Estate Planning, Litigation and Dispute Resolution

Liquidation – is it really the end for a company?

20 June, 2018

How do you determine whether a person had testamentary capacity at the moment they prepared their will? In Drivas v Jakopovic [2019] NSWCA 218, such a dispute made its way to the NSW Court of Appeal. The Court had to balance the evidence of the solicitor who drafted the will against medical tests and expert medical opinions. In doing so, the Court has reaffirmed the significant weight that is to be placed on lay evidence in determining the question of testamentary capacity.

The death of a loved one is difficult, and disputes about that loved one’s estate can make this all the more so. Disputes concerning testamentary capacity can be emotionally charged, drawn-out, and factually complex. In recent years, the prevalence of estate disputes has increased for many reasons, including the ageing population, the increase in life-expectancy leading testators to live longer than their mental faculties, and the increase in the average size of estates (driven by the increasing value of real estate).

In Drivas v Jakopovic, the appellant disputed the will of her grandmother, and the NSW Court of Appeal upheld the decision of the primary judge who gave significant weight to lay evidence over medical evidence in determining whether the deceased had testamentary capacity at the time she made her will.

What is testamentary capacity?

In order to create a valid will, a testator must have capacity at the time they executed it. The law on this point is well established, dating back to the decision of Cockburn CJ in Banks v Goodfellow (1870) 5 LR QB 549.

Essentially, the law requires that the testator:

  1. must have understood the nature and significance of the act of making a will (i.e., what does it mean to make a will?);
  2. must have understood the nature, extent, and value of their estate (i.e., what does their estate comprise of?);
  3. needs to be capable of comprehending and appreciating any claims on their estate (i.e., who may have a claim on their estate?); and
  4. must not have suffered from a delusion that influenced the terms of the will at the time it was made (i.e., was the will ‘tainted’ by delusions the deceased was suffering at the time?).

If all of these elements are present, then the testator will be found to have capacity and the Court will uphold the will. Of course, this leads to an evidentiary question – how does one prove that the deceased had capacity?

The estate of Jakopovic

This was the issue that the NSW Court of Appeal had to consider in Drivas. The case concerned the deceased, Ms Marija Jakopovic, who in May 2007 executed a will leaving her estate equally to her two children, Boris and Branka. The May 2007 Will provided that in the event either Boris or Branka predeceased their mother leaving children, then those children would take their parent’s share of the estate.

A short time later, in September 2007, Ms Jakopovic executed another will, which was substantially identical save that it removed the provision allowing Branka’s children to inherit in the event that she predeceased her mother. The provision for Boris’ children remained. As it happened, Branka predeceased Ms Jakopovic, leaving a daughter, Anita, surviving her.

Following Ms Jakopovic’s death in September 2015, the September 2007 Will was admitted to probate in common form. Anita subsequently sought probate of the May 2007 Will on the basis that, as she was suffering dementia, her grandmother lacked testamentary capacity at the relevant time.

The role of lay evidence

In determining whether Ms Jakopovic had testamentary capacity at the time she executed the September 2007 Will, the Court considered evidence provided by Mr Taylor, the solicitor who drafted the will, as well as additional medical evidence.

Although Mr Taylor had no independent recollection of acting for Ms Jakopovic, he gave evidence that he had experience in drafting wills, powers of attorney and appointments of enduring guardians for elderly clients. He was aware of the Banks v Goodfellow test and stated that it was his normal practice to make detailed notes of his discussions with a client and keep those notes in the firm’s safe custody if he had reservations about whether that client satisfied the test. No such notes were included in the firm’s safe custody. He also said that the inclusion of the provision that only Boris’ share of the estate, and not Branka’s, would go to his children if he were to predecease them was not in accordance with his usual practice. He stated that he would have only included this provision if specifically instructed by the client to that effect.

With respect to the medical evidence, the Court considered a CT scan of Ms Jakopovic undertaken in October 2006 which showed she had significant vascular disease in the brain, consistent with dementia. It also considered the MMSE three tests, which are used to screen for dementia, administered to Ms Jakopovic in April and June 2007. However, the Court held that these two tests did not constitute significant evidence of testamentary incapacity given that they did not provide reliable information as to the degree or nature of the impairment. Further conclusory expert medical opinion was also provided by two doctors. However, the Court again did not give it any significant weight as it was apparent the doctors were not aware of the full facts surrounding Ms Jakopovic’s relationship with her family.

Conversely, the Court placed significant weight on the evidence of Mr Taylor for reasons including the following:

  • he was a solicitor of considerable experience, including in dealing with elderly clients and their testamentary wishes, so was accustomed to detecting issues with capacity;
  • given the considerable time he spent alone with Ms Jakopovic, he was able to form a view about her testamentary capacity and instructions to him; and
  • it was his practice to satisfy himself of his client’s instructions when preparing the will to give effect to their intentions.

Given the evidence of Mr Taylor, the Court ultimately upheld the decision of the primary judge and determined that Ms Jakopovic did have testamentary capacity when she made the September 2007 Will.

What does this all mean?

The decision of Drivas v Jakopovic highlights the importance of lay evidence over medical evidence in determining whether a testator had testamentary capacity at the time they executed their will. Although medical evidence can indicate deterioration of brain function and mental state, there are issues when inferences are made without any consideration of the testator’s personal circumstances.

The Courts have consistently placed great emphasis on lay evidence of observations of the deceased at the time they prepared the will in question. However, what makes this case all the more unique is that it was the absence of evidence to the contrary that was persuasive. That is, the court was able to draw an inference sufficient enough to satisfy itself on the question of capacity from what the solicitor did not do, rather than what he did. That is, the failure of the solicitor to keep his notes indicated that he formed the view at the time the deceased had capacity.

Cases like this always serve as an important reminder to keep your will updated to reflect current intentions. It is also a reminder for solicitors to be diligent in satisfying themselves of the elements of Banks v Goodfellow when preparing a will for a client to ensure that the client has testamentary capacity at the time they execute their will.

McCabes has extensive experience in advising on and acting in will disputes, as well as drafting wills and estate planning. Do not hesitate to contact us if you require any assistance.

This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice that is specific to your particular circumstances.

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After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. 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Published by Foez Dewan
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