. She was a well organised woman with an air of authority around her. Other persons attending the meetings deferred to her.
He responded to aspects of Ms Hayman's affidavit by saying that, during the period that he knew Lady Macarthur-Onslow, she appeared to him to be highly intelligent, a person who had no difficulty making up her mind, a person who was always interested in one's welfare, always immaculately dressed, always wearing smart clothes, and she always had her hair done and face made up. He said that he did not ever observe Lady Macarthur-Onslow to be looking unkempt and scruffy or to wear shabby old clothes.
Mr Martin elaborated on the evidence given in his affidavit in oral evidence in chief. He said that he clearly recalled Lady Macarthur-Onslow asking questions of her advisers during the many meetings that she attended concerning the proposed transaction with Australand. She asked questions on such subjects as the final price, the terms and conditions that had to be met by MGPL, and how long the transaction would last. She asked real estate questions of Mr Martin, and legal questions of Mr Best.
Mr Martin said that he observed Lady Macarthur-Onslow making the necessary decisions on behalf of MGPL; being in respect of the key commercial decisions about the pricing and the main terms attached to the pricing.
Mr Martin agreed in cross-examination that at the meetings Lady Macarthur-Onslow was always assisted by her advisers. Mr Martin thought that she usually sat in the middle between one or other of Mr Macarthur-Onslow, Mr Beardow, or Mr Best on either side.
Mr Best handled the legal side of the negotiations. Mr Martin did not agree that Mr Best did all the talking, and said that Lady Macarthur-Onslow would occasionally interrupt and ask direct questions.
Mr Martin did not accept that Lady Macarthur-Onslow's questions were limited to such basic questions as "when will this all be over?", "when will this be rezoned?", and "how much money to we get?" He said in particular that Lady Macarthur-Onslow clearly understood the cash flow schedule that was part of the transaction summary prepared by Mallesons (at court book p 563); although he conceded that he "presumed" that she understood the document.
Pressed as to the real nature of Lady Macarthur's involvement in the negotiations, the following occurred (T 240.20): Q. I think, really, what I'm trying to get at, Mr Martin, is to say well, she at no time said "Look, I've read proposal A, I've read proposal B, C and D, I think A is better in this respect rather than C but D, that we should get rid of", or something like that. It didn't go in that process, did it? A. No, because she looked at the numbers, and she selected the highest one, which happened to be Australand.
Mr Martin said that he could not recall being told that in June 2002 Lady Macarthur-Onslow had been diagnosed as suffering from dementia.
At the end of his cross-examination, Mr Martin gave some evidence about the fate of the agreement between MGPL and Australand. He said that the put and call option with Australand had come to an end in 2008, just after the global financial crisis. MGPL subsequently entered into an agreement with Lend Lease for the development of land at Mount Gilead. The legal documentation was entered into in the first half of 2015. That is all that the evidence discloses about the agreement with Lend Lease.

Evidence of Mr James Daniel Lane

Lady Macarthur-Onslow executed an enduring power of attorney drafted by Mr Beardow on 3 September 2004. As Mr Beardow was one of the nominated attorneys, he arranged for Mr Lane to provide Lady Macarthur-Onslow with independent legal advice in relation to the execution of the enduring power of attorney, and to witness the execution of the document. At the time, Mr Lane was a partner at Lane & Lane Lawyers. Mr Lane swore an affidavit in the defendants' case on 31 July 2015.
Mr Lane gave evidence of his experience, and his qualifications to provide the advice required by Lady Macarthur-Onslow. He noted that s 6C(1)(e) of the Guardianship Act 1987 (NSW) required him, as the witness to the enduring power of attorney, to certify that Lady Macarthur-Onslow executed the instrument voluntarily in his presence and appeared to understand the effect of the instrument.
Mr Lane set out the conversation that he had with Lady Macarthur-Onslow concerning the advice that he gave to her, following which she said to him: "I understand all of that. It is what I want." Mr Lane then stated that he was satisfied that Lady Macarthur-Onslow had the required capacity to make the appointment of enduring guardian, and to provide him with instructions to enable him to certify as the witness to her signing the document.
Mr Lane was not cross-examined on the evidence that he gave.
I will therefore accept the evidence of Mr Lane, as a solicitor of about 14 years' experience in the field at the time, that he formed a genuine opinion, on reasonable grounds, that Lady Macarthur-Onslow appeared to have the capacity to understand the effect of, and form the desire to execute, the enduring power of attorney.

Witnesses to execution of 2004 will

The witnesses to the execution of the 2004 will were Mr Mark William Mackrell and Ms Julie A Davis. Mr Mackrell swore an affidavit of attesting witness on 17 December 2014. He did no more than to verify that the signatures on the will in the place for the witnesses were the signatures of himself and Ms Davis.
Mr Mackrell did not provide any evidence of the circumstances in which the terms of the will were read or explained to Lady Macarthur-Onslow, or any evidence of conversations going to her testamentary capacity or knowledge and understanding of the terms and effect of the will: cf what is now called Succession Law and Practice New South Wales, by Handler and Neal (Butterworths) at [10,019], where it is recommended that all others present at the signing of the will in addition to the solicitor and any medical practitioner should make appropriate notes.

Evidence of Dr Chanaka Wijeratne

Dr Wijeratne is a consultant psychiatrist, and conjoint senior lecturer in psychiatry at the University of New South Wales, who gave evidence in Lady Hobhouse's case, by means of a report addressed to her solicitor dated 17 November 2015.
Necessarily, Dr Wijeratne's evidence took the form of a medico-legal report based upon the information and assumptions that were given to him, as he was retained after Lady Macarthur-Onslow's death.
Dr Wijeratne summarised his task in the first paragraph of his report, as being to provide an opinion as to whether Lady Macarthur-Onslow retained testamentary capacity on 15 October 2004; whether she had knowledge and approval of the will signed on that date; and whether any undue influence was present.
It is doubtful whether an expert consultant psychiatrist would be qualified to express an opinion on the issue of whether Lady Macarthur-Onslow executed the will as a result of any undue influence; but as that aspect of Lady Hobhouse's case has been abandoned, that is not a question that requires further consideration.
Dr Wijeratne set out his qualifications in a detailed curriculum vitae that was appended to his report. I am satisfied that Dr Wijeratne had, in principle, the expertise to provide an expert opinion on the two questions put to him that remain relevant. However, the effectiveness of that expertise will necessarily be affected by the adequacy of the information and assumptions given to him, and the approach that he adopted in formulating and justifying his expert opinions.
Dr Wijeratne listed the facts, matters and assumptions upon which his report was based at the beginning of his report. That list included the pleadings, the substantive affidavits served on behalf of all parties (including the affidavit of Dr Paul Darveniza, who was Lady Macarthur-Onslow's neurologist, which was served by the defendants); as well as documents produced on subpoena by Dr Darveniza and Lady Macarthur-Onslow's general practitioner, Dr Hardy.
As the affidavit of Mr Martin was sworn on 22 March 2016, Dr Wijeratne did not have the benefit of Mr Martin's evidence to consider in preparing his report. That had a significant effect on Dr Wijeratne's report, as Mr Martin's affidavit was an important source of the defendants' evidence concerning Lady Macarthur-Onslow's apparent lucidity and capacity as a result of her participation in the various meetings that took place in 2003 and 2004, concerning the proposed sale of part of the Mount Gilead property. Consequently, Dr Wijeratne was deprived of the opportunity of responding to a significant aspect of the defendants' case.
Dr Wijeratne then set out a relatively elaborate summary of his view of the relevant facts and circumstances, as taken by him from the documents that he had been given. This included (a) a biography of family and other relationships; (b) a summary of the family company structure; (c) an outline of the relationship between Lady Hobhouse and Mr Macarthur-Onslow, particularly in relation to the proposed development of Mount Gilead; (d) an outline of Lady Macarthur-Onslow's medical history; (e) a summary of further medical history based upon a review of the documents prepared by medical professionals; (f) a history of Lady Macarthur-Onslow's conduct based on the evidence of Lady Hobhouse's witnesses; and finally (g) a history of Lady Macarthur-Onslow's testamentary intention and will making. In this way, Dr Wijeratne isolated from the documents given to him his own view of all relevant facts and circumstances.
Dr Wijeratne then set out his opinions. In relation to the issue of capacity, Dr Wijeratne responded to specific questions. It will be necessary to limit my review of Dr Wijeratne's expert evidence to the more significant aspects of that evidence.
First, Dr Wijeratne gave an affirmative answer to the question as to whether, in his opinion, in October 2004, Lady Macarthur-Onslow suffered from a medical or mental condition, or conditions, which was likely to impair her cognition? For reasons that he set out in outline, based upon his summary of the facts and circumstances, Dr Wijeratne concluded: In October 2004, Lady Dorothy experienced a disorder of cognitive impairment, dementia. The specific diagnostic sub-type of dementia is uncertain as I have not had available to me the original films or formal report of the cerebral MRI scan, and the sub-domain scores on the MMSE. Given these limitations, it is hypothesised that dementia was of "mixed" aetiology, due to a combination of Alzheimer's disease and cerebrovascular disease. It is emphasised that I agree with Dr Darveniza's diagnosis of dementia.
Secondly, in response to a request that he describe the nature and severity of the cognitive impairments, Dr Wijeratne stated that, at the time she executed the will, Lady Macarthur-Onslow's MMSE score was 18/30, which suggested that her cognition had declined to a level of dementia of at least moderate severity. Dr Wijeratne said that, in the case of persons whose premorbid intellectual function was superior to very superior (which would include Lady Macarthur-Onslow) the threshold for mild dementia was a score of 27 or 28, rather than 24 or 25, which would be more appropriate for the general population. Dr Wijeratne also noted that the MMSE does not examine frontal executive functions of insight, judgment and the ability to plan.
Thirdly, Dr Wijeratne responded affirmatively to the question as to whether Lady Macarthur-Onslow's impairments impacted upon her everyday life. In support of that answer, he provided a short summary of some of the evidence concerning the difficulties experienced by Lady Macarthur-Onslow in her daily life given by Lady Hobhouse and Ms Hayman.
Fourthly, Dr Wijeratne responded to a number of sub-questions concerning the effect of Lady Macarthur-Onslow's impairments on her capacity to make a will.
He began by giving his opinion that Lady Macarthur-Onslow's impairments did not prevent her from understanding the nature of the act of making the will and its effect, as even people with dementia of moderate severity will retain a basic awareness and appreciation of the purpose and effect of making a will. This is a significant finding concerning the issue of whether Lady Macarthur-Onslow had testamentary capacity.
He then said that the cognitive impairment was likely to have compromised Lady Macarthur-Onslow's ability to understand the nature and extent of the property of which she was disposing; and in this regard, he said that the threshold to meet this particular Banks v Goodfellow criterion of testamentary capacity must be higher in situations, such as the present, in which an estate is more complex, than in cases where the testator may only own a house and a car. Dr Wijeratne said: "Her understanding of the value of money, let alone her estate, is open to question". He responded to Dr Darveniza's view that Lady Macarthur-Onslow knew in detail the extent and approximate value of her estate, by saying that there was no evidence that this view "was compared with an objective list of her assets". Dr Wijeratne relied upon Lady Hobhouse's evidence concerning Macarthur-Onslow's misguided understanding as to what she apparently understood to be the parlous state of her finances.
Next, Dr Wijeratne expressed the opinion that it was likely that Lady Macarthur-Onslow retained awareness that her two children might reasonably be thought to have a claim on her testamentary bounty.
Finally, Dr Wijeratne stated his view that Lady Macarthur-Onslow's cognitive impairments were likely to have compromised her capacity to evaluate the respective nature and strengths of the claims of the beneficiaries to which she should give effect. Dr Wijeratne gave this opinion in the context of his own stated understanding of the relevant legal principles concerning the standard of proof of intact testamentary capacity required concerning the ability to identify, evaluate and discriminate between the respective strengths of the claims of potential beneficiaries. The higher standard of proof was stated to be required in complex cases. Dr Wijeratne based this opinion on the following reasoning: Whereas the evidence of Mr Beardow and Dr Darveniza showed that she wished for her estate to be shared equally, the 2004 Will resulted in Katrina no longer being the only beneficiary of the property in Darling Point and in Lee being favoured by the gift of the property, Kippilaw. Neither decision was explained at all adequately, other than Lady Dorothy's stated (sic) that Katrina no longer needed the Darling Point property. In contrast, in 1998 Lady Dorothy provided very cogent reasons for the bequest of this property to Katrina.
Fifthly, Dr Wijeratne expressed the view, without explanation, that Lady Macarthur-Onslow suffered from a medical condition that was a disorder of the mind that was likely to poison her affections, pervert her sense of right or prevent the exercise of her natural faculties.
Finally, Dr Wijeratne expressed an opinion, based primarily on aspects of Lady Hobhouse's evidence, that Lady Macarthur-Onslow developed suspiciousness or paranoia around 2002.
In his summary, Dr Wijeratne stated that, when Lady Macarthur-Onslow signed her will on 15 October 2004, she experienced a significant level of cognitive and functional impairment consistent with dementia of moderate severity. He said that it was likely that she understood the purpose of making a will, and understood that her two children were entitled to her testamentary bounty. He said: "It is unlikely, however, that she understood the value of her estate given her basic understanding of finances was such that by this time she had difficulty knowing how much to pay her cleaner and believed that she could not afford the services of a gardener". Finally, he said: "In my opinion, Lady Dorothy did not retain testamentary capacity on 15 October 2004".
Dr Wijeratne then dealt with the question of Lady Macarthur-Onslow's knowledge and approval of the terms of her 2004 will.
A number of significant aspects of Dr Wijeratne's report concerning this issue were rejected. Dr Wijeratne gave the following evidence: That the Will was signed at a time she experienced dementia of moderate severity is a seminal factor that does cast doubt as to whether Lady Dorothy had full knowledge and approval of the Will. Specifically, someone with her level of cognitive impairment is vulnerable to uncritically accepting advice from apparently trusted sources.
Dr Wijeratne provided some limited reasons (insofar as his report was admitted) in support of his view that: "The specific circumstances surrounding the making of the Will of 2004 were suspicious".
I have found Dr Wijeratne's expert report to be of limited use. Those limitations arise more from the constraints under which Dr Wijeratne was required to prepare his report than inadequacies in his reasoning or expertise. From the way Dr Wijeratne gave his evidence in cross-examination, I should say that I found him generally to be an impressive and conscientious expert witness.
The principal source of difficulty is that Dr Wijeratne was required to prepare his own summary of material facts and circumstances, from the documents that were provided to him. As I have noted above, Dr Wijeratne did not have the benefit of Mr Martin's affidavit when he prepared his report. Consequently, it was practically unavoidable that Dr Wijeratne has prepared his summary of the facts and circumstances in a way that gives primacy to the evidence in Lady Hobhouse's case. In particular, Dr Wijeratne was not able to respond to Mr Martin's evidence of Lady Macarthur-Onslow's participation in numerous meetings concerning the proposed sale of part of the Mount Gilead property for the purpose of subdivision, including her actions in giving instructions to her various advisers, and her execution of significant commercial documents.
Consequently, Dr Wijeratne has expressed his opinions on the basis of findings of fact that differ in material ways from the findings of fact that I have made based upon my consideration of the whole of the evidence.
In particular, I am unable to accept that the facts determined by Dr Wijeratne provide a proper basis for his opinion that at the time she executed the 2004 will, Lady Macarthur-Onslow lacked testamentary capacity.
A finding to that effect may still be available to the court, but it would have to be justified by a more balanced view of the evidence.
The limited part of Dr Wijeratne's report that was admitted into evidence on the issue of Lady Macarthur-Onslow's knowledge and approval of the 2004 will provides little assistance to the court.
Dr Wijeratne was cross-examined. The cross-examination covered the evidence given by Mr Martin, as that witness' evidence was served after Dr Wijeratne had prepared his report.
As I have said above, I was impressed by Dr Wijeratne as an expert witness. He had a substantial command of the detail of the evidence upon which he had based his expert opinions. He defended his opinions; but he was also prepared to make concessions where appropriate. I generally accept the evidence given by Dr Wijeratne in cross-examination, aspects of which I have found very helpful.
I have taken the view that the following aspects of the cross-examination of Dr Wijeratne are of particular significance.
Dr Wijeratne accepted that it was common for people with dementia to have episodes of confusion, and episodes of lucidity in which they are cognisant of what is going on around them (T 115.6). Dr Wijeratne said that it is a universal feature of dementia that patients vary in their lucidity, so that there may be periods when they are more confused and other periods when they are more alert and attentive. He said that the pattern was highly variable, and that the broadest pattern is that patients with dementia tend to be more confused in the late afternoon or early evening.
Dr Wijeratne expressed the following opinion concerning the evidence that Lady Macarthur-Onslow participated in a lucid way in a substantial number of commercial meetings (T 116.44): … What we are talking about there is a very simplistic cognitive function, which is attention. With regard to testamentary capacity in particular, even if there was a lucid interval, what we do know about lucid intervals is that during lucid intervals, attention and concentration improves, but the higher order cognitive functions of executive function, which I alluded to earlier, do not improve. And it is those higher order executive functions that are required to make decisions about complex tasks, having absorbed complex and often contradictory information. So I think this is the whole issue I have with this notion of lucid interval. And lucid intervals, too, must be understood tend to be relatively brief in duration… They do not improve executive function and it is executive function which is, you know, the, the, the most, which, which we require for more sophisticated thinking, planning, judgment that does not improve in lucid intervals.
Dr Wijeratne referred to Mr Martin's affidavit and said (T 113.27): …. So Mr Martin has described Lady Dorothy as actively participating in meetings, being aware of details, well dressed and presented with an air of authority. Whilst Mr Martin has testified that agendas were prepared for business meetings and issues papers distributed to guide discussions, there is no evidence that Lady Dorothy, who by the time of these meetings experienced dementia of moderate severity, read or understood these documents. It is very likely that Lee helped her dress for these meetings. In particular, it is likely the nature of these business meetings, where the associated formal structure, prompts from others conducting the meetings and the presence of familiar people masked a degree of cognitive impairment experienced by Lady Dorothy.
The cross-examiner challenged Dr Wijeratne about his conclusion as to the likelihood that Lady Macarthur-Onslow was helped by her son to dress properly, as being based upon the evidence of Lady Hobhouse and Ms Hayman, concerning the lack of attention given by Lady Macarthur-Onslow to her dress. Dr Wijeratne accepted this suggestion, and said that he believed it was Mr Macarthur-Onslow who accompanied his mother to the meetings, and that it was his assumption that, with her degree of apathy and loss of interest in grooming, Lady Macarthur-Onslow "would have required assistance with those basic activities of daily living" (T 114.8).
Dr Wijeratne was asked to agree that if he had read Mr Martin's affidavit without any other evidence, he would have concluded that Lady Macarthur-Onslow did not have any cognitive impairment (T 114.15). Dr Wijeratne's response was: But that's exactly what I'm trying to highlight. The fact that a lay witness such as Mr Martin was able to observe Lady Dorothy in a number of meetings and came to the conclusion that she was quite capable of understanding proceedings. But my suggestion is that the particular context of the meetings is such that it actually masked the degree of cognitive impairments, for the reasons I've just mentioned. And I think a further point, if I just go back to my notes, is that with not only this affidavit, but previous affidavits, including the one by Mr Beardow that the suggestion to me is that Lady Dorothy, essentially, responded to closed questions asked by other people. And when asked her opinion on various matters, she gave, I thought, quite stereotyped and repetitive responses such as "I agree" or "What do you think?", And my feeling was that these were, in effect, quite superficial interactions and did not specifically prove her capacity to understand what were highly complex matters in hand".
Dr Wijeratne developed the concept of "closed questions" in relation to subsequent questions put to him at T 114.25 and 136.11 (the latter in re-examination). As I understand it, Dr Wijeratne's point was that a closed question is one in which the question conveys substantially the whole of the information necessary to enable a response; and invites a response such as "yes", or "no", or "what do you think", or some other limited response, which does not provide an objective indication that the person giving the answer has been able personally to construct the relationship between the concepts contained in the question. In that regard, a closed question has something in common with a leading question that may be asked of a witness in a court case. Dr Wijeratne's response in re-examination was: … my assumption is that given she was asked a number of closed question that very much does not give us an insight into what her exact understanding was. That she was simply agreeing with her advisers, her trusted advisors. And I also note that closed questions - this issue of open versus closed questions actually discussed in New South Wales Law Society journal or article on or advice - I'm not quite sure what one would call it - advise on to solicitors on when taking instructions for capacity, such as testamentary capacity. So I believe that's a seminal point that's understood by both the medical and legal professions with regard to determining whether someone had the capacity to understand the import of what they were signing.
Dr Wijeratne was taken to the transaction summary that was given to Lady Macarthur-Onslow on the morning of 30 August 2004 by her solicitors, at a conference before the signing of the agreement with Australand that afternoon (T 115.15). The document (court book 672-703) was described as Lady Macarthur-Onslow's copy. It is a complex 31-page summary of the proposed transaction. It was apparently discussed at the conference. There are some hand written notations on the document (at pages 679, 680, 682, 683, 684, 693, 696 and 698). All of the notations (save for the notations at pages 683 and 693) consist of vertical lines beside parts of the document or underlining. As Dr Wijeratne observed, the written comments are not legible.
The notations on the transaction summary provide little evidence of Lady Macarthur-Onslow's true understanding of the contents of the document; though they do tend to show that she was paying some attention to what was being said to her about the significance of the document.
Dr Wijeratne was pressed on the issue of the basis upon which he disagreed with Dr Darveniza's view that Lady Macarthur-Onslow had testamentary capacity at the time she made her 2004 will (T 119.29-120.40). He responded that he was not suggesting, having regard to Dr Darveniza's experience, that Dr Darveniza was not qualified to express opinions as to testamentary capacity. Rather, his response was (T 120.28): "[W]hat I'm saying is that this being a highly complex case, it's unclear what information he had at hand". Dr Wijeratne was in effect saying that Dr Darveniza may not have had sufficiently detailed instructions concerning the terms of Lady Macarthur-Onslow's proposed will to be able to make a valid judgment concerning her capacity to make that particular will..
Finally, Dr Wijeratne was cross-examined about the evidence given by Mr Beardow of his advice to Lady Macarthur-Onslow concerning how she might take steps to avoid a deadlock in the control of the family companies; and in particular, his advice in response to her statement of desire for her children "to pretty much equally share in the assets", that "you will have to rely on Lee doing the right thing by Katrina" (130.10). The essence of Dr Wijeratne's response was that he did not disagree with Dr Darveniza's diagnosis of moderate dementia. He accepted that Lady Macarthur-Onslow understood that Mr Macarthur-Onslow would be given control. Dr Wijeratne's point of disagreement was that, given Lady Macarthur-Onslow's expressed wish that her children share equally, he had "strong grounds to believe… that she lacked the ability to… understand that" the degree of animosity between her children would lead to the result that Mr Macarthur-Onslow "would not do the right thing by Katrina", after he was given control.

The reports of Dr Paul Darveniza

Dr Paul Darveniza, who is a specialist neurologist, treated Lady Macarthur-Onslow for her dementia from June 2002. He said in cross-examination that it was his practice to prepare a letter to his patient or the referring doctor to report on the results of his consultations immediately after the consultations ended. The letters served as his notes of the consultations.
It will be convenient to set out extracts from Dr Darveniza's letters, before his evidence is considered more generally.
The first letter is dated 28 June 2002. Dr Darveniza said the following: You were seen in consultation on 18 June 2002. As you say, you have had increasing forgetfulness in recent years, more so in the last twelve months. In particular, you have trouble recalling names and have developed a tendency to misplace things, forget chores and tasks and you now require a shopping list. However, you remain totally independent in the activities of daily living, but you have become concerned you might do something silly like leave a stove on etc. In recent years, you have handed over the running of the property to your children. …. On examination, there is mini mental state score of 22 out of 30, absent ankle jerks, and vibration sense was absent in the feet. There was also a subjective change shading to touch towards the mid shins. Blood pressure was 190/90 in the right arm sitting on repeated measurement, and the remainder of a full neurological and general examination was normal. Clinically you do have a mild cognitive deficit, probably early Alzheimer's disease. …
The letter also reported that Lady Macarthur-Onslow "would commence Aricept 5 mg nocte for the cognitive deficit". (Dr Wijeratne gave evidence that Aricept is a drug used in the treatment of moderate to severe dementia. He also said that 10 mg was the maximum dosage for this drug).
On 28 August 2002 Dr Darveniza wrote: You were reviewed on 22nd August 2002. On the 28th June 2002 Carotid ultrasound showed a 50-70% stenosis of the proximal right internal carotid artery and plaque on the other side. Chest x-ray was normal. On the same date MRI of the brain showed some cerebral atrophy consistent with Alzheimer's disease but MR spectroscopy did not support that diagnosis. … Since commencing Aricept you have noticed you are more energetic and active and Katrina, your daughter confirms this. There has been no change in your memory. …
Dr Darveniza's next letter was dated 16 December 2002: You were reviewed on the 3.12.02. Overall your cognitive function remains stable on Aricept 5mg nocte. Minimental score today was 25 out of 30 improving from 22 out of 30 six months previously. …
Dr Darveniza wrote a further letter on 17 April 2003: You were reviewed on 15th April 2003. Since you were last seen your condition overall has remained stable although apparently your family says your memory is not quite as good. However, you remain fully independent of activities of daily living including driving a car. Today on examination mini-mental state score was 28/30 an improvement of 3 from the previous estimate on 3rd December 2002. …
On 14 August 2003 Dr Darveniza wrote: You were reviewed on the 12th August 2003. …. On examination MMSE score was 24/30, a drop of 4 from the previous improved score of 28/30 in April this year. Blood pressure was 14/80 in the right arm sitting. Given the small drop in the MMSE score the Aricept will be increased to 10mg nocte and Avapro 150mg will be continued. …
Each of Dr Darveniza's reports up until the 14 August 2003 report recorded that Lady Macarthur-Onslow's dosage of Aricept was 5 mg daily. Following the drop in Lady Macarthur-Onslow's MMSE score, Dr Darveniza doubled the dosage of Aricept to its maximum prescription.
The next letter was dated 10 December 2003: This lady was reviewed on the 9th December 2003. … As you will see she suffers from Alzheimer's disease and hypertension. On review today she remains well and since she was last seen she has stopped the hormone replacement therapy without any adverse effect although she is getting more flushes than previously. … Her daughter tells me that since increasing the Aricept to 10mg nocte her mother has become more active but there has been no change in her forgetfulness which has at least been stable. ...
As it happens, Dr Darveniza saw Lady Macarthur-Onslow some months before, and shortly after, she executed her will on 15 October 2004. Dr Darveniza's letter relating to the earlier consultation was dated 23 June 2004: This lady was reviewed on 22nd June 2004. As you know she suffers from Alzheimer's disease and hypertension. Since she was last seen six months ago her condition has remained overall stable. She does not think her memory has deteriorated. On examination blood pressure was 160/80 in the right arm sitting on repeated measurement. Apparently there have been some family squabbles over their assets and estate etc. In this regard Dorothy knows in detail what her assets are and their approximate value and she realises that both her children would have a call on her estate which she plans to divide 50/50 between them. She is also fully aware of the potential for development of one of their properties on the edge of the city which, if developed, would be worth a very large sum. MMSE score today was 18/30. In detail she did not know the day and date but did know the month and the year but was orientated with respect of place although she did not realise she was on the seventh floor. She could not perform serial sevens or spell world backwards or recall three common objects after several minutes. She had some nominal dysphasia but other language functions were normal. … Despite her dementia there is no doubt, as of today, she is under proper care and control and has testamentary capacity.
Then, Dr Darveniza wrote a further letter on 1 December 2004: This lady was reviewed on 30th November 2004. She thinks she is a little more "waftier" than previously but in most respects her condition has remained stable in the past 6 months. Today blood pressure is 160/80 in the right arm sitting on repeated measurement. MMSE score today was stable at 18/30 unchanged from the previous estimation. … Today she was under proper care and control and retained testamentary capacity and judged by her general knowledge of her assets etc as set out in a previous letter. She will be reviewed in 6 months.
Dr Darveniza's next letter was dated 5 June 2005: This lady was reviewed on 3rd June 2005. She and her son both think her cognitive dysfunction has remained stable. On examination, MMSE score was 17/30, not a significant change from previous estimation in November 2004. …
On 5 December 2005 Dr Darveniza wrote: This lady was reviewed, accompanied by her son on 2nd December 2005. There has been some deterioration in her memory but she is still able to travel alone in familiar places, although she would become lost in unfamiliar surroundings. For instance, she can go to the hairdressers and then go to the city and have lunch with friends and then catch a bus home. She now limits her driving locally to 10km. She remains independent of all activities of daily living and she has not been doing anything silly or dangerous around the farm etc. MMSE score today was 15/30 compared to 17/30 about six months ago. …
This letter is of some significance, as Mr Beardow gave evidence that the last of the significant agreements with Australand relating to Mount Gilead was a call option dated 23 December 2005. I infer from Mr Beardow's evidence that Lady Macarthur-Onslow participated in conferences concerning the negotiation of the terms of this agreement; and that Mr Beardow did not detect any consequences of her dementia that might limit her cognitive capacity as a result of his observations of her involvement in the conferences.
Then, on 2 June 2006, Dr Darveniza wrote the following: This lady with Alzheimer's disease and hypertension was reviewed on 2 June 2006. According to her son, and she agrees, her cognitive function has remained stable since she was last seen about six months ago. … She will be reviewed just within six months, or sooner as needed.
The final letter I will extract was written on 19 December 2006: According to her son who accompanied her, she is not as physically robust as previously, although she can still dress and toilet herself. Her daughter, Katrina, continues to cook her meals and generally look after her, and her son Leigh, visits two to three times per week. … On examination MMSE score was 5/30, dropping from 17/30 about 18 months ago.
Two more reports written by Dr Darveniza dated 25 May and 25 October 2007 were in evidence. The reports recorded that Lady Macarthur-Onslow's condition remained "stable" from a neurological point of view.

Evidence of Dr Paul Darveniza

Dr Darveniza swore two affidavits that were relied upon by the defendants.
In the first, made on 31 July 2015, Dr Darveniza annexed his letter of instructions and the various reports that he prepared and sent to Lady Macarthur-Onslow and her general practitioner, which I have considered above. In relation to his statements in his 23 June 2004 and 1 December 2004 reports to the effect that Lady Macarthur-Onslow had the capacity to make a will, Dr Darveniza merely said: "I asked her questions intended to elicit answers from her which enabled me to assess her capacity".
Dr Darveniza annexed to his first affidavit an email dated 10 June 2015 from the defendants' solicitor, which posed to him a number of questions including: "1. Do you recall why you specifically assessed and made reference to the testamentary capacity of Lady Dorothy in your reports?" Strangely, Dr Darveniza did not give an answer to this question in either of his affidavits; and he did not give any satisfactory explanation elsewhere in his evidence as to why he expressed an opinion on the issue of testamentary capacity in the two reports prepared before and after the making of the 2004 will.
In his second affidavit, made on 22 March 2016, Dr Darveniza gave brief explanations for the statements that he made in his 23 June 2004 report. In relation to the statement: "She realises that both her children would have a call on her estate which she plans to divide 50/50 between them", Dr Darveniza said: From the questions to Lady Dorothy and her answers to me, she told me of and demonstrated insight as to the expectations of her children and she understood that to avoid conflict between her children that approximate parity between them was required.
It became clear in Dr Darveniza's cross-examination that he had very little present recollection of his consultations with Lady Macarthur-Onslow. That is unsurprising given the passage of time. Dr Darveniza said that he dictated his reports shortly after the end of the consultations.
Dr Darveniza gave the following evidence in cross-examination concerning the statement in his 23 June 2004 report of Lady Macarthur-Onslow's intention about the disposal of her estate to her children (see T 175.46 - 176.38): Q. If we can go to paragraph 5C, in the sentence, "She realises that both her children would have a call on her estate, which she plans to divide fifty fifty between them. A. Yes. Q. Did you ask her on 22 June whether she had an existing will? A. Unless I can find it in one of these letters, I can't recall. Q. Do you want to have a look? A. Do you know the answer to that? Q. That's why I'm asking you the question. A. All right. I - I - I would say that in answer to that is that she definitely - now, I just can't remember which ones that came in here. But she definitely told me her intention was to divide her estate between - equally between her two children. So I could almost guarantee that she said that, even if I can't remember the words in my head. Q. Can we shift back one step further. My question was whether she had told you whether she had an existing will. A. No, I can't recall that. No. Q. So you can't recall whether she told you what the terms of that existing will was? A. No, but accept I knew her intention, and I - and I knew her - I would be very surprised if her will said anything else. That, you know, if she said, "I've told you on one hand I'm going split my - I'm going split my assets between my two children equally, but here's my will and I've given 70% to the other and 30% to this." I mean I - I just can't see why she would do that. Q. You don't see why she would make a split like that, do you mean? A. No, why she would say that - to me that she was going to split her will fifty fifty to her children, but on the other hand her will didn't contain that - that amount, you know, that - that split. Q. Did she tell you she was thinking of making a new will? A. Not that I can recall. Q. It would follow she didn't bring any draft or say that she was A. No. Q doing anything about making a new will? A. No.
Dr Darveniza therefore professed to have a definite view that Lady Macarthur-Onslow had an intention to divide her estate equally between her children. He said that he would be surprised if her will had any different effect. Dr Darveniza added that "I just can't see why" Lady Macarthur-Onslow would have divided her estate 70% to one child and 30% to another, given what she had told him concerning her intention to distribute her estate equally between her children.
At the end of Dr Darveniza's cross-examination, I put a number of questions to him concerning the significance of Lady Macarthur-Onslow's statements to him concerning her intentions as to the distribution of her estate (see T 183.29 - 184.14): Q. Doctor, I propose to ask you a number of questions but just pause, I invite counsel to object as they would if the questions were asked by another barrister. Your 23 June 2004 report to Dr Hardy, which is at page 269 of the first folder A. Thank you, your Honour. Q. It's the statement in the middle paragraph, "And she realises that both her children would have a call on her estate" A. Yes. Q. "Which she plans to divide 50/50 between them" A. Yes. Q. I think you said in answer to a question by Mr Willmott that that was something that Lady Macarthur Onslow said to you. A. Yes. Q. Was that statement of any particular significance to the final opinion you expressed that Lady Macarthur Onslow had testamentary capacity? A. Only in the sense that she knew the usual community standards, what, what one naturally would do with one's assets when you die, you know? And it, I mean, it's a common, as I understood from my, as I understand it, it's commonly felt that assets should be equally divided between the children unless specifically stated for other, you know, other reasons, you know? And that, many people in the community would know that, you know, that they would, most children would expect to get, if there were five children they would expect to get one fifth and so forth, you know? Q. So is it fair to say, I'm only paraphrasing your words, that when she made that statement to you, you thought that her testamentary intention conformed to A. Yes. Q. To community standard? A. Exactly, yes, for the usual.
That evidence tends to establish that Dr Darveniza understood that Lady Macarthur-Onslow's testamentary intentions were consistent with his view of prevailing community standards; which was that a parent would distribute his or her estate equally to all children.
Dr Darveniza professed, by the following evidence, to have an accurate recollection of what Lady Macarthur-Onslow said to him about her testamentary intentions (see T 177.24 - 177.32): Q. Which is why I ask the question how are you able, now, as a result of that, she demonstrated insight as to the expectations of her children? A. Well, from the general tenure of her, our conversations. Q. So it's a general impression? A. Yes. Q. As you, at the time you A. So it's - general impression, it's going to be very accurate.
Dr Darveniza gave the following evidence in cross-examination concerning the significance of Lady Macarthur-Onslow's MMSE scores to his opinion concerning her testamentary capacity (see T 178.36 - 179.17): Q. Just before we leave that report of 23 June, the penultimate sentence on 269, "Despite her dementia." A. Uh-huh. Q. At this stage she had moderate dementia, didn't she? A. Yes. Q. And at the A. At the top end of the moderate range. Just by way of explanation, your Honour, the MMSE scores - a normal score's 30. 20 to 30 is usually considered to be a mild dementia and ten to 20 is a moderate dementia. Below ten is severe. But I can tell you there's a big difference between a score of 11 and a score of 19. At the top end of the middle range, compared to the bottom range of the middle range. So although it was moderate, it was, if I could put it to you, the top end of the moderate range. I think that's an important point to make. Q. Moderately moderate. A. Mildly moderate. Q. What you're saying is, all right, we'll..(not transcribable)..at the moment. But the difference between mild dementia and other forms of dementia is that the frontal lobes are affected and short term memory is affected. Is that correct in broad terms? A. In broad terms that's correct, yes. Q. Whereas moderate dementia, you're starting to lose the long term memory as well. A. Starting to, yes. Q. Of course, severe dementia means that you've lost both short term and long term memory. A. Generally speaking, yes. Q. The MMSE is designed to establish memory and recall, isn't it? A. It's a screening test, really. It's not a detailed test. It's certainly accurate though, however.
Dr Darveniza said that he was not advised by Lady Macarthur-Onslow during the consultation on the 30 November 2004 that she had made a will on 15 October 2004.
While the concession was elicited from Dr Darveniza in cross-examination that he had no real independent recollection of what happened during his consultations with Lady Macarthur-Onslow, it was not suggested to him that anything that he had recorded in his reports was wrong.
More significantly, the opinions that he expressed in his 23 June 2004 and 1 December 2004 reports concerning Lady Macarthur-Onslow's testamentary capacity were not directly challenged.
Although Dr Darveniza could not remember his conversations with Lady Macarthur-Onslow in any detail, he did positively assert that he had conducted a professional interrogation of her that accorded with his usual practice, and that he formed his opinions based upon the results of the interrogation.
It is clear that Dr Darveniza is a highly experienced physician practising in the field of neurology, and as Lady Macarthur-Onslow's treating physician, he was best placed to make an assessment concerning her testamentary capacity. His professional opinion carries substantial weight.
Dr Darveniza expressed disagreement with Dr Wijeratne's opinion that Lady Macarthur-Onslow lacked testamentary capacity, although he did not respond to Dr Wijeratne's report in detail.
Dr Darveniza was not asked to comment on the evidence given by Dr Wijeratne concerning the significance of apparent intervals of lucidity of a person suffering from moderate dementia, which may be encapsulated as: "even if there was a lucid interval, what we do know about lucid intervals is that during lucid intervals, attention and concentration improves, but the higher order cognitive functions of executive function, which I alluded to earlier, do not improve." (See par 352 above). Dr Darveniza did not contradict this evidence. Nor did he contradict the evidence given by Dr Wijeratne concerning the unreliability a person's responses to "closed questions" in determining the cognitive function of the person.

Legal principles relevant to validity of wills

The principles that govern the validity of wills in cases where capacity and knowledge and approval are in issue have been considered by Meagher JA (with whom Basten and Campbell JJA agreed) in Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285. As this is a recent statement by a unanimous Court of Appeal, I will set it out at some length: [44] The starting point is that the onus of proof lies upon the proponent of the will to satisfy the court that it is the last will of a "free and capable" testator: Barry v Butlin at 482; 1092; Fulton v Andrew [1875] LR 7 HL 448 at 461; Tyrrell v Painton [1894] P 151 at 157; Bailey v Bailey [1924] HCA 21 ; 34 CLR 558 at 570; Timbury v Coffee [1941] HCA 22 ; 66 CLR 277 at 283. To establish that a document is the last will, it must be proved that the testator knew and approved its contents at the time it was executed so that it can be said that the testator comprehended the effect of what he or she was doing: Barry v Butlin at 484; 1091; Cleare v Cleare (1869) LR 1 P & D 655 at 657-658; Atter v Atkinson (1869) LR 1 P & D 665 at 668 and 670; Nock v Austin [1918] HCA 73 ; 25 CLR 519 at 522, 528. [45] If the will is rational on its face and is proved to have been duly executed, there is a presumption that the testator was mentally competent. That presumption may be displaced by circumstances which raise a doubt as to the existence of testamentary capacity. Those circumstances shift the evidential burden to the party propounding the will to show that the testator was of "sound disposing mind": Waring v Waring (1848) 6 Moo PC 341 at 355; 13 ER 715 at 720; Sutton v Sadler (1857) 3 CB NS 87 at 97-98 ; 140 ER 671 at 675-676; Smith v Tebbitt (1867) LR 1 P & D 398 at 436; Bull v Fulton [1942] HCA 13 ; 66 CLR 295 at 343; Kantor v Vosahlo [2004] VSCA 235 at [49], [50]. That doubt, unless resolved on a consideration of the evidence as a whole, may be sufficient to preclude the court being affirmatively satisfied as to testamentary capacity: Bull v Fulton at 299, 341; Worth v Clasohm [1952] HCA 67; 86 CLR 439 at 453. [46] Upon proof of testamentary capacity and due execution there is also a presumption of knowledge and approval of the contents of the Will at the time of execution. That presumption may be displaced by any circumstance which creates a well-grounded suspicion or doubt as to whether the will expresses the mind of the testator. In Thompson v Bella-Lewis [1997] 1 Qd R 429 McPherson JA (dissenting in the result) said (at 451) of the circumstances able to raise a suspicion concerning knowledge and approval that, except perhaps where the will is retained by someone who participated in its preparation or execution or who benefits under it, "a circumstance must, to be accounted 'suspicious', be related to the preparation or execution of the will, or its intrinsic terms, and not to events happening after the testator's death". See also McKinnon v Voigt [1998] 3 VR 543 at 562-563; Robertson v Smith [1998] 4 VR 165 at 173-174. Once the presumption is displaced, the proponent must prove affirmatively that the testator knew and approved of the contents of the document: Barry v Butlin at 484-485; 1091; Cleare v Cleare at 658; Tyrrell v Painton at 157, 159; Nock v Austin at 528. [47] Evidence that the testator gave instructions for the will or that it was read over by or to the testator is said to be "the most satisfactory evidence" of actual knowledge of the contents of the will: Barry v Butlin at 484; 1091; Gregson v Taylor [1917] P 256 at 261; Re Fenwick [1972] VR 646 at 652. What is sufficient to dispel the relevant doubt or suspicion will vary with the circumstances of the case; for example in Wintle v Nye [1959] 1 WLR 284 the relevant circumstances were described (at 291) as being such as to impose "as heavy a burden as can be imagined". Those circumstances may include the mental acuity and sophistication of the testator, the complexity of the will and the estate being disposed of, the exclusion or non-exclusion of persons naturally having a claim upon the testator, and whether there has been an opportunity in the preparation and execution of the will for reflection and independent advice. Particular vigilance is required where a person who played a part in the preparation of the will takes a substantial benefit under it. In those circumstances it is said that such a person has the onus of showing the righteousness of the transaction: Fulton v Andrew at 472; Tyrrell v Painton at 160. That requires that it be affirmatively established that the testator knew the contents of the will and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator: Tyrrell v Painton at 157, 160; Nock v Austin at 523-524, 528; Fuller v Strum [2001] EWCA Civ 1879; [2002] 1 WLR 1097 at [33]; Dore v Billinghurst [2006] QCA 494 at [32], [42]. [48] In this context the statements prescribing "vigilance" and "careful scrutiny" and referring to the court being "affirmatively satisfied" as to testamentary capacity and knowledge and approval are not to be understood as requiring any more than the satisfaction of the conventional civil standard of proof: see Worth v Clasohm at 453. What such statements do is emphasise that the cogency of the evidence necessary to discharge that burden will depend on the circumstances of each case and in particular the source and nature of any doubt or suspicion in relation to either of these matters: Kantor v Vosahlo at [22], [58]; Dore v Billinghurst at [44]. They also recognise that deciding whether a document is indeed a person's last will is a serious matter, so any decision about whether the civil standard of proof is satisfied should be approached in accordance with Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 or, now, s 140(2) of the Evidence Act 1995.
The primary question is how these principles are to be applied where a will is made by a testator who suffered from moderate dementia at the time, both in relation to the testator's testamentary capacity, and as to whether "the testator knew the contents of the will and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator". Further, if the dementia has not deprived the testator of testamentary capacity, may it nonetheless have had the effect that the testator did not adequately appreciate the effect of the contents of the will, even if those contents were read over by or to the testator.

Testamentary capacity

Although in the present case the 2004 will is rational on its face and was duly executed, it is accepted by the defendants that the presumption that Lady Macarthur-Onslow was mentally competent is displaced by the evidence of her dementia, which raises doubt as to the existence of testamentary capacity. The question will therefore be whether the defendants have, on a consideration of the evidence as a whole, affirmatively satisfied the court as to Lady Macarthur-Onslow's testamentary capacity.
The parties agreed that the classical statement of the criteria governing testamentary capacity are those laid down by Cockburn CJ in Banks v Goodfellow (1870) 5 QB 549. I will examine that case in a little depth, as it is relevant to know the context in which the court determined the criteria necessary to establish capacity.
The evidence in that case established that the testator frequently believed that he was pursued and molested by devils or evil spirits, whom he believed to be visibly present (551). However, the case was decided on the basis that the evidence at the trial had established as a fact "that the testator, though generally of weak intellect, was able to manage his own affairs, and, apart from the delusions under which he laboured, was, at all events at the time of executing one or both of the testamentary instruments in question, of sufficient testamentary capacity", and "that no delusion manifested itself at the time of making the will" (554 and 555). The question before the court was expressed in the following way (556): The question whether partial unsoundness, not affecting the general faculties, and not operating on the mind of a testator in regard to the particular testamentary disposition, will be sufficient to deprive a person of the power of disposing of his property, presents itself here for judicial decision, so far as we are aware, for the first time…
Cockburn CJ addressed the question before him in the context of an examination of the limitations that the law should place on the free exercise of testamentary discretion of the testator to decide how to deal with his or her estate. His Lordship said at 563: The law of every civilised people concedes to the owner of property the right of determining by his last will, either in whole or in part, to whom the effects which he leaves behind him shall pass. Yet it is clear that, though the law leaves to the owner of property absolute freedom in this ultimate disposal of that of which he is thus enabled to dispose, a moral responsibility of no ordinary importance attaches to the exercise of the right thus given. The instincts and affections of mankind, in the vast majority of instances, will lead men to make provision for those who are the nearest to them in kindred and who in life have been the objects of their affection…
His Lordship set out his conclusion at 565 to 566, in the following terms: … It is obvious, in either case, that to the due exercise of a power thus involving moral responsibility, the possession of the intellectual and moral faculties common to our nature should be insisted on as an indispensable condition. 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, avert his sense of right, or prevent the exercise of his natural faculties - that no insane delusions 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. ... If it be conceded, as we think it must be, that the only legitimate or rational grounds for denying testamentary capacity to persons of unsound mind is the inability to take into account and give due effect to the considerations which ought to be present to the mind of a testator in making his will, and to influence his decision as to the disposal of his property, it follows that a degree or form of unsoundness which neither disturbs the exercise of the faculties necessary for such an act, nor is capable of influencing the result, ought not to take away the power of making a will, or place a person so circumstanced to a less advantageous position that others with regard to this right … In these cases it is admitted on all hands that 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…
In Beverley v Watson [1995] ANZ ConvR 369, Owen J described the test for testamentary capacity in the following way at 372: In Timbury v Coffee [1941] 66 CLR 277 Dixon J at 283 approved this statement taken from In the Will of Wilson [1897] 23 VLR 197 at 199: "Before a will can be upheld it must be shown that at the time of making it the testator had sufficient mental capacity to comprehend the nature of what he was doing, and its effects; that he was able to realise the extent and character of the property he was dealing with, and to weigh the claims which naturally ought to press upon him. In order that a man should rightly understand these various matters it is essential that his mind should be free to act in a natural, regular and ordinary manner." This test was explained in Crago v McIntyre (supra) where Holland J said at 740-1: "In establishing that test the courts have endeavoured to reconcile acceptance of the right of a testator to dispose of his property as he pleases with a desire to protect the interests of those whom society has accepted as having a moral claim on a testator's bounty. For this reason it is not enough for the testator to know and understand how he is leaving his property when he executes his will. He must also possess sufficient capacity to appreciate what his property is and recognise the persons who have a moral claim upon him and, more importantly for present purposes, a capacity to exercise a balanced judgment as to such claims.
It is not a tenet that is accepted or applied under modern Australian law, but when the principle governing testamentary capacity was established, it was based upon an assumption that the testator was entitled to exercise an absolute testamentary discretion, and the question was when the presence of mental incapacity should deprive the testator of that right. It was established that such deprivation was only justified in cases where the testator lacked capacity to perform what was seen as a moral duty to the persons who had a call on the testator's bounty. Testamentary incapacity was defined as the minimum interference with the testator's absolute discretion that could be morally justified.
Testamentary capacity is not concerned with ensuring that testators with mental disabilities make wills which have the effect that the testators intend them to have, or, as will now be seen, it is also not concerned with ensuring that testators actually perform in a satisfactory way the 'moral duty' identified by Cockburn CJ.
In Hoff v Atherton [2004] EWCA Civ 1554; [2004] All ER (D) 314, Peter Gibson LJ, with whom Lindsay J agreed, and whose reasons Chadwick LJ implicitly accepted, responded at [34] to an argument based upon the use of the words "shall understand" by Cockburn J in the expression "a testator shall understand the nature of the act and its effects", that actual understanding by the testator must be proved in every case, in the following way: [34] Mrs Talbot Rice fastens on the words "shall understand" and elevates that to a rule that actual understanding must be proved in every case of doubtful capacity. But in my judgment that is an over-literal approach to a judicial statement and one which ignores the subsequent words "shall be able to comprehend and appreciate". Further, it ignores other statements in the same judgment, such as the approval given at p 557 to the words of Lord Kenyon in charging the jury in Greenwood v Greenwood 3 Curt App xxx: "If he had a power of summoning up his mind, so as to know what his property was, and who those persons were that then were the objects of his bounty, then he was competent to make his will."
As Ward J (as her Honour than was) said in A v N [2012] NSWSC 354: [464] … I am not satisfied that N has discharged the onus of proving on the balance of probabilities that he lacked the mental competence on that date to understand, if the transactions contemplated under the March Deed had been carefully explained to him, what was provided for under that deed and to enter into it. Accordingly, I cannot find that E lacked the mental capacity to enter into the March Deed. [465] (Whether he did in fact understand it is a different issue and would go to the allegations of unconscionable conduct, undue influence and unjustness of the contract…
Accordingly, it is not necessary for the defendants to prove that Lady Macarthur-Onslow actually understood the nature and effect of her will in order to prove that she had testamentary capacity.
Just as proof is not required that the testator actually understood the effect of the testator's will, it is not necessary to prove that the testator actually, or properly, considered the claims of the persons to which he or she should give effect: see King v Hudson [2009] NSWSC 1013 at [51] per Ward J (as her Honour then was) which was followed by Hallen AsJ (as his Honour then was) in Petrovski v Nasev; Estate of Janakievska [2011] NSWSC 1275 at [253]; and by Stevenson J in Re Estate of Tsilfidis; Stavrakakis v Tsilfidis [2015] NSWSC 1720 at [90]. See also the discussion by White J in Estate of George Aeneas Mcdonald; Howard v The Sydney Children's Hospital Network (Randwick & Westmead) [2015] NSWSC 1610 at [57] to [64].
The parties accepted the authority of the following observations by Dixon CJ and Kitto and Taylor JJ in Gibbons v Wright (1954) 91 CLR 423, at 437 and 438, made in the context of considering whether the grantor of a power of attorney had mental capacity. Their Honours said: The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation… They approved a statement in the charge that as one test of the requisite capacity the jury was at liberty to consider whether the person concerned was capable of understanding what he did by executing the deed, when its general purport was explained to him. The principle which the case supports, and for which Boughton v Knight (1873) LR 3 P & D 64, at p 72; Jenkins v Morris (1880) 14 Ch D 674; Birkin v Wing (1890) 63 LT 80 and Estate of Park (1954) P 112 may also be cited, appears to us to be that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained. As Hodson LJ remarked in the last-mentioned case, … one cannot consider soundness of mind in the air, so to speak, but only in relation to the facts and the subject-matter of the particular case" (1954) P 112, at p 136 Ordinarily the nature of the transaction means in this connection the broad operation, the "general purport" of the instrument; but in some cases it may mean the effect of a wider transaction which the instrument is a means of carrying out: Manches v Trimborn (1946) 174 LT 344, at p 345. In the present case, it was necessary, we think, that the two sisters should have been capable of understanding, if the matter had been explained to them…
Gibbons v Wright is authority for the following propositions. First, the question is whether the person is "capable of understanding" what he or she did. It is not necessary that it be proved by positive evidence that the person did actually understand.
Secondly, the person must be capable of understanding "the general nature of what he is doing", or its "general purport". It is not necessary that the person be capable of understanding the effect of the transaction in precise detail.
This proposition is supported by the following observation by the Justices in Gibbons v Wright at 438-439, which continues on from the extract set out above: In the present case, it was necessary, we think, that the two sisters should have been capable of understanding, if the matter had been explained to them, that by executing the mortgages and the memorandum of transfer they would be altering the character of their interests in the properties concerned, so that instead of the last survivor of the three joint tenants becoming entitled to the whole, each of them would be entitled to a one-third share which would pass to her estate if she still owned it at her death. This is apparently not what the learned Chief Justice put to the jury. It was the direct effect of the instruments according to their terms, and not the resultant severance of the joint tenancy, that seems to have been referred to by the expression "the effect of the deed", in the questions ultimately formulated.
Ward J described this aspect of the requirement for testamentary capacity in A v N at [400] as being "whether the testator is aware, and appreciates the significance, of the act in law upon which the testator is it about to embark…"
Thirdly, the issue of capacity must be determined having regard to the "facts and the subject-matter of the particular case". The matter was put succinctly by Peter Gibson LJ in Hoff v Atherton as follows: The test of capacity is issue-specific, as was pointed out by this court in Masterman-Lister v Brutton & Co. (Nos. 1 and 2) [2003] 1 WLR 1511: the question must be considered in relation to the particular transaction and its nature and complexity…
Finally, there is a question as to the significance of the references by their Honours to the possibility of an explanation in the expressions "when its general purport was explained to him", "capacity to understand the nature of that transaction when it is explained" and "if the matter had been explained to them". It must be noticed that in the first two expressions the Justices use the word "when" and in the last they use the word "if".
In Dalle-Molle (by his next friend Public Trustee) v Manos [2004] SASC 102, Debelle J said (in a case concerned with whether a party had the mental capacity to conduct litigation) after referring to Gibbons v Wright at 437 to 438: [24] ...A person will not be under a disability if, after careful advice and explanation and time to consider the advice and explanation, he then gives instructions. After all, in many a complex matter, it may be necessary for careful advice and explanation and time for consideration. [25] While these principles are relatively easy to identify, the more difficult task is to determine whether a person does have the capacity to give sufficient instructions. In the case of a document or transaction, the person must understand its general purport when it has been explained to him: Gibbons v Wright (above). But it may be necessary to explain also the implications of the transaction and its broader effects: Manches v Trimborn (1946) 174 LT 344 at 345, affirmed in Gibbons v Wright (above) at 438-439 where there is an illuminating example of how extensive the explanation and understanding must be.
In Varma v Varma [2010] NSWSC 786, Ward J (as her Honour then was) referred to the Dalle-Molle decision at [539], and then at [540] set out an extract from Gibbons v Wright at 437-438, with parts of that extract emphasised as follows: "…whether the person concerned is capable of understanding what he did by executing the deed when its general purport was explained to him", and "…may be described as the capacity to understand the nature of that transaction when it is explained". (The emphasis is her Honour's).
Ward J referred to this aspect of Debelle J's judgment in A v N, where her Honour said: [393] Insofar as Professor Dickson had opined as to the capacity of E in September 2007 and December 2007 in the context of E being a party to litigation, the relevant test to be satisfied would have been that in Dalle-Molle, namely whether E was able to give sufficient instructions to take, defend or compromise legal proceedings (the latter being precisely what was in issue when the matter was the subject of mediation - namely, the giving of sufficient instructions to compromise the proceedings). As to what was meant by the qualification "sufficient" in that context his Honour considered it meant instructions of a quantity, extent or scope adequate for the purpose or object of those instructions. His Honour said: When qualifying the noun "instructions" it is signifying that a person is able, once an appropriate explanation has been given, to understand the essential elements of the action and is able then to decide whether to proceed with the litigation or, if it is a question to agreeing to a compromise of the proceedings, to decide whether or not to compromise. (my emphasis) … [396] His Honour noted that the question whether the person has the capacity to give sufficient instructions must be examined against the facts and subject matter of the particular litigation and the issues involved in that litigation. Accordingly, in a complex matter it may be necessary for careful advice and explanation to be given and for there to be time for consideration by the litigant. His Honour concluded that: A person will not be under a disability, if after careful advice and explanation and time to consider the advice and explanation, he then gives instructions.
In Public Trustee (WA) v Brumar Nominees Pty Ltd [2012] WASC 161, Prichard J said (footnotes omitted): [17] Secondly, the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity of a person to understand the nature of that transaction when it is explained to them. It may also be necessary to explain the implications of the transaction and its broader effects.
In England, the relevance of any explanation given to the person whose capacity is in question was put as follows by Peter Gibson LJ in Hoff v Atherton: 35. There will be cases, as the judge recognised, where a testator will not have testamentary capacity in the absence of an explanation. In Re Beaney dec'd [1978] 1 WLR 770, Mr. Martin Nourse Q.C., sitting as a deputy judge of the High Court, held that a gift inter vivos by a mother of three children to one of them alone of the mother's only asset of value, at a time when she was in an advanced state of senile dementia, was void because the claims of the donee's siblings and the extent of the property to be disposed of were not explained to the mother. That was a case, as the judge in the present case found, in my view correctly, of a person who could not understand the relevant transaction and its effects without explanation. The test of capacity is issue-specific, as was pointed out by this court in Masterman -Lister v Brutton & Co. (Nos. 1 and 2) [2003] 1 WLR 1511: the question must be considered in relation to the particular transaction and its nature and complexity. In the present case the judge found nothing in the evidence that would justify holding that an explanation was needed. In my judgment, given the fact that Mrs. Krol wanted to make a new will in 1994 and gave instructions to her solicitor to that effect, given the evidence, to which I will come shortly, that she was well aware of her assets and given the straightforward nature of the Will, the judge's view that no explanation was needed was justified.
There may, with respect, be some scope for confusion about what the Justices in Gibbons v Wright meant by the use of the expressions such as "when its general purport was explained to him" and "if the matter had been explained to them". The use of the word "when" in the first of these expressions tends to suggest that an explanation is required, while the use of the word "if" in the latter tends to leave open the possibility that the reference to an explanation is hypothetical.
Where Debelle J in Dalle-Molle at [25] states the principle as being: "In the case of a document or transaction, the person must understand its general purport when it has been explained to him: Gibbons v Wright (above)", his Honour has adopted the first of the expressions used by the Justices, rather than the second. His Honour then proceeded to observe that Gibbons v Wright "is an illuminating example of how extensive the explanation and understanding must be".
The question is whether the Justices contemplated that there would actually be an explanation before the relevant person entered into the transaction. The issue is whether the person "shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation". "Capable" is a word of ordinary meaning suggesting the ability to do or understand something. The Justices could have meant the references to an explanation to refer to a capacity to understand if an appropriate explanation had been given, whether or not any explanation was actually given.
The expressions used by the Justices came from a direction by the trial judge in the proceedings that led to the decision of the House of Lords in Ball v Mannin (1829) 1 Dow & Cl 380; 6 ER 568, which Lord Tenterden endorsed at 6 ER 568 at 392: … To be sure the Judge goes on to say that, as one test of capacity or incapacity, the jury was at liberty to consider whether the party was capable of understanding what he did by executing the deed in question, when its general import was explained to him; and surely that is one good test, and there is nothing irregular in that…
There is nothing in the reports of Ball v Mannin or Gibbons v Wright, or the authorities referred to by the Justices at 438, that suggest that there was any evidence in the particular case that any explanation had been given to the person whose capacity was in question, or that the outcome of the case in any way depended upon the adequacy of that explanation, and what effect it had on the understanding of the person. It would appear that the reference to an explanation in the expression "capable of understanding, if the matter had been explained to them" was used to describe a level of capacity that must exist if an explanation had been given, not after it has in fact been given. Gibbons v Wright did not turn upon any explanation, let alone an extensive explanation, as suggested by Debelle J.
In A v N, notwithstanding that her Honour had earlier set out aspects of the judgment of Debelle J in Dalle-Molle, as noted above, and also considered the relevance of the evidence in the case of the explanation given to the person whose mental capacity was in question, at [429], Ward J stated her conclusion at [464] in the following terms: "I am not satisfied that N has discharged the onus of proving on the balance of probabilities that he lacked the mental competence on that date to understand, if the transactions contemplated under the March Deed had been carefully explained to him, what was provided for under that deed and to enter into it" (emphasis added).
These authorities should not be seen as laying down any rule that, where the capacity of a party is in question in any context, an explanation in some form must be given to that party before he or she will be found to have had capacity. Some transactions, including the making of wills, may occur in circumstances where no explanation is given to the participants, while other transactions occur in circumstances where explanation may be available, which may be more or less thorough. As the question of capacity cannot be considered "in the air", the terms of any explanation that is given will in practical terms be part of the context of the particular transaction. As the concept of capacity involves understanding, memory and reasoning, the ability of the person concerned to understand what he or she did by entering into the transaction may naturally be affected by the nature and adequacy of any explanation that is in fact given, as memory and understanding may be enhanced by the explanation, which may also assist the ability of the person to reason to a sound conclusion.

Knowledge and approval

I will now turn to a consideration of the principles concerning the requirement for knowledge and approval of the contents of the 2004 will.
Most of the cases that have considered the testator's knowledge and approval of the terms of his or her will have been concerned with knowledge and approval of the contents or wording of the will. The question is whether the testator knew what was written in the document when he or she executed it. The concern arises because of the many circumstances in which the document may be put before the testator for execution, in which words may be inserted, either intentionally or by mistake, without the testator's knowledge and approval. Generally, the wording of wills is relatively straightforward, in that identified property, or the residue of the testator's property, is given directly to nominated persons. Generally, it is true that a mentally competent person who knows and approves of the contents of the will also naturally knows and approves of the effect of the will. Not only is that so, but reasons of expediency have been recognised for equating knowledge and approval of the contents of the will with knowledge and approval of its effect, and also for holding the testator responsible for drafting errors that have caused the will to have a different legal effect from that intended. The question is whether the same rules should apply where the will does not give effect to the testator's intention because of the operation of some mental disability of the testator.
To ask that question is to invite the response: if the law recognises that a testator has capacity, even if he or she only understands the general effect or purport of the making of a will, why should that not be the end of the matter, and why should the law go further to give effect to any actual failure by the testator to implement his or her wishes, by reason of mental incapacity? The answer may perhaps be found in the analysis given above of the basis for the principles established by Banks v Goodfellow. Those principles were directed towards protecting a testator's right to exercise an absolute testamentary discretion, by limiting the circumstances in which the law would decline to recognise the capacity of the testator to exercise that discretion. The limitation was confined to requiring a general level of understanding of the effect of the making of a will, the testator's property, and the nature of the calls on the testator's estate. Where those requirements are satisfied, the testator is not required to exercise his or her capacity in any particular way.
However, where a testator's mental disability is not so extreme as to deprive the testator of testamentary capacity, it may nonetheless impair the ability of the testator to give instructions as to his or her actual testamentary intention, or to understand any advice given, or to understand whether the wording of his or her will actually reflects the intention. Even in cases where such a testator 'knows' of the contents of his or her will, either by reading it or having it read over, the testator's mental disability may have the effect that the will, in whole or in part, does not contain the real intention of the testator.
In [43], [44] and [46] in Tobin v Ezekiel (in the extract set out above at par 397), Meagher JA refers to the requirement of proof of "knowledge and approval of the contents of the will", and, in [44], that requirement is put in the context that "it must be proved that the testator knew and approved its contents at the time it was executed so that it can be said the testator comprehended the effect of what he or she was doing". That statement recognises the line of authority that has proceeded on the basis that it should be assumed that, if the testator was competent and knew and approved of the contents of the will, then it will follow that the testator comprehended the effect of what he or she was doing.
The authorities cited by Meagher JA at [44] consider the nature of the proof required to establish that the testator knew and approved of the contents of the will. In Barry v Butlin (1838) 2 Moo PC 48; 12 ER 1089, the testator was described as being of "slender capacity", though "not insane". The question was still whether it was proved that the testator had knowledge of the contents of the will, which could be inferred from all of the circumstances, and did not require proof of written instructions from the testator, or that the will had been read over to the testator. Parke B said at 487 to 488: … It is not indeed disputed on the one side but that he was of testable capacity, nor on the other, that he was a person of weak mind: as to the extent of that weakness there is a difference, but admitting its existence, even to the degree represented on the part of the Appellant, the only consequence will be, that it adds to the suspicion which unquestionably belongs to the circumstance of the attorney who prepared the Will, taking no less than a fourth of the Estate, and the Legatees taking the whole to the exclusion of his own family, and calls upon us to watch the proof of the Will itself with increased jealousy and suspicion. The question is, whether these grounds of suspicion have been satisfactorily removed and the instrument proved to be the real Will of the Testator himself…
There was no suggestion in this case that the causes of the testator's "slender capacity", which apparently flowed from his being "addicted to drinking", may have caused him to have failed to understand the meaning and effect of the relatively simple wording of his will.
The report of Atter v Atkinson (1869) LR 1 P & D 665, also cited by Meagher JA at [44], relates the summing up of Sir JP Wilde to a jury, and may represent the high point of the view that a testator will be taken to know and approve of all of the contents of a will that is executed after having been read over to the testator. His Lordship said at 670: … The question of fact is, did Mrs Newcombe ever read the contents of this document? If you are satisfied that she read it, then, as a proposition of law, I feel bound to direct you that she must be taken to have known and approved of its contents. If, being of sound mind and capacity she read this residuary clause, the fact that she afterwards put her signature to it is conclusive to show that she knew and approved of its contents. Reflect on the contrary proposition. Suppose that a long will with a number of complicated arrangements, is read to a competent testator, and is executed by him, if we were permitted some time after his death to enter into a discussion as to how far he understood and appreciated the bearings of all the different parts of the will, we should upset half the wills in the country…
Again, there was no suggestion that the testator may have failed to understand the contents or effect of the will by reason of some mental disability. (Note that the rigidity of the rule suggested in Atter v Atkinson concerning the conclusiveness of the effect of the execution by a competent testator of a will after it has been read over to the testator "does not survive in any shape or form": see Theobald on Wills by Martyn et el (18 ed 2016) at p 63; and see Law of Succession by G E Dal Pont and K F Mackie (1 ed 2013) at [2.28]).
Atter v Atkinson suggests that the rule that equated knowledge and approval of the will by the testator to a presumed knowledge and approval of the contents of the document arose out of considerations of expediency and to avoid a proliferation of disputes about the validity of wills. However, in the great majority of cases it seems reasonable to equate a testator's knowledge and approval of his or her will with knowledge and approval of the contents of the document.
At [47] of Tobin v Ezekiel, Meagher JA began the paragraph by again referring to the evidence that might be necessary to prove the testator's "actual knowledge of the contents of the will", but he ended the paragraph by saying: That requires that it be affirmatively established that the testator knew the contents of the will and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator…
The question is whether by adding the words "and appreciated the effect of what he or she was doing so that it can be said that the will contains the real intention and reflects the true will of the testator" (emphasis added), Meagher JA intended to recognise the possibility that mere knowledge of the contents of the will might not always be sufficient to establish that the testator knew what he or she was doing, so that the will may not contain the real intention and reflect the true will of the testator.
In Tyrrell v Painton [1894] P 151 at 157, cited by Meagher JA at [47], Lindley LJ referred to the need "to prove affirmatively that the testator knew and approve of the contents of the document". Nock v Austin (1918) 25 CLR 519 at 522, 528; [1918] HCA 73, also cited by Meagher JA, referred to the issues of whether the "the provisions of the instrument may not have been fully known to and approved by the testator" and the burden of proving "that the testator knew and approved of the contents of the document": see in particular 528. The same is true for Fuller v Strum [2002] 1 WLR 1097, in which Peter Gibson LJ at [33] said "it must be the more clearly shown that the deceased knew and approved the contents of the will so that the suspicion is dispelled"; although his Lordship continued to say "the propounder must prove affirmatively that knowledge and approval so as to satisfy the court that the Will represents the wishes of the deceased". Finally, in Dore v Billinghurst [2006] QCA 494, at [32], Jerrard JA said (footnotes omitted): [32] It follows that the UK Court of Appeal, as recently as last year and twice this century, has treated the requirement of "knowledge and approval" by a testator of the contents of a will, as stating the same as whether those contents represented the testator's intentions. The learned trial judge in this matter did the same, and that involved no error; the learned judge cited, when describing Mr Dore's obligation to provide affirmative proof that the will reflected the testator's intentions, from Nock v Austin (1918) 25 CLR 519 at 523-524 and 528. The cases cited in those passages of the judgments in the High Court themselves demonstrate that the well known requirement, that where suspicion is raised then affirmative evidence is required that the testator knew and assented or approved of the contents of a will, has also been authoritatively expressed as whether it was affirmatively established that the testatrix "knew what she was doing when she executed this will?"; or whether the court is "judicially satisfied that the paper propounded does express the true will of the deceased;" or whether the testator failed to understand the nature and effect of his act; or whether the court is judicially satisfied that "the document does contain the real intention of the testator."14 The appellants accordingly fail to show any error by the learned trial judge.
Jerrard JA appears to have expressed the requirement of knowledge and approval in terms of knowledge of the contents of the will; although his Honour continued by formulating the requirement in a number of alternative ways, including that "the document does contain the real intention of the testator".
It therefore appears that the authorities cited by Meagher JA in [47] support the proposition that knowledge of the contents of the will is equivalent to the testator knowing what he or she was doing, so that the will contains the real intention and reflects the true will of the testator. However, in all of those cases, it was reasonable in fact for the court to be satisfied that, if the testator knew and approved of the contents of the will, the will contained the real intention of the testator.
Be this as it may, I would not be justified in reading down the clearly stated words of Meagher JA at [47], that require that it be proved that the testator appreciated the effect of what he or she was doing, so that the contents reflect the true will of the testator. To do so would be to treat Meagher JA as having repeated at [47] what he had already said at [45].
It is also necessary to consider the principle that, if a testator relies upon another party to express the testator's intentions in writing, the court will give effect to the wording of the will on its proper construction, even if by some error or mistake the wording does not have the effect intended by the testator.
In Dore v Billinghurst, McMurdo J (as his Honour then was) said the following (footnotes omitted): [63] Secondly, there is the argument that the trial judge applied the wrong test in relation to knowledge and approval, by at one point, referring to the testator's intention. As Jerrard JA has explained, in several judgments, including that of Isaacs J in Nock v Austin, this question has been asked by reference to the testator's intention, treating that as synonymous with knowledge and approval of the will's content. Conceivably, there could be cases where there is a difference between the two. The required knowledge and approval is of the contents of the will rather than a knowledge of its legal effect. So there could be cases where the testator knows and approves of the words in his will, thereby making it valid, although it is not what he intended in its effect. The present case, however, is not an example. There could have been no prospect that the testator was under some misunderstanding as to the effect of this clause in his will. In this case, intention and knowledge and approval were the same thing.
McMurdo J relied for his proposition that the required knowledge and approval is of the contents of the will, rather than a knowledge of its legal effect, on Theobald in Wills (15 ed) at 35. Of the authorities cited by the editors of Theobald in Wills, Sir Francis Jeune P referred in The Estate of Beech [1923] P 1 at 3 to the fact that the testator had misunderstood the meaning of the words that she used, and said at 4: … Then Mr Bray refers me to the case of Morrell v Morrell, and it seems to me that the language used in that case expresses the law which is applicable to this case, and expresses what is some reason for it, records the view of Lord Hannen in that case is this, that if a testator employs another to convey his meaning in technical language, and that other person makes a mistake in doing it, the mistake is the same as if the testator had employed that technical language himself…
The other authorities relied upon in Theobald are consistent with the principle being that, where a testator instructs, or relies upon, another party to formulate in writing the testamentary intentions of the testator, the testator will be bound by the legal effect of the words actually used, even if, by mistake or ignorance, the drafter fails to use words that successfully implement the testator's intention.
There is a question as to whether this principle should apply, and if so how, to a situation where, by reason of mental disability, the testator does not effectively understand the process by which the drafter has carried out the testator's instructions, and does not actually understand that the wording prepared by the drafter has been chosen to have some effect other than the implementation of the instruction given by the testator.
This brings me to a consideration of the relatively few cases that have considered the possibility that a testator's mental disability may not be so serious as to deprive the testator of testamentary capacity, but may nonetheless be significant, and have the result that the will executed by the testator does not give effect to the actual testamentary intentions of the testator.
The first case to raise this possibility is the decision of the English Court of Appeal in Hoff v Atherton.
At [49], Peter Gibson LJ, with whom Lindsay J agreed, said: 49. …In my judgment, it is for the court to determine in the particular circumstances of the case before it whether the requisite knowledge and approval has been proved. I do not doubt that in some circumstances the court will rightly insist on evidence that the testator had the earlier testamentary dispositions in mind in order to test whether he truly intended to make the new dispositions under the new Will. However, in the present case, having regard to the absence of any relations and of other claimants on Mrs Krol's bounty other than the Claimants and Mrs Atherton, I do not accept that that is necessary in order to establish knowledge and approval…
Chadwick LJ, with whom Lindsay J also agreed, in responding to a submission that, in a case of doubtful testamentary capacity, the person propounding the will must show that the testator actually recalled, and understood and appreciated the nature and extent of his property, and if the new will represents a significant change from the last will, that significant change, said: [62] That submission, as it seems to me, betrays a failure to appreciate that the requirements of testamentary capacity and knowledge and approval are conceptually distinct. A finding of capacity to understand is, of course, a prerequisite to a finding of knowledge and approval. A testator cannot be said to know and approve the contents of his will unless he is able to, and does, understand what he is doing and its effect. It is not enough that he knows what is written in the document which he signs. But if testamentary capacity - the ability to understand what is being done and its effect - is established, then it is open to the court to infer that a testator who does know what is written in the document which he signs does, in fact, understand what he is doing. And, where there is nothing to excite suspicion, the court may infer (without more) that a testator who signs a document as his will does know its contents. It would be surprising if he did not. [63] Whether those are inferences which should be drawn depends, of course, on the facts of the particular case. The fact that a beneficiary has been concerned in the instructions for, and preparation of, the will excites suspicion that the testator may not know the contents of the document which he signs - or may not know the whole of those contents. The degree of suspicion - and the evidence needed to dispel that suspicion - were considered by this Court in Fuller v Strum [2001] EWCA Civ 1879, [2002] 2 All ER 87 paragraphs [32]-[36], [73], [77], [2002] 1 WLR 1097, 1107C- 1109A, 1122A-C, 1122G-1123C. [64] Further, it may well be that where there is evidence of a failing mind - and, a fortiori, where evidence of a failing mind is coupled with the fact that the beneficiary has been concerned in the instructions for the will - the court will require more than proof that the testator knew the contents of the document which he signed. If the court is to be satisfied that the testator did know and approve the contents of his will - that is to say, that he did understand what he was doing and its effect - it may require evidence that the effect of the document was explained, that the testator did know the extent of his property and that he did comprehend and appreciate the claims on his bounty to which he ought to give effect. But that is not because the court has doubts as to the testator's capacity to make a will. It is because the court accepts that the testator was able to understand what he was doing and its effect at the time when he signed the document, but needs to be satisfied that he did, in fact, know and approve the contents - in the wider sense to which I have referred. [65] In the present case the judge found that the 1994 Will was read over to Mrs Krol immediately before she signed the document and she confirmed to Mr Hatt that it gave effect to her intentions. In the light of those findings he was bound to hold that she knew the contents of the will. The dispositions made by that will were straightforward and wholly rational. Those dispositions did take account of the claims on her bounty which she had recognised in her earlier will. There was nothing surprising in her desire that her close friend, Mrs Atherton, should take a substantial part of her estate; and, given the way in which that friendship had developed over the years since the death of Mr Krol in 1985, nothing surprising in the difference, in that respect, between the earlier will and the 1994 Will. The judge had held that Mrs Krol was able to understand what she was doing and its effect without explanation, information as to the extent of her estate or an analysis of the manner in which she was departing from her earlier will. He was entitled to take the view that she knew and approved the contents in the wider sense - that is to say, that she did, in fact, understand what she was doing and its effect. He made no error of law.
The observations made by Chadwick LJ, concerning the significance of the testator having a failing mind were obiter. His Lordship, at [62], stated the conceptual distinction between the requirement of testamentary capacity and knowledge and approval. He then referred to testamentary capacity being established, which he described as "the ability to understand what is being done and its effect". However, testamentary capacity only requires that the testator is able to understand what is being done and its effect in general terms, or the general purport of what is being done. Testamentary capacity may be established even though the testator does not understand the actual effect of the contents of the will. His Lordship then referred to the significance of evidence of a failing mind on the part of the testator, in which case he suggested that "the court will require more than proof that the testator knew the contents of the documents which she signed".
It is the validity of that final proposition that is in issue. If it is valid, then the court will be able to recognise the possibility that a testator with a failing mind may still have testamentary capacity, but by reason of that failing mind may not necessarily express his or her true testamentary intentions simply by executing a will the contents of which the testator knows.
Chadwick LJ continued by allowing the possibility that the court may require evidence that the effect of the document was explained. If that is a correct statement of principle, then it may be that the court could be satisfied that the will expresses the true testamentary intentions of the testator, not simply because the testator knew of the contents of the will at the time of execution, but because the testator received an explanation of the effect of those contents that was sufficient to enable the testator to understand and approve of the effect, notwithstanding the testator's mental disability.
Further, Chadwick LJ suggested that the court may require proof that the testator did know the extent of his or her property, and that he or she did comprehend and appreciate the claims on his or her bounty to which he or she ought to give effect. The reason was not because the court had a doubt as to the testator's capacity to make a will, but because, in addition to proof of capacity, the court "needs to be satisfied that he did, in fact, know and approve the contents - in the wider sense to which I have referred". It is apparent from [65] that his Lordship, in using the expression "wider sense", intended to distinguish between the level of knowledge of the effect of the will necessary to support the requirements of testamentary capacity, and actual knowledge of the effect of the contents of the will, for the purpose of proof of the conceptually distinct requirement of knowledge and approval, so that the will contains the real intentions and reflects the true will of the testator.
White J in Re Estate of Stanley William Church [2012] NSWSC 1489, referred to [62] to [64] from the judgment of Chadwick LJ extracted above, and summarised the effect of those paragraphs in the following terms: [66] In other words, the will-maker may have testamentary capacity, but it may be found that he or she did not know and approve of the contents of the will, notwithstanding that he or she understood its contents, if the person did not exercise his or her capacity to comprehend and appreciate the claims to which he or she should give effect. If there are suspicious circumstances, evidence will be required that the deceased not only knew the contents of the will, but approved them, and proof of approval may require evidence that the deceased not only was capable of weighing the claims to which he or she might be expected to give effect, but did so. [67] I do not decide whether this accurately states the law. In this case Marjorie's evidence, supported by the document Stanley signed, dated 13 August 2009, that he considered and rejected options for leaving Robert a share of his estate, establishes that Stanley knew and approved the contents of the will in the wider sense to which Chadwick LJ referred in Hoff v Atherton at [64].
The Court of Appeal upheld White J's decision in Church v Mason [2013] NSWCA 481. Meagher JA, with whom Barrett and Emmett JJA agreed, identified the issue at [2], as whether White J erred in being satisfied that the testator approved of the contents of his will, so that it could be said to express "the true will of the deceased". At [18], his Honour repeated his statement of principle in Tobin v Ezekiel at [47], by saying: "What was required was 'that it be affirmatively established that the testator knew the contents of the will and appreciated this effect of what he… was doing so that it can be said that the will contains the real intention and reflects the true will of the testator".
Meagher JA described the reasoning of White J at first instance in terms that included the following: [18] The primary judge accepted that the circumstance that Marjorie was instrumental in causing the will to be made in her favour raised a suspicion concerning Stanley's knowledge and approval and displaced the presumption to that effect otherwise arising from proof of testamentary capacity and due execution: [62]. Accordingly, it was necessary for Marjorie to prove affirmatively that Stanley knew and approved of the contents of the will. What was required was "that it be affirmatively established that the testator knew the contents of the will and appreciated the effect of what he … was doing so that it can be said that the will contains the real intention and reflects the true will of the testator": Tobin v Ezekiel [2012] NSWCA 285 at [47]. [19] As Peter Gibson LJ said in Fuller v Strum [2002] 2 All ER 87 at [33], suspicion may be aroused in varying degrees, depending on the circumstances, and what is needed to dispel the suspicion will vary accordingly. That proposition informs the following observation of Chadwick LJ in Hoff v Atherton [2004] EWCA Civ 1554; [2004] All ER (D) 314at [64] to which the primary judge referred. … If the court is to be satisfied that the testator did know and approve the contents of his will - that is to say, that he did understand what he was doing and its effect - it may require evidence that the effect of the document was explained, that the testator did know the extent of his property and that he did comprehend and appreciate the claims on his bounty to which he ought to give effect. But that is not because the court has doubts as to the testator's capacity to make a will. It is because the court accepts that the testator was able to understand what he was doing and its effect at the time when he signed the document, but needs to be satisfied that he did, in fact, know and approve the contents - in the wider sense to which I have referred. [20] Accepting that this was a correct statement of the relevant principles, the primary judge addressed the three matters which he considered showed Stanley to have known and approved the contents of his will…
The Court of Appeal upheld White J's decision upon a consideration of the facts, and did not give any further consideration to the significance of Chadwick LJ's observations in Hoff v Atherton.
White J returned to a consideration of Chadwick LJ's observations in Estate of George Aeneas McDonald; Howard v The Sydney Children's Hospital Network (Randwick & Westmead). His Honour noted, at [53] to [56], that in Church v Mason, neither he nor the Court of Appeal had decided whether the observations of Chadwick LJ in Hoff v Atherton represented the law in this State.
His Honour said at [57]: [57] No case was cited and my researches have not found a case in which it has been held that a will was not validly made because although a capable testator knew the contents of the will and understood the nature and extent of the gifts in the will, it was not established that he had given due consideration to other claims on his testamentary bounty or his previous testamentary dispositions.
It is to be noted that this observation was made on the basis of an assumption that the testator was capable, and understood the nature and extent of the gifts in the will. In those circumstances, was the proponent of the will required to establish that the testator had given due consideration to the claims on his testamentary bounty, or his previous testamentary disposition?
The assumption upon which White J considered that question differs from the case presently under consideration, where it is assumed that the testator had testamentary capacity, but there is a question as to whether she did not actually understand the nature and effect of the gifts in the will.
White J considered the validity of the proposition that he stated at [57], and concluded at [64]: [64] Because a capable testator can make a valid will notwithstanding that he does not evaluate the strength of the claims on his testamentary bounty, it does not appear to me that in all cases where there are suspicious circumstances that require the court to be satisfied that the testator did know and approve the contents of the will, that requires proof not only that the testator knew that he was leaving his estate in the way for which the will provided, but that he had weighed all the claims on his testamentary bounty. Nor did Chadwick LJ so decide in Hoff v Atherton.
As I understand this paragraph, White J has rejected the proposition that, where a failing mind and suspicious circumstances exist, proof will be required that the testator actually weighed all of the claims on his or her testamentary bounty. That proof is not required, because it is not required to establish testamentary capacity, and a testator may in fact know that he or she was leaving the testator's estate in the way for which the will provided, without weighing all of the claims at all, or weighing them in any particular way. The law does not require testators to weigh all of the claims on the testator's testamentary bounty at all. That process of reasoning is not essential to actual knowledge and approval, although in a particular case, proof that the testator has not weighed the claims on his or her bounty, or has done so in an irrational manner, may provide some evidence that the testator, if mentally impaired, did not actually know the effect of his or her will.
His Honour said at [67] and [68]: [67] Chadwick LJ's observations in Hoff v Atherton at [64] were prefaced upon there being evidence of a failing mind. Where testamentary capacity is in issue, the Court has to decide one way or the other whether the testator has or lacks capacity. Nonetheless, it is no doubt correct that there are degrees of capacity and notwithstanding that it is found that a testator has testamentary capacity, the degree of capacity can be relevant to deciding whether or not the testator knows and approves of the contents of the will so that the court can be satisfied that the Will represents the testator's true will. This is consistent with the approach taken in earlier decisions of the Prerogative Court (Billinghurst v Vickers (1810) 1 Phill Ecc 187; 161 ER 956 at 193-194; 161 ER 956 at 958-959; Ingram v Wyatt (1828) 1 Hagg Ecc 384 at 400-404, 412, 414-415, 428-429; 162 ER 621 at 626-627, 630, 631 and 635). [68] I accept that if it is shown that a testator of doubtful capacity has indeed weighed the claims on his testamentary bounty that could tend to show that the will represented his intentions, and the converse may also be true.
As I understand his Honour's reasons, he has accepted that, notwithstanding that the testator has been shown to have a failing mind, it may be found that the testator had testamentary capacity, but even then it must be shown that the testator knew and approved of the contents of the will, so that it can be satisfied that the will represents the testator's true will. In this connection, knowledge and approval of the contents of the will may require more than knowledge and approval of its wording. There may be occasions that justify a finding that a testator knew and apparently approved of the wording of his or her will, but by reason of mental disability falling short of incapacity, the will does not express the true will of the testator.
In my view, where it is shown that a testator suffered from a mental disability at the time he or she made the will, and that the will was read by or read over to the testator before it was executed, so that in that sense the testator knew of the contents of the will, it will not necessarily follow from a finding that the testator had testamentary capacity that the will contains the real intention and reflects the true will of the testator. There may be cases where the testator's mental disability has had the consequence that, by one means or another, the process by which the will was prepared and executed has miscarried, so that, in whole or in part, the will does not reflect the true will of the testator.
Broadly, the court must be concerned with the functional equivalent of the situation of a competent testator, who is actually capable of understanding the contents of his or her will, executing the will without knowing that the will contains particular wording. The question must be, in a case where the testator is shown to have suffered from a mental disability, whether, at the time the testator executed the will, the testator did not know the effect of the will, because the mental disability prevented the testator from adequately understanding the meaning and effect of the words used, so that the will does not, in whole or in part, contain the testator's real intention or reflect his or her true will.
That is a different case to one where the effect of the mental disability has only been to impair the process of reasoning whereby a testator with testamentary capacity has decided how to dispose of his or her estate, and notwithstanding that impairment, the testator has made a determination which is known to the testator and intended to be put into effect by the terms of the will.
As the law does not require testators who have testamentary capacity to execute that capacity in any particular way, in deciding how the testators' property should be distributed, mere proof that the testator's mental disability has had the effect of impairing the way in which the testator has gone about weighing the calls on his or her estate, which falls short of establishing that the disability caused the testator to fail to understand the effect of his or her will, should not affect the validity of the will.

Severance

If it is shown that Lady Macarthur-Onslow had testamentary capacity, and that she knew and approved of part, but not all, of her 2004 will, the question whether the court has power to admit the 2004 will to probate, but with the parts of which Lady Macarthur-Onslow did not know and approve omitted, is authoritatively determined by the following statement of principle by Kitto J, with which Menzies and Windeyer JJ agreed, in Osborne v Smith (1960) 105 CLR 153 at 159 to 162: It is undoubted law that a court of probate has jurisdiction, in an appropriate case, to grant probate, or administration c.t.a. in respect of a portion only of a document which has been executed as a will, omitting other portions as having formed no part of that to which the execution of the document really applied, as, for example, where by fraud or mistake there has been included in the instrument words which in truth were not part of the testator's will: Rhodes v Rhodes (1882) 7 App Cas 192, at p 198. "In that case you may strike out the passage, because he did not know it was there or intend that it should be, and therefore it was not his will in any sense of the word": Morrell v Morrell (1882) 7 PD 68, at p 70. In Rhodes v Rhodes (1882) 7 App Cas 192, however, Lord Blackburn, for the Privy Council, expressed doubt as to whether words could be rejected under this principle where the result would be to alter the sense of those which remained. "For", he said, "even though the Court is convinced that the words were improperly introduced, so that if the instrument was inter vivos they would reform the instrument and order one in different words to be executed, it cannot make the dead man execute a new instrument; and there seems much difficulty in treating the will after its sense is thus altered as valid within the 9th section of the 7 Will 4 & 1 Vic c 26, the signature at the end of the will required by that enactment having been attached to what bore quite a different meaning". That the doubt thus expressed was well-founded the Court of Appeal held in a considered judgment in the case of Re Horrocks; Taylor v Kershaw (1939) P 198. The will there under consideration contained a gift for objects described as "charitable or benevolent". Evidence was given that the word "or" was inserted by a mistake on the part of the typist to whom the solicitor dictated the will, the solicitor having used the word "and". In order to save the gift from the invalidity which would result from the use of "or", the Probate Court was asked to strike that word out. The Court of Appeal considered that the alleged mistake had not been established by the evidence, but went on to hold that even if it had been established the case would not have fallen within the jurisdiction to exclude from the probate a portion of a document which otherwise was proved as a will. The reason was that "charitable", with its full meaning, was the choice of the testatrix herself; the word "benevolent", with its full meaning, was the choice of the draftsman to whom she had committed the task of drafting the will and by whose choice of the word she was in the circumstances bound; and the word "or" could not be deleted without making the words "charitable" and "benevolent" qualify one another so that neither would then carry its full meaning. The fact that the actual intention of the testatrix would thereby be effectuated was not regarded as justifying a step which would produce this result. The principle which was applied - and whether it was applied correctly or not is not to the point - was expressed in the words: "the cases in which the Court has decreed probate with the omission of words, phrases or clauses have all been cases where the matter omitted was, so to speak, self-contained and its omission did not alter the sense of what remained": (1939) P 189, at p 219. This proposition has recently been accepted by this Court in Ebert v The Union Trustee Company of Australia Ltd (1960) 104 CLR 346, at p 351 and is fully borne out by the authorities… … But both on principle and on the authority of the remark of Sir Wilfred Greene above referred to, it seems clear that the case cannot be regarded as meaning that the Probate Court may omit from the probate a word or words which appear in a will, where the omission will cause other words of the will to produce a result different from that which was within the knowledge and approval of the testator.
It is proper to use the term "severance" to describe the process that may be available to the court when it is shown that the testator did not know or approve of parts of his or her will, rather than "rectification". Where it is shown that the parties to a contract have made an agreement that is not reflected in the wording of the document, the court can rectify the error by reforming the contract, to replace the defective wording with new words that will reflect the true agreement between the parties. However, that process is not available where it is proposed that a will be admitted to probate. The court can only admit the will to probate with identified parts of the documents deleted. The court cannot add words nor can it replace words with a new formulation that matches the intention of the testator. Further, the deletion of words to omit something not intended may have the consequential effect that the will, following severance, does not reflect the testamentary intentions of the testator; and if that occurs, severance is not permitted.

Consideration

As Campbell JA said in Tobin v Ezekiel (above): [2] In litigation relating to probate, certainly one, and sometimes more, of the people best able to inform the court about facts relevant to the drafting and execution of the will are not available to give evidence. That has the consequence that frequently it is important who has the onus of proving some particular matter relevant to that litigation, and in what circumstances there is a shifting of the onus of adducing evidence concerning that matter. Further, the onus of adducing evidence concerning one matter relevant to the litigation might be shifted by evidence that is not enough to shift the onus of adducing evidence concerning another matter relevant to the litigation.
The present case raises acutely the problem identified by Campbell JA. Lady Macarthur-Onslow is not available to give evidence, and Mr Macarthur-Onslow, though available, has chosen not to do so.
In Tobin v Ezekiel, Meagher JA said: [100] The relevant principles permit the drawing of inferences which may be taken into account in deciding whether to accept or rely upon particular evidence or as being themselves corroborative of other evidence. Those principles cannot be employed to fill gaps in the evidence. They are exemplified by cases such as Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 and Armory v Delamire (1722) 1 Stra 505; 93 ER 664. The general principle is that the "non-production of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavourable to the party's cause": Wigmore on Evidence at 162-171, paras 285-288. See also The Insurance Commissioner v Joyce [1948] HCA 17; 77 CLR 39 at 49, 61; G v H [1994] HCA 48 ; 181 CLR 387 at 391-392; Jones v Dunkel [1959] HCA 8; 101 CLR 298 at 308, 312, 320-321; ASIC v Hellicar at [166]-[167], [250], [252]. Reference has already been made (in relation to the probate appeal) to the application of this general principle to the giving of false or fabricated evidence as indicating a consciousness that a case is weak or unfounded and justifying an inference as to the fact of a lack of truth or merit in the case or an aspect of the case.
Pursuing Meagher JA's reference to ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17 further, French CJ and Gummow, Hayne, Crennan, Kiefel and Bell JJ said (footnotes omitted): [166] Lord Mansfield's dictum in Blatch v Archer that "[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted" is not to be understood as countenancing any departure from any of these rules. Indeed, in Blatch v Archer itself, Lord Mansfield concluded that the maxim was not engaged for "it would have been very improper to have called" the person whose account of events was not available to the court. [167] This court's decision in Jones v Dunkel is a particular and vivid example of the principles that govern how the demonstration that other evidence could have been called, but was not, may be used. The essential facts of the case, though well known, should be restated. The personal representative of a driver who had died in a collision with another vehicle brought an action for damages on her own behalf and on behalf of the deceased driver's dependants. The plaintiff's case depended upon demonstration that the other driver's negligence was a cause of the accident. The plaintiff sought to demonstrate negligence by having the tribunal of fact (in that case a jury) infer from facts concerning the road and the two vehicles involved that the collision had occurred when the defendant's vehicle was on the wrong side of the road. One of the defendants, the surviving driver, did not give evidence at the trial. The court divided about whether the inference which the plaintiff sought to have the jury draw about where the collision occurred was an inference that was open on the evidence. But the court held166 "that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence".
The observations of Heydon J in this case at [250] are, with respect, particularly useful in the present case (footnotes omitted): [250] … In Blatch v Archer Lord Mansfield CJ stated: It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. In G v H Brennan and McHugh JJ stated: when a court is deciding whether a party on whom rests the burden of proving an issue on the balance of probabilities has discharged that burden, regard must be had to that party's ability to adduce evidence relevant to the issue and any failure on the part of the other party to adduce available evidence in response. In Ho v Powell Hodgson JA stated: in deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision. … In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so. In Shalhoub v Buchanan Campbell J stated: failure of a party who bears an onus of proof to call an available witness who could cast light on some matter in dispute can be taken into account in deciding whether that onus is discharged, in circumstances where such evidence as has been called does not itself clearly discharge the onus. This is an application of Lord Mansfield's maxim. In Whitlam v Australian Securities and Investments Commission Hodgson, Ipp and Tobias JJA stated: the principle in Briginshaw calls attention to the requirement that a party seeking a finding of serious misconduct produce adequate material to enable a court to reach a comfortable satisfaction on such a serious matter. Although this is not the same as the obligation of the Crown to call available evidence in a criminal prosecution, we think it is fair to say that a person seeking such a finding does need to be diligent in calling available evidence, so that the court is not left to rely on uncertain inferences. And in Cook's Construction Pty Ltd v Brown Hodgson JA stated, in an ex tempore judgment: where a party has to prove something and prima facie has available evidence that would directly deal with the question, a court will be very hesitant in drawing an inference in that party's favour from indirect and second-hand evidence, when the party doesn't call the direct evidence that prima facie it could have called, at least unless some explanation is given, or the circumstances themselves provide an explanation.
See also the reasons of Ward J in A v N at [302]-[307].
These principles are of particular significance in the present case. Mr Macarthur-Onslow ought to have been in a position to give material evidence on a number of crucial issues. He ought to have been able to give evidence concerning whether Lady Macarthur-Onslow exhibited the relatively extreme manifestations of dementia referred to in the evidence of Lady Hobhouse and Ms Hayman, and as to the frequency of that conduct occurring. He ought to have been able to respond to Lady Hobhouse's evidence concerning his mother's statements and conduct that occurred in his presence. That is particularly significant in relation to the conversations to which Lady Hobhouse deposed, which concerned the equal distribution of their mother's estate, and how that might be achieved. Mr Macarthur-Onslow was in a position to contradict, if his evidence would have allowed him to do so, the evidence given by his sister concerning the extreme manner in which he disparaged his sister in the presence of his mother.
Furthermore, during almost all of the period over which steps were being taken to prepare Lady Macarthur-Onslow's will, being February to 15 October 2004, Lady Hobhouse had been excluded from participation in the meetings relating to the Australand transaction, and also the steps that were taken for the purpose of preparing the 2004 will. Mr Macarthur-Onslow accompanied his mother to all of the meetings, and was in a position to discuss the proposal and any draft documents or reports that were provided to MGPL with his mother prior to meetings, and to prepare her, even to the extent of monitoring her dress and appearance. Mr Macarthur-Onslow drove his mother to meetings with Mr Beardow, and the evidence suggests that, at least on a number of occasions, he was present for some part of the meetings. Mr Macarthur-Onslow was in a position to discuss his mother's testamentary intentions with her, assuming she was prepared to do so.
As I have said above, I found both Lady Hobhouse and Ms Hayman to be credible and impressive witnesses. My inclination to accept their evidence anyway has substantially been reinforced by the fact that Mr Macarthur-Onslow should have been in a position to give evidence that contradicted the evidence of those two witnesses, if his recollection of events permitted him to do so.
I have not been able to draw positive conclusions from the absence of evidence from Mr Macarthur-Onslow concerning Lady Macarthur-Onslow's preparation for the commercial meetings and the preparation of her 2004 will. The result has been that it has been necessary for me to decide quite difficult questions concerning Lady Macarthur-Onslow's testamentary capacity, and her knowledge and approval of the terms of the 2004 will, without evidence from a witness who ought to have been in a position to give detailed evidence that may have enabled the court to decide the evidentiary contest in a much more refined way than has in fact been possible.
There are two conflicting streams of evidence concerning the consequences of Lady Macarthur-Onslow's cognitive impairment. It has been necessary for the court to achieve the best reconciliation possible by objectively analysing the confluence of those two streams.
Another matter of significance in the present case is the fact that about a decade elapsed between the occurrence of the material events in 2004 and the time when the witnesses prepared their affidavits.
Ward J helpfully set out the principles relevant to this matter in A v N in the following terms: [348] As to the lay witnesses generally, I note at the outset that the fallibility of human memory has been explained by McLelland CJ in Eq (as his Honour then was) in an oft-quoted passage in Watson v Foxman (1995) 49 NSWLR 315 (at 318), as follows: … human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. [349] His Honour noted (at 318-319) that: Each element of the cause of action [there for misleading and deceptive conduct though his Honour expressly noted that the principles so espoused were true also for claims based on contract and equitable estoppel] must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not … attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a cause of action… in the absence of some reliable contemporaneous record or other satisfactory corroboration.
Her Honour observed at [350] that, where evidence is given long after the occurrence of the events in question, the witnesses may "put their own gloss or interpretation on events in which they were emotionally involved and that, by now, those perceptions will be reinforced in their minds so that they will be convinced of the truth of those perceptions". Not only "do memories fade with time", but "impressions of events may become accepted as fact".
I do not think these considerations substantially undermine the value of the evidence of Lady Hobhouse and Ms Hayman, concerning the objective conduct of Lady Macarthur-Onslow. No doubt, recollections concerning the extremity of that conduct and its regularity may be dimmed with the passing of time. Also, the passing of time may impair the ability of the witnesses to accurately identify the time periods during which particular conduct occurred. However, the evidence of the two witnesses broadly corroborates the other, and I have had no hesitation in accepting their evidence, subject to necessary reservations about the specificity of their recollections.
The evidence given by Ms Hobhouse concerning the precise terms of conversations with her mother or her brother, or the two of them, will be more susceptible to attenuation as a result of the passing of time. However, as I have recorded above, Lady Hobhouse impressed me as a witness who was speaking from the best memory available to her.
In all of these matters I have considered the absence of contradiction by Mr Macarthur-Onslow, and the consequential inability of the defendants' counsel to contradict the witnesses in cross-examination, to be of considerable consequence.
The authorities provide some assistance on the question of how the court should treat the evidence of lay persons who have had dealings with the person whose mental capacity is in question in determining whether mental capacity was present.
In Bailey v Bailey (1924) 34 CLR 558, Isaacs J said at 572: 10. The opinion of witnesses as to the testamentary capacity of the alleged testator is usually, for various reasons, of little weight on the direct issue - Kinleside v Harrison, 2 Phill. at pp 457 to 459. 11. While, for instance, the opinions of the attesting witnesses that the testator was competent are not without some weight, the court must judge from the facts they state, and not from their opinions - Durnell v Corfield, 1 Rob. Ecc. at p 55.
As I understand these observations by Isaacs J, they were intended to relate more to persons who are simply brought in to witness the execution of a will, rather than persons who have had lengthy dealings with the testator.
In Worth v Clasholm (1952) 86 CLR 439, Dixon CJ and Webb and Kitto JJ, at 452-453, appear to accept that the court can give weight to the evidence of "competent observers" concerning a testator's testamentary capacity, after referring to evidence of persons who had had dealings with the testator, and had discussed transactions with her and "formed the impression that the testatrix understood the transaction and in her demeanour and her actions seemed perfectly normal".
Ward J considered this issue in A v N, where her Honour said: [432] Mr Ahmed further submits (in what again seems to me to be a very broad generalisation of something as to which I should not attempt to take judicial note) that solicitors (and I assume he intends by this also to include barristers given the earlier submissions in that regard) are not qualified to form a view as to whether a person with progressive dementia understands a document and that it would be very difficult for a solicitor (when assessing the answers given by a client to questions of the kind it was suggested should have been posed in Szozda) to distinguish between mere platitudes and a true understanding. With respect, there is no basis for me to draw such a conclusion... It cannot surely be the case that a solicitor or barrister is necessarily incapable of testing whether an answer to a question posed of a client reveals an understanding or lack thereof as to the subject matter of the question, even if the level of mental competence as would appear from a medical examination cannot be assessed. (Emphasis added)
The reference by her Honour to solicitors and barristers "testing" a person has testamentary capacity on the basis of the person's response to questions posed is important. That opinion is consistent with the advice given by Santow J (as his Honour then was) in Pates v Craig; Estate of Cole (NSWSC, unreported, 28 August 1995), where he said: At the least, a solicitor should ask the kind of questions designed to probe the testator's understanding of the basic matters which connote testamentary capacity, as earlier set out: Banks v Goodfellow, supra. For this purpose, and subject to the earlier caveat concerning checklists, the advice concerning the taking of instructions, contained in Mason and Handler's Wills Probate and Administration Service New South Wales (Butterworths) at [10,019], is a useful guide.
Proper testing is likely to be most important if the issue is whether a testator with a cognitive disability could actually understand the contents and effect of the will, so that the will contains the real intention and reflects the true will of the testator. That is so because of the relative generality of the level of understanding required for the purposes of testamentary capacity, compared to the relatively precise understanding that may be required to establish knowledge and approval.

Testamentary capacity

The cross claimants accept that they have the burden of establishing that Lady Macarthur-Onslow had testamentary capacity at the time she executed the 2004 will.
I am satisfied on the evidence that the defendants have satisfied that burden and that Lady Macarthur-Onslow had the necessary testamentary capacity.
At this stage of the enquiry into the validity of the 2004 will, the question is whether it has been established on the balance of probabilities that Lady Macarthur-Onslow had the mental competence, on 15 October 2014, to understand the general nature of what she was doing in making the 2004 will, or its general purport. That is a different issue to whether Lady Macarthur‑Onslow in fact understood the terms of the draft will or their effect.
As was the case in A v N at [405], in my view, the nature and complexity of the 2004 will did not require any especially complicated explanation for the purpose of determining whether Lady Macarthur-Onslow had testamentary capacity. Mr Beardow gave evidence that he explained many parts of the draft will, and I am satisfied that the explanation was sufficient to enable Lady Macarthur-Onslow to understand the nature of the act of making a will and its effects, in the sense of appreciating the significance of the act in law upon which she was about to embark, if in fact Lady Macarthur-Onslow had the mental capacity to have that understanding.
I do not understand Lady Hobhouse to submit that her mother did not understand the extent of the property of which she was disposing by her 2004 will.
In any event, in my view, the evidence establishes that Lady Macarthur-Onslow had the necessary understanding of the nature and extent of her estate.
The substantial body of evidence concerning Lady Macarthur-Onslow's participation in the meetings concerning the proposed option agreement with Australand for the purchase of a substantial part of Mount Gilead, and the detailed discussions that she had with Mr Beardow concerning the disposition of individual assets within her estate, together with the terms of the 12 February 2004 memorandum of advice, are sufficient, in my view, to show that Lady Macarthur-Onslow did not have the required understanding of her estate.
I do not accept the basis of Dr Wijeratne's opinion that Lady Macarthur-Onslow's "understanding of the value of money, let alone her estate, is open to question". Dr Wijeratne relied for his opinion on a particular piece of evidence given by Lady Hobhouse concerning the effect of her mother's dementia, in which it appeared that at one time Lady Macarthur-Onslow had a misguided understanding concerning the parlous state of her finances, in relation to her capacity to pay certain types of small debts.
I do not rule out that on the rare occasion Lady Macarthur-Onslow may have misguidedly acted as if she was in some financial difficulty, but upon the whole of the evidence I am satisfied that Lady Macarthur-Onslow appreciated that she was a wealthy person, and moreover she had by long experience a grasp of the nature and extent of her estate.
I have not seen any evidence that the aspect of Lady Macarthur-Onslow's cognitive function that manifested itself in impaired memory caused her in fact to forget the nature and extent of her estate.
I prefer the evidence on this issue of Dr Darveniza, who recorded in his 23 June 2004 report: … In this regard Dorothy knows in detail what her assets are and their approximate value… She is also fully aware of the potential for development of one of their properties on the edge of the city which, if developed, would be worth a very large sum.
I accept that this is a summary of information provided to Dr Darveniza following questions that he asked of Lady Macarthur-Onslow, and that it is probable that the doctor made sufficient enquiries of his patient to justify this summary.
The evidence also establishes that Lady Macarthur-Onslow was able to comprehend and appreciate the claims to which she ought to give effect.
As Dr Darveniza noted in his 23 June 2004 report, Lady Macarthur-Onslow "realises that both her children would have a call on her estate which she plans to divide 50/50 between them".
Lady Macarthur-Onslow gave to her solicitor, Mr Beardow, an instruction that the balance of her estate, after the making of a small number of particular gifts, was to be divided "half and half" between her two children.
If the question is whether a testator was able to comprehend and appreciate the claims to which she ought to give effect, and the testator gives an instruction to her solicitor that she wishes to make an entirely conventional and proper equal distribution between her children in conformity with the general custom, the required ability must be established.
In the present case, the issue cannot be whether Lady Macarthur-Onslow lacked testamentary capacity because she was unable to comprehend properly the calls on her bounty. The issue is whether, Lady Macarthur-Onslow, having properly comprehended the calls on her bounty, and given instructions to her solicitor to implement an equal distribution of most of her estate to her children, she did not know and approve of that part of the 2004 will that failed to implement her instruction.
Dr Wijeratne's opinion that Lady Macarthur-Onslow lacked this aspect of the requirement for testamentary capacity was based upon his view that the evidence cast doubt on her ability to identify, evaluate and discriminate between the respective strengths of the claims of potential beneficiaries. That opinion must be undermined by the evidence of Lady Macarthur-Onslow's testamentary intention to divide her estate with approximate equality between her children.
Dr Wijeratne based his opinion on the fact that, notwithstanding that Lady Macarthur-Onslow intended to divide her estate equally between her children, one effect of the 2004 will was to remove the gift of the Darling Point apartment that was given to Lady Hobhouse under the 1988 will.
The Darling Point apartment was only a minor part of Lady Macarthur-Onslow's estate. Such a small change in the balance of the distribution of the estate between the two children could not prove that Lady Macarthur-Onslow was not able to comprehend and appreciate the claims to which she ought to give effect.
Rather, Lady Macarthur-Onslow's expressed intention to divide her estate between her children with approximate equality proves to the contrary.
Dr Wijeratne also asserted that Lady Macarthur-Onslow suffered from a medical condition that was a disorder of the mind that was likely to poison her affections, pervert her sense of right or prevent the exercise of her natural faculties. There was substantial evidence of conduct by Mr Macarthur-Onslow that was capable of poisoning his mother's mind against his sister, and that to some degree his conduct caused Lady Macarthur-Onslow to take his side, and to behave uncivilly towards her daughter in various ways.
However, the real point is that there is no evidence that any uncivil conduct on Lady Macarthur-Onslow's part was caused by her dementia, rather than Mr Macarthur-Onslow's conduct, and more importantly, the poisoning did not work, as Lady Macarthur-Onslow's primary testamentary intention was to distribute her estate with approximate equality between her two children.
The only real question is whether Lady Macarthur-Onslow sufficiently understood the nature of the act of making her will and its effect.
On this question, Dr Wijeratne's opinion goes a long way to ending the dispute in favour of the cross claimants, as he said that Lady Macarthur-Onslow's impairments did not prevent her from understanding the nature of the act of making the will and its effect, as even people with dementia of moderate severity will retain a basic awareness and appreciation of the purpose and effect of making a will.
The issue is decisively determined by the evidence of Dr Darveniza, which I accept on this point. He formed the view, on 22 June 2004 and 30 November 2004, that he had no doubt that she was under proper care and control and had testamentary capacity, notwithstanding her dementia. There is no evidence to suggest that Lady Macarthur-Onslow's testamentary capacity was materially different on 15 October 2004, when she executed her will.
Although Dr Darveniza could not give evidence from recollection concerning the questions that he put to Lady Macarthur-Onslow to satisfy himself that she had testamentary capacity, I am satisfied that he did so, and that his expertise placed him in the best position to form an expert opinion on that question.
This conclusion is supported by the evidence given by Mr Beardow and Mr Martin, concerning Lady Macarthur-Onslow's participation in the many meetings concerned with the Australand proposal. Those meetings took place on a significant number of occasions over a relatively long period straddling the date on which Lady Macarthur Onslow made her 2004 will, so that the evidence of these witnesses of her apparent competence to give instructions on behalf of MGPL in the negotiations with Australand carry weight on the issue of her contemporaneous testamentary capacity. It is highly unlikely that Lady Macarthur-Onslow's participation in the meetings would have continued as it did, if any of the experienced professional people present had detected any behaviour on the part of Lady Macarthur-Onslow that was inconsistent with contractual competence in relation to that relatively complex dealing.
Considerable weight should be given to Mr Beardow's evidence of his dealings with Lady Macarthur-Onslow on the subject of her will, even though it is true that he failed to follow up his knowledge that his client suffered from dementia, and he failed to apply best practice to satisfy himself that his client had testamentary capacity during the conference in which Lady Macarthur-Onslow executed the will. If the issue is testamentary capacity, rather than knowledge and approval, the duration and extent of Mr Beardow's dealings with Lady Macarthur-Onslow put him in a position where he ought to have been able to make reasonable judgments based upon his observations concerning Lady Macarthur-Onslow's testamentary capacity.
As the concept of testamentary capacity depends upon an ability to do things, rather than the actual achievement or implementation of those things, judgments by observers about the presence of the capacity are likely to be more reliable than judgments about whether the subject has actually been able to execute the capacity in so far as that involves the achievement of an actual understanding of the nature and effect of the relevant act.
In reaching the opinion that the evidence establishes that Lady Macarthur-Onslow had testamentary capacity, I have not ignored the evidence given by Lady Hobhouse and Ms Hayman concerning the various manifestations of Lady Macarthur-Onslow's dementia. That is a subject that I will explore in detail when considering the issue of knowledge and approval.
Given the evidence concerning the manifestations of Lady Macarthur-Onslow's dementia, and the failure of Mr Macarthur-Onslow to respond to that evidence in particular, the court will be forced to investigate the intersection between testamentary capacity and knowledge and approval, in cases where the testator was significantly cognitively impaired at the date of the will, and in particular the circumstances in which testamentary capacity may be present, but the mental impairment may nonetheless operate with the effect that the testator did not understand the effect of all or part of the will, or what the testator was doing in a way that prevents the will containing the real intention and true will of the testator.

Knowledge and approval

As I have found that Lady Macarthur-Onslow had testamentary capacity when she executed the 2004 will, it is necessary for me to consider whether the court should decline to admit the whole or any part of that will to probate on the ground that it was not executed with the knowledge and approval of Lady Macarthur-Onslow.
As the 2004 will was duly executed, it is to be presumed that Lady Macarthur-Onslow had the required knowledge and approval of the contents of the will and appreciated the effect of what she was doing. That presumption will be displaced by any circumstance which creates a well-grounded suspicion or doubt as to whether the will expresses the mind of the testator.
Lady Hobhouse relied upon a number of matters summarised in par 6.3 of her final submissions to establish the suspicion that will displace the presumption, and throw onto the defendants the onus of showing affirmatively that Lady Macarthur-Onslow knew the contents of the 2004 will and appreciated the effect of what she was doing. Those matters included Lady Macarthur-Onslow's infirmity of mind; the complexity of the provisions of the 2004 will; the complexity of Lady Macarthur-Onslow's assets, in particular in relation to the family companies and the Trust; the differences between the 1988 will and the 2004 will; the way Mr Macarthur-Onslow undermined his sister in the eyes of his mother; and the allegation that Mr Macarthur-Onslow had become increasingly possessive of his mother.
The position adopted by the cross claimants on this issue is unclear. At par 75 of their final submissions, they appear to accept that they carry the burden of proving that Lady Macarthur-Onslow did have knowledge and approval, although at pars 85 and 130, they assert that the presumption of knowledge and approval has not been displaced.
In Tobin v Ezekiel at [47], it was held that the circumstances that may displace the presumption "include the mental acuity and sophistication of the testator, the complexity of the will or the estate being disposed of" as well as certain other matters. I am satisfied that the evidence of Lady Macarthur-Onslow's dementia, in connection with the complexity of the estate, and the protracted manner in which instructions for the 2004 will were taken, and the manner in which the draft was put before Lady Macarthur-Onslow for her brief consideration before execution, raise sufficient suspicion to displace the presumption.
The question is whether, notwithstanding that there is evidence that Lady Macarthur-Onslow read the draft will before she executed it, and much of the document was explained to her, she suffered from a degree of mental impairment that had the result that in fact she did not appreciate the effect of what she was doing so that the 2004 will does not contain her real intention and reflect her true will.
I have concluded on the evidence that Lady Macarthur-Onslow appreciated the terms and effect of all of the provisions of the 2004 will, save for those provisions which had the effect of giving control of Kalemon to Mr Macarthur-Onslow, and thus control of the exercise by that company of the discretions given to the trustee of the Trust. Those provisions are cll 16(a)(i) and (ii) and 17(a)(i) and (ii).
That is a relatively exceptional finding which depends upon the effect of a number of separate but interrelated considerations.
In summary, I have concluded that Lady Macarthur-Onslow suffered from a persistent dementia which, even though it fluctuated in outward affect, caused her to suffer a continuous cognitive deficit in relation to her understanding and ability to undertake relatively high level conceptual processes, including a deficit in her ability to understand conceptually complex processes that were not fully and adequately explained to her at the time.
The evidence plainly establishes that Lady Macarthur-Onslow gave an instruction for the preparation of her will that involved an equal distribution between her children of all of the property that she owned or controlled, save for Kippilaw. That instruction was not implemented by her will, insofar as Mr Macarthur-Onslow was given sole control over the Trust through voting control of Kalemon. Lady Macarthur-Onslow received no explanation at any time that her instructions had not been carried out. All she was given some eight months before she executed her will was a cryptic statement that the existing corporate and trust structure would not allow her to divide her estate equally, and that she would have to rely upon Mr Macarthur-Onslow "doing the right thing" by Lady Hobhouse. The uncontested evidence is that Mr Macarthur-Onslow displayed such a high degree of animosity towards his sister in front of his mother in the months leading up to the execution of the 2004 will, that it would have been irrational for Lady Macarthur-Onslow to believe that her son would look after her daughter, if she still had in mind that the equal division of her estate was dependent upon decisions to be made by Mr Macarthur-Onslow.
Lady Macarthur-Onslow gave her instructions for the will so long before the draft was presented to her, that in reality her solicitor of his own motion drafted the will in the way that he thought would meet Lady Macarthur-Onslow's earlier instructions, and this is not a case where the testator has given instructions to a lawyer and the lawyer has simply rendered those instructions into a written document. Lady Macarthur-Onslow was not given a copy of the draft will with time to consider it carefully and at her leisure. The draft was presented at the conference at which it was executed, and I am not satisfied that Lady Macarthur-Onslow had an adequate opportunity to appreciate the effect of the wording of the document, and whether or not it implemented her instructions. Neither Mr Beardow nor the witnesses made any notes of what took place during the conference. Mr Beardow explained aspects of the draft will to Lady Macarthur Onslow, and also explained that the will would give Mr Macarthur-Onslow control of the companies, but he did not explain that the will did not implement Lady Macarthur-Onslow's "half and half" instruction, or say anything to her about that instruction.
Furthermore, there is evidence, including in the form of statements by Mr Macarthur-Onslow and Mr Beardow, that the presence of independent executors and directors on the boards of the family companies would ensure that Lady Hobhouse would be treated fairly, but Lady Macarthur-Onslow was not given explanations about the possibility that executors would renounce, or that directors could be replaced by the person who controlled Kalemon.
I am not satisfied that Lady Macarthur-Onslow appreciated the effect of the provisions of the 2004 will that gave control of the family companies to Mr Macarthur-Onslow, although she did want him to have that control for the purposes of the performance of the contract with Australand. I am not satisfied that she understood that in respect of what was then thought to be an overwhelming part of the property that she controlled within her estate, her "half and half" instruction had not been implemented. There is no objective evidence that Lady Macarthur-Onslow understood this consequence. The consequence went far beyond the case where a testator gives an instruction and believes the instruction has been implemented when reading the terms of the draft will, but the effect of the instruction has miscarried because of some drafting or other error by the person who has drawn the will.
It will be convenient to begin my explanation for reaching these conclusions by considering the significance of the terms in which the 2004 will was drawn. It is a legalistic document in appearance, but in almost all respects it is not complex in structure. It provides for relatively straightforward gifts and administrative arrangements, and would be understood by a reasonably intelligent layman who read it, perhaps with some assistance from a solicitor as to the meaning of aspects of the legal language. That is true even for the arrangements whereby funds would be made available to Mr Macarthur-Onslow to enable him to purchase Kippilaw from DWMO.
I am satisfied that, in respect of all of the parts of the 2004 will other than the provisions that gave control of the family companies to Mr Macarthur-Onslow, Lady Macarthur-Onslow formulated her own testamentary wishes, and expressed those wishes to Mr Beardow in the form of instructions as described in his evidence. Those instructions reflected relatively simple decisions on the part of Lady Macarthur-Onslow, which would not, in my view, have been impaired by the level of dementia from which Lady Macarthur-Onslow suffered. They did not require any significant combination of memory, understanding, and cognitive function.
That is also the case for the provisions in the 2004 will that provided for payments to be made to Mr Macarthur-Onslow, to enable him to purchase Kippilaw from DWMO. Those arrangements are not particularly complicated, and as they are merely a mechanism to achieve a testamentary purpose clearly stated by Lady Macarthur-Onslow, a testator in her position could well be prepared simply to accept an explanation from her solicitor that the mechanism chosen was appropriate to achieve the purpose.
The exception is the provisions in the 2004 will that gave control of the family companies to Mr Macarthur-Onslow. To a testator with adequate cognitive function, particularly one who had been aware for decades of the existence of a family discretionary trust, and who had received an explanation as to how the trust operated, it would not be a difficult conceptual extrapolation from an understanding that a draft will gave control over the trustee of the discretionary trust to one beneficiary, that the beneficiary would not only be able to control the commercial activities of the trustee, but would also be able to control the exercise of the trustee's discretion in relation to the distribution of the income and capital of the trust. The effect of cll 16(a)(i) and (ii) and 17(a)(ii) of the 2004 will would not be particularly difficult to understand by a testator with adequate cognitive function.
The question is whether in fact Lady Macarthur-Onslow suffered from a cognitive deficit that caused her not to understand sufficiently that these provisions of the 2004 will did not implement her instructions.
As a practical matter, control of the family companies was important for two quite different purposes. One was to ensure that MGPL, which was effectively an asset of the Trust, satisfactorily performed its obligations under the option agreement with Australand. A second purpose was the control of the discretionary powers of Kalemon as trustee of the Trust. While the relationship between those different purposes may be reasonably obvious to a testator with normal cognitive function, it would be possible for a testator with a relevant cognitive deficit to focus on one purpose without sufficient regard to the other, and not proceed with an effective understanding that both purposes must be kept in mind at the one time.
The issue of whether Lady Macarthur-Onslow's cognitive function was inadequate to appreciate the relationship of the two purposes to the achievement of her primary testamentary intention should be considered from a proper perspective. The value of the ordinary assets disposed of under the 2004 will was about $47 million. At the date of the will, MGPL was party to the option agreement with Australand. Apart from the substantial option fees, the enjoyment by MGPL of the full fruits of the agreement depended upon a number of contingencies, including the exercise of the option by Australand. However, it is plain that the mind of Lady Macarthur-Onslow would have focused on the expected benefits from the agreement. There was nothing complex about the numbers involved. MGPL stood to receive $175 million plus 7.5% of the gross sale proceeds of 4,300 residential lots. There is no evidence of the expected average sale price of the lots. For the sake of the argument, let me speculate that the average price may have been $200,000, which is probably not a high estimate. The additional receipt would in that case be $64.5 million. The total would be $239.5 million. MGPL acquired Mount Gilead before the capital gains tax inception date. In addition, as I have noted above, the other assets of MGPL, which Lady Hobhouse suggested were valued between about $8 million and $11.4 million, were assets of the Trust.
The value of the assets of the Trust, assuming the full implementation of the Australand agreement, represented in the order of 80% of the value of the total of the assets owned or controlled by Lady Macarthur-Onslow at the date of the 2004 will, assuming the validity of the $200,000 per lot assumption that I have made for the purposes of this argument.
The point is that the potential receipts from the Australand transaction were so large in relation to the ordinary estate of Lady Macarthur-Onslow, that the operative effect of cll 16(a)(i) and (ii) and 17(a)(ii) of the 2004 will have extraordinary significance to the issue of whether or not Lady Macarthur-Onslow understood that the will implemented her "half and half" testamentary intention.
While I have accepted the force of Dr Darveniza's opinion concerning the presence in Lady Macarthur-Onslow of testamentary capacity at the time she executed the 2004 will, Dr Darveniza has provided no opinion that is of material assistance to the question of whether Lady Macarthur-Onslow's dementia prevented her from sufficiently understanding the effect of any part of the 2004 will.
As recorded above, Dr Darveniza made the following notation concerning his examination of Lady Macarthur-Onslow on 22 June 2004: In detail [Lady Macarthur-Onslow] did not know the day and date but did know the month and the year but was oriented with respect of place although she did not realise she was on the seventh floor. She could not perform serial sevens or spell world backwards or recall three common objects after several minutes.
The medical evidence did not explain the significance of these observations to the actual cognitive ability of Lady Macarthur-Onslow, in relation to the disposal of her estate by means of her will. As I have already noted, Dr Darveniza was adamant that Lady Macarthur-Onslow planned to divide her estate equally between her two children. His opinion that she had testamentary capacity was partly based upon that understanding. The doctor has not expressed any opinion on an assumption that Lady Macarthur-Onslow understood that she could achieve this testamentary intention by giving Mr Macarthur-Onslow sole control of the family discretionary trust.
All that can be said from a lay perspective is that the effects that were recorded by Dr Darveniza are consistent with a level of cognitive deficit in relation to memory.
The evidence given by Mr Beardow and Mr Martin, concerning Lady Macarthur-Onslow's participation in commercial meetings and conferences concerning the making of her will, provide limited assistance on the issue of her actual cognitive function and the level of her understanding of the issues with which she was dealing. I have not noticed any evidence that Lady Macarthur-Onslow made statements, either of her own accord or in response to questions, which would provide an objective basis for a careful lay observer to form a reliable opinion about her actual cognitive function, or the level of her understanding of any issue in question. There is no evidence that Lady Macarthur-Onslow made any contribution to any of the commercial meetings that showed that she had personally analysed complex concepts or documents and had formulated rational responses. Lady Macarthur-Onslow's participation was uniformly described in responsive terms, in the sense that she made simple and limited, though rational, responses to relatively complex propositions put to her.
I am satisfied that there is force in Dr Wijeratne's opinion that only limited reliable judgments can be made concerning a person's cognitive function by relying upon simple responses to what the doctor called "closed questions". That opinion is consistent with the advice given by Santow J (as his Honour then was) in Pates v Craig; Estate of Cole, to which I have referred above.
The advice referred to by Santow J is relevantly that the solicitor for the testator should fully question the testator to determine her capacity. Although these observations were made by reference to testamentary capacity, they apply with more force where the issue is not ability to understand but actual understanding.
In the circumstances, it is necessary to infer the nature of Lady Macarthur-Onslow's cognitive function from the objective evidence. That involves an investigation into how the evidence of Lady Hobhouse and Ms Hayman on the one hand, should be reconciled with the evidence concerning Lady Macarthur-Onslow's participation in the commercial meetings and the preparation of her will, given by Mr Beardow and Mr Martin, on the other hand.
That investigation may be assisted by considering the relationship between Lady Macarthur-Onslow's expressed statements of testamentary intention and the effect of the wording of the will that she executed, in relation to whether a person with her testamentary intention would rationally have executed a will in the terms of the 2004 will.
As to the first of these matters, the evidence does not permit a finding that the evidence given on behalf of Lady Hobhouse on the one hand, or the defendants on the other, should be accepted to the exclusion of the other. With due allowances, a considerable part of the evidence given on behalf of all parties must be accepted, and the task is to achieve the best reconciliation of the objective evidence that is possible.
For the reasons that I have given above, I have broadly accepted the evidence of Lady Hobhouse and Ms Hayman. I have done so because I found both of those witnesses to be credible; they were not to any significant degree contradicted; and in particular, Mr Macarthur-Onslow did not give evidence, even though he must have been in a position to contradict much of the evidence given by Lady Hobhouse and Ms Hayman, if his recollection of relevant events materially differed from theirs.
As I have acknowledged, however, the evidence given by these witnesses was anecdotal and episodic, and Lady Hobhouse in particular acknowledged that her mother experienced lucid periods and periods when she was not lucid.
It is clear that Lady Macarthur-Onslow's cognitive function varied from time to time.
However, I have concluded that this is not a case that is factually similar to Banks v Goodfellow, where the court acted upon the basis that the testator suffered from delusions from time to time, but those delusions were not present or operative at all at the time the will was executed. Lady Macarthur-Onslow's dementia operated on her mind at all times, but with varying effect. There were occasions when Lady Macarthur-Onslow manifested relatively extreme episodes of dementia. There were many other occasions when her conduct to all outward appearances was relatively normal. There were periods when she was not lucid, and other periods when she appeared to be lucid. However, I find that, during the periods of apparent lucidity, it was not the case that her dementia had no effect on her cognitive function.
I have carefully considered the weight that should be given to the evidence of Lady Hobhouse and Ms Hayman, for the purpose of judging the conclusions that should be reached concerning Lady Macarthur-Onslow's underlying cognitive function. I have concluded that it is likely that the more extreme manifestations of Lady Macarthur-Onslow's dementia have figured more strongly in the memory than the periods in which her conduct was more normal, so that the witnesses have naturally, but honestly, painted a more dramatic picture than might be supported, if the entirety of Lady Macarthur-Onslow's conduct had been recorded and reported upon. I have also tended to discount to a degree the evidence of Lady Macarthur-Onslow's violent conduct towards Lady Hobhouse, because that may have been influenced by anger towards Lady Hobhouse's involvement in the Australand negotiations, as well as the pejorative observations made by Mr Macarthur-Onslow to his mother about his sister.
However, even when these adjustments are made, the remaining evidence establishes that Lady Macarthur-Onslow engaged from time to time in irrational conduct and suffered from significant memory deficits. That behaviour was caused by a dementia that was continuously present, although variable in its manifestations. I accept the evidence given by Dr Wijeratne, which was not challenged by Dr Darveniza, that even though Lady Macarthur-Onslow may have experienced apparently lucid intervals, her underlying dementia continued to impair what he described as her "executive function".
I note particularly, by reference to Lady Hobhouse's principal affidavit, the following evidence concerning Lady Macarthur-Onslow's behaviour: she did not appear to remember that she had removed Lady Hobhouse from the family company boards (par 150); she did not remember the name of her solicitor, Mr Best (par 186); she responded to the presence of McClellan CJ of the Land and Environment Court at Mount Gilead as if he and his party were tourists, even though she had been told that a view would take place (par 190); she washed tea towels in dog bowls (par 193); she forgot that she had been to the bank the previous day (par 197); and she forgot that she had gone to see Mr Beardow (par 204).
This evidence shows that Lady Macarthur-Onslow suffered an underlying cognitive deficit, particularly in relation to her memory, and also in relation to her understanding of the appropriateness of her conduct. From a lay perspective, perhaps the best and only way available to describe the nature of Lady Macarthur-Onslow's cognitive deficit, is to do so in terms that it was such as caused her to act in the way generally described by Lady Hobhouse and Ms Hayman.
The evidence concerning Lady Macarthur-Onslow's participation in commercial meetings establishes, however, that she did not always act in a way that made these cognitive deficits obvious. Even if allowance is made for the capacity of Lady Macarthur-Onslow to choose the times of conferences, and to make private preparation for her participation, and even if the significance of that participation is measured with respect to its relatively short duration, the fact remains that Lady Macarthur-Onslow was able to act with apparent normality on numerous occasions.
That circumstance causes me to conclude that Lady Macarthur-Onslow's dementia must have been such that she enjoyed some measure of self-control, which permitted her to focus on a particular task, and by appropriate preparation to conduct herself with apparent normality, at least for short periods, and possibly longer. It may be that the more extreme manifestations of Lady Macarthur-Onslow's dementia occurred at times when she was able, so to speak, to let her guard down, and act in a manner that represented her own normality.
The evidence shows that Lady Macarthur-Onslow was always accompanied by Mr Macarthur-Onslow to business meetings. She was always supported by him and other advisors. An obvious issue in these proceedings has been how the relatively unchallenged evidence of Lady Hobhouse and Ms Hayman should be reconciled with the evidence of Lady Macarthur-Onslow's participation in the commercial meetings. An obvious question is what, if anything, Mr Macarthur-Onslow did in private to prepare his mother for meetings, including by monitoring her dress and appearance. One consequence of Mr Macarthur-Onslow's decision not to give evidence is that there is no evidence concerning the extent to which the apparent competence of Lady Macarthur-Onslow in the commercial meetings may have been a result of private preparation that occurred before those meetings. I do not ignore the fact that Lady Hobhouse also did not give evidence on this subject in respect of business meetings that happened before she was removed from the boards of the family companies.
It seems reasonable to conclude, however, that the two strands of evidence concerning the effect of Lady Macarthur-Onslow's dementia on her may have been reconciled to some extent, had it been possible to know whether she had been tutored or prepared for meetings in a way that assisted her to focus for short periods in a way that allowed her to act with apparent normality, particularly in so far as she could participate by way of brief responses, and not engage in complex cognitive discussions.
The evidence also makes reasonable the conclusion that, notwithstanding her dementia, Lady Macarthur-Onslow was able to act with more normal apparent cognitive function over relatively short periods, in the sense of being able to prepare for a particular meeting, so that she could focus and conduct herself with apparent normality. The strongest evidence of cognitive deficit relates to Lady Macarthur-Onslow's memory function; which would support a conclusion that she was more likely to be debilitated by her dementia if her involvement in a particular transaction was protracted, episodic, and disjointed.
That is what happened in relation to the preparation by Mr Beardow of the 2004 will.
It is clear that the 2004 will was not prepared in the normal way, by the testator being asked to give instructions in a single episode; the draft will being prepared in a relatively short time; and the draft will being explained to and read by the testator on an occasion when the testator would have in mind the whole of the instructions.
The 2004 will was prepared as a result of instructions given to Mr Beardow on a number of incomplete occasions over a period of approximately eight months.
Lady Macarthur-Onslow instructed Mr Beardow in February 2004, at a time when Lady Hobhouse's conduct in the negotiations with Australand was uppermost in Lady Macarthur-Onslow's mind, that she would like her children "to pretty much equally share the assets".
In my view, when Lady Macarthur-Onslow referred to her assets, or her estate, she meant not only the ordinary assets in her estate, but also the assets in the Trust, which she was in a position to control by means of her governing directorship of Kalemon. She was also able to influence who controlled Kalemon by how she distributed her shares in her will. That is the natural way for a person in the position of Lady Macarthur-Onslow to think of distributing the family property to her children. As I understand the defendants' position, they accept that Lady Macarthur-Onslow's estate includes assets within its control but of which beneficial ownership lies elsewhere: see final submissions par 13.
Mr Beardow responded to Lady Macarthur-Onslow's statement by saying that the structure of the companies and the trust in place after Lady Macarthur-Onslow's death would not permit her to ultimately control how the assets were distributed, and that if Mr Macarthur-Onslow was given the ability to control the entities, she would have to rely upon him doing the right thing by Lady Hobhouse. It is implicit in Mr Beardow's response to Lady Macarthur-Onslow's statement that she would like to share the assets equally that he understood that his client meant to include the assets of the Trust. Otherwise, his reference to the companies and the Trust would have been incongruous.
Although these statements were made during a discussion between Lady Macarthur-Onslow and her solicitor, they do not have the hallmarks of a serious or considered advice. They more appear to take the form of unconsidered remarks made in passing. Mr Beardow did not provide any explanation to Lady Macarthur-Onslow of his suggestion that there was no way that she could control the disposition of the Trust after her death, in a manner that would ensure equality of treatment between her children. The subject was never mentioned again.
There is force in the submission made on behalf of Lady Hobhouse that the statement that Lady Macarthur-Onslow would have to rely upon her son doing the right thing was cryptic. The statement was not explained by Mr Beardow. There is no mention of it ever having been made again. Yet it is the foundation of Mr Beardow's belief that he was given an instruction by his client to prepare the 2004 will in a way that gave control not only of MGPL to Mr Macarthur-Onslow, but also the Trust as a whole, and that she was content to leave her primary desire that her estate be divided equally between her children to the whim of her son.
I accept that Lady Macarthur-Onslow expressed the preference that Mr Macarthur-Onslow should control the family companies, to the exclusion of Lady Hobhouse, in relation to their commercial activities, and she never deviated from that preference. That was not a decision that was vitiated in any way by her dementia, as it was a simple choice to make, and she maintained that choice consistently.
In relation to the fact that this February 2004 conversation was the only source of instructions to Mr Beardow to draft the 2004 will in a way that gave Mr Macarthur-Onslow sole control over the family companies, the evidence given by Lady Hobhouse concerning the increasing displays of animosity by her brother towards her, in the presence of her mother, becomes relevant. I will not summarise that evidence in detail, but note that it is primarily found in Lady Hobhouse's primary affidavit in pars 174, 191, 192 and 198 to 201. I find that Mr Macarthur-Onslow exhibited extreme animosity towards Lady Hobhouse in front of his mother.
The significance of that evidence is that it would have been entirely irrational for Lady Macarthur-Onslow to still believe by 15 October 2004, if she ever did so, that she could achieve equality of distribution of her assets to her children by leaving the outcome solely in the control of her son. This is a major reason why I am unable to accept that Lady Macarthur-Onslow understood the effect of what she was doing when she made the 2004 will, in relation to the part of the will that gave control of the family companies exclusively to Mr Macarthur-Onslow.
Mr Beardow's 12 February 2004 memorandum of advice to Lady Macarthur-Onslow contained a clear explanation of how the discretionary trust worked, in relation to the ability of Kalemon, as trustee, to exercise discretions concerning the distribution of the capital and income of the Trust.
It is not clear whether Lady Macarthur-Onslow read the memorandum of advice, or if she did, what she understood it to mean. There is no reason to suppose that Lady Macarthur-Onslow did not read the document, and it is likely that she did. The recommendations made in the memorandum of advice, were not, however, implemented. Mr Beardow did not explain why that is so. He did not give evidence of any discussions with Lady Macarthur-Onslow concerning the fate of the recommendations, so it is not clear how seriously Lady Macarthur-Onslow took them.
If it be assumed that Lady Macarthur-Onslow did read the memorandum of advice, it should also be assumed that she read the covering letter. If she did that, she would have understood that Mr Beardow was advising her that the recommended steps were designed to ensure that Lady Hobhouse was "not disadvantaged in regard to her ultimate economic interests". It cannot be known what Lady Macarthur-Onslow made of that statement, but if she gave it any credence, it would naturally have caused her to understand that, in so far as it was recommended that steps be taken to remove Lady Hobhouse from any position of control of the family companies, that would not disadvantage her economic interest. The statement made by Mr Beardow could only jeopardise the capacity of a person in Lady Macarthur-Onslow's position, who was suffering from moderate dementia, to understand the consequences of including in the 2004 will provisions that gave control of the family companies and the Trust to Mr Macarthur-Onslow.
Lady Hobhouse was removed as a director of Kalemon and MGPL during February 2004, and thereafter she took no part in the management of the companies. That fact may have tended to diminish the significance of the control issue in Lady Macarthur-Onslow's mind.
Mr Beardow became aware on 24 February 2004 that Lady Macarthur-Onslow was suffering from dementia. Thereafter, he did nothing to determine the possible effect of the dementia on his client's ability to give proper instructions, or to understand his advice, or to understand the effect of any document prepared by him on her instructions. He simply relied upon his own lay judgment, and even then, he does not appear to have adjusted his approach in dealing with Lady Macarthur-Onslow, by questioning her in a way that would give him an objective basis for believing that she actually understood the effect of which she was doing. He did not ask her to respond to questions that demonstrated that she was able to process complicated reasoning in her mind before expressing an appropriate answer.
On 14 May 2004, in a conference with Lady Macarthur-Onslow, Mr Beardow sought instructions concerning the number and identity of her executors. He positively advised Lady Macarthur-Onslow that, if she appointed four executors in total, who were her present advisors, that "should provide some comfort to Katrina that views other than Lee's are taken into account with decision-making". That simple statement was calculated to cause Lady Macarthur-Onslow to form an understanding that she could give control to Mr Macarthur-Onslow, but Lady Hobhouse would be protected in respect of equality of treatment by the ability of three independent executors to be able to control relevant decision-making. Mr Beardow did not explain to his client that the independent executors could renounce.
Sometime after the 14 May 2004 meeting, Mr Beardow had meetings with Lady Macarthur-Onslow in which she gave him instructions to remove the gift of the Darling Point apartment to Lady Hobhouse, to delete the legacy to her deceased housekeeper, and to include arrangements that would result in Mr Macarthur-Onslow receiving Kippilaw in his own name. As I have already observed above, there was nothing complicated about those instructions, and I am satisfied that they reflect Lady Macarthur-Onslow's true testamentary intentions, uninfluenced by the effect of her dementia.
At the meeting held on 20 August 2004, at which Lady Macarthur-Onslow gave instructions to Mr Beardow concerning the gift of Kippilaw, her final instruction was "THEN HALF AND HALF", as reflected in Mr Beardow's brief note of the meeting.
This was in effect the primary instruction given by Lady Macarthur-Onslow to Mr Beardow concerning the disposition of almost the entirety of her estate, including the assets in the Trust.
The fact that Lady Macarthur-Onslow gave that instruction is inconsistent with her continuing to have an understanding that the structure of the companies and the Trust was such that an equal distribution of her estate by her will was the very thing that she could not achieve.
Mr Beardow did not respond to the instruction by reminding his client that her instruction was not achievable, or explaining why that was so.
On the balance of probabilities, Lady Macarthur-Onslow from this time on would have expected that Mr Beardow would draft the 2004 will in a way that had the effect that her estate would be distributed equally between her children, save for the special gift of Kippilaw.
Mr Beardow did not give evidence of ever explaining positively to Lady Macarthur-Onslow that the 2004 will would not necessarily have that effect.
Mr Beardow did not complete the preparation of the draft will until a further period of almost two months had elapsed.
He did not, as I have already noted, provide a draft of the 2004 will to Lady Macarthur-Onslow, in order to give her time to read and reflect upon the draft at her leisure.
In the meantime, on at least one occasion in October 2004, Mr Macarthur-Onslow asserted in discussion with his sister and mother that Lady Hobhouse would be protected by reason of the presence of independent directors and executors, and that Lady Macarthur-Onslow understood that that assertion was correct. I accept the evidence of Lady Hobhouse that her mother made numerous statements consistent with an erroneous belief that the presence of independent directors and executors would have the effect that Mr Macarthur-Onslow would not be in a position to control the companies unilaterally.
As I have already noted, at the conference with Lady Macarthur-Onslow on 15 October 2004, at which she executed her will, Mr Beardow relied upon the appearance of his client's conduct and responses to his questions, in judging her testamentary capacity, but he did nothing of a positive nature to explore the true level of her understanding of the nature and effect of her will.
Notwithstanding that he had been given the "half and half" instruction, he did not specifically inform Lady Macarthur-Onslow that the draft will did not implement her instruction, in so far as giving Mr Macarthur-Onslow two more of both the A and B class shares in Kalemon would have the practical effect that Mr Macarthur-Onslow would, after the transfer of those shares to him, be able to control the exercise of Kalemon's discretion as trustee of the Trust to distribute the income and capital of the Trust otherwise than equally as between Lady Hobhouse and Mr Macarthur-Onslow, and in fact in any way that he thought fit. (The cross claimants did not make any submission that the effect of cll 16(a)(i) and (ii) and 17(a)(i) and (ii) was not substantially inconsistent with the "half and half" instruction).
According to his own version of the explanation he gave during the meeting, he did inform Lady Macarthur-Onslow that dividing the hundred voting shares in Kalemon as to 51 to Mr Macarthur-Onslow and 49 to Lady Hobhouse would give the former control of Kalemon "which ultimately controls Mount Gilead and the trust", and that lady Macarthur-Onslow responded: "Yes, that is what I want".
The difficulty I have with this evidence, even if I were to accept Mr Beardow's recollection of the conversation as being precisely accurate, is that it suggests that Lady Macarthur-Onslow was simply content to give control of the Trust to Mr Macarthur-Onslow, without asking how that would achieve her primary testamentary intention of treating her children with approximate equality of distribution of her estate.
I say primary testamentary intention, because that was the final instruction that Mr Beardow has reported was given to him by his client.
Furthermore, as I have already noted, Dr Darveniza was adamant that Lady Macarthur-Onslow told him that it was her plan to distribute her estate equally between her children, and that is apparently a factor that influenced his judgment that she had testamentary capacity. Dr Darveniza made this statement in his 23 June 2004 letter, in the context of having been informed by his patient: "Apparently there have been some family squabbles over their assets and estate etc." At the time, Lady Macarthur-Onslow was directing her mind to the "squabbles" between her children, yet she expressed her testamentary intention to her doctor in terms of an equal distribution of her estate, not in terms of giving control of the Trust component of her estate to her son.
During the meeting at which the 2004 will was executed, Mr Beardow on his own evidence, gave incorrect advice to Lady Macarthur-Onslow that the effect of cl 11 of the draft will was that the income from the farming operations would be distributed by the executors to her two children. That advice was quite wrong, as the executors were given an absolute discretion to distribute the income as they thought fit without any obligation to ensure equality of distribution.
That erroneous advice is not directly material, as Lady Hobhouse has not made a submission that the court should not give effect to cl 11 of the 2004 will, if it were otherwise prepared to admit some parts of that will to probate.
However, the mistaken advice is significant in a number of important ways.
First, it wrongly suggested to Lady Macarthur-Onslow that the draft will created a situation of equality between her children, when in fact it did not do so. That could have lulled Lady Macarthur-Onslow into a false belief that the will generally complied with her principal instruction.
Secondly, it suggests that Mr Beardow was less than careful in the way that he explained the terms of the draft will to his client, and that lack of care could have extended to other provisions of the draft, even if not disclosed by Mr Beardow's present recollection of the advice that he gave.
Thirdly, Mr Beardow gave evidence that his client read the will to herself before it was executed, and then said: "Yes, I understand all of that, I am happy to sign it". It seems clear that Lady Macarthur-Onslow did not read the draft will closely enough to notice that, contrary to her solicitor's advice, the draft said that the executors had a discretion concerning the distribution of the farming income, which did not require equality between her children. That fact casts considerable doubt on whether Lady Macarthur-Onslow was able to understand all of the terms of the draft will when she read it.
Had Lady Macarthur-Onslow not been suffering from moderate dementia, the way in which Mr Beardow went about getting his instructions for the will, and implementing those instructions, may have been reasonable and justifiable, even if somewhat unusual. However, the way in which he did so in this case entirely omitted to guard against the possible consequences of his client having dementia.
Ultimately, the most significant circumstance is that the primary instruction that Lady Macarthur-Onslow gave to her solicitor, which was a statement of testamentary intention that she also expressed to her doctor and her daughter, was not achieved by the 2004 will in relation to a proportion of her estate that was then hoped to represent in the order of 80% of the value of that estate. That outcome occurred without any real explanation from Mr Beardow at all, and did so as a result of episodic dealings over an eight month period that, in my view, undermined the practical ability of Lady Macarthur-Onslow to understand the real nature and effect of her will, in its most material part, particularly as a result of the fact that her moderate dementia significantly compromised her faculty of memory.
I do not think that this outcome can properly be categorised in the same vein as the case where a testator, with an actual capacity to understand the meaning and effect of the contents of his or her will, gives instructions to the drafter in the conventional way, and then relies upon the competence of the drafter to give effect to the instructions in words, where the testator is bound by the mistake of the drafter. In the present case, the whole of the process over the eight month period over which the 2004 will was prepared must be taken into account, and because of the effect of Lady Macarthur-Onslow's dementia, cll 16(a)(i) and (ii) and 17(a)(i) and (ii) should not be accepted as expressing the true will of the testator.

Severance

The question is whether the court should admit the 2004 will to probate with any parts of that will deleted in respect of which the court is not satisfied that Lady Macarthur Onslow did not know and approve those parts in the relevant sense.
As I have noted above, the cross claimants put the submission that, if Lady Macarthur-Onslow did not know and approve part of her 2004 will, that will should be admitted to probate with cll 16(a)(i) and (ii) and 17(a)(i) and (ii) deleted.
That, if done, would remove entirely from the 2004 will the provisions which gave two more of Lady Macarthur-Onslow's A and B class shares in Kalemon to Mr Macarthur-Onslow than to Lady Hobhouse, so that all of those shares would fall into cl 19 and be distributed equally between the two beneficiaries. Mr Macarthur-Onslow would consequently not gain control of meetings of members of Kalemon, and each of the two shareholders would have voting equality, with whatever consequences that might have for the management of the company.
Lady Hobhouse resisted this alternative submission by the cross defendants, and submitted that the effect of the absence of knowledge and approval of the terms of the 2004 will was that the entirety of the document should be passed over for probate purposes.
First, Lady Hobhouse submitted that there were additional aspects of the 2004 will that were not known and approved by Lady Macarthur-Onslow. The first was the change in the age of entitlement to receive capital from 55 years to 60. The second was the means by which the disposition of Kippilaw was to be achieved. The third was the provision governing the disposition of income from the farming and grazing business in cl 11(b), which Mr Beardow acknowledged he misdescribed to Lady Macarthur-Onslow.
I do not accept the submission that Lady Macarthur-Onslow did not know and approve of the change in age of entitlement from 55 years to 60 years. I have set out the part of Mr Beardow's evidence in which he explained that change to Lady Macarthur-Onslow at par 271 above. That was a simple change, and I do not accept that Lady Macarthur-Onslow's dementia prevented her from knowing of it or approving it.
As I have explained above, I am satisfied that Lady Macarthur-Onslow knew and approved of the arrangements in her will that would have allowed Mr Macarthur-Onslow to purchase Kippilaw from DWMO.
However, I have accepted that Lady Macarthur-Onslow did not actually know and approve of the effect of cl 11(b) of the 2004 will, for the reason that Mr Beardow explained its effect in a way that made it consistent with Lady Macarthur-Onslow's instruction (equality of entitlement between her children), when the real effect of the provision was exactly the opposite.
The parties did not address the possibility of whether this shortfall in Lady Macarthur-Onslow's knowledge and approval of the 2004 will could also be cured by a deletion from the document admitted to probate. If cl 11(b) was simply deleted, the income would fall into residue, and be shared equally between the children in conformity with Lady Macarthur-Onslow's intention.
This submission is not an adequate reason for the court to decline to admit any part of the 2004 will to probate. Although, as I have indicated, a case could be made that the 2004 will should be admitted to probate with cl 11(b) deleted, that is not a course that Lady Hobhouse has asked the court to take. Had Lady Hobhouse taken that course, it would have been available to the defendants to argue that a mistake of this nature was not one that would justify the court in omitting the particular term from the instrument admitted to probate, on the principle identified by McMurdo J in Dore v Billinghurst, referred to above at par 447. The defendants have not been given an opportunity to contest this issue.
The second submission put by Lady Hobhouse in support of her position was that the cross claimants have not in any case dispelled the suspicion that Lady Macarthur-Onslow was unable, by reason of her failing mind, to know and approve of the entire will. She relied upon the complexity of the will, the period it took for Mr Beardow to draft it, the fact that Lady Macarthur-Onslow was not given the draft before the conference at which she executed the 2004 will, and many of its provisions had not been the subject of prior instructions.
I do not accept this submission, because, for the reasons that I have set out above, I have placed the level of Lady Macarthur-Onslow's mental infirmity by reason of her dementia at a lower degree of disability than contended for by Lady Hobhouse. I have in effect found that Lady Macarthur-Onslow did know and approve the terms of the 2004 will, except for the effect of the provisions that gave control of Kalemon to Mr Macarthur-Onslow, and that gave the executors power to distribute the income from the farming and grazing properties.
The third submission put by Lady Hobhouse was that the excision of the clauses identified by the cross defendants would involve the making of a new testamentary instrument, and one that may not have reflected Lady Macarthur-Onslow's true wishes.
My searches of the authorities that have dealt with the circumstances in which it is permissible for the court to grant probate of a will with some part deleted have not led me to discover any case that is substantially the same as the present one, in relation to the effect of the suggested deletions. As I have noted above, this is not a case where some term has been included that the testator did not know of. This is the case where, on the findings that I have made, Lady Macarthur-Onslow wished to achieve two testamentary outcomes; one being to give control of the companies to Mr Macarthur-Onslow for the purpose of ensuring that MGPL would comply with its agreement with Australand, and gain the benefits of that agreement; and the other being the equal division of her estate between her children, save for the special provision in relation to Kippilaw. Those intentions were mutually inconsistent; at least if the only way they were sought to be implemented in the will was by giving Mr Macarthur-Onslow control of the companies.
The problem in the present case is not that the deletion of cll 16(a)(i) and (ii) and 17(a)(i) and (ii) would change the meaning and effect of the balance of the 2004 will. It is that Lady Macarthur-Onslow did know and approve of those provisions in respect of one of the consequences they would have (being the direct consequence of giving control of the companies to Mr Macarthur-Onslow for the purposes of the Australand transaction); but the provisions had an additional consequence that was by and large of equal or greater importance to Lady Macarthur-Onslow, of which she did not know and approve.
The issue is whether a term in a will should be deleted from the document admitted to probate when it has two consequences, one of which is intended and the other is not.
It seems to me that in principle the resolution of this question must proceed on the basis that the testator either knew of the term and appreciated its effect, so that the term contains the real intention and reflects the true will of the testator, or it does not. In the present case, as I have found, on the basis of Lady Macarthur-Onslow's objective conduct, her primary testamentary intention was to achieve an actual distribution of the property she owned or controlled equally between her two children, save for the special arrangement in relation to Kippilaw, and I am not satisfied that she knew that her will would not necessarily have that effect.
Accordingly, in my view, the 2004 will should be admitted to probate with cll 16(a)(i) and (ii) and 17(a)(i) and (ii) omitted.
It follows that probate will not be granted of the 1988 will.

Orders

Broadly, orders should be made by the court that have the following effect: 1. The plaintiff's statement of claim should be dismissed. 2. On the cross claim, an order should be made, with appropriate consequential orders, that the 2004 will should be admitted to probate with cll 16(a)(i) and (ii) and 17(a)(i) and (ii) omitted.
I will ask the parties to bring in detailed short minutes of order to give effect to these reasons for judgment.
I will hear the parties on the appropriate costs order for the court to make.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 January 2017

Successions Act 2006(NSW)

Vendor Duty Act 2004(NSW)

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