The law’s response

8.13     The law does not ignore coerced transactions. There are several doctrines that deal with situations that include abuse of older people. Rather than suggesting specific amendments of these doctrines, the focus in this chapter is principally on improving the understanding and contribution of lawyers involved in the making and execution of wills, noting relevant law reform developments.

8.14     Transactions that involve undue pressure may be rendered void or voidable through doctrines of equity and probate. With respect to lifetime transactions, the equitable doctrine of undue influence places the emphasis on the person who seeks to gain under particular transactions to demonstrate that they were not the result of undue influence.^[15] Probate also has a doctrine of undue influence, but it is different from the equitable doctrine^.[16]

8.15     Probate law requires that will-makers have ‘testamentary capacity’ and have knowledge and approval of the contents of their will. Probate law also closely scrutinises wills that benefit ‘strangers’—those unrelated to the testator. Integrity measures are also built in to the formalities of will making. One aspect of this is the rule that witnesses cannot be beneficiaries, known as the ‘witness-beneficiary rule’. Although significantly changed, and in places abolished, the rule reflects a concern for self-interest affecting the validity of another’s will. A further rule of this kind is the forfeiture rule, which prevents a person who has caused the death of another from benefiting from that person’s estate.

Undue influence in probate

8.16     The probate law doctrine of undue influence requires more than just pressure; nor is it presumed in any particular relationship. Professor Gino dal Pont and Ken Mackie summarise the probate doctrine in this way:

Only actual coercion will invalidate a will. Persuasion, influence or indeed importunity is not sufficient—after all, a testator is ordinarily free to accept or reject persuasion—unless the testator is thereby prevented from exercising a free will.^[17]

8.17     In the leading case of Wingrove v Wingrove, endorsed by Australian courts, Sir James Hannen P explained, in his direction to the jury, about the different kinds of coercion, in terms that may be particularly pertinent to older persons:

The coercion may of course be of different kinds, it may be in the grossest form, such as actual confinement or violence, or a person in the last days or hours of life may become so weak and feeble that a very little pressure will be sufficient to bring about the desired result, and it may even be, that the mere talking to him at that stage or illness and pressing something upon him may so fatigue the brain, that the sick person may be induced, for quietness’ sake, to do anything. This would equally be coercion though not actual violence.^[18]

8.18     ‘Coercion’ is the essential characteristic of undue influence in the probate context—forcing someone to do something against their wishes. Actions that are the result of pressure, and acquiesced in, even where the person knows that others may think what they are doing is unwise, do not amount to ‘undue influence’. Clearly, however, there are no bright lines. As a person’s cognitive ability declines, so their vulnerability to pressure may increase.

8.19     Undue influence is a difficult matter to establish in the probate context, particularly as the onus of proof lies upon the person who alleges undue influence.^[19] In its 2013 report, Succession Laws, the Victorian Law Reform Commission (VLRC) commented:

The main problem with probate undue influence is that it has been too difficult to prove. This may lead to the Court upholding a will that does not in fact reflect the will-maker’s true intentions. This is particularly concerning given the ageing population and increasing vulnerability of older people making wills. As the population ages, there may be an increasing number of people who, despite having testamentary capacity, are vulnerable to pressure from relatives, caregivers and others.^[20]

8.20     In Nicholson v Knaggs, Vickery J made observations about the degree and nature of pressure, particularly as it relates to the ‘vulnerability and susceptibility’ of the individual:

The key concept is that of ‘influence’. The influence moves from being benign and becomes undue at the point where it can no longer be said that in making the testamentary instrument the exercise represents the free, independent and voluntary will of the testator. It is the effect rather than the means which is the focus of the principle.^[21]

8.21     Vickery J also commented about the standard of proof:

The test to be applied may be simply stated: in cases where testamentary undue influence is alleged and where the Court is called upon to draw an inference from circumstantial evidence in favour of what is alleged, in order to be satisfied that the allegation has been made out, the Court must be satisfied that the circumstances raise a more probable inference in favour of what is alleged than not, after the evidence on the question has been evaluated as a whole.^[22]

8.22     The VLRC suggested that, following Nicholson v Knaggs, undue influence may now be easier to prove in Victoria.^[23] There is also New Zealand authority that supports a similar broadening of the doctrine. In Carey v Norton,the New Zealand Court of Appeal stated that the alleged undue influence need not be accompanied by malign intent:

‘Undue’ relates to impairment of judgment rather than the improper conduct on the part of the person possessing influence. It will be ‘undue’ when it can no longer be said that the will represents the will-maker’s independent judgment.^[24]

8.23     Dal Pont and Mackie suggest that the facts in this case did not show ‘coercion in the accepted sense of the word’, which, together with Nicholson v Knaggs, may represent ‘the developing trajectory of judicial opinion’ and ‘herald some (limited) convergence between common law and equitable concepts of undue influence’.^[25]

8.24     The VLRC also considered as a reform option the legislative change in British Columbia, which commenced in 2014, to introduce into the probate context the equitable doctrine of undue influence. The section provides:

In a proceeding, if a person claims that a will or any provision of it resulted from another person

      (a)     being in a position where the potential for dependence or domination of the will-maker was present, and

      (b)    using that position to unduly influence the will-maker to make the will or the provision of it that is challenged,

and establishes that the other person was in a position where the potential for dependence or domination of the will-maker was present, the party seeking to defend the will or the provision of it that is challenged or to uphold the gift has the onus of establishing that the person in the position where the potential for dependence or domination of the will-maker was present did not exercise undue influence over the will-maker with respect to the will or the provision of it that is challenged.^[26]

8.25     Stakeholders to the VLRC inquiry were divided about whether to introduce a similar provision in Victoria: some ‘saw advantages in such a change, while others were concerned that the equitable doctrine is not appropriate to the probate context’.^[27]

8.26     The VLRC concluded that the British Columbia provision was ‘groundbreaking’ and could suggest a reform direction for Australia to follow. But the VLRC also pointed to the decision of Vickery J in Nicholson v Knaggs, and suggested that ‘the recent developments in the common law probate doctrine appear to have made undue influence easier to prove’, which may mean that legislative change is unnecessary.^[28] The final recommendation was that Victoria should review the effect of the British Columbia legislation in practice, after it had been in effect for four years, to consider whether a similar provision should then be introduced in Victoria.^[29] The commencement date for the BC reforms was 31 March 2014. The proposed Victorian review would therefore be undertaken after 31 March 2018.

8.27     The ALRC considers that the emphasis of the proposed law reforms in this Inquiry should be on the role that lawyers, and other professionals, can play in assisting older persons in their estate planning and the instruments to give effect to such plans; and community education strategies that may be developed and enhanced through the National Plan discussed in Chapter 3. Further law reform in relation to specific doctrines can be developed through state and territory law reform inquiries, such as in relation to the effect of the British Columbia reform and through a cooperative approach, as in the uniform succession laws project.

Testamentary capacity

8.28     The test for testamentary capacity, the legal competency to make a will, is a longstanding one, and stems from the 1870 decision of Cockburn CJ in Banks v Goodfellow,^[30] where he stated, in relation to the power to make a will:

It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties —that no insane delusions shall influence his will in disposing his property and bring about a disposal of it which, if the mind had been sound, would not have been made.^[31]

8.29     This is a functional test of capacity, related to the nature of the transaction and the circumstances of the testator at the time of making the will. Peisah and O’Neill summarise it as requiring that will-makers must:

1.   understand the nature and effect of a will;

2.   know the nature and extent of their property;

3.   comprehend and appreciate the claims to which they ought to give effect; and

4.   are not affected delusions that influence the disposal of their assets at the time they are making their will.^[32]

8.30     When wills have been challenged on the basis of a lack of testamentary capacity, judges have emphasised the important role that the lawyer plays in supporting their client. For example, in Pates v Craig, Santow J said that the duty of the solicitor taking instructions ‘from an obviously enfeebled testator, where capacity is potentially in doubt’ is ‘to take particular care to gain reasonable assurance as to the testamentary capacity of the testator’.

It is clearly undesirable to attempt to lay down precise and specific rules as to what that necessarily entails for every case. Such rules may lead to a perfunctory, mechanical check list approach. What should be done in each case will depend on the apparent state of the testator at the time and other relevant surrounding circumstances. Any suggestion that someone, potentially interested, has instigated the will, whether or not a client of the will draftsperson, should particularly place the solicitor concerned on the alert. At the least, a solicitor should ask the kind of questions designed to probe the testator’s understanding of the basic matters which connote testamentary capacity, as [set out in Banks v Goodfellow].^[33]

8.31     Professional bodies have developed guidelines for solicitors in such cases.^[34]

The doctrine of suspicious circumstances

8.32     The requirement of knowledge and approval of the contents of a will is a separate probate element from establishing that a person had the requisite ‘testamentary capacity’. It must be established that the will-maker knows that the document being signed is their will and that it deals with their property. Where a will benefits someone completely unrelated to the testator, probate calls for greater scrutiny to ensure that the testator had the appropriate knowledge and approval of the contents of the will. Justice Hallen of the New South Wales Supreme Court explained that, where knowledge and approval of a will is challenged, there is generally a two-stage process:

The first stage is to ask whether the circumstances are such as to ‘excite suspicion’ on the part of the court. If so, the burden is on the propounder of the will to establish that the deceased knew and approved the contents of that will. If the circumstances do not ‘excite suspicion’, then the court presumes knowledge and approval in the case of a will that has been duly executed by the deceased who had testamentary capacity.^[35]

8.33     While circumstances that may be raised to suggest undue influence do not satisfy the probate doctrine of undue influence, they may nonetheless point to a lack of knowledge and approval. However, as Dal Pont and Mackie state, ‘this does not mean that undue influence is to be subsumed into suspicious circumstances; it is a separate issue that, where relevant, must be specifically pleaded’.^[36]

8.34     The kinds of matters that ‘excite suspicion’ include:

the circumstances surrounding the preparation of the propounded will; whether a beneficiary was instrumental in the preparation of the propounded will; the extent of physical and mental impairment, if any, of the deceased; whether the will in question constitutes a significant change from a prior will; and whether the will, generally, seems to make testamentary sense.^[37]

8.35     In its 2013 Succession Laws report, the VLRC provided the following illustrations of situations that have been considered to constitute suspicious circumstances and have required further investigation of the ‘righteousness of the transaction’, and therefore the validity of the will:

•     A beneficiary is involved in the will-making process, for example by witnessing the will, writing or preparing the will or taking the will-maker to a legal practitioner.

•     The will-maker is ‘blind, illiterate or mentally or physically enfeebled’.

•     The will was not read to or by the will-maker before it was executed.

•     The will changes a pattern of previous wills by cutting out ‘natural’ beneficiaries and replacing them with recent acquaintances.^[38]

8.36     The VLRC inquiry involved a specific focus on protecting ‘older and vulnerable will-makers from undue influence’. From this perspective, the VLRC commented that, while the doctrine of suspicious circumstances was a ‘well settled area of the law’, and no changes were suggested, a constructive contribution would be for the Law Institute of Victoria to include a discussion of knowledge and approval and suspicious circumstances in guidelines on undue influence.^[39] Recommendation 8–1 is based on the VLRC recommendations.

Wills formalities

8.37     The formalities for wills, including the requirement of witnessing, serve a number of purposes, one of which is to protect a testator from being forced to sign a document they do not wish to sign.^[40] The VLRC Succession Laws inquiry included specific consideration of wills formalities and particularly with reference to ‘whether the current requirements for witnessing wills should be revised to better protect older and vulnerable will-makers from undue influence by potential beneficiaries or others’.^[41]

8.38     The VLRC concluded that, although

widespread concern was expressed … about potential beneficiaries improperly prevailing upon vulnerable will-makers to make wills that do not reflect their wishes, there was little support for the view that changing the witnessing requirements would deal with this problem’.^[42] The VLRC considered that changing the witnessing requirements was ‘unlikely to prevent undue influence.^[43]

8.39     However, as the VLRC observed:

increasing concern that older and vulnerable will-makers are being subjected to pressure about their wills has led some judges and commentators to suggest other ways of reducing the risk of undue influence in the will-making process. The key suggestion in this area is to ensure that legal practitioners take greater care when making wills.^[44]

8.40     A focus on the role and understanding of legal practitioners informs Recommendation 8–1, considered below.

8.41     The power of the Court to dispense with the formal requirements of a will—the ‘dispensing powers’, may potentially require consideration of elder abuse.^[45] Such powers enable a court to forgive compliance with wills formalities where the deceased intended the particular document in question to be a will. Given that pressure to make a will has been cited as an example of potential elder abuse, a situation might arise where a person may go along with pressure, but not succumb to it by, for example, keeping a draft will, and even signing but not having the draft will witnessed, as a strategy to keep the peace, but fully aware that it was an invalid will. Judges in such circumstances need to continue to exercise vigilance as to whether the supposed testator really intended that document to constitute their will, rather than just intending it to be a draft of something not yet completed—not confusing ‘inadvertence’^[46] with a deliberate choice.^[47]

Disqualifying beneficiaries

8.42     Two particular doctrines directed towards the disqualification of beneficiaries and others from taking in an estate are the ‘witness-beneficiary rule’ and the ‘rule of forfeiture’.

Witness-beneficiary rule

8.43     From 1752 the law in England was that a witness who was a beneficiary would lose the gift in the will, but the will itself would remain valid.^[48] This rule, known as the ‘witness-beneficiary rule’ was included in the Wills Act 1837 (UK), which formed the basis of the wills legislation in Australian states and territories.

8.44     If a person or that person’s spouse was a beneficiary, and the person witnessed the will, the gifts were ‘utterly null and void’.^[49] The argument in favour of such a rule was that ‘if a witness or a witness’s spouse were allowed to take a benefit under a will, an opportunity for undue influence would arise’.^[50] Since 1837, however, the rule has been ameliorated, principally because the rule does not distinguish ‘between the innocent and the guilty witness’.^[51] In Australia this has led to its abolition in the Australian Capital Territory, South Australia and Victoria.^[52] Change was also achieved through implementation of the model Wills Bill 1997, proposed in the uniform succession laws project.^[53] In other states and territories, the rule was retained but in the modified manner included in the model Wills Bill, namely that a witness should not be absolutely disqualified from taking a benefit under a will, but should be able to retain the gift if:

• there are at least two other witnesses who are not beneficiaries under the will;

• all the persons who would benefit directly, if the gift were avoided, consent to the distribution of the gift according to the will;

• the court is satisfied that the testator knew and approved of the gift and the gift was given freely and voluntarily.^[54]

8.45     Additionally, the rule should no longer disqualify the spouse of a witness from taking a benefit.

8.46     The reason for the change in the rules is reflected in the analysis made in the United States in the notes accompanying the Uniform Probate Code. The purpose of the change was ‘not to foster use of interested witnesses’, because ‘attorneys will continue to use disinterested witnesses in execution of wills’. Rather, it was not to penalise ‘the rare and innocent use of a member of the testator’s family on a home-drawn will’:

This approach does not increase appreciably the opportunity for fraud or undue influence. A substantial devise by will to a person who is one of the witnesses to the execution of the will is itself a suspicious circumstance, and the devise might be challenged on grounds of undue influence. The requirement of disinterested witnesses has not succeeded in preventing fraud and undue influence; and in most cases of undue influence, the influencer is careful not to sign as a witness, but to procure disinterested witnesses.^[55]

8.47     In probate contexts, where the witness-beneficiary rule is abolished, the behaviour of someone who seeks to secure a will in their favour is left to be considered under the doctrine of suspicious circumstances.

Forfeiture

8.48     In succession law, a person who causes the death of another is not permitted to benefit from the person’s estate as a result of that killing. Known as the ‘forfeiture rule’, it is a common law rule of public policy that a person should not benefit from their own wrongdoing.^[56] The rule extends to those claiming through the killer. Applicable to both wills and intestacy, the rule operates as ‘a matter of the civil law (as opposed to the criminal law), proof of the killing must be carried out in the civil court according to the civil law rules of proof, and a previous criminal trial may be irrelevant’.^[57]

8.49     There are two exceptions recognised at common law: first, where the killer is found not guilty by reason of mental illness;^[58] and where the will benefiting the killer is made after the criminal act.^[59]

8.50     The VLRC noted a number of concerns with the operation of the common law rule:

• whether the rule applies to every unlawful killing that results from an inadvertent, involuntary or negligent act or omission;

• the relevance of the moral culpability of the person responsible—for example, the difference between murder and manslaughter; and

• the impact of the rule on third parties—such as the children of the person who caused the death;

• the absence of any judicial discretion to respond to such concerns.^[60]

8.51     A number of Australian jurisdictions have responded by enacting legislation, following the United Kingdom in 1982:^[61] the Australian Capital Territory in 1991 and New South Wales in 1995.^[62] The legislation allows for an application to the Court for an order modifying the effect of the rule.^[63] In 2007, the Committee for Uniform Succession Laws considered the rule in the context of intestacy and recommended legislation.^[64] In 2014, the VLRC recommended such legislation be introduced in Victoria.^[65]

8.52     In the United States, in addition to forfeiture provisions, called ‘slayer’ laws,^[66] a number of states have expanded these statutes to disqualify persons from inheriting when they abuse or financially exploit an elderly or vulnerable adult testator.^[67] Given that a ‘distinguishing aspect’ of elder abuse cases is that family members and trusted individuals may ‘stand to inherit from the victim’, such expanded slayer laws seek to reduce elder abuse:^[68] ‘[b]y recognizing elder abuse as a matter of probate law, the goal is to disincentivise elder abuse by those who stand to gain from the death of an elderly individual’.^[69]

8.53     An example is the Illinois probate statute of 2004.^[70] It links the disinheritance provision to criminal elder abuse statutes and requires a criminal conviction under those statutes to invoke the disinheritance provision.^[71] Another model targets financial abuse.^[72]

8.54     Queensland University of Technology (QUT) academic, Barbara Hamilton, argued that a similar approach should be taken in Australia, using the Illinois statute as an example.^[73] The trigger for disinheritance is a conviction of an offence of financial exploitation, abuse or neglect of an elderly person or disabled person. ‘Financial exploitation’ is defined as occurring when a ‘person in a position of trust and confidence’ knowingly obtains control over an elderly person’s property by means of deception or intimidation.^[74] As Hamilton explains:

The aim would be to provide an additional (and potentially powerful) deterrent to combat the serious and widely prevalent problem of family violence, particularly elder abuse, and to encourage through financial incentives (potential disinheritance under a will or intestacy) respectful behaviour towards elderly family members.^[75]

8.55     Two stakeholders suggested amending the forfeiture rules along similar lines in Australia in response to elder abuse. The New South Wales Trustee & Guardian said that

[t]he reason for expanding the forfeiture legislation in the USA to financial abuse cases is to help prevent and reduce elder abuse. Family members often stand to inherit from the victim and by recognising elder abuse as a matter of succession law, the aim is to deter elder abuse by those who are likely to gain from the death of an elderly person. The introduction of such measures in Australia are worthy of investigation and evaluation.^[76]

8.56     In the Discussion Paper, the ALRC suggested that the other strategies identified for preventing and responding to elder abuse should be considered and evaluated, before consideration is given to amending the forfeiture rule in the way noted above. The Law Council, however, considered that the suggestion of the NSW Trustee & Guardian deserved further attention.^[77]

8.57     There are two major constraints on a simple transposition of such provisions into Australia. First, the US forfeiture provisions are linked to specific elder abuse offence provisions. The ALRC has concluded against recommending specific alteration to criminal laws in this way, emphasising improved responses to existing laws and an expansion of the jurisdiction of civil and administrative tribunals to handle some of the allegations of financial abuse that may arise, for example with respect to misuse of powers of attorney.^[78]

8.58     Secondly, such a specific amendment to forfeiture provisions, as a matter of probate law, would also need to be set in the wider context of succession law in Australia. In particular, in Australia, the distribution of an estate may be affected by family provision laws in each state and territory.^[79] Under such laws, an eligible person who has been left without ‘adequate provision for their proper maintenance, education or advancement in life’^[80] in the will or on the intestacy of a particular family member may apply for provision, or increased provision from the estate.

8.59     In New South Wales this also includes the ability to claw back property into the estate that may otherwise be regarded as lifetime transactions as ‘notional estate’.^[81] This means that there are other ‘corrective’ means to the distribution of an estate that may have been affected by the pressures of relatives to benefit them in this context—without the necessity of having to establish a conviction under specific elder abuse offences. This corrective means is not available in the same way in the US.

8.60     Any consideration of the introduction in Australia of amendments to state and territory probate laws, in the form of disinheritance provisions similar to those in the US, would need to be undertaken in the context of a wider consideration of succession law in Australia. The uniform succession laws project provided a significant opportunity for coordinated law reform across all areas of succession law: wills, intestacy, family provision and the administration of estates. While a consideration of forfeiture provisions would be a project of a smaller scale, the necessity for considering it in the wider context of succession laws would still be essential.

8.61     The initiative could be a matter for, and led by, a state law reform agency, such as the specific project undertaken by the VLRC with respect to the forfeiture rule. It could also form part of the ongoing agenda of, for example, succession law and elder abuse committees of the state and territory law societies and the Law Council, together with other issues that have been noted in this Report, including, for example, the undue influence doctrine in probate. The bigger issue surrounding these matters is the way that property law, and particularly inheritance law, expresses ideas of ‘unworthiness’ in families. Civil law and common law systems have approached such matters differently, both in terms of property in marriages and property on death. Reviewing any aspect of inheritance law needs to be located within an understanding of this complex history.^[82]