It is appropriate to highlight a Kiwi case in what is likely to be one of my last posts before I disappear to New Zealand for a month – in part to co-teach a short course on mental capacity law at Auckland University with the great Kris Gledhill (normal burblings will be resumed in late August). In Green v Green  NZHC 1218, the High Court of New Zealand conducted an extensive (and for comparative purposes) fascinating review of the relevant principles to apply in a claim based in particular part upon (1) a want of testamentary capacity; (2) capacity to appoint (and remove) trustees; (2) capacity to appoint (and remove) directors of trust companies; and (3) undue influence. Given that it appears clear (for now – and regardless of whether this is a ‘good thing’) that testamentary capacity for English purposes is governed by the common law), the tour d’horizon from the High Court at paragraph 89 is very relevant, at least as regards testamentary capacity.
There was a dispute between the parties as to what it meant to understand (in relation to each of the acts in question) ‘the nature of its act and its effects.’
- The plaintiff argued, in substance that in order for the person to have the capacity to understand the nature and effect of each decision he had to have the capacity to understand the implications of the decision for other legal and family relationships. By way of an example, in relation to the testamentary decision to appoint new executors, the plaintiff argued that the man needed to be able to understand the impact of the appointment of those executors upon the control of the Green Group, the welfare of the Green Group, the trusts, and the beneficiaries, particularly in light of the working relations between the various trustees and beneficiaries. Counsel for the plaintiff describes this as “the general nature, broad operation, and wider effect of the exercise of each challenged power”;
- The defendants’ position was that the relevant capacity is simply the capacity to understand the nature of the decisions and not the wider implications of the decisions, certainly not the interplay of each decision with the human dynamics of the family situation.
Relying in part upon the (English) Court of Appeal decision in Simon v Byford, Winkleman J agreed with the defendants (at paragraph 92) “that it is not necessary for the appointor/testator to have the capacity to understand the collateral consequences of the disposition, appointment or removal.” However, Winkleman J held at paragraph 95 that “[i]t is clear however that the effects referred to in Banks that the person expressing a power or executing a will must have the capacity to understand, are more than understanding the nature of the act or decision itself. It must encompass the immediate effect of the decision, for example that the effect of appointing an executor is to give the executor control over an estate. In this case it would encompass the fact that the executors have the power of appointment of trustees and through that, control over the Green Group.” It did not, however, require of the man “that he have capacity to understand the effects of his decisions upon the well being of the various entities, and his beneficiary children and grandchildren” (paragraph 97).
In a passage of equal application in England, Winkleman J did not accept (at paragraph 99) that “the law is that a fair and rational decision requires less capacity than one that on its face is unfair or apparently irrational. The nature of the decision will clearly be one of the factors, part of the evidence, that a court takes into account in assessing the issue of capacity. As the principles stated above recognise, an apparently irrational decision may in certain circumstances make the case that there was no capacity. Similarly, the rationality or consistency of the decision is reassuring as to capacity. It does not follow however that less capacity is required to make an apparently fair or rational will than one which is apparently irrational. This point was made by Tipping J in Bishop v O’Dea [(1999) 18 FRNZ 492 (CA)]:
 Irrationality of a will on its face, either as to content or as to expression, is often an indication of greater or lesser force that the will maker lacked capacity. But the rationality of a will on its face does not necessarily provide much evidence of capacity, especially if the will is professionally drawn, in which case one can expect it to be at least rationally expressed. There was in this case a rational reason for Mr Byrne wishing to benefit the Bishop family; thus the will certainly could not be described as irrational on its face. Its ex facie rationality was simply one of a number of factors which the Judge had to consider. That the will was rational on its face was clearly apparent. In the circumstances of the present case and in particular in the light of the medical evidence we do not consider there is any force in Mr Matheson’s contention that the Judge failed to give any or sufficient weight to this factor. (Emphasis added)”
In terms of the claims based upon undue influence, Winkleman J expressly drew the relevant principles (at paragraph 100) from the House of Lords in Royal Bank of Scotland v Etridge  2 AC 773 as then approved in the NZ context by the NZ Court of Appeal. He then engaged in a review of the (predominantly NZ) case-law as to the burden of proof in a claim for undue influence in relation to the formation of a will, concluding that that the onus remained on the plaintiff throughout (consistent with the English position – see Re Good  EWHC 640 (Ch) and Ark v Kaur  EWHC 2314 (Ch)). His review may well prove of interest to testamentary aficionados in England. Although the statutory provisions in England and New Zealand are rather different, one of the things that I will be looking forward to most on my trip to Auckland is exploring with the students the extent to which they both seek to address similar problems, and whether (and to what extent) we reach similar answers by different routes.