BETWEEN : PERPETUAL TRUSTEES WA LTD (ABN 98 008 666 886)

SEVENTH-DAY ADVENTIST CHURCH (WESTERN AUSTRALIAN CONFERENCE) LTD (ACN 104 553 808)

Succession - Wills, probate and administration - Application for proof of will in solemn form - Whether testatrix had testamentary capacity - Whether will valid as a testamentary instrument - Factors relevant to capacity of testator - Rules concerning the award of costs

Guardianship and Administration Act 1990 (WA)

Wills Act 1970 (WA), s 8

Held that probate of the subject will should be granted in solemn form

Bailey v Bailey [1924] HCA 21; (1924) 34 CLR 558

Banks v Goodfellow (1870) LR 5 QB 549

Re Full Board of the Guardianship & Administration Board [2003] WASCA 268; (2003) 27 WAR 475

Roebuck v Smoje [2001] WASC 95

Silvester v Tarobina, unreported; SCt of WA; (Anderson J); 13 February 1996; Library No 960062

The Public Trustee v Kita [2004] WASC 38

West Australian Trustee Executor & Agency Co Ltd v Holmes [1961] WAR 144

Wheatley v Edgar [2003] WASC 118

Worth v Clasohm [1952] HCA 67; (1952) 86 CLR 439

1 These proceedings concern the estate of Hilda May Gray who died on 27 December 2006 at 94 years of age.

2 At the time of her death the plaintiff, Perpetual Trustees WA Ltd, was holding a will executed by the deceased in the presence of two witnesses on 26 May 2002, being a will in which the plaintiff was named as executor.

3 The first defendant is the deceased's daughter. It soon became apparent that the first defendant disputed the validity of the subject will, principally on the ground that as at 26 May 2002 the deceased lacked testamentary capacity. This made it necessary for the plaintiff to commence these proceedings for an order that probate of the subject will in solemn form be granted to the plaintiff.

4 The first defendant contended by way of counterclaim that probate in common form or solemn form should be granted in respect of a will executed by the deceased in the presence of two witnesses on 20 November 1996.

5 The residuary estate of the deceased under both the 1996 will and the subject will is to be divided in equal shares between the first defendant and the deceased's son (the second defendant). Thus, it might be said that essentially the dispute concerns the question of who is to act as executor and trustee of the estate.

6 It is a large estate, and at an early stage of the dispute the first defendant made it clear to the interested parties that she was vehemently opposed to the plaintiff's claim and to the payment of any fees from the estate that might flow from the plaintiff acting as executor and trustee in the manner allowed for by the subject will.

7 The nature and tone of the first defendant's stance makes it necessary to trace the history of the dispute with care, for the relevant details have a bearing upon the question of costs.

8 I will turn to the pleadings in due course. However, it emerges from these introductory remarks that there is a central issue to be resolved as to whether the deceased lacked testamentary capacity as at 26 May 2002. There is also an issue as to costs.

9 The deceased was born on 23 April 1912. She was married to David Alexander Gray on 30 October 1937. Her son, the second defendant, was born on 24 February 1946. Her daughter, the first defendant, was born on 26 January 1950. It follows that the two children of the deceased are both adults of mature years. The husband of the deceased died some years ago.

10 It emerges from the evidence that the deceased's brother, Lloyd Riches, died in 1996 leaving a large estate. The deceased inherited a sizeable amount from her brother with the result that she herself became well off, although she continued to live frugally.

11 On 20 November 1996 the deceased executed the first of the testamentary instruments under notice in these proceedings. By the 1996 will she appointed the first defendant and the first defendant's husband to be the executors of the will and trustees of her real and personal estate. Subject to a bequest to her sister (the fourth defendant) the residuary estate was to be held in trust and to be divided between the first and second defendant as her children in equal shares.

12 It seems that the deceased and her elderly sister lived on the first defendant's property at Caversham. At some time after the making of the 1996 will the first defendant formed a view that her mother might not be capable of managing her affairs. This led to the first defendant applying for and obtaining an administration order dated 14 November 2001 pursuant to provisions of the Guardianship and Administration Act 1990 (WA).

13 It appears from the subject order that the Guardianship and Administration Board was satisfied that the deceased at that time was unable by reason of mental disability to make reasonable judgments in respect of matters relating to all of her estate. The first defendant was appointed plenary administrator of her mother's estate with provision for review of the order on 12 November 2006.

14 It appears from the evidentiary materials before me that at the hearing or inquiry preceding the making of the administration order, expert opinions were presented bearing upon the intellectual capacity of the deceased. The exact nature of this evidence is not known to me, and nor do I know to what extent, if any, the evidence was tested by cross-examination, inquiry or opposing argument.

15 Having regard to the legal reasoning I will refer to later, I am of the view that the subject order and the related opinions are not conclusive as to the testamentary capacity of the deceased in 2002. However, I must keep steadily in mind that the order and related opinions may arguably have a bearing upon the subsequent actions of the first defendant and the propriety of her stance in these proceedings.

16 It appears that after a period of living in proximity to the first defendant and possibly as a consequence of the first defendant's application for an administration order, a decision was taken by the deceased and her elderly sister to move into other accommodation, being certain units at 271 Wharf Street, Cannington.

17 There is a difference of opinion on the evidence as to the intellectual capacity of the deceased by the end of 2001 but there is evidence before me from the witnesses mentioned later that the deceased, assisted by her elderly sister, lived comfortably in her own premises after the move, and was able to cope with the demands of daily life.

18 On 22 March 2002 the deceased signed a will in the presence of two witnesses in which she purported to appoint her son (the second defendant) as the sole executor of the will and as trustee of her estate. The estate was to be held on trust for the benefit of the third defendant (the Seventh-Day Adventist Church) as to one-third with the remaining two-thirds of the estate to be divided equally as tenants in common between her daughter and her son. I will call this the 'first 2002 will'.

19 Two months later the deceased enlisted the aid of her solicitor, Mr Ron Cannon, to prepare another will. Being a solicitor with many years of experience behind him, Mr Cannon wished to be sure that his elderly client had sufficient capacity to execute a will. His view of the matter was influenced by the presence of an administration order concerning the affairs of the deceased and various indications that the first defendant doubted her mother's capacity and was likely to challenge any will made by the deceased.

20 Mr Cannon made arrangements for a report to be obtained from Dr Oleh Kay. This led to an examination of the deceased in Dr Kay's rooms at Ardross and to a home assessment of the deceased by Dr Kay on 26 May 2002. I will say more about these events later. However, in essence, Dr Kay and Mr Cannon were of the view that the deceased had testamentary capacity.

21 Thus, with the assistance of the deceased's solicitor, Mr Ron Cannon, another will was prepared for the deceased by a solicitor, Ms Linda Tudori. This further will was executed by the deceased on 26 May 2002 in the presence of Mr Cannon and Ms Tudori at the deceased's Wharf Street home. I will continue to call this the 'subject will'.

22 The subject will provided for the plaintiff, Perpetual Trustees, to be appointed as executor and trustee. Provision was made for the deceased's estate to be divided equally between her children, namely, the first defendant, and the second defendant.

23 The position of the second defendant is reflected in a written statement dated 23 February 2009 that reads in part as follows:

1. The Deceased, Hilda Gray, was my mother. The First Defendant, Anne Lenore Elliot is my sister. Lilla Ann Riches, the Fourth Defendant, is the Deceased's sister and therefore my aunt.
2. On 3 May 2002, Ronald William Cannon ('Ron Cannon') sent to me a letter asking amongst other things whether I would be prepared to be executor of my mother's will.
3. On 5 May 2002, I sent a letter to Ron Cannon advising (amongst other things) that I did not wish to be the executor of my mother's will. I was aware at this stage that there had been a number of hearings in the Guardianship and Administration Board with respect to my mother and in particular to her capacity in that Anne was arguing that my mother did not have capacity to manage her finances or her day-to-day activities.
4. I therefore knew that a dispute was likely to arise with respect to my mother's will once she passed away. Consequently, I declined to be the executor of the will.
5. I stress that the reason I expected there to be a dispute over the will was not because I felt my mother lacked testamentary capacity, but because I knew that Ann believed my mother lacked testamentary capacity.

24 The subject will executed by the deceased on 26 May 2002 was held in safekeeping by the plaintiff. The deceased died 4½ years later on 27 December 2006 at 94 years of age. The cause of death in the relevant certificate is given as 'cardiac arrest, extreme frailty/immobility, Alzheimer's type dementia (3 years), (contributory cause) mastectomy for breast cancer, osteoporosis'.

25 By letter dated 11 January 2007 the plaintiff wrote to the first defendant foreshadowing an application for probate of the subject will.

26 The first defendant responded to this by letter dated 16 January 2007. The first defendant said that the will was invalid as the deceased had already lost her testamentary capacity when it was executed and the plaintiff was therefore requested to cease any attempt to obtain probate.

27 This was followed by a further letter from the first defendant dated 22 January 2007 in which she informed the plaintiff's representative, Spencer Charles Percival, that the defendant could not make a will of the kind contended for by the plaintiff because 'my mother had Alzheimer's'. The first defendant said in that letter that she was no fan of the plaintiff company being 'an organisation renowned for stripping assets from estates and rightful beneficiaries'.

28 A little later on 14 March 2007 the first defendant's solicitors, Leask & Co, wrote to the plaintiff's solicitors (Kott Gunning) to advise them that on 14 November 2001 the administration order mentioned earlier had been made. The first defendant's solicitors went on to say that the administration order remained in place until at least 26 May 2002. They said further that an explanation was called for 'as to how it is to be argued that the deceased had capacity to execute the will dated 26 May 2002'.

29 By letter dated 2 April 2007 the plaintiff's solicitors responded in this way (omitting the inessential parts):

As you are aware, the appointment of your client as plenary administrator of the estate was made under Part 6 of the Guardianship and Administration Act (the 'Act'). Specifically the appointment was made under section 64(1). Under section 77(1) of the Act, so long as there is a determination in force that a person is in need of an administrator, that person is stated to be incapable of entering into contracts or making any disposition of their estate or part thereof, or appointment an agent or attorney.

We draw your attention to the decision of the Full Court of the Supreme Court of Western Australia in the matter of Re: The Full Board of the Guardianship and Administration Board [2003] WASCA 268 in which the Full Court constituted by 5 judges determined that section 77(1) of the Act do not apply to any will or testamentary instrument made by a testator who is the subject of a declaration by the Guardianship and Administration Board under section 64(1) of that Act.

The Court held that the reasons are that the making of a will or other testamentary instrument does not constitute any disposition of the testator's property and that the eventual devolution and distribution of the testators' property if any, which will take place on his or her death in accordance of the terms of that will and, if they apply, the laws relating to intestate distribution, is not a distribution of property or a state to which section 77(1) of the Act applies.

The Court further determined that any issue of whether or not such a testator possessed the requisite testamentary capacity at the time the will or other instrument was made will need to be determined in the usual way on the facts of the particular case on any subsequent application for a grant of probate or letters of administration with the will annexed.

Accordingly, there is very clear legal authority in support of the fact that the existence of the Administration Order did not determine that Hilda Gray lacked capacity to make a valid will. Whether she in fact lacked capacity to make a valid will will need to be determined on the evidence available.

30 I pause here to say that, in my view, the summary provided by the plaintiff's solicitors as to the effect of the decision of the Full Court in the Full Board case is correct. It follows from this and from my earlier observations that I am of the view that the existence of the administration order did not determine that the deceased lacked capacity to make a valid will as at 26 May 2002. That is an issue which must be determined by this court after trial having regard to the issues raised by the pleadings.

31 Moreover, it follows from the Kott Gunning letter that the first defendant was put on notice, prior to commencement of the present proceedings, that the making of an administration order in late 2001 could not be regarded as a decisive determination of the deceased's testamentary capacity as at 26 May 2002.

32 It was against the background of these exchanges between the plaintiff and the first defendant that the plaintiff thought it necessary to issue a writ of summons on 15 May 2007 seeking a grant of probate of the subject will in solemn form; that is, orders resolving the matters in issue.

33 As appears from earlier discussion, a significant bone of contention seemed to be the first defendant's objection to the plaintiff acting as executor and trustee of the deceased's estate. By contending for the validity of the 1996 will the deceased sought to achieve an outcome whereby the first defendant and the second defendant would be appointed as executors and trustees.

34 By email dated 12 May 2008 the first defendant wrote to her brother about the matters in issue in the proceedings and endeavoured to solicit his support for her stance. In the course of that email she observed that 'the will that Perpetual is hankering to execute is invalid, and the only reason they are so desperately trying to hang on to it is because of the hefty fees that come their way as a result'.

I have absolutely no intention of acting as executor, and will hand over that role to an accountant. If you and I can agree on the executor/s - you and the accountant or some such, it will save us a packet and mum's valid will will be able to be executed.

36 As the litigation moved towards trial, the first defendant foreshadowed that expert evidence would be adduced to substantiate the first defendant's stance that the deceased lacked testamentary capacity as at 26 May 2002. This led eventually to a conference between expert witnesses who were to be called at the trial with a view to narrowing or removing the differences between the evidence of the respective experts.

37 It appears from the report of that conference dated 9 March 2009 that the expert witness to be called by the plaintiff was Dr Oleh Kay; the expert for the first defendant was to be Dr Lester Szudej; it was agreed by both experts that their respective positions were accurate and reasonable taking into account the circumstances in which each expert met with the deceased.

38 The matter was listed for trial for three days commencing Monday, 16 March 2009 at the Supreme Court. Counsel for the plaintiff prepared a detailed outline of opening submissions dated 13 March 2009. I understand from those submissions (par 4) that on 12 March 2009 the first defendant indicated through her counsel that she was no longer taking an active role in the proceedings and that she was not going to attend the trial.

39 It emerges therefore that up to 12 March 2009 the first defendant had maintained an adversarial stance and in a tone and manner which made it clear that the plaintiff's claim was to be contested vigorously. She then changed her stance.

40 At the commencement of the trial on Monday, 16 March 2009 counsel for the first defendant, Mr Leask, confirmed that his client was not in attendance and did not propose to take an active role in the proceedings. Witnesses called by the plaintiff would not be cross-examined. He was instructed to seek leave to withdraw subject only to voicing four points that were said to explain the stance previously adopted by the first defendant.

41 Mr Leask's instructions did not permit him to say exactly why it was that the first defendant had changed her stance and would not be calling any evidence, presenting any submissions (apart from the four points) or taking an active role in the proceedings.

42 I will return to the first defendant's four points later. Suffice it to say that, having heard from counsel for the first defendant, and having regard to the legal principles I will come to shortly, in my view, it was still incumbent upon the plaintiff to make out its claim and to establish that the deceased had testamentary capacity as at 26 May 2002 when the subject will was executed.

43 I was of the view also that, notwithstanding the position expressed by counsel for the first defendant, the issues raised by the pleadings remained live issues, which made it necessary for the court of its own volition to review the evidence carefully before any ruling was made.

44 I understood from what was said by counsel for the first defendant that his client had been informed and understood that any ruling made by the court would be binding upon the parties for all purposes, notwithstanding that none of the four defendants were minded to play an active role at the trial. I pause there to note in passing that the third defendant was represented by counsel at the opening of the trial who confirmed that her client did not wish to play an active role.

45 It was against this background that counsel for the plaintiff called various witnesses and tendered certain documentary exhibits in support of the plaintiff's case. However, before looking at the evidence presented in support of the plaintiff's claim, it will be useful to review the pleadings in this matter.

46 The plaintiff pleads in its statement of claim that it is the body named as executor in the subject will dated 26 May 2002. This is said to be the last will and testament of Hilda May Gray who died on 27 December 2006 leaving property in Western Australia. The subject will was executed in the presence of Linda Elizabeth Tudori and Ronald William Cannon.

47 The plaintiff seeks an order that probate of the 26 May will in solemn form be granted to the plaintiff with related orders.

48 By her statement of defence and counterclaim the first defendant denies that the deceased executed her last will on 26 May 2002 and says that the deceased suffered from Alzheimer's disease to such an extent that as from November 2001 she lacked testamentary capacity.

49 Further, the first defendant does not admit that the subject will was signed by the deceased in the presence of Linda Elizabeth Tudori and Ronald William Cannon as alleged in the statement of claim.

50 By way of counterclaim the first defendant alleges that on 20 November 1996 the deceased duly executed her last will in the presence of two witnesses. The first defendant seeks a grant of probate of the 1996 will of the deceased in common form or solemn form in favour of the first and second defendants.

51 It emerges from earlier discussion that the first and second defendants are the daughter and son of the deceased respectively. The third defendant, being the Seventh-Day Adventist Church, is a party with an interest in the matter. The fourth defendant is the sister of the deceased.

52 It will now be useful to look at certain legal principles.

53 Section 8 of the Wills Act 1970 (WA) provides that a will is not valid unless it is in writing, it is signed by the testator, the testator makes or acknowledges his signature in the presence of at least two witnesses present at the same time and the witnesses attest and subscribe the will in the presence of the testator.

54 In Wheatley v Edgar [2003] WASC 118 E M Heenan J observed at [17] that wills can be proved in two ways, being in common form or in solemn form. In the former case the grant of probate is revocable. In the latter case, with two exceptions (concerning fraud or discovery of a later will) the grant of probate is irrevocable. Wills are proved in solemn form in a probate action where the main, and generally the sole question for the determination of the court is whether a will is or is not either in whole or in part, valid as a testamentary instrument.

55 His Honour went on to indicate that the different consequences give rise to evidentiary implications. He observed at [24] that for there to be a grant in solemn form the court must be satisfied on evidence adduced by the party propounding the will in question, or by any other party to that suit, whether joined or cited, of the formal validity of the will. The issue will be decided on such evidence as the propounder decides to adduce that the testator had the capacity to make a will at the relevant time.

56 I pause here to note that inherent in these observations is the notion that all parties with an immediate or prospective interest in the proceedings should be joined so that any ruling made by the court will be binding upon the parties. In the circumstances of the present case, having regard to the provisions of the three instruments under consideration, I am satisfied that all parties with an interest in the matter have been joined.

57 Cockburn CJ observed in Banks v Goodfellow (1870) LR 5 QB 549 that in order to exercise the power of disposition by the execution of a will, a testator must understand the nature of the will and its effects; understand the extent of the property of which he is disposing; 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, preserve his sense of right, or prevent the exercise of his natural faculties, that no insane delusion should 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.

58 As to the question of testamentary capacity, the propounder of the will contended for in the statement of claim may take advantage of the rule that a will, properly executed is, in the absence of evidence to the contrary, presumed to have been made by a person competent and of understanding. If there is evidence to the contrary it is for the proponent to establish affirmatively that the testator was of sound mind. There must be proof at least to this extent on the civil standard to justify a grant in solemn form: West Australian Trustee Executor & Agency Co Ltd v Holmes [1961] WAR 144.

59 It follows from all of this that where an issue concerning testamentary capacity has arisen no grant of probate in solemn form should be made by the court merely on the consent of the parties or simply because the matter is not contested at trial. As I indicated in earlier discussion, having regard to the pleadings, findings are required as to the deceased's testamentary capacity as at 22 March 2002 or 26 May 2002.

60 In Bailey v Bailey [1924] HCA 21; (1924) 34 CLR 558 Isaacs J at 570 summarised the effect of certain decided cases. He said that the onus of proving that an instrument is the will of the alleged testator lies on the party propounding it. The propounder's duty is, in the first place, discharged by establishing a prima facie case. A prima facie case is one which satisfies the court judicially that the will propounded is the last will of a free and capable testator. It is not the integrity of the body, but of the mind, that is requisite in testament.

61 Isaacs J went on to say that the quantum of evidence must always depend upon the circumstances of each case including reference to the complexity of the relevant provisions, the exclusion of persons naturally having a claim upon the testator, the presence of any person having motive and opportunity and exercising undue influence taking a substantial benefit.

62 Once the proponent establishes a prima facie case of sound mind, memory and understanding then the onus of proof lies upon the party impeaching the will to show that it ought not to be admitted. Mere proof of serious illness is not sufficient. There must be clear evidence that undue influence was in fact exercised, or that the illness of the testator so affected his mental faculties as to make then unequal to the task of disposing of his property.

63 In Worth v Clasohm [1952] HCA 67; (1952) 86 CLR 439 the High Court held that the effect of a doubt initially is to require a vigilant examination of the whole of the evidence. However, that examination having been made, a residual doubt is not enough to defeat a claim for probate unless it is felt by the court to be substantial enough to preclude a belief that the document is the will of a testator who possessed sound mind, memory and understanding at the time of its execution.

64 I note also that in Silvester v Tarobina, unreported; SCt of WA; (Anderson J); 13 February 1996; Library No 960062 Anderson J considered that mere proof of a serious illness will not necessarily lead to a conclusion of want of testamentary capacity. There must be evidence that the illness affected the testator's mental faculties to a degree sufficient to deprive the testator of testamentary capacity.

65 It emerges from my review of the decided cases and from The Public Trustee v Kita [2004] WASC 38 that the test of testamentary capacity may be summarised as follows:

1. an understanding of the nature of the testamentary act and its effects;
2. an understanding of the extent of property the subject of the disposition;
3. comprehension and appreciation of claims made upon the testator's bounty; and
4. the absence of any disorder of mind that poisoned her affection, diverted the testator's sense of right or prevented the exercise of the testator's natural faculties.

66 Let me now return to the circumstances of the present case and the evidence presented by the plaintiff at trial.

67 Ronald William Cannon said in evidence at the trial that he was admitted to practice as a barrister and solicitor in Western Australia on 21 December 1951. Since approximately July 2001 he had been involved as counsel for the deceased's sister, Lilla Ann Riches, and at times the deceased herself with respect to a number of disputes which went before the Guardianship and Administration Board regarding the deceased, Lilla and the first defendant. In mid April 2002 he engaged Linda Elizabeth Tudori on behalf of the deceased to draft and witness the deceased's will.

68 Mr Cannon said that on 23 April 2002 he attended the deceased's home at the Wharf Street unit with his wife and Ms Tudori. They spoke to the deceased and Lilla for approximately an hour. He discussed with the deceased that she had a sizeable estate worth over a million dollars and that she had an existing will which gave a third of her estate to the Seventh-Day Adventist Church with the remaining two-thirds divided between her son and daughter. The deceased then said that she no longer wanted the church to be a beneficiary and wanted her estate to be divided equally between her two children.

69 On his account, Mr Cannon recommended to the deceased that she should appoint the plaintiff to be the executor of her will due to the very significant disputes that had arisen involving the first defendant in the recent past. The deceased said that she preferred to appoint her son as the executor and Mr Cannon should make that request.

70 Mr Cannon said in evidence that at no stage did he have reason to doubt that the deceased had testamentary capacity. However, he knew that this was likely to become an issue so he wrote to Dr Oleh Kay requesting a written report as to the deceased's testamentary capacity. He wrote also to the deceased's son and received a reply to the effect that the second defendant did not wish to be the executor of the deceased's will and that he would support the appointment of either the plaintiff or the Public Trustee to act in that role.

71 Ms Tudori prepared the deceased's will. Mr Cannon said that on 26 May 2002 he attended the deceased's home with a view to having the deceased sign the will. Upon arriving at the deceased's home, he met Dr Oleh Kay who was leaving the premises. He had a short conversation with Dr Kay and was advised that in Dr Kay's view she had capacity to make her will.

72 Ms Tudori explained the will to the deceased. As this conversation proceeded Mr Cannon formed the view that the deceased agreed with and thoroughly understood the contents of the will and had full knowledge of its effect. The deceased executed the will by signing her name at the foot of the first page and on the attestation clause in the presence of Mr Cannon and Ms Tudori, all of them being present at the same time. They attested and subscribed the will as witnesses in the deceased's presence.

73 Mr Cannon went on to describe letters written after the signing of the will, including a letter he wrote to the deceased asking her to express her wishes with respect to her estate. She replied by handwritten letter dated 5 July 2002 addressed to Mr Cannon in which she set out her views. The deceased's letter forms part of the evidentiary materials.

74 I note in passing that the deceased's letter is a three-page letter and appears to be a cogent expression of the deceased's views. To my mind, it is significant that, notwithstanding some adverse comments made by the deceased about her daughter's conduct in recent times she was obviously still minded, as reflected in the subject will itself, to leave her daughter half the estate. However, she was clearly of the view that as to administration the plaintiff company would deal with her affairs in a fairer way.

75 Ms Tudori affirmed in the course of her evidence that on 23 April 2002 she attended with Mr Cannon at the residence of the Lilla and the deceased and took instructions to draft a will for the deceased.

76 The deceased explained that she had recently signed a will which was with a third person. She no longer wished to leave part of her estate to the Seventh-Day Adventist Church. She wanted to divide her estate equally between her son and daughter. She instructed Ms Tudori that she wanted the executor to be her son if he was agreeable, or an independent trustee such as Perpetual Trustee.

77 Ms Tudori said in evidence that the deceased was not as talkative as Lilla, but she was very much attuned to the conversation as it progressed. Ms Tudori said that if she felt at all that the deceased was not capable of giving instructions for a new will, then she would not have accepted the instructions or prepared the will.

78 In due course Ms Tudori received from Mr Cannon a copy of the deceased's previous wills and other materials. On 26 May 2002 she attended the deceased's home with Mr Cannon and his wife. She confirmed the evidence given by Mr Cannon concerning the conversation with Dr Kay. She said that the deceased read the will Ms Tudori had prepared. Ms Tudori was satisfied that the deceased read and understood the contents of the will. The will was then executed by the deceased in the presence of Mr Cannon and herself.

79 Ms Tudori said that she did not specifically recall asking the deceased questions to ascertain her testamentary capacity beyond satisfying herself that the deceased understood the will and its implications to her estate. She was satisfied from the deceased's responses, general conversation and demeanour that she was mentally capable of understanding the content of her will and the importance of the document. The deceased never said anything that seemed illogical, obviously untrue, out of character or indicative of having no understand of what she was giving or doing with her estate in the will. Ms Tudori did not detect any signs of confusion about her estate or the beneficiaries. She was clear that she wanted her estate divided between the named beneficiaries.

80 Ms Tudori wrote to the deceased on 3 June 2002 enclosing a copy of the will and advising that Mr Cannon had forwarded the original will to the plaintiff company for safekeeping.

81 Dr Oleh Kay gave evidence in support of the plaintiff's case. He described his qualifications at length including reference to the fact that he has been a practising psychiatrist since 1989. I am satisfied that he is appropriately qualified to express an opinion of the kind mentioned later.

82 Dr Kay confirmed in the course of his evidence that he was asked to examine the deceased by Mr Cannon and provide a report.

83 The first report provided by Dr Oleh Kay is dated 27 May 2002 and reads as follows (omitting the formal parts):

In reply to your letter of the 29th April 2002, I advise that I have examined Mrs Gray on 3 occasions, on the 21st March and 4th April in my rooms at Ardross and on the 26th May 2002 at her residence in Cannington in order to perform a home assessment.

Mrs Gray has clear evidence of cognitive disturbance, however, she was oriented in space, time and person. She had poor recall of recent events, but better recall of past life events. She has insight into her poor memory and relies on her sister to cue her memory, otherwise, masks her forgetfulness with the use of humour. It is reported to me that she is quite capable of the activities of daily living and has no trouble coping with her new living environment.

Mrs Gray had understanding as to what her assets were, being the balance of her inheritance from her deceased husband, the likely claimants upon her future Estate, ie, her son and daughter and was intending to divide her Estate equally between her children. I am, therefore, of the opinion that she has Testamentary capacity in relation to her Will.

84 I pause here to note, as indicated in earlier discussion, that in fact the deceased's inheritance had come not from her husband but from her brother. I will return to this matter of detail later, being a matter touched upon in the 'four points' raised by counsel for the first defendant. However, it is important to keep in mind that the matter being addressed by the deceased was not the source of her wealth but the manner in which it should be distributed after her death.

85 Dr Kay referred also to some later reports dated respectively 27 May 2002, 18 June 2002 and 29 July 2002. I do not find it necessary to traverse these reports in detail save to note that in the latter report dated 29 July 2002, having regard to materials that had been forwarded to him by then, Dr Kay acknowledged that as at that date Ms Gray suffered from dementia and the most probable cause was Alzheimer's disease. However, in his view there was clearly a fluctuating aspect to her cognitive dysfunction. He went on to say, in describing his exchanges with her, that Ms Gray was aware that she had inherited a sizeable estate and in the event of her death she wanted that estate to be equally distributed to her children.

86 Dr Kay then observed: 'We spoke for some time about what constituted a will and I ultimately formed the opinion that Ms Gray had testamentary capacity'.

87 The central issue raised by the pleadings is whether the deceased had testamentary capacity as at 26 May 2002 when she executed the subject will in the presence of her two solicitors, Mr Cannon and Ms Tudori.

88 I pause to say in passing that I am satisfied on the balance of probabilities that the will was properly executed by the deceased as alleged in the presence of the two witnesses just mentioned, notwithstanding an allegation to the contrary in the first defendant's statement of defence. There is evidence from Mr Cannon and Ms Tudori confirming the due execution of the will and no evidence to the contrary. I accept that they are both experienced practitioners of good reputation and I am satisfied that the evidence provided to the court by them must be believed.

89 As to the issue of testamentary capacity, I noted in earlier discussion that it is immaterial that the affairs of the deceased was subject to an administration order at the time the will was executed. This was established by the decision in the Full Board case (Re Full Board of the Guardianship & Administration Board [2003] WASCA 268; (2003) 27 WAR 475). Whether the deceased lacked testamentary capacity to make a valid will is a matter that must be decided having regard to the evidence presented to the court at the hearing of this matter.

90 However, the presence of the administration order and the matters mentioned in the certificate of death and in the first defendant's statement of defence makes it necessary to examine the evidence bearing upon the capacity of the deceased with care. In circumstances of this kind I cannot rely simply upon the presumption arising from the existence of a properly executed will.

91 The onus of proof lies upon the plaintiff as the party propounding the subject will. It is apparent from the decided cases I must be satisfied that the will is that of a free and capable person who is shown to have an understanding of the nature of the testamentary act and its effects. It must be shown that the person has an understanding of the property the subject of the disposition and a comprehension and appreciation of claims made upon her bounty. Testamentary capacity requires that there be an absence of any disorder of mind distorting the affections of the testator or diverting the testator's sense of right or the exercise of the testator's natural faculties.

92 In the present case it is material to note that the form and structure of the will are material. By the subject will the deceased purported to dispose of her residuary estate to her son and daughter being those of her next of kin apparently with the principal claim upon her bounty. This was in keeping with the contents and structure of the earlier 1996 will.

93 To my mind, having regard to the deceased's unsettled situation prior to the making of the subject will, the appointment of the plaintiff as executor and trustee is understandable. It cannot be regarded as an aberration that might be thought to bear upon the issue of testamentary capacity. Moreover, it is significant that the deceased's son had no objection to such an appointment and was minded to accept that his mother had testamentary capacity at the relevant time.

94 It emerges, then, that there is nothing in the form or structure of the subject will to suggest that the deceased was not proceeding in a rational manner or that her affections had been distorted by any untoward or improper influence. The letter she wrote shortly after the will had been executed is persuasive evidence also that she had capacity to make the will and knew exactly what she was doing.

95 I give weight also to the evidence of Mr Cannon and Ms Tudori that the deceased appeared to understand the nature of the will and there was nothing irrational in her conduct. Further, there is no evidence of any pressure or influence being brought to bear upon the deceased by the plaintiff or any other person that might have affected her actions.

96 I give weight also to the expert opinion of Dr Oleh Kay that she had testamentary capacity, bearing in mind that he examined her with a view to being able to present evidence directed to that issue. I am conscious also that as a consequence of the changed stance of the first defendant on the eve of trial there is no expert evidence before me contrary to that of Dr Kay.

97 The decided cases show that a residual doubt is not enough to defeat the plaintiff's claim unless it is felt by the court to be substantial enough to preclude a belief that the document contended for by the plaintiff is the will of a testator who possessed sound mind, memory and understanding at the time of its execution.

98 Against this background, and having regard to the evidence I have mentioned, I conclude that the deceased had testamentary capacity at the time of making the subject will and that the will is valid. The consequences of such a finding is that the two earlier wills, being the 1996 will and the first 2002 will, have been revoked and are of no further force and effect. I am therefore prepared to make orders of the kind sought by the plaintiff that probate of the subject will be granted to the plaintiff in solemn form.

99 I must now proceed to further issues including principally the question of costs.

100 The parties have been afforded an opportunity to make submissions concerning matters bearing upon the question of costs and the appropriate orders to be made. They will be afforded an opportunity to make further submissions in the light of my findings concerning the validity of the subject will.

101 Nonetheless, in order to refine the issues to be addressed, it will be useful to refer to certain principles bearing upon the question of costs.

102 I dealt with the principles concerning costs in a case of this kind at some length in Roebuck v Smoje [2001] WASC 95. I will not repeat everything I said on that occasion.

103 I made these observations in Roebuck v Smoje:

Put shortly, the basic rule is that while costs lie in the discretion of the Court, in general, costs follow the event. For that basic rule there are a number of recognised exceptions, of which for present purposes two have been suggested as being relevant to the circumstances of the present case, namely, (1) where the litigation has been caused by the conduct of the testator - in that case the unsuccessful defendant may be relieved of the burden of costs and at times may be awarded his costs out of the estate - and (2) where there are circumstances which afford reasonable grounds for opposing the Will by the unsuccessful defendant. In the latter case, the unsuccessful party, although not usually awarded his costs out of the estate, will usually be relieved of the burden of costs.

Those principles are derived from various cases. One of the leading cases in that regard is Twist v Tye [1902] P 92. It was there said at 93 - 94:

The general rule is, of course, that costs, after a trial of this character, should follow the event unless, according to the principles which are in force in this Court, there should be adequate reason for an order of a different character.

Speaking generally, there are in this Division two classes of cases in which there should be, and generally is, a departure from the ordinary rule: the first is where the litigation has been brought about through the conduct of the testator or testatrix; and the second is where the parties who have failed have reasonably been led into the litigation by a bona fide belief in their case, and have, therefore, felt it desirable to inquire into the testamentary dispositions of the testator or testatrix."

Those principles have generally been followed in Australia and in the State of Western Australia. [27] - [29]

104 It emerges, then, that in a contested case the successful party will generally obtain an order for recovery of his costs from the opposing party; that is, costs will follow the event. However, there are two types of case where the general rule whereby costs follow the event may be departed from. First, where the litigation has been caused by the conduct of the testator - in that case the unsuccessful party may be relieved of the burden of costs and at times may be awarded his costs out of the estate.

105 Second, the general rule may be departed from where there are circumstances which afford reasonable grounds for opposing the subject will by the unsuccessful party. In this case, the unsuccessful party, although not usually awarded his costs out of the estate, will usually be relieved of the burden of costs in that he will not be required to pay the costs of the successful party.

106 In the present case the plaintiff submitted that in circumstances where the plaintiff successfully proved the will in solemn form the general rule should apply; that is, the first defendant, as the party who opposed the plaintiff by contesting the validity of the will, should be required to pay the plaintiff's costs. For the position to be otherwise, the first defendant would need to demonstrate that she falls within one of the two exceptions.

107 As to the first exception, the plaintiff submitted that there was no evidence that the testator's actions brought about the litigation. The will was drafted by two independent solicitors and properly executed in their presence. The instructions were given contemporaneously with a meeting with a geriatric psychiatrist who confirmed that the deceased had testamentary capacity. Moreover, the will was in simple terms, dividing the estate equally between the deceased's two surviving children and appointing an independent trustee company as executor.

108 Against this background, the plaintiff submitted, it is difficult to see what more the deceased could have done in the circumstances to avoid any dispute arising. Consequently, the first exception should be held not to apply.

109 As to the second exception, it was said that the first defendant has not called any evidence in this matter, nor provided any or any satisfactory explanation as to why she chose at a very late stage not to participate in the trial. The substance of the plaintiff's evidence in support of the will, including the report of Dr Kay dated 27 May 2002, was provided to the first defendant at the earliest possible stage and prior to the litigation being commenced. No other reports specifically contradicted Dr Kay's report.

110 Without any explanation as to why the first defendant chose not to participate in the trial, the plaintiff submitted, it can only be concluded that the first defendant no longer considered she had reasonable grounds to challenge the validity of the will.

111 The plaintiff submitted further that if the court was to find that one of the exceptions applied, the court should, in its discretion, order that the first defendant pay the plaintiff's costs in any event or, at least, bear her own costs.

112 This was because the only substantive difference between the respective wills sought to be proved was the identity of the executor. The beneficiaries are the same in both wills. In practice therefore the effect of the litigation was to decide whether the plaintiff was to be the executor or the first defendant and her husband. However, the first defendant stated in an email mentioned in earlier discussion that she did not intend to accept the role of executor in any real sense even if she was successful in proving the 1996 will.

113 I note in passing that the plaintiff was not opposed to the third defendant obtaining an order for costs from the estate upon the basis that it had a legitimate interest in the outcome and was not a party responsible for creating contested issues or needless expense.

114 As I indicated in earlier discussion, counsel for the first defendant at the commencement of the trial, informed the court that his client would play no active part at the trial. However, he sought and was allowed leave to make certain submissions which were said to explain the first defendant's decision to contest the subject will and which were relevant to the question of costs. These were the 'four points' mentioned in earlier discussion. Put shortly, it was said that there were four matters which the first defendant considered might excite the suspicion of the court in relation to the subject will, being matters which therefore could be regarded as matters justifying the stance adopted by the first defendant.

115 The first of the matters was that at the time the deceased gave instructions for the will (in April 2002), and at the time that she executed the will on 26 May 2002, she was suffering from a condition which at the time was suspected to be Alzheimer's. Moreover, as appears from the death certificate, it was ultimately found to be Alzheimer's.

116 The second matter was in relation to the form of the will itself. Counsel for the first defendant acknowledged that it was a straightforward document. However, there were certain features of the document which were said to excite suspicion that everything might not be in order. For example, the name on the will is given only as 'Hilda Gray'. In fact, as appears from the death certificate, her name was actually 'Hilda M Gray'. This is the name appearing in the 1996 will.

117 It was said also that the first defendant considered that the deceased would always have been minded to appoint a natural person as executor because she had a number of items of personal property which were of considerable sentimental value.

118 The third matter concerned the circumstances surrounding the giving of instructions and the execution of the will. It was said that for approximately 6½ years prior to March 2002 the deceased had lived with the first defendant at the first defendant's property in Caversham. On 20 March 2002 the deceased left Caversham. Two days later the first 2002 will was executed. That was a will in which one-third of the deceased's estate was purportedly left to the Seventh-Day Adventist Church. This conduct was said to have excited the suspicion of the first defendant.

119 The fourth matter related to the evidence of capacity that was likely to be brought before the court. Reference was made to a video record of an interview with the deceased in April 2002 giving instructions for the making of her will and a further video record made on 26 May 2002 when the will was executed. These video records were put up as evidencing a full understanding on the part of the deceased as to what was taking place but it was said that they did not go that far.

120 Another aspect of the fourth matter was a passage in Dr Kay's report which suggested that the deceased understood that she was dealing with an inheritance from her deceased husband's estate. It was common ground that in fact she had inherited her sizeable estate from her brother, Lloyd Riches and not from her husband.

121 Having regard to these four matters, counsel for the first defendant submitted that it was reasonable for the first defendant to have acted as she did during the course of the litigation. Accordingly, even if it be held that she was an unsuccessful party, no order for costs should be made against her in favour of the plaintiff. Further, an order should be made enabling her to recover her legal costs from the estate.

122 For the reasons I have provided, I consider that probate of the subject will in solemn form is to be granted to the plaintiff with related orders. I will hear from the parties as to the form of the orders to be made including the form of the orders as to costs.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : PERPETUAL TRUSTEES WA LTD -v- ELLIOTT [2009] WASC 76 (S)

MATTER : Estate of HILDA MAY GRAY late of Unit 2, 261-271 Wharf Street, Cannington, Western Australia (Dec)

BETWEEN : PERPETUAL TRUSTEES WA LTD (ABN 98 008 666 886)

SEVENTH-DAY ADVENTIST CHURCH (WESTERN AUSTRALIAN CONFERENCE) LTD (ACN 104 553 808)

Succession - Wills - Probate and administration - Costs orders on deceased's estate - Actions contesting will

Plaintiff's costs to be paid from estate on a solicitor/client basis including reserved costs

Third defendant's costs to be paid from estate on party/party basis to be taxed if not agreed

1 At the hearing of this matter I afforded to the parties an opportunity to be heard in respect of matters bearing upon the question of costs. I received full submissions from counsel for the plaintiff and the first defendant at that time. Further, having informed the parties that I intended to reserve my decision, so that I could fully consider the evidentiary materials before me, I indicated that when my ruling was handed down, and the outcome of the case was known, a further opportunity would be afforded to the parties to make additional submissions concerning costs, if requested.

2 Against that background, I must now deal with the question of costs. In doing so in this supplementary judgment I must begin by mentioning that the relevant legal rules concerning an award of costs are set out in the principal judgment. There is no need to repeat them. The main factual considerations are set out in that judgment also.

3 The plaintiff in the present case gave clear notice to the first defendant before commencing the present proceedings that it contended for the validity of the subject will dated 26 May 2002. The first defendant contested the validity of that will upon the basis that the deceased lacked testamentary capacity. The plaintiff was then obliged to commence these proceedings and as a consequence of matters raised in the first defendant's statement of defence was obliged to prove its case at trial, although the first defendant eventually gave notice that she would not play an active role at the trial.

4 The plaintiff has now proved its case in that the court has found that the deceased had testamentary capacity at the time the subject will was executed. The plaintiff can therefore be characterised as the successful party in respect of the matters in dispute.

5 In a contested case a successful party will generally be entitled to recover its costs from the opposing party. However, as appears from the rules mentioned earlier, there are certain exceptions to this basic rule.

6 In the present case I am of the view that the first exception does not apply. I have held that the deceased had testamentary capacity at the time the subject will was executed and it was reasonable for her to appoint the plaintiff as executor. The deceased was managing her own affairs at the relevant time with the assistance of her sister and her solicitor. The will she made was straightforward and benefited her son and daughter in equal shares. To my mind, it cannot be said that the testator's actions brought about the litigation. It follows that, in my view, the first exception does not apply.

7 As to the second exception, counsel for the first defendant referred to four points which might be thought to have excited the suspicion of the court in relation to the subject will with the result that the adversarial stance adopted by the first defendant could be regarded as reasonable. The four points relied upon are set out in the principal judgment.

8 To my mind, the second, third and fourth points are largely concerned with comparatively minor discrepancies concerning the form of the will and the evidence to be adduced by the plaintiff and are not sufficient to bring the second exception into play.

9 The crucial issue is raised by the first point; that is, as at 26 May 2002 there were indications that the intellectual capacity of the deceased was impaired as evidenced not only by the making of an administration order concerning her affairs in November 2001 but also by the first defendant's observations and certain observations in Dr Kay's reports.

10 However, the fact remains that the first defendant abandoned her active opposition to the plaintiff's claim on the eve of trial. She did not bring forward evidence to substantiate her adversarial stance and there is no evidence before me at the end of the day verifying her assertions that the deceased lacked testamentary capacity.

11 Further, certain of the first defendant's letters (being those mentioned in the principal judgment) suggest that the first defendant's opposition was based not upon a genuine concern about a lack of testamentary capacity but upon a determination to oppose the plaintiff's appointment as a means of saving expense. Essentially, the only matter in contention was the appointment of the plaintiff as executor, not the manner in which the estate was to be divided between son and daughter because that remained the same under the 1996 will contended for by the first defendant and under the subject will.

12 In these circumstances I am of the view that the second exception applies to a limited extent only. There was some justification for the first defendant to contest the subject will because there were certain features of the situation that could be said to have excited the suspicion of the court as to the validity of the subject will. Thus, I do not consider that the first defendant should be required to pay the plaintiff's costs, notwithstanding that the first defendant is the unsuccessful party.

13 However, I cannot overlook that part of the evidence before me which suggests that the first defendant brought about and continued the dispute in order to advance certain opinions of her own which were not necessarily related to the testamentary capacity of the deceased or the validity of the subject will. Accordingly, in the exercise of my discretionary power as to costs, I do not consider that an order should be made for the first defendant to recover her costs from the estate. Having failed in respect of the issues she contended for, she must meet her own costs. On the other hand, I consider that the plaintiff has acted reasonably throughout in commencing litigation that had to be pursued in order to obtain a ruling that the subject will was valid.

14 I will make an order allowing for the plaintiff to recover its costs from the estate. I consider also that the third defendant, as a party with an interest in the matter under the second 2002 will, is entitled to an order for recovery of its costs from the estate upon the basis that it acted reasonably. There will be no order as to the costs of the first defendant to the intent that she will bear her own costs of the litigation.

15 I will hear from the parties as to the precise form of the orders to be made.