Perpetual Trustee v Baker

Court of Appeal (NSW)|1999-07-16|Before: Giles JA, Bennett AJ, Mr P, Santow J, Smith J, Byrne J, Gleeson CJ, Handley JA

New South Wales Court of Appeal CITATION : Perpetual Trustee v Baker [1999] NSWCA 244 FILE NUMBER(S) : CA 40320/97 HEARING DATE(S) : 21/06/99 JUDGMENT DATE : 16 July 1999

LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : CL109704/95 LOWER COURT JUDICIAL OFFICER : Bennett AJ

Mr D.P.P Officer & COUNSEL : Ms D. Stewart (Appellant) Mr P. Hallen (Respondent) SOLICITORS : Gadens (Appellant) Teece Hodgson & Ward (Respondent) CATCHWORDS : WILLS - Testamentary capacity; apparent intelligcnce; whether nonetheless delusional belief as to claims on bounty; distinction from mistaken belief; costs of successful appeal; whether out of estate. Wills, Probate and Administration Act 1898 ACTS CITED : Suitors Fund Act Credit Act 1984 Hire Purchase Agreements Act Re Griffith, Easter v Griffith NSWCA 7 June 1995 unreported at 10-13 Banks v Goodfellow (1870) LR 5 QB 549 at 563 In the estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 aT 709 In the estate of Moyle: Moyle v Moyle (Santow J, 18 June 1988, unreported) Davies v Gregory (1873) 3 P & D 28 Roe v Nix (1893) P 55 CASES CITED: In the will of Millar (1908) VLR 682) In the will of Sivers (1887) 13 VLR 572 Phillips v Dundas (Smith J VSC 4 December 1995, unreported) Redroff v Miegoch (Santow J, NSWSC 22 April 1996, unreported) re Ryan: Williams v Ryan (1998) VSC 109 In the will of Ryan: Williams v Ryan (Byrne J VSC, 23 October 1998, unreported) cf Middlebrook v Middlebrook (1963) 26 ALJR 216 Browne v M'Encroe (1890) 11 NSWLR Eq. 134 at 146. DECISION : (1) Appeal upheld; (2) Order of Bennett AJ 9 May 1997 set aside); (3) Order probate of the last will and testament of Mary Victoria Tompson 19 August 1993 in solemn form be granted to Perpetual Trustee Company Limited ACN 000 001 007; (4) Order appellant's costs and respondent's costs on a trustee basis, of the trial before Bennett AJ be paid paid out of the estate; (5) By majority the order of the Court will be that the appellant's and the respondent's costs of the appeal be paid out of the estate of the deceased, in the case of the appellant on a trustee basis.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40320/97 CL 109704/95

GILES JA COLE AJA BROWNIE AJA

1 GILES JA AND BROWNIE AJA: The issue to be decided is whether the deceased had testamentary capacity when she made her last will on 19 August 1993. 2 The relevant principles are not in issue. It is sufficient to set out a passage from the judgment of Gleeson CJ, with whom Handley JA agreed, in Re Griffith, Easter v Griffith , NSWCA, 7 June 1995, unreported, at 10 to 13 - "Where the evidence in a suit for probate raises a doubt as to testamentary capacity, there rests upon the plaintiff the burden of satisfying the conscience of the court that the testatrix had such capacity at the relevant time. If, following a vigilant examination of the whole of the evidence, the doubt is felt to be substantial enough to preclude a belief that the testatrix was of sound mind, memory and understanding at the time of execution of the will, probate will not be granted ( Worth v Clasohm (1952) 86 CLR 439). This formulation of the onus of proof, well established by authority and not in dispute in the present case invites caution. The power freely to dispose of one's assets by will is an important right, and a determination that a person lacked (or, has not been shown to have 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 was the point made by Sir James Hannen in his charge to the jury in Boughton v Knight ([1873] LR 3 P and D 64 at 69). Nevertheless, difficult though its application may be in individual cases, the law treats as critical the distinction between mere antipathy, albeit unreasonable, towards one who has a claim and a judgment which is affected by a disorder of the mind. The traditionally accepted formula for determining testamentary capacity is that stated by Sir Alexander Cockburn CJ in Banks v Goodfellow ((1870) 5 QB 549, at 565): 'It is essential to the exercise of (testamentary) power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties - and 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.' A detailed analysis of the manner in which the courts have approached the practical application of that formula, including the rules as to onus of proof, is to be found in the judgment of Powell J in Re Hodges, Shorter v Hodges (1988) 14 NSWLR 698. Mental infirmity of a kind which denies testamentary capacity does not necessarily involve 'insane delusions'. In Harwood v Barker (1840) 3 Moo PC 282, the testator was said to have a bodily disease affecting the brain and was greatly debilitated physically. He was said (at 285) not to have been suffering from any delusion, but was found not to have been in a state of mind to judge the propriety of his dispositions. (See also Batton Singh v Amirchand [1948] AC 161). Nevertheless, the courts have regularly discussed this subject in a manner which tends to focus upon the presence of delusions as the indicator of mental disorder. In Smith v Tebbitt (1867) LR 1 P and D 354, 398 at 402-3 Sir J P Wilde asserted that mental disease is always accompanied by the exhibition of thoughts and ideas that are false and unfounded, ie delusions. This approach is reflected in Cockburn CJ's formula quoted above. By a delusion is meant a 'fixed and incorrigible false belief which the victim could not be reasoned out of' ( Bull v Fulton (1942) 46 CLR 295 at 339). As Santow J observed, psychiatric knowledge has developed a great deal since those early formulations of the relevant legal principles. There is a degree of artificiality in seeking to force all manifestations of 'insanity' under the rubric of delusion. Where the existence of a material delusion can be shown, then the relevance of that to an issue as to a person's ability to comprehend and appreciate the claims upon his or her bounty may be clear and direct. For example, in Timbury v Coffee (1941) 66 CLR 277 an alcoholic testator suffered hallucinations and believed that his wife was unfaithful. This influenced his testamentary dispositions, which were held invalid. The attention paid to delusions is understandable, but the law must be sufficiently flexible to take account of developments in psychiatric understanding. The critical question, in a case such as the present, concerns mental capacity to comprehend and appreciate the claims upon one's bounty. Where an alleged delusion concerns a fact, or state of affairs bearing upon a judgment as to the moral claim one person has upon another's bounty, and the question of its falsity is capable of objective determination, the task of the court is relatively straightforward. However, there may be cases in which one person's estimation of another's claims may seem harsh and unwarranted, and perhaps even unnatural, but it is impossible to assign a reason for that, or to point to any false belief. Testamentary capacity is not reserved for people who are wise, or fair, or reasonable, or whose values conform to generally accepted community standards. A person may disinherit a child for reasons that would shock the conscience of most ordinary members of the community, but that does not make the will invalid. In this area of discourse the concept of delusion is not restricted to false beliefs about objective facts (such as a husband's belief that his wife is unfaithful). Delusion may also consist in, or involve, a value judgment where 'the judgment is so extreme as to defy credibility'. (See the definition in the Diagnostic and Statistical Manual of Mental Disorders, 3rd Ed, Revised (DSM-III-R), 1987, issued by the American Psychiatric Association and cited by M Spitzer, 'On Defining Delusions' (1990) Comprehensive Psychiatry, Vol 31, No 5 at 395). In practice, however, it may be much easier to characterise a belief about a matter of objective fact as irrational and the product of a disorder of the mind than it is to characterise a value judgment as so extreme as to warrant the description of a delusion. The scope for difference of opinion about the character of other people, in particular, is so wide that great care needs to be exercised before concluding that a harsh or unreasonable judgment of another amounts to a delusion."

3 We draw upon the facts set out in the judgment of Cole AJA, without repetition. 4 Here, the deceased presented to the world an appearance of intelligence and rationality. As Cole AJA has said, there was much evidence indicating that she had testamentary capacity when she signed the 1993 will, and his Honour has summarised the evidence. However, there was raised at the trial a question as to whether, notwithstanding this appearance of intelligence and rationality, the deceased was suffering from an insane delusion, so that the appellant (the executor named in the will) bore the onus of proving testamentary capacity. Bennett AJ held that this onus had not been discharged. We respectfully disagree, concluding that the evidence established that whilst the deceased was quite mistaken about some matters, her mistaken beliefs were not delusional, in the sense discussed in Griffith . 5 The matters said to preclude a belief that the deceased was of sound mind, memory and understanding were essentially three. The first was that the deceased's explanations to Mrs Roberts and Mr Milne for changing her will demonstrated an unjustified and irrational attitude to the Bakers. The second was that her attitude to the Bakers otherwise expressed demonstrated the same. The third was the support found in the evidence of Professor Brodaty. 6 Cole AJA has set out the explanation to Mrs Roberts and Mr Milne. When the deceased told Mrs Roberts that she was going to leave her estate to charity, she was returning to what she had done by her 1988 will. It was not suggested that she lacked testamentary capacity in 1988, and passing over the Bakers was not a new thing. She said that the Bakers had already had enough. We do not think that this should be taken to have been any more than a reference to the $324 per quarter for which provision had been made in 1990, an amount which the deceased had come to feel was no longer warranted when the visits to her were much less frequent. That view might be thought hard, but it can be understood and we do not think it can be described as relevantly delusional. 7 The statement to Mr Milne that the Bakers were not close family was true in one sense, although they were her only living "family". Mr Milne's evidence set out by Cole AJA shows that the deceased meant that they were distant relatives, and that was so. The statement that the Bakers did not bother with her was in all probability the consequence of a mistake or misunderstanding, produced by the decreased visiting and then cessation of visiting after the argument on 3 August 1993. Again that might be thought a harsh judgment, in that the deceased did not recognise, or adequately recognise, the other demands on the Bakers or the stresses under which Mrs Baker laboured with the illness of her mother. The relationship between the deceased and the Bakers, and Mrs Baker in particular, also became strained because of the deceased's mistaken belief that the Bakers were not handling the deceased's financial affairs as the deceased would have liked, and it may be that criticism would be fairly levelled at the deceased about that. However, none of these matters, whether considered individually or collectively, seem to us to go to show that the deceased's beliefs were delusional in the relevant sense. That others needed the deceased's bounty more than the Bakers was an available view. Mr Baker had lost his job, as the deceased knew, some months earlier, but as Mr Milne's evidence set out by Cole AJA shows the deceased had in mind needy people; she felt that there were "other more needy people". 8 The other expressions of the deceased's regard to the Bakers were in statements to Mrs Baday and possibly other staff at the nursing home that they were "using her money". This was in the same category as her telling Mrs Roberts that she felt they were taking advantage of her, and again we do not think it should be taken to have been more than a reference to the $324 per quarter. While it was a mistaken view, that the deceased came to it and held it can be understood, and again we do not think it can be described as relevantly delusional. 9 Finally, on our reading of the evidence of Professor Brodaty it did not rise above explanation of how the deceased's 1986 haemorrhage or some other process could have brought cognitive impairment. He did not accept that cognitive impairment had been established sufficient to negate testamentary capacity, and so far as he said that whether the deceased was delusional depended on her persistently holding a demonstrably false belief from which she could not be moved by logical argument and evidence to the contrary, we do not think that those criteria have been satisfied. 10 Bennett AJ considered that the Bakers might reasonably be thought to have a claim upon the bounty of the deceased. This involves a view about moral values, and her Honour was certainly not alone in thinking that the only surviving relatives of the deceased had such an expectation: see, for example, Banks v Goodfellow (1870) LR 5 QB 549 at 563. However, this question is only of peripheral importance. The critical issue is whether the deceased's mistaken beliefs were delusional or otherwise destructive of a testamentary capacity. 11 It follows that we consider that the appeal succeeds. 12 The parties were agreed that, regardless of the outcome of the appeal, Bennett AJ's order that the costs of the trial should be paid out of the estate of the deceased should stand. They were also agreed that an unsuccessful appeal could bring an order that the appellant pay the respondent's costs. They disagreed over costs in the event of a successful appeal. The appellant said that, in the normal exercise of the discretion as to costs, the costs would follow the event, so that the respondent should pay the appellant's costs (but have a certificate under the Suitors Fund Act ). The respondent acknowledged that the normal exercise of the discretion would have that result, but said that the particular circumstances called for an order that the costs of the appeal be paid out of the estate of the deceased. Direct authority as to costs of an appeal in a situation such as the present could not be found. 13 Costs are in the discretion of the Court, and the established principle on which the discretion as to costs will normally be exercised is that costs follow the event. In probate litigation, in particular, however, exceptions have been recognised, one being that where the testator has been the cause of the litigation the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate, and another being that if the circumstances led reasonably to an investigation concerning the testator's will the costs may be left to be borne by those who incurred them (see for example in the estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709). 14 The two exceptions tend to overlap. As was said by Santow J in In the estate of Moyle: Moyle v Moyle (18 June 1988, unreported), if a testator is by his mental frailty and other circumstances in a position where the circumstances reasonably call for investigation of the validity of the will "in one sense the testator, though usually with no sense of blameworthy fault, has by his or her conduct caused the litigation to occur". A party reasonably but unsuccessfully propounding or challenging the will, and so bringing about the necessary investigation, should no more have to bear his own costs than pay the costs of the other party. So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party ( Davies v Gregory (1873) 3 P & D 28; Roe v Nix (1893) P 55; In the will of Millar (1908) VLR 682), and the costs of both sides in testamentary capacity cases have often been allowed out of the estate (In the will of Severs (1887) 13 VLR 572; Phillips v Dundas (Smith J, VSC 4 December 1995, unreported); Redroff v Miegoch (Santow J, NSWSC, 22 April 1996, unreported); re Ryan: Williams v Ryan (1998) VSC, 109; In the will of Ryan: Williams v Ryan (Byrne J, VSC, 23 October 1998, unreported); cf Middlebrook v Middlebrook (1963) 26 ALJR 216 where Dixon CJ and McTiernan, Taylor and Owen JJ ordered that the parties bear their own costs but Menzies J would have ordered that the costs be paid out of the estate). 15 We consider that the approach in these cases extends to the costs of unsuccessfully seeking to uphold a grant of probate on appeal, at least where the result at first instance was not obviously erroneous. In the present case the respondent was a necessary contradictor, and can hardly be said to have acted unreasonably when possessed of a judicially sanctioned grant. In the circumstances of the present case, we consider that a proper exercise of discretion is that the costs of the appeal should be paid out of the estate of the deceased, in the case of the appellant on a trustee basis. 16 We agree with the orders proposed by Cole AJA save that in lieu of order (5) we propose an order that the appellant's and the respondent's costs of the appeal be paid out of the estate of the deceased, in the case of the appellant on a trustee basis. 17 COLE AJA : The issue in this appeal is whether Mary Victoria Tompson ("the deceased") had testamentary capacity when she executed her will on 19 August 1993. Bennett AJ held that she did not. 18 The deceased was born on 9 August 1899. She had been a patient at Kurmala Nursing Home ("Kurmala") since 27 May 1986. She entered Kurmala after sustaining a sub-arachnoid haemorrhage on 5 May 1986. A cerebral CT scan on 23 May 1986 showed resolution generally of that haemorrhage. She was discharged from Concord Hospital to Kurmala. 19 The deceased made six wills; they being in November 1982, September 1983, January 1986, June 1988, October 1990 and, finally, on 19 August 1993. In each of the first three wills and the fifth will the deceased left her estate, in various proportions, either to Peter Baker entirely (first will), or to Peter Baker and members of his family comprising his wife and three children. In the fourth will made in June 1988 the deceased left the whole of her estate of the National Heart Foundation of Australia (NSW Division), and in her 1993 will she left her estate to be divided equally between the Society of St Vincent de Paul (NSW), the Salvation Army (NSW) Property Trust, and the Australian Red Cross Society (NSW Division). There was no suggestion at the hearing that, in making the first five wills, including that leaving the whole of the estate to the National Heart Foundation, at the time of the respective wills the deceased lacked testamentary capacity. There was not, of course, any need to investigate that issue at the hearing. However, in substance Bennett AJ held that irrationality in excluding the Bakers from her sixth will was indicative of lack of testamentary capacity. 20 The deceased had married but her husband predeceased her in 1982 and she had no children. Peter Baker was not a close relative but was her great nephew, being the deceased's brother's grandson. Nonetheless, the deceased had a reasonably close association with Mr Baker over some years since her husband's death. Mr Baker held the deceased's power of attorney, he attended to her financial affairs, and his wife, Mrs Baker, had, over the years since her admission to Kurmala, visited the deceased at Kurmala, and attended to her washing, shopping and monetary requirements. The deceased had, prior to 1993, gone to the Bakers' home for Christmas and on other special occasions. The Bakers' three children visited the deceased from time to time at Kurmala. 21 There was much evidence before her Honour indicating that the deceased had testamentary capacity when she signed the 1993 will. That evidence, as found by her Honour, may be summarised as follows:

(1) On 26 July 1993 the deceased had a conversation with a long time friend, Mrs Roberts indicating she wished to change her will. She said to her: "You know I am revising my will. I am going to change my will and leave my estate to charity. I think the Bakers have already had enough." Appeal book 803K.

From early 1993, the deceased had raised with Mrs Roberts the topic of Mr and Mrs Baker on a number of occasions and complained about their dealing with her financial affairs; she expressed concern that she was uninformed by them as to her financial affairs Appeal book 802T-V. .

(2) As her solicitor had retired, the deceased asked Mrs Roberts if she knew of a solicitor. Mrs Roberts arranged for Mr Milne, a solicitor experienced in assessing elderly persons for the purpose of determining their testamentary capacity, to attend the deceased.

(3) Mr Milne attended on the deceased at Kurmala on 16 August 1993. He had a general conversation with the deceased for approximately half an hour and then took her instructions for her will. She specified the charities to be named as beneficiaries. Mr Milne asked why she was leaving her family out of the will. She responded: "They are not close family. They don't bother about me much and there are others who need it more than them."

It was Mr Milne's view, accepted by the trial Judge, that the deceased was "physically frail but mentally alert". Appeal book 796. Her Honour found that, during the discussion concerning her instructions for her will, there was discussion "on the identity of the executor, the identity of the charities to be named as beneficiaries, the fact that the estate did not include her house which had been sold, her funeral requirements, and the fact that members of her family were not to be named as beneficiaries and a reason for that, as well as a number of non-related subjects". Appeal book 798N-S. Mr Milne's evidence was that "I can't ever remember getting clearer instructions off anybody". Appeal book 233.

(4) Having drafted the will in accordance with the deceased's instructions Mr Milne returned to Kurmala on 19 August 1993, together with his secretary, Ms Bradley. He did not read the will to the deceased as she took the will, looked at it and commented immediately on a misspelling of her name. She appeared to read it. She queried the name of the Salvation Army (NSW) Property Trust, and signed the will without assistance. She then had a general discussion with Mr Milne concerning other matters. Mr Milne maintained his view formed on 16 August 1993 that she was "a very bright old lady" and, as the Judge found, was plainly of the view that the deceased understood the nature and effect of her will. The trial Judge was satisfied that Mr Milne did not have any doubts about the deceased's capacity.

(5) Ms Bradley also formed the view that whilst physically frail, the deceased was mentally alert and aware of what she was doing.

(6) In the months prior to the signing of the will, Mrs Roberts, who was eight-five years of age when she gave evidence, had visited the deceased every Sunday, and sometimes during the week as well. She spoke to her on the telephone weekly and took the deceased out for drives and for lunch. She and the deceased conversed on a range of topics over an extended period of time. Whilst she observed some short term memory problems, she did not have any difficulty conversing with the deceased, nor did she observe confusion or lack of attention. Appeal book 799K-S.

(7) Each of Dr Waran, a medical practitioner who attended the deceased regularly from 1990 until her death in 1995 and who was experienced in the treatment of nursing home patients, Ms MacDonald, the director of nursing at Kurmala, and Mr Cases, a staff nurse at Kurmala, all being disinterested witnesses, conveyed to the trial Judge their impression of the deceased as at August 1993. They persuaded her Honour that the deceased "remained mentally active, was interested in and able to discuss politics, was able to dress and feed herself and spent much of her time listening to the radio in her room". Sometimes she was confused about small things, particularly after drinking whiskey accompanying sleeping pills. Her Honour found that: "each was adamant that the deceased did not have significant memory problems but was perfectly capable of carrying on and did carry on conversations on a range of topics both personal and general" Appeal book 800C-S.

(8) Neither Dr Waran, Ms MacDonald or Mr Cases, each being experienced in the area, considered that the deceased was suffering from dementia in 1993. Appeal book 801C.

(9) After making her will on 19 August 1993, the deceased subsequently consulted her accountant regarding her taxation return for the year ended 30 June 1993. This was arranged by Mr Baker who, presumably, thought her capable of addressing these matters. 22 In my view, this material constitutes powerful evidence indeed that the deceased had testamentary capacity at the time she made her will. 23 The reasons for her Honour's finding to the contrary were summarised as follows: "I find that Mrs Tompson understood the instructions that she gave to Mr Milne and she understood that those instructions had been carried out; she did understand the nature and significance of the act and its effects. She was aware, at least in general terms, of the nature and extent and value of her estate; she discussed her investments with the Bakers, she received yearly financial data from Mrs Baker and dealt with the accountant in respect of her tax return. I am not satisfied, however, that, at the time of executing the 1993 will, Mrs Tompson was really aware of those who might reasonably be thought to have a claim upon her bounty and the basis for and nature of the claims of the Bakers. None of the charities referred to in the 1993 will had any claim upon her bounty. The Bakers were not only her nearest relatives, they had also cared for her and looked after her and she was part of their family. They had been close and constant in their attentions until Mrs Tompson's rejection of Mrs Baker at the time of Mrs Baker's mother's illness. Mrs Baker had a significant claim as the person who had assumed the very regular care of the deceased. Mrs Tompson's reaction to her during 1993 and, in particular, at around the time of the execution of the 1993 will, was inexplicable and unjustified and difficult to rationalise, particularly when she was aware of Mrs Baker's personal difficulties at the time. The deceased did not, in my opinion, have the ability to evaluate and appreciate the nature of the claims of the Bakers, nor was she able to discriminate between their claims and those of the charities named in the will. She seems to have been motivated by an irrational resentment towards the Bakers and Mrs Baker in particular and an unfounded fear that they were using her money. She was unable to make a balanced judgment as to those to whom she owed a duty upon the disposition of her property. The medical evidence of Professor Brodaty provides the most likely explanation of her conduct in that the deceased was suffering the effects of vascular dementia and cognitive impairment which itself can result in impatience and delusions. Here, the delusions related to the Bakers, especially to their handling of the deceased's financial affairs. That delusion was a fixed belief, which was false and which the deceased could not be reasoned out of and this affected the disposition of the 1993 will which excluded the Bakers. This is sufficient to preclude testamentary capacity in respect of that will ( Shaw v Crichton Court of Appeal unreported 23 August 1995; Easter v Griffith supra ). In my opinion, the deceased lacked testamentary capacity at the time of execution of the 1993 will. Accordingly the will for which Probate should be granted is the previous, unchallenged will executed in 1990."

24 The process of reasoning exhibited by the passage I have quoted involved four steps. Those steps were:

(1) a finding that the Bakers had a claim on the bounty of the deceased;

(2) a finding that the rejection of that claim was because of "inexplicable", "unjustified" and "difficult to rationalise" conduct or attitudes of the deceased;

(3) a finding that such "inexplicable", "unjustified" and "difficult to rationalise" attitudes were "most likely" to be a result of the effects of vascular dementia and cognitive impairment; and

(4) that such conduct constituted a delusion being a fixed although false belief from which the deceased could not be unpersuaded, and thus she lacked testamentary capacity. 25 The process of reasoning ignores entirely the cogent, apparently considered and reasonable reasons in fact given by the deceased to her solicitor for the exclusion of Mr Baker and his family. 26 I have difficulty in understanding the finding that the deceased was not really aware of those who might reasonably be thought to have a claim upon her bounty, being her great nephew, his wife and children, when the solicitor, Mr Milne, asked why her family was being excluded and she gave three reasons, each of which, in terms, is both reasonable and sensible. They were accepted as such by her solicitor. It is accurate to describe a great nephew and his family as not being "close family". It was true, as was undisputed, that in the period preceding August 1993, the visits of Peter Baker to the deceased were infrequent, the visits of Mrs Baker had diminished, and the visits of their family were scattered. An elderly lady could sensibly form the view that the persons assisted by the three charities which she nominated had greater need than her great nephew and his family. 27 The respondent contended that of the three reasons given by the deceased to her solicitor when he raised with her, specifically, why her family were being excluded, two reasons given by her were false. It was contended that the Bakers were "close family", the expression "family" being a reference to inter-personal relationships rather than degrees of lineal relationship. Thus, having regard to the association between the deceased and the Bakers prior to mid 1993, it was said to be accurate to describe them as "close family", and so the first reason advanced was false.

The evidence makes clear that that is not what the deceased meant when she used the expression "not close family", nor was it the understanding of her solicitor. She was addressing lineal relationship, not personal relationship. Mr Milne, the solicitor, gave the following evidence: "Q: Were there any other red lights in this case that struck you? A: I think you have covered most of them. Her age, the fact she was in a nursing home, but I think the major one was the fact that she was not leaving it to family, although she did explain that they were not close family. I would be more concerned if it was children or - Appeal book 205. … A: She said to me they were distant relatives, they weren't close relatives and they didn't bother with her and there were more needy people. Q: You didn't make any enquiry of her to test her on that, did you? A: She previously told me she had no children, I think that's there, she previously told me she had no children. She previously told me that her husband had long since been dead and that was that. Q: I am asking you whether you tested her on her assertions, that the relatives were not close? A: I think she told me there were nephews or great nephews or something like that. Appeal book 225. " 28 The second reason advanced by the deceased for exclusion of the Bakers from her will was that "they don't bother about me much". Looked at from the perception of the deceased in August 1993, that was an available reasonable view of her view of the relationship of the Bakers with her. Between about 1986 and 1991 or 1992, Mrs Baker visited her about three times a week. Thereafter, until about May or June 1993, Mrs Baker visited her approximately weekly. From May/June 1993, Mrs Baker visited her less frequently than weekly, and, after an argument on 3 August 1993, she ceased visiting her altogether. Mr Baker had throughout the whole time visited the deceased irregularly, a number of times during each year, and the Bakers' children visited her even less frequently. With the diminishing attention being shown to her by members of the Baker family, even if Mrs Baker had good reason for her reduced attendance as plainly she did, the deceased could sensibly take the view that "they don't bother about me much" in July/August 1993. 29 The third reason that "there are others who need it more than them" make clear that the deceased was making a conscious choice between such claims upon her bounty as she might have thought they had, and the needs of beneficiaries of the three charities she mentioned. Mr Milne's evidence was that when she gave him her instructions for her will: "She said she wanted, particularly the part that I took note of, was that she felt that there were other more needy people and later on, I think the day e signed it, she picked me up on the Salvation Army Property, rather than people, as I understood it, she wanted it to go to people, not to property, and that particular question sort of confirmed in me she was wanting it to go to needy people". Appeal Book 233

That is an entirely rational choice which she was entitled to make. 30 Thus, she gave three sensible, logical and rational views as to why she was excluding members of her family from her will when that matter was specifically raised with her by the solicitor taking her instructions. She plainly did evaluate the claims of the Bakers against the background of her linear relationship with them, the attention they were at that time giving to her, and the needs of persons receiving the assistance of the nominated charities. 31 As Gleeson CJ in Estate of Griffiths, Easter v Griffiths (unreported, NSW Court of Appeal, 7 June 1995). wrote: "Testamentary capacity is not reserved for people who are wise, or fair, or reasonable, or whose values conform to generally accepted community standards. A person may disinherit a child for reasons that would shock the conscience of most ordinary members of the community, but that does not make the will invalid." 32 Quite apart from this, the process of reasoning of the trial Judge involved in the four steps I have mentioned cannot be sustained. 33 The Bakers constituted the deceased's only relatives. The blood relationship between Mr Baker and the deceased was extremely remote. He was the grandson of the deceased's brother. Mrs Baker, and the Baker children, were a further step removed. Such a relationship is not sufficient to give rise to a claim to the bounty of the deceased. Nor, in my view, does the fact that, in the eleven years following the death of her husband in 1982 until the making of the contested will in 1993, and especially after her brain injury in 1986, Mr Baker, and more especially Mrs Baker, attended to the financial and personal affairs of the deceased and included her from time to time in a family relationship, give rise to such a claim. 34 It is to be appreciated that Mr Baker was not born during the first forty-two years of the deceased's life, was not in Australia for the first fifty years of her life, and played an insignificant part in her life for the first eighty-three years of her life which included fifty-five years of marriage. Assisting a person in a nursing home in the latter years of her life does not, in my view, give rise to any claim on the bounty of the deceased. It may be a factor which might influence a testator to make provision for such an assisting person in his will, but that is a different concept to the notion of an assisting person having a "claim on the bounty" of a testator. That being so, no question arises as to competition or discrimination between competing claims of the Bakers and the charities nominated in the deceased's will. It follows, in my view, that the basic premise upon which the trial Judge's reasoning proceeded is unsustainable. 35 The second step in the reasoning process ascribed rejection of the supposed claim on the bounty of the deceased to behaviour of the deceased characterised as "inexplicable", "unjustified" and "difficult to rationalise". It ignores the apparently lucid reasons given by the deceased to her solicitor for that decision. The attitudes so characterised relate to statements attributed to the deceased that the Bakers were using her money, which suggestion the deceased denied when she was confronted with it, and her anxiety and behaviour when Mrs Baker failed, for sufficient reason, to provide the deceased in July 1993 with her usual accounting statement of her affairs for the previous twelve months, such document being provided in early August 1993. I doubt if it is correct to characterise the behaviour of an elderly person, anxious about her financial affairs as elderly people are, as "inexplicable", "unjustified" or "difficult to rationalise". Be that as it may, there is no basis, in my view, for inferring that the reason for the deceased excluding the Bakers from her will was due to irrational behaviour based upon an unfounded fear that they were either using her money or not properly attending to her financial affairs when the reasons she gave to her solicitor for excluding them are entirely rational, and did not include such a fear or assertion as a reason for such exclusion . She simply exercised a choice regarding the manner in which she wished to dispose of her assets and gave three sensible reasons for that choice. There is no room, in those circumstances, to infer some other irrational reason. The second step in the process of reasoning thus cannot be sustained. 36 The respondent's argument, accepted by her Honour, was that the deceased held a false belief, which was characterised as delusional, that the Bakers were using her money for their own benefit. It is important to understand some background circumstances. In late 1989 or early 1990, the deceased wrote to Mr Baker suggesting that $10,000 of her money should be invested in debentures with the interest to go to Mrs Baker. The sum of interest amounted to $324 per quarter. The intention was that that sum should be for Mrs Baker's use but that it would also cover the costs of petrol and sundry items which Mrs Baker expended in visiting and attending to the deceased's requirements. At that time, Mrs Baker was visiting three times a week. From 1991 or 1992, those visits reduced to weekly, and in May or June 1993 became less frequent. Mrs Roberts gave evidence that the deceased said to her in about mid 1993 "Jannice does not visit me at all now". On 18 July 1993, Mrs Roberts said the deceased said to her: "I am very upset with the Bakers. Jannice visited me and told me that she had filled her car with petrol and charged it to my account. I don't see why I should be paying for her petrol when she hardly ever visits me. This is really the last straw. I feel they are taking advantage of me. I may reconsider my will." 37 The trial Judge accepted Mrs Baker's denial that she had not charged petrol to the deceased's account. Nonetheless, it is understandable that the deceased could form an adverse view of the Bakers, including Mrs Baker, based upon her having made some provision in 1990, minor though it may be, in part to cover her expenses associated with visiting her, at a time when she was visiting three times per week, and that thereafter, whilst that financial provision continued, the visits diminished. There was no suggestion that the Bakers were misappropriating or misusing the deceased's funds and the trial Judge accepted that they were not. When Mr Baker confronted the deceased in September 1993 with the allegation that she had been telling staff at Kurmala that they had been "using her money", the allegation that she had said that was denied. Mrs Baker said in her affidavit: "Apart from the amount of $324 that Mary gave to me for my expenses in looking after her, I have never used Mary's money for my own purposes." Appeal book 98. 38 Once Mrs Baker ceased to visit the deceased, she could well have thought that Mrs Baker was "using" or "taking" her money, although no longer visiting her. To Mrs Baker's credit, once she had an argument with the deceased in August 1994 and ceased visiting her, she elected not to receive the $324 per quarter, however there is no evidence that the deceased was aware of that. Looked at from the deceased's view point, she could well have sensibly thought that Mrs Baker was "using" or "taking" her money once she ceased to visit her. That may have been erroneous but the true situation was never explained to the deceased. Her perception may well have been she was receiving no benefit for the moneys which she provided to Mrs Baker, in part to cover her expenses of visiting and attending to the deceased's requirements and thus that her money was being misused once Mrs Baker ceased to attend her. Such a perception cannot be described as irrational or delusional, particularly as no one ever sought to reason to the contrary with the deceased. 39 Whether the deceased was in August 1993 suffering from the effects of vascular dementia and cognitive impairment is open to question. If she was, there remains the further question whether any such condition resulted in absence of testamentary capacity. 40 One factor which led the trial Judge to the conclusion that the deceased lacked testamentary capacity was an analysis of the evidence of Professor Brodaty, the Director of the Academic Department of Psychogeriatrics at Prince Henry Hospital and Professor of Psychogeriatrics at the University of New South Wales, coupled with an analysis of certain aspects of the deceased's behaviour towards members of the Baker family, Mrs Baker in particular. Her Honour summarised Professor Brodaty's evidence as follows: "He agreed that persistently holding a belief which was false could have poisoned the affection of the deceased towards the Bakers; that would be pointer to some cognitive impairment. If there were no evidence to support the belief, it was more likely in a lady of the age of the deceased that there was cognitive impairment. If a demonstrably false belief is persistent and is held despite logical argument and evidence to the contrary, the person is likely to have a delusion. A delusion is held over a period of time but a person can be delusional for, say, a month. The area of impaired cognition could be memory and reasoning. It was those areas of cognitive impairment that would be relevant to the determination of testamentary capacity. Further, Professor Brodaty was of the opinion that, if damage had occurred at the time of the sub-arachnoid haemorrhage to the under-side of the frontal lobe, and the lack of ability to control patience was only manifested later, that would indicate progression of vascular dementia and cognitive impairment. This progression would, however, be due to another process, such as the onset of Alzheimer's disease, rather than the damage caused by the 1986 episode itself. Such a progressive condition could explain the absence of manifestation of loss of control over a period of time, such as between 1986 and 1993." Appeal book 808I-W. 41 I do not think that a fair reading of the reports and cross-examination of Professor Brodaty results in the view that she was so suffering or that she lacked testamentary capacity, but it is unnecessary to reach a firm view on that matter. On my reading of the evidence, Professor Brodaty accepted that the trauma of the 1986 brain injury may have resulted in impatience in the deceased, but did not accept that it had affected her power of reasoning sufficient to constitute absence of testamentary capacity. As previously indicated, there was a very substantial body of lay and qualified opinion that she was a mentally alert lady of full capacity. The notion that she had a delusional belief from which she could not be moved that the Bakers were either taking her money or mishandling her financial affairs is not sustainable. 42 In rejecting the process of reasoning of the trial Judge, no question of credit affecting fact finding is involved. The issue is one of characterisation of behaviour of the deceased, and recognition of the strength of the evidence of rationality and testamentary capacity derived from the evidence of Mr Milne, Ms Bradley, Dr Waran, Ms MacDonald, Mr Cases and Mrs Roberts. In my view the trial Judge gave insufficient weight to that evidence, and especially the rationality of the reasons given by the deceased to her solicitor for the exclusion of Mr Baker and his family from her will, and gave too much emphasis to comparatively insignificant events upon which a structure of inference, supposedly explanatory of absence of a rational reasoning process, for exclusion of the Bakers was built, which inference was contrary to sensible reasons given by the deceased for that exclusion. 43 Although I disagree with the trial judge's finding of testamentary incapacity, in light of her Honour's finding it must be held that the respondents had reasonable grounds for seeking to impeach the capacity of the testator. In those circumstances the costs of the appellant and the respondent at the trial should each be paid out of the estate. See Browne v M'Encroe (1890) 11 NSWLR Eq. 134 at 146. However there is no reason why the usual rule should not apply in respect of costs of the appeal, with the unsuccessful party bearing those costs. 44 I would propose the following orders:

(2) Order of Bennett AJ dated 9 May 1997 be set aside.

(3) In lieu thereof, order that probate of the last will and testament of Mary Victoria Tompson dated 19 August 1993 in solemn form be granted to Perpetual Trustee Company Limited ACN 000 001 007.

(4) Order that the appellant's costs and the respondent's costs on a trustee basis, of the trial before Bennett AJ be paid out of the estate.

(5) Although I would favour an order that the unsuccessful party on the appeal should pay the successful party's costs the order of the Court will be that by majority the appellant's and the respondent's costs of the appeal be paid out of the estate of the deceased in the case of the appellant on a trustee basis. ------------------------------

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Judgment (31 paragraphs)

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Cases Cited (5)