Bothmann v White
[2015] VSC 247
•3 June 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2013 4399
| CHRISTA BOTHMANN | Plaintiff |
| v | |
| CLIVE WILLIAM WHITE (as one of the Executors of the Estate of Karl Heinz Anton Jackle, deceased) and MARCUS JULIUS JACKLE | Defendants |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 20 May 2015 |
DATE OF JUDGMENT: | 3 June 2015 |
CASE MAY BE CITED AS: | Bothmann v White |
MEDIUM NEUTRAL CITATION: | [2015] VSC 247 |
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SETTLED LAND ACT 1958 (Vic) – Application by tenant for life for sale of property – Sale opposed by remaindermen – Whether property is ‘settled land’ within the meaning of s 8 of the Settled Land Act 1958 (Vic) – Whether property is subject to a ‘trust for sale’ within the meaning of s 18 of the Property Law Act1958 (Vic) – Whether applicant a tenant for life or holds a mere right of residence – Royal Melbourne Hospital & Ors v Equity Trustees Ltd (2007) 18 VR 469 and Re Hoppe deceased [1961] VR 381 considered and applied – Relevant discretionary considerations – Application granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R H Miller | Mason Black Lawyers |
| For the First Defendant | Mr G Burns | Oakleys White |
| The Second Defendant appeared in person |
HER HONOUR:
Ms Christa Bothmann was the long-time de facto partner of Mr Karl Jackle (‘deceased’). The deceased died on 15 May 2012. In his will dated 30 June 1995 (‘Will’), the deceased appointed Ms Bothmann and the first defendant, Mr Clive White, a solicitor, as executors of the Will. Probate of the Will was granted on 21 February 2013. Clause 3 of the Will provides that:
I GIVE DEVISE AND BEQUEATH unto my trustees the whole of my estate of whatever kind and wherever situate UPON TRUST as follows:
(a)to hold the whole of my estate and interest in all my lands situate in the Parish of Dumbalk and known as ‘Schemmerberg’ Stony Creek and being lands described in Certificate of Title Volume 9818 Folio 610 for my friend CHRISTA BOTHMANN to have the use and occupation thereto and to receive the net income therefrom for her lifetime she during such time being responsible for payment of rates and taxes, attending to maintenance to maintain the property in a proper and tenantlike manner and to maintaining an appropriate insurance coverage against fire on the property to a practical standard approved by my trustees and on the death of my said friend I DIRECT that such lands shall be held for my children MARCUS JULIUS JACKLE and BRITTA MARIA JACKLE as tenants in common in equal shares;
(b)to hold the whole of the then residue of my estate to sell call in and covert such parts thereof as shall not consist of money at my death with power to postpone the sale calling in and conversation of the whole or any part or parts of my real or personal estate during such period as my trustees may in their uncontrolled discretion think proper and out of the clear moneys to arise from such sale calling in and conversion and my ready moneys to pay my debts funeral and testamentary expenses and all Estate and Probate duty and other Government taxes on the whole of my estate and to hold the balance thereafter remaining UPON TRUST as follows:
(i)for my friend CHRISTA BOTHMANN absolutely;
(ii)should my said friend have died before me then to hold the same for my children MARCUS JULIUS JACKLE and BRITTA MARIA JACKLE as tenants in common in equal shares.
Ms Bothmann is currently residing at the land referred to in clause 3(a) of the Will (‘property’), which is a 10 acre block on the Foster‑Mirboo Road, some 22 kilometres from the nearest town, Meeniyan. This proceeding commenced as an application for further and better provision under Part IV of the Administration and Probate Act 1958 (Vic), whereby Ms Bothmann sought the entirety of the deceased’s estate absolutely. However, by an Amended Originating Motion filed on 20 August 2014, Ms Bothmann seeks orders that the property, being the only significant asset of the deceased’s estate, be sold, and that the net proceeds of the sale of the property be paid to Mr White (‘executor’), to be held on trust for the estate of the deceased, and to be used to purchase or lease a residence by her which she would be permitted to occupy for the remainder of her life. The application is opposed by the second defendant, Mr Marcus Jackle, and his sister Britta. However, Ms Britta Jackle, who lives in North Queensland, is not a party to the proceeding, and has made no formal submissions to the Court.
The questions before the Court in this proceeding are whether:
(a) the property is ‘settled land’ within the meaning of s 8 of the Settled Land Act 1958 (Vic) (‘SLA’), and is not land held upon a trust for sale within the meaning of s 9 of the SLA, and therefore, the jurisdiction of the Court to sell the property is enlivened; and
(b) the Court, having the power to order the sale of the property, ought to exercise its discretion to do so having regard to all relevant facts and circumstances.
Since 1985, and up until his death, the deceased and Ms Bothmann lived together at the property, having been in a de facto relationship together since 1971. When the deceased originally purchased the property in 1976, it was uncultivated and blackberry infested. The deceased and Ms Bothmann together worked to clear and re‑vegetate the property and built a modest two bedroom home. There is no electricity connected to the property, and Ms Bothmann is reliant upon solar panels and a diesel generator for power, including for power to pump water from underground water storages to water tanks to supply the house. The water is heated by a combustion stove, and the refrigerator is powered by bottles of LPG, which need to be delivered to the property every three weeks. The house is connected to the main road by a 400 metre long unsealed driveway.
Ms Bothmann is fit and healthy. However, she turns 80 in September this year, and is finding it increasingly difficult to maintain the property, including the large vegetable garden, and is reliant upon neighbours to assist her in that regard. She is finding it difficult to operate the diesel generator, which is necessary to supplement the power generated by the solar panels during the area’s harsh winters. She does not drive, and takes a community bus to Leongatha each fortnight for grocery shopping, and is again reliant upon neighbours if she wishes to travel at other times. She has some savings, but is otherwise reliant upon a Centrelink pension and a small pension she receives from the German government. Her savings, which amounted to approximately $55,000 at the date of the death of the deceased, have been whittled away to between $35,000 to $40,000 by expenditures upon repairs to and maintenance of the property.
Ms Bothmann wishes to have the property sold, and for the estate to lease or purchase a property for her use in either Meeniyan or Leongatha. She wishes to be closer to shops, amenities, and medical services, and to have the flexibility to move into supported accommodation should the need arise. The executor is largely supportive of Ms Bothmann’s application, and has pointed out that in all likelihood, the property will need to be sold to pay the liabilities of the estate, which are largely made up of legal costs incurred by the executor in the administration of the estate and in participating in this proceeding. However, the executor has felt constrained from providing formal consent to the sale owing to the opposition of Marcus and Britta Jackle. There is a further potential liability of the estate, being Ms Bothmann’s legal costs in bringing and prosecuting this proceeding, should orders be made that she be entitled to those costs. The value of the property is approximately $325,000.
The application is opposed by Mr Marcus Jackle, the deceased’s son and one of the remaindermen under the Will. Mr Jackle did not file and serve any affidavit in this proceeding, but the grounds of his opposition can be ascertained from his mediation position statement dated 4 August 2014, the lengthy correspondence between him and the solicitors for Ms Bothmann and the executor, and from his oral submissions during the course of the hearing. Primarily, the basis of his opposition is that the property should be kept within the family, as his father wished, and he and his children desire, and that Ms Bothmann has acted unilaterally and incurred unnecessary costs by demanding that the property be sold and in selling plant and equipment used to maintain the property. He also disputes that the net proceeds of sale would be sufficient to enable the estate to purchase a suitable property for Ms Bothmann to reside in. He contends that if the parties had engaged in discussions in good faith at an early stage, then the parties would have been able to identify a solution, taking into account Ms Bothmann’s savings, which would meet her needs while still keeping the property in the family.[1] One option Mr Jackle presented was that a ‘trust’ be created, which could borrow funds against the equity of the property, to be applied to assist Ms Bothmann with rental payments. He was, understandably, unable to comment upon the legal issues raised by Ms Bothmann’s application. He does not dispute the evidence given by Ms Bothmann regarding the state of the property or the living conditions at the property.
[1]Much of the correspondence is repetitive, and concerns matters not directly relevant to the current application, such as the events leading up to the death of the deceased, and as such, is not traversed in these Reasons.
Turning to the legal questions first, the question of whether the property is ‘settled land’ within the meaning of the SLA, and is not excluded from the operation of the SLA by reason of it being held under a trust for sale, and whether Ms Bothmann is a tenant for life, is ultimately a question of construction of the terms of the relevant clause of the Will.[2] Section 38 of the SLA provides that:
A tenant for life with the consent of the trustees of the settlement or order of the Court
(a) may sell the settled land, or any part thereof …
[2]See In Royal Melbourne Hospital and Ors v Equity Trustees Ltd (2007) 18 VR 469 at [237] (Bell AJA).
There is no doubt that the property is settled land within the meaning of s 8 of the SLA. Section 8 of the SLA states as follows:
8. What constitutes a settlement
(1)Any deed, will, agreement for a settlement or other agreement, Act of Parliament, or other instrument, or any number of instruments, whether made or passed before or after, or partly before and partly after, the commencement of this Act, under or by virtue of which instrument or instruments any land, after the commencement of this Act stands for the time being –
(a)limited to or in trust for any persons by way of succession; or
(b)limited to or in trust for any person in possession –
(i)for an entailed interest;
(ii)for an estate in fee-simple or for a term of years absolute subject to an executory limitation, gift, or disposition over on failure of his issue or in any other event;
(iii)for a determinable fee;
(iv)being a minor, for an estate in fee-simple or for a term of years absolute; or
(c)limited to or in trust for any person for an estate in fee‑simple or for a term of years absolute contingently on the happening of any event; or
(d)limited to or in trust for a married woman of full age in possession for an estate in fee-simple or a term of years absolute or any other interest with a restraint on anticipation; or
(e)charged, whether voluntarily or in consideration of marriage or by way of family arrangement, and whether immediately or after an interval, with the payment of any rentcharge for the life of any person, or any less period, or of any capital, annual, or periodical sums for the portions, advancement, maintenance or otherwise for the benefit of any persons, with or without any term of years for securing or raising the same –
create or is for the purposes of this Act settlement and is in this Act referred to as a settlement, or as the settlement, as the case requires:
In the current case, the relevant ‘settlement’ is the Will. Where any doubt arises in whether the terms of the Will create a ‘trust for sale’ within the meaning of s 9 of the SLA, and whether Ms Bothmann is a life tenant of the property, or simply holds a mere right of personal residence with respect to the property.
Section 3 of the SLA provides that a ‘trust for sale’ has the same meaning as provided for in the Property Law Act 1958 (Vic). Section 18 of that act defines a trust for sale to be:
…in relation to land, means an immediate binding trust for sale, whether or not exercisable at the request or consent of any person, and with or without a power at discretion to postpone the sale.
As noted by counsel for Ms Bothmann, whose submissions were made with an acute awareness of the absence of a proper contradictor, at least on the legal questions facing the Court, the SLA is an ‘arcane, complex, and difficult Act to construe’. However, it was submitted that the provisions of the SLA, and the terms of the Will need to be construed in the context of the underlying policy of the SLA, and its local and English predecessor statutes, as set out by Chitty LJ in the following passage:[3]
The object is to render land a marketable article, notwithstanding the settlement. Its main purpose is the welfare of the land itself, and of all interested therein, including the tenants, and not merely the person taking under the settlement. The Act of 1882 had a much wider scope than the Settled Estates Acts. The scheme adopted is to facilitate the striking off from the land of the fetters imposed by settlement; and this is accomplished by conferring on tenants for life in possession, and others considered to stand in a like relation to the land, large powers of dealing with the land by way of sale, exchange, lease and otherwise, and by jealously guarding those powers from attempts to defeat them or to hamper their exercise. At the same time the rights of persons claiming under the settlement are carefully preserved in the case of a sale by shifting the settlement from the land to the purchase money which has to be paid into court or into the hands of trustees.
[3]Re Mundy and Roper’s Contract [1899] 1 Ch 275 at 288, referred to with approval by Bell J in The Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469 at [255].
In Re Hoppe,[4] Pape J held that:
In order to constitute a trust for sale (as opposed to a mere power of sale) there must be an imperative direction to sell which in equity effects a notional conversion of land into money, whereas a power of sale has that effect only from the date of the actual sale.
[4][1861] VR 238 at 385.
However, in Re Johnson[5] and Re Crips,[6] it has been found that settlements created by wills which contained clauses which provided trustees with a mere discretion to sell the relevant property to be ‘trusts for sale’, with a right of postponement at the option of the trustee.
[5][1915] 1 Ch 485.
[6](1907) 95 LT 865.
However, in the current case, there is no need to resolve any inconsistencies or ambiguities discernible in the above authorities. In my view, the terms of clause 3 of the Will do not empower the executor to sell the property. It merely empowers him to hold the property on trust for Ms Bothmann until her death, and after that time, directs that he hold the property on trust for Marcus and Britta Jackle as tenants in common in equal shares. Presumably, the executor is permitted to transfer the property to the tenants in common at their direction after the death of Ms Bothmann, but there is no provision by which the executor is empowered or entrusted to sell the property. This is to be contrasted with the terms of clause 3(b) of the Will, which expressly directs the trustees to sell any assets which form part of the residue of the estate, with the discretion to postpone a sale. Accordingly, the property is not excluded from the operations of the SLA by reason of being subject to a trust for sale.
Turning to the question of whether Ms Bothmann is a life tenant, and therefore entitled to sell the property subject to complying with the relevant provisions of the SLA, in my view, the terms of clause 3(a) of the Will confer more than a mere right of residency upon Ms Bothmann. Critical to this conclusion is the conferring of the right upon her to receive the net income from the property. This right necessarily contemplates Mr Bothmann not being in occupation or residence in the property, but still having all of the powers of the proprietor of the property during her lifetime.
Clause 3 of the Will also provides that the trustees under the Will hold the property on trust for Ms Bothmann ‘to have the use and occupation thereto’. In Royal Melbourne Hospital & Ors v Equity Trustees Ltd,[7] Bell AJA surveyed the authorities and noted that, subject to clear indications of contrary intention, a gift of the ‘use and occupation’ of a property prima facie confers a life estate upon the beneficiary. It is also noteworthy that clause 3 of the Will imposes a condition upon Ms Bothmann that she ‘maintain the property in a proper and tenant-like manner’.
[7](2007) 18 VR 469 at [229]-[233].
Further, s 12 of the SLA provides as follows:
12 Who is tenant for life
The person of full age who is for the time being beneficially entitled under a settlement to possession of settled land for his life shall for the purposes of this Act be the tenant for life of that land and the tenant for life under that settlement.
Further, section 16(1)(g) of the SLA provides that:
(1)Each of the following persons being of full age shall when his estate or interest is in possession, have the powers of a tenant for life under this Act, namely—
…
(g)a person entitled to the income of land under a trust or direction for payment thereof to him during his own or any other life, … unless the land is subject to an immediate binding trust for sale; …
Ms Bothmann is in possession of the property. By reason of the terms of the Will, she is entitled to the income from the property for life, and, as noted above, the property is not subject to a trust for sale of any kind. Accordingly, she is, subject to the consent of the executor or an order of the Court, empowered to sell the land under s 38 of the SLA. The question remains, in the absence of the formal consent of the executor, whether I should so order.
In my view, the facts and circumstances of the current case overwhelmingly support a conclusion that the property should be sold and the proceeds applied to, first, discharge the liabilities of the estate, and secondly, to enable the executor to deploy the net proceeds to provide accommodation for Ms Bothmann commensurate with her needs, while having regard to the size of the estate and the rights of Marcus and Britta Jackle. The property is spartan and isolated, and unsuitable for a woman of advancing years living alone. One would not expect that it would easily find a tenant who could pay a reasonable rent and maintain the property. Mr Jackle has criticised Ms Bothmann for failing to have a driver’s licence, as is his right, but one could hardly expect her to obtain one at this stage of her life.
Mr Jackle has submitted that alternative solutions could be found to the sale of the property, but has not advanced any realistic proposal which would meet Ms Bothmann’s legitimate needs and pay out the liabilities of the estate, while retaining the property within the estate. He makes reference to a trust being created which could borrow against the equity in the property to create a fund for Ms Bothmann’s accommodation needs, with the loan to be repaid by him and his sons. But, by his own admission, Mr Jackle has had a number of health emergencies and chronic health problems which have precluded him from working since 2010, and it seems that he does not have secure housing himself. The means by which he could possibly be able to repay or guarantee the repayment of any loan is entirely unclear. While Britta Jackle seems to be ‘running hot and cold’ on Ms Bothmann’s proposal,[8] there is no suggestion that she has any ongoing interest in the property (indeed, the contrary is likely to be the case, based upon statements in Mr Jackle’s correspondence), or that she would be prepared to financially contribute to enable its retention. As for Mr Jackle’s contentions about his father’s desire to keep the property in the family, that may well be correct, but it is also clear from the terms of the Will that the deceased intended that Ms Bothmann have secure accommodation for the rest of her life if he pre‑deceased her.
[8]Originally Ms Jackle supported Ms Bothmann’s proposal that the property be sold, but in an email to the executor dated 7 May 2015 she suggested that she would not have agreed had she known at the time that Ms Bothmann had substantial savings at the time of the death of the deceased.
There are other relevant matters not expressly referred to in submissions by counsel for Ms Bothmann which would weigh in favour of an order for the sale of the property. First, this proceeding was originally brought as a claim for further provision under Part 4 of the Administration and Probate Act. Having regard to the matters in evidence in this proceeding, and in particular, the status of Ms Bothmann as a domestic partner and business partner of the deceased of more than 40 years, such application would have good prospects of success, which would almost inevitably result in the property being sold.[9] Further, even if I refused to make the order, one could foresee the possibility that the property would be sold in the not too distant future. Ms Bothmann appears to be fit and healthy, despite her age. But she is approaching 80, and upon her death, the property will pass to Marcus and Britta Jackle as tenants in common. Britta Jackle lives in North Queensland, and has done so for over 30 years. There is no evidence that should she hold her share in the property as a tenant in common that she would be prepared to gift her share to Marcus Jackle, or to relinquish her right to take action to convert her share of the property into cash. Mr Jackle’s own prospects of being able to buy out his sister’s share in the future given his lack of employment and ongoing health problems seem slim. Refusing to make an order for sale now would be, in all likelihood, merely postponing the inevitable. And that is before considering the liabilities of the estate, being the legal costs of the executor, and quite possibly, those of Ms Bothmann.
[9]See King v White [1992] 2 VR 417, where Hedigan J held that a widow ought to have sufficient provision ‘to enable her to live with comfort and without pecuniary anxiety.’
Sections 39, 73 and 75 of the SLA provide for the manner in which the property must be sold and the proceeds dealt with. Section 39 of the SLA provides that any sale must be made for the best consideration in money that can be reasonably obtained. The proceeds of sale are deemed to be capital moneys, which must be paid to the trustee or into court at the option of the life tenant. Section 73 of the SLA prescribes the manner in which capital moneys are to be invested by the trustee, which may be used, among other things:
(a) to invest in Government securities or other securities authorised by the Will or by law (s 73(1)(a));
(b) in the purchase of land (s 73(1)(g)); and/or
(c) in payment of costs, charges and expenses of or incidental to the exercise of any of the powers, or the execution of any of the provisions of the SLA (s 73(1)(k)).
I am satisfied that it is appropriate and prudent for the property to be sold by private contract, given the practical difficulties associated with the sale of a property of this unique nature by auction, and the proceeds of sale be held by the executor rather than paid into Court.
I shall hear further from the parties upon the form of order to give effect to these reasons, and the question of costs.
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