Testamentary capacity and the solicitors role

TESTAMENTARY CAPACITY

RYAN v DALTON [2017] NSWSC 1007

Kunc J – 31 July 2017

The Proceedings

This was a contested probate suit between the deceased’s 3 children and his long time defacto spouse.  The children succeeded in knocking out the last Will which divided the estate equally between them and the defacto.  Probate was granted of an earlier Will made 2 years earlier which gave it only to the 3 surviving children.

The disputed Will was prepared by the defendant solicitor who gave evidence to the effect that the deceased appeared lucid and clear when giving instructions.  That evidence was overcome by other evidence showing that the deceased was suffering from very significant mental impairment which had not been disclosed to the solicitor and which was not apparent to her.

The case turned on expert evidence that the deceased had lost ‘executive function’ which is the ability to assess complex situations and make decisions.  That opinion was in turn based on both medical records and lay evidence of chronic and significant mental impairment both in the period when the disputed Will was made.

The judgment itself raises the need for the profession to become more educated on the issues which arise when dealing with elderly testators and the steps which should be taken to satisfy oneself as to the person’s capacity.

The Story

The testator, Frank Ryan, was born in 1923.  He was a baker.  He had 4 children with his first wife, Patricia, who died in 1978.  In 1983, Frank met “Ms X” (a pseudonym) who was then separated from her husband.  In 1988, Frank and “Ms X” commenced ‘a relationship’ – the degree of intimacy in that relationship is not stated.

In 1990, “Ms X” divorced her husband and in February 1990, Frank moved into her house at Mandurama which is between Bathurst and Cowra.  At that time, he was still running his own bakery.  Frank told his children that “Ms X” had a lot more in the way of assets than he did and that they had agreed that they would:

• keep their assets separate; and
• not leave anything to each other in their Wills; or
• not claim against each other’s estate.

“Ms X” conceded that they had such an agreement or understanding.

In 1994, Frank retired.  He had poor hearing and wore hearing aids but there was no discernible deterioration in his capacity until about 2007.  Gradually, he started to struggle to remember names or recognise less familiar faces.  His short-term memory deteriorated.  He started to have difficulty finding things or using equipment he has previously used.  He started to focus on the past and began repeating stories many times without an awareness that he was doing so.  He started to be easily tired and often just fell asleep where he was for an extended period.  He was increasingly lacking in energy and apathetic.

Around the time of a knee replacement in May 2010, Frank’s hospital notes recorded mild post-operative confusion, mild cognitive impairment and “Ms X’s” concern in relation to his short-term memory.  He was 87 years old at that time.

“Ms X” took Frank to see Dr Ireland, a geriatrician, in July 2010 who provided a report (from which the history above is taken).  Dr Ireland’s conclusions were, in summary:

• Frank’s symptoms could represent an early dementia.
• His sleep apnoea should be reviewed by a sleep physician.
• Frank would have capacity to discuss the issues of a POA which he should obtain.
• Improved management of his sleep apnoea, less alcohol and a more engaged and active life might help him overcome many of his cognitive difficulties.
• Dr Ireland had concern about the possible early dementia and suggested Frank be reviewed in early 2011.

It appears that the recommended review in early 2011 did not take place.

On 1 June 2011, Frank made a Will appointing his 3 surviving children as executors and dividing the estate between them.  At the same time, he executed an advanced care directive and an enduring power of attorney in favour of “Ms X”.  All of these documents were drawn up by the defendant Ms Dalton and were executed in her presence.  These were all rational and sensible documents and Frank’s capacity to execute them was not contested.

On 24 June 2011, an ACAT assessment recommended Frank for low level residential care.  The report focused on Frank’s physical difficulties which included poor vision and hearing and unsteadiness on his feet.

In July and August 2011, Frank took his annual holiday with his surviving children.  He flew to Brunswick Heads to visit his two daughters and then visited his son who lived in Sydney.  On this trip, he told his children about his testamentary arrangements and the reasons for them.  His statements about those arrangements accurately reflected the Will he had recently made and the arrangement he had with “Ms X” in relation to their respective property.

In September 2011, Frank was admitted to a hostel.  In late October 2011, he had an MRI which showed ‘small vessel cerebrovascular disease and moderate cerebral atrophy.’  His GP diagnosed ‘micro vascular ischaemic cerebral disease with significant memory loss’ and ‘visual impairment’ which was put as a basis for a disability pension.

By mid-2012, Frank’s condition had deteriorated markedly.  In phone conversations with his son Joe, he started to ask who he was talking to.  He confused Joe with his other son Francis who had died in 1990.

In August 2012, Frank’s hostel notes recorded him as wearing his pyjamas over his daytime clothes and often recorded him as being confused.  At times he became overfamiliar with female residents.

In October 2012, the hostel manager spoke to Frank’s children of the dementia having progressed to the point where it was significantly impacting him.  His behaviour became unusual at times demonstrating agitation and aggression.

In December 2012, Frank went on a holiday with “Ms X” and his son Joe.  He said nothing on this trip to indicate that he was thinking of changing his Will.  After visiting Joe, Frank flew up to stay with his daughter Bernadette in Brunswick Heads.  She observed that he was constantly struggling with serious dementia related problems.  Frank was confused, did not know who Joe was when he called and did not know where he was.  He required assistance for all his needs.  He was observed yelling into the remote control for the air conditioner demanding that the person on the other end speak up.  The situation was so bad that Frank’s daughter obtained the help of a professional aged care trainer with a specialty in dementia.  The trainer gave uncontested evidence that Frank

‘required constant care and attention … couldn’t stand without assistance and even with a walking frame required assistance to move about … could not be left alone at any time he was awake. He required constant care.’

Frank returned to the hostel on 2 January 2013.  His hostel notes from that time onwards record frequent confusion.  On 28 January 2013, his hostel notes describe Frank thus:

Verbally disruptive, Generally noisy, Repetitive Speech, Disoriented, Confused, Pacing, Wanders/absconds, Attention seeking, Paranoid, Antisocial, Manipulative, Restlessness, Bothering residents, Anxious, Depressed, Refusing care, Abnormal sleep pattern, Risky, Chronic complainer, Interferes.

In the middle of all that, on 14 January 2013, “Ms X” telephoned Ms Dalton to go see Frank about making a new will.  On 17 January 2013, Ms Dalton attended upon Frank at a café in Orange where she took instructions from him.  On 24 January 2013, Ms Dalton attended the hostel again and had the new Will executed.

Ms Dalton’s evidence about the making of the Will of 24 January 2013

Ms Dalton had drawn the 2011 Will.  She made contemporaneous notes of her conversation with “Ms X” on 14 January 2013 and when taking instructions from Frank 3 days later.  She made a detailed affidavit in relation to these events.

There were two significant changes in the 2013 Will.  One was a change to the executor.  This was raised in the conversation with “Ms X” on 14 January 2013.  The other was a change to the beneficial disposition of the estate:  The 2013 Will added “Ms X” an equal share along with the 3 children.  This change to the disposition of the estate does not seem to have been raised until the meeting at the café on 17 January 2013.

Ms Dalton saw Frank alone to take instructions.  She described him as ‘bright, happy and talkative’ on that occasion.  Frank told a number of stories about baking disasters and his war service.  He gave instructions and requested Ms Dalton to become his executor.  She arranged to draft the new Will and post it to “Ms X”.  In cross examination, Ms Dalton added to her affidavit, saying that Frank had volunteered a reason for including “Ms X” as an equal beneficiary because ‘he just didn’t feel right about not providing for [her.]’

The same day, Ms Dalton posted the new Will to “Ms X”.  On 21 January 2013, “Ms X” rang to advise of a spelling error and in light of that error, it was arranged for Ms Dalton to attend upon Frank at the hostel on 24 January 2013 with a corrected version for signature.

On 24 January 2013, Ms Dalton went to see Frank.  He was up and dressed and waiting for her.  She asked if he knew what she was there for and he correctly answered that she was there with a Will for him to sign.  He knew about the spelling mistake.  She then says in her affidavit:

‘I read through the Will paragraph by paragraph with the deceased to ensure that he still agreed each paragraph properly reflected his instructions.  He said to me words to the effect: “I’m pleased you’re the executor Lee as I don’t think my children will be very cooperative with “Ms X”, and Joe does not get on well with his two sisters.”… “I’m happy to sign this now.”’

Ms Dalton then found an employee of the hostel to serve as the second witness and the Will was duly executed in the proper way.

As to Frank’s deportment on this occasion, Ms Dalton’s evidence was:

“During my visit with the deceased on 24 January 2013 I observed the deceased to be his usual self, maybe a little slower on his feet then I had previously noticed and frustrated with his impaired vision.  He appeared alert but more sombre then I had observed him to be when we met at Cafe Latte the week before.  The deceased did not repeat himself, ramble or digress in his conversation with me.  His conversation with me was relevant in the context of the reason I was there visiting him.”

So what is wrong with that?

In defence of the common sense manner in which Ms Dalton approached the task, one can say that although Frank was 89 years old and living in a hostel, he appeared lucid.  He gave instructions for the new Will personally.  Those instructions were rational on their face and appeared apt for his circumstances.

The real difficulty for the 2013 Will is that the contemporaneous evidence of very serious indicators of incapacity was very strong.  Ms Dalton was completely unaware of the medical context in which Frank was giving instructions.  She was not told of these things by “Ms X” and made no enquiry of the staff at the hostel.  She was unaware of the applicable guidelines published by the Law Society of NSW.

The Solicitors’ Guidelines

The Law Society of NSW had recently republished the relevant guidelines under the title “When a Client’s Mental Capacity is in Doubt.”

Key principles are set out in section 4.  In summary, they are:

• Assume capacity
• Capacity is decision specific
• Capacity is fluid
• Don’t make assumptions based on a person’s looks, how they present, how they communicate, impairment or behaviour.
• Assess the capacity not the decision
• Respect a person’s privacy
• Use a tutor, guardian or financial manager as a last resort

Section 5 of the Guidelines list some ‘Warning Bells’ and ‘Red Flags’ to look out for:

‘ . . in [some] cases, it will not be obvious that a person may lack mental capacity.  Many people with age related cognitive disabilities may present extremely well to people to who do not know them well and can appear capable.’

‘A person with dementia may have excellent long term memory and be oriented in time and space but have poor short term memory with deficits in their judgment or ability to plan. They may be able to hold intelligent, lucid and entertaining conversations but not remember any details of that conversation a short period later.

Notwithstanding the principle that one should not make assumptions by reference to a person’s looks, how they present, how they communicate, apparent impairment or behaviour, these are all matters to which are properly taken into account in coming to a reasoned assessment of capacity – or whether one needs make further enquiry.

Specific things to look out for:

• Difficulty with recall or memory loss
• Ongoing difficulty with communications
• A lack of mental flexibility
• Problems with simple calculations which they did not have previously
• Disorientation
• “something about the client has changed”, including deterioration in personal presentation, mood or social withdrawal
• The client is in hospital or a residential aged care facility
• The client has changed solicitors several times over a short period, particularly if there has been a change from a solicitor who has advised the client for many years
• The client is accompanied by many other friends, family or carers to interviews with the solicitor but is not given the chance to speak for themselves
• The client shows a limited ability to interact with the solicitor
• The client shows a limited ability to repeat advice back to the solicitor or ask key questions about the issues

Communication style:  It is frequently the case that people with deteriorating cognitive ability often develop techniques to hide it.  Techniques which the interviewer needs to adopt to bring out any lack of understanding are listed in section 6:

• Ask open ended questions rather than ‘yes/no’ questions.
• Do not ask leading questions.
• Ask questions directed to areas of potential concern.
• Make sure the answers are coming from the person of concern, not someone assisting them or interpreting for them.

My own take on some obvious open ended questions to ask about in relation to Wills, Transfers, Powers of Attorney and Appointments of Enduring Guardianship are

• How will you be affected by this transaction/document?
• What the important features of the transaction/document?
• Why do you want to do this transaction/make this change to your Will etc.

Take Notes

In section 7, the guidelines state that solicitors should take notes which are ‘thorough, comprehensive and contemporaneous’

Get reports from appropriate people and consider them in the right way

Section 8 gives a summary of various types of medical specialists and their area of expertise.  One needs to understand these areas to some extent to identify the right person to provide a report.  It is not always enough to just ask their GP for an opinion.

Section 9 deals what needs to be included in a referral letter when seeking a report.  The suggested areas to cover are:

• Client’s background
• Reason the client contacted the solicitor
• Purpose of the referral – the legal task or decision being considered
• The relevant standard of mental capacity to be applied.
• Any known medical information about the client.
• Information about the client’s social or living circumstances
• The client’s values or preferences, if known.

Section 11 advises that a solicitor needs to thoroughly read and understand the report which comes back – seeking clarification where required.  Clinical opinions contained in a report are not the same as a legal assessment of capacity.  A solicitor needs to consider not just the report but also any information going to capacity which is available to them.

In relation to reports in probate proceedings, Hallen J has repeatedly expressed the view that medical experts should be asked to express views on medical questions and not legal questions.  Medical specialists can state the medical conditions and the effect or likely effect of those conditions on the patient’s functioning.  These are medical questions and there is often a high degree of agreement between ‘opposing’ experts on these matters.  Whether the effect or likely effect results in a lack of legal capacity according to the relevant legal principles is a legal question for the Court to determine.  A solicitor making an assessment is in a similar position – get the facts from the doctors and then consider the legal ramifications.

Appendices to the Guidelines

Appendix A of the guidelines contains a summary of the legal tests for capacity in relation to various legal acts.

Appendix B is a capacity worksheet for lawyers

Appendix C is a description of techniques to enhance the ability of persons with diminished mental capacity to participate in decisions affecting their own wellbeing.  (These are not directed to enabling a person lacking legal capacity to make a Will or enter into a transaction adverse to their own interests.)

The failures in Ryan v Dalton

In January 2013, Frank Ryan was 89 years of age. He was living in residential aged care. These facts should have put Dalton on notice that enquiries as to his mental functioning were appropriate.  The evidence was that she was not told of the concerns in relation to his capacity when the appointment was made: she was only told of his physical ailments and concern about his children not getting on with each other or with his defacto (who initiated the attendance and who stood to benefit by the proposed changes to the Will.)  She should have made enquiries of the nursing home in this regard.

Dalton met Frank Ryan at a café.  Appropriately, she spoke to him alone.  He appeared lucid and able to tell stories from the past.  He gave clear instructions.  Apparently, she did not appreciate that this established his long term memory was functioning but not that his executive functioning was intact.  Not having been told or not having made enquiries of the hostel, she was completely unaware of the medical context of these interactions with Frank.

The process of reading through the Will with Frank Ryan as described in Dalton’s affidavit suggests, and she confirmed in cross-examination, that she read each paragraph out and then asked him: ‘Is that right Frank?’  This is not the open ended questioning mandated by the Guidelines.  The proper approach would have been to read a portion out and then ask something open ended like: ‘What does that mean?’

Importantly, Dalton agreed in cross-examination that she was not aware of the Law Society Guidelines, was not aware that Frank Ryan had dementia, she did not ask him any open ended questions, she did not ask his care manager about any concerns held about his mental state.

The expert evidence that sank the disputed Will

The plaintiffs relied on a report from a consultant psychiatrist who was an Associate Professor at the School of Medicine at Notre Dame University in Sydney.  Salient features of his report were:

• Frank was most likely suffering from ‘vascular dementia.’
• The normal MMSE score noted by the geriatrician does not assist with the assessment of ‘executive function’ and the relative preservation of memory is a feature of vascular dementia.
• Letters written by Frank between October 2011 and February/March 2013 evidenced a ‘gradual decline of cognition, in particular of executive function’
• Evidence of the care staff at his hostel was that he became increasingly confused and agitated from around August 2012.
• Applying the criteria in Banks v Goodfellow

• • An ability to understand the general nature of a Will generally remains intact even in people with moderate to severe dementia.
  • There was no evidence as to his ability to recall the nature and size of his estate to the requisite degree.
  • The terms of the disputed Will indicate that Frank was able to recognise the people who had a claim on his bounty.
  • The dementia from which he suffered is suggestive of impairment of his executive function.

At paragraph 69 of the judgment the following important passage from the first expert report are reproduced in full:

“Ms X” has argued that Mr Ryan retained periods of relative clearness of thinking during the period when he made the Will of 2013.  This raises the question of whether there were intervals of sufficient lucidity for him to make his Will competently.

It is important to note, however, that the legal concept of the “lucid interval” is open to considerable doubt from a medical perspective.  This is because during periods of fluctuation of sensorium, it is functions such as attention and alertness that are thought to improve, not memory or the higher order executive functions thought essential to testamentary capacity.  Moreover these fluctuations are brief in duration and small in magnitude.

In a later report, after Ms Dalton had provided her account of the making of the Will, the expert noted the disparity between that account and the other evidence in relation to Frank’s dementia and confusion at the relevant period.  It then states:

In any case, as opined in my previous report, his recall of the extent of his estate is a less pertinent matter than his ability to appreciate the effect of the change on his respective heirs, his ability to provide a cogent explanation for his changing his Will, and his retention of executive function.

The decision

After considering the authorities and the submissions on the parties in detail, Kunc J sets out the reasons for his decision to reject the 2013 Will at paragraphs 94 to 98.  In summary, the powerful evidence of significant dementia combined with the deficiencies in the manner in which the solicitor had approached the task of taking instructions left his Honour unable to conclude, on the balance of probabilities, that the 2013 Will was the Will of a capable testator.  His specific reasons are set out at paragraph 98.  In summary these are:

• The hostel notes from the day the Will was signed evidencing confusion.
• On that date, Dalton only read the Will back to him and Frank indicated agreement rather than asking him open ended questions.
• Dalton was unaware of the dementia and never asked about it.
• Dalton did not approach the task with knowledge of the appropriate guidelines and diminished the value of her assessment of relevant matters.
• An undoubted expert had concluded that it was very unlikely Frank Ryan had testamentary capacity and there was no contrary opinion called.
• There was no explanation as to why Frank had departed from his longstanding agreement with the defacto about not leaving each other anything.
• All the general evidence about Frank’s ‘increasing cognitive issues.’

In relation to the second point about open ended questions, Kunc J quotes from the judgement of Campbell JA in Doulaveras v Daher (2009) 253 ALR 627; [2009] NSWCA 58 at 637 [65] (emphasis added):

“Mr Sneddon submits that the fact that two solicitors, Mr Hourigan and Mr Smith, on separate occasions decided that Mrs Daher understood the various transactions effected by the documents that they respectively witnessed is powerful evidence against the judge’s conclusion concerning Mrs Daher’s capacity. However, a difficulty in placing much weight on the views that the two solicitors formed is that there is no detail before the court of the basis upon which they formed their views. A solicitor who gives a detailed and careful explanation to someone sitting on the other side of the desk might form the view that that person understood the transaction if the person remained silent during the explanation, looked at the solicitor during it, periodically nodded, and when asked at the end whether all that had been understood, also nodded. Alternatively, a solicitor might form that view on the basis that the person on the other side of the desk periodically asked questions that related to the subject matter. In the first of those situations, if the person on the other side of the desk had, unbeknown to the solicitor, a serious deficiency in brain functioning, the solicitor’s conclusion might not be a reliable one, however honestly it may have been arrived at. In the present case, the evidence does not disclose on what basis Mr Hourigan and Mr Smith arrived at their respective views.”