Occasionally, a testator leaves their estate or some part of it to their treating physician, especially where there is a history of illness and poor health and medical care and treatment in the period leading up to their death, when strong bonds and relationships may be formed in the course of the professional care and support provided.
Such gifts are often treated( quite understandably) with strong suspicion by other beneficiaries or potential beneficiaries and may be challenged on the grounds of unconscionable conduct or undue influence.
However- no presumption of undue influence arises in probate.
CASE STUDY
In Schwanke v Alexakis; Camilleri v Alexakis [2024] NSWCA 118, the Court dealt with these issues.
On 16 May 2023 letters of administration of the will of Raymond McClure dated 10 July 2017 (the July will) were granted to Dr Peter Alexakis, the first respondent on appeal.
McClure died aged 84, leaving an estate worth in the order of $27m. He had no spouse or children and was estranged from his brother. McClure made six wills of which the final three were relevant in these proceedings. The final July will, left his home at Strathfield and 90% of the residue of his estate to Dr Alexakis, Mr McClure's general practitioner, $10,000 to McClure's carer Maggie Nasr, 9% of the residue to Frank Camilleri and the remaining 1% and various chattels to Hildegard Schwanke. Hildegard and Mr Camilleri were both friends of McClure.
McClure's penultimate will was made on 8 June 2017 (the June will) and left 65% of his estate to Dr Alexakis, 25% to Mr Camilleri, 5% to Hildegard and 5% to Irmgard Schwanke, Hildegard's daughter. The June will superseded a will made on 27 May 2016 (the 2016 will) which left McClure's entire estate, less his household contents which were left to Hildegard, to Gary Masters as financial director of the Salvation Army (NSW) Property Trust (the Salvation Army).
The 3 last wills were made in circumstances where McClure was suffering from serious health issues, including diabetes and prostate cancer, and had been admitted to hospital on several occasions since June 2015. McClure frequently expressed that he did not wish to stay in hospital and in January 2017, Dr Alexakis began visiting McClure on occasion at his home.
While in hospital in May 2017, McClure told Dr Alexakis that he wanted to change his will to remove the Salvation Army as principal beneficiary.
THE NEW FINAL WILL
At McClure's insistence, Dr Alexakis arranged for a solicitor to take instructions to draft and execute a new will, the June will.
A month later, while at home and receiving regular house visits from Dr Alexakis, McClure executed the July will.
APPEAL
Mr Camilleri and the Schwankes, by way of appeal, and the Salvation Army, by way of cross-appeal, (collectively referred to as the appellants) challenged the will, pleading that the gifts to Dr Alexakis were the product of undue influence, fraud or unconscionable conduct, or that McClure did not know and approve of the contents of the July will or the June will and accordingly, those gifts failed.
The principal issues on appeal were:
- whether the primary judge erred in her Honour's application of the principles for proof of a will by:
(a) failing to apply a presumption of undue influence in circumstances where a testator in poor health left a substantial gift to his treating physician (as submitted by the Schwankes and the Salvation Army); or
(b) failing to apply general equitable principles relating to unconscionable conduct (as submitted by Mr Camilleri);
- whether the primary judge erred in substantially accepting Dr Alexakis' evidence;
- whether the primary judge in failing to find undue influence or fraud were made out or to find suspicious circumstances or the existence of a quid pro quoarrangement between McClure and Dr Alexakis;
- whether the primary judge erred in her Honour's alternative finding that if the presumption of undue influence applied, it had been rebutted; and
- whether the primary judge erred in ordering the appellants pay their own costs.
The Court held (Adamson JA, Ward P and Gleeson JA agreeing) dismissing the substantive appeal, but allowing the challenge to the primary judge's costs order:
Principles applicable to proof of a will
NO PRESUMPTION OF UNDUE INFLUENCE ARISES IN PROBATE
1. The onus of proving undue influence in probate, as distinct from in equity, is on those seeking to impugn a will on that basis. No presumption of undue influence arises in probate: The onus on the proponent of a will to prove that a testator knew and approved of the contents of that will, which arises if there are suspicious circumstances, does not also require the proponent disprove undue influence. The authorities have consistently imposed the onus of proof of undue influence on the opponent to probate of a will:
2. General equitable principles relating to unconscionable conduct ought not apply to testamentary gifts. There is a necessary distinction between inter vivos transactions and gifts and testamentary gifts:
The primary judge's factual findings
3. The detail and rigour of the primary judge's reasons negated any conclusion that her Honour could not recall the evidence when writing her reasons
NO ERROR IN FINDINGS
4. The evidence supported the findings that Dr Alexakis knew the terms of the June will or the July will or that there was a quid pro quo arrangement between him and McClure.
5. Minor inconsistencies in Dr Alexakis' evidence do not establish that he was a dishonest witness or impugn his credibility.
UNDUE INFLUENCE OR FRAUD WAS NOT MADE OUT.
6. In circumstances where it was not proved that Dr Alexakis knew he was a beneficiary of the June will or the July will, and the evidence was equally consistent with the appellants' case theory as it was the respondent's, no error in the primary judge's finding that undue influence or fraud was not made out has been shown.
A DEDICATED, DILIGENT MEDICAL PROFESSIONAL:
7. The tasks Dr Alexakis performed for McClure, including conducting home visits, telephoning him regularly and assisting to find a solicitor to draft a new will, were not consistent with the behaviour of a person taking advantage of McClure's vulnerability for his own material ends but were that of a dedicated, diligent medical professional:
Alternative finding that if there was a presumption of undue influence, it had been rebutted
8. The appellants' case theories to this point were largely dependent on Dr Alexakis entering into the quid pro quoarrangement and knowing of the contents of the June will and the July will. Neither of these facts was found and there was ample evidence that McClure knew and understood his wills. This finding was not in error:
COSTS
9. The prima facie case for undue influence appeared to be strong. The appellants are entitled to have their costs paid out of the estate.
This case and the facts are a timely reminder that the onus of proving unconscionable conduct is a difficult one, and often suspicious circumstances arise, which still fail to amount to proof of undue influence.
A wise testator wishing to bestow a gift upon a treating physician might be well advised by the person drafting the will to record some statement of intent, the effect of which expressly negates and suspicion or presumption of undue influence.