Stanley v Mechler [2004] NSWSC 58

New South Wales Supreme Court

CITATION : Stanley v Mechler [2004] NSWSC 58 HEARING DATE(S) : 9.2.04, 10.2.04 JUDGMENT DATE : 18 February 2004 JURISDICTION: Probate JUDGMENT OF : Brownie AJ DECISION : Declaration in terms of paaragraph 1 of the further amended summons. Order in terms of paragraph 2. The matter is referred to the Registrar to complete the grant of probate. The cross-claim and further cross-claim dismissed. Parties invited to make submissions as to costs.

CATCHWORDS : Wills - informal will - trusts - a trustee of an express trust who has accepted appointment as trustee may not thereafter impeach the validity of the trust instrument LEGISLATION CITED : Wills Probate and Administration Act 1898 Family Provision Act 1982 PARTIES : Thomas Alexander Joseph STANLEY - Plaintiff Viola MECHLER - Defendant FILE NUMBER(S) : SC 115876/02 COUNSEL : J R Wilson SC - Paintiff M S Willmott SC - Defendant SOLICITORS : The Argyle Partnership Lees & Givney

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

BROWNIE AJ

18 February 2004

115876/02 Thomas Alexander Joseph STANLEY v Viola MECHLER JUDGMENT 1 BROWNIE AJ: Alex Stanley (the deceased) died on 24 May 2002, aged fifty-eight. He was formerly married but divorced in 1993. There was one child of the marriage, the plaintiff. In about 1992 the deceased formed a relationship with the defendant, and they lived together as de facto partners from 1996 until the deceased was admitted to hospital on 6 May 2002, during the course of his final illness. On 3 May 2002 the deceased signed a document in the form of a will, but there were no witnesses to his signing the document. I will call this document the informal will. 2 The deceased had earlier made a will, in 1999 (the 1999 will). To state matters very shortly, both the 1999 will and the informal will gave substantial benefits to each of the plaintiff and the defendant, but the defendant was the executrix of the 1999 will and the plaintiff the executor of the informal will, and the informal will was relatively advantageous to the plaintiff and disadvantageous to the defendant, comparing it to the 1999 will. 3 The plaintiff now seeks a declaration that the informal will constitutes the will of the deceased, pursuant to the provisions of s 18A of the Wills Probate and Administration Act 1898 and a grant of probate of the informal will. Alternatively, he seeks a declaration that the informal will revoked all former wills, and on this basis he seeks a grant of letters of administration of the intestate estate. The defendant resists this, and seeks a grant of probate of the 1999 will. In addition, she seeks a declaration that she and the deceased held the title and the beneficial interest in certain property at Artarmon, as tenants in common in equal shares, and free of any encumbrances and any obligation to any trust; and she also seeks rectification of the informal will, if it is to be admitted to probate. She made a claim under the Family Provision Act, but did not press this claim on the hearing. Additionally, by a further cross-claim, filed without objection, she seeks a declaration that the deceased held a half share in the Artarmon property in trust for her, and that it would be unconscionable for the deceased, and therefore for his estate, to deny that she held such an interest. 4 In 1997 the deceased and the defendant contemplated the purchase of a home unit situated at 118/421 Pacific Highway, Artarmon (the Artarmon property). Generally speaking, they intended to buy the property and rent it out, regarding it as an investment. At the time the deceased conducted a business through a company Metro Souvenirs Pty Limited (the company), and the defendant had a separate business of her own. The deceased was advised by his accountant, Mr Calfas, and Mr Calfas came to act for both the deceased and the defendant, although he apparently took instructions primarily from the deceased (except, perhaps, in relation to the taxation affairs of the defendant herself). 5 Upon the advice of Mr Calfas, the deceased brought into existence a superannuation fund called Metro Souvenirs No 2 Superannuation Fund (the fund), and later a unit trust, AS and VM Property Trust (the trust). Mr Calfas kept the records of the company, the fund and the trust. He said that the deceased treated the affairs of the fund as if it was the deceased's own. 6 The deceased and the defendant spoke as if they were buying the Artarmon property themselves, personally, and as if they owned it personally, but the records show that affairs were arranged quite differently. The property was purchased in their names, as tenants in common, in equal shares but at the same time the trust was constituted by a deed dated 14 January 1997, executed by the deceased and the defendant, and they purchased the property as trustees for the trust; and thereafter, the income and outgoings in relation to the Artarmon property were treated as the income and outgoings of the trust. The trust made distributions to the deceased and defendant, as unit holders in the trust. 7 The deceased and the defendant borrowed money from a bank at the time of the purchase of the Artarmon property, and they executed a mortgage of that property in favour of the bank. However, as Mr Calfas arranged matters, when they received the money from the bank, they lent it to the company; the company made a contribution to the fund; the fund purchased units in the trust; and the trust bought the Artarmon property. In succeeding years, each of the deceased, the defendant, the company, the fund and the trust treated the property for income tax purposes on the basis that the trust owned the Artarmon property. However, it seems clear that neither the deceased nor the defendant had a clear understanding about these niceties. 8 In late 1998 the deceased was diagnosed as suffering from bowel cancer. He was treated for that condition, it was said with success, but in January 1999 he was advised that the cancer had spread to his liver. Presumably this was one of the circumstances that led to the deceased and the defendant each making a will in March 1999. For that purpose they consulted Ms Roser, a solicitor employed by Permanent Trustee Company Limited (Permanent). 9 The deceased seems to have remained in relatively good health until 2001. Then, as his health declined, the plaintiff began to work with the deceased and the company. Until August 2001 the plaintiff's practice was to drive from his home to the home of the deceased and the defendant at 27 Penrose Street, Lane Cove, on the morning of each working day and to pick up the deceased and to drive him into the City, where the company had premises. In August 2001 the deceased became too ill to continue to do this, but the plaintiff continued to drive to the deceased's home each morning, before continuing on to the City. Some of the company's work was done from its city premises, and some from the deceased's home at Lane Cove. It appears to be common ground that by April 2002, the deceased's health was noticeably worse. 10 He made an appointment to see Ms Carolyn Yarrington, another solicitor employed by Permanent, on 16 April 2002, to give her instructions to prepare a new will. On that morning, when the plaintiff called into the deceased's home, the deceased announced that he intended to go into the City with the plaintiff; and in response to a question asked by the plaintiff, he said that he had an appointment to see a solicitor, and then that he intended to make a new will. During the journey to the City the plaintiff asked the deceased if the deceased had told the defendant that he proposed to change his will. The deceased said that he had not, and the plaintiff suggested that he might do so. The deceased said that he would write a letter explaining his decision to her that way. The plaintiff did not press him, and the deceased referred to the need for the plaintiff and defendant to work together, that is conducting the affairs of the company, at the Lane Cove home. The plaintiff dropped the deceased off at the office of Permanent, leaving the deceased there, but later picked him up and drove him home again. 11 The deceased saw Ms Yarrington and the two of them discussed the deceased's proposed new will. She had previously arranged to procure a copy of the 1999 will. The deceased said that he wanted to change that. He said that he wanted to leave the Lane Cove property to the plaintiff on terms that the deceased could live there until she was ready to move into a unit that she owned at Bondi. He mentioned various other assets, and then said that he wanted the defendant to have a life interest in his half of the Artarmon property, and in two other home units situated at Russell Lea, with the plaintiff taking those properties after the death of the defendant. Ms Yarrington enquired about the details of the ownership of the Artarmon and the Russell Lea properties, and the deceased could not be precise. She explained that she needed this information, to be able to properly draft a will, and he said that he would contact his accountant, obtain the information she was asking for, and that he would then speak to her again, and in the course of the discussion he spoke as if he and the defendant owned the Artarmon and the Russell Lea properties between them. During this discussion the deceased told Ms Yarrington that he did not want the defendant to know that he was making a new will, and he asked that if she telephoned him, she do so between 10 am and 3 pm, when the defendant would not be at home. 12 Later that day the deceased telephoned Ms Yarrington, said that he had spoken to his accountant, that the position was very complex, and that he would not be able to provide her with the further information she had said she needed until he had consulted the accountant. She said that she would not draft anything until she had heard from him again. 13 On 23 April the deceased telephoned Ms Yarrington again. He said that he had spoken to his accountant, but that he was still unclear about the ownership of "my assets". He believed that his superannuation fund owned the Artarmon property, and that he was the sole trustee and beneficiary of that fund. He believed that he and the defendant owned the Russell Lea properties as joint tenants. He also said that his accountant had told him that the superannuation fund owned his half of the Artarmon property. She advised him of the possibility of severing any joint tenancy that might exist in respect of the Russell Lea properties, and agreed to look into what needed to be done, if those became his instructions. He asked her to telephone Mr Calfas. She did try to telephone Mr Calfas, but did not receive any information from Mr Calfas or his office then, or indeed until 14 May. 14 On 30 April there was a further telephone conversation between Ms Yarrington and the deceased. She said that she had not been able to obtain information from Mr Calfas and said that the position needed to be clarified and in the upshot she agreed to draft a will, and they arranged that he would call in to her office the next day to execute it. By then, the deceased was confident that he and the defendant owned the Russell Lea properties as joint tenants, and he did not wish to take any steps to sever the joint tenancies. It is clear now that this understanding, concerning the ownership of the Russell Lea properties, was correct. 15 Ms Yarrington prepared a will, but the deceased was too ill to attend on 1 May. He telephoned her, and asked her to arrange for it to be delivered to the plaintiff who was to pick it up and take it to the deceased's home for execution. She agreed to do this, and she put the will, a covering letter, and probably a document prepared by Permanent giving general advice about the execution of wills, into a sealed envelope. On 2 May the plaintiff called at the office of Permanent, picked up this envelope, and took it to the deceased's home at Lane Cove. The letter to the deceased contained this passage: The Will should be signed in the presence of two witnesses who must sign, print their names, and add their addresses where indicated. The witnesses must not be beneficiaries under the Will or married to beneficiaries under the Will. Kindly ensure that the Will is dated at the time of execution and that all parties use the same pen. 16 The Permanent document was headed "Will Execution Instructions When Signing Your Will". It contained detailed instructions, expanding upon what Ms Yarrington had said in her letter. In addition, the will itself had pencil notes, in conventional manner, advising where the deceased and the witnesses should place their signatures, and the date. 17 Later on 2 May the plaintiff told the deceased that he had picked up the will, but at the request of the deceased, he left it in his car. On Friday 3 May at a time when the defendant was out shopping the deceased asked the plaintiff for the will. The plaintiff took the envelope from his car, and handed it to the deceased, when the deceased was in the lounge room of his home. The plaintiff then left the deceased alone in the lounge room for some five or ten minutes. When he returned, and enquired if the deceased was ready, the deceased said that he was not quite ready, and -ad to check something. He was turning the pages of the will at the time, and the plaintiff again left the room, leaving the deceased alone. When the plaintiff next returned, some minutes later, the deceased asked the plaintiff to obtain some sticky tape. When this was provided, the plaintiff saw the deceased seal the envelope, place the sticky tape over the seal, and then sign on top of the sticky tape. The plaintiff did not see it happen, but it is quite clear that whilst he was absent from the lounge room, and whilst the testator was alone, the testator signed the informal will. 18 The deceased said to the plaintiff: "Thomas, I've got no witnesses because it is only you and me here and you can't witness my will."