Kerr & anor v Badran & anor Estate of Badran

• 28 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROBATE LIST

119957/02 JOHN KERR & ANOR V MAURICE BADRAN & ANOR IN THE ESTATE OF MICHEL BADRAN JUDGMENT Issue 1 The question to be decided is whether Mr Michel Badran had testamentary capacity at the time he signed a will dated 14 March 1995. Facts 2 Mr Michel Badran (the deceased) died on 24 June 2002, aged 95. His wife pre-deceased him. He had three children, Maurice, Raymond and Joyce, at the date of his death aged respectively 70, 68 and 66. Mr Raymond Badran is one of the plaintiffs; Mr Maurice Badran and Mrs Joyce Freije are the defendants. As it will be necessary to refer to them often I will do so by their first names. 3 The proceedings concern three testamentary instruments of the deceased. The latest in time is the will dated 14 March 1995. If that document is not admitted to probate then its predecessor is a will dated 13 June 1985 and a codicil to that will dated 16 August 1989. It is conceded that if the latest document is not admitted to probate then a grant should be made of probate of the 1985 will with the 1989 codicil. There is no challenge to the due execution of any document. Testamentary capacity at the time of the last will is the only issue. Lack of knowledge and approval is raised only insofar as it is claimed by Maurice that the deceased did not have the capacity to understand the will or its contents. 4 The 1995 will contained the following provisions:

A. It appointed the deceased's accountants, David Dransfield and John Kerr and Raymond executors (Dransfield predeceased the testator).

B. It gave to each of Maurice and Joyce an annuity of $20,000 for a period of ten years. There were provisions for substitution in each case of a son, if the annuitant did not survive the ten years.

C. It gave the residue to Raymond. If he predeceased the testator there was a substitution of four nominated grandsons in equal shares.

D. Clause 13 of the will was as follows: 13. I AM NOT leaving any part of my estate to my said son MAURICE BADRAN or to my said daughter JOYCE FREIJI other than the annuities contained in Clause 3 as both my said son MAURICE BADRAN and my said daughter JOYCE FREIJI have received from me during my lifetime gifts amounting to a considerable amount of money which I would otherwise have left to them under this my Will whereas I have not made gifts anywhere of the same magnitude to my said son RAYMOND ROBERT BADRAN . 5 The 1985 will: (a) appointed the same executors; (b) gave Raymond the shares held by the deceased in Badran's Silk Store Pty Limited and moneys to his credit on loan accounts with that company; (c) gave a legacy of $20,000 to Maurice; (d) gave a legacy of $300,000 to his grandson Nicholas; (e) gave 60% of the residue to Raymond and 40% of the residue to Joyce; (f) provided in Clause 8 as follows: 8. I am not leaving to my said son MAURICE BADRAN any portion of my estate other than the bequest contained in Clause 4 of this my Will as my said son MAURICE BADRAN has received from me during my lifetime gifts amounting to a considerable sum of money which I would otherwise have left him under this my Will. 6 The 1989 codicil to the 1985 Will: (a) gave to Philip Muhlbauer Unit 2B at 3 Darling Road, Darling Point and 10% of the deceased's leasehold interest in real estate at Shellborne Bay Queensland. 7 The original of the 1985 document has not been found. It was in the hands of Messrs Norton Smith & Co, solicitors. This firm has been dissolved and the partners gone different ways. The original is not shown to have been in the hands of the deceased. The evidence points to it having been mislaid by the solicitors. It was confirmed by the codicil. I am satisfied that if the 1995 will is not valid then a copy of the 1985 will should be admitted to probate. Property 8 The property of the deceased as shown in the inventory of property prepared and filed by the plaintiffs consisted of the following: Unit 6C "Ranelagh" Darling Point $ 600,000 Carpet $ 20,000 Oil paintings $ 10,000 Furniture and contents $ 10,000 Motor vehicle $ 2,000 National Australia Bank proceeds of account $ 2,032 Shares in private companies 1,002 in Badrans Burelli Centre Pty Limited $ 210,854 48,000 shares in Badrans Silk Store Pty Limited $ 385,185 10,000 shares in Burelli Service Station Pty Limited $1,930,478 25,000 shares in Normandie Pty Ltd $1,356,937 100,000 shares in North Silica Pty Ltd no value Mining leases no value $4,527,486 Liabilities 535,567

Net Estate $3,991,919 9 The inventory was prepared with little care. The shareholdings are incorrect but the values do represent the value of the deceased's actual shareholdings in each of the companies. He had 1,000 shares in Badrans Burelli, 24,000 shares in Badrans Silk, 7,198 shares in Burelli Service Station and 22,750 shares in Normandie. There was an added asset being a refund of a nursing home accommodation bond amounting to $182,955, bringing his net estate to approximately $4,175,000. In addition the deceased held some land in Lebanon of unknown value and may have had some money or assets held in a bank in Switzerland. These latter assets are more relevant to the claims under the Family Provision Act 1982 (FPA) than to the probate action. A lot of time was spent on cross-examination as to the Swiss accounts with no actual result. At some stage the deceased held funds in or had assets held by that bank. The bank will not disclose anything without production of an original grant of probate. It has added that in so saying that does not indicate that the bank held money or other property for the deceased as it, the bank, has not looked. Pleadings 10 Both defendants opposed the plaintiffs' claim for probate of the 1995 document. Why Maurice has done so is not clear, as he is better off under that than under the earlier will and codicil. However, there has been no challenge to his interest. As I have said Joyce propounded the earlier will and codicil. Both Joyce and Maurice make claims for provision under the FPA. 11 I originally made an order for the trial of the probate action before the FPA claim. In my view it is seldom suitable to hear these matters at the same time. After all if Joyce succeeds in her claim, her share in the estate would be about $1,500,000 so that her chance of a successful FPA claim is somewhat remote. So far as Maurice is concerned, it would not be proper to determine his FPA claim without the position of Joyce being decided. During the course of the hearing I was asked to revoke the order for separate trial as Joyce had come out from Lebanon and it was not desirable to force her to come out twice. Thus it was agreed that all her evidence be taken at the same time and the matter proceeded on the agreed basis, that while all the available evidence on the FPA claims would be taken I would give judgment on the probate action first and then stand over the FPA matters for further argument after the position regarding the Swiss accounts had been investigated and to allow the value of land in Lebanon to be determined. In some ways this was a little irregular, but it was a procedure that everyone agreed was desirable in the particular case. I will therefore not discuss the evidence relevant to the FPA claims now. For the most part it is uncontested. 12 The deceased was born in Lebanon. He married in 1930 and came to Australia with his wife in 1931. His parents and his uncle had come to Australia ten years earlier and had set up business in Wollongong. Raymond and Maurice were born in Australia. The family returned to Lebanon in about 1935 and Joyce was born there in 1936. However, her father had, before she was born, returned to Australia and she did not see him until she was 18. It seems that the deceased acquired or inherited what I will call the Wollongong assets. These consisted of the silk store business and land, the Normandie private hotel business and land and an apartment block built on the site of what was originally a service station. At least in latter years these assets were managed by Raymond who was the other shareholder with the deceased in the other companies. The deceased lived in an apartment in a building known as Ranelagh in Darling Point.

Lay evidence as to capacity 13 One of the strange features of this case was the paucity of evidence on the only issue. A lot of time was spent cross-examining witnesses about assets in Switzerland rather than on the real issue. As there is an evidential burden on the defendants to cast doubt upon otherwise assumed capacity it is convenient to deal with their evidence first. 14 Maurice spent most of the time between 1957 and 1980 overseas. The deceased told him that he was investing for him. He got into financial difficulties in the United States and asked his father to help by selling company shares in his name. He said that his father agreed but changed his mind, sending only US$5,000 and then over three years US$3,000 per month. He was divorced from his wife in 1990, the bank sold the family home, and he got nothing. He returned to Sydney and after a time moved in with his father in 1995. He went back to Lebanon and the United States for some time, returning to Sydney in 1997. He did not return to live with the deceased until shortly before the deceased moved into a nursing home in July 1999. 15 In spite of various attempts the only evidence he gave relevant to the issue was that between 1993 and 1995 his father wore a hearing aid; that sometimes he forgot it and put it in his pocket and then it went to the laundry. He also supported evidence of Mrs Paciano, a Portuguese cleaning lady, as to an argument in 1995. The deceased had given his cleaner $100 for shopping; she had spent $85 of it, but when she returned home she did not have $15 change. She said that she would be back on Monday. The deceased then said, "I don't trust you." He said that his father had not paid moneys agreed to be paid to him as a result of a court action brought between them. After 1986 his father had paid some school fees for his son and had given him various amounts from time to time between $5,000 and $20,000. He was unable to say the amount received between 1985 and 1991, but his vague evidence was that he received not less than $200,000 between 1980 and 1995. 16 Maurice said that at about 11.30 pm one night in late June 1995 his father attacked him with a large kitchen knife. He suffered some wounds. The police were called and his father calmed down. Mr Muhlbauer, one of the plaintiffs' witnesses of this incident said the deceased had said to him, "Maurice and I had a big argument and the police came and escorted him away." In a later affidavit he said that the deceased telephoned him and asked him to go down immediately; that the Rose Bay police had removed Maurice from the residence. In cross-examination it was, I think, established that the police suggested that he move out rather than that they removed Maurice from the apartment. 17 Joyce visited Australia at the end of the 1990. She said that her father was moody and bad-tempered and that he treated her more as a servant than a daughter. She said that he was mean and irrational, accusing her of wasting money because she had purchased a bottle of Lebanese oil which cost one dollar more than Spanish oil. After this incident the deceased stopped giving her money for a time. 18 Joyce said that during this visit her father wanted only to talk about the past and kept repeating himself. This was elaborated in cross-examination and the following passage appears in the transcript at page 109-111:

Q. You say that when you were in Australia from about that time, namely December 1990, an observation that you made of your father was that he only wanted to talk about his past? A. Yes.

Q. This was not an observation that you made about him when you were in Australia from about December of 1990 to when you left which I think was in about March of 1991? A. Yes.

Q. When you say that he wanted to talk about his past, are you referring to his past in Lebanon or his past in Australia or what particular aspect of his past? A. I think in Lebanon because Australia cannot share with me anything in Australia because I don't know anything of Australia, of his relationship with Australia. A. Lebanon people, because I still remember his friends, they were - some of them were alive.

Q. So it is what you are trying to convey in your affidavit evidence that when you were visiting with your father in this period, late 1990 to late 1991, you and he would speak from time to time about, for example, his friends or his former friends back in Lebanon? A. Of course, yes.

Q. What other aspects of his past did you then talk about, just the friends or other things as well? A. No, he used to ask about my kids, my family, what they are doing, how proud of them in America, he always was the family and ask sometimes about certain people, then he talks about his - how successful his shares, the money he is making. He always used to talk too much about himself and the finances.

Q. So when in your affidavit you say that at this time, that is in 1990, 1991, your father used to like to talk about the past, you only mean by that when you were speaking to him he would like to understand what was going on back home? A. No, he used to repeat the same question about something I used to tell him, "these people are dead". This is what I found out, my father is repeating the people he used to know when he was young, and some of them, then I don't know, the repetition, that made me doubt - know something wrong.

Q. I want to come to the repetition in a moment. We will get there. I want to understand presently when you say "wanting to talk to about the past", what you mean - you have told me one of the things you meant was your father would ask about old friends back in Lebanon; correct? A. Yes.

Q. And he would ask about the family back in Lebanon; correct? A. Yes.

Q. And when you say "wanted to talk about the past" you mean only those things or do you mean that he asked about other things concerning the past? A. He used to tell me about his stories when he was young, taking the gout - so many stories - sometimes I used to get tired of repeating.

Q. I see? A. When he was a child, things like that.

Q. So he would also tell you, is this right, that the time 1990, 1991 stories about what life was like for him back in Lebanon when he was there? A. What life in Lebanon?

Q. What life was like for him when he was living in Lebanon? A. Stories, simple incidents and things like that.

Q. But things that happened in his leave [sic] when he was living back in Lebanon? A. Exactly, yes.

Q. You said in your affidavit and you have told us again today that at this time you also realised that your father would repeat things? A. Yes.

Q. What kind of things did he then repeat? A. His story about in Lebanon, what he used to do, the same question about that person, the same repeating, different persons but repeating all the time and - can I ask something?

HIS HONOUR: Q. Yes. A. Please, at the end I was so fed up, it was a - that area he loves telling stories about, the old timers, about the different villains. I arranged for someone to visit. I used to be so happy to have him come, so he would relieve me - I was very happy because dad was happy.*

Q. But was the things that your father was repeating in his discussion with you things which all related to what was happening in Lebanon? A. Yes.

Q. He otherwise spoke to you about things he was doing like his investments? A. Oh, yes, he was so proud of it all the time.

Q. He was not just talking about the past he was talking about his life in Australia; is that right? A. His success - I am not talking about his friends now, his shares. Sometimes he used to tell me about his shares, what money in Switzerland, "You are going to live a hundred years with this money". He loves doing this these things. My father was that type.

*(the answer indicated here differs from the printed transcript, but has been agreed by Counsel). 19 The evidence of Joyce in cross-examination on the question of the olive oil appears in the following passage in the transcript at page 111: Q. Can I ask you about something slightly different? You also tell us that there was an occasion where your father you say became angry because you apparently bought Lebanese oil rather than Spanish oil? A. Yes.

Q. When you say he became angry, what did he say to you, do you remember? A. I remember all of a sudden he start abrupt like this (demonstrating) "Why did you buy?" I said, "This is better". "You cannot get hold money". He - my father used to have very bad moods especially when I came 1990, 1991. I saw a very big difference. I really did and he stopped giving me money.

Q. When you say he was angry. He said to you words to the effect you have just told his Honour? A. Excuse me? He said to me, "You cannot hold money, you and your brother", because of this one bottle of oil that I paid $1 for.

Q. You say in the same paragraph of your affidavit, that is paragraph 55, that your father accused you of being incapable of handling money and you go on to say "not providing money for household expenses". Do you see that? A. Excuse me?

Q. Paragraph 55? A. Yes. For a while he didn't give me something. I remember I think Arthur was around and he was giving him--

Q. When you say in paragraph 55 that your father accused you of not providing money for household expenses such as the purchases of food, you were referring to the same period of time, that is December 1990 to about March of 1991? A. That is incident. After that incident it stopped for a while, then gave us - me back again to do.

Q. But when you were referring in paragraph 55 to your father making this accusation about you, it was in this period, was it, December 1990 to March 1991? A. Yes, of course I was there.

Q. You at that time were living where? A. With him, of course my father.

Q. And what he was saying to you at the time, that if you were living with him and eating the food he thought it appropriate you should contribute to the expenses? A. He did?

Q. When he made an accusation to you that you were not providing money for household expenses, what exactly did he say and as best you can recall it? A. He said - stop giving me buy stuff for him.

Q. What did he say to you before that? What did he say to you about you not providing money for household expenses such as the purchase of food, if you can recall? A. I remember when I bought this thing and all of a sudden he was so nervous and making an issue of it and I was so silent, I could see the change and then he didn't give me money to go as usual to buy his food.

Q. But you say in this paragraph that your father accused you of not providing money for household expenses such as the purchase of food. Can you tell us what he said? A. Excuse me, he said to me, "You cannot handle money". I remember, "You cannot - you nor your brother" - all of a sudden he got this turning point.

Q. When did this occur? You had been living with him for a few weeks before you had this discussion? A. I can't remember. We were very happy. I spent Christmas. We used to make parties, get relatives, get friends. I used to cook for him, enjoying him very much.

Q. And after this discussion where he told you that you had bought more expensive oil he stopped the money for a while but eventually started giving you money again to purchase food-- A. Of course. He was very happy and normal again, becoming normal, but he was not as I used to remember dad, the loving, the affectionate - he was treating me to cook, he was not treating me, take me out, he was not taking me, the father that I used to know. 20 Joyce came back to visit her father in Australia for his ninetieth birthday. This was in 1997. On one occasion during her visit she went with her father to Raymond's home in Wollongong. While there she went for a drive with Raymond's second wife which upset her father. He said to her "You have come to serve me, not to have a good time" and tried to hit her with his walking cane. There were other occasions during the visit when the behaviour of the deceased was abusive and difficult, but not necessarily irrational. She came to Australia again in 1999 after the deceased had suffered a stroke. She and Maurice arranged for their father to move to the Rose Bay Gardens Nursing Home. 21 Edward Arthur was a business colleague of the deceased. They worked together on the silica mining leases. The deceased offered Mr Arthur 20% of the enterprise but did not carry this through. Neither it seems did he pay him the wage which he agreed to pay. Nevertheless Arthur worked as a consultant and a type of mining agent for the deceased from 1984 until 1992. He worked full time and saw the deceased nearly every day at the Darling Point unit during this time. He said that in 1989 the deceased read an article about silica tiles being used in space shuttles and told some CSIRO scientist that he was going to build silicon space suits. He and the deceased had a major falling out in 1992 about the need to spend money on research and development. This ended in abuse and seems to have brought about an end to the relationship until January 1995. He said that on one occasion the deceased said it was necessary to complete an environmental impact study on the lease and when he told him this had been done in 1987 and a copy of it was on the file, the deceased said that he had never seen it and again became abusive. None of this was seriously challenged in cross-examination, apart from the space suits evidence in respect of which there was evidence of Mr Muhlbauer, whom I shall refer to later in more detail, that at a dinner party at the deceased's apartment there was a guest who was an inventor who talked about designing a suit to enable people to fly, and that the deceased expressed interest in this. Perhaps the most relevant evidence of Mr Arthur was of an occasion in 1992 when he and his wife were to drive the deceased to Wollongong to visit Raymond. He said that the deceased was in bed when they arrived, that he had three showers and shaved himself three times before they left, apparently not remembering the previous occasions. When Mr Arthur said to him, after one of these, that he had already had a shower and a shave he said, "No I haven't". 22 In 1995 the relationship between the deceased and Mr Arthur resumed for a period, but not on a business basis. He said that the deceased had become something of a recluse. He said that he was seeing Dr Iland regularly. They seemed to meet each other every day and they talked about "nothing in particular", but he did say that he talked about his health. He was there for three or four hours a day and it was difficult to believe that he would have been there if there was nothing sensible being said. 23 A Mrs Paciano commenced to clean for the deceased in about 1988 and continued to do so until 1997. She said that when she commenced the deceased was polite and kind to her and they got on well, but she said his behaviour changed about 1995. An incident occurred, probably in 1996, when the deceased accused her of stealing his money. The deceased, she said, was shouting and screaming. Mrs Paciano said that she asked him to calm down, after which they went to look for the money, and found it, which was eighty dollars, in his trouser pocket. On another occasion in late 1996 or early 1997, the deceased accused her of stealing women's clothes from the unit although she said there had never been any women's clothing in his unit. Late in 1997 the deceased accused her of breaking the Hoover, which had stopped probably through old age. She said he screamed at her and hit her across the face. She left for a while but Mr Muhlbauer asked her to return which she did for a month, but found the atmosphere too tense and then left. Nevertheless, she did visit the deceased on three or four occasions after that. 24 Joyce's daughter, Nathalie Azar, received considerable help from her grandfather which enabled her to go to the Boston Medical School. She kept in touch with him by telephone. She said that during the early 1990's these telephone calls became shorter. There were three or four occasions between 1991 and 1995 when the deceased discussed putting her through the Harvard Medical School, when she him told that she had already graduated through Boston. The plaintiffs' evidence on the issue of capacity 25 The only affidavit evidence of Raymond was his formal affidavit as one of the executors required to obtain the grant and a further affidavit expanding the evidence of assets, but not as to their value. He gave no evidence relevant to the issue and was not cross-examined on it. 26 Mr Kerr, the other executor, had known the deceased since 1968. They had met when Mr Kerr, who is an accountant, was doing some work for a friend of the deceased. He and the deceased became friends and met regularly. He said that they talked about complex commercial transactions, about his family, but in 1995 mostly about the Queensland mining leases. He deposed to many conversations when the deceased said words to the following effect: Deceased: I have educated most of Joyce's children at Harvard University in the U.S. I could not believe Maurice took me to Court and I could not believe he thinks I would not do things right by him. All Maurice wants is money from me. I have helped him out financially on many occasions and also bailed him out when he went bankrupt with his business in the U.S. I am happy with the work that Raymond is doing with the business. He is a very hard worker. 27 Mr Kerr said the deceased said nothing good about Maurice. He, Mr Kerr, knew that the deceased and Raymond were shareholders in all the businesses. He had no discussions about a will until 1997 when the deceased discussed changes and leaving Joyce and Maurice out and removing Raymond as an executor to make things easier, but did not go ahead. In cross-examination Mr Kerr said he had conversations with the deceased about his financial affairs. These were limited to the Wollongong assets, although he knew that there were some funds in Switzerland at one stage as $98,000 was transferred from the Clariden Bank in Zurich to his, Mr Kerr's, bank account on instructions from the deceased as part of the purchase moneys for a unit which he bought above his own unit in "Ranelagh". This was the unit where Mr Muhlbauer lived and which was transferred to Mr Muhlbauer by the deceased in 1993. 28 Mr Cordell is the solicitor who prepared both the 1985 and the 1995 wills. In affidavit evidence he said the deceased gave clear instructions for the 1995 will. He had two conferences with the deceased and Mr Dransfield prior to execution of the will. The first meeting took place on 2 December 1994. Much of the time seems to have been spent discussing the possible transfer of the deceased's shares in the silk company to Raymond. Mr Cordell had little independent recollection of what was discussed. He made notes of the meeting and the subsequent meeting and his evidence really comes from those notes. His notes indicate that Mr Dransfield was to provide a list of assets of the deceased. Three Wollongong companies are named in the note of the first meeting. The note states: In will - may not want Joyce to get shares in her name and therefore perhaps a trust for her. I to consider this when I have details of Michel's assets. Told Michel won't stop Maurice if he wants to challenge the will. 29 A second meeting took place on 18 January. The same people were present. Again notes were taken. Mr Dransfield said that the deceased's assets were the Woollahra unit, shares in the three companies and the Normandie Hotel. The notes refer to the Phoenicia apartment block units being ten units and one penthouse worth about $200,000 each. The notes refer to the annuities to Joyce and Maurice and that these would be taxable. Mr Cordell said in one of his affidavits that the deceased had said: I will provide each of Maurice and Joyce with an annuity of $20,000 for ten years. I have given Joyce a lot. I bought a unit in Beirut and put her kids through university. I want to give everything else to Raymond. Don't transfer the shares at this stage. Do the transfers via the will.

To which he, Mr Cordell said: It is possible that Maurice and Joyce might make a claim pursuant to the testator and family maintenance legislation[sic].

This conversation is really a paraphrase of what was in the notes. I am satisfied that Mr Cordell would not be able to give any evidence without the notes. His evidence does not really expand the notes. 30 Mr Cordell sent a copy of the draft will to the deceased and Mr Dransfield. The letter to Mr Dransfield asked him to check Clause 13. Mr Dransfield rang on 31 January 1995 and said, "Clause 13 is correct. We can't prove where and when payments were made." He asked that a clause be put in for himself and Mr Kerr to charge fees for accounting. Mr Cordell said that he warned Mr Dransfield of the likely TFM applications. Mr Dransfield told him that Raymond had children by two marriages and that he was to ask which of these he wanted to benefit in the event of the death of Raymond. Mr Cordell spoke to Mr Dransfield again on 28 February 1995 who told him that, "Maurice is around". He asked him to phone the deceased about signing the will. There is a diary note then as follows "Attending Michel 14.3.1995. If Raymond predeceases - to go to Joyce's son Emil and Maurice's son Nicholas and Raymond's two sons - Raymond and Alexander." The will as executed provided for this substitution but it did not provide for the accountant executors to be able to charge fees for their work. Mr Cordell said that while there may have been no discussion of benefits provided to Maurice on these occasions, this had been discussed by the deceased over the years and would have been taken for granted. He said that it was Mr Dransfield who provided details of the assets. There was no discussion of value other than the possible value of the Wollongong units. There was no discussion of assets overseas. 31 The will was signed on 14 March 1995. It was prepared in its final form on that day, when the names of the four grandsons to be substituted in event of Raymond's death were provided. The evidence satisfies me on the balance of probabilities the provisions in the will were read over or summarised to the deceased and explained paragraph by paragraph and the deceased agreed to them. It was witnessed by an employee solicitor and a secretary in the office, both of whom gave formal evidence on affidavit and neither of whom was cross-examined. Insofar as it remained an issue I am satisfied that provided he had capacity the deceased knew and approved of the contents of the will. 32 Mr Philip Muhlbauer lived in the unit on the floor above the deceased from 1988 to 1998. He had met him earlier as his mother had worked at one stage for the deceased. He formed a very close relationship with the deceased and had breakfast with him nearly every morning. In affidavit evidence he said that they talked about current affairs, the businesses and sometimes about the family and in particular they discussed the Wollongong and Queensland businesses. He gave details of a particular discussion in 1995 about the Normandie Hotel, its possible sale and the difficulties with the business in the silk store. He did not discuss the deceased's will with him until 1997 when he said the following conversation took place. He had suggested to the deceased that, to avoid problems, it might be better if he divided his assets equally between his three children. He did this it seems as a result of Maurice having spoken to him quite regularly asking him to intercede with his father on his behalf and on behalf of Joyce. In paragraph 8 of his affidavit of 15 July 2003 he said that on this occasion the deceased had said: No I have given Maurice a lot. Maurice has disappointed me greatly. He has received a good education but he is not interested in working. He has not made anything for himself. He is a bludger. Raymond has been a good son. He has always done the right thing by me. He has worked very hard. He has looked after the Normandie Hotel, the Church Street units and the retail store for me. I want him to have all my assets. 33 I have already discussed the evidence which this witness gave about the space suit and calling of the police after the knife incident. In his second affidavit sworn 29 June 2004, Mr Muhlbauer elaborated on the conversations that he had had with the deceased. Paragraphs 6, 7 and 8 of that affidavit are as follows: 6. During the period 1988 to 1998, the late Michel Badran ("the Deceased") and I met most mornings (5 - 6 times a week) for breakfast. During breakfast, we spoke on a full gamut of issues including business, politics, history, current affairs and generally what was going on in our every day lives. During this period, I also took the Deceased on drives where we would have coffee or have lunch. Whenever the Deceased needed to visit the dentist, hearing specialist or doctor for a routine check up, I would always accompany him. On many occasions, particularly between the period of 1994 and 1998, the Deceased and I discussed in details, the Deceased's assets and liabilities.

7. Between 1994 and 1998, the four main assets of the Deceased that the Deceased and I constantly discussed are: (a) the retail business conducted at 142 Crown Street, Wollongong;

(b) the Normandie Hotel Suite located at 30 Bourke Street, North Wollongong; (c) the residential units across the street from Normandie Hotel Suite, located at 2 Church Street (corner of Church and Bourke Street), North Wollongong; and

(d) the silica mining leases in the mining district of Mareeba, Queensland ("Mining Leases") leased from the Queensland Department of Natural Resources and Mines ("Department of Mines").

8. In 1995, on many occasions the Deceased said to me words to the following effect: Deceased: "The retail business is finding it tough going. Raymond has frequently been travelling to Sydney purchasing stock and negotiating the best terms he can. Raymond is working hard organising special sales and promotions." Raymond Badran ("Raymond") ran the day-to-day aspect of the retail business but the Deceased kept an active role in monitoring the financial aspects of the retail business. In 1995, on many occasions that I was with the Deceased, I saw and heard the Deceased speaking to Raymond on the telephone. I recall hearing the Deceased say to Raymond on the telephone words to the following effect: Deceased: "How are the sales going? How much stock did you buy? How much did the stock costs? Did you negotiate the best terms you possibly could? What are the mark ups of the various stocks? What is your profit margin?" 34 He also said that between 1994 and 1997 he and Mr Arthur and the deceased often discussed the mining leases. He said that he was present at a meeting with Mr Cordell and the deceased early in 1998. This had been arranged by him because he thought Maurice might raise difficulties about the estate on the deceased's death and Maurice had asked him to speak to the deceased about the will saying: Can you speak to Dad about his will and about him giving me more money. Raymond is holding the bag. Joyce and I are entitled to something. 35 At the meeting which took place the deceased said: No, this is way I want it. I don't want to change my will. I am happy with it. Raymond has been running the shops for 40 years. Joyce is married to her husband from a good family. Joyce's husband is well off and everything is ok with her family. Her children and[sic] well educated and are doing well. 36 That conversation was of course about three years after the date of the will in question, but its relevance, if any, is to show that the deceased seemed to be able to think reasonably clearly at that time, although by ordinary standards Joyce's husband was not well off. Counsel for Maurice cross-examined this witness on this evidence of the conversation, but without any success. 37 A great deal of the cross-examination of Muhlbauer by Mr Cashion SC for Joyce, seemed to be directed to casting doubt upon his testimony by establishing that he had received considerable benefits from the deceased. It is true that he had received considerable benefits in money and in property. For instance, the home unit was transferred to him in 1993 for $130,000, he saying the arrangement he made with the deceased was that he would make payments off that purported purchase price when he was able to do so. He made a few small payments. He sold the unit in 1998 for $430,000 so this was a real benefit. In addition he was maintained for at least three years by the deceased and paid about $50,000 a year during this period, but he explained this by saying that he had given up any other work that he had to look after the needs of the deceased. He did confirm that the deceased considered that the Queensland leases might, in the long run, be worth many millions of dollars. 38 No cross-examination was directed to the crucial passages in the affidavit which I have set out. While I thought that Mr Muhlbauer was somewhat evasive, I formed the impression that he was not too keen to volunteer benefits that he had received from the deceased. On the other hand he was obviously a close friend of the deceased, he saw him more regularly than any other of the witnesses and no real inroads were made during cross-examination on his evidence. While his evidence must be considered with care, it has certainly not been shown to be unreliable and in general I accept it. Medical evidence 39 Dr Susan Iland was the deceased's general practitioner, at least since 1995. I would have thought that her evidence would have been of great value in determining this case and certainly of far more assistance than the evidence of expert psychiatrists who did not see or treat the deceased. For some unexplained reason Dr Iland was not called, both sides perhaps considering that there was some forensic advantage in this for them. There was put into evidence what is, so far as the document in evidence is concerned, an unsigned report of Dr Iland dated September 1999, which on its face would seem to have been written in connection with an application to the Guardianship Tribunal for a management order in respect of the deceased property. This is confirmed by the reasons for decision of that Tribunal, a management order having been made on 15 August 2000, pursuant to which Raymond was appointed manager. That report is as follows: DR SUSAN N. ILAND 235-385 New South Head Road M.B., B.S.(HONS), M.P.M. (UNSW) EDGECLIFF N.S.W. 2027 Provider Nr. 325925W Phone: 9327 5444 Fax: 9363 5914

BY: DR. SUSAN ILAND, M.B, B.S.(HONS), M.P.M. (UNSW) I first began caring for Mr. Badran in September, 1995 when I admitted him into St. Vincent's Private Hospital for acute hypertension and vomiting.

Since that time, Mr Badran's mental falculties [sic] have slowly been declining, until early this year it became evident that he was suffering from dementia. It is impossible to pinpoint the exact date after which I consider that Mr. Badran was in no fit state to manage his own financial affairs.

However, his dementia became fully evident during his recovery from his fractured neck of femur (June, 1999). From this time I am confident that Mr. Badran was no longer capable of managing his own financial and property affairs. In fact, he was no longer capable of any self care.

My opinion is based not only on my own observations but also those of Dr. Russel Clark (Geriatrician) who viewed Mr. Badran at St. Vincent's Private Hospital on 24 June, 1999 and concluded that Mr. Badran was dementing and unable to be involved in any decision making or responsibility for his care. He was also seen by Dr. Mark Ryan (Psychiatrist) while in St. Vincent's Private Hospital due to behaviour problems related to his dementia.

In conclusion: Mr. Michel Badran suffers from dementia and since June, 1999 was no longer able to manage his own financial and property affairs. SUSAN ILAND 40 There was also in evidence a letter from Dr Iland to Professor Broarty in November 2000 prior to his proposed examination of the deceased. The letter says, inter alia, "in the past he has injured female staff, and has had abusive behaviour in the last ten years that I have know him". It was said that this established that Dr Iland had been the general practitioner for the deceased since 1990. That is contrary to the earlier letter and without other evidence I do not accept that to be the position. The medical notes which appear to have come from a general practice where there were two other doctors together with Dr Iland include many entries which are clearly not in the handwriting of Dr Iland. There is no doubt that the evidence established that the deceased lacked testamentary capacity in 1999 and that he at that stage was suffering from relatively severe dementia. The death certificate itself listed a cause of death "end stage dementia (3)" which takes this back to 1999. 41 The plaintiff put into evidence a medical report of Dr Yvonne Skinner, an experienced consultant psychiatrist. Dr Skinner considered the deceased had capacity. Although her opinion was in part based on unestablished assumptions or evidence rejected from affidavits, she stated that when this material was deleted her opinion was not changed. She did not consider that the medical records in evidence showed dementia in 1995 and probably not for some years thereafter. She said that "dementia is a diminution of cognitive functioning with deterioration in two or more intellectual functions". She said "a person with an established diagnosis of moderate to severe dementia will lack testamentary capacity because the cognitive impairment impairs recall of relevant information regarding assets and the claims to which the person ought to give effect". She considered the behaviour described by Joyce in 1990 to be that of an irascible man "and his behaviour may also be related to dynamics in his relationship with his daughter. He may have been talking about the past because he had not seen her for some time and had been separated from her during her youth". I do not think there is anything to establish the so called dynamics but nevertheless the clear evidence is of a difficult, abusive and probably irascible man. Dr Skinner gave some attention to delusional behaviour particularly in relation to the space suits and irrational behaviour about the mining leases in considering whether this might show mental disorder, which would have "poisoned his affections, perverted his sense of right, or prevented the exercise of his natural facilities": Banks v Goodfellow [1870] 5 QB 549 at 565. She said that this behaviour did not bear on capacity nor had it been shown to have borne upon the dispositions of the will. She addressed the findings of Dr Revai and I will return to this. 42 Dr Revai, who is also an experienced consulting psychiatrist, gave a report dated 19 February 2004. To a large extent he said he based his opinion on the definition of dementia in the Diagnostic and Statistical Manual of Mental Disorders 4th Ed (DSM-IV). To paraphrase this "the essential feature of dementia is the development of multiple cognitive deficits including memory impairment and one of aphasia, apraxia, agnosia or a disturbance in executive functioning". Dr Revai relied upon memory impairment and disturbance in executive functioning. The latter, according to DSM-IV, involves "the ability to think abstractly and to plan, initiate, sequence, monitor and stop complex behaviour". The definition states that for dementia to be diagnosed "the mental impairment … and disturbance in executive functioning must be severe enough to cause significant impairment in social or occupational functioning". Dr Revai carefully considered all the medical records which are in evidence, together with the provisions of the wills and the affidavits which have been read in these proceedings. It is fair to say that some of the material which he considered was rejected, which must reduce the weight of his opinion but does not cause it to be completely disregarded. It is in the same position as the evidence of Dr Skinner. Insofar as he relied upon a letter from Anne Muhlbauer, the mother of the witness Philip, I do not think much attention should be given to this as it described behaviour over a thirty-six year period and nobody is suggesting that there was a lack of capacity over the whole of that period. In fact the behaviour complained of in the letter which was put into evidence without objection would indicate in one way irrational behaviour over a long period of years. Nevertheless Dr Revai regarded the behaviour as indicative of disinhibited behaviour "which in latter years would be in keeping with a dementing". In his conclusion he stated that he did not think the deceased had testamentary capacity as he thought he was suffering from dementia when he made the will as evidenced by the following behaviours and symptoms which he then set out as follows: 1. Irrational behaviour (ref: the affidavit of Edward Arthur regarding Michel Badran's insight into the financial arrangements he was proposing with prospective mining and Dr Iland's letter to Professor Brodaty of 7 November 2000 describing Michel Badran's behaviour from when she first started treating him, annexed to the affidavit of Joyce Freije). 2. Unrealistic thinking (ref: affidavit of Edward Arthur regarding the silica coated space suits). 3. Loss of control (ref: affidavit of Edward Arthur regarding Michel Badran's behaviour in relation to discussion of business with Michel Badran) 4. Memory loss (ref: affidavit of Edward Arthur regarding Michel Badran showering and shaving and then repeating those activities immediately thereafter also Michel Badran's loss of memory of the environmental impact statement and on being shown it, abusing Edward Arthur and accusing him of having hidden it from him; affidavit of Maurice Badran regarding his discussions with Michel Badran regarding financial matter and affidavit of Joyce Badran regarding discussions with Michel Badran regarding the past) 5. Loss of executive functioning (ref: affidavit of Edward Arthur regarding his inability to continue working with Michel Badran in relation to business affairs and the leaving of deteriorating food in the refrigerator; Dr Iland's letter to Professor Brodaty; Affidavit of Maurice Badran regarding his father's forgetfulness, the difficulty Maurice Badran increasingly had in understanding statements made by his father with respect to financial matters and his father's dependence on him with respect to household management and other activities) 6. Paranoia (ref: Joyce Freije's affidavit regarding her father's behaviour during her visit in 1990 and particularly the disparaging remarks he made about Maurice, Raymond and Raymond's wife, the suspension of housekeeping moneys to Joyce Freije when she was living with and looking after Michel Badran in 1990).

43 Under cross-examination Dr Revai identified item 4 as relating to memory impairment and items 1, 2, 3 and 5 as relating to disturbance in executive function. 44 Dr Skinner in her report dealt with each of these without agreement with any of them. However, her reasons for disagreement are not all convincing.

Benefits received by Joyce and Maurice 45 Joyce did not know of the terms of either will. It seems that while she was young and living in Beirut with her mother, her father supported her mother and paid for all their living expenses and for her education. In 1969 the deceased bought two apartments in Beirut, one for Joyce and her husband to live in and another for her mother. She inherited the one given to her mother on her mother's death. The apartment which was given to her appears to have been comfortable enough and at the time it was given in 1969 the purchase price was the equivalent of about US$18,000. The apartment she says is now worth about US$125,000. Her father sent her money up until about 1991, but a lot of that was used in maintaining one of the deceased's properties in Lebanon. The deceased owned other land in Lebanon which it seems, under Lebanese law, has gone on his death to his three children in equal shares. The value of that is not determined at the present time. The deceased did pay for some of Nathalie's expenses at Boston University, probably by giving her two gifts, each of US$10,000. It seems that he also paid for some of the fees at the Pratt Institute of Graphic Design in New York for Joyce's second daughter, Mayda. He paid for an industrial engineering course which Aman undertook at the Perdue College in Seattle. He may have made other payments for those children. There are other reasonably substantial amounts sent by the deceased to Joyce but the amount has never been properly quantified. The deceased did pay US$25,000 to Joyce's husband to cover the cost or part of the cost of triple by-pass surgery which he had in America in 1983. Whatever the amounts they did not come to the amount of $800,000, which the deceased in 1997 told Joyce he had spend on her children. 46 The position for Maurice is not so clear. One of the things of significance is that Maurice sued his father in this Court in 1985. The evidence was not clear. Judgment was given in favour of the deceased but the deceased apparently agreed to make certain payments which Maurice said were not made. It is clear that there was a falling out between them at this time, albeit that the deceased allowed Maurice back into his unit later when he came back to Australia in the 1990s. 47 So far as moneys paid to Maurice is concerned, it is quite impossible from the evidence to determine any precise figure, but at page 102 of the transcript Maurice agreed that the figure would be not less than $200,000. The balance of the evidence was far too vague to enable any reasonable conclusion to be drawn. The Law 48 Both medical experts were referred to the passage in Banks v Goodfellow which since that time has been accepted as the proper test in cases where testamentary capacity is the issue. I set it out once again, because this case requires proper attention to be paid to it. The test is at page 565 of the judgment as follows: 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 property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties - that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

The onus of proof is explained in Bailey v Bailey (1924) 34 CLR 558 and Estate of Hodges, dec'd; Shorter v Hodges (1988) 14 NSWLR 698. 49 In dealing with the Banks v Goodfellow test it is, I think, necessary to bear in mind the differences between life in 1870 and life in 1995. The average expectation of life for reasonably affluent people in England in 1870 was probably less than 60 years and for others less well off under 50 years: the average life expectation of males in Australia in 1995 was 75 years. Younger people can be expected to have a more accurate understanding of the value of money than older people. Younger people are less likely to suffer memory loss. When there were fewer deaths at advanced age, problems which arise with age, such as dementia, were less common. In England in 1870, if you had property it was likely to be land or bonds or shares in railway companies or government backed enterprises. Investment in ordinary companies was far less common than now. Older people living today may well be aware that they own substantial shareholdings or substantial real estate, but yet may not have an accurate understanding of the value of those assets, nor for that matter, the addresses of the real estate or the particular shareholdings which they have. Many people have handed over management of share portfolios and even real estate investments to advisers. They may be quite comfortable with what they have; they may understand that they have assets which can provide an acceptable income for them, but at the same time they may not have a proper understanding of the value of the assets which provide the income. They may however be well able to distribute those assets by will. I think that this needs to be kept in mind in 2004 when the requirement of knowing "the extent" of the estate is considered. This does not necessarily mean knowledge of each particular asset or knowledge of the value of that asset, or even a particular class of assets particularly when shares in private companies are part of the estate. What is required is the bringing of the principle to bear on existing circumstances in modern life. The decision of Gleeson CJ in Estate of Griffith dec'd; Easter v Griffiths (unreported NSWCA 7 June 1995) must be kept in mind where he said: The formulation of the onus of proof, well established by authority and not in dispute in the present case, invites caution. The power freely to disclose one's assets by will is an important right, and a determination that the persons lacked (or, has not been shown to have been possessed) a sound disposing mind memory and understanding is a grave matter. Where a testatrix exhibits florid symptoms of psychotic disturbance, such a conclusion may be reached relatively easily. However where, as in the present case, what is claimed is that a woman who presented to the world an appearance of intelligence and rationality, had formed an aversion to her child so unfounded and unreasoning that it evidences an unsoundness of mind, the decision may be very difficult.

This, of course, was a case of alleged delusion, but the general requirement for care is involved in all contested probate actions. Although he was in dissent, Kirby P in paragraph 8 of his judgment, emphasised the need for caution and stated that medical evidence must be carefully looked at to ensure that it was considered in light of the relevant test and not what the medical expert using medical terminology considered to be the legal position. 50 Next it is important to bear in mind the decision in Worth v Clasohm (1952) 86 CLR 439. This explained that in a case where a doubt as to capacity is raised - thereby as explained in Shorter, satisfying the evidentiary onus on the defendant, the onus passing to the propounder to satisfy the court that the will propounded is valid - this does not mean that a doubt is enough; the doubt must be such that the court considers it sufficient to prevent its finding for the will propounded.

Missing witnesses or failure to lead evidence 51 It must be assumed that the evidence of Dr Iland was available to both sides. As the defendants had an evidential burden to adduce evidence casting doubt on capacity I am inclined to the view that the second defendant could have been expected to call Dr Iland if her evidence would have assisted her case. On the other hand, as the defendants' witnesses were known and their affidavit evidence did I think raise a doubt about capacity, it was open to the plaintiffs to call the doctor to allay that doubt. The position is not such that a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn against either side. 52 Mr Raymond Badran gave no evidence related to capacity. The evidence is that he was in regular contact with his father and saw him every week or two weeks. Counsel for the plaintiffs said that as Raymond was called to give evidence he could have been cross-examined on the issue. However, in Commercial Union Assurance Company of Australia Limited v Ferrcom Pty Ltd (1991) 22 NSWLR 389, Handley JA at page 428 referred to this and said that while there was no Australian authority on the question, the principle in Jones v Dunkel should apply where a party fails to ask questions in chief, and I would have thought that would apply particularly to failure to question the plaintiff in chief. 53 This reasoning has been followed by the Victorian Court of Appeal: R v GEC [2001] 3 VR 334. The failure of Raymond, as one of the executors and principal beneficiary, to give any evidence bearing upon capacity was, to say the least, unexplained and surprising as I consider the evidence of the defendants raised a relevant doubt. It was known by the time he gave evidence that much of the affidavit evidence of Mr Cordell, insofar as it was directed to this question, had been disallowed. I draw the only inference available, namely that the failure to adduce evidence was a purposeful decision and that the evidence he could have given would not have assisted his case. Summary 54 I have no doubt the evidence establishes the deceased knew he was making a will and understood what that involved. Next I consider that the deceased understood the extent of his estate sufficiently to satisfy the test. It does not, I think, matter that the land in Lebanon was not mentioned as it appears its devolution does not depend upon the will and the deceased can be assumed to have known this. Nor, I think, does the possibility of money in Switzerland bear on the matter as no such money has been shown to exist. The details of the Wollongong assets were provided by Mr Dransfield, but there is nothing to show the deceased was not aware of their general nature. They were, it seems, much the same as in 1985; they had been held by the deceased for many years. He discussed them regularly with Mr Muhlbauer. The difficulty is the claims of the children and I turn to this. 55 The deceased knew those persons with a proper claim on his bounty. These were his three children, but he generally favoured one. That one had worked for and with the deceased for many years. He was closely involved with the Wollongong assets. He managed the businesses. The deceased had little regard for Maurice, although he treated him reasonably well at a time when he needed accommodation. The two had been engaged in litigation, the rights and wrongs of which are not established by the evidence. Maurice had no close association with the business. Joyce saw little of her father, through no fault of hers. The deceased had been reasonably generous to her and her family, although not to the extent he stated in 1997, namely $800,000. The provisions are unequal, and to some eyes they may seem very unfair. The question is whether they are a knowing considered exercise of the right to leave property by will, or whether the deceased was affected by cognitive impairment that he was unable to bring proper reasoning to his dispositions. 56 The evidence as to cognitive impairment is really quite limited and to some extent relates to isolated incidents, rather than repetitive behaviour. I am referring to the evidence of questioning about old friends, the knife incident, the walking stick incident, the environmental impact plan, the money incidents, the change of mind about transactions with Mr Arthur in 1995, the incidents with the cleaner and the three showers. Dr Revai said he would have expected continuing conduct of the type of these incidents, whereas they were not what could be described as a series and the cleaner incidents probably all took place after the date of the will. None of the medical evidence of the period prior to death in the form of general practitioner's notes and hospital records and notes goes close to establishing dementia in 1995. It does establish difficult, abusive and unattractive behaviour of an ageing man used to getting his own way. 57 Neither expert witness was convincing. This was partly because their opinions were coloured by statements rejected from the evidence and partly because there was not a great deal of evidence of day to day conduct to assist them. Apart from drawing attention to various indicators of cognitive impairment their evidence was not such as to carry the day either way. The case depends on a consideration of conduct and relating the conduct to the relevant test. Dr Skinner, I consider, placed too much reliance on the rejected evidence of Mr Cordell; Dr Revai strayed from his test which made his evidence difficult to accept in parts, but the real weakness was reliance on few incidents over a considerable period. Neither witness can be preferred. That is often the nature of probate actions. 58 The dispositions made by the will are not irrational. They may not have been particularly well explained in Clause 13 but that clause does not indicate an intention to bestow an equality of benefits during life and by will. The unchallenged evidence of Mr Kerr and Mr Muhlbauer was quite convincing. It indicates an active mind. Mr Arthur was less convincing. I do not accept he would be spending three to four hours a day with an irrational old man. I accept the deceased may have had unrealistic ideas about the value of his mining leases, but it is at least significant he did not spend vast sums of money on their development. I accept that the deceased might have had fanciful ideas about people in spacesuits flying around propelled by silicon suits. These are, I think, incidents in a rather lonely life with plenty of money and time to think. The matter which has really raised a significant doubt in my mind is the failure of Raymond to give evidence on the issue in question. However, I accept the evidence of Mr Kerr and Mr Muhlbauer on the issue which I found convincing. While I accept the evidence of Maurice on the knife incident, he was not a satisfactory witness and gave little relevant evidence; what he did give being complaints about the deceased not providing all the support he thought he was entitled to or had been promised. 59 Joyce was a far more satisfactory witness. Her evidence about memory loss is important, as is the evidence of her daughter about Harvard, together with the other evidence that the deceased said he had put the children through Harvard. But while all this raises a doubt and therefore a question to be determined, that question is whether I am satisfied that the deceased had the required capacity to make the will in 1995. On a consideration of all the evidence I find that he did. The will should be admitted to probate. **********

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