Australia: Valid suspicions or obvious delusions? An important distinction for the purposes of assessing testamentary capacity

Last Updated: 14 January 2013
Article by Bernadette Carey

In brief - Court analyses conduct and motives of claimants in dispute over estate

A recent case in the Supreme Court of NSW serves as a reminder that manoeuvring for a cut of a wealthy relative's estate can be fraught with pitfalls. Courts will analyse the conduct and motives of claimants to an estate in considering allegations of "delusions" or "paranoia".

Long lost family members seek control of their elderly aunt's fortune

Stories about family members fighting over their inheritance are a dime a dozen these days. However, it is not often that an entire family is overlooked in favour of the multi-millionaire testatrix's next-door neighbour. But so it was in the case of Gray v Hart & Ors [2012] NSWSC 1435, which concerned the estate of the late Betty May Harris.

Mrs Harris died in September 2009 at the age of 95. At the time of her death, Mrs Harris was a widow without children of her own or any surviving siblings. She left behind an estate worth more than $12.5 million and a lengthy cast of family and friends intent on squabbling over who should rightly inherit that fortune.

On one side of the fence was Mrs Harris' niece, Coralie Hart, and her family - relatives who according to court records had not seen their wealthy aunt for over 13 years, but had re-entered Mrs Harris' life around the time that Mrs Harris was recovering from a serious operation in hospital. On the other side were Mrs Harris' neighbours and close friends of some 35 years, Mr and Mrs Gray.

Niece ransacks house, locates will and removes financial documents

Not long after appearing on the scene, Mrs Hart obtained a key to Mrs Harris' Point Piper property and promptly conducted a full search of the house (later described by the court as a "ransacking").

In the course of doing so, Mrs Hart located a Will executed by Mrs Harris in 1996 (1996 Will), which provided for Mrs Hart to be the sole beneficiary of Mrs Harris' estate. The evidence before the court showed that Mrs Hart also removed from Mrs Harris' home two bags of financial documents and title deeds.

Application filed with Guardianship Tribunal

Mrs Hart then proceeded to file an application to the Guardianship Tribunal seeking orders for the appointment of Mrs Hart and two other relatives as guardians and Mrs Hart's son-in-law, the aptly named Mr Swindells, as financial manager to the person and estate of Mrs Harris. Those orders were made on 3 February 2005, largely on the back of a diagnosis by a Dr Beveridge while Mrs Harris was in hospital that she was suffering from moderately severe dementia.

Mr Swindells then set about charging significant fees for his "financial management" work, and transferring Mrs Harris' assets into his own name. He also gave a debit card tied to Mrs Harris' account to his wife, which was used immediately at an interesting range of establishments around Sydney including Liquiorland, David Jones, Mecca Cosmetica and Witchery.

Elderly testatrix revokes her will in favour of her neighbours

On returning home from the hospital, Mrs Harris was shocked to discover that her house had been ransacked and she had lost control of her mail and bank accounts. For many weeks Mrs Harris was dependent for funds on money she had to borrow from her neighbours, Mr and Mrs Grey. She became very angry when she learnt of the orders made by the Guardianship Tribunal and took steps to have them overturned.

Mrs Harris became very concerned that Mrs Hart was working to take control of her money and put her in a nursing home. She told Mr Gray that she wanted to make a new Will, in order to ensure that the relatives who had attempted to take over her personal life did not receive anything on her death.

Mr Gray, a barrister, then arranged for two independent consultant neurologists to attend at Mrs Harris' home for an assessment. They determined that Mrs Harris was not suffering from dementia at that time and that she had testamentary capacity. A month later, Mrs Harris made a new Will (2005 Will) that was duly witnessed by her lawyers and revoked all prior Wills. It confirmed that Mr and Mrs Gray were to take her entire estate.

A clash of Wills: family fights to prevent neighbours from receiving Mrs Harris' estate

On Mrs Harris' death, Mrs Hart sought probate of the 1996 Will of which she was the sole beneficiary. She was supported by her nieces and nephews, who sought to inherit from her in due course.

Mrs Hart argued that Mrs Harris did not have testamentary capacity to revoke the 1996 Will or to make the 2005 Will. She argued that Mrs Harris demonstrated paranoia and suffered from delusions at the time of making the 2005 Will, in that she believed that her family members were attempting to obtain her assets improperly, were acting entirely out of self-interest and were not assisting her at all.

Mrs Gray propounded the 2005 Will of which she was sole beneficiary. She argued that Mrs Hart was not in the slightest bit delusional when she made the 2005 Will and it was entirely valid.

Evidence in support of Mrs Gray's case showed that while in hospital, Mrs Harris had made it clear that she did not want her relatives around, describing them as "a pretty pathetic lot", "they're just after my money" and "I'd rather die than give them anything".

On the other hand, she had described the Grays as "nice people" and informed her lawyers that they supported her over the years and she wished to acknowledge this by providing for them in her new Will.

Allegations of "delusions" must be supported by evidence of unreasonable false beliefs

The main issue in the case was whether Mrs Harris had testamentary capacity to revoke her 1996 Will and make her 2005 Will and, in particular, whether Mrs Harris was "delusional" when she made a new Will in favour of Mr and Mrs Gray. The court conducted a rigourous examination of the evidence regarding Mrs Harris' state of mind at the time of making the 2005 Will, including a substantial number of competing medical assessments concerning Mrs Harris' apparent dementia. The court concluded that Mrs Harris did have testamentary capacity to make the 2005 Will.

The court also considered closely Mrs Hart's argument that Mrs Harris was "delusional" in that she thought the family were "out to get her". For the purposes of testamentary capacity, a delusion has been said to be "a fixed and incorrigible false belief which [the testatrix] could not be reasoned out of". To be delusional, such a false belief must also be unreasonable, and not be correctable by an appeal to reason. The somewhat archaic legal test involves putting the question "Can I understand how any man in possession of his senses could have believed such and such a thing?"

The court considered whether Mrs Harris' belief about her family members was paranoid and delusional. It found that Mrs Harris certainly believed her relatives were attempting to obtain her assets for themselves improperly and were acting purely out of self-interest. However, the court also found that those beliefs were not unreasonable beliefs to hold and were understandable.

The court found that whether the members of her family were "out to get her money" or were not acting in her best interests, mistaken or not, was not an irrational view in the circumstances of the case and given the family members' conduct.

Court will uphold a validly created Will to the exclusion of misbehaving family members

The court concluded that Mrs Hart was not suffering from delusions at the time the 2005 Will was entered into and as she had otherwise been shown to have testamentary capacity, the 2005 Will was valid. Much to the family members' chagrin, Mrs Harris' estate duly passed to Mrs Harris' neighbours.

The case is yet another helpful reminder that manoeuvring for a cut of a wealthy relative's estate is just not as easy as it looks on television. Allegations of "delusions" and "paranoia" must be substantiated. The ability of the courts to analyse intensively the conduct and motives of claimants on an estate in considering such allegations should not be underestimated.

Family members or professionals assisting individuals to prepare their Will should also take note: a decision not to provide for a relative or friend in a Will because of views about that person's conduct or apparent bad motives will not always be controversial or render the Will void.

Bernadette Carey
Trusts and estates
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Bernadette Carey
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