Elders Trustee and Executor Company Ltd and Richard Gilmore Howard as Executor of the Estate of Alice Marie Howard and the Public Trustee of the Northern Territory of Australia v Laurence Cheong Ah Toy and Koolpinyah Station Pty Ltd in the Wills of Oscar Schomburgk Herbert and Evan Schomburgk Herbert Both Late of Koolpinyah Station Via Darwin in the Northern Territory of Australia, Pastoralists, Deceased and the Administration and Probate Act [FLR]

• Jurisdiction: Northern Territory
• Judge: Gallop,Kearney,Martin JJ.
• Judgment Date: 28 August 1990
• Court: Supreme Court
• Docket Number: Nos. AP24 and AP25 of 1989
• Date: 28 August 1990

(1990) 101 FLR 279

IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA

Gallop, Kearney and Martin JJ.

Nos. AP24 and AP25 of 1989

Elders Trustee and Executor Company Limited and Richard Gilmore Howard As Executor of the Estate of Alice Marie Howard and the Public Trustee of the Northern Territory of Australia

and

Laurence Cheong Ah Toy and Koolpinyah Station Pty Ltd In the Wills of Oscar Schomburgk Herbert and Evan Schomburgk Herbert Both Late of Koolpinyah Station Via Darwin In the Northern Territory of Australia, Pastoralists, Deceased and the Administration and Probate Act

Cases followed:

Nock v Austin (1918) 25 CLR 519

Wintle v Nye (1959) 1 All ER 552 ; (1959) 1 WLR 284

In the Estate of Fuld, dec'd (No. 3) (1968) p 675

Tanner v Public Trustee (1973) 1 NZLR 68

Barry v Butlin (1838) 2 Moo P C 480 ; 12 ER 1089

Tyrrell v Painton (1894) p 156

Fulton v Andrew (1875) LR 7 HL 488

Westpac Banking Corporation v Spice (unreported, Federal Court (FC), 4 April 1990)

Chordas v Bryant (Wellington) Pty. Ltd. (1988) 20 FCR 91

Johnson v Buttress (1936) 56 CLR 113

Whereat v Duff (1973) 1 ALR 363

Child v Osment (1914) p 129

Goodacre v Smith (1867) LR 1 P and D 359

Mitchell v Gard (1863) 3 Sw Tr 275 ; 164 ER 1280

Orton v Smith (1873) LR 3 P and D 23

Smith v Smith (1866) LR 1 P and D 239

Wilson v Bassil (1903) p 239

Middlebrook v Middlebrook (1962) 36 ALJR 216

Spiers v English (1907) p 122

Brown v McEncroe (1890) 11 LR (NSW) Eq.134

Stanley v Phillips (1966) 115 CLR 470

Howell v Marsh (1906) 23 WN (NSW) 17

Liffe v Hedderwick (1922) 31 CLR 148

Cases referred to:

Norbis v Norbis (1986) 60 ALJR 335

Public Trustee v Hall (1937) SASR 252

Woolf v Burman (1940) ALJ 431

Cretazzo v Lombardi (1975) 13 SASR 4

Levy v Leo (1909) 25 TLR 717

Churchill v Badenochs Transport Ltd (1971) 1 SASR 63

Cases distinguished:

Twist v Tye (1902) p 92

Summerell v Clements (1862) 2 Sw and Tr 35 ; 164 ER 1184; 32 LJ 33, Prob.

Dwyer v Vindin (1906) 4 CLR 216

In re Cutcliffe's Estate (1959) p 6

Cases not followed:

Page v Williamson (1902) 87 LT 146

Appeal — Costs — Probate and Administration — Undue Influence

Appeal — review of findings of fact — function of appellate court when findings based on credibility of witnesses

Costs — probate actions — principles applicable to exercise of discretion — costs usually follow event — exceptions — where suspicion that wills did not reflect true will of testators is caused by conduct for which beneficiary responsible — applicable principle to be determined on facts

Costs — probate actions — significance in award of costs of number of counsel briefed and extent of examination of suspicious circumstances — sanction for excessive effort.

Costs — probate actions — unsuccessful plea of undue influence — costs of this issue follow event except where reasonable to press the issue

Probate and Administration — probate actions — costs — when costs of losing party may be paid out of estate — beneficiary responsible for suspicious circumstances which reasonably required enquiry Undue Influence — requirements for presumption of undue influence to arise

1 These appeals demonstrate the truth of the old aphorism ‘where there's a will, there's a relative’.

On 1 October 1972 Oscar Schomburgk Herbert and Evan Schomburgk Herbert made identical wills appointing the respondent and the testator's brother as Executors and trustees, and bequeathing their respective estates both real and personal to the trustees upon trust for the brother for life, and upon the death of that brother for the use of the respondent absolutely. The wills also contained clauses investing the trustees with certain powers and a precatory clause that the trustees and beneficiaries should continue to carry on the pastoral business upon Koolpinyah Station under the business name of Herbert Bros. for as long as may be practicable. Subsequent to the execution of the wills, the testators made certain dispositions which were intended to implement what was then known as a ‘Bray scheme’.

2 Two actions were brought by the respondent for probate of the respective wills in solemn form of law and another action was brought by the Executors of the Estate of the late Alice Marie Howard and the Public Trustee of the Northern Territory to set aside the dispositions made by the testators as the implementation of the Bray scheme and for consequential orders. The three actions were heard together in the Supreme Court of the Northern Territory. On 24 July 1989 the learned trial judge (Nader J.) granted decrees of probate in solemn form of law of both wills and entered a verdict for the respondent in relation to the dispositions inter vivos.

3 The Executor of the Estate of the late Alice Marie Howard and the Public Trustee of the Northern Territory have appealed to this Court against the orders made.

4 At the trial of the actions the two wills were contested in accordance with the pleadings on the grounds of lack of testamentary capacity, lack of knowledge and approval of the wills by the respective testators and undue influence and fraud on the part of the present respondent. In the third action the inter vivos transactions were challenged on the grounds of fraud, undue influence and unconscionable conduct on the part of the present respondent. Whether the allegation of fraud was pursued at the trial is relevant to the question of costs. It was never expressly abandoned. On the hearing of the appeals to this Court the only challenge in relation to the will actions was on the grounds of lack of knowledge and approval by the testators. In the appeal in relation to the inter vivos transactions the challenges on the grounds of undue influence and unconscionable conduct were maintained.

5 The trial of the actions extended over some 30 sitting days and involved a vast amount of oral and documentary evidence. In his reasons for judgment the learned trial judge reviewed all the evidence and made appropriate and relevant findings of fact.

6 Included in his findings were the significant events in the respective lives of the testators, including their medical histories. He traced the circumstances in which the respondent was introduced to the testators and recounted generally, and as to some matters particularly, the relations between them. He dealt in detail with the involvement of the respondent in the testators' business and legal affairs. His Honour's findings were:

‘On 23 March 1970, Laurence Cheong Ah Toy, an accountant practising in Darwin, was engaged by Evan as accountant to replace Frederick Barry who had been admitted to hospital and could no longer carry onas the Brothers' bookkeeper. In March, Richard Charles Ward (Ward), a solicitor and senior partner in the firm of Ward Keller and Rorrison, telephoned Ah Toy and asked him to act as accountant for the Brothers. Ward was well regarded and liked by the Brothers and enjoyed a good reputation in the community in general. He was active in politics. He later became a judge of the Supreme Court of the Northern Territory. His name is now integrated in the history of the Northern Territory. A main road in Darwin has been named after him: Dick Ward Drive. Later, there was a time when the Brothers intended making Ward the sole residuary beneficiary under their wills. I have no doubt that, for Ward to have commended Ah Toy to the brothers, he held him in high regard both as to his ability and honesty: two qualities that Ward would have understood to be indispensable in the person who was to take care of financial matters for the Brothers. It is likely that this respect had been earned by Ah Toy. Having an accountant to whom they were referred by Ward, and who came to show such interest in their affairs, would certainly have been a matter of comfort and assurance to the Brothers. It is vital to a proper understanding of this case to remember that Ah Toy had come to them on Ward's recommendation. The fact tends to show that Ah Toy was a person of good character, and it tends to explain why the Brothers would have placed such faith in him. That, on 26 March 1970, the Brothers authorized Ah Toy to invest $40,000 on their behalf and handed to him a cheque for that amount to invest exemplifies their confidence.’

7 The significant findings of fact were that the respondent became progressively more intimately involved in the business affairs of the testators and Koolpinyah Station. He became the brothers' financial adviser and consultant. In financial matters they came to rely upon him and he also helped them in respect of things not associated with their financial affairs.

8 Ah Toy discovered that the brothers had made wills in 1948. His Honour's findings of fact on this subject were:

‘On 24 March 1970, Ah Toy asked the Brothers whether they had current wills. It transpired, when the facts became known concerning the circumstances of the Brothers, that the question was timely and prudent. On 31 March 1970 the Brothers, at Ah Toy's request, authorized him in writing to inspect their wills held by the ES and A Bank, Smith Street, Darwin. The authorities included a requirement that, after inspection, the wills be replaced in sealed envelopes and handed back to the bank for safe keeping.

Ah Toy discovered on inspection that the residuary beneficiary in each Brother was one, Pauline Murray (the Brothers' sister) who was then deceased. There is no evidence explaining why Ward had not himself discovered that fact: he was the Brothers' lawyer and close friend. He knew one of them to be old and frail, and both possessed of considerable property. That it was Ah Toy who made the discovery is to his credit, and must have created a favourable impressionof him on the Brothers.

…

At the meeting with the Brothers on 2 April, Ah Toy, unprompted, raised the subject of...