THE NEW ZEALAND GUARDIAN TRUST CO LTD v STILLMAN [2018] NZHC 3303

THE NEW ZEALAND GUARDIAN TRUST CO LTD v STILLMAN [2018] NZHC 3303 [13 December 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2016-485-615512[2018] NZHC 3303BETWEEN THE NEW ZEALAND GUARDIANTRUST COMPANY LIMITEDPlaintiffAND VALERIE STILLMANFirst DefendantCECILIA LATAJA CLARIANTESSecond DefendantDAIJIRO MIYAZAKIThird DefendantTSUYOSHI NAGAYAMAFourth DefendantTHE MOTOR NEURONE DISEASEASSOCIATION OF NEW ZEALANDFifth DefendantRICHARD JOHN OTLEY ELLISSixth DefendantHearing: 12 December 2018Appearances: A W Johnson for the PlaintiffNo appearances by or for the DefendantsJudgment: 13 December 2018RESERVED JUDGMENT OF WYLIE JThis judgment was delivered by Justice WylieOn 13 December 2018 at 4.00pmPursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Introduction[1] The plaintiff – The New Zealand Guardian Trust Company Limited (GuardianTrust) – seeks an order either that probate of the will of the deceased, John AnthonyButler, dated 20 January 2012 be granted to it in solemn form, or, pursuant to r 27.4of the High Court Rules, that the proceedings be treated as an application for a grantof probate in common form and that evidence be given by way of affidavit.[2] No other party to the proceedings has taken any steps to oppose either of theorders sought by Guardian Trust and, by minute dated 17 October 2018, Whata Jgranted Guardian Trust's application to proceed by way of formal proof.[3] I heard from Mr Johnson on behalf of Guardian Trust. There was noappearance by or for any of the defendants.Factual background[4] On 21 September 2016, Mr Butler (the deceased) passed away. He hadexecuted a will on 20 January 2012. Guardian Trust is named in that will as theexecutor and trustee, and Christopher Gambrill (incorrectly named in the will asChristopher Gamble) is appointed as an advisory trustee.[5] The estate has assets valued at approximately $2,089,000.[6] By his will, the deceased gave:(a) gifts of $5,000 each for teaching and research purposes to:(i) The Cancer Society of New Zealand Auckland DivisionIncorporated;(ii) The Auckland Division of the Royal New Zealand Foundationof the Blind;(iii) CCS Disability Action Auckland Incorporated;(iv) The Motor Neuron Disease Association of New Zealand; and(v) The Cerebral Palsy Society of New Zealand Incorporated.(b) gifts of $10,000 to each of his five godchildren who were living at hisdeath and who reached the age of 20;(c) gifts of:(i) $10,000 to the second defendant;(ii) $20,000 to the first defendant;(iii) $20,000 to John Lewis;(iv) $10,000 to Frank Morris and Judith Morris;(v) $10,000 to the third defendant;(vi) $20,000 to the fourth defendant; and(vii) $20,000 to Mr Gambrill;(d) all of his household effects and articles of personal use to Mr Gambrill;and(e) the residue of his estate to his trustees to divide into equal one fifthshares and to pay one share to each of the first to fifth defendants.[7] There are provisions in the will governing what is to happen if particular giftsfailed.[8] After the deceased's death, Guardian Trust found out that a documentpurporting to be a codicil had been executed by the deceased on 17 April 2015. Underthe codicil, the deceased gifted $20,000 to the sixth defendant, Mr Ellis, in substitutionfor the gift of $5,000 to the fifth defendant. The fifth defendant was also removedfrom the will as a residuary beneficiary and Mr Ellis took its place. The codicilprovided that if Mr Ellis died before the deceased, Mr Ellis' interests under the willwere to go to Mr Ellis' son. The codicil recorded that the deceased had made theprovision for Mr Ellis and his son in recognition of the assistance Mr Ellis has been tohim over the preceding years.[9] The codicil was prepared by Mr Gambrill and witnessed by Anne Farmer andPhillip Millar.[10] Mr Ellis filed a caveat with this Court, preventing any dealing with the will.Guardian Trust was advised of this on or about 13 January 2017.[11] For some unexplained reason, the Guardian Trust delayed filing theseproceedings until May 2018.Formal proof[12] As noted, Guardian Trust seeks to proceed by way of formal proof.[13] Rule 15.9 of the High Court Rules applies. The obligation was on GuardianTrust to file affidavit evidence establishing, to the Court's satisfaction, the cause ofaction relied on.1 Guardian Trust was, however, only required to prove the cause ofaction insofar as the burden of proof lies on it. It was not required to engage with anymatters of affirmative defence, set off, or counterclaim.2The statement of claim/affidavit evidence[14] The statement of claim sets out the relevant background as noted above andrecords that, prior to the execution of the codicil, the deceased had been assessed byTracey Elisabeth McMillan, a registered medical practitioner, as "mentally incapableas he lacked the capacity to foresee the consequences of decisions about his ongoingmedical care and future residence, or to foresee the consequences of any failure tomake such decision". The statement of claim asserts that the certificate was givenunder ss 98(3) and 99D of the Protection of Personal and Property Rights Act 1988,and that it was dated 4 December 2014.[15] The statement of claim also refers to the filing of the caveat. It records theGuardian Trust's position that the deceased's final wishes are as contained in the will,1 High Court Rules, r 15.9(4).2 Ferreira v Stockinger [2015] NZHC 2916 at [33]-[36].and that the deceased was not of sound mind and testamentary capacity at the time ofcompletion of the codicil. The orders are sought on that basis.[16] Mr Broad, head of Legal Personal Client Services for Guardian Trust, hasdeposed that Guardian Trust will faithfully execute the will if it is granted probate ofthe same. He has also deposed that Guardian Trust is not aware of any informationthat suggests the deceased did not have testamentary capacity at the time of theexecution of the will. He also expressed the view, based on the certificate given byDr McMillan, that the deceased did not have mental capacity to complete a codicil.[17] Mr Broad has also filed a separate affidavit setting out the factual backgroundin a little more detail and annexing copies of relevant documents, including DrMcMillan's assessment and memoranda and file notes prepared by Mr Gambrill andMs Claire Guild, who is Guardian Trust's file manager who dealt with the deceased.Service[18] On 22 June 2018, Churchman J ordered service of the proceedings on the firstto sixth defendants.[19] On 27 August 2018, Collins J dispensed with personal service on the seconddefendant and directed that the documents should be sent to the second defendant'slast known address.[20] When the matter was before me in Court, the only affidavits of service on thefile related to service on the first and fifth defendants. I raised this issue with MrJohnson. He undertook to file a further affidavit of service, and I received that affidavitlater in the afternoon. It was from Ms Kapua, who is a Legal Assistant employed byGuardian Trust's solicitors. She deposed that service was affected on the third andfourth defendants by email, and on the sixth defendant by service on his solicitor.[21] I am satisfied that both the third and fourth defendants specified emailaddresses for the purposes of service and that the documents were transmittedelectronically to the specified email addresses. Similarly, there is no difficulty withservice on the sixth defendant's solicitor. There is, however, still nothing on the Courtfile confirming service on the second defendant in accordance with the directionsmade by Collins J. That, of itself, would preclude the Court proceeding to make ordersby way of formal proof.Steps taken by defendants[22] The fifth defendant filed an appearance reserving rights. As noted, none of theother defendants served have taken any steps in the proceeding. Although the sixthdefendant, Mr Ellis, had earlier lodged a caveat, his solicitors withdrew the caveat bynotice dated 26 September 2018.Analysis[23] I am asked to grant probate of the will only, and not the will and codicil.[24] In probate proceedings, those propounding the will do not have to establishthat the maker of the will had testamentary capacity, unless there is some evidenceraising lack of capacity as a tenable issue.3 In the absence of such evidence, the makerof a will apparently rational on its face, will be presumed to have testamentarycapacity.4[25] Here, there is nothing to suggest that the deceased lacked testamentary capacityat the time he executed his will and the will is apparently rational on its face. However,to obtain a grant of probate of the will alone, Guardian Trust also has to satisfy me thatthe deceased did not have testamentary capacity when he executed the codicil.[26] The principles relating to testamentary capacity are of long standing. Theywere laid down in the oft-cited case of Banks v Goodfellow.5 They have been restatedby the Court of Appeal in this country, for example in Woodward v Smith,6 and morerecently in Loosley v Powell, as follows:7[19] (1) Because it involves moral responsibility, the possession of theintellectual and moral faculties common to our nature isessential to the validity of a will.3 Bishop v O'Dea (1999) 18 FRNZ 492 (CA) at [3].4 At [3].5 Banks v Goodfellow (1870) LR 5 QB 549.6 Woodward v Smith [2009] NZCA 215 at [19].7 Loosley v Powell [2018] NZCA 3.(2) It is essential to the exercise of such a power that a testator:(i) understands the nature of the act and its effects; and alsothe extent of the property of which he is disposing;(ii) is able to comprehend and appreciate the claims to whichhe ought to give effect;(iii) be free of any disorder of the mind which would poisonhis affections, pervert his sense of right, or prevent theexercise of his natural faculties; that no insane delusionshall influence his will in disposing of his property andbring about a disposal of it which, if the mind had beensound, would not have been made.(5) In deciding upon the capacity of the testator to make his will,it is the soundness of the mind, and not the particular state ofthe bodily health, that is to be attended to. The latter may be ina state of extreme weakness, feebleness or debility and yet hemay have enough understanding to direct how his propertyshall be disposed of; his capacity may be perfect to dispose ofhis property by will, and yet very inadequate to themanagement of other business, as, for instance, to makecontracts for the purchase or sale of property.(6) A testator who has reflected over the years on how his propertyshould be disposed of by will is likely to find it less difficult toexpress his testamentary intentions than to understand somenew business.(7) Testamentary capacity does not require a sound and disposingmind and memory in the highest degree; otherwise, very fewcould make testaments at all.(8) Nor must the testator possess such capacity to the same extentas previously. His mind may have been in some degreeweakened, his memory may have become in some degreeenfeebled; and yet there may be enough left clearly tounderstand and make a sound assessment of all those things,and all those circumstances, which enter into the nature of arational, fair and just testament.(9) But if that standard is not met, he will lack capacity.[27] Although it is hearsay, it appears from Ms Guild's and Mr Gambrill'smemoranda and file notes, which were annexed to one of Mr Broad's affidavits, thatthere were concerns in relation to the deceased's mental state over a lengthy period.Various persons interested in the deceased's welfare contacted either Ms Guild or MrGambrill and expressed concern. There is nothing, however, to suggest that any ofthose persons had the appropriate medical or legal training to make any assessment oftestamentary capacity and they did not purport to do so.[28] On 4 December 2014, prior to execution of the codicil, Dr McMillan, who isnot only registered with the Medical Council of New Zealand, but is also a fellow ofthe Royal Australasian College of Physicians as a practitioner of geriatric and internalmedicine, issued a certificate in relation to the deceased. The certificate was in thestandard form put in place by ss 98(3) and 99D of the Protection of Personal andProperty Rights Act. It was not carefully filled out. The doctor did not make it clearwhether she examined or simply assessed the deceased and if so, relying on whatinformation. She crossed out some alternatives and circled "statement C" in the form.Statement C reads as follows:In my opinion, the donor is mentally incapable as he lacks the capacity toforesee the consequences of decisions about her ongoing medical care andfuture residence or to foresee the consequences of any failure to make suchdecisions.The doctor also circled a further statement, reading as follows:The donor's mental incapacity is due to the health condition that is likely tocontinue indefinitely.In giving the reasons for her opinion, the doctor stated as follows:Progressive dementia.[29] There is a further difficulty with Dr McMillan's certificate. It does not directlyaddress testamentary capacity. The certificate was given under the Protection ofPersonal and Property Rights Act. The relevant provisions in that Act are concernednot with testamentary capacity, but rather with whether the donor of an enduring powerof attorney is mentally incapable in relation to his or her personal care and welfarematters.8 The two issues may overlap but they are not identical.[30] Further, there is evidence suggesting testamentary capacity. Although it ishearsay, it appears that Mr Gambrill has a law degree. I do not know whether he wasa practising solicitor at the time that the codicil was executed, but that is of no moment.It is clear from the memoranda and notes prepared by Mr Gambrill (annexed to MrBroad's affidavit) that Mr Gambrill was aware of the testamentary capacity issue andthat he took detailed and careful steps to try and address it. He questioned the deceased8 Protection of Personal and Property Rights Act 1988, s 98(3A).and he was of the opinion that the deceased knew what he was doing when he signedthe codicil, and that he wanted to make provision for Mr Ellis and exclude the fifthdefendant from his bounty. So, it seems were the two witnesses, Ms Farmer and MrMillar.[31] A further certificate under the Protection of Personal and Property Rights Actwas issued by another doctor – Dr Waterfal – on 29 March 2016. The doctor'shandwriting is difficult to read, but he appears to have certified that the deceased, asdonor under a power of attorney, was mentally incapable as he lacked the capacity tomake any decisions with regards to health or property. The doctor said that thedeceased suffered from dementia (vascular). He recorded that the deceased had norecent recall, and that he had no insight or understanding. This certificate, however,was issued some time after the codicil was signed. It does not directly bear on theissue of whether or not the deceased had testamentary capacity at the time he executedthe codicil.[32] For all of these reasons, it follows that I am not satisfied, on the balance ofprobabilities, that the deceased lacked testamentary capacity when he signed thecodicil. I am therefore not prepared to grant probate of the will alone to GuardianTrust, and its application is declined.[33] This matter will have to proceed as an application for probate in solemn form.Given that the defendants have not taken any steps to date, it will be necessary toappoint an amicus to assist the Court. I direct the Registrar to make enquiries fromMs Vanessa Bruton QC to see whether she is prepared to act as an amicus in thismatter.[34] If Ms Bruton is not available, it will be necessary to consider who else may besuitable. In that regard, I would request that Guardian Trust should file a memorandumgiving the names of other persons who it considers may be able to assist the Court.Costs[35] In its application, Guardian Trust sought costs against the sixth defendant,Mr Ellis. It has failed in its application, and costs are no longer in issue.[36] For the sake of completeness, I record that I do not consider that it would havebeen appropriate to make an award of costs against Mr Ellis. Mr Ellis was entitled tofile the caveat in the circumstances which had arisen. He subsequently withdrew thecaveat, and it cannot be suggested that he has in any way acted unreasonably. Theapproach to costs in will cases has long been that set out by Stringer J in Re Paterson,9following the leading English decisions of the time. It is as follows:10The Court has a general discretion as to costs in all actions and proceedingsbefore it, but there are certain well-established principles upon which thatdiscretion should be exercised in cases of contested wills. They are as follows:(i) If the litigation originates in the fault of the testator – e.g., by the state inwhich he left his testamentary writings, or by his eccentric or irrational habitsand mode of life – or of those interested in the residue, the costs may properlybe paid out of the estate. (ii) If there be sufficient and reasonable ground,looking to the knowledge and means of knowledge of the opposing party, toquestion either the execution of the will or the capacity of the testator, or toput forward a charge of undue influence or fraud, the losing party mayproperly be relieved from the costs of his successful opponent. (iii) Unlessthe circumstances of the case are such as to bring it within one of the foregoingexceptions, the general rule that costs should follow the event ought to prevail.[37] Both (i) and (ii) apply. Even if Guardian Trust had succeeded, in my view, itwould have been appropriate to order that the estate should bear the costs of thisproceeding._______________________________Wylie J9 Re Paterson [1924] NZLR 441 (SC). See also Loosley v Powell, above n 7, at [118]-[119].10 At 442.