Menna v Jacobs; Re The Estate of Catherine Nolan [2004] NSWSC 1191

New South Wales Supreme Court

CITATION : Menna v Jacobs; Re The Estate of Catherine Nolan [2004] NSWSC 1191 HEARING DATE(S) : 1/12/04 JUDGMENT DATE : 1 December 2004

JURISDICTION: Equity Division Probate List JUDGMENT OF : Young CJ in Eq DECISION : Probate granted: Rectification refused.

CATCHWORDS : SUCCESSION [164]- Wills- Rectification- Principles involved- Mistaken view of extent of estate insufficient. LEGISLATION CITED : Wills Probate and Administration Act 1898, s 29A Mortensen v New South Wales NSWCA 1991 Rawack v Spicer [2002] NSWSC 849 CASES CITED : Re Dippert [2001] NSWSC 167 Re Spinks (Needham J, 22.8.1990) Slee v Warke (1949) 86 CLR 271 Trimmer v Lax (9.5.1997) PARTIES : Maryjane Menna and Regina Mary Harris (P) Peter Jacobs (D) FILE NUMBER(S) : SC 105382/03 COUNSEL : P O'Loughlin (P) C Simpson (D) SOLICITORS : Coyne & Whittemore (P) James & Associates (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROBATE LIST

YOUNG CJ in EQ

Wednesday 1 December 2004

105382/03 – MENNA v JACOBS; RE THE ESTATE OF CATHERINE NOLAN JUDGMENT 1 HIS HONOUR: Catherine Nolan died on 30 January 2003. She made and published two testamentary documents, a will of 2 March 2001 and a codicil to that will of 5 October 2001. The plaintiffs, Mary Jane Menna and Regina Mary Harris, are the executors named in the will and they seek probate of those documents in solemn form. The defendant, Mr Peter Jacobs, lodged a caveat against probate and then later filed a cross-claim seeking that the will be rectified under s 29A of the Wills Probate and Administration Act 1898 as amended. 2 Mrs Nolan's estate is estimated at having a value of $926,150, including approximately $850,000 in bank accounts. The evidence shows that the testatrix cashed in her investments in April 2001 and that cash was added to her bank account, a matter to which I will return. 3 Mrs Nolan's will provided in clause 4 that there be a gift to her brother of the expected refund from her retirement village and a further gift of $150,000 and the balance, after certain small gifts, was to pass to her nephews and nieces as named in equal shares. 4 There is no dispute as to the formal validity of the will or indeed with the formal validity of the codicil. The question that I have to decide revolves around the cross-claim for rectification. 5 The facts of the making of the codicil are provided by the affidavit of Mr Glenn M Coyne, the solicitor who prepared it. He says that by request he saw the testatrix in the Delmar Private Hospital on 5 October 2001. She seemed tired, but he had no doubt that she was sufficiently lucid and in control of herself in order to make testamentary dispositions. He said that the testatrix said to him that she wanted to make some changes to her will and gave general instructions. Mr Coyne replied that he could prepare a codicil which the testatrix could sign there and then so that she could stop worrying and which could be properly typed up later. He says that the testatrix was in bed and had a savings bank deposit book in front of her which she referred to from time to time and a piece of paper to which she also referred. She did not show him the passbook. 6 As Mr Coyne recorded her wishes, she passed him a piece of paper n which she had written the names of her proposed legatees and the amounts of the legacies. He passed it back to her on one occasion for clarification and he then recorded the names and amounts from that piece of paper into the codicil which he was writing out. The piece of paper is in evidence as part of PX01. 7 When Mr Coyne had finished writing out the codicil he read it to the testatrix who said, "Yes, that sounds good". Mr Coyne then said, "You have made all these specific bequests, if you have not covered all of your property there would be an intestacy which is clumsy and makes it more difficult for your executors to administer your estate. Let's say there is a small balance left over what would you want to do with it?" The testatrix replied, "Give it to the War Vets at Collaroy, they have a building programme for a nursing home there. Also the Cancer Research Institute. The girls can decide who gets what". Mr Coyne took the reference to "The girls" as meaning the executors. Mr Coyne says it was clear to him that had he not mentioned a possible surplus and the risk of intestacy the testatrix would not have made any mention of any charity in her will. Mr Coyne then added the residuary clause to the codicil and read it to the testatrix who said, "That seems to cover it". He then went and found the nurse in charge and she and Mr Coyne witnessed the codicil. 8 Mr Coyne did not see the testatrix again before she died as her medical condition deteriorated quite quickly and, as I have said earlier, she died about three months later. 9 The bank book which the testatrix may have held in her hand as she was dealing with her codicil was a savings investment account with the Commonwealth Bank of Australia. The book for such an account has to be produced for withdrawals but does not need to be produced for deposits and the bank updates the book when requested or when the next withdrawal is made. It would seem that as at October 2001 the book had not caught up with the realisation of the investments, a deposit of some $836,000, and that the book was next updated on 31 December 2001, when Mrs Menna took it to the bank in the course of doing her aunt's regular banking. 10 I should now turn to the text of the codicil. The original will, as I have said, provided for the residue of the estate to go to seven nieces and nephews. The codicil changed that so that clause 4(d) reads as follows: "The balance of such proceeds upon trust of those of the following beneficiaries and the amounts specified: Regina Mary Harris $50,000; Catherine Anne Ross $25,000; Paul Edward Jacobs $25,000; Peter Anthony Jacobs $25,000; Patricia Mary Buchanan $25,000; Joan Jensen $25,000; Marie Adele Jensen $10,000; Marie Ross $10,000; Ouida Hobson $15,000; Margaret Parkinson $5,000". 11 There was a proviso which I need not set out. 12 The list of names was not identical with the list in the earlier will, Michael Ross and Valerie Merle Ross having been omitted from it and others added. 13 The cross-claimant says that the evidence of Mr Coyne establishes that the testatrix had no intention of benefiting any persons other than the named beneficiaries. Those named beneficiaries represent the only surviving sibling of the deceased and the children of various siblings (with one wife of a nephew). It is properly to be inferred that the deceased did not intend to create an intestacy. Acceptance of those facts establishes that the will failed to carry out the deceased's intention of leaving her estate to her family constituted by the named persons. 14 The evidence of Mr Coyne as to the circumstances and the surrounding evidence establishes that the testatrix intended to benefit the named parties differently but, as outlined above, to the exclusion of others and accordingly the case has been made out that there should be rectification under s 29 A of the Wills Probate and Administration Act. 15 The rectification order sought is that there should be added after the table of names and amounts in the codicil the following words: "and in the event such proceeds exceed $300,000 in the proportion that the amount ascribed to each beneficiary bears to the total provision made by me in respect of all the beneficiaries". 16 The effect of making such an order would be to increase each beneficiary's legacy in a pari passu fashion so that the approximately $350,000 to $400,000 which, if there was no rectification, would pass to the two charities, would instead augment the legacies given to the nephews and nieces. 17 Section 29A(1) to (3) of the Wills Probate and Administration Act reads as follows: "(1) If the Court is satisfied that a will is so expressed that it fails to carry out the testator's intentions, it may order that the wll be rectified so as to carry out the testator's intention. (2) An application for an order under this section shall not be made after the expiration of the period of 18 months after the death of the testator, except as provided by subsection (3). (3) The Court may grant leave to make an application for an order under this section after the expiration of the 18-month period if the Court is satisfied that sufficient cause is shown for the failure to make the application within that period." 18 The cross-claim in the present proceedings was filed after the eighteen month period had expired. However, there is some evidence as to the reason for the failure to make the application within the period and counsel for the potential executors does not oppose leave being granted. I will in due course make that order. 19 The courts have considered the application of s 29A on a number of occasions in the last decade. Most of the law has been concisely digested by Campbell J in his judgment in Rawack v Spicer [2002] NSWSC 849. Omitting the reference to authority, his Honour said at paras 26 and following of his judgment: "Before the power of rectification can be exercised, the court must be satisfied both that the will was so expressed that it fails to carry out the testator's intentions, and also what it was that the testator intended concerning the part of the will which is to be rectified. Even if the court is satisfied that a testator would not have wanted his property to go in the way that, in the events which have happened, a particular clause results in the property going, the court can rectify the will only if it is satisfied about what the testator actually intended to happen to his property in that particular event. … It is the intention of the testator at the time of making the will that matters, not the intention at some later time. There is some family resemblance between the principles on which a court grants rectification of a will and the principles on which an equity court grants rectification of a contract." 20 His Honour continued from where I have left off quoting, reminding his readers of what Sheller JA said when giving the judgment of a Court of Appeal consisting of Mahoney JA, Meagher JA and himself in Mortensen v New South Wales NSWCA 1991 at page 6: "I think it may be productive of error in a particular case when determining whether an order should be made under s 29A to pay over much regard to the principles evolved by Equity as part of the doctrine of rectification. Primarily the Court is concerned with the meaning of the language of the section." 21 His Honour also quoted from the judgment of Trimmer v Lax (9 May 1997) at 12: "It is not enough for the Court to have the opinion that, if the deceased had considered the possibility, she probably would have provided in favour of [a named beneficiary]. What is required is an actual intention, which has miscarried". 22 His Honour also quoted from my judgment in Re Dippert [2001] NSWSC 167 at [17]: "What one must look for is an error which has occurred in the transcription of the will or where one can see what the intention of the testator was but the words used have not fulfilled the intention. What one cannot do is to look at unforeseen circumstances and speculate what the testator might have done in those circumstances and then supply words to meet those circumstances." 23 I was very much assisted by the concise and learned submissions of Mr Simpson of counsel who appeared for the cross-claimant and Mr O'Loughlin of counsel who appeared for the cross-defendant. 24 Mr Simpson says that one must be a little careful about Campbell J's judgment in seeking to substitute his Honour's twofold test with the actual words of the section because that is just what the Court of Appeal said one should not do in Mortensen v New South Wales. I accept that, but, both in Mortensen and in Rawack, the guidelines as to how one looks at the section are very useful. 25 Section 29A is employed quite often in this Court. In most of the applications under the section, the result is fairly clear. Sometimes a line is missed out in the engrossment of a will or somehow or other a "not" has snuck into or out of the text by mistake. Accordingly, it is not infrequent that orders are made under the section. However, it must be realised that it is a very serious matter to change what a testatrix has solemnly put her hand to in the presence of two witnesses after saying that she fully understands what was read out to her as her will. 26 Rectification is not to be lightly granted. The Court in contract cases is sometimes said to require strong irrefragable evidence of what the true intention was and, as Needham J said in Re Spinks (22 August 1990) at [5] (the judgment from which Mortensen in the Court of Appeal is the appellate decision): "Rectification, in equity, is available for mistakes, not for lack of vision or perception or knowledge." 27 I need to consider then what was the intention at the time the testatrix made her will and did the will express that intention properly. Mr Simpson says it is clear that the testatrix wished to benefit her family, and them alone. She never intended that the charities might take 40 per cent of her estate. She made a mistake as to the amount of cash she had in the bank. Had she not made this mistake, she would have left proportionately more to her named nephews and nieces. 28 On the balance of probabilities I find that the testatrix did make an error as to the extent of her estate. It is difficult, however, to see the extent of that error. The bank books in her hand seem to suggest that she had about $46,000 in the bank where in actual fact she had about $880,000 but she must have known she had more than $46,000 because she disposed of more than $300,000 by her will. 29 I accept also that the testatrix considered that the residuary clause would only catch perhaps a small portion of her estate, if anything. One of the most common errors of amateur will makers is to omit a residuary clause. Mr Coyne was well aware of this problem and met it. However, I would infer that the insertion of the clause was because of Mr Coyne's expertise in making wills and knowing the necessity of having a back stop and both he and the testatrix did not intend there would be the benefaction of the charities to the extent that has in fact occurred. 30 The question then is on these findings: Is the cross-claimant entitled to rectification? Unfortunately in some respects, the answer is "no". The section requires one to posit the question as to whether the bequest in the will is so expressed that it fails to carry out the testatrix's intention. The initial answer to that question in this case must be "no". The testatrix handed Mr Coyne a piece of paper showing her intentions. Mr Coyne faithfully recorded it, read it over to the testatrix, she acknowledged it and signed the will. However, it is said that had the testatrix realised the full extent of her estate she would have made further provision. Her intention was not to do what the will, as expressed, means will happen; the two charities will benefit to the extent of perhaps $400,000. 31 However, to my mind the scope of the section does not extend so far as to deal with mistakes in the knowledge of the extent of one's estate. Again, to take out of context the example given in Re Spinks, it also does not cover lack of knowledge that one of the proposed beneficiaries is in fact dead. One has to look at what the testatrix thought were her dispositive provisions, whether she made a mistake of fact or not, and then work out whether her intended disposition was correctly expressed. There may be a case, because one hates to say that there can never be such a case, where such a mistake might trigger off the section, however not the mistake that was made in the instant case. 32 The word "rectification" used in the section does connote the equity of commanding people to alter their contract so that the formal document accords with their common intention. The legislature used that word deliberately. Up until cases such as Slee v Warke (1949) 86 CLR 271, prior to rectification of contracts equity required an "antecedent agreement". That is no longer necessary and rectification can be granted in cases of operative unilateral mistake. However, basically, the concept is, one of parties having formed an intention or, in the case of a contract made an agreement, and the formal document does not accurately record it. Rectification does not lie where the party made a false assumption and, because of that, he or she agreed to the document as written. 33 I understand what Sheller JA said in Mortensen's case, but he did not say, nor did Campbell J understand him to say, that the basal concepts of rectification of contracts are to be disregarded. He merely said that one must focus on the words of the section and not holus-bolus import all the matters that relate to rectification of contracts. 34 Here the testatrix made a mistake. That mistake went to the formation of her intention. She formed an intention on the basis of that mistake. That intention was properly expressed in the will and accordingly it is not a case to which s 29A applies. 35 However, even if I were wrong on that aspect of the case and have taken too narrow a view of the operation of the section, the case must fail on what might be called the second limb, that is, that the plaintiffs must prove what it was that the testatrix intended concerning that part of the will which is to be rectified. One solution is to say that each of the named nephews and nieces is to have their benefaction increased proportionately; but that is only one solution. We do know that from March to October 2001 the list of family members has changed. We do know that in that period from being equal recipients of her bounty they became unequal recipients and there is no certainty (using that term in the sense of the required degree of legal certainty rather than absolute certainty) that she would have increased each beneficiary's proportion in the same way. Accordingly, the claim for rectification fails. 36 Consequently, the orders must be: