Beverley Karen Gilbert as executor and trustee of the estate of James Matheson Gilbert v Donohoe - [2020] WASC 213

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   BEVERLEY KAREN GILBERT as executor and trustee of the estate of JAMES MATHESON GILBERT -v- DONOHOE [2020] WASC 213
CORAM:   MASTER SANDERSON
HEARD:   9 MARCH 2020
DELIVERED          :   11 JUNE 2020
PUBLISHED           :   11 JUNE 2020
FILE NO/S:   CIV 2512 of 2019
BETWEEN:   BEVERLEY KAREN GILBERT as executor and trustee of the estate of JAMES MATHESON GILBERT
Plaintiff

AND

ANNE ELIZABETH DONOHOE
First Defendant

PETER JEFFREY GILBERT
Second Defendant

JUDITH ROSE GILBERT by guardian ad litem TERENCE JOHN GILBERT
Third Defendant

TERENCE JOHN GILBERT
Fourth Defendant

TERENCE JOHN GILBERT as executor of the estate of MARY AGNES GILBERT
Fifth Defendant

BEVERLEY KAREN GILBERT as executor of the estate of JOHN GILBERT
Sixth Defendant

Catchwords:

Probate - Proper interpretation of clause of will - Turns on own facts

Legislation:

Wills Act 1970 (WA)

Result:

Direction given

Category: B

Representation:

Counsel:

Plaintiff	:	P MacMillan
First Defendant	:	N Siegwart
Second Defendant	:	No appearance
Third Defendant	:	M Curwood
Fourth Defendant	:	M Curwood
Fifth Defendant	:	No appearance
Sixth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Philip Wyatt Lawyer
First Defendant	:	Birman & Ride
Second Defendant	:	No appearance
Third Defendant	:	Leach Legal
Fourth Defendant	:	Leach Legal
Fifth Defendant	:	No appearance
Sixth Defendant	:	No appearance

Case(s) referred to in decision(s):

Boyes v Cook (1880) 14 ChD 53
Pringle v Pringle [2010] WASC 206
Walsh v Adrian Cory Sloan as executor of the estate of the late Laurette Dorothy Keddie [2019] WASCA 107

MASTER SANDERSON:

This case concerns a disputed clause in a will. The relevant facts are not in dispute and are summarised in pars 3 to 8 of the affidavit of the plaintiff sworn 19 August 2019 and filed in support of the application. Those paragraphs read as follows:
3.I am the executor of the Will of my late husband James Matheson Gilbert, deceased (James), dated 10 December 2015. Probate was granted to me on 21 July 2017. Annexed hereto and marked Annexure BKG1 is a true and correct copy of the Grant.
4.James was one of the executors of the Will dated 16 January 1991 (the Will) of his late father, John Gilbert, deceased (John), to whom Probate was granted by the Supreme Court of Western Australia on 2 January 2009, with leave reserved to James' mother and wife of John, Mary Agnes Gilbert (Mary), the other executor appointed under the Will. Annexed hereto and marked Annexure BKG2 is a copy of the Grant.
5.James died on 18 February 2017.
6.Mary died on 16 May 2017.
7.John's estate was not completely administered for the following reasons:
7.1Pursuant to the terms of the Will:
7.1.1all of John's estate was left to Mary in trust to provide income for Mary during her lifetime; and
7.1.2on the death of Mary, all of John's estate was to pass to James, subject to conditions.
7.2James predeceased Mary.
8.As the executor of the estate of the deceased executor of the Will, I am entitled to administer the estate of John. There are no persons entitled to the administration of John's estate prior to or equal with myself.
The only remaining assets for distribution in John's estate are four blocks of land which taken together the plaintiff defines as the 'Farming Land'. The difficulty arises in relation to cl 2 of John's will. It is in the following terms:
2.I GIVE DEVISE AND BEQUEATH all my real and personal estate whatsoever and wheresoever situate unto my Trustees UPON TRUST:
FIRSTLYTo pay my just debts funeral and testamentary expenses
SECONDLYTo hold the balance of my real and personal estate on trust and to pay the whole of the income thereby arising to my wife MARY AGNES GILBERT during her lifetime and
THIRDLYProvided my son JAMES MATHIESON GILBERT pays the sum of THREE THOUSAND DOLLARS ($3,000) to each of his brothers PETER JEFFERY GILBERT and TERRENCE JOHN GILBERT and his sister ANNE ELIZABETH DONOHOE then to give the balance of my real and personal estate to the said JAMES MATHIESON GILBERT absolutely.
The dispute is of very narrow compass. The first defendant says that as James did not pay the amount referred to in the third limb of cl 2 of the will prior to James' death, the gift of the remainder to James fails. Accordingly, the remainder, including the Farming Land, should pass on a partial intestacy. The plaintiff says that as the executor of James' estate she can pay the relevant amounts to the first, second and fourth defendants and thereafter complete administration of John's estate by transferring the residue – in particular the Farming Land - to James' estate.
Before detailing the evidence I should deal with objections taken by the first defendant to the affidavit of the plaintiff to which I referred and a subsequent affidavit of the plaintiff sworn 10 January 2020. A number of the objections taken by the first defendant relate to evidence of events which occurred after John signed his will on 16 January 1991. It is said evidence of these events cannot be used to interpret the will. The first defendant relies on the decision of Boyes v Cook (1880) 14 ChD 53 at 56 and Pringle v Pringle [2010] WASC 206 [25.7]. As a statement of principle that is undoubtedly correct and it was not suggested otherwise by counsel for the plaintiff. But some statements are important to the overall narrative. For instance, objection is taken to par 18 of the plaintiff's affidavit. That paragraph deals with events that occurred between the signing of the will and John's death in October 2008. The paragraph does not in any way suggest how cl 2 of John's will ought be interpreted. It simply gives context to the application.
That said, there are a large number of paragraphs which are either irrelevant or, at least by implication, suggest that events after the signing of the will are relevant to the interpretation of cl 2.
Objection is taken to pars 23 to 26. It is said these are irrelevant. In fact they provide background material which is relevant to the disposition of the application. The same can be said of pars 29 through to 35. They detail factual matters as they existed prior to 16 January 1991. Paragraphs 36, 37 and 39 are irrelevant and should be struck out.
Paragraph 40 details events after John signed his will and is irrelevant and will be struck out. Paragraph 41 gives evidence of a fact and although it may not be relevant to the interpretation of cl 2 it is not in itself objectionable. Paragraph 42 is irrelevant and will be struck out. Paragraphs 43 through to 47 detail events which occurred prior to John signing his will. They are evidence of surrounding circumstances and are unobjectionable. Paragraph 48 is irrelevant and will be struck out. Paragraph 49 is evidence of John's state of mind prior to his signing the will. It is unobjectionable.
Turning then to the plaintiff's supplementary affidavit of 10 January 2020 objection is taken to pars 7 and 8. Those paragraphs are irrelevant and will be struck out. Paragraph 9 gives evidence of the fact that the only remaining assets for distribution in John's estate is the Farming Land. That is a fact and the statement of fact is unobjectionable.
The relevant facts can best be stated by quoting from the plaintiff's first affidavit:
14.John and Mary resided in the house on Lot 410 and conducted a partnership business under the name and style 'J & M Gilbert' (the Business).
15.Under the Business, John and Mary ran sheep and cattle and an orchard on the Farming Land and on the other parcels of land specified below.
16.Prior to 1985, in addition to the Farming Land, John owned two other lots, being Lots 406 and 411 comprised in the same Certificate of Title (the Other Lots) (Annexure BKG3).
…
18.John and Mary continued the Business until John's death on 24 October 2008.
…
20.Prior to 1985, James and I were living in Perth. I was a school teacher, and James was a bread carter. James and I lived in our own home.
21.John and Mary, at that time, were approaching retirement age and intended to wind down the Business on the Farming Land and expressed a desire to James and I for the Farming Land to be retained in the Gilbert family.
22.Mary and John's other children, the First, Second and Fourth Defendants, do not live at the farm.
23.Prior to 1985 James and I discussed with John and Mary that it would greatly assist them if James and I were to move to the Farming Land, assist them in the Business, reside at the house on Lot 411, and establish an intensive and sustainable business of our own on the Farming Land and live off the Farming Land.
24.James was a horticulturist and took an active interest in viticulture. The Great Southern area of Western Australia and Mount Barker where the Farming Land was situated was a prime wine region.
25.James and I decided that establishing a vineyard on the Farming Land and making wines would be a sustainable business.
26.During the same period, John discussed his succession planning for the Farming Land and the Other Lots. Based on those discussions, John and Mary agreed with us that:
26.1we were to move to the Farming Land;
26.2we were to repair and occupy the house on Lot 411;
26.3we were to live in the house rent-free in return for assisting John and Mary in the Business for no remuneration;
26.4we were to establish an intensive and sustainable business on the property, being a vineyard, at our owns cost and expense;
26.5we were to make a living from the Farming Land;
26.6we were to purchase some of the Other Lots, forming the Farming Land when we have established and were financial;
26.7John and Mary were to retire in due time;
26.8James was to inherit the Farming Land in due time.
27.James and I moved to the Farming Land in or about May 1985.
28.James and I renovated the house on Lot 411 with our own funds to make it habitable for our family.
29.James worked on the farm and as a shearer around the Mount Barker region to bring in extra income.
30.Soon after, in 1985, James and I planted our first vines.
31.The cost of establishing the vineyard on Lot 406 was borne by James and me, including James' labour, the costs of earthworks, and the purchase of the cuttings from the Swan Valley Research Station in Perth.
32.James and I planted vines on 15 acres on Lot 406.
33.John and Mary continued to use the Farming Land and the remainder of Lot 406 for the Business.
34.Our first wine was produced in 1989.
35.In 1990 James and I restored the old shed on Lot 411 and opened a cellar door under the name and style of 'Gilbert Wines' (Gilbert Wines).
…
38.For the first 10 years living on the Farming Land, we had no income other than the income generated by James doing shearing work.

There was no dispute between the parties as to the applicable legal principles. Reference was made to the Court of Appeal decision in Walsh v Adrian Cory Sloan as executor of the estate of the late Laurette Dorothy Keddie [2019] WASCA 107 and to the decision of Kenneth Martin J in Pringle v Pringle. In that latter decision his Honour sets out a series of principles of interpretation which, with respect, clearly articulate the present state of the law. I would incorporate those principles by reference without repeating them.
It was the primary position of the first defendant, cl 2 was not ambiguous and therefore s 28A of the Wills Act 1970 (WA) (the Act) was not engaged. Section 28A reads as follows:
28A. Use of extrinsic evidence to clarify will
(1)In proceedings to construe a will, evidence, including evidence of the testator’s intention, is admissible to the extent that the language used in, or other content of, the will renders the will or any part of the will -
(a)meaningless; or
(b)ambiguous on the face of the will; or
(c)ambiguous in the light of the surrounding circumstances.
(2)Evidence of a testator’s intention is not admissible to establish any of the circumstances referred to in subsection (1)(c).
(3)Nothing in this section prevents evidence that is otherwise admissible at law from being admissible in proceedings to construe a will.
(4)This section applies to the will of any person dying on or after the day on which section 22 of the Wills Amendment Act 2007 comes into operation, whether the will was made or executed before, on or after that day, but does not apply to the will of a person who died before that day.
The starting point is to look at what cl 2 actually says. There is no difficulty with the first point. Nor is there any difficulty with the second point. The executor is to hold the balance of the real and personal estate on trust and pay the whole of the income to Mary. In other words, Mary had a life interest. The will anticipates John predeceasing Mary and Mary predeceasing James. It might reasonably have been expected the person drafting the will would have covered a situation where James predeceased Mary. But that was not done and that is the cause of the present problem.
What the will does not say is when the payment of $3,000 was to be made to the three named beneficiaries. The sequential wording suggests payment was to be made on Mary's death. It would be a tortured reading of the clause to say that payment had to be made on John's death. But it is logically consistent to say that payment had to be made on Mary's death.
In my view, cl 2 has within it a latent ambiguity. It does not say when the payment of $3,000 is to be made and it does not specifically deal with the circumstance where James predeceases Mary. That being so, I am satisfied s 28A is engaged and evidence of the surrounding circumstances is admissible. In saying that I am mindful of the limitation found in s 28A(2) of the Act. This ambiguity is on the face of the will.
The first defendant maintains there is a partial intestacy because cl 2 of the will fails. The argument is put on a number of different grounds. First it is said the plain meaning of cl 2 is that James must survive Mary to take under the will. It is submitted there is in the clause a clear sequence - the death of John with the life interest passing to Mary, the death of Mary, the payment of $3,000 to each of the three named beneficiaries and the property passing to James. If James predeceases Mary then that sequence fails and the clause fails. There is no basis upon which James' estate can stand in the shoes of James - the clause simply does not provide for that eventuality.
That reading of the clause ought be rejected. The way in which the clause is structured makes it plain the Farming Land was to pass to James. Looking at the evidence of surrounding circumstances as they existed in January 1991 it is clear the wine business had been established on the Farming Land and continuity was required. It does no violence to the language of cl 2 to allow that if James did predeceased Mary the Farming Land would pass to his estate.
Two factors are particularly relevant. First, the fact John was aware James and Beverley had established a horticultural undertaking on the Farming Land. Such undertakings are long term ventures. Retaining ownership of the land is crucial to the success of such ventures. As part of the security necessary for the venture to succeed the Farming Land had to be retained by James (or his estate) and not divided up between all of John's children. That leads into the second point. Each of the three named beneficiaries was to receive $3,000 - not a large sum. I accept, as was put by counsel for the first defendant, an amount of $3,000 in 1991 was of somewhat more significance than it is today. But nonetheless the amount is not substantial. It does not suggest John was attempting to distribute his estate equally. At least there is no evidence to that effect. So the passing of the Farming Land to James' estate is not, in my view, inconsistent in any way with the proper reading of cl 2.
The second submission of the first defendant is that the gift to James in the third limb of cl 2 was subject to a condition precedent. That is because it is capable of being performed immediately. Both parties agree on this point. The plaintiff submits that a conditional gift of this nature should be construed either as a trust or an equitable charge. Courts have resorted to such a rule to protect third parties who might otherwise lose the benefit of a condition in their favour. Otherwise it would be in the interests of a beneficiary of the residue to cause a condition to fail so that the property falls to them free of the condition.
The first defendant says there is no need to protect the interests of the three named beneficiaries. If there is a partial intestacy the three beneficiaries stand to receive more than $3,000 each. The first defendant says there is no rationale to apply the rule to protect the interests of third parties.
This approach suggests that imposing the gift with a trust or equitable charge depends on the circumstances - that is to say the rule will be applied only if to do otherwise, would potentially be detrimental to the beneficiaries. The first defendant provides no authority for this selective application of the rule. It is difficult to see why the rule should not be universal and operate whether or not the beneficiaries would be better off if there was a partial intestacy. Accordingly, I am satisfied the Farming Land can pass to James' estate and when it does so it will be impressed either with a trust or an equitable lien in favour of the beneficiaries.
Thirdly, the first defendant argues cl 2 embodies a personal obligation that does not survive James' passing. The first defendant compares the obligation to an option to be treated as a personal right which is not assignable or transmissible.
The plaintiff submits that characterisation of the conditional bequest is too narrow. While accepting the obligation to make payment is a personal obligation, the plaintiff submits there are three possible approaches. First, the obligation is truly personal in the sense of the provision, for example of some personal service. Second, the obligation, though not personal in the first sense is to be viewed as personal. Certain options for example can only be exercised by the donee. Third, the obligation is not personal in either of the above respects and is transmissible. Not surprisingly, the plaintiff favours the third option.
There is considerable authority about whether or not options are personal in one or other of the ways outlined above. Those authorities make it plain it is the intention of the parties as it emerges from the form of the option that is important. There appears to be no authority directly on testamentary dispositions. But there is no reason why the same approach, looking at the intention of the testator, is not the correct approach. Moreover, whereas an option will most often be contractual so that parole evidence is not generally admissible to ascertain the parties intention, s 28A of the Act would make such evidence admissible. Accordingly, I see no reason why evidence of the surrounding circumstances could not be called upon to determine whether or not satisfying the condition precedent is a personal obligation or whether it can pass to James' executors.
Looking at the wording of the clause and taking into account the surrounding circumstances I am satisfied the condition precedent can be met by the executors of James' estate. It is clear this is not one of those condition precedents which is entirely personal to James. So it must fall either into the second or the third of the categories I have outlined above. Consistent with the approach I have adopted above I am satisfied it was the intention of John that the Farming Land should pass to James or his estate. I will not repeat what I have said about the horticultural pursuit and the need for continuity. There is no reason why, in this case, satisfaction of the condition precedent should be personal to James. None of the beneficiaries loses anything if the condition is satisfied by the estate.

Finally, the first defendant says that as payment of the $3,000 to each of the beneficiaries has not yet been made and almost three years has passed since the grant of probate the executor has failed to comply with the terms of the will and a partial intestacy results. The question here is whether or not a reasonable time has passed so that it can be implied the plaintiff has passed the opportunity to have the Farming Land transferred to her. There are two answers to that submission. First, there has clearly been uncertainty in the mind of the executor as to what her rights and obligations are. To have made payment of the $3,000 to each of the beneficiaries while that uncertainty exists would be unreasonable. On that basis it cannot be said payment has not been made within a reasonable time. Secondly, as I have determined the interests of the beneficiaries are protected by a trust or an equitable lien over the Farming Land the beneficiaries could at any time have sought to enforce their rights. The fact they have not done so is a matter for them and has no consequences for James' estate and the administration of John's will.
For the sake of completeness I should note counsel for the third and fourth defendants adopted the submissions of the plaintiff and her interpretation of the will.
For these reasons I am satisfied orders sought by the plaintiff ought be made.
Parties to confer as to a precise form of orders and as to costs. In the circumstances an agreement cannot be reached, parties are to file completing minutes of proposed orders by 18 June 2020.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson
11 JUNE 2020