Erem v Moussa [2024] NSWSC 641 (Richmond J) involved testamentary capacity, the mental ability to sever a joint tenancy, proprietary estoppel, resulting trust, Will rectification, and alternatively, a family provision order. The matters concerned the estate of Mary Moussa (the deceased), who lived with Ali Erem (the plaintiff) from 1990 until she died in 2015. In 2007, they jointly acquired real estate. The plaintiff’s consistent testimony indicated that he had multiple discussions with the deceased, where she mentioned that the property would go to him following her death.
Several key questions concern the deceased’s legal capacity and the implications for her estate. Firstly, the Court must assess whether the deceased possessed the requisite testamentary capacity when she executed either the 2015 or 2014 Will. Additionally, it is necessary to consider whether the deceased lacked the mental capacity to sever the joint tenancy of the McPherson Street property with the plaintiff. Should it be established that the deceased did sever the joint tenancy, were the defendants estopped by denying the plaintiffs legal ownership of the McPherson Street property due to the deceased’s conduct? If not, the Court must evaluate whether the plaintiff holds the deceased’s share of the property on a resulting trust. Furthermore, if the 2014 Will is deemed valid, should the Court rectify the 2014 Will under s27(1) of the Succession Act? Lastly, in the alternative, consideration must be given to whether the Court should make an order for provision in favour of the plaintiff under s 59 of the Succession Act.
Background
In 2014, the deceased was diagnosed with terminal glioblastoma, a type of brain cancer. The medical records from that time revealed the deceased could not comprehend the situation and had “done nothing wrong and had never been bad to others.” The records also noted incidents where the deceased exhibited extreme aggression towards the plaintiff, including public abuse and blaming him for her illness. They documented a violent confrontation between the deceased and the plaintiff.
Shortly after her diagnosis, the deceased chose to sever the joint tenancy and created a new Will, leaving her portion of the property to her nephew. At the same time, the deceased bequeathed the remainder of her estate to her sister, Marcel Aziz Moussa (the first defendant), who was also a beneficiary under each of the deceased’s 1993 and 2014 Wills and was mistakenly referred to in the 2014 Will as “my husband, Marcel.” Nine months later, in 2015, the deceased executed another Will with a different lawyer, allocating most of her estate to the first defendant and claiming to the solicitor that she had given the plaintiff a million dollars. Both lawyers testified that the deceased possessed testamentary capacity.
Delusions
However, the Court determined that the deceased was suffering from delusions, the most significant being her belief, expressed at multiple moments from mid-2014 until her death, that the plaintiff had “put the cancer in my head.” The first defendant submitted that no one presented evidence to the deceased to disprove this incorrect belief.
The Court found the belief “clearly pertinent to her capacity to consider and weigh all the moral claims on her testamentary bounty,” as this delusion directly related to her ability to evaluate the moral claims of potential beneficiaries when the deceased instructed the solicitors to draft both the 2014 and 2015 Wills. (at [215]).
Medical experts
The conclusion that the deceased was under the delusion that the plaintiff was responsible for her cancer shifted the burden of proof onto the first defendant, who failed to meet this burden because medical evidence from the deceased’s treating doctors (Dr Hovey and Dr Shivalingam) and two medical experts (Dr Saines and Dr Fisher) indicated she could not assess the moral claims of potential beneficiaries, especially when she created her last two Wills (at [215]).
Solicitors
The Court noted that it was evident from Mr Robert Windeyer’s (the second solicitor) file notes that he was “a highly competent and diligent probate lawyer, and he endeavoured to evaluate the deceased’s testamentary capacity by observing her during those meetings.
Nevertheless, the second solicitor was unaware at that time that the deceased had an incurable brain tumour and had undergone surgical procedures to remove it. The second solicitor also lacked knowledge of the cognitive assessments made by her treating doctors during that period” (at [216]).
Concerning the 2015 Will, the first defendant submitted information concerning the second solicitor’s evaluation of the deceased during meetings on 6 and 13 July 2015, where he concluded she had testamentary capacity. The first meeting lasted approximately 84 minutes, and the second about 102 minutes. The Court held that the file notes indicate he is an exceptionally competent and thorough probate lawyer, having attempted to gauge the deceased’s testamentary capacity during these meetings. However, the deceased did not inform the solicitor at that time that she had an incurable brain tumour and had received surgical treatment for it.
Similarly, the second solicitor lacked knowledge of the cognitive evaluations conducted by her treating doctors. When cross-examined, he stated that had he been aware of her condition, he would have sought a medical opinion to confirm the deceased’s testamentary capacity.
Moreover, nothing the deceased stated to the second solicitor in those meetings on 6 and 13 July 2015 raised any alarms concerning the possibility the deceased suffered from delusions, especially concerning the plaintiff. The second solicitor had no reason to doubt the deceased’s claim that she had given the plaintiff $1 million, which, as previously mentioned, was invalid; also, the initial solicitor. The Court deemed the assessments of testamentary capacity by both solicitors to be unreliable.
Joint tenancy Broader transaction
The Court indicated that consideration of testamentary capacity is required when the relevant instrument is part of a broader transaction. Therefore, ‘when an individual attempts to sever a joint tenancy in conjunction with creating a new Will, it is essential to apply, with necessary adjustments, the test [for testamentary capacity] because the outcome of the severance, by terminating the right of survivorship, ultimately benefits one or more beneficiaries under the Will (at [223]).
When an individual attempts to sever a joint tenancy at the same time as executing a new Will, it becomes crucial to apply, with suitable modifications, the test in Banks v Goodfellow because the revocation of survivorship as a consequence of severance advantages one or more Will beneficiaries: refer to Hamill v Wright [2018] QSC 197 at [158]- [161]. A similar method applies to voluntary gifts made during the deceased’s lifetime: Crago v McIntyre [1976] 1 NSWLR 729 at 740-741; Perochinsky v Kirschner [2013] NSWSC 400 at [96]. In this instance:
‘Mary’s intention behind severing the joint tenancy was to allow her to manage her share of the … property via a new Will executed on the same day. Given these circumstances, her mental capacity should be evaluated based on the test [for testamentary capacity]’ (at [231]).
Gibbons v Wright [1954] HCA 17; 91 CLR 423; 28 ALJ 111; [1954] ALR 383 acknowledged capacity assessment when executing an instrument considering a broader transaction. In this context, the deceased’s intention in severing the joint tenancy was to enable her to gift her portion of the McPherson St property through a new Will created on the same day; the solicitor should determine the deceased’s testamentary capacity following the test in Banks v Goodfellow. In applying that standard, Richmond J believed the deceased lacked the necessary testamentary capacity to effect the severance. At that moment, her delusions regarding the plaintiff hindered her from accurately assessing his claim on her testamentary assets.
Utilising that standard, the deceased did not have the mental capacity to sever the joint tenancy because she lacked testamentary capacity at that time. This determination rendered the severance voidable at the discretion of the deceased or, following her death, her executor. Although the plaintiff was the executor, he had a duty to act in the interests of the beneficiaries, and it was not in their best interests for him to nullify the severance (at [232]).
Ultimately, determining which test to apply in this case is inconsequential. If the deceased lacked mental capacity at the time of the severance, it would be voidable rather than void. Only the deceased or the deceased’s representative could annul it. The deceased did not choose to negate it during her lifetime. While the plaintiff serves as the administrator pendente lite and receiver, he lacks the authority to nullify the severance. The limited powers allocated to him upon his appointment do not extend to annulling severance.
Furthermore, an administrator pendente lite is obliged to manage and safeguard the estate for the benefit of those ultimately entitled in future proceedings: Henderson v Executor Trustee Australia Ltd (2005) 93 SASR 337; [2005] SASC 477 at [45], [53], and [124]; Gooley v Gooley [2020] NSWSC 798 at [126], [138]. Likewise, a receiver operates in a caretaker capacity until the entitled individuals are identified: Henderson [2005] SASC 477 at [43]. It would not serve the beneficiaries’ interests for the plaintiff to void the severance.
The decision
The Court was ‘convinced that the plaintiff would not have purchased the … property had he been aware that the deceased would, at some point, sever the joint tenancy without the plaintiff’s consent’ (at [262]). Consequently, the plaintiff was entitled ‘to relief fulfilling his expectation of acquiring the full interest via survivorship’ (at [264]).
The Court found that the plaintiff relied on the deceased’s assurance that she would not sever the joint tenancy of the McPherson Street property without his agreement. This expectation was fundamental to the plaintiff’s decision to proceed with the purchase, during which he contributed 65% of the costs, sold his property, and undertook significant maintenance work. The deceased later unilaterally severed the joint tenancy, which caused Ali financial detriment.
The Court declared that the deceased’s 50% share of the property is held on constructive trust for the plaintiff, granting him full ownership by survivorship. The plaintiff’s alternative claims, including the resulting trust and family provision, were dismissed as unnecessary due to the estoppel claim’s success.