Katie Wechsler v Michael Du Maurier [2002] NSWCA 13 (13 February 2002)

Last Updated: 15 February 2002

NEW SOUTH WALES COURT OF APPEAL

CITATION: Katie Wechsler v Michael Du Maurier [2002] NSWCA 13

FILE NUMBER(S):

40059/01

HEARING DATE(S): 11 December 2001

JUDGMENT DATE: 13/02/2002

PARTIES:

Katie Wechsler (Appellant) v Michael Du Maurier (Respondent)

JUDGMENT OF: Stein JA Hodgson JA Foster AJA

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): PD 103367/98

LOWER COURT JUDICIAL OFFICER: Windeyer J

COUNSEL:

D P F Officer QC/J S Mendel (Appellant)

P Hallen SC/C F Hodgson (Respondent)

SOLICITORS:

Murphy & Maloney (Appellant)

Pricewaterhousecoopers Legal (Respondent)

CATCHWORDS:

SUCCESSION - Wills, probate and administration - the making of a will and codicil - construction and effect of testamentary instrument - failure by testatrix to make sufficient provision for appellant - intention and capacity of testatrix - whether testatrix was affected by a delusion at the time of making the will - false belief not a delusion - ND

LEGISLATION CITED:

n/a

DECISION:

Appeal dismissed with costs

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40059/01

PD 103367/98

STEIN JA

HODGSON JA

FOSTER AJA

Wednesday, 13 February 2002

Katie WECHSLER v Michael Du MAURIER

The deceased, Gizela Fiala, died on 3 December 1997. She had two daughters, Marika (Mary) Du Maurier and Katie Wechsler (the Appellant). In wills made in January and October 1995, she devised her residual estate in the proportions of 60% to Mary and 40% to Katie. In the October will, the deceased also gave Mary her two-fifths interest in a property in Bankstown. The question put before Windeyer J was whether the testatrix, Mrs Fiala, had testamentary capacity when she executed the will and a codicil thereto. The appellant's case, which failed before Windeyer J, was that the deceased was suffering from a delusion as to the appellant's character, and that of her husband Dr Wechsler, and that this had a direct impact on the dispositions in her wills.

The appellant appeals from the decision of Windeyer J, in which his Honour held that the belief of the deceased that the Appellant and her husband had cheated her, or deceived her, or dealt with her improperly was explicable and not a delusion.

Held:

Per Stein JA (Hodgson JA and Foster AJA agreeing):

1. Windeyer J was entitled to conclude that the evidence demonstrated that the deceased was able to properly reflect and consider the claims of those who may have claims on her estate, and to determine in what proportions her property should be divided amongst the claimants.

2. Windeyer J did not misapply the test for delusion in Bull v Fulton [1942] HCA 13; (1942) 66 CLR 295. There was ample evidence to enable his Honour to conclude that the false belief which Mrs Fiala held was explicable and that it was not a delusion but in fact a mistaken view;

3. In deciding whether a delusion was operative regard is to be had to

the contents of the will and the circumstances surrounding its execution, Boughton v Knight (1873) LR 3 P&D 64. In this case neither the contents of the will(s), nor the surrounding circumstances of execution, suggest any direct operation or impediment upon testamentary capacity; and

4. If there was a delusion, it did not operate so as to have a direct bearing on the will(s) and destroy the testamentary capacity of the deceased.

Orders:

1. Appeal dismissed with costs.

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40059/01

PD 103367/98

STEIN JA

HODGSON JA

FOSTER AJA

Wednesday, 13 February 2002

Katie WECHSLER v Michael Du MAURIER

Judgment

1 STEIN JA:

Introduction

2 The deceased, Gizela Fiala, who died on 3 December 1997, had two daughters, Marika (Mary) Du Maurier and Katie Wechsler (the appellant). She clearly loved both of them and treated them with scrupulous equality until sometime late in 1994. However, in wills made in January and October 1995, she departed from that equality and devised her residual estate in the proportions of 60% to Mary and 40% to Katie. In the October 1995 will, the deceased also gave Mary her two-fifths interest in a property at Bankstown.

3 The appellant's case, which failed before Windeyer J, was that the deceased was suffering from a delusion as to Katie's character, and that of her husband Dr Wechsler, and that this had a direct bearing on the dispositions in the wills. Accordingly, the respondent had not discharged the onus of proof that the deceased had testamentary capacity at the time of making the wills.

4 The deceased was extremely generous to her daughters. Between 1987 and 1994 she gave each of them equal gifts amounting to in excess of $1 million, that is a total of over $2 million. The last equal gift was made on 1 November 1994. Unfortunately, it was this handsome generosity which caused the problem. Until around May 1994, the deceased clearly believed that the moneys in two partnerships, upon which she drew to make the gifts, was hers to distribute. What she was not told in clear terms, until that time, was that her generous gifts to the daughters were accumulating a large debt to the partnerships. In particular, a large debt to her daughter Katie and to her husband, Dr Wechsler was accumulating. It appears that the deceased had enormous difficulty in comprehending the true position and in accepting it. However, accept it she did, albeit with obvious reluctance and bitterness. By the end of 1994 the deceased had repaid $250,000 to Katie and her husband and agreed that she owed a further sum of $529,150. Interest on the indebtedness was foregone by Katie and Dr Wechsler. Further smaller payments were made by the deceased to the Weschsler's family company, Hexiva Pty Ltd, before she died.

5 The deceased's estate was valued at over $6 million and Katie's 40% share of the residue will amount, according to his Honour, to about $2.4 million, so this was not a case of a testator making no provision for her child.

The judgment of Windeyer J

6 Windeyer J found that the deceased held a false belief that Katie and her husband had cheated or deceived her or dealt with her improperly. His Honour said that while Mrs Fiala accepted the debt, she believed that she should have been warned of it in precise terms and earlier than she was. Further, she believed that it was improper for Katie and her husband to demand interest on the debt, having accepted the gifts and that this conduct amounted to cheating. Also, that the demand for repayment of the debt was made at a time convenient to make a claim for her interest in the George Street property when she believed that she had been responsible for getting Katie and Dr Wechsler (Hexiva) the interest.

7 His Honour also referred to problems the deceased had with the accountant to the partnership (Mr Vickers), with Dr Wechsler's failure to give the deceased a receipt for the $250,000 paid by her and his failure to allay her fears about a potential problem with the Astoria building. These matters had some relevance although, as it may be seen, they mainly concerned Dr Wechsler.

8 Windeyer J then said:

I have after considerable thought decided that there was no delusion. There is no medical evidence to support the claim, although Mrs Wechsler through her husband, sought the opinion of two doctors, who were not called. That is however not in any way determinative. Anger about the lack of a receipt and the Astoria problem was aimed at Dr Wechsler and was I consider, explicable. The real concern was about the debt, its size, the lack of warning and the interest claim. The view about the acquisition of the Hexiva interest was mistaken but really incidental to this. While such concern may on one view have been unjustified it was explicable and if explicable then the fact that Mrs Fiala thought she had been cheated and deceived was also explicable. If one asks the question in the terms Sir James Hannan put in his charge to the jury in Broughton v Knight [sic] (1873) LR 3 P&D 64 at 68:

Can I understand how any woman in possession of her senses could have believed that Dr & Mrs Wechsler had acted improperly in the ways she believed?

I consider the answer to be in the affirmative. The belief might have been mistaken and I think it likely that all involved were to some extent mistaken. It should be remembered that Mr Lederer thought Katie should accept the gifts as loan repayments. Lest there be any doubt about it I am affirmatively satisfied that the third requirement as to validity specified in Banks v Goodfellow is made out. [My emphasis added]

9 The will dated 18 January 1995 contained the following clause (cl 6):

My decision to give sixty percent (60%) of my residuary estate to my daughter the said MARIKA DU MAURIER and forty percent (40%) of my residuary estate to my daughter the said KATIE WECHSLER was not made by lack of love or natural affection for my daughter the said KATIE WECHSLER as I love both my daughters equally. However my daughter the said MARIKA DU MAURIER living next door to me cared for years for my wellbeing and assisted me in every possible way and it is my wish to acknowledge and appreciate her kindness to me.

10 A similar clause (cl 7) was included in the will dated 17 October 1995 but also included a reference to the giving of the deceased's two-fifths interest in Bankstown to Mary.

11 Of clause 6 in the January 1995 will, Windeyer J said:

... I have already held that the first explanation came from the deceased in answer to the question from Mr Winter [the solicitor] and there is I think no reason to think that explanation untrue and thought up by the deceased to put forward to hide the true reasons for difference.

12 The learned judge added that he considered the reason for the inequality in the second will was the reason given in it, viz cl 6. The statement made about the care given to the deceased by Mary was true (indeed conceded) and remained even more so as time progressed.

13 His Honour also noted that most cases where incapacity is alleged through delusions in failing to consider claims on a testator's bounty, were in circumstances where a person was left nothing. Here Katie was left 40% of residue (about $2.4 million). Acknowledging the onus of proof on the propounder of the will, this fact nonetheless supported a finding of capacity.

14 Windeyer J also stated that it could not be said that the will was not `officious'. His Honour concluded that even if there was a delusion, contrary to his earlier finding, `it did not bear on the testamentary dispositions'. Accordingly, probate in solemn form was granted to the respondent, Michael du Maurier, in respect of the third will (October 1995) and a codicil to it dated 19 November 1997.

Consideration

15 There was ample evidence to support Windeyer J's finding that while the deceased held a false belief that Katie and her husband had cheated or deceived her, it was not a delusion.

16 First, as his Honour said, the false belief held by the deceased was explicable given the circumstances. There were many reasons for this and they included the fact that for around 5 years the extremely generous gifts to Katie (and to Mary) were accepted notwithstanding that Katie, and her husband in particular, knew that the gifts were escalating the deceased's indebtedness to Hexiva. Whether, or to what extent, Dr Wechsler tried to make the deceased aware of the situation, it is clear that she was not made aware of the full extent of the indebtedness until April 1994. It is plain that it rankled with the deceased that Katie (and Dr Wechsler) wanted to retain the gifts and give no credit to the indebtedness she had incurred to Hexiva. This lead to the deceased's analogy that `Katie has two pockets'.

17 In my opinion, his Honour's conclusion that the deceased had testamentary capacity and was not suffering from any delusion is sustainable and completely understandable when regard is had to the evidence as a whole.

18 The two 1995 wills and the 1997 codicil do not, by their terms, create any suspicion. Indeed, to the contrary. The dispositions in the 1995 wills are rational and indicative that the deceased considered all of those persons who might have a claim on her testamentary bounty. Clause 6 (and cl 7 in the October 1995 will) provide a perfectly adequate and acceptable explanation (indeed one which is acknowledged to be truthful) for the extra provision made for Mary. Plainly, Mary had a greater claim on the deceased's bounty which she recognised.

19 His Honour was entitled to find that the deceased made the wills in the terms which she did for the reasons set out in the wills.

20 If, contrary to the trial judge's conclusion, the false beliefs held by the deceased about the appellant, and Dr Wechsler, had affected her testamentary capacity, one would have expected the appellant to have been wholly excluded as a beneficiary or left only a pittance.

21 What the evidence bears out is that Mrs Fiala had the capacity to reflect, to draw back and reason, and consider the consequences of her actions. The beliefs she held did not overwhelm her judgment when she made each of the 1995 wills and the codicil in 1997. She was still able to make reasonable and appropriate dispositions and to remain rational in her consideration and reflection on those who had a claim on her bounty.

22 However angry or upset she got with the appellant, and her husband, she was able to calm down and reflect. There are two very good examples of this. At one time she gave instructions to her solicitor to divide her residual estate in the proportions of 70/30 between Mary and Katie. However, the next day she withdrew those instructions after talking to Mary and reflecting. At another time, she gave instructions to cut Katie out completely and leave her 40% share to her children. However, the deceased was able to accept the advice of her solicitor and withdraw those instructions.

23 The evidence of the two solicitors, Dr Winters and Mr Hamilton, is also compelling. Dr Winters, in particular, was aware of the family problems. There is no reason not to accept their evidence that they had no ground to suspect that Mrs Fiala lacked testamentary capacity or to doubt the wisdom or fairness of her dispositions. Neither of them believed that the deceased's reasons for making an unequal disposition between Mary and Katie was other than disclosed. Indeed, the deceased was consistent in what she said to her solicitors about the reason for providing a greater benefit to Mary up to and including Mr Hamilton's visit to her in June 1997.

24 Moreover, it was the deceased who suggested the reason for the 60/40 split of residue. It did not come from the solicitors. Mrs Fiala also appreciated that at her age, and because of remarks that Katie had made to her, it was a good idea that she obtain a letter from Dr Atlas, her general practitioner. Again, this was an idea which emanated from the deceased and not from her solicitor or medical advisor.

25 Indeed, the medical evidence, while not determinative, deserves to be given due weight. In fact, it is all one way and confirms that the deceased had no condition which affected her testamentary capacity.

26 The evidence of Dr Jenneke, Mrs Fiala's psychiatrist between 1994 and 1996, is important. In his view, she suffered from depression and a panic condition, but no cognitive impairment. She did not suffer from any dementia or psychotic disorder. In short, she did not suffer any condition which would compromise her capacity to make a will. Further, in Dr Jenneke's opinion, she did not suffer from any delusion in the clinical sense.

27 There is no doubt, as Dr Jenneke said, that Mrs Fiala felt anger for Dr Wechsler and Katie. But his Honour was entitled to find that the false beliefs which he found that she held, were in many ways explicable. In the circumstances which unfolded in 1994, it is not surprising that the deceased was antagonistic towards Dr Wechsler and Katie. Her complaints were not, when one considers the circumstances, to be seen as irrational. What occurred with Mrs Fiala's incurring the large debt to Hexiva should not have been allowed to occur, or not to the extent that it did. The full picture should have been made very plain to the deceased well before April/May 1994. If it had been, the problem would have been very much less acute and Mrs Fiala's gifts to her daughters much less generous.

28 Two points in particular are made by the appellant about the evidence. One is the content of Mrs Fiala's `notes', especially notes made proximate to the time of the making of the 1995 wills. These notes, in the deceased's hand, were not discovered until after she died. They were never forwarded by the deceased to Katie. His Honour said that they were, to a large extent, diatribes against Dr Wechsler. This is true although they also contain a considerable amount of venom and criticism directed towards Katie. In oral evidence Dr Jenneke thought that they were the product of a great deal of anger towards her daughter and son-in-law, but not delusion. It is significant that the notes were never sent by the deceased to Katie or Dr Wechsler. This fact is indicative that the deceased may have been attempting to get her bad feelings `off her chest', somewhat like a personal diary. In any event, the whole of the evidence is indicative that at the time of the making of each of the wills in January and November 1995, and the 1997 codicil, the deceased was able to draw back from the anger she felt for Katie and her son-in-law.

29 The other point emphasised by the appellant is the fact that there was no discussion between Mr Hamilton and Mrs Fiala about the inclusion of cl 7 in the October 1995 will. There was, of course, discussion between the deceased and Dr Winters in relation to the January 1995 will (cl 6).

30 There was evidence that the deceased explained to Mr Hamilton the reasons why she wished to reward Mary with a greater share of her estate. For example, in June 1997. As I said earlier, if the deceased's feelings for Katie had been so severely poisoned by her falsely held beliefs by the end of 1994, it would have been unlikely that she would have made any provision for Katie. On the one occasion that she contemplated such a course she soon calmed down, took advice and reflected. As a result, she reverted to the 60/40 split of residue between the daughters, which she clearly saw as an appropriate way to recognise the contribution of Mary to her care.

31 The appellant further argues that Windeyer J misapplied the test for a delusion in Bull v Fulton [1942] HCA 13; (1942) 66 CLR 295 at 339, namely, whether the delusion was a fixed and incorrigible false belief which the testator could not be reasoned out of. The appellant complains that his Honour, having found that the deceased had a false belief, failed to go further and inquire as to whether it was fixed and incorrigible and one which she could not be reasoned out of.

32 Windeyer J did refer to Bull v Fulton and in discussing it said:

When discussing delusions in terms of testamentary capacity, it is generally accepted that delusion is a belief not capable of rational explanation or amenable to reason; or a fixed and incorrigible false belief which the victim could not be reasoned out of.

33 His Honour added that there was a clear difference between a mistaken view and a belief arising from a delusion. Windeyer J found that although Mrs Fiala held a false belief that Katie and Dr Wechsler cheated or deceived her or dealt with her improperly, there was no delusion. I accept that it is implicit in his Honour's reasoning that the test of delusion enunciated in Bull v Fulton was not satisfied. Mrs Fiala, although clearly upset and angry, and for understandable reasons, was able to accept that she was indebted in Hexiva. She was able to accept that she had to come to an arrangement to pay the debt. Indeed, she started to do this, paying in excess of $300,000 to Hexiva. The false belief that his Honour found that she held had elements of rationality within it. For example, that the true situation was not properly drawn to her attention until after she had gifted $1 million out of the partnerships to each of her daughters. Why would she not be entitled to be angry at the acceptance of such generous gifts by Katie when she knew, or must have known through her husband, that with every gift she took from her mother, the greater the indebtedness of her mother to their family company, Hexiva?

34 Nonetheless, Mrs Fiala was amenable to advice and compromise, which was agreed at a meeting which all of the relevant actors attended in December 1994.

35 The conduct of the deceased following this meeting contrasts with that of Dr Wechsler. In at least three respects he attempted to renege from the agreement until the stand taken by Dr Winters prevailed and he signed and accepted the agreed minutes.

36 There was, in my view, ample evidence to enable his Honour to conclude that the false belief which Mrs Fiala held was explicable and that it was not a delusion but in fact a mistaken view.

37 It is plain that it could not be said that the deceased was unable to properly reflect upon the claims of those entitled to be considered to share in her bounty. Nor can it be said that the false belief, assuming for a moment that it was a delusion, had any direct bearing on the disposition by the testator. The evidence did not establish that Mrs Fiala was suffering from a disorder of the mind which poisoned her affections and perverted her sense of right or prevented her from exercising her natural faculties.

38 In deciding whether a delusion, assuming its existence, was operative, regard is to be had to the contents of the will and the circumstances surrounding its execution, Boughton v Knight. Here neither the contents of the will(s), nor the surrounding circumstances of execution, suggest any direct operation or impediment upon testamentary capacity.

39 In Easter v Griffith (Unreported, Court of Appeal, 7 September 1995) Gleeson CJ noted that `the law treats as critical the distinction between mere antipathy, albeit unreasonable, towards one who has a claim, and a judgment which is affected by a disorder of the mind' (p 10).

40 Although in dissent, Kirby P's conclusions (at 16 - 17) may be apposite to the facts of this case. He said:

Combined with the lay evidence, the opinion of the two medical practitioners who actually saw the deceased in her lifetime, convince me that the suggested conditions of delusion and paranoia were not present in the testatrix at the time she made the will which was propounded in this proceeding. She emerges from the evidence as an intelligent, combative, interesting and sometimes difficult person. It would be astonishing if the person described by the evidence had not given much thought to the various claims on her testamentary provision. Clearly she considered the claims of her son but she concluded that he was not deserving. This may not be the response which would have been typical of a parent who loved and forgave. But given the total breakdown of the relationship, the son's properties and undoubted other sources of support and his complete neglect of his mother in the last decade of her life, I am not convinced that the claimed want of testamentary capacity is established simply because of the act of disinheritance. Nor am I convinced that the other evidence called on the issue of capacity displaces the inference of capacity derived from the will itself and from much other evidence. On the contrary, I am convinced that the will was made by the testatrix as a rational disposition of her property according to her own assessment of what was just and proper. I can reach this view with full acceptance of the truthfulness of the evidence of the respondent as found by Santow J and all of his Honour's other credibility based findings. It was the testatrix's right, in law, to provide as she did.

41 In my view, Windeyer J was entitled to conclude, and indeed I would agree, that the evidence demonstrated that the deceased was able to properly reflect and consider the claims of those who may be supposed to have claims on her bounty, and to determine in what proportions her property should be divided amongst the claimants (Banks v Goodfellow [1870] LR 5 QB 549).

42 For the reasons I have given, I do not see how it could be concluded that the deceased lacked testamentary capacity. His Honour's finding that there was no delusion was open to him on the evidence. In any event, if there was a delusion, Windeyer J was entitled to conclude, as I would, that it did not operate so as to have a direct bearing on the will(s) and destroy the testamentary capacity of the deceased.

43 The appeal should be dismissed with costs.

44 HODGSON JA: I agree with Stein JA.

45 FOSTER AJA: I agree with Stein JA.

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LAST UPDATED: 14/02/2002