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Capacity, Wills

She loves me, she loves me not …

It can be hard enough to deal with being de-friended on Face Book.  But what about when your mother favours the sibling who lived with her for her whole life over you?

Rule and Belcher v Rule and Charles Whata J grappled with this reality when an elderly mother entered into a new will days after suffering a stroke.

Some interesting factoids:

  • Muriel died in August 2011
  • Her last will was made on 19 July 2007
  • The matter was heard over 6 days in 2016, 8 days after she suffered a stroke event – at the time she was in her 90s
  • The estate’s legal costs were approximately $112,000.

Enough of the numbers.  What about the facts?  Simply:

  • Muriel had three children, all of whom the court found to be loving and caring
  • One of her children, Louise, had already inherited her father’s share of the family home
  • Under the will made 8 days after Muriel’s stroke, Louise inherited the her mother’s half share of the house
  • Louise’s siblings felt betrayed and were of the view that either Muriel did not have mental capacity or was subject to duress.

Neither duress or incapacity were found.  The allegation regarding capacity was considered and is worthwhile reading for interested parties.  The points that warrant particular consideration are as follows:

  • no formal cognitive impairment testing was undertaken at the time of the stroke event (this is not a criticism but an observation and – a word to families – maybe if there is ever the opportunity – ask for one)
  • expert evidence cannot be presumed to reach the same conclusion – evidence by a person with proximity to the relevant time or event can be expected to be preferred
  • a lawyer drafting a will, especially for an elderly client, would serve the client well by recording evidence that the client understood the terms of the will
  • a lawyer drafting any will where the effect of the will is that the will can provide foundation for challenge would serve the client well by documenting evidence as to what was explained to the client.  Care to ensure that all supporting correspondence is in accordance with the will is also recommended
  • the time at which capacity is assessed is at the time of the relevant act or decision
  • the enquiry concerns capacity to understand rather than actual understanding
  • evidences of misstatements by a will-maker will be treated as no more than the same without more
  • if the will is rational on its face those seeking to overturn it  must establish a tenable case that the will-maker lacked capacity. If this is the case then the onus shifts to the parties seeking to uphold the will to show that the will-maker had capacity
  • importantly, where a will is professionally prepared and the lawyer has formed the view that the will-maker has capacity, the Courts should not too readily overturn that view, particularly on the basis of expert evidence, where the expert did not interact with the testator. See [22] where reference is made to the English Court of Appeal in Hawes v Burgess, where it was said:

“[60] My concern is that the courts should not too readily upset, on the grounds of lack of mental capacity, a will that has been drafted by an experienced independent lawyer. If, as here, an experienced lawyer has been instructed and has formed the opinion from a meeting or meetings that the testatrix understands what she is doing, the will so drafted and executed should only be set aside on the clearest evidence of lack of mental capacity. The court should be cautious about acting on the basis of evidence of lack of capacity given by a medical expert after the event, particularly when that expert has neither met nor medically examined the testatrix, and particularly in circumstances when that expert accepts that the testatrix understood that she was making.”

With regards to undue influence, as noted at [27], the “threshold principles for undue influence in a will-making context were also canvassed by Winkelmann J in Green v Green and expressly approved by the Court of Appeal. … They are:

(a) The overall burden of proof rests on the person seeking to establish undue influence.

(b) The burden of proof is the balance of probabilities … where the allegation made is serious (such as an allegation of dishonesty or criminal offending), the Court will require strong evidence to be satisfied on the balance of probabilities that that occurred.

(c) The person asserting undue influence must show that the alleged influence led to the making of the impugned transaction, and that the influence was undue in the sense that the transaction was not the result of the free exercise of an independent will on the part of the person at whose expense the transaction was made.

(d) The question of whether a transaction was brought about by undue influence is a question of fact. A party can succeed in establishing this either directly by proving “actual undue influence” or recourse to an evidential presumption which arises where it is established that:

(i) the person said to have been subject to undue influence placed trust and confidence in the other; and

(ii) the transaction called for explanation.

(e) Whether there is a relationship of trust and confidence can either be established factually or by reference to a class of specific relationships such as lawyer/client; parent/child; doctor/patient. In the latter category the law presumes irrebutably that one party had influence over the other. The presumption is only as to proof of influence. The person alleging undue influence will still need to establish a transaction calling for an explanation.

(f) Whether a transaction calls for an explanation depends on the circumstances of the case. The question is simply whether “failing proof to the contrary, [the transaction] was explicable only on the basis that undue influence had been exercised to procure it”.

(g) Once the person claiming undue influence has established both the relationship of trust and confidence and a transaction calling for explanation, the evidential burden shifts to the person seeking to uphold the transaction to show that the transaction was not the result of undue influence. This however should not obscure the position that the overall burden of proof will always rest on the person alleging undue influence.

(h) The presence of independent advice is one of many factors that may be taken into account in determining whether undue influence is proved. Whether the independent advice helps to establish that the transaction was the result of a person’s free will depends on the facts of the case. Independent advice can help establish that a person understood the decision they were making. But establishing that a person fully understood the act is not the same as establishing that the act was not brought about by undue influence. A person can fully understand an act and still be subject to undue influence.

(i) Allegations of undue influence may succeed in relation to the exercise of powers not just the transfer of property.”

When alleging undue influence the burden rests on the person or persons making the allegation.  In the case in hand the allegation was not made out.

However, the matter did not end there.  The court was satisfied that even though the will-maker knew what she was doing, she was not right to favour her daughter to the exclusion of her other children.  Having reached this conclusion the court found itself floundering for a result in the absence of helpful submissions on the point.  Something for counsel to contemplate.

This is a worthwhile decision for anyone interested in capacity.  Think 90+ and down, but not necessarily out.  The sadness lies in the years to get to the conclusion.

References:

  • Rule and Belcher v Rule and Charles on behalf of the Estate of Muriel Gwendoline Rule [2016] NZHC 3160
  • Green v Green [2015] NZHC 1218

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