Telfer v Telfer - [2014] NSWCA 186 - NSWCA 2014 case summary — Zoe

NSWNSWCA

Telfer v Telfer

[2014] NSWCA 186

Court of Appeal (NSW)|2014-05-15|Before: Macfarlan JA, Gleeson JA, Slattery J

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2014-05-15

Before

Macfarlan JA, Gleeson JA, Slattery J

Catchwords

APPEAL - application to adduce further evidence - evidence could have been obtained through reasonable diligence for use at trial - evidence not likely to have led to a different result at trial

Source

Original judgment source is linked above.

Catchwords

APPEAL - application to adduce further evidence - evidence could have been obtained through reasonable diligence for use at trial - evidence not likely to have led to a different result at trial

Judgment (13 paragraphs)

[1]

Background 23Lyall and Carolyn married in 2004. Carolyn was Lyall's second wife. Mark was one of Lyall's three children from his first marriage. Mark and Carolyn did not get on well. 24Neil was Lyall's older brother. Lyall had been a plumber and, as the primary Judge found (at [14]), respected "Neil's wider life experience as a tertiary educated electrical engineer". 25After Lyall's divorce from his first wife, he purchased the house at Northmead, where he lived with Mark. In 2002, Mark purchased and moved into the property next door. 26Lyall made three wills in the last eight years of his life: in May 2003, in February 2009 and in June 2010. The 2009 will was drafted by Neil, but Carolyn was closely involved in discussions concerning this will and was present at its execution. By this will, Lyall appointed Neil as executor, gave a motor vehicle and his plumbing business to Mark and divided the residue of his estate equally between Carolyn and his three children (that is, one quarter each). 27Neil also drafted the Will which, as I have noted, was executed on 21 June 2010 and witnessed by Neil and Sandra. At this time, so the primary Judge found (at [29]), Lyall was facing financial difficulties. The plumbing business was deteriorating due to Lyall's increasing ill health and mounting tensions with Mark. The Will gave the plumbing business equipment to Mark, but the Northmead property and the residue of the estate were given to Carolyn. 28Carolyn was present when the Will was discussed with Lyall and when he executed the Will. About a month later Lyall and Carolyn entered into the deed to which I have referred (at [9], [11] above). 29On 2 January 2011, Lyall was admitted to Westmead Hospital (Hospital) suffering from numerous debilitating ailments. He remained there until 2 March 2011. 30On 28 March 2011, Lyall was transferred to a retirement village. Just before Lyall went into the retirement village, he told Neil that he had agreed to sell the Northmead property to Mark for $500,000 to achieve a quick sale. Lyall signed a power of attorney in favour of Neil to enable Neil to manage the sale. Contracts were exchanged on 31 March 2011. Settlement was scheduled for 27 May 2011 but Lyall died on 14 May 2011, before settlement could take place. 31Neil asked Carolyn to vacate the Northmead property on 20 May 2011, so that the sale could be completed on 27 May 2011. This, so the primary Judge found, caused Carolyn to become resentful towards Neil.

[2]

Neil's Case 32Neil's case was that he drafted the Second Codicil on the desktop computer at Lyall's home on the evening of 16 February 2011 and that Lyall executed the Second Codicil the following morning at the Hospital in the presence of Neil and Sandra as witnesses. What follows is a summary of Neil's account of the relevant events. 33Neil and Sandra drove from their home in Canberra on 15 February 2011 to visit Lyall in the Hospital. They saw Lyall at 9:00 pm that evening. During their visit, Lyall said he wanted to change the Will because: "Carol's finances are good and I want to make sure that Mark is better looked after." Lyall then instructed Neil that, apart from the plumbing equipment, one third of the estate should be given to each of Carolyn and Mark, with the remaining one third to be invested in superannuation for Mark's future. Neil advised Lyall that the easiest way to give effect to the instructions was to draft a codicil, which Lyall asked Neil to do. 34Neil and Sandra proceeded from the Hospital to the Northmead house, where they had arranged to stay with Carolyn. Together Neil and Sandra used the desktop computer in the study at the house to create the codicil. Neil dated the codicil 16 February 2011 in anticipation of Lyall executing it the following day. 35On the morning of 16 February 2011, Neil and Sandra returned to the Hospital. Neil showed the codicil to Lyall and Sandra read it to him. Lyall then signed the codicil, albeit with great difficulty because his hands were swollen and he had trouble moving his wrists. Neil and Sandra witnessed the codicil. I refer to this document, the existence of which the primary Judge doubted, as the First Codicil. 36Neil and Sandra left the ward at the Hospital to have lunch. When they returned at about 1.30 pm, Lyall informed them that he had thought about the First Codicil and wanted to change it. He said that he now wanted to delete the provision for Mark's superannuation and simply divide the residue of his estate equally between Mark and Carolyn. Neil agreed to draft a fresh codicil and to bring it to Lyall to sign the following day. 37Neil drafted the new codicil that evening (that is, the Second Codicil), on the desktop computer at the Northmead property. He drafted it to give effect to Lyall's instructions, but incorporated the following statement: "It is noted by the witnesses that the condition of amyloidosis has caused deterioration in the signature of Lyall Vincent Telfer." Neil said that he incorporated this statement because of the difficulty Lyall had experienced that morning in signing the First Codicil. 38Neil and Sandra returned to the Hospital on the following morning, 17 February 2011, to assist Lyall with his breakfast. Sandra read out the terms of the Second Codicil and then Lyall signed it. Neil observed that Lyall's wrists were stiff and tight, but he was able to sign the document, which was placed on a magazine for support. Neil then shredded the First Codicil "as it was no longer required, and to avoid any confusion". 39Carolyn was not present when Lyall signed the Second Codicil but, according to Neil, he told her of its contents on the day Lyall executed it. He observed that Carolyn made little or no response to this news. 40Neil kept custody of the Second Codicil. This was a departure from the practice adopted for the previous wills, which Neil had left in Lyall's custody.

[3]

The Primary Judgment 41The primary Judge formed an unfavourable view of Neil's evidence. He described (at [21]) Neil as assuming his role as a drafter of wills with "an easy confidence that was palpable in the Courtroom". Neil also "held a firm sense of entitlement to assume this important role in Lyall's life". 42After recounting the events prior to 15 February 2011, his Honour summarised (at [43]) the conclusion he had reached: "[Neil] bears the onus of establishing the validity of the second codicil. In the contest about the execution of the second codicil the Court has little confidence in the evidence of the two witnesses to the second codicil, Neil and Sandra. There are many contradictions in their evidence and a palpable lack of certainty between them about what happened. I have reached the view I cannot be satisfied the codicil was executed in a manner they both say they witnessed." 43The primary Judge acknowledged (at [49]) that Neil and Sandra gave similar accounts of the conversation with Lyall said to have taken place on the night of 15 February 2011. Despite the absence of contradictory evidence, his Honour did not accept their account of the reasons Lyall gave for wanting to change his Will (at [50]). In his view, their version of Lyall's declared reasons for changing his Will "[did] not make sense". Carolyn's financial position had not improved since the making of the Will and the relationship between Lyall and Mark was poor. 44The primary Judge accepted (at [53]) Carolyn's evidence that she was asleep when Neil and Sandra arrived at the Northmead property on the night of 15 February 2011. Thus she did not see Neil and Sandra use the desktop computer. His Honour found (at [53]) that: "... if the first codicil was drafted that night (and I have such little confidence in Neil's and Sandra's evidence that I am not prepared to find that it was) it was drafted without Carolyn's knowledge on Lyall's home computer. This pattern of drafting without Carolyn's knowledge continued the next night with the second codicil. I infer that this (and the following night) Neil and Sandra engaged in a lengthy period of activity affecting a close family member, Carolyn, using her own home computer, without telling her." 45His Honour also considered that there were difficulties with Neil's account of what happened at the Hospital on the morning of 16 February 2011. One difficulty was that the Hospital's nursing notes, which his Honour accepted as "accurate and complete", made no mention of the visit (at [57]). Thus, although it was clear that Neil and Sandra had visited Lyall on the afternoon of 16 February 2011, he had "no confidence in their narrative of seeing Lyall that morning ... for him to execute the first codicil". 46The primary Judge then expressed doubts about Neil's "inherently odd" account of Lyall changing his mind about the First Codicil within an hour and a half (at [61]). In particular, he thought it surprising that Neil did not then think it appropriate to bring in a lawyer (at [62]). His Honour was "not persuaded that there ever was a first codicil and a change of mind" (at [63]). 47In his Honour's view, Neil and Sandra's account of what happened on the evening of 16 February 2011 was "one of the least satisfactory parts of their mutual evidence" (at [64]). His Honour accepted that they had drafted the Second Codicil, but considered (at [66]) that the real reason they incorporated the notation about Lyall's handwriting was not just because of Lyall's amyloidosis, but because they were not confident that Lyall would be fully alert the following day. His Honour also thought it significant that Neil and Sandra had given inconsistent accounts as to whether Sandra had typed the Second Codicil on the basis of what Neil and Lyall had discussed, or Neil had given Sandra the First Codicil with handwritten changes (at [69]). Their evidence was also unclear as to who had actually typed the document on the computer (at [70]). 48Although Neil and Sandra's account of what passed between them and Lyall on the morning of 17 February 2011 was uncontradicted, the primary Judge found (at [74]) that the rest of their evidence was so unreliable that he could not accept their account. His Honour considered that his doubts as to their evidence were supported by the absence of any record of the visit in the nursing notes (at [75]). Furthermore, the handwriting experts agreed that there was evidence of so-called "pen lift" in the signature on the Second Codicil and that pen lift can indicate "simulation" or "tracing". Accordingly, his Honour was not satisfied (at [76]) that the signature on the Second Codicil could have been written consistently with the version given by Neil and Sandra. 49The primary Judge rejected the evidence of Neil and Sandra that they had told Carolyn on 17 February 2011 that Lyall had executed the Second Codicil. Their version was "not credible", either in comparison with Carolyn's denial or on the objective probabilities (at [78]). Neil's evidence that Carolyn had made little or no response to the news that Lyall had reduced her entitlement that she had under the Will without consulting her was "inherently improbable" (at [79], [80]). If Carolyn had been told, she would undoubtedly have consulted a solicitor (at [81]). It was also unlikely that Lyall himself would not have raised a change of testamentary disposition directly with Carolyn (at [83]). 50There were further reasons for rejecting the evidence of Neil and Sandra. They did not offer to give Carolyn custody of the Second Codicil (at [90]). Yet she and Lyall retained custody of the Will, without which the Second Codicil did not make sense. Neil's solicitor made no mention of the existence of the Second Codicil in the first four letters sent to Carolyn's solicitors after Lyall's death (Carolyn's solicitors' first letter regarding the Will was written two days after Lyall's death). This suggested (at [105]) that, if the Second Codicil was created before Lyall's death, "Neil was not confident about asserting its existence to Carolyn". 51The primary Judge observed (at [107]) that a court is entitled to make its own comparison between the handwriting that is admitted and disputed. But because the disputed signature looked "quite different to the undisputed specimens" his Honour was certainly not confident about drawing his own conclusions as to the authenticity of the disputed signature. Accordingly, it was necessary to pay regard to the expert handwriting evidence. 52Mr Anderson, who prepared a report on behalf of Carolyn, had concluded that there was "very strong support for the proposition" that the writer of the specimen signatures did not write the disputed signature. Mr Dubedat, who prepared a report on behalf of Neil, expressed the opinion that the disputed signature was probably a genuine signature of the author of the specimen signatures. However, Mr Dubedat qualified his opinion due to the abbreviated form of the disputed signature, the wide range of variation in the specimen signatures and the lack of specimen signatures written under similar writing conditions to the disputed signature. 53His Honour preferred Mr Anderson's opinion, for four main reasons:

While there was little pictorial similarity between the disputed signature and the specimen signatures, even the specimen signatures written during the more severe stages of Lyall's illness showed habitual features of other specimen signatures. By contrast, the disputed signature did not share these features (at [114]).
The disputed signature exhibited evidence of pen lifts in unusual places in letter formations. Such pen lifts are indicia of forgery, particularly given that the writer was able to return the pen to the paper in the exact location from which the pen had been lifted (at [115], [116]).
The disputed signature was notably smaller than any of the specimen signatures. The difference in size of the disputed signature could not be attributed to Lyall's illness because the specimen signatures included signatures from close to the height of Lyall's illness and were of "normal" size (at [117]).
The questioned signature was above the base line, whereas most of the specimen signatures were on the base line (at [118]). 54The primary Judge summarised his conclusions as follows (at [119]): "In summary the handwriting evidence supports the conclusion that the signature on the second codicil purporting to be that of Lyall Telfer was not his signature and I so find. The authorities do not require me to find that there was a forgery or who was responsible for the forgery. But, it is difficult to escape the inference that if this was not Lyall Telfer's signature ... the plaintiff who propounds it as Lyall's signature, Neil Telfer, must have been aware that it [was] not and I find that he was so aware. If Lyall's purported signature on the second codicil was not his actual signature and the only account advanced of Lyall's signature being appended to the document has Neil and Sandra as the witnesses there [is] no room to conclude that somehow by accident and without their knowledge the document was signed by someone other than Lyall."

[4]

The Application to Adduce Further Evidence 55Neil filed a motion seeking leave to adduce five further items of evidence for the purposes of the application for leave to appeal and the appeal itself. After hearing argument, the Court dismissed the motion, with costs. The Court indicated that the reasons for dismissing the motion would be given in the judgment on the application for leave to appeal. Since, as will appear, Neil has succeeded on the application for leave to appeal and on the appeal, it is necessary only to give brief reasons for rejecting the motion. 56There was no dispute as to the principles to apply. Under the Supreme Court Act 1970 (NSW), s 75A(7), the Court may receive further evidence in an appeal. However, after a hearing on the merits, the Court is to do so only in special circumstances: s 75A(8). The general principle is that special circumstances will ordinarily not be shown unless the further evidence could not have been obtained through reasonable diligence for use at the trial, the evidence is credible and there is a high degree of probability that the evidence would have led to a different result at the trial: Tjiong v Tjiong [2012] NSWCA 201 at [165]-[168] (Meagher JA, Barrett and Whealy JJA agreeing); CDJ v VAJ [1998] HCA 67; 197 CLR 172 at [111] (McHugh, Gummow and Callinan JJ). In determining whether the evidence could have been obtained through reasonable diligence, the actions or inaction of a legal representative, acting within his or her authority, are attributed to the client: Hampson v Hampson [2010] NSWCA 359 at [38] (Campbell JA, Giles JA and Handley AJA agreeing). 57Neil sought leave to adduce five items of evidence:

an unsigned version of the First Codicil said by Neil to have been kept after the signed version had been destroyed;
a computer forensic report by Mr J Le Roux, dated 6 July 2013;
a computer forensic report by Dr A Watt dated 6 August 2013;
correspondence between the parties' solicitors in October and November 2013 relating to Dr Watt's report; and
a supplementary report by Dr Watt dated 10 December 2013. 58None of these items satisfied the criteria for the admission of further evidence on the appeal. 59The unsigned copy of what was said to be the First Codicil was in the possession of Neil or his legal representative at the trial. It was therefore available to be used in the proceedings but was not tendered by Neil's counsel. The reports from the computer experts merely showed that there had been a flow of data between the desktop computer at the Northmead property and Neil's USB device on 16 February 2011. The evidence does not elucidate the contents of the information transferred to the USB. Thus it does not address whether that information comprised the draft First Codicil or perhaps the draft Second Codicil. Moreover, the proffered evidence suggests that the USB device was connected to the desktop computer at about 9:06 am on 16 February 2011, not the previous night (when Neil said he created the First Codicil on the computer). Neil did not give evidence at the trial that he connected the USB device on the morning of 16 February 2011. Indeed, Neil's evidence was that he and Sandra had already left Northmead for the Hospital before 9:00 am on 16 February 2011. The computer evidence was not likely to have led to a different result at the trial.

[6]

Principles 63In Fox v Percy [2003] HCA 22; 214 CLR 118, the joint judgment of three members of the Court reiterated statements made in earlier decisions about the need for appellate courts to respect the advantages enjoyed by trial judges at [26] per Gleeson CJ, Gummow and Kirby JJ. This is especially the case where the decision is affected by the trial Judge's impression about the credibility of witnesses who have been seen by the trial Judge, but not by the appellate court. 64Among the statements endorsed in Fox v Percy was that of Brennan, Gaudron and McHugh JJ in Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472 at 479: "... a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage' or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'." (Citations omitted.) 65It is important to appreciate however, that the joint judgment in Fox v Percy also reiterated (at [27]) that the principle articulated in cases such as Devries cannot: "... derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act [s 75A(5), (6), (10)] applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute." Their Honours also cautioned (at [30]) against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses.

[7]

The Evidence Act 66The primary Judge in the present case had the advantage of observing the key witnesses, specifically Neil, Sandra and Carolyn. He clearly preferred the evidence of Carolyn when it was in conflict with that of Neil and Sandra, although he did not accept Carolyn's evidence on some issues. But much of his Honour's reasoning was founded on what he regarded as the inherent improbability of the account given by Neil and Sandra and the inconsistencies in their evidence. This led him to reject Neil and Sandra's account, not only when it was in conflict with Carolyn's evidence but even when it was uncontradicted by the evidence of any other witness. In addition, his Honour took into account his preference for the expert opinion of Mr Anderson over that expressed by Mr Dubadet. 67The findings made by the primary Judge attributed very serious wrongdoing to Neil and Sandra. Although his Honour said in the Primary Judgment that it was unnecessary to find that there was a forgery or who was responsible for the forgery, he found that Neil knowingly propounded a document he knew had not been signed by Lyall. In the Second Judgment, his Honour expressly found (at [9]) that the case was one of "proven misconduct" by Neil as the nominated executor. The distinction between a finding that Neil forged Lyall's signature and a finding that he knowingly propounded the forged Second Codicil is a very fine one so far as Neil's culpability is concerned. 68This is a case which calls for careful consideration of s 140(2)(c) of the Evidence Act 1995 (NSW). Section 140 provides as follows: "Civil proceedings: standard of proof (1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence, and (b) the nature of the subject-matter of the proceeding, and (c) the gravity of the matters alleged." 69Section 140(2)(c) is generally regarded as giving effect to the principles stated by Dixon J in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336. In that case, Dixon J rejected (at 361) the suggestion that the common law developed a third standard of persuasion, other than proof on the balance of probabilities and proof beyond reasonable doubt. He went on to say (at 362) that in a civil case: "... it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences." 70Later cases have made it clear that observations such as that made by Dixon J are not to be understood as directed to the standard of proof in a civil case which, subject to statute, requires proof on the balance of probabilities. Rather, the observations should be understood as: "...merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170 at [2] (Mason CJ, Brennan, Deane and Gaudron JJ). (Citations omitted.) 71The primary Judge correctly stated (at [44]) that Neil bore the onus of proving on the balance of probabilities that the Second Codicil had been executed by Lyall in conformity with s 6 of the Succession Act 2006 (NSW). His Honour also correctly stated that the burden continued throughout the case and that Carolyn did not bear an onus of proving that in the circumstances of this case the Second Codicil was a forgery. But Neil was placed in a position where, in order to prove that the Second Codicil was authentic, he had to rebut the allegation that Lyall had never signed the document and that Neil had either forged Lyall's signature or been compliant in propounding a forgery. 72It has been held in New South Wales that the seriousness of an allegation of this kind should be taken into account by the trier of fact in determining whether the proponent of the document has made out his or her case on the balance of probabilities. That is so even though the proponent bears the onus of establishing the authenticity of the document on the balance of probabilities: Gawne v Gawne [1979] 2 NSWLR 449 at 454 (Glass JA, Reynolds JA agreeing). In the present case, the primary Judge did not advert to the seriousness of the allegations made against Neil and Sandra or, in the words of Dixon J, the "inherent unlikelihood" that Neil would have forged the Second Codicil or knowingly propounded a forgery. 73The language of s 140 of the Evidence Act is consistent with the approach taken in Gawne v Gawne. Section 140(2) says that in deciding whether the court is satisfied that the case of a party is proved on the balance of probabilities, it is to take into account both the nature of the defence and the gravity of the matters alleged. The sub-section does not say that the court is only to take into account the gravity of the matters alleged by the party bearing the onus of proving a case on the balance of probabilities. If the defence alleges, for example, that the proponent of a will has forged the testator's signature, s 140(2) requires the court to take into account the gravity of the allegation made in the defence when deciding whether the proponent has proved his or her case on the balance of probabilities. 74The need to take into account the gravity of the allegation made against Neil is significant in the present case because the primary Judge placed considerable weight on the "inherent" oddities (at [61]) in the evidence given by Neil and Sandra, even on matters in respect of which there was no contradictory evidence. I shall return to some of those matters, but mention should first be made of matters to which his Honour did not refer, but which bear on the inherent probability that the Second Codicil was forged and thus on whether Neil proved on the balance of probabilities that the Second Codicil was authentic.

[8]

Matters Bearing on the Likelihood of Forgery 75One curious feature of this case is that no motive to forge the Second Codicil, or to propound the Second Codicil knowing it was forged, was put to Neil in cross-examination. The primary Judge made no finding as to what could have motivated Neil to act in such an apparently flagrant and dishonest manner. Neil was not a beneficiary under the Will and stood to gain nothing from the execution of the Second Codicil. He had already been nominated in the Will as Lyall's executor, a state of affairs that remained unchanged by the Second Codicil. The Second Codicil increased Mark's share of the estate to the detriment of Carolyn, but it was never suggested that Neil was somehow concerned to advance Mark's interests at Carolyn's expense, although Carolyn appears to have had a perception that Neil would be biased towards Mark in discharging his responsibilities as executor. In any event, on Neil's unchallenged evidence, he had been aware since December 2010 that Lyall had to sell the Northmead property to repay the loan from Carolyn. He must therefore have been aware that there was little likelihood that the estate would have any substantial net value, as Neil's solicitor asserted in correspondence after Lyall's death. 76A second curious feature is that the disputed signature on the Second Codicil is, as the primary Judge remarked, "quite different" to the undisputed specimens. Mr Anderson pointed out that the disputed signature: "overall, is smaller in size [than] any of the specimen ... signatures, regardless of whether the specimen signatures were signed in apparent poor health or at [a] time of supposedly better or more stable level of health. In other words, the size of the questioned signature is inconsistent to [sic] the size exhibited by the specimen signatures." 77If Neil was intent on forging the Second Codicil, or propounding it knowing it to be forged, it is very strange that he or the forger would choose a form of signature that bears very little overt resemblance to Lyall's usual signature (with which Neil was well familiar). The primary Judge accepted (at [114]) Mr Anderson's conclusion that there was little "pictorial similarity" between the disputed signature and the specimen signatures. His Honour also accepted Mr Anderson's opinion that many of the specimen signatures written during Lyall's illness in January 2011 exhibited the habitual features of other specimen signatures, whereas these features were not present in the disputed signature. 78While the primary Judge was clearly aware that the disputed signature was markedly different to the specimen signatures he does not remark on the apparently odd circumstance that, on his findings, the forger produced a signature on the Second Codicil that appears to be quite different to any of Lyall's other signatures. This seems to raise an obvious question: why would a forger manufacture a signature bound to attract attention because of its uncharacteristic appearance? It is true that Mr Anderson said that he had seen forgeries that bore little resemblance to the genuine signature of the person concerned. But the primary Judge does not suggest an explanation as to why Neil, or someone acting at his behest, would produce a forged signature so clearly different to Lyall's usual signatures.

[9]

Matters Relied on by the Primary Judge 79The reasoning of the primary Judge identified a number of matters that, in his view, rendered the account given by Neil and Sandra improbable and supported his Honour's rejection of their evidence. There are, however, significant difficulties with aspects of this reasoning. 80The primary Judge was not prepared to find that the First Codicil was drafted on the night of 15 February 2011, nor that there ever was a First Codicil signed by Lyall. One reason given for this conclusion, and for the finding that the Second Codicil was not genuine, was that the nursing notes did not record that Neil and Sandra visited Lyall at the times they claimed he had signed the First and Second Codicils (that is, on the mornings of 16 and 17 February 2011). His Honour proceeded (at [57]) on the basis that the nursing notes were the "product of a reliable and disciplined record keeping system" and were "accurate and complete". It is true that the notes occasionally record visits by family members, but there were many days on which no visits by family members were recorded. It seems unlikely that Lyall was not visited on any of these days by Carolyn or any other members of his family, especially since his Honour found that Carolyn visited often (at [45]), and that she saw Lyall on a daily basis between 17 February 2011 and his death (at [82]). There was no independent evidence that the staff of the Hospital were required to record every visit received by a patient by a member of his or her family. It is not clear why his Honour thought that such a system was in place and the notes themselves do not suggest that the staff were required to record all visitors to the ward. The absence of any reference in the notes to the visits by Neil and Sandra at the critical times does not render their account improbable. 81The primary Judge rejected Neil and Sandra's account of the reasons given by Lyall, on the evening of 15 February 2011, for changing his Will so as to increase Mark's share of the residue of the estate. His Honour considered (at [50]) that the reasons recounted by Neil - that Carolyn's finances were good and that Lyall wanted to make sure Mark was looked after - made no sense. This was said to follow from the fact that Carolyn's financial position "had not improved" and from Carolyn's evidence (accepted by the primary Judge) that the relationship between Lyall and Mark was not good. 82Neil did not claim that Lyall said that Carolyn's finances had improved; their claim was that Lyall had said that her finances were "good". The fact is that she owned a house, on the security of which she had raised $400,000 for the purpose of making a loan to Lyall. The loan was secured on the Northmead property which, under the terms of the deed, was to be sold within a short time and the proceeds used to discharge Lyall's indebtedness to Carolyn. Presumably, once the loan was repaid, Carolyn would own an unencumbered property of not inconsiderable value. Notwithstanding the primary Judge's conclusion, the objective evidence does not suggest that it is inherently improbable that Lyall told Neil and Sandra that Carolyn's finances were good. He might well have held the view that Carolyn's finances were good, at least in comparison to his own precarious financial position. 83Whatever Carolyn's perception of the relationship between Lyall and Mark, it is not inherently improbable that, for whatever reason, Lyall formed the view that he should make better provision for Mark in his Will. A testator may have all sorts of reasons for changing his or her mind about prior testamentary positions. A testator may also choose to communicate wishes to a potential executor or drafter of a testamentary document that appear to be somewhat at odds with the apparent nature of the relationship between the testator and an intended beneficiary. 84The primary Judge described the conversation recounted by Neil and Sandra, in which Lyall informed them that he wanted to change the First Codicil that he had just executed, as "inherently odd". The change of mind involved increasing Carolyn's share of the residue of the estate (from one third to one half). While it may be unusual for a testator to change his or her mind so quickly, a change of mind of this kind is hardly implausible, particularly if the testator is seriously ill in hospital. 85Similarly, it is hardly implausible that Neil did not consider it necessary to bring in a lawyer to give effect to Lyall's new instructions. Neil's conduct in drafting the Will and the Second Codicil (leaving aside the First Codicil) may have been unwise, but if it was, Neil had been unwise on other occasions. His evidence was that he had drafted wills for a number of people. Moreover, the primary Judge had already remarked on Neil's "firm sense of entitlement" to assume the role of drafter of Lyall's testamentary dispositions. The continuation of that role, through the drafting of the Second Codicil, would seem to have been quite consistent with Neil's character as assessed by the primary Judge. 86A further reason the primary Judge gave for doubting the evidence of Neil and Sandra concerned the notation on the Second Codicil. His Honour accepted (at [65]) that a conversation probably took place between Neil and Sandra on the evening of 16 February 2011, to the effect that the Second Codicil should contain a notation recording Lyall's difficulty in writing due to his amyloidosis. But his Honour found (at [66]) that because the nursing notes for 16 February 2011 referred to Lyall being drowsy, the real reason for including the notation relating to the deterioration in Lyall's signature was that Neil and Sandra were not confident that Lyall would be fully alert on 17 February 2011, when he was to execute the Second Codicil drafted by Neil. 87As the clinical notes record, Lyall was in fact suffering from amyloidosis. It is unclear why the primary Judge chose to reject the uncontradicted evidence of Neil and Sandra as to their reasons for incorporating the notation into the Second Codicil, when their evidence accorded both with Lyall's condition and with the terms of the notation itself. In any event, given that the notation was incorporated in the unexecuted Second Codicil on the night of 16 February 2011, the form of the document, if anything, adds credence to Neil and Sandra's evidence that Lyall had executed the First Codicil that morning but they observed that he had experienced difficulty when signing his name. 88The primary Judge was critical of Neil for not informing Carolyn about the existence of the Second Codicil. (His Honour rejected (at [81]) Neil's evidence that he had told Carolyn that Lyall had changed his Will on the day he executed the Second Codicil.) His Honour regarded it as significant that in a letter of 20 May 2011, six days after Lyall's death, Neil's solicitors stated that they had instructions to obtain probate, but made no mention of the Second Codicil (at [102]). His Honour also noted that Neil's solicitors did not reply to a letter from Carolyn's solicitors, in which issues were raised concerning the sale of the Northmead property, until 22 June 2011. 89Insofar as the primary Judge was implying that it was not until the letter of 22 June 2011 that Neil's solicitors revealed the existence of the Second Codicil, that is not correct. Neil's solicitors placed a notice in the Sydney Morning Herald of 25 May 2011, stating that Neil intended to apply for probate of the Will and Second Codicil. Whatever the position prior to Lyall's death, it is difficult to see how any inferences adverse to Neil can be drawn from the eleven day gap between Lyall's death and the appearance of the advertisement.

[10]

The Handwriting Evidence 90The strongest evidence that Lyall's signature on the Second Codicil was forged was the opinion of the handwriting expert, Mr Anderson. His view, it will be recalled, was that there was "very strong support for the proposition" that Lyall did not sign the Second Codicil. Mr Dubedat, on the other hand, concluded that the signature on the Second Codicil was "probably genuine". Each adhered to his opinion when giving joint oral evidence and in cross-examination. The primary Judge preferred Mr Anderson's opinion. 91Perhaps the most cogent point supporting Mr Anderson's opinion was his identification of pen lifts in unusual places in the disputed signature. Mr Anderson's examination suggested that the writer of the disputed signature was able to replace the pen at precisely the correct spot when resuming writing the signature after the process had been interrupted. Mr Anderson accepted that pen lifts sometimes occur within genuine signatures and that, indeed, some were apparent in Lyall's specimen signatures. However, he opined that any pen lift in the earlier signatures were obvious, as one would expect with a person having some difficulty in writing. 92Mr Anderson's evidence clearly provided support for his Honour's finding that the disputed signature was not that of Lyall. But Mr Anderson's evidence was not definitive and he did not suggest that it was beyond dispute that the signature on the Second Codicil was not genuine. Mr Dubedat disagreed with Mr Anderson's analysis on the ground that, although there were anomalous features in the disputed signature that might be consistent with pen lifts, he could find no evidence that they were actually pen lifts. 93In assessing the significance of the expert handwriting evidence, other matters need to be taken into account. In his report of 15 March 2012, Mr Anderson indicated he had been instructed that Lyall was suffering from various medical conditions when admitted to the Hospital. His report listed some of the conditions. Mr Anderson noted that on the morning of 17 February 2011, when the Second Codicil was supposedly signed, the nurse recorded at 6:50 am that Lyall was "alert & orientated". Mr Anderson discerned a gradual improvement in Lyall's writing ability and pen control in the specimen signatures written after he had entered the Hospital, when his condition had apparently stabilised. 94Mr Anderson was not made specifically aware of the medical evidence directed to Lyall's ability to write on 17 February 2011. Dr Spencer, a specialist rheumatologist, saw Lyall on that day regarding his acute arthropathy. According to Dr Spencer, on that day Lyall had "acute crystal arthritis, most likely gouty in the right wrist". Dr Spencer considered that the condition would have significantly impaired Lyall's ability to write, a problem compounded by a tremor that was likely to have affected his signature. In Dr Spencer's opinion, it would have been possible for Lyall to sign a document, but the signature might have been significantly different from his normal signature. In his oral evidence, Dr Spencer said that Lyall's wrist would have been "exquisitely painful". 95Dr Leaf, a Senior Registrar in Emergency Medicine, agreed that acute gout would have affected Lyall's fine motor skills, although Dr Leaf would have expected Lyall's signature to be larger than normal, rather than smaller (as was in fact the case). Dr Leaf adhered to his view in oral evidence, but acknowledged that Dr Spencer had the advantage of seeing Lyall on the day in question. 96The medical evidence gives some support to the version of events given by Neil and Sandra. In particular, it provides a plausible explanation for Lyall's signature on the Second Codicil being so different from the specimen signatures. The primary Judge gave reasons for preferring Mr Anderson's opinion to that of Mr Dubadet. But his Honour, although referring in general terms to Lyall's debilitating illnesses, did not address the medical evidence going directly to Lyall's ability to sign his name on 17 February 2011. 97In his cross-examination, Mr Anderson said that the only information he had about Lyall's posture when the Second Codicil was signed was that Lyall was bedridden at the time. Mr Anderson accepted that such matters as the angle at which Lyall was lying or sitting when signing the document could be an "issue". However, as he had no information as to these matters, he assumed that Lyall was bedridden in much the same way as he had been when some of the specimen signatures were written. 98In determining the weight to be given to Mr Anderson's opinion as to whether Neil was complicit in propounding a forged codicil, some consideration should have been given to the difficulties Lyall would have experienced when attempting to sign the Second Codicil. In Sumner v Booth [1974] 2 NSWLR 174 at 178, Holland J referred to the dangers of attempting to make a judgment about the effect of ill-health upon a person's handwriting. His Honour commented that it was often the case that: "the suspicion which is put forward as the basis of a challenge to the handwriting of a person relates to the handwriting of old people, people on their death-beds or people during a time of serious illness when, in order to get their affairs in order, they desire to make a will."

[11]

Application of the Principles 99The decision of the primary Judge partly depended on his assessment of the credibility of the key witnesses, Neil, Sandra and Carolyn. Assuming a grant of leave to appeal, the scope of appellate review is therefore limited by the principles stated or affirmed in Fox v Percy. Despite the constraints on appellate review that flow from those principles, I think that appellate intervention is warranted here for two reasons. 100The first is that the primary Judge does not appear to have taken into account the gravity of the findings that attributed very serious, if not criminal conduct to Neil and Sandra. This is not merely a matter of a court omitting to refer to s 140 of the Evidence Act or the principle stated in Briginshaw but nonetheless accepting the need to take into account the gravity of the allegations in the fact finding process. The judgment does not refer to the proposition that a court should not lightly make a finding that a party to civil litigation has been guilty of fraudulent or criminal conduct. Had his Honour borne that proposition steadily in mind, it is very likely that he would have paid closer attention to the apparent absence of motive for forgery and the curious circumstance that the disputed signature was so different from Lyall's specimen signatures. Each of these matters was relevant to the probability that Neil and Sandra were prepared to engage in fraudulent conduct and to conceal their misdeeds and thus was relevant to whether Neil had established, on the balance of probabilities, that the Second Codicil had been executed by Lyall. 101The second reason is that the primary Judge's assessment of the credibility of Neil and Sandra was based not so much on their demeanour in the witness box (although this played an important part in his Honour's reasoning), but on inferences from the evidence that his Honour considered were inconsistent with, or at least cast serious doubt on, their version of events. His Honour took care to identify the matters he thought were important and gave his reasons for regarding them as undercutting the credibility of the evidence given by Neil and Sandra. 102As I have explained, a number of these matters cannot fairly be regarded as inconsistent with or even as casting any doubt on the account given by Neil and Sandra. Had his Honour not placed weight, for example, on the absence of references in the Hospital records to their claimed visits to Lyall or on what his Honour said (incorrectly in my view) was their implausible account of the conversation with Lyall on the evening of 15 February 2011, it is doubtful that he could have formed the same wholly unfavourable view of their truthfulness. 103In my opinion, a proper exercise of the appellate function, as explained in Fox v Percy at [27], requires this Court, subject to the grant of leave, to set aside the findings of serious misconduct made by the primary Judge. While those findings were based to a considerable extent on the credibility of Neil and Sandra, the findings overlooked the seriousness of the allegations made against them, did not take into account matters that bore on the likelihood that forgery had been committed and depended on adverse inferences drawn from the material that did not justify those inferences.

[12]

What Orders Should be Made? 104Subject to the question of parties, in the very unusual circumstances of this case Neil should be granted leave to appeal even though his appeal is now limited to the challenge to the adverse costs orders made by the primary Judge. Those orders expose him (but not Lyall's estate) to a substantial liability (exceeding $100,000). The orders are based on findings of very serious misconduct that, for the reasons I have given, are flawed. I accept that it is not the law that anyone who has been found to be dishonest should be granted leave to appeal an order to challenge the finding: Zelden v Sewell [2011] NSWCA 56 at [17] (Campbell JA, Young JA agreeing). But the issues have been fully argued and the difficulties with the reasoning of the primary Judge exposed. 105Perhaps Neil gained an advantage by filing a draft notice of appeal that sought a grant of probate, a claim now abandoned. It is possible that if the draft notice of appeal had been limited at all times to a challenge to the costs orders, an order would not have been made for the concurrent hearing of the leave application and the appeal. However, Carolyn bears some responsibility for not drawing the fact of Mr Fairfax's appointment and his non-joinder to the attention of the Court at an earlier stage. Had she done so, the course of the proceedings in this Court may have been different. 106The case for refusing leave to appeal would have been stronger if Neil had been solely responsible for instituting and pursuing futile proceedings. But it was Carolyn who commenced the formal dispute by filing, on 11 July 2011, a caveat against the grant of probate to Neil. Thereafter, Carolyn asserted that Lyall had not signed the Second Codicil. Neil then commenced the proceedings seeking a grant of probate in solemn form. Both parties pursued the litigation with vigour and persistence. Both parties knew that the estate was or was very likely to be insolvent, but each incurred very substantial costs nonetheless. 107In Fox v Percy, the joint judgment upheld a decision of the New South Wales Court of Appeal, which had allowed an appeal from judgment in favour of the plaintiff. The Court of Appeal overturned credit-based findings and substituted a judgment for the defendant. The joint judgment in the High Court pointed out (at [44]) that a principal purpose of providing for an appeal by way of rehearing (Supreme Court Act, s 75A(5)) is to ensure within the appellate process finality of litigation, correctly decided. Since it was unlikely that the evidence would change if a second trial was held, the Court considered it appropriate to finalise the litigation. 108McHugh J in Fox v Percy reached the same conclusion (at [104]). His Honour distinguished State Rail Authority (NSW) v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; 73 ALJR 306, where the High Court allowed an appeal from a judgment based on findings as to credit and ordered a new trial. McHugh J said that the difference was that in SRA v Earthline Constructions there was a substantial amount of evidence supporting the plaintiff's claims that had not been dealt with in a satisfactory way. His Honour also pointed out that in SRA v Earthline Constructions, the parties apparently proceeded on the basis that if the appeal succeeded, a new trial was required. 109In the present case, the evidence as to the authenticity of the signature in the Second Codicil has not been dealt with in a satisfactory manner, but it cannot be said that the evidence establishes on the balance of probabilities that the disputed signature was that of Lyall. There remain some curious features in the evidence of Neil and Sandra that could warrant further consideration, such as their apparent failure to inform Carolyn of the existence of the Second Codicil and Neil's destruction of the First Codicil "to avoid any confusion". In addition, the expert handwriting evidence tends to suggest that the disputed signature was not genuine, although the opinions of the experts might require re-evaluation in the light of facts not known to the experts when they prepared their reports and gave evidence. 110Subject to the observations I make later concerning the joinder of the administrator of Lyall's estate, finality can and should be achieved in this litigation. The Court should set aside the costs orders made by the primary Judge that require Neil personally to pay the costs of the proceedings on an indemnity basis. It would be unjust to allow those orders to remain in place having regard to the conclusion that the findings underpinning the orders were flawed. Equally, however, it would not be in the interests of justice to order a new trial solely for the purpose of determining which party should bear the cost of these bitterly contested proceedings. To do so would be to condemn the parties (and the Court) to further wasteful and disproportionately expensive litigation for no useful purpose. Since the question of the disputed signature on the Second Codicil remains unresolved, and the proceedings were essentially futile from the very outset, the primary Judge's order that Neil should not recover his costs out of the (insolvent) estate should not be disturbed. 111Section 75A(10) of the Supreme Court Act empowers the Court to make any order which the nature of the case requires. In my view, the appropriate orders in the present circumstances are: 1Grant the applicant leave to appeal limited to the costs orders made by the primary Judge on 14 June 2013. 2Allow the appeal. 3Set aside Orders 5 and 6 made by the primary Judge on 14 June 2013. 4In lieu thereof, order each party pay his or her costs of the proceedings. 112In my view, Carolyn should pay 75 per cent of Neil's costs of the appeal (including the application for leave to appeal). Some allowance should be made for the fact that Neil abandoned at a late stage his claim to be granted probate of the Will and the Second Codicil. I therefore propose the following additional orders: 5The respondent pay 75 per cent of the appellant's costs of the appeal (including the application for leave to appeal, but excluding the costs of the motion to adduce further evidence). 6The respondent, if otherwise qualified, have a certificate under the Suitors Fund Act 1951 (NSW). 113At the time Neil filed the summons for leave to appeal, the Trustee had been appointed administrator of Lyall's estate. The Trustee was joined as a respondent to the summons. Neil no doubt was advised to take this course because, at that stage (and indeed until the hearing of the application for leave to appeal), he was seeking orders granting him probate of both the Will and Second Codicil. The Trustee, as the duly appointed administrator of the estate, was clearly a necessary party to Neil's application in this Court. 114Neil has now abandoned his claim to be granted probate of the Will and Second Codicil. The only remaining issue in the application for leave to appeal is whether the costs orders against Neil should be set aside. Lyall's estate has no direct interest in that question. Thus if the costs orders made by the primary Judge had been the only issue arising on the application for leave to appeal, Mr Fairfax may not have been a necessary party to the application. But given the relief originally sought by Neil, once Mr Fairfax replaced the Trustee as administrator, Neil should have applied for an order substituting Mr Fairfax for the Trustee as a party to the application for leave to appeal: see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1 at [131]-[132] (per curiam); Ross v Lane Cove Council [2014] NSWCA 50 at [51]-[55] (Leeming JA, Meagher JA and Tobias AJA agreeing). 115Mr Fairfax may now have no interest in whether the costs orders made against Neil should be set aside or whether the Court should disturb the findings that underlie the orders. On the other hand, it is possible that Mr Fairfax, as the administrator of Lyall's estate, may wish to contend that the costs orders made by the primary Judge and the underlying findings (including the finding that the Second Codicil was not validly executed) should not be disturbed by this Court: cf Ross v Lane Cove Council at [37]-[42]. Alternatively, it is possible that Mr Fairfax may wish to seek orders that a new trial should be held on the question of whether the Second Codicil was validly executed. If that course were to be adopted, an issue might well arise as to whether other persons should be joined as parties to avoid a multiplicity of suits: cf Supreme Court Act, s 63. 116Having regard to the unfortunate procedural history, I think that if Neil is to have the benefit of the orders I propose he should join Mr Fairfax as a respondent to the application for leave to appeal. That will give Mr Fairfax the opportunity, if he so wishes, to make submissions to this Court as to whether the orders I propose should be made or whether the Court should make other orders and procedural directions that may facilitate the orderly administration of the estate. 117The orders I propose should now be made are as follows: 1 Direct the applicant (Neil Telfer) to file and serve a motion seeking leave to join the administrator of the estate of Lyall Telfer (deceased) (Administrator) as a respondent to the appeal. 2 Direct the applicant to file and serve the motion and any supporting affidavit within fourteen days. 3 Direct that in addition to the motion and supporting affidavit, the applicant serve on the Administrator within fourteen days copies of this judgment and the appeal books. 4 The matter be relisted for directions at 9:30 am on 3 July 2014.

Parties

Applicant/Plaintiff:

Telfer

Respondent/Defendant:

Telfer

Legislation Cited (5)

Under the Supreme Court Act 1970(NSW)

Suitors Fund Act 1951(NSW)

Supreme Court Act 1970(NSW)s 75A, ss 63, 75A, 101(2)

Evidence Act 1995(NSW)s 140

Succession Act 2006(NSW)s 6

Cases Cited (15)

HEADNOTE [This headnote is not to be read as part of the judgment] The applicant sought probate in solemn form of the will and codicil of his late brother. The application for the grant of probate was opposed by the brother's widow on the ground that the brother had not executed the codicil. The evidence suggested that the estate was insolvent. The primary Judge found that the signature on the codicil was not that of the brother and that the applicant had knowingly propounded the false codicil. The proceedings were dismissed and the applicant was ordered to pay costs personally, without any indemnity from the estate. The summons seeking leave to appeal joined as a respondent the NSW Trustee and Guardian, who had been appointed as administrator of the estate. Prior to the hearing of the application for leave to appeal the NSW Trustee and Guardian declined to act and was replaced by a new administrator, although the Court was not informed of this until the hearing. The administrator was not joined as a party. During the hearing in the Court of Appeal the applicant withdrew his claim for a grant of probate. He pursued the application for leave to appeal only in relation to the adverse costs order. The Court held: 1 In making finding of serious misconduct against the applicant, the primary Judge was obliged to take into account the gravity of the allegations: s 140(2)(c) of the Evidence Act 1995 (NSW). The primary Judge, in rejecting the uncontradicted evidence of the applicant and his wife (a witness to the Codicil) and not taking into account matters bearing on the probability that the Codicil had been forged, overlooked that requirement: at [65]-[70], [90]. Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170; Gawne v Gawne [1979] 2 NSWLR 449; referred to. 2 The primary Judge's findings as to the credibility of the applicant and his wife were based, not only on their demeanour in the witness box, but also on a number of adverse inferences drawn from the evidence that his Honour considered cast serious doubt on their account. A number of these matters could not fairly be regarded as casting doubt on the appellant's and his wife's account: [75]-[85], [97]-[98]. Fox v Percy [2003] HCA 22; 214 CLR 118; Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472; referred to. 3 Subject to the question of proper parties, a proper exercise of the appellate function justified granting the applicant leave to appeal and allowing the appeal so as to set aside the costs orders: [97]-[99]. 4 As the new administrator should have been a party to the application for leave to appeal, directions should be made for the applicant to join the new administrator as a respondent. This will give the administrator an opportunity to make submissions as to whether orders should be made that involve, in effect, setting aside the finding that the codicil was forged: [113]-[116]. John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1; Ross v Lane Cove Council [2014] NSWCA 50; referred to.

The Proceedings at First Instance 4The proceedings were commenced by the applicant, Neil Telfer, in his capacity as executor of the estate of his late brother, Lyall Telfer, who died on 14 May 2011. The defendant was Carolyn Telfer, Lyall Telfer's widow. It is convenient to refer to the parties, the testator and members of his family by their first names. By doing so, I intend no disrespect. 5Neil commenced the proceedings on 21 October 2011 seeking a grant of probate in solemn form of Lyall's will dated 21 June 2010 (Will) and a codicil purportedly executed by Lyall on 17 February 2011. I shall refer to the codicil as the Second Codicil, for reasons that will become apparent. (A will is proved in solemn form when it is propounded in an action to which interested parties are joined and the court rules on validity after hearing evidence: LG Handler and R Neal, Mason and Handler Succession Law and Practice New South Wales at [1181.2]). There was no issue in the proceedings as to the validity of the Will, which was drafted by Neil (who is not a lawyer) and was witnessed by Neil and his wife, Sandra Telfer. 6The validity of the Second Codicil, which was also drafted by Neil and witnessed by Neil and Sandra, was, however, fiercely contested. The Second Codicil was in the following form: 7Carolyn's amended defence pleaded that the Second Codicil was not valid because the signature purporting to be that of Lyall was not his signature. Carolyn also pleaded that Lyall lacked the requisite capacity to make the Codicil. By an amended cross-claim Carolyn sought an order granting letters of administration of the Will to a solicitor nominated by her and an order passing over Neil as the executor named in the Will. 8Evidence was given at the trial by Neil, Sandra and Carolyn, and each was extensively cross-examined. Evidence was also given by handwriting experts and medical practitioners. Mark Telfer, Neil's son, did not give evidence. 9The primary Judge observed (Neil Ronald Telfer as Executor for the Estate of the late Lyall Telfer v Carolyn Telfer [2013] NSWSC 412 (Primary Judgment) at [5]) that it was "curious" that the litigation was being conducted at all. Both parties had accepted that the estate was insolvent. As his Honour found, the only substantial asset in the estate was the sum of about $500,000, expected from the completion of the sale to Mark of Lyall's residence in Northmead. However, Carolyn had a claim for approximately $460,000 against the estate pursuant to a deed dated 26 July 2010, while Mark had a claim against the estate for unpaid employee entitlements and other debts due to him of approximately $200,000. 10It would seem from the acrimonious solicitors' correspondence exchanged at about the time the proceedings were instituted that there was no real doubt that the estate was then insolvent. For example, in a letter dated 26 October 2011, Neil's solicitors, in rejecting Carolyn's demand that Neil renounce probate, stated that the Second Codicil had no practical significance because the liabilities of the estate exceeded its assets, even if Mark's claims as a creditor of the estate were not accepted. 11Although Neil's solicitors did not concede the point in the correspondence, it would seem that there is no real doubt that Carolyn's entitlement under the 26 July 2010 deed is secured by an equitable charge over Lyall's residence. The deed recited that Lyall had been unable to service the debts secured over his property and that Carolyn had offered to take out a loan in the sum of $400,000 to be secured over her own property and to use the funds to discharge Lyall's debts. Lyall undertook to sell the Northmead property within twelve months and to apply the proceeds to repay Carolyn's indebtedness to her lender and to reimburse her for mortgage instalments she had paid in the meantime. The deed provided that Carolyn's solicitor would hold the certificate of title to the Northmead property pending Lyall meeting his commitments. Lyall also consented to the lodging of a caveat over the Northmead property to secure Carolyn's interest. In these circumstances, in the absence of other grounds for attacking the deed, it is difficult to see how an executor or administrator, impartially exercising his or her functions, could deny Carolyn the status of a secured creditor of the estate. 12The primary Judge heard the case over two days in August and October 2012 and delivered the Primary Judgment on 24 April 2013. His Honour found (at [119]) that the Second Codicil was not signed by Lyall and that Neil was aware that the signature was not Lyall's. In view of this finding, his Honour did not need to decide the question of Lyall's testamentary capacity. 13In a supplementary judgment delivered on 21 June 2013, his Honour concluded that Neil should be passed over as executor of the Will on the ground that "the present case is one of proved misconduct, not just of a conflict of interest": Neil Ronald Telfer as Executor for the Estate of the late Lyall Telfer v Carolyn Telfer (No. 2) [2013] NSWSC 823 (Second Judgment) at [9]. His Honour directed that the President of the Law Society nominate a person suitable to act as the administrator of Lyall's estate. 14The primary Judge found in the Second Judgment (at [23]) that it was Neil's deliberate conduct in propounding the Second Codicil, which he knew did not contain Lyall's signature, that caused costs to be incurred in the proceedings. His Honour also found (at [19]) that Neil could not rely on the general principle that an executor is entitled to be indemnified for costs out of the estate if he or she has acted honestly, since "Neil's pursuit of the litigation was not honestly mistaken". Accordingly, Neil was ordered to pay the costs of the proceedings personally, without the benefit of any indemnity out of the assets of Lyall's estate. 15According to information supplied by the applicant's representatives after the hearing of the appeal, the President of the Law Society nominated the New South Wales Trustee and Guardian (Trustee) to act as the administrator of the estate. Orders entered in Justice Link indicate that in fact the President of the Law Society was unable to nominate a suitable person and, in consequence, the Supreme Court ordered on 19 August 2013 that the Trustee be appointed as administrator. In any event, the Trustee declined to act and filed a motion to discharge the order appointing it as the administrator of the estate. On 4 November 2013, the primary Judge set aside the appointment of the Trustee and acceded to Carolyn's motion to appoint Mr KJ Fairfax, an independent legal practitioner, to act as administrator of the estate: Neil Ronald Telfer as Executor for the Estate of the late Lyall Telfer v Carolyn Telfer (No 3) [2013] NSWSC 1614. The orders appointing Mr Fairfax made no mention of either the Will or the Second Codicil, although the judgment appointing him suggests that it may have been intended to grant him Letters of Administration only of the Will (at [7], [28]). It appears that Mr Fairfax continues to be the administrator of the estate.

The Proceedings in this Court 16Neil's summons for leave to appeal was filed on 10 September 2013, a notice of intention to appeal having previously been served. Leave was required because Neil accepted that the matters in issue on the appeal involved an amount less than $100,000: Supreme Court Act 1970 (NSW), s 101(2)(r). The summons named the Trustee as the second respondent. At that stage, the Trustee was the appointed administrator of Lyall's estate. 17The draft notice of appeal accompanying the summons for leave to appeal seeks orders setting aside the orders made by the primary Judge and granting Neil probate in solemn form of the Will and Second Codicil. The notice of appeal also seeks an order that Carolyn pay Neil's costs of the proceedings below and of the appeal. 18On 10 September 2013, Neil filed a motion in this Court seeking a stay of the administration of Lyall's estate and a stay of the costs orders made by the primary Judge, pending determination of the application for leave to appeal and the appeal. Carolyn and the Trustee were named as respondents to the motion, but only Carolyn appeared at the hearing of the motion on 30 September 2013. On that day, Meagher JA ordered that the administration of the estate be stayed to the extent of making any payments or distributions to creditors until the disposition of the application for leave to appeal and, if leave was granted, of the appeal: Telfer v Telfer [2013] NSWCA 330. Orders were subsequently made for a concurrent hearing of the leave application and of the appeal. 19Despite the appointment of Mr Fairfax as the administrator of the estate on 4 November 2013, Neil did not seek to amend his summons for leave to appeal or his draft notice of appeal to substitute Mr Fairfax for the Trustee as a respondent. Since the draft notice of appeal seeks orders allowing the appeal and granting Neil probate of the Will and Second Codicil in solemn form, Mr Fairfax, as administrator of the estate, was a necessary party to the application for leave to appeal. 20The written submissions of the parties filed in this Court made no reference to the fact that Mr Fairfax had been appointed in place of the Trustee to act as administrator of the estate. Had they done so, it would have been readily apparent that the application for leave to appeal was not properly constituted as to parties. Instead the matter only came to light in the course of argument in this Court. Prior to that development, but well into the second day of the hearing, Mr Rollinson, who appeared for Neil, had informed the Court that Neil no longer sought an order granting him probate of the Will and Second Codicil in solemn form. 21In his summary of argument on the application for leave to appeal, Neil stated that he: "has nothing to gain on appeal except the restoration of his and his wife's reputation, the satisfaction of knowing that he will carry out the task that Lyall gave him as nominated executor, and the removal of a crushing costs burden." Since Neil no longer seeks to be restored to the position of executor of the estate, his interest in the appeal is limited to the restoration of his reputation and the setting aside of the costs orders made by the primary Judge. An appeal to the Court against a judgment as to costs only requires the leave of the Court: Supreme Court Act 1970 (NSW), s 101(2)(c). Thus amending the draft notice of appeal to challenge only the costs orders made by the primary Judge would not alter the need for Neil to seek leave to appeal. 22I shall return later to the significance of the fact that Mr Fairfax has not been made a party to the application for leave to appeal.

[1992] HCA 66

[1999] HCA 3