Proctor : September 2017
18 PROCTOR | September 2017 The nature of the claim Typically, your client’s claim will involve the law relating to testamentary capacity, undue influence, and breach of trust. The law with respect to testamentary capacity is well settled, and of course involves the requirement that the testator should have an understanding of the extent of the property he is disposing and is able to comprehend and appreciate the claims to which he ought to give effect etc. See Banks v Goodfellow (1870) LR5 QB 549; Shorter v Hodges (1988) 14 NSWLR 698; and Jee v Goodman (2001) QSC 471 as per Holmes J. The doctrine of undue influence in deceased estate cases is somewhat more complex. A will may be set aside when it is the product of undue influence. However, the doctrine of undue influence is harder to make out in a context involving a will than when it is sought to set aside an ‘inter vivo’ transaction. In essence, collusion that destroys free agency must be shown. Mere suspicion is insufficient. See Winter v Crichton (1991) 23 NSWLR 16. There must be clear evidence of undue influence, see Green v Critchley (2004) QSC 022; Bailey v Bailey (1924) 34 CLR 558 at 571. Further evidence of incapacity or undue influence may be derived from the terms of the will itself. If, during a period of enfeeblement, a testator revokes prior wills and executes entirely different dispositions, the court’s suspicion will be aroused (see Bailey v Bailey – supra at page 571). The High Court case of Louth v Diprose (1992) 175 CLR 621 deals with breach of trust by persons in a position of trust, such as a carer. There are some categories of confidential relationships from which a presumption of undue influence arises; when a substantial gift is made by one party in the relationship to the other (relationships such as solicitor and client, physician and patient, parent and child, guardian and ward, superior and member of a religious community). Public policy creates a presumption of undue influence in cases in which the relationship falls into one of those recognised categories. In such cases the law will make a presumption that the transaction was procured by the grantee through some unconscientious use of their power over the grantor, and the law places on the grantee the burden of supporting the transaction by which they so benefit, and of rebutting the presumption of its invalidity. Commencing a claim and relevant time limits As legal representative for the plaintiff Mr Angelico, you will need to act quickly, and lodge your caveat in Uniform Civil Procedures Rules 1999 (Qld) (UCPR) Form 116 in the Supreme Court before probate is granted in respect of the offending will. Your caveat must be supported by UCPR Form 118 Notice in Support of Caveat – the grounds stated would be: i. lack of testamentary capacity on the part of the deceased at the time of his execution of that will; or ii. The will dated _____ is invalid on the basis that the deceased was induced to execute that will subject to undue influence exerted on him by _______ . You must commence your court proceedings in the Supreme Court within six months of the date of lodgement of your caveat, otherwise the caveat will lapse. Forthwith, after filing your caveat, write to the defendant’s lawyer calling on them to prove the last will in solemn form within 14 days; in default you will bring your own proceedings. Usually (in Queensland proceedings), such proceedings are commenced by way of Originating Application Form 5, seeking directions for the delivery of pleadings and a timetable for the other steps (disclosure of documents, mediation, etc.). Your application must be supported by affidavit by your client, whereby they will dispose to the fact of the undue influence over the deceased on the part of the defendant. You should also exhibit any relevant medical evidence as to the issue of lack of testamentary capacity. You should prepare draft direction orders in readiness for the return date of the originating application and try to work out consent orders with the defendant’s solicitors. Be sure to serve copies of the originating application and affidavit in support thereof to all interested parties, including all those beneficiaries named in the last will and the previous will that you will be now seeking to pronounce. Importance of non-party disclosure Such are the dynamics of the case that any relevant disclosure from the defendant will be of limited value to the prosecution of your case. To overcome that difficulty, cast your net wide in order to arrive at the truth of the situation relating to the parent’s execution of the last will. Non-party disclosure should be obtained from the following: i. the former solicitor who prepared the prior will ii. the solicitor who prepared the last will iii. hospital records of the deceased three years prior and up to date of the last will iv. medical practitioner records for treatment of the deceased up to three years prior and up to the date of the last will v. palliative care services, three years prior to and up to the date of the last will vi. tax records of the deceased and/or any trust/company in which they were involved, for three years prior to the date of death. Expert reports If the estate involves multiple entities such as family trusts and family companies, engage also a forensic accountant to examine the financial records of all entities to ascertain the whereabouts and quantum of all assets, and unravel the mysteries of the various unpaid trust distribution accounts and company loan accounts. Also, great care must be taken to ascertain what tax liabilities, if any, are outstanding, including any deemed dividends, tax and penalties. In 2009, the Australian Taxation Office (ATO) introduced amendments to the Income Tax Assessment Act 1936 (Cth), requiring company loans to directors to be in writing prior to the lodgement day for the relevant income year – section 109N(1) (9). Failure to comply renders such loans to be ‘deemed dividends’ for tax purposes, which would result in massive primary and penalty tax.