In Alexakis v Masters (No 2) [2023] NSWSC 509; Alexakis v Masters (No 3) [2023] NSWSC 694, a Sydney General Practitioner has denied allegations in the New South Wales Supreme Court that he pressured a patient into modifying his Will despite being named the main beneficiary of the patient’s multi-million dollar estate. He faced accusations of “unconscionable conduct” during court proceedings.
While contesting a Will can be intricate, there are valid reasons to question its legitimacy. In New South Wales, the Succession Act outlines seven categories of individuals who have the right to dispute a Will, such as (ex) spouses, de facto partners, children, and grandchildren. Individuals with the right to contest a Will may contest it for various reasons, including fraud, forgery, undue influence, and lack of mental capacity.
Undue influence involves taking advantage of a dominant relationship to convince a testator to favour a specific person in their Will. This often occurs when the testator is in a weakened state. Wills may be challenged on the grounds of undue influence, which could lead to their invalidation if adequate evidence is presented. However, it is essential to understand that demonstrating undue influence can be difficult.
Compelling evidence of pressure applied to the testator must be present to prove actual undue influence. On the other hand, presumed influence may result from particular relationships that imply the presence of such influence. Typical examples of these influential relationships include the connections between religious leaders and their followers, solicitors and their clients, and doctors and their patients.
While challenging a Will is complex, legitimate reasons exist to contest a Will’s validity. In New South Wales, the Succession Act specifies seven categories of individuals entitled to challenge a Will, including (ex) spouses, de facto partners, children, and grandchildren. A Will can be challenged on several grounds, including fraud, forgery, undue influence, and lack of mental capacity.
Undue influence
Undue influence is exploiting an influential relationship to persuade a testator to favour a particular individual in their will. This situation often arises when the testator is in a vulnerable position. Wills can be contested on the basis of undue influence, potentially rendering them invalid if sufficient evidence is provided. However, it is important to note that proving undue influence can be quite challenging.
To establish actual undue influence, there must be clear evidence of pressure exerted on the testator. In contrast, presumed influence can arise from specific relationships that suggest the existence of such influence. Common examples of these influential relationships include religious leaders and their followers, solicitors and their clients, and doctors and patients.
When someone wishes to contest a will due to undue influence, they must demonstrate several vital factors. These include an unexpected distribution of assets, a strong trust that the testator placed in the influencer, the testator’s vulnerability due to illness or other circumstances, and the fact that the influencer benefited from the will.
Witness testimonies from individuals who knew the testator can play a vital role, especially since the testator cannot clarify their intentions after passing away. Establishing undue influence requires proof of coercion, which can manifest in both severe actions and subtle forms of persuasion.
To effectively counter claims of undue influence, it must be shown that the testator understood their actions and acted independently. The focus should be on whether the testator received competent advice and had adequate time to consider their decisions, reinforcing the validity of their will.
Moreover, establishing undue influence necessitates proving that some form of coercion occurred. In the landmark British case of Wingrove v Wingrove (1885) LR 11 PD, which has received affirmation from Australian courts, the judge remarked:
“Coercion can manifest in various forms, ranging from severe instances like physical confinement or violence to cases where a person near death may be so frail that minimal pressure could achieve the intended outcome; it may even occur through simple conversation or persuasion when such a person is ill, potentially overwhelming their mental capacity to the extent that they may comply just for the sake of tranquillity. This too would constitute coercion, even if it’s not outright violence.”
Wingrove v Wingrove (1885) LR 11 PD 81 at 83.
To counter the presumption of undue influence, two factors must be proven:
- the testator was aware of and comprehended their actions and
- they operated free from the influence of anyone else.
A key aspect of determining independent action is whether the plaintiff received competent and informed advice and adequate time to reflect on that advice.
Alexakis v Masters (No 2) [2023] NSWSC 509; Alexakis v Masters (No 3) [2023] NSWSC 694
On May 16, 2023, the NSW Supreme Court registry granted letters of administration letters of the estate of Raymond McClure (the deceased) to Dr. Peter Alexakis (the first respondent). The deceased died at age 84, leaving an estimated estate worth around $27 million. The deceased had no spouse or children and had an estranged relationship with his brother.
Background
- The Plaintiff was Dr Alexakis, the deceased’s General Practitioner
- The First Defendant (and Crossclaimant) was the Salvation Army
- The Second Defendant (also a Cross-claimant) was the deceased’s [friend] Mr Camilleri
- The Third & Fourth Defendants (also Cross-claimants) were a Mother and daughter, Hildegard Schwanke & Irmgard (Marianne) Schwanke
The deceased created six wills, with the last three pertinent to these legal proceedings. The most recent, dated July 10, 2017 (the July Will), allocated his residence in Strathfield and 90% of the remaining estate to the first respondent, who was the deceased’s general practitioner, $10,000 to his caregiver, Maggie Nasr, 9% of the residue to Frank Camilleri, (the Third Respondent and the last 1% along with various personal items to Hildegard Schwanke(the First Appellant). Hildegard and Mr Camilleri were both close friends of the deceased.
The second-to-last will was made on June 8, 2017 (the June Will), which designated 65% of his estate to the First Respondent, 25% to the third Respondent, 5% to the First Appellant, and 5% to Irmgard Schwanke, ( the Second Appellant) the daughter of Hildegard. The June Will replaced a Will created on May 27, 2016 (the 2016 will), which left the deceased’s entire estate, minus household items left to the first Appellant, to Gary Masters (Second Respondent / Cross-Appellant), who served as the financial director of the Salvation Army (NSW) Property Trust (the Salvation Army).
The three most recent Wills were drafted as the deceased battled significant health challenges, including diabetes and prostate cancer, and had been hospitalised multiple times since June 2015. The deceased often voiced his desire to avoid staying in the hospital, and beginning in January 2017, the first respondent started making house calls to see the deceased. While hospitalised in May 2017, the deceased informed the first respondent that he wished to modify his Will to exclude the Salvation Army as the principal beneficiary.
At the deceased’s request, the first respondent arranged for a lawyer to take instructions to create and sign a new Will (the June Will). A month later, while at home and receiving routine visits from the first respondent, the deceased executed the July Will.
Schwanke v Alexakis; Camilleri v Alexakis [2024] NSWCA 118
Background
- Frank Camilleri (Appellant / Second Cross Respondent)
- Peter Alexakis (First Respondent / First Cross Respondent)
- Salvation Army (Second Respondent / Cross-Appellant)
- Hildegard Schwanke (Third Respondent / Third Cross Respondent)
- Irmgard (Marianne) Schwanke (Fourth Respondent / Fourth Cross Respondent)
The Appellant, the First and Second Appellants, along with the Salvation Army, contested the Will by cross-appeal, arguing that the gifts to the first respondent resulted from undue influence, fraud, or unconscionable conduct or that the deceased lacked knowledge and approval of the contents of both the July and June Wills, thereby rendering those gifts null.
The main issues on appeal included:
Whether Henry J made an error in applying the principles for proving a will by:
(a) neglecting to apply a presumption of undue influence in cases where a testator in poor health awarded a substantial gift to their treating physician (as argued by the first and second appellant and the Salvation Army) or
(b) failing to apply general equitable principles concerning unconscionable conduct (as contended by Mr. Camilleri);
- whether Henry J erred in essentially accepting the respondents testimony;
- whether Henry J failed to establish undue influence or fraud, nor to identify suspicious circumstances or a quid pro quo arrangement between the deceased and the respondent;
- whether Henry J erred in her alternative conclusion that if the presumption of undue influence were applicable, it had been successfully countered and
- whether Henry J made an error in directing the appellants to bear their costs.
The decision
The Court dismissed (with Adamson JA, Ward P, and Gleeson JA concurring) the main appeal while permitting the challenge to the primary judge’s order on costs.
Those challenging a Will on undue influence bear the burden of proof in probate, unlike in equity, where a presumption may exist. In probate, the proponent must demonstrate that the testator was aware of and approved the Wills contents if there are suspicious circumstances, but this does not entail disproving undue influence. The responsibility for proving undue influence has consistently rested with those opposing the probate of a Will.
General equitable principles concerning unconscionable conduct should not be applied to testamentary gifts, as a clear distinction exists between gifts made during a person’s lifetime and those made via a Will.
Henry J’s thoroughness and detail in her reasoning contradicted any suggestion that she could not recall the evidence while drafting her reasons.
The evidence substantiated the conclusions that the first respondent either knew the terms of the June or July Will or that there was a quid pro quo arrangement between him and the deceased.
Minor discrepancies in the first respondent’s testimony do not prove that he was dishonest or undermine his credibility.
Since the appellants did not demonstrate that the first respondent was aware he was a beneficiary under the June or July Wills, and because the evidence supported both the appellants’ and the respondent’s theories equally, no error was found in Henry J’s conclusion that neither undue influence nor fraud had been established.
The first respondent’s duties for the deceased, such as visiting him at home, making regular phone calls, and helping him find a solicitor for a new Will, did not align with the behaviour of someone exploiting the deceased’s vulnerability for personal gain but instead reflected that of a committed and diligent medical professional.
At this point, the appellants’ theories heavily relied on a quid pro quo arrangement and on the respondent being aware of the contents of the June and July Wills. Since neither of these facts was established, and ample evidence indicated that the deceased knew and understood his Wills, this finding was not erroneous.
While the prima facie case for undue influence appeared compelling, the appellants are entitled to have the estate cover their costs.
Costs
Furthermore, Henry J considered that the appellants had a financial stake in the proceedings while exercising discretion over costs according to s98 of the Civil Procedure Act 2005 (NSW), treating this fact as a disqualifying factor. However, having a financial stake is a requirement for standing in such cases and thus cannot be a relevant factor in determining costs.
Henry J also factored in the apparent injustice to the first respondent, the successful party, in mandating that he shoulder most of the costs incurred by the unsuccessful parties, as these costs would have to be paid from the residuary estate, of which he is a 90% beneficiary.
The Court of Appeal believes Henry J’s discretion was incorrectly exercised for these reasons. The suitable order regarding costs from the proceedings in the lower Court is for the appellants (the defendants in that Court) to have their costs covered by the estate.
It is worth mentioning that the appellants informed the Court that regardless of the appeal’s outcome, Ms. Nasr would still receive her gift of $10,000 from the estate. This decision aimed to prevent the need to officially include her as a party since the agreement among the parties indicated she did not have a stake in the case’s outcome.
Next of Kin
Before the Court of Appeal reached its decision, the Presiding Judge notified the parties that the court’s view was that the proceedings were not correctly constituted since the deceased’s next-of-kin (his brother, if still alive, or his brother’s descendants in the event of his death) had not been incorporated as a party and had an interest. An intestacy might potentially arise if the deceased’s gift were deemed to have failed. Counsel for the Second Respondent agreed that the deceased’s next of kin was indeed a necessary party to these proceedings.
As the administrator appointed to handle the estate, the Court instructed the respondent to take all reasonable measures to locate the deceased’s brother or next of kin and submit an affidavit by May 1, 2024, detailing the outcomes of such searches. The respondent submitted an affidavit from the solicitor managing the case on his behalf, sworn on May 15, 2024, testifying that her searches uncovered that the deceased’s late brother, Herbert McClure, had two children, Julie Kennelly and Roger McClure. Julie serves as the deceased’s brother’s legal personal representative.
While the deceased’s next-of-kin had a stake in both the June and July Wills being set aside due to undue influence, this stake was sufficiently represented and protected by all parties except the respondent, whose interest lay in maintaining the July Will (and subsequently, the June Will, if the former were not upheld). The position of the deceased’s next-of-kin would only diverge from that of the appellants if the Court determined that the July or June Will was affected by undue influence or other factors.
Since the appeals have not been substantiated, the issue of what would occur if the gift to the respondent under the July Will were to fail has become irrelevant. In these circumstances, including the deceased’s late brother’s legal personal representative or next-of-kin in the proceedings is unnecessary since they hold no entitlement if the July Will remains valid and operates under its conditions.
Costs
Regarding costs, counsel for the Second Respondent submitted that if the Salvation Army lost on the appeal overall but were successful regarding costs, the fitting order for costs in the lower Court would be for the estate to pay the Salvation Army’s costs, with the appropriate order for costs in this Court being that his client bears its appeal costs. Counsel for the appellants and second respondents supported these arguments concerning costs.
- For the reasons given above, I propose the following orders:
- Allow the appeals and the cross-appeal on costs.
- Otherwise, dismiss the appeals and the cross-appeal.
- Set aside order (2) made by Henry J on 23 June 2023 and, in lieu thereof, order that the defendant’s costs on the ordinary basis be paid out of the estate of the late Raymond John McClure (deceased) from the gift of the residue and remainder under clause 2(D) of the deceased’s will dated 10 July 2017.
- Order the appellants and the cross-appellant to pay the first respondent’s costs of the appeal.
Health Care Complaints Commission
The Health Care Complaints Commission initiated legal action against general practitioner Dr Alexakis in the NSW Civil and Administrative Tribunal. It was claimed that from May to October 2017, Dr Alexakis:
- Failed to maintain appropriate professional boundaries with a patient and other healthcare professionals involved in the patient’s treatment.
- Unlawfully prescribed Schedule 4 and Schedule 8 medications to another patient.
- Maintained insufficient records regarding the care of these patients.
In Health Care Complaints Commission v Alexakis [2023] NSWCATOD 99, dated 10 July 2023, the Tribunal determined that these allegations were substantiated and found Dr. Alexakis guilty of unsatisfactory professional conduct and professional misconduct.
In Health Care Complaints Commission v Alexakis (No. 2) [2024] NSWCATOD 82 dated 21 June 2024, the Tribunal reprimanded Dr. Alexakis and placed conditions on his registration to ensure public health and safety.