Bower v Bower - [2024] SASC 146

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
BOWER v BOWER & ANOR
[2024] SASC 146
Judgment of the Honourable Justice Stanley
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - PARTICULAR TESTAMENTARY DISPOSITIONS
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - WHAT INTEREST PASSES - LICENCE, LIFE ESTATE OR FEE SIMPLE
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - PRINCIPLES OR RULES OF CONSTRUCTION - WHERE UNCERTAINTY
SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - INTEREST OF BENEFICIARY IN PARTICULAR PROPERTY
This is an application for directions and advice pursuant to section 69 of the Administration and Probate Act 1919 (SA). The dispute relates to the proper construction of the will of Rex Bower (the deceased) dated 5 June 2003. The applicant is the widow of the deceased and the sole executrix and trustee of his will.
The applicant and the deceased purchased a property in Wynn Vale (Wynn Vale property) in July 2002 as joint tenants. In April 2003 they effected a transfer of the property to change the ownership to tenants in common in equal shares. By his will, the deceased bequeathed his half-share of the property to the applicant upon trust for her lifetime subject to certain conditions and cessation factors. The applicant now wishes to sell the Wynn Vale property and to utilise the proceeds to purchase a smaller residence.
The respondents are children of the deceased and residual beneficiaries of the deceased’s will. The applicant and the respondents are in disagreement as to the how the proceeds of the sale of the Wynn Vale property ought to be used.
The issue before the Court is whether the applicant can use the trust share of the proceeds of sale of the property to purchase alternative accommodation and live in that accommodation or purchase further alternative accommodation, during her lifetime.
Held:
1.      The deceased’s will cannot deal with the half interest that is held by the applicant as a tenant        in common. The deceased had no basis when making his will to make any provision for that      half interest as it did not form part of his estate.
2.      Words in a will cannot be made to bear a meaning which on the face of the will they are     incapable of conveying.
3.      The applicant is entitled to sell the Wynn Vale property and employ the proceeds of sale to purchase a new property for her accommodation. The applicant is under no obligation to use her own resources for the purposes of purchasing subsequent accommodation.
4.      The applicant in her capacity as executor of the deceased’s estate is to divide the net proceeds      of any sale of the Wynn Vale property with one portion to be paid to the applicant in her personal capacity and one portion (trust share) to be paid to the applicant in her capacity as       executor of the deceased estate.
5.      The applicant, in her capacity as executor of the deceased's estate is to register the title of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bower v Bower

Details

AGLC: Bower v Bower [2024] SASC 146
Case: [2024] SASC 146
Decision Date: 16 December 2024

CaseChat Overview and Summary

The case of Bower v Bower involves a dispute over the interpretation and execution of a will, with Barbara, the applicant, seeking an order for the costs of the application to be paid by Vicki and Tania, the respondents, or alternatively from the Trust’s share. Vicki and Tania oppose this, arguing that the costs should be paid out of the residue of the estate. The central issue in this case is the interpretation of the will, specifically regarding the extent of the interest that Barbara holds in the Wynn Vale property. The will grants Barbara a life interest in the property, subject to certain conditions, and allows her to sell the property and reinvest the proceeds in another residence, held under the same trusts.

The court had to determine whether the will intended for Barbara to have a life interest in the property or if a fee simple interest was intended to pass to her. The court found that the will’s language and the circumstances surrounding its creation clearly indicated that the deceased intended for Barbara to enjoy a life interest in the property, with the ability to sell and reinvest the proceeds in another residence. The terms of the will, particularly the use of the word “employ” in clause 2(c), were held to mean that Barbara could use the proceeds of sale to purchase another residence, including but not limited to a home unit, serviced apartment, hostel, nursing home, or other assisted accommodation. The court rejected Vicki and Tania's contention that the will intended a fee simple interest to pass to Barbara, finding their interpretation to be self-interested and mistaken.

In conclusion, the court ordered that the costs of the application be paid by Vicki and Tania. The court also made orders for the transfer of the property, the division of the net proceeds from any sale, the use of the trust share for purchasing a new property, and the registration of title for any new property. The court granted liberty to the parties to apply for further orders as necessary.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Barbara seeks an order that the costs of and incidental to the application be paid by Vicki and Tania or, in the alternative, be paid out of the Trust’s share. Vicki and Tania seek an order that the costs should be paid out of the residue of the estate. Unfortunately, the stance taken by Vicki and Tania has been misconceived. These proceedings resulted from the approach they took in response to Barbara exercising her legitimate rights under the will. The need for these proceedings was not that the terms of the will were poorly drafted so as to require the intervention of the Court. Their approach has been self-interested. While I do not doubt that their subjective belief was that they were acting in accordance with what they understood to be their father’s testamentary intentions, they are mistaken. Barbara should not be prejudiced by their mistake. In the circumstances I would order that the costs of the application be paid by Vicki and Tania. Conclusion I would make the following orders:1.Pursuant to s 64 of the Real Property Act 1886 upon the lodgement of any instruments required to affect the transfer of the Land comprised in Certificates of Title Register Book Volume 5997 Folio 135 and Volume 5997 Folio 136 and Volume 5997 Folio 137 and the improvements on it (“the Land”) in fee simple and payment of all necessary fees, the Registrar-General subject to any normal examination requirements is to affect the transfer of the Land in fee simple.2.The applicant (in her capacity as the Executor of the deceased’s estate) is to divide the net proceeds of any sale of the Land after the deduction of all proper expenses (“the Net Proceeds”) into two equal portions with:2.1One portion to be paid to the Applicant in her personal capacity;2.2One portion (“Trust Share”) to be paid to the Applicant in her capacity as the Executor of the deceased estate with such share to be held on trust pursuant to the terms of the will (“the Will”) executed by the deceased on 5 June 2003.3.The Applicant (as Executor of the deceased estate) may employ the entirety of the Trust Share for the purchase of a new property (and any subsequent property) in which the Applicant may reside for her own use and benefit during her lifetime pursuant to the same trusts as contained in the Will. 4.The Applicant (in her capacity as Executor of the deceased’s estate) is to register the title of any new property (and any subsequent property) in the name of the Applicant as the Executor of the deceased’s estate and the Applicant in her personal capacity enjoying a life interest in the estate and, in the event she was to use her own funds to purchase any subsequent property, that proportionate interest in such proportions as reflect:4.1the contribution from the Trust Share to the purchase of such new property; and4.2the contribution by the Applicant in her personal capacity to the purchase of such new property;5.The applicant’s costs of and incidental to this application are to be paid by the respondents.6. The parties are granted liberty to apply.

Ratio Decidendi

Legal Principle Established

Barbara contends that the will should be construed to provide that the applicant enjoys the deceased’s 50 per cent interest in the Wynn Vale property during her lifetime. If she wishes, the will empowers her to direct the executor of the deceased’s estate to sell the land and utilise the entirety of the trust’s interest in the land to purchase a new property, and any subsequent property in which she may reside for her own use and benefit during her lifetime. In that event, Barbara will hold any subsequent property on trust pursuant to the same trust as is established by the will.Consideration At the time the will spoke and at the time of executing the will the deceased’s estate owned a 50 per cent interest in the Wynn Vale property as tenant in common. The other 50 per cent interest in the Wynn Vale property was, and is, owned by Barbara as tenant in common. Clause 2(b) of the will gifts to Barbara a lifetime interest in the Wynn Vale property subject to certain prescribed conditions being satisfied by her. Those conditions are that Barbara pays all rates, taxes and other outgoings and keeps the Wynn Vale property in a good state of repair and insured against fire to the satisfaction of her as trustee and subject to payment by Barbara during such life estate of all instalments of principal and interest payable under any mortgage. Clause 2(c) empowers Barbara as trustee on Barbara’s request to sell the Wynn Vale property and employ the proceeds of sale in the purchase of another residence which shall be held upon the same trusts including the trust for sale and repurchase as declared in respect of the Wynn Vale property. The verb “employ” in clause 2(c) in the context of the will means to make use of the proceeds of sale and the purchase of another residence which includes but is not limited to a home unit, serviced apartment, hostel, nursing home or other such assisted accommodation. By its terms the deceased’s will does not impose any other limitation concerning the use of the trust’s share of the proceeds of sale. It is tolerably clear that in making his will in the terms he did the deceased intended that Barbara be able to utilise his interest in the land, or the proceeds of sale thereof, during her lifetime subject to compliance with the prescribed conditions in clause 2(b) and (c). This construction is reinforced by the terms of clause 2(d) which prescribes the circumstances by which Barbara’s life interest in the Wynn Vale property trust terminates and the interest in the Wynn Vale property, or subsequent land, passes to the remaindermen. Those circumstances are:(i)Barbara’s death;(ii)Barbara remarrying; (iii)Barbara entering into a de facto relationship; or(iv)Barbara ceasing to reside on the property for a continuous period of three months. Barbara refers in her submissions to these matters as the cessation factors. If any of those circumstances occur, clause 2(e) is enlivened, and Barbara’s life interest in the Wynn Vale property or subsequent accommodation ceases and the 50 per cent share of the Wynn Vale property or subsequent accommodation passes to the remaindermen. I accept Barbara’s submission that the expression “cease” in clause 2(d) and the term “cessation” in clause 2(e) convey the same meaning.